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[2023] ZAECMKHC 71
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Long Beach Owners Association v Miles N.O - Trial (624/2020) [2023] ZAECMKHC 71 (30 May 2023)
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IN THE HIGH COURT OF SOUTH AFRICA
EASTERN CAPE DIVISION,
MAKHANDA
CASE NO: 624/2020
In the matter between:
LONG
BEACH OWNERS ASSOCIATION
Plaintiff
and
QUINTON
MILES N.O.
Defendant
(in
his capacity as Trustee for the
time-being
of the Haven Trust (I[…])
JUDGMENT: TRIAL
LOWE J:
INTRODUCTION
1.
In
this matter I shall refer to the plaintiff as plaintiff or the
Association and the defendant as such for convenience.
2.
In March 2020 plaintiff
brought an action against defendant claiming payment of the sum of
R600 216,15 together with interest thereon.
Put simply, the
cause of action is one in which plaintiff alleges that as a home
owners’ association and having regard to
its resolutions and
constitution, it legitimately incurred legal expenses
inter
alia
as
“
extraordinary
expenses”
in
pursuing litigation against the DEDEAT and the DAFF, including the
Minister of the DAFF, on behalf of plaintiff, the home owners’
association incurring legal expenditure in an amount of R4 201
513,03. Plaintiff alleges that either on the basis of its
first
claim A and its alternative claim B defendant in his capacity as
trustee for the time being of the Haven Trust N.O., is liable
to
plaintiff in the sum of R600 216,15 being its share, as a member of
the plaintiff, of the said legal costs duly and legitimately
incurred
in one or other of the manners set out in the particulars of claim.
3.
In response, at least
initially, the defendant denied all liability herefore on a number of
different bases relying inter alia on
clause 5 of the Home Owners’
Constitution of the plaintiff.
4.
Later on, and after the
matter had in fact been set down for trial and on 1 December
2022 defendant amended its plea to raise
a special plea of
prescription.
5.
That plea of
prescription followed its discovery that the debt upon which
plaintiff sued had at least allegedly arisen on 25 April
2016, of
which defendant became aware, so it is alleged much later, at least
some time between 2 July 2021 and the discovery of
the judgment which
defendant (in argument) says it became aware of much later and closer
to the date of its filing of its special
plea upon discovery of the
judgment relevant.
6.
Unfortunately, the
application to separate was launched very late on 6 March 2023, just
before trial, the parties having been unable
to agree on that
separation.
7.
At the commencement of
the trial it became apparent that plaintiff alleged that the special
plea, if successful, would be dispositive
of all the issues between
the parties as it would defeat its claim and that in this context it
should be heard first and separately.
The defendant resisted
this separation application.
8.
I heard argument on the
separation application at the commencement of the trial and in a full
ex tempore judgment concluded that
a good basis had been set out for
separation and that the application must succeed ordering accordingly
that “
(b) The
issues raised in the defendant’s special plea relevant to the
prescription of plaintiff’s claim, are separated
from the
remaining issues between the parties, to be heard separately and
first, merits and quantum to stand over for later determination
if
relevant
.”
9.
I ordered that the
costs of this separation application were to be costs in the cause.
10.
Having so separated the
issues the trial proceeded.
11.
It should be said that
in the separation application argument both applicant and respondent
set out that no evidence would be required,
but at the commencement
of the trial on the separated issue, defendant indicated that it
would in fact lead a witness.
SEPARATED TRIAL
12.
To understand the
issues to be decided I should again refer briefly to the pleadings.
13.
I have already set out
the cause of action above in sufficient detail, it being the special
plea to which I must give attention.
14.
A further Rule 37
conference, held at my insistence, on 7 March 2023 set out the issues
to be determined in the entire trial.
15.
It was the first issue
(one of eight) which was required to be addressed in the separated
trial, being “
whether
or not the plaintiff’s claim has prescribed”
.
The parties then agreed in the minute that the prescription issue
could be argued on the pleadings as they stand “…
with
the application in the Gauteng High Court under case number 624/2020
having commenced in April 2014 … and judgment was
handed down
on 26 April 2016 … and that the present action commenced on 5
March 2020, and the defendant was during this
period and still
remains a member of the plaintiff.
”
16.
It was apparent from
the minute that plaintiff would argue that the provisions of section
13 of the Prescription Act 68 of 1969
(The
Prescription Act) apply
,
and interrupted prescription as the defendant was at all relevant
times a member of the plaintiff, while defendant would argue
that the
provisions of
section 10
, as read with 11 and 12 of the
Prescription
Act apply
such that plaintiff’s claim has prescribed.
17.
On the special plea
itself defendant pleaded that:
17.1
Plaintiff’s claim
is premised upon a claim or obligation by defendant arising from a
resolution purportedly taken by the members
of plaintiff during
December 2014 to pay a proportionate share of plaintiff’s
expenditure upon the legal costs already referred
to above incurred
in the Gauteng High court under case number 624/2020;
17.2
It is pleaded further
that the plaintiff’s application in the Gauteng High Court was
determined by a judgment of that court
delivered on 25 April 2016;
17.3
Accordingly, the debt
claimed from defendant was due, in terms of
section 12
of the
Prescription Act, at
the latest, on 25 April 2016 and plaintiff’s
claim had prescribed in terms of
section 10
as read with
section 11
of the
Prescription Act on
26 April 2019;
17.4
Plaintiff’s
action against defendant having been issued on 5 March 2020 had by
then prescribed, this accordingly unenforceable.
18.
There was no
replication, and effectively the relevant factual basis underlying
the special plea was common cause, but not the consequential
result
relevant to prescription.
19.
The evidence of Mr.
Quinton Miles was led shortly, he being cited in his capacity as a
trustee for the time being of the defendant
trust (the Haven Trust).
20.
I will only refer to
his evidence briefly as, in my view, nor was it contended otherwise,
that at the end of the day it took the
agreed facts and the issues to
be decided no further.
21.
Mr. Miles is indeed a
trustee of the Haven Trust which owns two erven in the Long Beach
development of which plaintiff is purportedly
the home owners’
association. In short he contended that he at no time ever
received any invitation to any meeting
of the home owners’
association nor had he ever attended such meeting. He referred
to the judgment of Kollapen J in
the Gauteng litigation, being a
review of two decisions taken by the MEC: Economic Development
Environmental Affairs and Tourism,
this being to uphold an appeal
against the granting of an application for environmental approval
granted by the Department of Economic
Development, Environmental
Affairs and Tourism and in so doing effectively denied the applicant
an environmental authorisation
relevant to the home owners’
association and erven. The second decision related to the
refusal to grant two forestry
licences. Mr. Miles said he did
not know of this in any way at all. He said he did not know of
the appeal against the
judgment of Kollapen J, in the Supreme Court
of Appeal in any way at all (this relating to the forestry
licences).
22.
He said he had no
knowledge of a resolution purportedly taken by plaintiff on 16
December 2014 relevant to this litigation, the
members of the
association again purportedly authorising the bringing thereof.
He said that the Trust acquired his erven
directly from a certain Mr.
Crawford who had since passed away. He said that he did not
even know who the purported chairman
of the plaintiff’s
association was then or at any time, he having met that purported
chair, or seen him, on the day of the
trial. That chair was
said to be Rick Tudhope, who was not himself an owner of any erf in
the development. In my view
the cross-examination which was
limited, took the matter relevant to prescription no further at all.
THE PRESCRIPTION
ISSUE
23.
Generally, chapter III
of the
Prescription Act provides
for the extinction of debt by
prescription. Obviously the effect of prescription is to
extinguish the debt after the lapse
of the prescriptive period
applied to that debt by the Act. The claim in this matter is
indeed a “
debt
”
as such relevant to the
Prescription Act.
24.
The
litigant pleading prescription and alleging same has the onus of
proving the date of the inception of the period of prescription
[1]
.
For the purposes of this matter prescription runs as soon as the debt
is due, in terms of
section 12(1)
of the
Prescription Act
[2
]
.
This too is not contentious in this matter.
25.
For this matter the
debt prescribed after three years in terms of the Act.
26.
The
real issue is whether or not there was a delay of completion of
prescription, the onus on the creditor (plaintiff) to allege
and
prove that the completion of prescription was delayed under the
circumstances set out in
section 13
of the
Prescription Act
[3
]
.
27.
Section 13
of the
Prescription Act, relevant
to this matter, as to its relevant parts
provides that:
“
13(1)
if –
(a)
…
(b)
…
(c)
…
(d)
…
(e)
The creditor is
a juristic person and the debtor is a member of the governing body of
such juristic person; …
(f)
…
(g)
…
(h)
…
(i)
…
The period of
prescription shall not be completed before a year has elapsed after
the day referred to in paragraph (i).
28.
The only issue relevant
to the argument and decision in this matter is
section 13(1)(e).
0i
n; line-height: 150%">
29.
The claim is based upon
the plaintiff’s constitution which provides in summary that the
plaintiff may raise levies to meet
expenses associated with the
maintenance, repair, improvement and keeping in proper order and
condition of the property, and for
the payment of rates and charges
in respect of the common areas and services rendered to it, and
for the payment of expenses
necessarily or reasonably incurred in
connection with the management of the plaintiff.
30.
It provides in addition
that the plaintiff may require members to pay an additional levy to
cover “
extraordinary
expenses
”
necessarily incurred.
31.
The constitution
provides that the plaintiff is “
its
own legal persona, quite separate and distinct from its members
”.
It is entitled to institute action for all and any of the obligations
and duties imposed on the members in terms
of the constitution.
For the purposes of this proceeding it must be assumed that the debt
claimed is one in terms of the
constitution, its prescription being
the issue relevant.
32.
The claim refers to
section 29(2)(b) of the Land Use Planning Ordinance 15 of 1985
(“LUPO”). Section 29(2)(b)
providing that plaintiff
shall have a constitution for various purposes, and section 29(2)(c)
that the owners of land units arising
from the sub-division of
property shall be members of the home owners’ association and
shall be “
jointly
liable for the plaintiff’s expenditure”
.
33.
The haven trust as I
have said is the owner of two subdivided portions of the property
relevant and it is alleged that in terms
of LUPO that defendant is a
member of plaintiff and jointly liable for the plaintiff’s
expenditure accordingly. It
is further alleged that by the
constitution and resolution, previously referred, the litigation
commenced and was approved by the
members they becoming jointly
liable via LUPO for plaintiff’s expenditure in a proportionate
share. The alternative
claim relies simply on the resolution
alleged.
34.
As per the dates, and
from the further minute already referred to above it is common cause
that:
34.1
The Gauteng litigation
commenced in April 2014;
34.2
The judgment by
Kollapen J was handed down on 26 April 2016 – the costs
relevant thereto being the origin of the claim;
34.3
The present action
commenced on 5 March 2020;
34.4
Defendant was a member
of plaintiff at all times relevant;
34.5
Effectively that
prescription commenced to run on 25 April 2016 (which is common
cause);
34.6
That unless delayed, in
terms of
section 13
of the
Prescription Act the
claim would long have
expired and become prescribed by 5 March 2020 when the claim was
issued.
35.
It
is not disputed that plaintiff’s claim is clearly a debt as
contemplated by
section 12
of the
Prescription Act
[4
]
.
36.
It’s prescription
period is three years.
37.
It is thus that the
parties accept that the claim has prescribed as a matter of law in
terms of
sections 10
and
11
of the
Prescription Act, but
for the
delay argument.
38.
It comes down then to
whether, for the purposes of
section 13(1)(e)
of the
Prescription
Act, plaintiff
is a juristic person as contemplated in the Act and
the defendant a member of its governing body.
IS THE PLAINTIFF A
JURSITIC PERSON CONTEMPLATED IN
SECTION 13(1)(E)
OF THE
PRESCRIPTION
ACT?
39.
In
interpreting the
Prescription Act, it
is not disputed that the approach is as set out
below.
40.
It
must be emphasised, and always remembered, that in the current day,
interpretation of a document, including a statute, requires
careful
regard to context. When a court determines the nature of the
party’s rights and obligations in a contract it
is involved in
an exercise of contractual interpretation. There is now a
settled approach to the interpretation of contracts,
documents and
indeed statutes.
[5]
In
that matter the following was said:
“
[18]
Over the last century there have been significant developments in the
law relating to the interpretation of documents, both
in this country
and in others that follow similar rules to our own. It is
unnecessary to add unduly to the burden of annotations
by trawling
through the case law on the construction of documents in order to
trace those developments. The relevant authorities
are collected and
summarised in
Bastian
Financial Services (Pty) Ltd v General Hendrik Schoeman Primary
School.
The
present state of the law can be expressed as follows. Interpretation
is the process of attributing meaning to the words
used in a
document, be it legislation, some other statutory instrument, or
contract, having regard to the context provided by reading
the
particular provision or provisions in the light of the document as a
whole and the circumstances attendant upon its coming
into existence.
Whatever the nature of the document, consideration must be given to
the language used in the light of the ordinary
rules of grammar and
syntax; the context in which the provision appears; the apparent
purpose to which it is directed and the material
known to those
responsible for its production. Where more than one meaning is
possible each possibility must be weighed in the
light of all these
factors.
15
The
process is objective not subjective. A sensible meaning is to be
preferred to one that leads to insensible or unbusinesslike
results
or undermines the apparent purpose of the document. Judges must be
alert to, and guard against, the temptation to substitute
what they
regard as reasonable, sensible or businesslike for the words actually
used. To do so in regard to a statute or statutory
instrument is to
cross the divide between interpretation and legislation. In a
contractual context it is to make a contract for
the parties other
than the one they in fact made. The ‘inevitable point of
departure is the language of the provision itself’,
16
read
in context and having regard to the purpose of the provision and the
background to the preparation and production of
the document.”
41.
As was emphasised this
approach to interpretation requires that from the outset one
considers the context and language together,
with neither
predominating over the other.
42.
In
Chisuse
v Director - General Director of Home Affairs
[6]
(at paragraph 52) the Constitutional Court speaking in the context of
statutory interpretation held that this “
now
settled
”
approach to interpretation, is a “
unitary
”
exercise. This means said the court in
University
of Johannesburg v Auckland Park Theological Seminary and another
[7]
,
that interpretation is to be approached holistically: simultaneously
considering the text, context and purpose. To make it
clear, it
has been explicitly pointed out in cases subsequent to Endumeni that
context and purpose must be taken into account as
a matter of course
whether or not the words used in the contract (or statute) are
ambiguous.
[8]
43.
In
Cool
Ideas 1186 CC v Hubbard
[9]
the court in dealing with the interpretation of statutes said the
following:
“
[28] A
fundamental tenet of statutory interpretation is that the words in a
statute must be given their ordinary grammatical
meaning, unless to
do so would result in an absurdity.
There
are three important interrelated riders to this general principle,
namely:
(a)
that statutory
provisions should always be interpreted purposively;
(b)
the relevant
statutory provision must be properly contextualised; and
(c)
all statutes
must be construed consistently with the Constitution, that is, where
reasonably possible, legislative provisions ought
to be interpreted
to preserve their constitutional validity. This proviso to the
general principle is closely related to
the purposive approach
referred to in (a).”
44.
In considering section
13(1)(e) it is relevant to note that as the
Prescription Act was
promulgated during 1969, at that time, the 1926 Companies Act was in
operation. Subsequently the 1973 Companies Act was promulgated
neither giving a definition of a “juristic person”.
45.
The new
Companies Act
of 2008
does have a definition of “juristic person” as
follows:
“
Juristic
person” includes –
(a)
A foreign
company; and
(b)
A Trust,
irrespective of whether or not it was established within or outside
the Republic.”
46.
The Close Corporation
Act 69 of 1984 simply defines a close corporation as a juristic
person on its registration.
47.
Defendant’s
counsel, Mr. De la Harpe, argued that:
“
What
is relevant, it is submitted, is that no statutory provision was in
effect when the prescription was promulgated which recognised
or
provided that a home owners’ association or any association of
its nature, was a juristic person.
”
48.
This is certinaly
correct, or at least was not contested by plaintiff.
49.
As was pointed out in
argument plaintiff was established purportedly in terms of section 29
of LUPO, which, as I have already set
out above, provides that:
“
29(2)
A home owners’ association coming into being by virtue of the
provisions of subsection (1) –
(a)
Shall be a body
corporate;
(b)
…”
50.
It goes on to provide
at section 29(2)(c) that the home owners’ association shall
have as its members the owners of the land
units involved.
51.
LUPO does not define
the term “body corporate”.
52.
Counsel for plaintiff,
Mr. Naidoo, did not suggest for a moment that the use of the words
“
shall be a
body corporate”
in LUPO were such as to be a deeming provision establishing thereby
the existence of a body corporate in respect of a home owners’
association regardless of its origin or form factually present.
53.
In
this matter factually, the plaintiff home owners’ association
is most certainly not on the face of it, or on what is before
me, in
any form, an incorporated association, but simply one arising from an
agreement between its members having a separate legal
personality
with perpetual succession, a “
universitas
”
the ability to sue and be sued in its own name with the purpose of
furthering the common interest of its members
[10]
.
54.
The question to be
answered is whether the home owners’ association is somehow
however a “
juristic
person
” as
envisaged in
section 13
of the
Prescription Act.
55.
Mr. Naidoo for
plaintiff, advanced the argument that
section 13(1)(e)
of the
Prescription Act was
indeed relevant and applicable referring to both
LUPO and the Sectional Titles Act.
56.
He argued in essence
that read with LUPO the provisions of clause 7 of the plaintiff’s
constitution provided clearly that
it was a body corporate.
57.
Clause 7 provides that:
“
7
LEGAL PERSONA AND
INSTITUTION OF ACTION
It is recorded that this
Association constitutes its own legal persona, quite separate and
distinct from the members who constitute
the Association. The
Association shall be entitled to Institute action out of any Court,
having jurisdiction for all or any
of the obligations and duties
imposed upon members in terms thereof.”
58.
On a plain reading of
this in context, it simply cannot, and does not, have the effect
contended for by Mr. Naidoo. It, at
the most, creates a
universitas
.
59.
Mr. Naidoo conceded
that this was a novel point for which there was no prior authority.
60.
He argued that the
purpose of section 13(1)(e) was to prevent the abuse by members of a
juristic person in claiming prescription
of a debt in the context of
section 13(1)(e)
of the
Prescription Act. He
contended that the
same principle applied to home owners’ associations.
61.
Again, I am unable to
agree herewith either as to the premise of the argument, let alone
the authorities upon which Mr. Naidoo relied
to establish the basis
thereof as to this matter.
62.
In
short,
section 13
provides for eight instances in which the
completion of extinctive prescription is delayed referred to as
“
impediments
”
citing various legal or practical “
hindrance
”
which makes it difficult for a creditor to institute proceedings for
the enforcement of its claim against the debtor
[11]
.
63.
In
Leipzig
v Bankorp Ltd
[12]
the then Appellate Division described the section as follows:
“
This
inept section is by no means clear and presents obvious problems of
interpretation.”
64.
A
detailed interpretation however of
section 13
was set out by the
Supreme Court of Appeal in
ABP
4X4 Motor dealers (Pty) Ltd v Igi Insurance Company Ltd
[13]
bringing clarity. At paragraph [8] “…
it
is a provision which provides for neither interruption nor the
suspension of the running of prescription in the normally understood
sense. Yet, traces of the elements of interruption and
suspension are not entirely absent from it. They are present
to
a greater or lesser degree as will be become apparent when some
concrete examples of its field of application are considered.
”
65.
There is no direct
authority on the point in question, either way, but it seems to me
that a proper interpretation of the relevant
subsection presents no
difficulty, being simply whether in context, and as described above,
properly interpreted plaintiff is a
juristic person as envisaged in
the Act.
66.
It seems to me having
carefully considered the arguments of both counsel, that
fundamentally plaintiff in this matter is not a juristic
person as
contemplated in the
Prescription Act, but
a
universitas
falling outside the provisions thereof, this unaffected by
section
29(2)(a)
of LUPO. This conclusion is dispositive of the issue.
67.
Quite apart from the
above, another issue relates to the question as to what the
association’s governing body is.
68.
Mr. de la Harpe argued
with some justification that it had not been established by
plaintiff, nor was it apparent from the documents
or the constitution
that the resolution was by the actual governing body of plaintiff.
He argued that all that was indicated
from the documentation before
me was that the purported resolution taken by the members of the Long
Beach Home Owners’ Association
on 16 December 2014 was that Mr.
Tadhope (referred to in paragraph 1.2 thereof as its chairperson) was
not a member of the association
and not in any way that the so-called
resolution was one taken by the association itself, that is by its
governing body.
69.
The point made was that
there is no evidence, documentary or otherwise, before me indicating
that the actual governing body, the
plaintiff home owners’
association, took the decision or resolution referred to, Mr.
Tadhope, not being a member by virtue
of being an erf owner, and the
purported decision not established as that of the home owners’
association necessarily at
all.
70.
Indeed, if I am
incorrect on the issue as to whether the home owners’
association is a juristic person, there is considerable
merit in this
alternative argument.
CONCLUSON
71.
In the result, on what
I have said above, it is clear, on a proper interpretation, that
plaintiff in this matter, does not fall
within the provisions of
section 13(1)(e)
of the
Prescription Act, and
prescription was not
delayed accordingly.
72.
In the result, the
special plea falls to be upheld, plaintiff’s claim having
prescribed on the common cause dates.
73.
As to costs, the
parties were not in dispute that should the special plea succeed
defendant should have its costs. Those of
the separation
application are costs in the cause.
ORDER
74.
The following order
shall issue:
1.
Defendant’s
special plea, as to prescription of the debt claimed, succeeds.
2.
Plaintiff’s claim
is dismissed with costs, including the costs of the separation
application.
M.J. LOWE
JUDGE OF THE HIGH
COURT
Appearing
on behalf of Plaintiff:
Mr.
Naidoo,
Instructed
by
Neville
Borman and Botha Attorneys, Mr. Powers.
Appearing
on behalf of Defendant:
Mr.
De la Harpe S.C.,
Instructed
by
Whitesides
Attorneys, Mr. Barrow.
Date heard: 8 – 9
March 2023.
Date delivered: 30 May
2023.
[1]
Lancelot Stellenbosch Mountain Retreat (Pty) Ltd v Gore NO and
Others [2015] ZASCA 37.
[2]
Standard Bank of South Africa Ltd v Miracle Mile Investments 67
(Pty) Ltd and Another 2017 (1) SA 185 (SCA).
[3]
Regering van die RSA v SA Eagle Versekeringsmaatskappy Bpk
1985 (2)
SA 42
(O); Malcolm v Premier, Western Cape Governent NO
2014 (3) SA
177
(SCA); Silouette Investments Ltd v Virgin Hotels Group Ltd
2009
(4) SA 617
(SCA).
[4]
Duet
and Magnum Financial Services (in liquidation) v Koster
2010 (4) SA 499.
[5]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593 (SCA).
[6]
2020 (6) SA 14
(CC).
[7]
2021 ZACC 13
at
[65]
.
[8]
Novartis
SA (Pty) Ltd v Maphil Trading (Pty) Ltd
2016 (1) SA 518 (SCA).
[9]
2014 (4) SA 474 (CC).
[10]
Nelson Mandela Metropolitan Municipality v Greyvenouw cc
2004 (2) SA
81
(SECLD) [58 – 60].
[11]
Extinctive Prescription 2
nd
Ed Loubser Juta 198.
[12]
[1993] ZASCA 198
;
1994
(2) SA 128
(A) at 133 F.
[13]
1999 (3) SA 924
(SCA) at 930D.