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[2022] ZANCHC 29
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Dawson v Sidney on Vaal CPA and Another (603/2019) [2022] ZANCHC 29 (27 May 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
(Northern
Cape Division, Kimberley)
Case
number:
603/2019
Date
heard:
--/--/----
Date
available:
27/05/2022
Reportable:
YES/NO
Circulate
to Judges: YES/NO
Circulate
to Regional Magistrates: YES/NO
Circulate
to Magistrates: YES/NO
In
the matter of:
JASON
DAWSON
Applicant
and
SIDNEY
ON VAAL CPA
First Respondent
THE
CHIEF DIRECTOR
DEPARTMENT
OF RURAL DEVELOPMENT
AND
LAND REFORM, NORTHERN CAPE
PROVINCE
Second Respondent
Coram:
AG van Tonder, AJ
JUDGMENT
ON APPLICATION FOR LEAVE TO APPEAL
VAN
TONDER, AJ
[1]
The
applicant herein applied for leave to appeal to the Full Bench of the
Northern Cape High Court,
alternatively
the Supreme Court of Appeal against my judgment delivered on 8
January 2021 in which I made the following order:
2.
The application is dismissed.
3.
The applicant is ordered to pay the costs of the application,
including the costs of the urgent application that were reserved.
[2] The Applicant’s
application was to obtain an order that the Sidney on Vaal Communal
Property Association (the first respondent/CPA)
be placed under the
administration of the Director-General: Land Affairs, in terms of
Section 13(1)
of the
Communal Property Associations Act 28 of 1996
.
[3] The Applicant also
requested an order that the Director General: Land Affairs be granted
the powers by the court in terms of
section 13(2) of the CPA Act, to
appoint a receiver to exercise the powers on behalf of the Director
General: Land Affairs, and
for the receiver to take over the running
of the CPA as set out in the notice of motion.
[1]
[4] The aforesaid
application was preceded by an urgent application which was brought
during March 2019, which urgent application
was settled on the basis
of interim relief pending the finalisation of the main application.
[5]
The
first respondent opposed the application for leave to appeal.
[6]
The facts of the application appear from my judgment and I do not
deem it necessary to repeat it.
[7] In the applicant’s
application for leave to appeal, the grounds of appeal are to the
effect that the judgment was based
on the following errors:
[7.1] By finding
that the maladministration is not a separate ground for placing a
Communal Property Association under administration.
[7.2] By concluding
that the complaints against the executive committee are not serious
enough to warrant placing the CPA
under administration.
[7.3] By finding
that the maladministration was facilitated by the applicant.
[7.4] By finding
that it would not be just and equitable to place the CPA under
administration.
[7.5] By finding
that the basis of the maladministration took place before the current
executive committee took office.
[7.6] By finding
that the complaints raised by the applicant were part and parcel of
his duties.
[7.7] By finding
that the criminal investigation identified no wrongdoing.
[8] The crux of the
applicant’s argument on which he applies for leave to appeal,
is that I have erred:
[8.1.] in finding that
maladministration is not an independent basis for having the CPA
placed under administration, and
[8.2] by finding
that it would not in the circumstances of the matter be just and
equitable to place the Respondent under
administration.
[9] This has from the
outset been the basis upon which the applicant had brought the
application, as set out in the applicant’s
founding affidavit
as follows:
“
The grounds for
the Application for the appointment of an Administrator is to stop
the continued maladministration of the Association’s
affairs by
the Executive Committee and that it would consequently be just and
equitable that the Association be placed under administration.”
[10] The applicant argues
that the
Communal Property Associations, Act 28 of 1996
, is an
example of socio-economic legislation, wherefore it ought to be dealt
with on the basis (and interpreted to the effect)
that
maladministration constitutes a separate ground for placing a
communal property association under administration.
[11] The applicant in
developing this argument relies on the
Social Housing Act, 16 of
2008
, in which maladministration is defined as:
“
Non-compliance
with the Act or a situation or condition indicating substantial
financial, governance or management failure.”
[2]
[12] The applicant relies
on the case of
Social
Housing Regulatory Authority v Free State Social Housing Company
,
to emphasise that maladministration in itself was found to be the
basis for intervention.
[3]
[13] The aforesaid matter
does however not support the contention that maladministration is
per
se
a sufficient and independent basis for an entity to be placed
under the administration of a regulating authority.
[14] Mbhele J, placed the
Free State Social Housing Company under administration under
circumstances where:
[27] The
evidence before me shows that the first respondent is ailing and
requires urgent intervention to restore it to normal.
It is evident
from the report of the provisional liquidator that its liabilities
far exceed its assets. The applicant is required
by law to intervene
in the affairs of the SHIs where it is satisfied on reasonable ground
that there is evidence of maladministration.
As
well as:
[30] It is
clear from the above dictum that courts are less likely to give
primacy to form over substance. The issues raised
in the current
matter are central to the state’s obligation to fulfil its
constitutional mandate as set out in Section 26
of the Constitution.
The evidence shows that the first respondent is factually insolvent.
The fact that it was placed under provisional
liquidation is an
indication that it needs to be rescued. The manner in which the first
respondent carried out its business threatens
the state’s
ability to fulfil its constitutional mandate of providing housing to
its inhabitants.
[15] The applicant also
referred to the case of
Dempa
Investments CC v Body Corporate of Los Angeles
,
as an example of an administrator being appointed in terms of the
Sectional Titles Schemes Management Act, 8 of 2011.
[4]
[16] In the said matter,
Gautschi AJ formulated the test as to whether an administrator stands
to be appointed in terms of Section
46 of the Sectional Titles
Schemes Management Act, 8 of 2011, as follows:
[21] Having
regard to the abovementioned authorities and the literature, I intend
to apply the following principles :
[21.1]
The court has a discretion to appoint an administrator, which must be
exercised judicially having regard
to the circumstances of the
particular case before it.
[21.2]
Special circumstances or good cause must be shown.
[21.3]
It is not possible to define what would constitute special
circumstances or good cause, but as a minimum
there should be –
[21.3.1] some neglect,
wilfulness or dishonesty on the part of the trustees, or an event
beyond their control; and
[21.3.2] a likelihood
that the owners of units will suffer substantial prejudice if an
administrator is not appointed.
[21.4]
Acts or omissions which would qualify would include
maladministration, breaches of statutory duties, dishonesty,
inefficiency and managerial atrophy or deadlock. The list is not
exhaustive.
[21.5]
The problem must be such that an administrator could be expected to
add value where the trustees could not.
For instance, mere
inexperience on the part of the trustees may not be sufficient, for
they could appoint an experienced managing
agent. So too it may be
insufficient that the body corporate is experiencing serious
financial difficulties, for the trustees and
managing agent may be as
capable an administrator to deal with the problem. If, however,
inexperience is coupled with wilfulness,
or the financial
difficulties have been caused by maladministration, dishonesty or the
like, an administrator could be expected
to achieve results which the
trustees would not.
[21.6]
A balance should be struck between, on the one hand, being slow to
interfere in the management of the scheme
by the body corporate’s
chosen representatives and, on the other hand, not hesitating to come
to the assistance of owners
of units who may suffer substantial
prejudice by the actions or omissions of trustees.
[21.7]
The applicant bears the onus to persuade the court that this is a
suitable case for the exercise of the
discretion.
[5]
[17] Once again, in the
aforesaid judgment maladministration is linked to financial
difficulties, as appears from paragraph [21.5]
of the judgment.
[18] It should also be
kept in mind that the Los Angeles Body Corporate owed almost R1,5
million for arrear rates and taxes the
City Council of Johannesburg
at the time when the application for an administrator to be
appointed, was instituted.
[19] The test enunciated
in
Dempa
Investments
was also applied in the matter of
David
Lechizio v Bridgetown Body Corporate
[6]
,
where it was found that:
[69] It is
clear that taking into account both sides’ versions, there is
deadlock, there are breaches of statutory
duties, there is
maladministration, there is neglect, there is financial mismanagement
and there is a likelihood of substantial
prejudice to owners if an
administrator is not appointed. Accordingly the appointment of an
administrator is appropriate even if
the answering affidavit is taken
into account.
[20] The Applicant also
referred to the matter of
Municipal
Employees’ Pension Fund v Mongwaketse
as another example of a regulatory body intervening by reason of
maladministration, in respect of money managed on behalf of other
parties.
[7]
[21] Although reference
is made of maladministration as a basis upon which the Pension Funds
Adjudicator can rule on a complaint,
this matter deals with a
determination made in terms of the
Pension Funds Act 24 of 1956
, and
does not deal with the appointment of an administrator.
[22] As set out in the
Dempa Investments
matter, the applicant bears the onus of
persuading the court that this is a suitable case for the exercise of
the discretion to
appoint an administrator.
[23] I have held that the
applicant has failed to establish that in the circumstances of the
matter, it is a suitable case for exercising
the Court’s
discretion to appoint an administrator.
[24] The applicant argues
that another Court could find that the first respondent should be
placed under administration firstly,
as a result of
maladministration, and secondly on the basis that it would be just
and equitable for it to be placed under administration.
[25] I have found that
Section 13
of the
Communal Property Associations, Act 28 of 1996
,
does not provide that maladministration is a separate and independent
basis for having a CPA placed under administration, but
that
maladministration is one of the factors to consider in order to
decide whether maladministration contributed to or caused
a CPA to be
unwilling or unable to pay its debts or unable to meet its
obligations.
[26] Even if I were wrong
in respect of the aforesaid interpretation, I have not disregarded
the maladministration as relied on
by the applicant, but have taken
cognisance thereof and considered it as a factor to determine whether
it would be just and equitable
to place the first respondent under
administration.
[27] In respect of the
principles regarding whether it would be just and equitable to place
the first respondent under administration,
I had taken cognisance of
the case law and legislation regarding company laws, and applied the
principles thereof.
[28] In the matter of
Erasmus
v Pentamed
[8]
,
Nestadt J (as he then was) gave a detailed analysis of the meaning
and ambit of “
just
and equitable
”
as used in section 344(h) of the Companies Act, 61 of 1973 and its
predecessor, and inter alia indicated that “
just
and equitable
”
does not postulate fact, but only a broad conclusion of law, justice
and equity.
[29] Adjudicating the
matter on the papers, I had found that the Applicant has failed to
establish that it would be just and equitable
for the first
respondent to be placed under the administration of the Director
General: Land Affairs, as envisaged in section 13(1)
of the CPA Act.
[30] Even if
maladministration were an independent ground to have the first
respondent placed under administration, the applicant
would have had
to establish maladministration of such a serious nature that a Court
would exercise its discretion to place the
first respondent under
administration.
[31] Even if applying the
test as formulated in the matter of
Dempa
Investments CC v Body Corporate of Los Angeles
,
to the present matter, the applicant has failed to show special
circumstances or good cause, and has failed to discharge the onus
to
persuade the court that this is a suitable case for the exercise of
its discretion to appoint an administrator.
[9]
[32] In this regard in
the case of
Mathebula
and Others v The Nwandlamhari Communal Property Association and
Others
,
Section 13 of the CPA Act was considered, and despite the fact that
the complaints made against the executive committee therein,
was far
more serious than in the present matter the Court did not place the
CPA under administration.
[10]
[33] As stated in the
Mathebula
judgment,
insofar as there are disputes of fact, the matter stands to be
adjudicated on those facts set out by the applicant that
are admitted
by the respondent, as well as the respondent’s factual
allegations (unless the respondent’s version was
rejected on
the papers).
[11]
[34] In considering the
facts set out by the applicant and admitted by the first respondent,
as well as the first respondent’s
factual averments, I am
satisfied that the applicant has failed to establish that there are
sufficient grounds for the Court to
exercise its discretion to place
the first respondent under the administration of the Director
General: Land Affairs, as envisaged
in section 13(1) of the CPA Act.
[35] I am not persuaded
that there is a reasonable prospect that another Court may come to a
different conclusion, and/or find that
it would be just and equitable
to place the first respondent under administration.
CONCLUSION
[36]
Leave to appeal may only be given if I
am of the opinion that the appeal would have a reasonable prospect of
success or if there
is some other compelling reason why the appeal
should be heard.
[37] I
do not agree with the submissions by Mr Raubenheimer that
there is a reasonable possibility of another Court coming to a
different finding, for the reasons as set out above.
[38]
The next question to be answered is whether there is any other
compelling reason why the appeal should be heard. The applicant
has
not advanced and/or relied on any such ground.
[39]
I am satisfied that the interests of justice do not require a
finding that the judgment is to be found appealable in this
instance.
I am satisfied further that the
appeal
would neither have a reasonable prospect of success, nor that there
is some other compelling reason why the appeal should
be heard.
The application for leave to appeal therefore stands to be dismissed.
I therefore make the
following order:
1
THE APPLICANT’S APPLICATION FOR LEAVE TO APPEAL IS DISMISSED
WITH
COSTS.
__________________
AG
VAN TONDER
ACTING
JUDGE
On
behalf of the Applicant: Adv. E. Raubenheimer (oio Engelsman Magabane
Inc
On
behalf of First Respondent: Adv. P. Mthombeni (oio Mjila &
Partners Inc)
[1]
Dawson v Sidney on Vaal CPA and another
2021 (6) SA 167
(NCK) also
reported as
[2021] 2 All SA 429
(NCK)
[2]
Section 1
of the
Social Housing Act, 16 of 2008
.
[3]
Social Housing Regulatory Authority v Free State Social Housing
Company and Others [2019] ZAFSHC 240
[4]
Dempa Investments CC v Body Corporate of Los Angeles 2010 (2) SA 69
(WLD)
[5]
Dempa
Investments CC v Body Corporate of Los Angeles
2010 (2) SA 69
(WLD)
at 82A - G
[6]
David Lechizio v Bridgetown Body Corporate [2012] ZAGPJHC 272
[7]
Municipal Employees’ Pension Fund v Mongwaketse [2019] ZAGPJHC
162
[8]
Erasmus v Pentamed Investments (Pty) Ltd
1982 (1) SA 178
(WLD) at
181E
[9]
Dempa Investments CC v Body Corporate of Los Angeles 2010 (2) SA 69
(WLD)
[10]
Mathebula and Others v The Nwandlamhari Communal Property
Association and Others (90356/16) [2019] ZAGPPHC 201 (9 May 2019)
[11]
Mathebula and Others v The Nwandlamhari Communal Property
Association and Others (90356/16) [2019] ZAGPPHC 201 (9 May 2019) at
par 82-85