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[2022] ZAKZPHC 81
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Rampul v Trustees of Mangrove Beach Centre Body Corporate and Others (9823/2022P) [2022] ZAKZPHC 81 (15 December 2022)
FLYNOTES:
MIXED-USE BODY CORPORATE
Property –
Body corporate – Mixed use of commercial and residential –
Special rules – Commercial owners
given greater percentage
of vote at general meetings than residential owners –
Differentiation to be expected and not
unfair.
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
Case
No: 9823/2022P
In
the matter between:
HIRALAL
RAMPUL APPELLANT
and
TRUSTEES
OF MANGROVE BEACH CENTRE: FIRST
RESPONDENT
BODY
CORPORATE
THE
BODY CORPORATE: MANGROVE SECOND
RESPONDENT
BEACH
CENTRE
THULANE
KHAMBULE N.O. THIRD
RESPONDENT
COMMUNITY
SCHEMES OMBUD SERVICE
FOURTH RESPONDENT
This
judgment was handed down electronically by being transmitted to the
parties’ legal representatives by email. The date
and time upon
which it was handed down is deemed to be 13h00 on 15 December 2022.
ORDER
It
is ordered that:
1.
The appeal is dismissed with costs.
JUDGMENT
MOSSOP
J:
[1]
This
is an appeal brought in terms of section 57 of the Community Schemes
Ombud Service Act 9 of 2011 (the Act) against an
adjudication order
(the order) made by the third respondent. In terms of section 57(1)
of the Act, such an appeal lies only in
respect of a question of law,
and not in respect of a question of fact. As a general proposition,
‘[a] question of fact usually
calls for proof’ while ‘[a]
question of law usually calls for argument’.
[1]
The confining of an ‘appeal to questions of law is intended to
limit the scope of intervention by a court’.
[2]
[2]
The
appellant is a businessman who owns a single section in the second
respondent,
[3]
which is what is
termed a ‘mixed-use’ body corporate. The mixed-use
appellation arises from the fact that the ground
floor of the
building is comprised of commercial sections from which commercial
enterprises operate and the second and further
floors of the building
are comprised of residential sections. There are, in total, 257
sections in the scheme of which 235 are
residential sections.
[3]
When the appeal was argued, the
appellant was represented by Mr Omar and the first and second
respondents were represented by Ms
Nicholson. Both are thanked for
their considered and helpful submissions. The third and fourth
respondents elected to abide the
decision of this court and
consequently played no part in the appeal.
[4]
In the proceedings before the third
respondent, which were conducted entirely on paper, the appellant had
sought the following relief
in a document referred to as an
‘Application for Dispute Resolution Form’ (the form):
‘
An
order in terms of Section 39(3)(c) and (d) of the CSOS Act, in the
following terms:
An
order declaring that Annexure “R”, or alternatively,
Rules 4.4, 4.5. 18, 63, 31.1.2, 31.1.4.1, Annexure “A”,
Annexure “B1”, Annexure “B2” and Annexure “C”
of Annexure “R” are invalid and unreasonable,
having
regard to the interest of all owners of the Scheme, and requires the
Scheme to approve and record new management rules:
(i)
To remove the invalid provisions; and
(ii)
To substitute the invalid provisions
with the prescribed management rules
(Annexure
1 of the STSM Regulations, dated 7 October 2016).’
The
reference therein to ‘STSM Regulations’ is a reference to
the Section Titles Schemes Management Regulations,
[4]
which were introduced through the Sectional Titles Schemes Management
Act 8 of 2011 (the STSM Act).
[5]
The relief sought by the appellant was
refused by the third respondent. In delivering his order, about which
I shall have more to
say shortly, the third respondent also purported
to dismiss an application by the appellant in terms of section 9 of
the Constitution
of the Republic of South Africa,1996 (the
Constitution). It is not clear what application that was, as it was
not an order that
the appellant had, in fact, sought in the form. The
refusal of the relief claimed by the appellant by the third
respondent led
to this appeal.
[6]
Before
the third respondent, in addition to generally denying the
appellant’s entitlement to the relief claimed, the first
and
second respondents raised the defence that the matter was res
judicata. This was based upon an earlier application (the prior
application) that had been argued before Masipa J in the matter of
Central
Plaza Investments 85 (Pty) Ltd v Body Corporate Mangrove Beach
Centre.
[5]
The first and second respondents submitted to the third respondent
that Masipa J had authoritatively and finally determined the
very
issue that the appellant requested the third respondent to determine.
[7]
This argument found favour with the
third respondent. In the reasons for his order, the third respondent
stated as follows:
‘
I
am therefore of the view that the Applicant’s application in
terms of sections 39(3)(c) and(d)(i) [sic] is hereby refused.
In
fact, the issues concerning section 10(2) of the STSMA, and the
validity of the Rules has been dealt [sic] at length in the
court
judgment. The matter in so far as is concern [sic] is Res judicata
[sic].’
[8]
In my view, the finding by the third
respondent on the issue of res judicata was
plainly
wrong. In determining the issue as he did, the third respondent erred
in the following respects:
(a)
Firstly,
he did not identify or consider the constituent parts of such a
defence.
[6]
Had he done so with
any thoroughness, he would have realised his error. The third
respondent found that the appellant was the ‘owner’
of
Central Plaza Investments 85 (Pty) Ltd (Central), the applicant in
the prior application. He was entirely mistaken in this regard.
Central’s guiding mind was not the appellant. Its guiding mind
was, and is, a Mr Christopher Pearson (Mr Pearson), one of
the three
trustees of the second respondent and the person who deposed to the
first and second respondents’ answering affidavit
in this
appeal. The appellant had no link whatsoever to Central. Central was
not a party to the proceedings before the third respondent
and it
follows that it is not a party to this appeal. One of the
requirements for a successful defence of res judicata, namely
that
the litigation be between the same parties, was consequently not met;
(b)
Secondly, the question before Masipa
J and the question that the third respondent was called upon to
determine could not have been
the same question for several reasons.
The issue between the parties before Masipa J in the prior
application was summed up by
the applicant (the second respondent in
this appeal) as follows:
‘
None
of the amendments which were effected by the original developer have
any bearing on the present dispute which is solely the
question of
how to allocate a particular disbursement which has been incurred. As
the rules do not cater for this particular expense,
the applicant has
brought an application to ask the above Honourable Court to make an
order about the allocation.’
The
issue described above was not the issue before the third respondent,
as is evident from the content of the form. In addition,
the STSM Act
did not exist at the time that Masipa J heard argument in the prior
application. The judgment in the prior application
was delivered on 2
May 2019. By that time the STSM Act had, indeed, come into effect,
but it had not been in place at the time
that the papers in the prior
application had been prepared or when the prior application was
argued;
[7]
and
(c)
Thirdly,
in the application papers before Masipa J, the following extract
appears in the replying affidavit delivered on behalf
of the
applicant by Mr Pearson:
[8]
‘
As
I have already stated, if the respondent’s complaint is that
the management rules as they presently stand are unlawful
or
unreasonable or for any other reason should be set aside, then it is
at liberty to make an application to court for the appropriate
relief. No such relief is sought herein and in the circumstances I am
advised that the above Honourable Court must hear and determine
this
application based on the management rules as they stand.’
This
is precisely the appellant’s complaint and it has acted upon Mr
Pearson’s invitation. It is hardly open to the
first and second
respondents to now claim that the issue was previously determined in
the light of the abovementioned extract.
In my view, the issues in
the prior application and the application before the third respondent
could not be, and were not, the
same.
[9]
The reasoning and finding of the third
respondent on the issue of res judicata was incorrect. The matter had
not previously been
determined. To the extent that this was the
basis upon which the appellant’s application was refused, it
must be set
aside.
[10]
The order handed down by the third
respondent is some 21 pages long. It diligently and laboriously
refers to all the relevant sections
of the Act that may possibly be
of application. The case for the appellant is stated at some length
as is the first and second
respondents’ defence thereto. Whilst
his summary of the issues demonstrated his awareness of the issues
before him, the third
respondent did not directly address those
issues, other than the issue of res judicata, in any great detail in
his order. It appears
that he took the view that the defence of res
judicata was unanswerable and therefore there was no need to consider
the other issues
raised by the appellant. Rather than refer the
matter back, it is perhaps prudent for this court to consider those
issues, due
regard being had to the fact that full argument was
delivered at some length on the merits of the matter when the appeal
was argued.
[11]
In
this division, appeals in terms of the Act are launched by way of a
notice of motion and affidavit(s).
[9]
This, however, does not render it an application: it still remains an
appeal. What must be addressed in the appeal are the findings
made by
the adjudicator. Indeed, practice directive 39.2 of this division
states that the founding affidavit in such an appeal:
‘…
shall not exceed ten (10)
pages, will succinctly set out the grounds upon which it is alleged
that the Adjudicator erred on a point
of law.’
The
fact that the form of motion proceedings is the preferred method of
presentation of the appeal does not mean, in my view, that
an
appellant is at liberty to raise issues that did not serve before the
adjudicator. In this particular appeal, the appellant
has taken a
point in limine in his replying affidavit regarding the legal
standing of Mr Pearson, who deposed to the answering
affidavit
delivered by the first and second respondents. This is not an issue
that was before the third respondent and I consequently
shall not
consider it.
[12]
In the appellant’s notice of
motion in this appeal, the following relief is claimed:
‘
1.
The Applicant’s appeal in terms of section 57 of the CSOS Act
is upheld.
2.
The Order of the Third Respondent dated 28 June 2022 is set aside.
3.
It is declared that the Special Rules described as Annexure “R”,
(Annexure “R”) being Annexure “HR2” to the
founding affidavit of H Rampul, are inconsistent with the Sectional
Titles Schemes Management Act, 2011 and are invalid.
4.
Alternatively to paragraph 3 above, Rules 4.4, 4.5, 18, 31.1.2,
31.1.4.1, 63,
Annexure “A”, Annexure “B1”,
Annexure “B2” and Annexure “C” of Annexure
“R”
are declared to be inconsistent with the Sectional
Titles Schemes Management Act, 2011 and are invalid.
5.
It is declared that as from 7
th
October 2016, the
Prescribed Management Rules set forth in Annexure “1” to
the Regulations of the Sectional Title Schemes
Management Act, 2011
shall apply to the Second Respondent.’
[13]
Central to the proceedings before the
third respondent, and in this appeal, is
the
appellant’s complaint concerning a document referred to
variously as ‘Annexure “R”’, or as the
‘special rules’. I prefer to refer to it by the latter
name. It is the fulcrum around which this appeal moves. The
special
rules came into being in 1994. When the building was first
constructed in 1965, it was initially operated as a share block
scheme. In 1994, the developer, Romwood Share Block Investments
Limited (Romwood), converted it to a sectional title scheme.
Contemporaneously
with the act of conversion, Romwood filed the
special rules with the Registrar of Deeds. They have remained in
place since then.
[14]
Before
the third respondent, the appellant’s principal complaint was
that the special rules unfairly discriminate against
owners of
residential sections in the second respondent by granting the owners
of commercial sections 75 percent of the vote at
general meetings
when the commercial sections only comprise 27 percent
[10]
of the total area of all the sections in the second respondent. Thus,
the owners of residential sections, which comprise 68 percent
of the
scheme,
[11]
only have 25
percent of the vote at such meetings. The appellant contends that:
‘
[t]here
is simply no commercial rationale or rational basis for conferring
upon the commercial component 75% of the vote …’
According
to the appellant:
‘
The
abovementioned rules are clearly unfair, unequal and prejudicial to
the residential unit owners …’.
[15]
The result of this, so the appellant
contends, is that the owners of the majority residential sections in
the second respondent:
‘…
have no effective voice
in the management, control and administration of the body corporate.’
On
the strength of these arguments, the setting aside of the special
rules was sought before the third respondent.
[16]
In his founding affidavit in this
appeal, the appellant claimed further that:
‘
The
owners of the commercial sections have accordingly unlawfully claimed
75% of the votes, thereby purporting to exercise absolute
control at
all times for their own benefit, despite their minority interest,
which is severely prejudicial to the owners of the
residential
sections and inconsistent with the provisions of the STSMA which came
into force on 7 October 2016.’
[17]
Finally, the appellant states in his
founding affidavit that:
‘
The
voting requirements must otherwise be governed strictly by way of
participation quota in accordance with section 20 of the Prescribed
Management Rules (Prescribed Management Rules) made under the
regulations, being Annexure 1, in terms of STSMA.’
[18]
In this appeal, the appellant made
further submissions associated with the special rules, it being
submitted that:
(a)
the owners of the residential
sections did not consent to the terms contained in the special rules;
(b)
when the special rules were
introduced, there were substantially less than 30%
of
owners of units in the scheme;
(c)
the special rules are inconsistent
with section 10(3) of the STSM Act and are therefore invalid and
because of that fact, they lapsed;
and
(d)
the special rules are
unconstitutional, as they do not apply equally to all owners of
sections within the meaning of section 10(3)
of the STSM Act, are
inconsistent with section 6 of the Promotion of Equality and
Prevention of Unfair Discrimination Act 4 of
2000 (the Equality Act)
and are inconsistent with the equality provisions of section 9(4) of
the Constitution.
[19]
At
the time that the special rules were introduced, the applicable act
in place was the Sectional Titles Act 95 of 1986 (the ST
Act). The ST
Act created a whole new form of composite ownership: owners owned
their respective sections separately from other
sectional owners in a
scheme but owned undivided shares in the common property collectively
with those other sectional owners.
[12]
The ST Act was intended to create a relatively flexible framework for
regulating this new form of sectional ownership.
[20]
Section 32(1) of the ST Act reads as
follows:
‘
Subject
to the provisions of section 48, in the case of a scheme for
residential purposes only as defined in any applicable
operative town
planning scheme, statutory plan or conditions subject to which a
development was approved in terms of any law the
participation quota
of a section shall be a percentage expressed to four decimal places,
and arrived at by dividing the floor area,
correct to the nearest
square metre, of the section by the floor area, correct to the
nearest square metre, of all the sections
in the building or
buildings comprised in the scheme.’
[21]
Section 32(2)
(a)
of the ST Act provides further that:
‘
Subject
to the provisions of section 48, in the case of a scheme other
than a scheme referred to in subsection (1), the
participation
quota of a section shall be a percentage expressed to four decimal
places, as determined by the developer: Provided
that—
(a)
where a scheme is partly residential
as defined in any applicable operative town planning scheme,
statutory plan or conditions subject to which a development was
approved in terms of any law, the total of the quotas allocated
by
the developer to the residential sections shall be divided among them
in proportion to a calculation of their quotas made in
terms
of subsection (1);’
[22]
Section 32(4) of the ST Act, now
repealed, provided that:
‘
Subject
to the provisions of section 37(1)(
b
),
the developer may, when submitting an application for the opening of
a sectional title register, or the members of the body corporate
may
by special resolution, make rules under section 35 by which
a different value is attached to the vote of the owner
of any
section, or the liability of the owner of any section to make
contributions for the purposes of section 37(1)(
a
) or 47(1) is
modified: Provided that where an owner is adversely affected by such
a decision of the body corporate,
his written consent must be
obtained: Provided further that no such change may be made by a
special resolution of the body corporate
until such time as there are
owners, other than the developer, of at least 30 per cent of the
units in the scheme: Provided further
that, in the case where the
developer alienates a unit before submitting an application for the
opening of a sectional title register,
no exercise of power to make a
change conferred on the developer by this subsection shall be valid
unless the intended change is
disclosed in the deed of alienation in
question.’
[13]
[23]
The
ST Act thus conceived of, and allowed for, a distinction to exist
between residential only and mixed-use schemes when it comes
to the
calculation of the participation quota. For residential only schemes,
the floor area of a section is the basis for calculating
the
participation quota, as indicated in section 32(1). With regards to
mixed-use schemes, the position was summed up by the Supreme
Court of
Appeal in
Body
Corporate of Marine Sands v Extra Dimensions 121 (Pty) Ltd and
another
,
[14]
where Ponnan JA stated that:
‘
Since
the formula of relative floor area was considered too rigid for
calculating the participation quotas for sections in schemes
not used
solely for residential purposes, the STA provides that the
determination of the participation quotas of non-residential
sections
should be left to the discretion of the developer.’
[15]
(Footnote omitted.)
[24]
The developer was accordingly entitled
in 1994, when it converted the building to a sectional title scheme,
to, inter alia, change
the value of a section owner’s vote,
subject to the proviso’s contained in section 32. The argument
by the appellant
that that the value of a vote has to be determined
with reference to the participation quota of that section is
incorrect. The
appellant’s further assertion that the
commercial owners had unlawfully claimed the 75% voting rights is, in
any event, incorrect.
The developer, Romwood, introduced the special
rules, not the owners of the commercial sections.
[25]
The
ST Act also adopted a similar approach to the charging of levies in
mixed-use body corporates. In those body corporates, levies
do not
necessarily have to be charged in proportion to the floor area ratio.
Indeed, as was stated in
Marine
Sands
,
developers were given an ‘unfettered discretion’ in this
regard in terms of section 32(2) of the ST Act.
[16]
[26]
On 7 October 2016, the STSM Act came
into effect. A similar provision to the repealed section 32(4) of the
ST Act was included in
the STSM Act, namely section 11(2)
(a)
,
which reads:
‘
Subject
to section 3(1)(
b
), the developer may, when submitting an
application for the opening of a sectional title register in terms of
the
Sectional Titles Act, or
the members of the body corporate may by
special resolution, make rules under
section 10
by which a
different value is attached to the vote of the owner of any section,
or the liability of the owner of any section
to make contributions
for the purposes of
section 3(1)(
a
) or 14 (1) is
modified.’
The
possibility that every section may not necessarily have the same
value vote has accordingly been retained in the STSM Act, as
has the
ability to modify the financial contributions of section owners to
the body corporate.
[27]
The appellant states that the owners of
residential sections have no effective voice in the management,
control and administration
of the body corporate. I am not able to
share that point of view:
(a)
The
special rules indicate that the body corporate, conceptually, is
comprised of two segments: the commercial segment and the residential
segment. Special rule 4.5 provides that one of the three trustees
that the second respondent must have must represent the residential
segment. There is thus representation for residential owners on the
board of trustees;
(b)
In terms of special rule 4.6, at
every annual general meeting, the owners of residential sections
elect a committee known as the
‘Residential Management
Committee’ whose function is to manage the residential aspects
of the second respondent’s
property;
(c)
At
meetings of trustees, special rule 25 and 25.1 provides that any
trustee may propose that an issue is solely a residential matter,
and
if there is agreement on this, then only the vote of the residential
trustee shall count;
(d)
If
there is no agreement that the matter is a residential matter, then
in terms of special rule 25.2, the matter is put to the vote
and all
trustees are permitted to vote on it. After the chairman has recorded
the votes, he is required immediately in terms of
special rule 25.3
to request the trustees to determine the identity of a referee,
[17]
and once this is done, the matter will be remitted to the referee for
his decision.
[28]
To suggest, as the appellant does, that
the owners of residential sections have no say in the affairs of the
second respondent accordingly
appears to me to be unfounded.
[29]
The
first and second respondents submit that there is a sound reason for
the differentiation in voting strengths between owners
of commercial
sections and owners of residential sections. The introduction of the
special rules initially drew the commercial
tenants to the scheme. As
was stated in the second respondent’s replying affidavit in the
prior application, the developer,
Romwood, acknowledged the
investment that the owners of commercial sections made in the
property as compared to the investment
made by owners of residential
sections.
[18]
That investment
would presumably have to protected in some way. The introduction of
the special rules was one way of achieving
this. In addition, as
stated in the answering affidavit in this appeal, the first and
second respondents submit that the commercial
sections pay far higher
levies per section than residential owners, many of whom are
pensioners, pay in respect of their respective
sections. The
consequence of this, according to the first and second respondents,
is that the levies that are required to be paid
by the residential
owners in the second respondent are less than half that allegedly
paid by owners in neighbouring residential
only schemes. An example
was provided: a scheme known as Grosvenor Court is a residential only
scheme and the levy paid in respect
of a 1,5-bedroom section is R4100
per month, whereas in the second respondent a similar section would
attract a levy of R1600 to
R1800 per month. The proposition that the
owners of commercial sections pay higher levies was disputed in reply
by the appellant.
On the issue of whether levies paid by the owners
of residential sections in the second respondent were markedly lower
than those
paid in solely residential schemes, this was met with a
blanket denial and a terse, and unsubstantiated, response that
maintenance
in other schemes is superior.
[30]
The appellant appears to me to have
approached the issue before the third respondent without
acknowledging that he did not buy into
a purely residential scheme
but bought into a mixed-use scheme. There is no recognition by him
that there may be competing interests
between the different classes
of owners. Those competing interests cannot be disregarded and need
to be addressed in some form
or another. The developer chose the form
by granting the owners of commercial sections a greater weighted
vote. It was permitted
to do so in terms of the ST Act.
[31]
I
do not find the method adopted by the developer as being unreasonable
or iniquitous. The appellant plainly knew that he was buying
into a
mixed-use scheme. In my view, the applicant as a prudent
purchaser,
[19]
knew, or ought
to have known, of the provisions of the special rules when he
considered acquiring a section in the second respondent.
He has not
stated that he acquired ownership at the time of the conversion of
the building from a share block to a sectional title
scheme. The
sectional title scheme would thus have been up and running when he
acquired his section and he could, and should, have
acquired
knowledge of the special rules before investing. He was not compelled
to buy into the scheme but chose to do so. It appears
that he is now
dissatisfied with the rules that he undoubtedly knew existed when he
acquired his section. In my view, he has no
reason to be
dissatisfied.
[32]
I do not find it unreasonable that a
distinction in voting rights has been established between commercial
and residential section
owners in the second respondent. In a
mixed-use scheme it appears to me to be an inevitability that such
must occur. That it has
occurred in this matter does not render its
occurrence unfair: both the ST Act and the STSM Act provide for it.
In the circumstances,
I can find no basis for the setting aside of
the special rules.
[33]
The appellant alleges that the owners of
residential sections did not consent to the terms contained in the
special rules. It appears
to me, strictly speaking, that this is a
ground of appeal based upon a question of fact and is not an issue
that I am thus required
to consider. For the point to be upheld, it
would require proof and not merely argument. In the event that I may
be wrong in the
characterisation of the issue, I shall deal with it.
It is not clear to me what the basis for this assertion by the
appellant is.
The special rules were introduced in 1994, some 28
years ago. The appellant does not claim to have been an owner at that
stage
and no affidavits have been put up of anyone who was an owner
of a section at the time that the special rules were introduced. The
point has accordingly not been established and must fail.
[34]
The applicant further asserts that when
the special rules were introduced, there
were
allegedly substantially less than 30 percent of owners of units in
the scheme. Again, this is an issue of fact that must be
determined
by evidence. Again, if I am incorrect in this regard, I consider the
appellant’s argument. He submits that section
11(2)
(c)
of the STSM Act is offended, which reads:
‘
The
members of the body corporate may not make rules by which a different
value is attached to the vote or liability of the owner
of any
section as contemplated in paragraph (
a
) until such
time as there are owners, other than the developer, of at least 30
per cent of the units in the scheme.’
The
fragility of the appellant’s argument is immediately obvious.
The special rules were
not
introduced when the STSM Act was in place, but rather when the ST Act
was the applicable legislation. Further, the restriction
of 30%
applies only where a change is contemplated by a special resolution
of the body corporate. The restriction does not apply
where the
developer introduces the change in the rules. In this case, the
special rules were not introduced by the body corporate
but their
introduction was the work of the developer. Whether the owners of
residential sections agreed or did not agree to the
special rules is
accordingly irrelevant. This point holds no merit.
[35]
The appellant claims further that the
special rules are inconsistent with section 10(3) of the STSM Act and
are therefore invalid
and because of that fact, they lapsed. Section
10(3) reads as follows:
‘
The
management or conduct rules contemplated in subsection (2) must
be reasonable and apply equally to all owners of units.’
Implicit
in this point raised by the appellant is that the special rules are
unreasonable and that they do not apply equally to
all owners. I have
already dealt with the alleged unreasonableness of the special rules.
In my view, when considering whether a
rule is reasonable, regard
must be had to the
particular
circumstances of the scheme and members of the body corporate. This
appears to be what the appellant has failed to take
into account: the
second respondent is a mixed-use scheme and not a residential only
scheme.
[36]
In
Wilds
Home Owners Association and others v Van Eeden and others
,
[20]
Murphy J cautioned, when dealing with demands made of a court to
amend the articles
of
association of a company, that this should only be acceded to:
‘…
as a last resort. The
articles are the contract bringing about the association and the
basis for the members doing future business
together. By becoming a
shareholder in a company a person agrees to be bound by the decisions
taken in accordance with the provisions
and prescriptions of the
articles. A court accordingly should hesitate to re-write the bargain
struck by the members with each
other, especially where the impetus
to do so is at the instance of a minority of the members (albeit a
substantial minority, in
this case about 30%) who think the terms of
the agreement are unfair or no longer serve their interests. The Act
requires that
the articles be changed by a special resolution, which
means 75 percent of the votes at a general meeting with a quorum of
25 percent
of total membership. A court ordinarily should pause
before overriding those prescriptions, unless there are illegitimate
or unfair
impediments rendering the achievement of a special
resolution impracticable; and even then it should intervene only to
the extent
necessary to remove the impediment.’
[21]
I
can see no reason why these words should not apply to the amendment
of rules within a body corporate.
[37]
Ms Nicholson submitted that the special
rules are not required to treat all members of the body corporate
equally. What was intended,
so she argued, was that the rules apply
to every member of the body corporate equally as opposed to them
applying only to some
members and not to others. I agree with that
but it appears to me that, on a practical level, not every rule can
apply to all members.
For example, there may be a rule in place that
deals with the management of gardens by those owners who have ground
floor sections.
Those rules cannot apply to owners who may reside on
the second and higher floors. The rules may thus treat ground floor
owners
differently.
[38]
In the circumstances, I do not find the
provisions of the special rules to offend against the provisions of
section 10(3) of the
STSM Act.
[39]
The final point taken by the appellant
is that the special rules are unconstitutional, as they are
inconsistent with section 6 of
the Equality Act and are inconsistent
with the equality provisions of section 9(4) of the Constitution.
[40]
The
Equality
Act
was,
inter
alia
,
brought into existence in an attempt to construct a
society
that cared for the wellbeing and dignity of its members. Our
country’s past had been characterised by a lack of care
and
compassion for our fellow citizens. In an attempt to right this
wrong,
the
Equality Act
prohibits unfair discrimination, hate speech and harassment on a
number of prohibited grounds, including religion, conscience,
belief
and culture.
Its
objectives are thus to introduce measures to address the injustices
that result from social inequalities by combating unfair
discrimination.
[41]
The
Bill of Rights in the Constitution also prohibits unfair
discrimination on the abovementioned and other grounds. In addition,
the Bill of Rights also contains additional important rights, such as
the right to freedom of association and the right to freedom
of
expression.
[42]
All
laws, including
the Equality Act
,
must be interpreted in accordance with the spirit, purport and
objectives of the Bill of Rights.
To an extent, the bringing to life of the Equality Act was aimed at
infusing life itself into section 9 of the Constitution as
required
by section 9(4) of the Constitution.
[43]
Section 6 of the Equality Act has been
identified by the appellant as the relevant section relied upon by
him. It reads as follows:
‘
Neither
the State nor any person may unfairly discriminate against any
person.’
[44]
The Equality Act defines discrimination
as being
:
‘
Any
act or omission, including a policy, law, rule, practice, condition
or situation which directly or indirectly-
(a)
imposes burdens, obligations or
disadvantage on; or
(b)
withholds
benefits, opportunities or advantages from,
any
person on one or more of the prohibited grounds.’
[45]
The prohibited grounds are:
‘
(a)
race, gender, sex, pregnancy, marital
status, ethnic or social origin, colour, sexual orientation, age,
disability, religion, conscience,
belief, culture, language, birth
and HIV/AIDS status; or
(b)
any other ground where discrimination
based on that other ground-
(i)
causes or perpetuates systemic disadvantage;
(ii)
undermines human dignity; or
(iii)
adversely affects the equal enjoyment of
a person's rights and freedoms in a serious manner that is comparable
to discrimination
on a ground in paragraph
(a).
’
[46]
I cannot discern any act of
discrimination in the special rules that would bring them within the
purview of the Equality Act. Nothing
commends itself to me within the
prohibited grounds identified in sub-section
(a)
quoted above as being of application. And while sub-section
(b)
appears to be a catch-all sub-section that would permit grounds not
identified in sub-section
(a)
to nonetheless still afford relief to a complainant if established, I
cannot conceive of the appellant’s complaint falling
within
that sub-section either. Mixed-use schemes are permissible in law and
it is not unlawful to adjust the voting strengths
of owners within
such a mixed-use scheme. There is no unlawful conduct and there can
therefore be no discrimination.
[47]
Section 9 of the Constitution reads as
follows:
‘
(1)
Everyone is equal before the law and has the right to equal
protection and benefit of the law.
(2)
Equality includes the full and equal enjoyment of all rights and
freedoms. To promote the
achievement of equality, legislative and
other measures designed to protect or advance persons, or categories
of persons, disadvantaged
by unfair discrimination may be taken.
(3)
The state may not unfairly discriminate directly or indirectly
against anyone on one or
more grounds, including race, gender, sex,
pregnancy, marital status, ethnic or social origin, colour, sexual
orientation, age,
disability, religion, conscience, belief, culture,
language and birth.
(4)
No person may unfairly discriminate directly or indirectly against
anyone on one or more
grounds in terms of subsection (3).
National legislation must be enacted to prevent or prohibit unfair
discrimination.
(5)
Discrimination on one or more of the grounds listed in subsection
(3) is unfair
unless it is established that the discrimination
is fair.’
[48]
Given
the fact that the second respondent is a mixed-use scheme, any
differentiation in the rights of different classes of owners
within
the scheme is both to be expected and is not unfair in terms of the
Equality Act or the Constitution. I can likewise find
no basis for
concluding that any infringement of the appellant’s personal
rights has occurred nor that any of his property
rights have been
infringed.
[22]
[49]
In the circumstances, I grant the
following order:
1.
The appeal is refused with costs.
MOSSOP
J
APPEARANCES
Counsel
for the appellant
: Mr.
M. S. Omar
Instructed
by:
: M. S. Omar and Associates
28
Rhodes Avenue
Westville
Counsel
for the first and second :
Ms. J. Nicholson
respondents
Instructed
by
: Shepstone and Wylie
24
Richefond Circle
Ridgeside
Office Park
Umhlanga
Rocks
Date
of Hearing
: 31 October 2022
Date
of Judgment
: 15 December
2022
[1]
C
Morris
‘Law and Fact’ (1942) 5
Harvard
Law Review
1303
at 1304.
[2]
Turley
Manor Body Corporate v Pillay and others
[2020] ZAGPJHC 190 para 17.
[3]
I shall assume this to be the case notwithstanding the fact that the
appellant’s name does not appear on annexure ‘HR4’
to the founding affidavit, being a Deeds Office printout detailing
the owners of the sections in the scheme. The first and second
respondents have not disputed that he is, indeed, an owner.
[4]
Sectional
Titles Schemes Management Regulations, 2016, GN R1231,
GG
40335,
7 October 2016.
[5]
Central
Plaza Investments 85 (Pty) Ltd v Body Corporate Mangrove Beach
Centre,
case
number 11454/2015, KwaZulu-Natal Local Division, Durban.
[6]
They are a final judgment, involving the same parties, arising out
of the same cause of action:
African
Wanderers Football Club (Pty) Ltd v Wanderers Football Club
1977 (2) SA 38
(A);
Le
Roux en ‘n ander v Le Roux
1967 (1) SA 446
(A);
National
Sorghum Breweries Ltd t/a Vivo African Breweries v International
Liquor Distributors (Pty) Ltd
2001 (2) SA 232 (SCA).
[7]
The judgment appears to have been reserved for some two years and
eight months. The judgment does make reference to the STSM
Act,
which came into effect while judgment was being considered.
[8]
In the first and second respondents’ answering affidavit in
this appeal, an offer was made to this court to have the application
papers that served before Masipa J placed before this court. I took
the first and second respondents up on this offer and a full
set of
the papers was made available to me about a week after the appeal
was argued. This occurred with the consent of the appellant’s
legal representative.
Indeed,
in the comprehensive heads of argument that he delivered, he
attached extracts of certain of the pages from the papers
that
served before Masipa J.
[9]
Ellis
v Trustees of Palm Grove Body Corporate and others
[2021] ZAKZPHC 97 paras 9-10.
[10]
I have rounded up the figure. The actual area occupied by the
commercial sections in the scheme is 26,78 percent.
[11]
I have also rounded up this figure. The actual area occupied by the
residential sections is 67,67 percent. The missing 5 percent
of the
scheme is comprised of parking.
[12]
Mobile
Telephone Networks (Pty) Ltd and another v Spilhaus Property
Holdings (Pty) Ltd and others
[2018] ZASCA 16
;
2018 (3) SA 396
(SCA) para 1.
[13]
This sub-section was repealed by section 20 of the STSM Act.
[14]
Body
Corporate of Marine Sands v Extra Dimensions 121 (Pty) Ltd and
another
[2019] ZASCA 161; 2020 (2) SA 61 (SCA).
[15]
Ibid
para 17.
[16]
Ibid para 20.
[17]
The procedure for the determination of a referee is set out in the
special rules which includes a provision dealing with a situation
where the trustees cannot agree who he should be: in such event, the
referee is to be appointed by the chairman of the Natal
Law Society
from time to time. Clearly, that latter provision will have to be
revised given that the Natal Law Society no longer
exists.
[18]
Indexed papers, at 313, para 28.
[19]
In the founding affidavit the appellant describes himself as ‘an
adult male insurance broker, estate agent, professional
accountant
and tax practitioner’.
[20]
Wilds
Home Owners Association and others v Van Eeden and Others
[2011] ZAGPPHC 101.
[21]
Ibid
para 205.
[22]
First
National Bank of SA Ltd t/a Wesbank v Commissioner, South African
Revenue Service and another; First National Bank of SA
Ltd t/a
Wesbank v Minister of Finance
[2002]
ZACC 5
;
2002 (4) SA 768
(CC) para 46.