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[2021] ZAGPPHC 682
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Drakenberg Body Corporate and Others v Trafalgar Property Management and Others (14470/2021) [2021] ZAGPPHC 682 (29 April 2021)
IN THE HIGH COURT
OF SOUTH AFRICA
GAUTENG DIVISION,
PRETORIA
(1)
REPORTABLE:
YES
/NO
(2)
OF INTEREST TO OTHER
JUDGES:
YES
/NO
(3)
REVISED: YES/
NO
29/04/2021
Case number:
14470/2021
In the matter
between:
DRAKENSBERG BODY
CORPORATE 1
st
Applicant
NEILOPAHR
CASSIM
2
nd
Applicant
SHEREEN
CASSIM
3
rd
Applicant
v
TRAFALGAR
PROPERTY MANAGEMENT
1
st
Respondent
MARTHA
MATJIE
2
nd
Respondent
KABELO
NKWANA
3
rd
Respondent
MALETETSANE PAUL
MOKOENA
4
th
Respondent
SIPHO ETWELL
MAHLANGU
5
th
Respondent
BICPROP (PTY)
LTD
6
th
Respondent
MAJOME ELVIS
MONYELA
7
th
Respondent
EDWIN NKHANGWENI
MATAMELA
8
th
Respondent
JOHANNA FIHLA
MAROGA
9
th
Respondent
MULINGONI JOMO
LAMBANI
10
th
Respondent
RICHARD
RIKHOTSO
11
th
Respondent
NONHLANHLA
KHABONINA SIBANYONI
12
th
Respondent
MASHAA MICHAEL
MATLALA
13
th
Respondent
GOLDEN BLESSINGS
MANGANDA
14
th
Respondent
TKC
PROPERTIES
15
th
Respondent
HLENGANI FAMILY
TRUST
16
th
Respondent
MOTLATJIE ANNE
LETSEBE
17
th
Respondent
RENATE
GARLIPP
18
th
Respondent
LUCKY MASHOBANE
SIBANDA
19
th
Respondent
JUDGEMENT
MOSOPA,
J
This
application for the termination of the first respondent as a
managing agent of the sectional title scheme known as 55 Drakensberg
(first applicant), situated at 195 Nana Sita Street, Pretoria, was
brought by the applicants on urgent basis in terms Rule 6(12)
of the
Uniform Rules of Court. The applicants also sought an order for the
first respondent to hand over all books of account,
documents
relating to its management of the first applicant, audited financial
statements for the past three (3) financial years,
monies, reserved
funds and keys to the water pump and storeroom and, ancillary
relief.
URGENCY
2.
It is not in dispute
that the managing agreement between the first applicant and the first
respondent lapsed by effluxion of time.
Further, that in the Annual
General Meeting (AGM) of the first applicant on 15 December 2020, it
was resolved that the first respondent’s
management of first
applicant is terminated. Following that meeting, a formal letter
dated 20 January 2021 was addressed to the
first respondent,
informing it of the intent to terminate the first respondent as
managing agent. Another AGM was held on 21 January
2021, during which
it was further resolved that a formal letter of termination be sent
to the first respondent.
3.
In the meeting of 15
December 2020, it was resolved that the first respondent be given
three (3) months’ notice. The first
respondent was already
informed on 15 December 2020 through its representative, Jessica, of
the resolution to terminate its managing
agent agreement with the
first applicant. The first respondent, in a letter dated 20 January
2021, was further requested to make
all bank statements available for
inspection by the trustees on 5 February 2021. Also, in the meeting
of 15 December 2020, it was
resolved that Midcity be appointed as the
new managing agent of the first applicant with effect from 15 March
2021 and the first
respondent was informed of this fact in the letter
of 20 January 2021.
4.
The first respondent
contends that despite a lapse in time of the agreement, there are
still some unfinished duties as managing
agent of the first
applicant, which the first respondent must finalise before they can
opt out of the managing agreement.
5.
There are serious
allegations made against the first respondent relating to its
managing duties of the first applicant – that
there is
currently no water or electricity at the premises of the first
applicant and that the lifts have not been operational
for over
twelve (12) years. It is for this reason that I found that the matter
is urgent, as it affects the constitutional rights
to water and
electricity of the residents and it needed to be heard on an urgent
basis.
LEGAL
PRINCIPLE
6.
Regulation 1 of the
Sectional Titles Schemes Management Regulations, 2016 (under the
Sectional Titles
Schemes Management Act 8 of 2011 (“the Act”)
),
defines a managing agent as follows:
“
any
person who provides scheme management services to a body corporate
for reward, whether monetary or otherwise, including any
person who
is employed to render such services.”
7.
From the above, it
becomes apparent that the relationship between the first applicant
and the first respondent is governed by the
Act and its Regulations.
8.
Rule 26(1)(c) provides:
“
[1]
A body corporate must
(c) prepare
annual financial statements for presentation at the annual general
meeting, which statements must include;
(i) amounts due
to the body corporate in respect of contributions, special
contributions and other charges, classified by member
and the periods
for which such amounts were owed;
(ii) amounts due
by the body corporate to its creditors generally and prominently
disclosing the amounts due to any public entity
for services rendered
including, without limitation, water, electricity, gas, sewerage and
refuse removal, classified by creditor
and time periods for which
such amounts were owed;
(iii) amounts
advanced to the body corporate by way of levy finance, a loan, in
terms of a guarantee, insurance policy or otherwise,
setting out the
actual or contingent liability of the body corporate and amounts paid
by the body corporate and by any member in
terms of such agreement;
(iv) amounts in
the reserve fund showing the amount available for maintenance, repair
and replacement of each major capital item
as a percentage of the
accrued estimated costs and the rand value of any shortfall;
(v) previous and
other amounts paid and payments received by the body corporate and
any member in terms of the insurance policies
of the body corporate
and the expiry date of each policy; and
(vi) amounts due
and payable to the Community Schemes Ombud Service.”
9.
The regulations
further provide the duties of the managing agent in terms of Rule
28(3)(a)-(f) as follows:
“
[3]
An executive managing agent –
(a)
is subject to
all duties and obligations of a trustee under the Act and the rules
of the scheme;
(b)
is obliged to
manage the scheme with the required professional level of skill and
care;
(c)
is liable for
any loss suffered by the body corporate as a result of not applying
such skill and care;
(d)
has a fiduciary
obligation to every member of the body corporate;
(e)
must arrange for
the inspection of the common property at least every six months; and
(f)
must report at
least every four months to every member of the body corporate on the
administration of the scheme.”
10.
Most importantly, which
is more relevant to this matter, is Rule 28(7) which provides:
“
[7]
A management agreement may not endure for a period longer that three
years and may be cancelled, without liability or penalty,
despite any
provision of the management agreement or other agreement to the
contrary;
(a)
by the body
corporate on two months’ notice, if the cancellation is first
approved by a special resolution passed at a general
meeting, or
(b)
by the managing
agent on two months’ notice.”
DISCUSSION
11.
The managing agent
agreement concluded by the first respondent and the first applicant
was meant to endure for a period of three
(3) years, having been
concluded on 1 February 2018 and set to lapse on 1 February 2021. The
managing agent agreement was concluded
in compliance with the
provisions of Rule 28(7) of the Regulations in terms of the Act. It
is apparent that when this application
was issued on 25 March 2021,
the managing agent agreement had already lapsed by effluxion of time.
12.
In the matter of
Oregon Trust v
BEADICA 231 CC (74/2018)
[2019] ZASCA 29
(28 March 2019)
,
Lewis ADP, when dealing with an agreement terminated by effluxion of
time, observed:
“
[46]
In the circumstances I conclude that there are no considerations of
public policy that render the renewal clause of the lease
unenforceable. The demand for compliance with their terms was not
unconscionable. The lease terminated on 31 July 2016 through
the
effluxion of time. When the lessees brought their urgent application
on 1 August 2016 the leases had expired. There was no
basis on which
to resuscitate them.”
13.
Clause 3.3 of the
management agreement between the first applicant and first respondent
provides for cancellation of the agreement
by the body corporate
(first applicant). Clause 3.2 provides that, in the event that the
cancellation of the agreement is at the
instance of the first
respondent, that the first applicant must be given two (2) calendar
months’ written notice to that
effect.
14.
Apart from termination
by effluxion of time as stated above, the first applicant resolved to
terminate the management agreement
at the AGM held on 15 December
2020.
15.
Rule 28(7)(a) requires
that, where the body corporate terminates the management agreement,
it must first pass a special resolution
at the AGM and then give the
managing agent two (2) months’ notice.
16.
In terms of the
management agreement between the first applicant and the first
respondent, the first applicant may cancel the agreement
under the
following circumstances;
16.1.
by giving notice to the
managing agent if a provisional or final liquidation order is made
against the managing agent (first respondent);
16.2.
by giving notice if the
managing agent or its directors is convicted of an offence involving
an element of fraud or dishonesty,
but there must be a special
resolution of the body corporate or the trustees; and
16.3.
give two (2) months
calendar written notice to the managing agent, after a special
resolution passed at a general meeting of the
body corporate, and
that the body corporate can cancel the agreement in accordance with
clause 3.3.3 as authorized by Management
Rule 28(7)(a).
17.
It is not
disputed by the first respondent that the first applicant held an AGM
on 15 December 2020. The circulation of the reconvened
AGM minutes to
undisclosed recipients is not disputed by the first respondent.
18.
What the first
respondent contests is the following;
18.1.
That the members of the
first applicant were not given 30 days written notice prior to the
meeting of 15 December 2020, that a special
resolution will be taken
to terminate the services of the first respondent on contemplated by
Rule 28(7)(a) and section 6(2) of
the Act;
18.2.
That the first
applicant cannot terminate the services of the first respondent by
adopting a unanimous resolution as opposed to
a special resolution;
and
18.3.
The agenda of the AGM
sent on 13 November 2020 makes no reference to a special resolution
to terminate the services of the first
respondent.
19.
For the sake of
completeness, I find it prudent to refer to the provisions of section
6(2) of the Act, which provides;
“
(6)
–
(2)
the body corporate must, at least 30 days prior to a meeting of the
body corporate where a special resolution or unanimous resolution
will be taken, give all members of the body corporate written notice
specifying the proposed resolution, except where the rules
provide
otherwise.”
20.
Notice of the AGM of
the first applicant sent on 13 November 2020, which was supposed to
held on 8 December 2020, but was reconvened
and held on 15 December
2020, is silent on the adoption of a special resolution or unanimous
resolution to terminate the services
of the first respondent.
21.
The use of the word
“must” in the provisions of section 6(2) of the Act is
peremptory. Thus, the question is whether
non-compliance with such
statutory provisions is fatal. Any interpretation of the provisions
of a statute must promote the spirit,
purport and object of the Bill
of Rights (see section 39(2) of the Constitution). It is trite that,
even where formalities required
by a statute are peremptory, not
every deviation is fatal. The question however, remains whether the
object of the statutory provision
has been achieved. To answer this
question, I am of the view that, that the object of the Act was not
achieved by the first applicant
as it failed to give 30 days’
notice of the adoption of the special resolution.
22.
What remains to be
determined now is the aspect pertaining to the termination of the
management agreement by effluxion of time.
I have already indicated
elsewhere in this judgment that when the current application was
issued, the management agreement had
been terminated by effluxion of
time.
23.
The defense raised by
the first respondent is, despite this fact, the first applicant
instructed it to issue an urgent application
against the City of
Tshwane Metropolitan Municipality to compel the municipality to
reconnect the water and electricity supply
to the property of the
first applicant, but the first respondent did not proceed with this
urgent application because the first
applicant did not have the funds
to finance such an application. However, this averment is vehemently
denied by the first applicant.
24.
It is not clear in
which manner this instruction was given to the first respondent and
who the representative of the first applicant
was who gave this
instruction. Simply put, this averment lacks particularity and
detail. Given the nature of the factual dispute
pertaining to this
aspect, I am of the view that it can be resolved on the papers as
they stand. At the time of the AGM of 15 December
2020, the
management agreement was still in place.
25.
This application is
only opposed by the first respondent, however there is a petition
which was compiled by the second to nineteenth
respondents (the
alleged owners of units in the property of the first applicant),
wishing to call to a special AGM to remove the
board of trustees of
the first applicant. The first applicant however, seeks an order to
declare this petition and its demands
invalid. A deed search was
performed and it was found that some of the signatories of the
petition were not owners of units in
the first applicant’s
property – particularly the third, eleventh, fifteenth and
nineteenth respondents.
26.
I am of the view that
the petition is flawed, even though it is signed by some of the
actual owners of units in the first applicant’s
property,
because not all the signatories are owners. This fact is not disputed
by the first respondent. The only people who can
remove the trustees
of the first applicant are the home owners.
27.
The first applicant
further seeks and order that the first respondent furnish it with the
books of account, audited financial statements
for the past three (3)
financial years as well as monies and reserve funds. What is apparent
from the papers, is that the financial
statements for the period
ending on 30 September 2019 was discussed in the meeting of 15
December 2020, as it appears as an agenda
item. What is not provided
is the financial statements for the period ending on 30 September
2020. The fist applicant averred that
the keys to the water pump
storeroom are in the possession of someone called Harry, who is in
charge of this storeroom. This is
the admission that indicates that
the first respondent is not in control of the water pump storeroom
and as such, it cannot be
in possession of its keys. The first
respondent neglected to make the accounting books and bank statements
available for inspection
by the first applicant.
COSTS
28.
This matter was
supposed to be heard by Khumalo J on 30 March 2021, remotely, but the
court documents were not uploaded to Caselines
and the matter was
struck from the roll for non-appearance. No order as to costs was
made when the matter was struck from the roll.
I am called upon to
make a determination pertaining to costs in respect of 30 March 2021,
but I am not inclined to do so. Mainly
because when the matter was
before me, there was no court order by Khumalo J available in respect
of 30 March 2021 and it was also
not uploaded to Caselines.
29.
However, I am inclined
to make a cost order in respect of the matter before me. The normal
principle applicable to costs will be
applied in this matter.
ORDER
30.
In the
consequence, I make the following order;
1.
The services of the
first respondent as managing agent for the Sectional Title Scheme
known as 55 Drakensberg with scheme number
74/1982, situated at 195
Nana Sita Street, Pretoria, is terminated;
2.
The first respondent is
ordered to hand over all books of account, audited financial
statements for the period ending on 30 September
2020 relating to its
management of the first applicant, including the monies and reserve
funds in the credit of the first applicant
within 15 days of this
order;
3.
The petition signed by
the alleged owners of units in the property of the first applicant is
declared defective, invalid and of
no force and effect;
4.
The first respondent is
ordered to pay the costs of this application.
MJ
MOSOPA
JUDGE OF THE HIGH
COURT, PRETORIA
Appearances:
For
the applicant:
Sambo-Mlahleki Attorneys
Instructed
by:
Adv N Erasmus
For
the respondent:
Jukes Malekjee & Associates
Instructed
by:
Adv Y van der Laarse
Date
of hearing:
8 April 2021
Date
of judgment:
Electronically transmitted