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2021
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[2021] ZAGPJHC 652
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Dibakoane N.O v Van den Bos and Others; Van den Bos and Others v Gugulethu and Others (2021/2054; 2020/28772) [2021] ZAGPJHC 652 (17 August 2021)
IN
THE HIGH COURT OF SOUTH AFRICA,
GAUTENG
DIVISION, JOHANNESBURG
(1)
REPORTABLE: NO
(2)
OF INTEREST TO OTHER JUDGES: NO
(3)
REVISED.
17/08/2021
CASE
NO’S:
2021/2054
2020/28772
In the
matter between:
NETTUS
MORAL PHONEY DIBAKOANE
N.O.
Applicant
and
JAN
VAN DEN BOS
First
respondent
P
GOVENDER
Second
respondent
M
MOYO
Third
respondent
TRADEWORX
148 (PTY) LTD T/A PAL PROPERTY MANAGEMENT & ADMINISTRATORS
Fourth
respondent
LWESWIKA
GWANGWA
Fifth
respondent
MEISIE
MALAPANE
Sixth
respondent
GIBSON
NDLOVU
Seventh
respondent
SELLO
RAPHELA
Eighth
respondent
RUTH
MOTHIBEDI
Ninth
respondent
MAGGY
KOMANE
Tenth
respondent
THE
BODY CORPORATE OF QUEEN ANNE
Eleventh
respondent
ABSA
BANK
Twelfth
respondent
AND
In the matter between:-
JAN
VAN DEN BOS
First applicant
TRADEWORX 148 (PTY) LTD T/A
PAL PROPERTY MANAGEMENT
& ADMINISTRATORS
(Registration number :
2006/004913/07)
Second
applicant
THE BODY CORPORATE OF QUEEN
ANNE
(Registration number :
SS105/1981)
Third
applicant
THE TRUSTEES OF THE BODY
CORPORATE OF
QUEEN
ANNE
Fourth
applicant
and
NCALA
VALENCIA THABASILE GUGULETHU
First respondent
NETTUS
MORAL PHONEY DIBAKOANE N.O
Second respondent
NETTUS
MORAL PHONEY DIBAKOANE
Third respondent
NETTUS REAL ESTATES
(Registration number :
2007/002327/23)
(In final deregistration since
2011)
Fourth respondent
SELOANE-VINCENT
ATTORNEYS
Fifth
respondent
VINCENT
O.M. SELOANE
Sixth respondent
ENGELBRECHT,
AJ:
Introduction
1.
This judgment concerns a contempt
application, and a “
counter-
application
” for joinder and
reconsideration of the order that forms the basis for the contempt
application. I refer to the parties
as cited in the contempt
application, unless otherwise indicated.
Background and relevant facts
2.
At a 17 August 2019 annual general
meeting (AGM) of the body corporate of the sectional title scheme and
building known as Queen
Anne situated in Hillbrow, Johannesburg
(Queen Anne), held pursuant to a notice compliant with regulations
issued under the Sectional
Titles Schemes Management Act 8 of 2011
(the Sectional Titles Act), the fifth to ten respondents were
appointed as trustees.
At the time, Carleon Properties (Pty)
Ltd (Carleon) was the appointed managing agent of Queen Anne.
3.
On 9 August 2020, at meeting called and
purporting to be an AGM (or a special general meeting), Ms Ncala
Valencia Thabasile Gugulethu
was alleged elected by those present at
the meeting as “
chairperson
”.
Correspondence from an owner of seven units in Queen Anne would later
point out that this meeting had been called
without the requisite 30
days’ notice (indeed not all owners were notified of the
meeting) and that the meeting did not form
a quorum, because there
were only 14 attendees instead of the required 52. Of the 14
attendees, 2 were not owners and some
others were said to be in
arrears with their levies, and accordingly not entitled to vote.
Indeed, the then managing agent
of the Queen Anne Body Corporate
informed the attendees that (i) the meeting was an illegitimate
meeting; (ii) the meeting could
not be a special general meeting as
the proper time notice had not been given; (iii) notice had been
given only to a “
select few”;
and (iv) no agenda had been furnished. There is no minute of
the meeting before this Court.
4.
It would appear that, sometime in late
August the “
trustees”
purportedly elected at the 9 August 2020 meeting informed Carleon
Properties that the body corporate would no longer require its
services and calling for the hand-over of the bank accounts to them.
5.
On 1 October 2020, Ms Gugulethu caused
the application for the appointment of the administrator to be
issued. In this application,
“
The
Body Corporate of Queen Anne”
was cited as the only respondent. She sought an order that the
applicant be appointed as the administrator of Queen Anne
for a
period of 36 months, in terms of section 16 of the Sectional Titles
Act.
6.
In motivating for the order, Ms
Gugulethu relied
inter alia
on:
6.1.
“
Lack
of co-operation from some recalcitrant owners who are refusing to pay
levies due or paying contribution towards the fund for
the upkeep and
management of the common areas including maintenance of the
building”;
6.2.
“
These
unruly owners together with some tenants manipulated the units, they
have taken it upon themselves to call meetings and give
other owners
who are not part of this group instructions that all amounts due and
payable for levies and services should be paid
into an unknown
account(s), which account does not belong to the body corporate of
Queen Anne neither is controlled by nor opened
in the name of the
body corporate of Queen Anne”;
6.3.
the managing agent (identified as
Carleon Properties) is not registered with the Estate Agents Affairs
Board and does not have a
valid fidelity fund certificate, nor was
the managing agent properly appointed as required by the Sectional
Titles Act; moreover,
no annual general meeting had been held since
the appointment of the managing agent;
6.4.
“
the
last attempt to hold an AGM was in August 2020 and it elected
trustees, who were later unrecognised by the other owners.
I
attach hereto a copy of the minutes of the meeting held on 09 August
of 2020. I was elected the chairperson in that meeting
and
other owners refused to recognise the newly elected trustees.
The old trustees refused to hand over the bank account
to the newly
elected trustees, hence the bank freezing the account of the body
corporate”
;
6.5.
there were no audit reports for three
years;
6.6.
the body corporate is running the risk
of financial loss, “
as the
funds administered by the unregistered managing agent as the body
corporate is not protected against theft or fraud. I [sic]
is
therefore my submission that the current managing agent be removed”;
6.7.
the owners were not contributing levies,
the safety of the building was compromised “
and
as such it has opened opportunity for some unlawful activities to
take place within the said property”
and “
Some residents are not
co-operative in the contribution of payment of debt to the city
council or to properly maintain the building”;
6.8.
“
failure
to reach a compromise among the residents has led to misappropriation
of funds and mismanagement of the property”;
6.9.
“
Some
owners are continuously defying the rules and regulations of the body
corporate”;
6.10.
“
The
body corporate’s board of trustees is currently dysfunctional
and there is breach of duties set out in section 39 read
with ss 37,
38 and 40. Failure to effect an appointment of an administrator
by the Court will cause a substantial prejudice
to the owners of this
property”;
6.11.
“
Lack
of a duly constituted board of trustees has resulted in the increase
of unpaid levies”
, and the
debt owed to the City of Johannesburg Metropolitan Municipality (the
City) was in excess of R800 000 in September
2020;
6.12.
there had been a debt settlement
arrangement with the City entered into by the managing agent, but the
City “
deactivated/cancelled”
the instalment payment due to breach of the settlement agreement;
6.13.
the body corporate “
requires
a firm control in managing its finances and collection of levies from
owners and this can only be achieved if an administrator
is
appointed”;
6.14.
“
The
financial debt that the Respondent has incurred due to non-payment of
certain creditors affects the members of the Respondent
with regards
to any legal proceedings instituted by such creditors”;
6.15.
“
should
the administrator not be appointed, the litigation and costs in the
collection of the indebtedness due by the recalcitrant
owners will be
lost as they have considerable sway and influence over the owners
within the building. The owners who are
making payment are
being prejudiced by lack of co-operation by the non-payers.”
7.
In support of the applicant as
administrator, Ms Gugulethu asserted that the applicant “
runs
a estate agent company, has a diploma in business management
administrator of sectional title scheme and dispute resolution.
Has 5 years experience in the administration of body corporates and
buildings in distress within Johannesburg. I submit that
he is
suitably qualified to successfully manage the building to the benefit
of the respondent”.
She
attached the applicant’s CV, which listed him having obtained a
Diploma in Business Management in 1982 and cited under
“
Working
Experience”
that he is a
director of Nettus Real Estates (Pty) Ltd and that his duties are
“A
DMINISTRACTOR [sic] OF LOS
ANGELS BODY CORPORATE”, “ADMINISTRACTOR [sic] OF
WESTMOLANT BODY CORPORATE”,
and
“
ADMINISTRACTOR [sic] OF
SECTIONAL TITLE SCHEME”
.
8.
On 9 October 2020, the trustees (being
those elected at the August 2019 meeting) representing the body
corporate of Queen Anne,
entered into a management agreement with the
fourth respondent (PAL Property Management). Thereafter, on 15
October 2020,
Carleon Properties gave formal notice of the
termination of their managing agent agreement with the body
corporate. It would appear
that it no longer wished to perform the
duties due to factional issues within the body corporate.
9.
In the meantime, on 12 October 2020, the
Sheriff served the application for the appointment of the
administrator, apparently on
the building next door to or across the
road from Queen Anne.
10.
On 26 October 2020, PAL Property
Management notified the body corporate of their appointment as new
managing agents.
11.
On 1 December 2020, Ms Gugulethu’s
application was heard. The matter was unopposed, with the
respondents in the
present application asserting that the Body
Corporate had not been served with the application, and the court
file in the administration
application containing several affidavits
showing that no service had been effected on a number of owners.
This, despite
the fact that the founding affidavit asserted that the
applicant’s attorney had “
arranged
for a copy of this application prior to the hearing of this
application to be placed on the Respondent’s central
noticeboard in a prominent position within the building”
and
that he (the attorney) would also deliver a letter to all the unit
owners/ occupiers within the building, advising them
of the
application.
12.
The application came before Vally who
was apparently not advised of any of the changed circumstances since
the issue of the application.
Vally J issued the order
appointing the applicant as administrator, and vesting him with the
powers and clothing him with the responsibilities
as contemplated in
section 16 of the Sectional Titles Act. This included that he
should open a bank account at a registered
commercial bank in the
name of Queen Anne, “
and/or
take possession of any account open in the name of the Body Corporate
or any modification thereof, and continue to operate
it or transfer
such funds into the aforesaid account opened by him and therefore
close any such account as he deems fit”.
It
was specifically ordered that the order as granted be served upon
each unit
in Queen Anne.
13.
The order was emailed to PAL Property
Management on 11 December 2020. The email included a letter to
the first to fourth respondents
(being PAL Property Management and
three of its directors) to deliver to the applicant a (i) levy roll;
city council account; (iii)
water and electricity accounts; and (iv)
a list of workers of Queen Anne Body Corporate.
14.
On that same day, the trustees of the
Body Corporate of Queen Anne (at least until the administrator’s
appointment) issued
a notice to the owners of units at Queen Anne,
asserting that:
“
We
have just been informed that
some
owners sneaked into the High Court on the 1
st
December 2020, to have an administrator appointed, without any notice
of such a date to any owners. Claiming that a notice
was put
under all the flat doors is an outright lie.
The way the appointment was made is not legitimate, because all the
owners were not informed. We will oppose this appointment.
There
is no need for an administrator. We, the trustees are in full
control of the body corporate affairs, we have managed
to settle the
municipal accounts, we are busy with various maintenance projects and
getting full co-operation from our managing
agent.
The administrator blocked our Standard Bank account and without our
knowledge opened an FNB account. Under no circumstances
must
owners pay into the FNB account as we will have no control as what
will happen to that money. It may take some time
to sort out
the Standard bank account, so in the meantime we have instructed our
managing agent in terms of regulations of the
Sectional Titles Scheme
Management Act to collect the levy payments into their ABSA Trust
account. The account number will
show on your levy statement,
use your flat number as reference. Do not at this stage pay
into the Standard Bank, nor FNB
account.”
[1]
15.
On 12 December 2020, the attorney for
PAL Property Management addressed a letter to the applicant,
asserting that PAL Property Management
had entered into a formal
agreement as property managers as provided for in the Sectional
Titles Act and was therefore entitled
to retain the documents sought
in the 11 December 2020 letter. The applicant was informed that
a number of owners of units
in Queen Anne had indicated that they had
not been informed of the application (taken to be the application to
appoint the administrator)
and that they would make application to
set aside the order. A copy of the property management
agreement entered into in
October 2020 was attached to the
correspondence.
16.
The applicant says that “
the
respondents”
interfered with
the work of the applicant
qua
administrator, in that they issued monthly levy statements to owners
and required owners to pay levies into “
the
account of
the
respondents”
, taken as a
reference to the Trust Account of PAL Property Management.
Certain owners paid their levies in to this account,
and the
administrator was prompted to bring an urgent application.
17.
On 20 January 2021, the applicant
instituted an
ex parte
contempt application for the alleged failure to comply with the order
of Vally J, including a prayer that the PAL Property Management
trust
account be frozen.
18.
The matter came before my brother Wright
J in the urgent court on 26 January 2021. A rule
nisi
freezing the bank account of PAL Property Management was issued and
returnable on 9 March 2021. The alleged contempt was
not dealt
with.
19.
In response, on 18 February 2021, the
respondents launched an application for reconsideration and joinder
of case number 28772/2020
(in which the applicant was appointed as
administrator) with this case (the contempt case). The founding
affidavit patently
also serves as the answering affidavit in respect
of the contempt application, with specific responses thereto included
in the
body of the affidavit.
20.
The application for reconsideration came
before Mudau J in the urgent court on 23 February 2021. By
order of 24 February 2021,
it was struck off the roll for want of
urgency. Mudau J held that to his mind “
the
application was poorly conceived”,
but
stated that “
nothing stops the
applicants to approach the court to seek an appropriate remedy in
relation to a reconsideration application for
purposes of the rule
nisi.”
21.
On 10 March 2020, the rule
nisi
was discharged before by sister Windell J, so that the freeze on the
bank account was lifted and consequential relief was granted.
The alleged contempt of court was postponed to the normal opposed
motion court. In adjudicating upon the matter, Windell
J
treated the founding affidavit in the reconsideration application as
also constituting the answer to the contempt application.
She
did so in the exercise of her discretion to forego strict compliance
with the rules of court in the interests of justice.
22.
The order of Windell J is the subject of
an application for leave to appeal pending with the Supreme Court of
Appeal (SCA). In the
SCA, the applicant contends that Windell J erred
in not dealing with the contempt. Be that as it may, the
contempt aspect
of the application that was enrolled before me for
the week of 10 August 2021. I directed that the matter be heard
on the
afternoon of 11 August 2021.
23.
Mr Seloane, who appeared for the
applicant, insisted that only the contempt was properly enrolled
before me. Indeed, the “
Final
Notice of Set-Down”
reflects
only the case number of the contempt application. Mr Köhn, for
the respondents, directed me to the “
APPLICATION
FOR DATE – SIMULTANEOUS”
uploaded to CaseLines on 21 June 2021, reflecting also the date of
the reconsideration application. The written heads of
argument
and the oral argument presented before me underscored that it would
be non-sensical to treat the applications as separate.
I am minded to
enrol the reconsideration application and dispose of it. The
arguments in the two matters are intertwined
and it is unnecessary to
burden yet another court with the hearing of the reconsideration
application. In any event, as Windell
J also recognised, it is
in the interests of justice and finality that these two matters that
are so intertwined be dealt with
together.
The
contempt application
Content
of the contempt application
24.
In the contempt application, the
applicant seeks an order that:
24.1.
“
the
First to tenth respondents be found to be in contempt of court order
granted by Honourable Judge Vally on 01
st
day of December 2020 under case number 28772/20 (‘the court
order’)”
;
24.2.
“
the
twelfth respondent be ordered to freeze the bank account belonging to
the Fourth Respondent with the following details and the
amounts be
transferred into the administrator’s account (held at First
National Bank Acc No: 6287-8581-878:
Acc
Holder:
Tradeworx (Pty) Ltd
Bank:
ABSA
Acc No:
408 578 0059
”;
24.3.
“
the
First to Third Respondents be committed to prison for contempt of a
court period of 30 days or such period as the court deems
just and
equitable”;
24.4.
“
the
Respondents committal to prison be suspended for a period of 10 (Ten)
days on condition that the Respondents fully complies
[sic] with the
aforementioned Court Order”;
24.5.
“
a
fine of R35 000 (Thirty Five Thousand Rand) or such as deemed
appropriate by this court be imposed upon the Respondents jointly
each to pay R3500.00 in regard to such contempt”;
and
24.6.
“
The
First to Tenth Respondents pay the costs thereof on attorney and own
client scale, jointly and severally one paying the other
to be
absolved”
.
The
Court Order
25.
The evaluation of the contempt
application requires that the order in respect of which it is sought
be replicated here in full:
“
IT
IS ORDERED THAT:-
1.
Nettus Moral Phoney Dibakoane
(‘the administrator’) is appointed as administrator of
the respondent for a period of
36 months from date of appointment in
terms of the provisions of section 16 of Act 8 of 2011 (“the
Act”);
2.
In the sole discretion of the
administrator and in his opinion and belief that it would be
advisable to have the period shortened
and / or extended, the
administrator may apply to the Honourable Court, for leave to do so,
in which event the proposed election
for the appointment of the board
of trustees referred to hereunder shall be held earlier or later as
the case may be;
3.
The administrator is vested with
the powers and obligations as provided in terms of section 16 of the
Act, which include, inter
alia, the right to:
3.1
Convene and preside at the meetings required in terms of this Act and
the scheme’s rules;
3.2
Lodge with the Ombud as defined in section 1 of the Community Schemes
Ombud Service Act 9 of 2011:
3.2.1 Copies
of the notices and minutes of meetings; and
3.2.2 Written
reports on the administration process every three months or at such
shorter intervals as the court may
direct.
3.3
Perform the functions of the body corporate as fully prescribed in
section
4 of the Act and to comply with the regulations and rules of
the Sectional Titles Management Regulations, including, inter alia,
3.3.1 To ensure
against risk against which the body corporate may encounter in terms
of section 3(1)(h) and (i) of the
Act; and
3.3.2 To uphold
and enforce the rules as prescribed in section 10 of the Act and the
Annexures 1 and 2 thereto, specifically
Part 6 of Annexure 1;
3.4
Exercise the powers entrusted to the body corporate as fully
prescribed
in section 4 and 5 of the Act;
3.5
To continue to take under his control and retain all documents and
records
of the respondent;
3.6
To continue and fund for the administration expenses sufficient for
the
repair, Up … reasonable provision for the future
maintenance and repairs), for the payment of rates and taxes and
other
local authority charges for the supply of electric current,
gas, water, fuel, sanitary and other services to the building or
buildings
or land and any premiums of insurance, and for the
discharge of any duty or fulfilment of any obligation;
3.7
To determine from time to time the amounts to be raised for the
purposes
the [sic] administration and functioning of the building;
3.8
To raise the amount so determined by levying contributions on the
owners
in proportion to their quotas of the respective sections;
3.9
To open and operate an account at a registered commercial bank in the
name of the respondent, and/or take possession of any account open in
the name of the Body Corporate or any modification thereof
or
pertaining thereto or purporting of [sic] representing to pertain
thereto, by any other parties and continue to operate it or
transfer
such funds into the aforesaid account opened by him and therefore
close any such account as deems fit [sic];
3.10
To keep the building known as QUEEN ANNE in a State of good repair
and to Properly
maintain the plant, machinery, fixtures and fittings
Used in connection with the common property on any section;
3.11
To ensure that the list of members be or Stay updated, and that the
record of rules
of the scheme be made available for Inspection,
specifically the duties of owners as set out in section 13 of the
Act;
3.12
To approach the Honourable Court to institute legal Proceedings:
3.12.1 For the recovery of
arrears from sectional title owners and others … Owed to the
respondent, and to institute further
legal Proceedings where
Necessary for the aforementioned purposes in terms fully set out in
section 15 of the Act;
3.12.2 To institute legal
Proceedings to interdict any person that obstructs the Administrator
in the running of the building or
the Performance of his functions;
3.13
To grant any power that may be assigned to the Administrator at the
general meeting
of the owners, which Owners must qualify to vote in
terms of the rules and the Act;
4.
The costs incurred by the
Administrator as administrator be funded out of the administrative
fund of the respondent and be fixed
at a rate of R450 per hour;
5.
A copy of this order be served on
each unit at the building known as QUEEN ANNE.
6.
The respondent is ordered to pay
this costs of this application on an attorney and client scale.”
The
test in contempt
26.
The leading judgment on
contempt of court is
Fakie.
[2]
The SCA explained in that judgment that:
“
It
is a crime unlawfully and intentionally to disobey a court order.
This type of contempt of court is part of a broader offence,
which
can take many forms, but the essence of which lies in violating the
dignity, repute or authority of the court. The offence
has in general
terms received a constitutional ‘stamp of approval’,
since the rule of law – a founding value
of the Constitution –
‘requires that the dignity and authority of the courts, as well
as their capacity to carry out
their functions, should always be
maintained
’.”
[3]
27.
It observed,
further, that a contempt of court application:
“…
is
a most valuable mechanism.
It permits a private
litigant who has obtained a court order requiring an opponent to do
or not do something (ad factum praestandum),
to approach the court
again
, in the event of non-compliance, for a further order
declaring the non-compliant party in contempt of court, and imposing
a sanction.
The sanction usually, though not invariably, has the
object of inducing the non-complier to fulfil the terms of the
previous order.
In the
hands of a private party, the application for committal for contempt
is a peculiar amalgam, for it is a civil proceeding
that invokes a
criminal sanction or its threat. And while the litigant seeking
enforcement has a manifest private interest in securing
compliance,
the court grants enforcement also because of the broader public
interest in obedience to its orders, since disregard
sullies the
authority of the courts and detracts from the rule of law
.”
[4]
28.
The SCA went on to
recount the requisites for contempt as follows:
“
In
particular, the applicant must prove the requisites of contempt (the
order; service or notice; non-compliance; and wilfulness
and mala
fides) beyond reasonable doubt.
But once
the applicant has proved the order, service or notice, and
non-compliance, the respondent bears an evidential burden in
relation
to wilfulness and mala fides: should the respondent fail to advance
evidence that establishes a reasonable doubt as to
whether
non-compliance was wilful and mala fide, contempt will have been
established beyond reasonable doubt
.”
[5]
29.
There are six points
to be highlighted:
29.1.
first, the order concerned must oblige the opponent to do
something;
29.2.
second, proof of the requirements for contempt – the
order,
service or notice, non-compliance, and willfulness and mala fides –
must be established beyond reasonable doubt.
29.3.
third, actual service of the order is not necessary, notification
of
the order may suffice;
29.4.
fourth, even if an order is incorrectly granted, a respondent
is
obliged to comply with it until such time as it is set aside, except
if it is a nullity;
29.5.
fifth, the requirement of wilfulness and
mala fides
implies
that contempt is committed not merely by the disregard of the court
order, but by the deliberate and intentional violation
of the court’s
dignity, repute or authority that this evinces; and
29.6.
finally, the shifting of the evidentiary burden to the respondent
to
establish that his non-compliance was not wilful and
mala fide
once the first three requirements for contempt have been met (order,
service or notice and non-compliance), equates to there being
an
inference of wilful and
mala fide
non-compliance in such
circumstances, which the respondent must rebut through the leading of
evidence.
Discussion
30.
The first requirement emanating from
Fakie
as identified poses the central question for determination in the
present instance. Did the order of Vally J require the
respondent in that application (the Body Corporate of Queen Anne) to
do something? The short answer is that it did not.
Indeed, the extraordinary feature of this application is that the
only respondent in the application that led to the order of Vally
J,
the Body Corporate of Queen Anne, is
not
sought to be held in contempt. And, since none of the remaining
respondents in the contempt application were cited as respondents
in
the application before Vally J, that order could never have imposed
any obligations on them. Simply put, if the
order was
intended to impose obligations on them, they would have had a
material legal interest in the outcome of the application
and they
would have had to be joined.
31.
The order was replicated as part of this
judgment and its terms are very clear: (i) the administrator is
appointed; (ii) the administrator
is given the power to approach a
Court for lengthening or shortening his period of appointment; (iii)
the administrator is given
the powers and obligations in terms of
section 16 of the Sectional Titles Act (
i.e.
the order places certain duties on the administrator); (iii) those
duties include that he should approach a Court for recovery
of
amounts owed to the Body Corporate of Queen Anne and to obtain
interdictory relief where persons obstruct him in the running
of the
building or the performance of his functions; and (iv) that he serve
the order upon the owners of each unit at the building
known as Queen
Anne. The only person assuming any duties or obligations under
this order is the administrator, with the exception
of the costs
order.
32.
The applicant’s position appears
to be that the order implied an obligation on third parties to allow
him to exercise his
powers under the order and that, if they did not,
they were in contempt of the order. However, that proposition
is wrong
not only generally, but also in the circumstances of this
case. The power conferred upon the administrator by virtue of
the
order of Vally J included
inter
alia
the right to approach the Court
to institute proceedings interdicting a person that obstructs the
administration in the running
of the building or the performance of
his functions. In other words, Vally J provided the
administrator with a mechanism
to enable him to compel third parties
to act in a manner that would enable him to perform his functions.
Once that is accepted,
it must be accepted that Vally J did not
contemplate that a party acting in a manner to frustrate performance
of the administrative
duties would automatically be in contempt of
his order. Therefore, the precursor to any contempt application would
have had to
be an application to interdict interference with the
performance by the administrator of his functions. Since the
order in
the administration application did not place any duties
directly on any person (or on the Body Corporate), it does not
constitute
contempt for any person to have acted in a manner that has
prevented the administrator to perform any of his duties.
33.
The
further issue is this: it is a requirement in a contempt application
that there be service or notice. Indeed, the order
of Vally J
included an order that it be served on every unit. On the
applicant’s own version this was not done.
In the
founding affidavit, the applicant records the obligation to serve on
each unit as contemplated in the order of Vally J.
This is
immediately followed by an assertion that the order was emailed to
PAL Property Management. Nothing further is said
about service,
and so it must be taken that this was the only event of service by or
on behalf of the applicant. The only other
attempt at service
recorded in the founding affidavit was to place the Order on the
notice board at the entrance of the Queen Anne
Building from 8
December 2020. But that does not constitute service and it does
not comply with the requirement that a copy
of the order “
be
served
on
each unit
at the building known as QUEEN ANNE”
.
[6]
On his own version, therefore, he has neither complied with the
requirement contained in the order of Vally J nor with the service
requirement that is a precursor to a contempt application. Let
me be clear: at best for the applicant, there was service
to PAL
Property Management and, by association, its directors. On the
applicant’s own version, there was no service
on the trustees
(the fifth to tenth respondents) and no service on the Body Corporate
of Queen Anne.
34.
I
cannot accept the assertion in the founding affidavit that the
applicant has “
fully
complied”
with the procedural requirement of proof of service. It is true
that PAL Property Management had been appointed as the managing
agents of Queen Anne, but the applicant’s position appears to
be that his appointment as administrator effectively undid
that
appointment (he says that “
the
Court Order overrides any other arrangement or agreements entered
into”
).
He cannot have his cake and eat it: if, in consequence of the
applicant’s appointment, PAL Property Management was
no longer
the lawfully appointed managing agent of Queen Anne, then he cannot
assert that service on PAL Property Management constituted
service on
the Body Corporate of Queen Anne. And, of course, as noted
above, the Body Corporate of Queen Anne, being the
opposing party in
the application, is not even sought to be held in contempt. He
can also not say that somehow PAL Property
Management, whose
appointment on his version had been undone, had to assume any
obligation to distribute the order to others, including
the owners of
the units.
[7]
35.
Moreover, since the applicant cannot
show that the order of Vally J imposed any direct obligation to be
complied with on any of
the respondents sought to be held in
contempt, the applicant also cannot meet the requirement as
reiterated in
Fakie
that there is any wilful and malicious non-compliance. It
cannot show any form of non-compliance with an order that does
not
require compliance. Again, this Court must reject the assertion
in the founding affidavit that non-compliance was proven.
36.
Given that the applicant has failed to
establish the requirements of (i) an order placing an obligation on
the respondents in respect
of whom a contempt order is sought; (ii)
notice to or service of the order upon all of the respondents sought
to be held in contempt;
and (iii) non-compliance with an obligation
imposed by the court order, the questions of wilfulness and malice do
not even enter
the debate. It can never be said that there was
a deliberate, intentional refusal to comply with an obligation
imposed by
the Court.
37.
The contempt application falls to be
dismissed.
38.
For the sake of completeness, I have to
deal with the prayer in the notice of motion calling for the freezing
once more of PAL Property
Management’s trust account.
Given the framing of the relief sought and the order in which the
prayers are set out,
it seems to me that this order is sought in
consequence of the prayer that the first to tenth respondents be held
in contempt and
therefore once I find that the contempt application
falls to be dismissed, the consequential relief cannot be
entertained.
I have analysed the founding papers in the
contempt application and it appears that there is no separate case
made out for the
grant of the relief sought in relation to freezing
the bank account. In any event, the question of the freezing
(and unfreezing)
of the bank in question is the subject of an appeal
to the SCA. It would be inappropriate for this Court to
pre-empt the
adjudication by the SCA by making a finding that may be
inconsistent with any order to be issued by the SCA. I decline
to
entertain the relief sought in respect of the freezing of the bank
account insofar as it may stand separately from the contempt
application.
The
reconsideration application
Introduction
39.
The notice of motion in the
reconsideration application signals in the heading between the tram
lines that it is an application
made “
IN
TERMS OF RULE 6(12)(C)”.
40.
Rule 6(12)(c) reads: “
A person
against whom an order was granted in such person’s absence in
an urgent application may by notice set down the matter
for
reconsideration of the order
.”
41.
While subrule 6(8) allows
a person against whom an order has been granted
ex
parte
to
anticipate the return day upon notice, this subrule allows a person
against whom an order was granted in his absence in
an urgent
application to set the matter down on notice for reconsideration. It
is for this reason that Mr Seloane argued before
me that rule
6(12)(c) does not find application in respect of the order freezing
the bank account: after all, the application here
was brought
ex
parte
. I do not
find the submission convincing. It is particularly unconvincing
to make the argument in the circumstances
of the case, where no
return date was provided for in the order that is sought to be made
the subject of reconsideration.
In any event, it is the absence
of the aggrieved party that has been termed the “
underlying
pivot
” to which
the exercise of the power under subrule 6(12)(c) is coupled.
The essential rationale for the rule is to give
effect to the
audi
principle. Th
requirement of absence is satisfied in the present instance. It
is also notable that in
Competition
Commission v Wilmar Continental Edible Oils & Fats (Pty) Ltd and
Others
[8]
the reconsideration application in question was launched pursuant to
an order being granted
ex
parte.
The Court there
explained:
“
In
terms of rule 6(12)
(c)
the
respondents are entitled to have an order reconsidered on the
presence of two jurisdictional facts: that the main application
was
heard as a matter of urgency; and that the first order was granted in
their absence. The dominant purpose of the Uniform Rule
is to afford
to an aggrieved party a mechanism designed to redress imbalances in,
and injustices and oppression flowing from, an
order granted as a
matter of urgency in his absence. See
ISDN
Solutions (Pty) Ltd v CSDN Solutions CC and Others
1996
(4) SA 484 (W)
([1996]
4 All SA 58)
at 486H – 487B. Read also
Oosthuizen
v Mijs
2009
(6) SA 266
(W)
at
268H – I.”
42.
What,
then, is the duty of this Court in the reconsideration application?
Guidance may be taken from
ISDN
Solutions (Pty) Ltd v CSDN
Solutions
CC and Others
[9]
“
The
Rule has been widely formulated. It permits an aggrieved person
against whom an order was granted in an urgent application to
have
that order reconsidered, provided only that it was granted in his
absence. The underlying pivot to which the exercise of the
power is
coupled is the absence of the aggrieved party at the time of the
grant of the order.
Given
this, the dominant purpose of the Rule seems relatively plain. It
affords to an aggrieved party a
mechanism designed to redress
imbalances in, and injustices and oppression flowing from, an order
granted as a matter of urgency
in his absence
. In circumstances
of urgency where an affected party is not present, factors which
might conceivably impact on the content and
form of an order may not
be known to either the applicant for urgent relief or the Judge
required to determine it. The order
in question may be either interim
or final in its operation.
Reconsideration may involve a deletion
of the order, either in whole or in part, or the engraftment of
additions thereto
.
The
framers of the Rule have not sought to delineate the factors which
might legitimately be taken into reckoning in determining
whether any
particular order falls to be reconsidered.
What
is plain is that a wide discretion is intended.
Factors relating to the reasons for the absence, the nature of the
order granted and the period during which it has remained operative
will invariably fall to be considered in determining whether a
discretion should be exercised in favour of the aggrieved party.
So,
too, will questions relating to whether an imbalance, oppression or
injustice has resulted and, if so, the nature and
extent
thereof, and whether redress is open to attainment by virtue of the
existence of other or alternative remedies. The convenience
of the
protagonists must inevitably enter the equation.
These
factors are by no means exhaustive. Each case will turn on its facts
and the peculiarities inherent therein
.
”
[10]
43.
Let me turn then
to the application at hand.
The
relief sought
44.
What is expressed
in terms is, in the first place, a request for
reconsideration of the order of Wright J of 26 January “
in
terms of Rule 6(12)(c)”.
However, as the chronology
hereinabove shows, the rule
nisi
issued on that day has been
discharged. The order of Windell J is the subject of a pending
application for leave to appeal
to the SCA. No reconsideration
of the order of Wright J can competently be entertained in the
circumstances. In any
event, when the application came before
me, this relief was not pressed for.
45.
However, the reconsideration
application was not confined to that.
What is sought, is “
to
set aside the appointment of [the applicant], in terms of section
16(5)(a) of the [Sectional Titles] Act on the grounds that”
he
–
45.1.
“
is
a director of a financially distressed company, Nettus Real Estates
(Pty) Ltd in final deregistration since 2011
”;
45.2.
“
has
failed to make out a case in terms of the provisions of section 16 of
the [Sectional Titles] Act”;
45.3.
“
is
not qualified to administer a sectional title on representations as
contained in his curriculum vitae”;
45.4.
“
is
not in possession of an EAAB trust account, neither does he hold a
trust account in order to administrate a sectional title scheme
in
terms of the provisions of the [Sectional Title] Act and the
Regulation”;
and
45.5.
“
the
administration application has yet to be served on any of the
occupants and/or owners of the body corporate of Queen Anne”
.
46.
The framing of the relief sought here,
as being for a setting aside of the appointment is infelicitous,
since it does specifically
invoke Rule 6(1)(c) upon which the
application is said to be premised; rather, on the face of it, it
appears to invoke section
16 of the Sectional Titles Act to have the
administrator removed from office. But the mere fact that
express reference is
not made to Rule 6(12)(c) in this part of the
relief does not mean that reconsideration was not sought in terms of
the rule –
indeed the short heads filed on behalf of Ms
Gugulethu and the applicant indicate that they understood and
responded to this relief
as constituting a reconsideration
application.
47.
If they are correct in their
understanding, that fact disposes of the preliminary point that the
applicants had no
locus standi
to bring the application. The conclusion cannot be right.
On the applicant’s version of events, his appointment
as
administrator affected the rights of PAL Property Management under a
management agreement concluded with the trustees elected
at the 17
August 2021 meeting; it affected the rights of the persons elected as
trustees at that meeting; and it affected the rights
of the Body
Corporate of Queen Anne. By right, these parties ought to have
been joined in the application to have the administrator
appointed.
Not only was this not done, there is also no evidence before this
Court that these parties were given notice of
the proceedings.
Something must in particular be said about the alleged absence of
locus standi
of the Body Corporate of Queen Anne. It cannot be so that, as
the applicant insists, the Body Corporate of Queen Anne had
no
locus
standi
to pursue the reconsideration
application on account of the administrator having been appointed.
That would be to hold that
an order appointing an administrator that
was granted in the absence of the body corporate can never be
challenged in a reconsideration.
I find that the appointment of
an administrator does not devoid a body corporate of the
locus
standi
to seek reconsideration.
I am fortified in this conclusion that section 16(5) of the Sectional
Titles Act empowers the body
corporate to bring an application to
remove an administrator. The statute thus recognises that the
body corporate, despite
the conferment of powers on the
administrator, retains the right to ask for the removal of the
administrator. If the body
corporate has standing to bring
application for removal in terms of section 16(5), it must equally
have standing to bring a reconsideration
application.
48.
The
second point taken is that the order appointing the applicant as
administrator was not an order taken in urgent court. The point
is
this: it appears to be jurisdictional requirement for a
reconsideration application that the application was to have been
made
I urgent court. It seems to me undesirable that the Body
Corporate of Queen Anne ought to be precluded from bringing a
reconsideration
application by the mere fact that the application for
the appointment of the administrator was not heard in the urgent
court, but
where the circumstances of the case are akin to an order
granted in urgent court. As the case precedent referred to
above
shows, the “
pivot”
is the absence of the party. Surely, this Court must interpret
and apply the rules in a manner that is consistent with the
access to
court right in section 34 of the Constitution of the Republic of
South Africa Act 108 of 1996 (Constitution). As
O’Regan J
explained in
Giddey
NO v JC Barnard and Partners:
[11]
“
A
court that fails to consider the relevant constitutional provisions
will not have properly applied the rules at all”
.
Moreover, in accordance with section 173 of the Constitution, the
High Court “
has
the inherent power to protect and regulate their own process …
in the interests of justice”
.
The Constitutional Court confirmed in
S
v S
[12]
that “
where
strict adherence to the rules is at variance with in the interests of
justice, a court may exercise its inherent power in
terms of s 173 of
the Constitution to regulate its own process in the interests of
justice”
.
49.
However, even if I am wrong in my
assessment that I am able to overlook the fact that the
”
reconsideration
”
sought may competently be entertained under rule 6(12)(c), that is
not the end of the relief that is sought in the reconsideration
application. I explained hereinabove that I considered the
language in the prayer concerning the set-aside of the appointment
of
the administrator as infelicitous. But maybe it is not.
Upon reflection, it would appear that what is being relied
on is not
rule 6(12)(c) – hence the absence from the prayer of any
reference to rule 6(12)(c). The substance of the
prayer and the
provisions invoked in support of the prayer give credence to the
conclusion that one is in fact concerned here with
an application in
terms of section 16(5) of the Sectional Titles Act. As I have
already indicated, a body corporate retains
the entitlement to make
such an application even where an administrator is appointed.
50.
For the sake of completeness, I will
consider the application both (i) under rule 6(12)(c), assuming I can
condone the fact that
that the original order was not granted in
urgent court; and (ii) under section 16(5) of the Sectional Titles
Act.
51.
The starting point for the analysis must
be the provisions of the Sectional Title Act.
The
Sectional Titles Act
52.
According to its Long Title, the
Sectional Titles Act is to provide
inter
alia
for the “
establishment
of bodies corporate to manage and regulate sections and common
property in sectional titles schemes and for that purpose
to apply
rules applicable to such schemes”
.
53.
In
accordance with section 2(1), “
With
effect from the date on which any person other than the developer
becomes an owner of a unit in a scheme, there shall be deemed
to be
established for that scheme a body corporate of which the developer
and such person are members, and any person who thereafter
becomes an
owner of a unit in that scheme is a member of that body corporate
”.
The developer ceases to be a member when they cease to have a share
in the common property and when an owner owns
a unit, the membership
of such an erstwhile owner in the body corporate also ceases.
[13]
54.
The
body corporate is responsible for the enforcement of rules as
contemplated in section 10 of the Sectional Titles Act, and
for
the control, management and administration of the common property for
the benefit of all owners.
[14]
It must perform the functions entrusted to it by or under the
Sectional Titles Act or the rules, and those functions include
those
listed in section 3(1) of the Sectional Titles Act. I do not
intend to rehearse those functions here. Moreover,
the statute
in section 4 entitles the body corporate to exercise certain powers,
which include to (i) appoint agents or employees
of the body
corporate; and (ii) do all things reasonably necessary for the
enforcement of the rules and for the management and
administration of
the common property.
[15]
55.
The
functions and powers of the body corporate must, “
subject
to the provisions of [the Sectional Titles] Act, the rules and any
restriction imposed or direction given at a general meeting
of the
owners of sections, be performed and exercised by the trustees of the
body corporate holding office in terms of the rules
”.
The Trustees stand in a fiduciary relationship to the body
corporate.
[16]
56.
A
body corporate may sue or be sued in its own name in respect of any
matter
arising out
of the exercise of any of its powers or the performance or
non-performance of any of its duties under the Sectional
Titles
Act or any rule.
[17]
57.
In addition, an owner may initiate proceedings “
on
behalf of the body corporate”
:
“
(a)
when such owner is of the opinion that he or she and the body
corporate have suffered damages
or loss or have been deprived of any
benefit in respect of a matter mentioned in section 2 (7), and the
body corporate has not
instituted proceedings for the recovery of
such damages, loss or benefit; or
(b)
when the body corporate does not take steps against an owner who does
not comply with the
rules.”
58.
In such a case, the owner must give
notice as contemplated in section 9(2) of the Sectional Titles Act
and a court may make an order
as contemplated in the remainder of
section 9.
59.
Moreover,
a body corporate, a local municipality, a judgment creditor of the
body corporate or any owner or other person
having
a registered real right in or over a unit “
may
apply to a Magistrate's Court for the appointment of a suitably
qualified and independent person to serve as the administrator
of the
body corporate
”.
[18]
Upon hearing of such an application, a Magistrate’s Court may
appoint an administrator for a fixed period and on such
terms and
conditions as it deems fit, subject thereto that it finds:
“
(i)
evidence of serious financial or administrative mismanagement of the
body corporate; and
(ii)
that there is a reasonable probability that, if it is placed under
administration, the body corporate
will be able to meet its
obligations and be managed in accordance with the requirements of
[the Sectional Titles Act]”
60.
Upon
such appointment being made, the administrator then has “
to
the exclusion of the body corporate”
such powers and duties of the body corporate as the Magistrate’s
Court directs, and “
must
exercise these powers to address the body corporate’s
management problems as soon as possible”
.
[19]
Any person that has the entitlement to bring an application to
appoint an administrator is empowered under section 16(5)
of the
Sectional Titles Act to remove the administrator from office.
Analysis
61.
In accordance with the duties upon this
Court, it now falls to me to consider whether the relief sought in
the reconsideration application
can be competently granted.
This exercise must be done against the backdrop of the requirements
to be fulfilled in an application
where an administrator is
appointed. In this I am guided by -
61.1.
the
test in
Bouramis
and another v Body Corporate of the Towers and others:
[20]
“
It
seems to me that the Court should not, where a duly constituted board
of trustees is in existence, grant an order for the appointment
of an
administrator unless the applicant establishes on a balance of
probabilities, firstly, that there have been breaches of the
duties
set out in s 37, 38, and 40, and, secondly, that it is likely that
the owners of units shall suffer
substantial
prejudice
if an administrator
were not appointed by the Court. Such breaches should take the
form of a failure to perform duties or
the improper performance of
duties.”;
and
61.2.
the
requirement in
Dempa
Investments
[21]
that there be “
special
circumstances”
shown, which “
as
a minimum”
include “
some
neglect, wilfulness or dishonesty on the part of trustees, or an
event beyond their control”
,
and “
a
likelihood that the owners of the units will suffer substantial
prejudice if an administrator is not appointed”
;
61.3.
the
consideration in
De
la Harpe Body Corporate of Bella Toscana
[22]
that “
a
mere disagreement or stand-off between the body corporate and an
owner or group of owners is not sufficient to trigger the decision
to
appoint an administrator. The threshold is much higher and the
onus is on the applicant to show that he or she will suffer
‘substantial prejudice’ should an administrator not be
appointed.”
62.
I also take notice of the reasoning
of the Court in
Dempa Investments
that the question whether an administrator should be appointed hinges
in part on the consideration that “
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
t
hey
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”.
63.
Let
me comment at the outset that there is no jurisdictional issue with
the application for the appointment of the administrator:
even though
the Sectional Titles Act speaks of the application to have an
administrator appointed and the one to have the administrator
removed
being brought in the Magistrate’s Court, the judgment in
Gert
v Body Corporate of Albany Court
[23]
confirms that the section is not peremptory. Ironically, as an
aside, it is the first respondent that was appointed as the
administrator in that case.
64.
I
am in respectful agreement with my brother Wepener J’s
assessment in
Oosthuizen
v Mijs
[24]
that, if I engage upon a reconsideration, I cannot confine my
analysis to the application that served before Vally J alone.
That would do violence to the
audi
alteram partem
principle, which is the very point of a reconsideration application.
Indeed, as Froneman J said in
Reclamation
Group (Pty) Ltd,
[25]
“
the
reconsideration of the matter needs to be done on the basis of a set
of circumstances quite different to that under which the
original ex
parte order was obtained”.
65.
I thus consider the basis for Ms
Guglethu’s application against the full facts now available,
and on the standard applicable
to applications for an administrator
to be appointed.
66.
Lack of co-operation from
recalcitrant owners and payment of levies into account not operated
by the Body Corporate of Queen Anne
66.1.
It would appear that the lack of
co-operation complained of was lack of co-operation with Ms Gugulethu
and her faction. In
any event, in the case of such a complaint,
the solution appears to lie in section 9 of the Sectional Titles Act,
not in seeking
the appointment of an administrator. Section 9
would also provide the mechanism in response to the (wholly
unsubstantiated)
complaint that “
Some
owners are continuously defying the rules and regulations of the body
corporate”.
66.2.
The complaint relating to the bank
account appears to be a complaint relating to payment into the trust
account of PAL Property
Management, although that allegation is not
directly made. There is nothing untoward about payment made
into a trust account.
66.3.
Indeed, the real problem with seeking
appointment of an administrator on these two bases is that it is
completely lacking in detail.
It cannot form the basis of an
order to appoint an administrator.
66.4.
The same is true of allegations of
undefined illegal activities, misappropriation of funds and
mismanagement of the property.
No facts underlying any of these
allegations were provided by Ms Gugulethu. Being unsubstantiated,
they cannot form the basis of
an order that an administrator be
appointed.
67.
Complaints about Carleon Properties
67.1.
By the time that the application for the
appointment of the administrator was launched, Ms Gugulethu and her
cohorts had given notice
to Carleon Properties. On her own
version (in which she asserts authority to have acted), they were
therefore not the managing
agents at the time the application was
heard.
67.2.
Given the findings of this Court, that
notice was ineffective, but in any event, Carleon Properties itself
gave notice and the duly
elected trustees had made appointment of PAL
Property Management well before the application for the appointment
of the administrator
was heard. Whatever shortcomings Carleon
Properties might have had, by the time the application came to be
heard, such shortcomings
could not be relied on as a basis for the
application.
67.3.
Quite apart from the fact that a number
of the allegations (such as failure to produce financial statements
and failure to call
meetings) have in the meantime been shown to have
been untrue, it is also a fact that, by the time Ms Gugulethu brought
the application,
new managing agents had been appointed by the duly
appointed trustees.
67.4.
Notably, the only allegation of risk of
financial loss to the Body Corporate was premised on the allegations
concerning Carleon
in its continued role as managing agent.
Once it is accepted (as it has to be) that PAL Property Management
had replaced
Carleon as managing agents by the time the application
was heard, then there are no relevant allegations of risk of
financial loss
left before this Court. Ms Gugulethu knew this
very well, as is evident from the fact that the only service of the
order
of Vally J purportedly effected was upon PAL Property
Management. The administrator, no doubt on the advice of Ms
Gugulethu
that PAL Property Management was the appointed managing
agent, also sought co-operation from that entity in pursuit of his
efforts
to take up his duties under the order of Vally J.
67.5.
In respect of PAL Property Management,
it is clear that Mr Van den Bos (the first respondent in the contempt
application) and his
firm (the fourth respondent) hold a valid
certificate from the Estate Agency Affairs Board.
68.
The election of Ms Gugulethu and the
failure to co-operate
68.1.
On the objective evidence, the meeting
at which Ms Gugulethu was allegedly elected was not a legitimate
meeting of the Body Corporate.
Notice was not appropriately
given and there was no quorum. Members in arrears with levy
payments were apparently allowed
to vote. No minutes of this
meeting have been provided to substantiate Ms Gugulethu’s
assertion that she was elected
as the chairperson, and no indication
is given in the agenda (relied on in the application as constituting
“
minutes”
as to who else might have been elected as trustees at that meeting.
68.2.
In the circumstances, there was no
obligation on the “
old
trustees”
to hand anything
over to Ms Gugulethu and her cohorts. It was directly as a
result of Ms Gugulethu’s improper interference
with the work of
the duly elected trustees that the bank froze the account.
69.
No audit reports for three years
69.1.
This allegation has been shown to be
false.
70.
Board of Trustees dysfunctional and
breach of duties
70.1.
The first problem for Ms Gugulethu is
that she does not make clear whether she relies on the
dysfunctionality of the trustees properly
elected at the 17 August
2019 meeting or the ones purportedly elected at the 9 August 2020
meeting.
70.2.
The
second problem is that a sweeping statement of “
breach
of duties contained in section 39, read with sections 37, 38 and 40
”
is made. What sections are being referred to here is not identified –
the Sectional Titles Act does not contain such
sections. What
appears to have happened is that Ms Gugulethu or her legal
representative slavishly copied and pasted from
considerations in the
Bouramis
judgment,
[26]
which concerned interpretation and application of the predecessor to
the Sectional Titles Act. No basis for the application
can be
founded in these allegations, which in any event are conclusions of
law, not pleading of facts.
71.
Lack of duly constituted board of
trustees
71.1.
The evidence before the Court is that
trustees were duly elected in August 2019.
72.
Debt owed to the City
72.1.
The affidavits exchanged show that it is
true that the Body Corporate of Queen Anne had fallen into arrears
with municipal payments.
But even on the version presented by
Ms Gugulethu, efforts had been made by the previous management agents
to come to an arrangement
with the City.
72.2.
Although it is accepted that the Body
Corporate of Queen Anne had not been in a position to honour its
settlement agreement with
the City due to the effects of Covid-19,
the trustees elected at the 17 August 2020 meeting and PAL Property
Management truly appear
to have matters in hand. Account
statements even in respect of October 2020, when the application for
the appointment of
the administrator was launched, already indicate
that the reduction of the debt was being managed quite effectively.
Indeed,
by that stage the account was in credit.
72.3.
Notably, the City made no application to
have an administrator appointed, as it would have been entitled to do
if it considered
the management of the debt owed to it to required
such intervention.
73.
The body corporate “
requires
a firm control in managing its finances and collection of levies from
owners and this can only be achieved if an administrator
is
appointed
”
73.1.
That
firm control is needed is not a basis for the appointment of an
administrator.
73.2.
Wallis
J (as he then was) in
Herald
Investments Share Block (Pty) Ltd and others v Meer and others; Meer
v Body Corporate of Belmont Arcade and another
[27]
correctly described the step to appoint an administrator as a
“drastic Power”:
"….it removes
control of the affairs of the body corporate from those in
whom it should be vested, namely
the trustees elected by the members
of the body corporate. In my view, therefore, it would normally
only be exercised when
those persons are not in a position properly
to perform the functions assigned to them under the [Sectional
Titles] Act, or when
the body corporate has not elected
trustees, or where for some other reason the affairs of the body
corporate are
not being, or are not capable of being,
administered in the fashion that the Act contemplates. …. But
it must be borne in
mind that the purpose of appointing
an administrator is remedial, the idea being that the
conduct of the affairs of the body
corporate should after
administration be restored to the members of the body
corporate."
73.3.
This allegation that firm control is
required (devoid of factual underpinning once more) cannot form the
basis of the appointment
of an administrator.
73.4.
In any event, a bank statement that is
attached to the reconsideration application indicates that, as at 8
December 2020, there
was a health balance in the account of the Body
Corporate of Queen Anne.
Conclusion
74.
With the benefit of both sides of the
story, the benefit not enjoyed by my brother Vally J, it would appear
that the application
to have the Body Corporate of Queen Anne be put
under administration was driven by a group of disaffected owners and
tenants, many
of whom according to the levy roll were significantly
in arrears. That, of course, might (at least in part) explain
the inability
of the Body Corporate of Queen Anne to have met its
obligations to the City for some time. Upon reconsideration, I
find that
there was no basis for such appointment.
75.
Even if this Court were not to have
jurisdiction to entertain a reconsideration application under section
6(12)(c), the considerations
listed hereinabove indicate that this
Court does can accede to the request for the setting aside of the
appointment of the administrator
(or his removal) in accordance with
section 6(5) of the Sectional Titles Act. The Body Corporate of
Queen Anne has the
locus standi
to bring such an application and the Court enjoys jurisdiction to
entertain such application.
76.
The point is this, the appointment of an
administrator is only ever an interim solution until such time as the
affairs of a body
corporate have been sorted out. Here, insofar as
the Body Corporate of Queen Anne had in fact experienced any
problems, those have
manifestly been sorted out, particularly insofar
as payment of monies due to the City is concerned.
77.
The removal of the applicant as
administrator is also appropriately motivated by reason of the fact
that the applicant does not
appear to have been an appropriate person
to have been appointed as administrator. His CV as relied upon
does not provide
any degree of detail necessary to lead one to the
conclusion that he qualifies for appointment.
78.
In response to an allegation that estate
agent company of which the applicant is a director is deregistered,
the applicant says
that the financial distress of that entity is not
relevant. To this Court it seems highly relevant that a
director of an
entity in financial distress is appointed to manage
the financial affairs of a body corporate. A bald denial of the
allegation
that the applicant is not duly qualified also does not
assist him. In view of the serious challenges raised, this
supine
approach gives credence to the conclusion that the applicant
is not appropriately qualified. This Court would have expected
him to provide details of his qualifications and experience to
convince the Court that he allegations made against him are not
spurious. He did not do so, and therefore the allegation that
he is not qualified and accordingly ought to be removed is
unchallenged.
Costs
79.
In both directions the parties have
asked for punitive costs orders. An effort was made in the
reconsideration application
to argue for the joinder of the
applicant’s attorney and the imposition of costs orders upon
him as well. This Court
declines to make the costs orders
sought in the form proposed. The adverse effects upon the
Body Corporate of Queen
Anne can be appropriately managed by the
costs orders that I propose to make. The Body Corporate should
not be held responsible
for the costs; the
dramatis
personae
who drove the applications should. This does not for present
purposes include the attorney acting for the applicant and Ms
Gugulethu. There mere fact that criticism may lie against the
conduct of an attorney does not warrant that he should be made
a
party to the litigation or burdened with a costs order. Insofar
as the costs in the reconsideration application are concerned,
this
Court takes the view that the costs cannot be on a punitive scale.
The manner in which the reconsideration was framed
presented an
opportunity to challenge its basis and even though that challenge was
ultimately unsuccessful, it was not spurious.
Conclusion
80.
In the circumstances, I make the
following order:
80.1.
The application under case number
2021/2054 and the application under case
number
2020/28772 are joined.
80.2.
The application under case number
2021/2054 is dismissed with costs on an
attorney and own client scale, such costs to be borne by Mr Nettus
Moral Phoney Dibakoane
in his personal capacity;
80.3.
Mr Nettus Moral Phoney Dibakoane is removed
as administrator of the Body Corporate of Queen Anne.
80.4.
The applicant for appointment of an
administrator in case number 2020/28772, Ms Ncala Valencia Thabasile
Gugulethu, is directed
to pay the costs of the applicants in the
reconsideration application under the same case number, on a
party-and-party scale.
MJ
ENGELBRECHT
ACTING
JUDGE OF THE HIGH COURT
GAUTENG
LOCAL DIVISION, JOHANNESBURG
Delivered:
This judgement was prepared and authored by the Judge whose name is
reflected and is handed down electronically
by circulation to the
Parties/their legal representatives by email and by uploading it to
the electronic file of this matter on
CaseLines. The date for
hand-down is deemed to be 17 AUGUST 2021.
Date
of hearing:
11
August 2021
Date
of judgment:
17 August 2021
Appearances
For
the applicant:
Mr V.O.M Seloane
of
Seloane
Vincent Attorneys
For
the respondents:
Mr M Köhn
Instructed
by:
AM Ellis Attorneys
[1]
Emphasis
supplied.
[2]
Fakie NO v CCII
Systems (Pty) Ltd
2006 (4) SA 326 (SCA).
[3]
Fakie
at para 6. Footnotes omitted.
[4]
Fakie
at paras 7 – 8. Emphasis supplied.
[5]
Fakie
at para 42 (3) and (4).
[6]
Emphasis
supplied.
[7]
See in
this regard,
Grundler
NO v Rambadursing
2011 JDR 0598 (KZD), explaining that the administrator steps into
the shoes of the body corporate.
[8]
2020
(4) SA 527 (KZP).
[9]
1996
(4) SA 484
(W) at 486H- 487C
[10]
Emphasis
supplied.
[11]
2007 (5) SA 525 (CC).
[12]
2019
(6) SA 1
(CC) at para 58.
[13]
Sectional
Titles Act s 2(2) and 2(3).
[14]
Sectional
Titles Act s 2(5).
[15]
Sectional
Titles Act s 4(a) and 4(i).
[16]
Sectional
Titles Act s 8(1).
[17]
Sectional
Titles Act s 2(7)(d).
[18]
Sectional
Titles Act s 16(1).
[19]
Sectional
Titles Act s 16(3).
[20]
1995
(4) SA 106
(D) at 109G-I.
[21]
Supra
at
para 21.
[22]
2014
JDR 2306 (KZD) at para 26.
[23]
2013
JDR 0923 (GSJ).
[24]
2009
(6) SA 266 (W).
[25]
2004
(1) SA 215
(SE) at 218D-F.
[26]
Supra
.
[27]
[2011]
2
All SA 103
(KZD) at para 46.