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[2021] ZAGPJHC 440
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The Body Corporate Marsh Rose v Steinmuller and Others (A5002/2020) [2021] ZAGPJHC 440 (23 September 2021)
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REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NUMBER:
A5002/2020
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: NO
REVISED.
23
SEPTEMBER 2021
In
the matter between:
THE
BODY CORPORATE MARSH ROSE
(SECTIONAL
SCHEME NUMBER: 269/2012)
Appellant
and
STEINMULLER,
ARNO
First Respondent
THE
STANDARD BANK OF SOUTH AFRICA LIMITED
(REGISTRATION
NO. [....])
Second
Respondent
THE
SHERIFF OF HALFWAY HOUSE
Third
Respondent
HAASBROEK
& BOEZAART ATTORNEYS INC.
Fourth
Respondent
JUDGMENT
This
judgment is handed down electronically by circulation to the parties
or their legal representatives via email and by uploading
same onto
CaseLines. The handing down of this judgment is deemed to be 23
September 2021.
MATOJANE
J (NICHOLS AJ CONCURRING)
:
Introduction
[1]
This appeal concerns the interpretation of
s 15B(3)(a)(i)(aa) of the Sectional Titles Act 95 of 1986 (‘the
ST Act’).
The court has to consider whether the court
a
quo
was entitled to assess whether the
security in the form tendered by the first respondent would suffice
to oblige the appellant
to issue the requisite levy clearance
certificate.
Background Facts
[2]
The appellant is a Body Corporate of Marsh
Rose. It is duly constituted in terms of section 36(1) of the ST Act
for the sectional
scheme known as Marsh Rose. The first respondent
purchased a unit in the scheme at a judicial auction on 30 January
2018 and has
complied with the conditions of the sale in execution.
The registered owner of the property (the soon to be ex-owner) –
is
not cited in these proceedings.
[3]
The body corporate refused to issue a levy
clearance certificate required in terms of section 15B(3)(a)(i)(aa)
until the outstanding
amount of R312 903.21 owed by the current
registered owner of the unit has been paid.
[4]
The amount demanded by the body corporate
does not comprise exclusively of levy amounts due to the body
corporate. It includes,
amongst others, a judgment debt and un-taxed
legal costs against the registered owner granted pursuant to a debt
in respect of
the property. The appellant contends that the
subsection is intended to secure payment of all amounts owing in
respect of the unit
upon transfer of the property into the name of
the transferee. Accordingly, the amount owed cannot be determined
subsequent to
the provision of a clearance certificate as found by
the court
a quo.
[5]
In paragraph 33.3 of the answering
affidavit, the body corporate states:
"In so far as legal
fees are concerned, these are legitimately owing. If it is necessary
to tax them, then this would need
to be done prior to transfer taking
place since a levy clearance certificate cannot be issued before they
are paid (or proper provision
made therefor).”
[6]
On 17 April 2018, the body corporate
provided the first respondent with a new breakdown of charges in the
sum of R295 044.81.
The first respondent again disputed the
amount claimed and tendered to give security to the body corporate in
the amount of R150 000.00
for the clearance certificate to be
issued. The body corporate refused to accept the security proffered
by the first respondent
as being insufficient as to both the amount
and form.
[7]
On 19 February 2018, the first respondent,
through his attorneys, addressed a letter to the body corporate
stating:
"We are instructed
that you had claimed an amount from our client which does not
comprise exclusively of levy amounts due to
the Body Corporate. We
are instructed further that when our client requested the ledger
detailing this amount, you refused stating
instead that our client
could pay under protest and raise the dispute at a later stage. This
is unacceptable as some of the amounts
that the Body Corporate is
claiming are patently unlawful, such as the collection costs.
This refusal by the Body
Corporate to provide the ledger detailing the amount claimed by the
Body Corporate is unreasonable and
irrational and is presently
causing our client damages due to the delay in the transfer of the
property.
We are accordingly
instructed to demand, as we hereby do, that you provide:
1.
The ledgers detailing the amounts that the
Body Corporate is allegedly owed;
2.
The minutes circulated by the Body Corporate in respect of the levies
raised from 2014 to
present;
3.
The resolution passed by the Trustees of
the Body Corporate in respect of the interest charged on arrear
levies from 2014 to present.”
[8]
The Body Corporate's written response on 22
February 2018 was that the first respondent accepted to pay all
amounts outstanding
to the body corporate when he signed the
conditions of sale. It stated that it was not obliged to provide the
first respondent
with information detailing the amount claimed as he
was not yet a registered owner of the unit.
[9]
The first respondent (purchaser in
execution) applied to the court
a quo
for an order directing the body corporate to issue the required levy
clearance certificate in respect of the unit against payment
by him
into his attorneys' trust account of an amount as security for any
amount which the body corporate might recover in an action
or
arbitration that the body corporate may institute in respect of the
property within ten days of the granting of the order.
[10]
Wanless AJ accepted the first respondent's
interpretation of the statutory provisions. He held in favour of the
first respondent
and made the following order:
1.
That First Respondent (Appellant herein) is
to sign any and all papers and take any steps necessary, for the
transfer of the property
known as section [….] of the
Sectional Scheme Marsh Rose SS269/2012, Country View Extension 1
Township (“the property”)
to the applicant (First
Respondent herein) subject to paragraph 2 hereof.
2.
Within 10 (TEN) days of the granting of
this order the applicant is to provide an amount of R250 000,00
(Two Hundred and Fifty
Thousand Rand) for the purposes of
Section
15B(3)
of the
Sectional Titles Act of 1986
.
3.
The aforesaid sum shall be held as security
for any claim that the First Respondent may have in respect of the
property in the trust
account of the applicant's attorneys of record
and shall be unconditional and irrevocable subject to paragraphs 4, 5
and 6 hereof.
4.
The first respondent (appellant herein) is
to institute an action in respect of, alternatively, refer to
arbitration, its claim
against the applicant and any other party in
respect of the property within 10 (TEN) days of the granting of this
order.
5.
In the event that the first respondent
fails to comply with paragraph 4 hereof the amount paid in terms of
paragraph 2 hereof shall
be repaid to the applicant.
6.
In the event that the first respondent
complies with paragraph 4 hereof, the amount paid in terms of
paragraph 2 hereof shall be
retained in an interest-bearing bank
account held by the applicant's attorneys of record pending the
finalisation of the action
or arbitration as set out in paragraph 4
hereof.
[11]
The body corporate appealed against the
judgment and order of the Court below, leave to appeal having been
granted by Wanless AJ.
[12]
It is the body corporate's case that
the "
amounts due"
in terms of
section 15B(3)(a)(i)(aa)
includes any amounts owing to it
no matter how it is comprised. The body corporate's view is that the
amount due by the owner should
first be determined (where there is a
dispute concerning them), payment should be made, or provision made
therefore and only then
would it issue a clearance certificate.
[13]
The provisions of the statute, as I will
show, does not support the far-reaching interpretation contended for
by the appellant.
If parliament intended that "amounts due”
to the body corporate should also include amounts unlawfully raised
to the
account of the owner, it would have said so expressly.
[14]
The body corporate submits further that the
amount of R250 000.00, which the court ordered to be paid into
the attorney's trust
account, should include a sum of R43 380.09
in respect of the legal costs of the judgment that the body corporate
obtained
against the registered owner.
[15]
I turn now to consider the provisions of
Section 15B (3)(a)(i)(aa) of the ST Act, which provides:
'The registrar [of deeds]
shall not register a transfer of a unit or an undivided share therein
unless there is produced to him
─
(a) a conveyancer's
certificate confirming that as at date of registration ─
(i)(aa) if a Body
Corporate is deemed to be established in terms of section 36(1), that
Body Corporate has certified that all moneys
due to the Body
Corporate by the transferor in respect of the said unit have been
paid,
or
that provision has been made to the satisfaction of
the Body Corporate for the payment thereof;' (my emphasis)
[16]
It
is trite that when interpreting a statute, the language in the
legislation should be read in its ordinary sense and that the
words
in a statute must be given their ordinary meaning in accordance with
the context in which they are found
[1]
.
Consideration must further be given to the context in which the
provision appears, the apparent purpose to which it is directed,
and
the material known to those responsible for its production
[2]
.
[17]
The section, when construed in a
business-like and common-sense manner, allows for the transferor,
instead of making actual payment
as at the date of registration, to
make provision for the payment of the debt provided it is to the
satisfaction of the body corporate.
This has the advantage that it
will avoid the consequences of payment under protest, namely, costly
and unnecessary litigation
to reclaim what is not due.
[18]
The legislature must have been aware that
the monies due to the bodies’ corporate could be disputed on
bona fide grounds,
which could be an obstacle to the transfer of
property and the embargo could amount to an arbitrary deprivation of
property where,
as in the present case, the property owes substantial
amounts which are disputed.
[19]
The court below noted that as the
indebtedness of the first respondent is admittedly in respect of
arrear levies only and that only
arises upon the transfer of the
property, nothing will prevent the body corporate from joining other
parties in the action or contemplated
arbitration to claim the other
monies due to the body corporate.
[20]
To hold otherwise would mean that Bodies
Corporate, which have raised charges to an account of the owner
without any lawful right
to do so, may withhold transfer of the unit
indefinitely to secure payment of disputed monies that may turn out
not to be due.
This could hardly have been the intention of the
legislature.
[21]
This brings me to the second issue. The
statute requires the payment provisions to be to the satisfaction of
the body corporate
without
specifying what
form of security is needed.
The body
corporate is not required
to satisfy itself
by any particular method or means.
[22]
There
can be no question that the decision of the Body Corporate would be
amenable to challenge if the Body Corporate does not act
in good
faith; it refuses to exercise any real discretion at all; or if its
discretion is exercised in a manner prejudicial to
the interest of
the owner. In Mkontwana
[3]
the
Constitutional Court, in dealing with embargo provision in terms of
section 11(3) of the Municipal Systems Act, which are similar
to
section 15B, held that a dispute on clearance figures is susceptible
to judicial intervention. The court held:
"…
A dispute about the amount of the
consumption charge that must be settled before a section 118(1)
certificate can be issued is a
justiciable issue. There is nothing to
prevent any owner or purchaser of the property, including any
applicant in this case, from
accessing a court to have the
justiciable issue resolved. The last argument has nothing to commend
it".
[23]
The
body corporate must exercise its discretion according to the rules of
reason and justice
[4]
. It must
exercise an honest judgment and its decision to reject the payment
provision must be based on reasonable grounds. See
Koumantarakis
Group CC v Mystic River Investment 45 (Pty) Ltd
[5]
.
The
onus rests on it to prove that it is entitled to the disputed
amount
[6]
. The body corporate
cannot contend for a payment in full ‘under protest’. As
Sishi J found in
YST
Properties CC v Ethekwini Municipality and Other
[7]
,
such payments are not conditional and constitute full payment of the
debt owed. The onus then rests on the person paying the debt
to
establish, in other proceedings, that the amount paid was not
actually due and should not have been paid. This would have the
effect of reversing of the onus which rests on the body corporate to
prove the amount due to it. Additionally, the court below
has already
made provision for proceedings to be instituted by the body corporate
for it to establish not only the amount due to
it but also the party
liable for such amount.
[24]
The form of security which has been ordered
by the court
a quo
is unconditional, irrevocable and will earn interest. It takes
account of the amount which may, in totality be due, to the body
corporate by all parties, not just the transferor. The court a quo
was correct, in my view, in finding that the payment provision
was
objectively reasonable and the body corporate ought to have been
satisfied with the security offered and issued the clearance
certificate.
[25]
The appellant, it would appear, has taken
upon itself the power to unlawfully raise to the account of the owner
amounts which are
not due to it, thereby exercising its discretion in
a manner prejudicial to the first respondent's interest.
[26]
I digress to observe that the appellant
conceded that it had no claim against the first respondent save for
arrear levies at the
commencement of the hearing in the court below.
It argued, however that until all the charges were paid, it was
entitled to apply
the “embargo” provided to it in terms
of section 15B(3)(a)(i)(aa) by refusing to issue the clearance
certificate.
[27]
The
liability for levies is the incident of ownership of a sectional
title unit and is a burden that attaches to such ownership
[8]
.
The amount of R43 380.09 being legal costs in respect of which
the body corporate has taken judgment against the owner and
has
attached the property in execution, is not a burden on the unit as
the nature of the debt has changed. The judgment debtor
remains
personally liable for the debt and costs, and his credit rating is
impugned thereby. The body corporate cannot claim the
same amount
again from the first respondent as it has done.
[28]
The
amount of collection and legal costs claimed before a clearance
certificate could be issued is R57 395.89. These costs
have not
been taxed or agreed to as provided for in section 25(5)
[9]
of the STSMA
[10]
and are
accordingly unlawfully levied as the amount is not due.
[29]
It is common cause that the body corporate
has charged interest on un-taxed legal fees, which it is not entitled
to do. The interest
charges raised to the account are R142 810.25
over 4 years and nine months. Instead of charging 9% simple interest
on the
judgment amount as ordered by the court, the appellant
unlawfully varied the court order and charged interest at an inflated
rate
of 24% compounded monthly, which meant that certain amounts
raised to the account would have exceeded the capital balance which
offends against the
in duplum
rule.
[30]
The body corporate has refused to provide a
resolution authorizing the charging of the aforementioned interest.
Section 3(2) of
the STSMA read with the management rules 21(3)
provides:
(3) The body corporate
may, on the authority of a written trustee resolution-...
(c)
charge interest on any overdue amount payable by a member to the body
corporate, provided that the interest
rate must not exceed the
maximum rate of interest payable per annum under the National Credit
Act, 2005 (Act 34 of 2005), compounded
monthly in arrear;"
[31]
The body corporate has failed to prove that
it was authorized to charge the inflated interest on the overdue
amount.
[32]
All
contributions levied are due and payable once the trustees of the
body corporate have passed a resolution to that effect
[11]
.
The first respondent took issue with the computation of the claimed
amount and requested the body corporate to produce the resolutions
passed as proof that the amounts claimed are owing and payable. The
explanation or supporting documents were refused. On the
Plascon-Evans
test, the body corporate’s version that levies are due and
payable falls to be rejected as they have not been proved.
[33]
It
is not clear why the body corporate is claiming levies from the first
respondent when
section 3(2)
of the
Sectional Titles Schemes
Management Act
[12
]
states that
ordinary levies, additional levies and levies payable to the reserve
fund may be recovered by the body corporate by
an application to a
regional ombud from persons who were owners of units at the time when
such resolution was passed.
[34]
In the light of the aforegoing, the Court
a
quo
was entitled to assess whether the
security in the form tendered by the first respondent was sufficient
to oblige the body corporate
to issue the clearance certificate under
the circumstances.
[35]
In the result, the appeal is dismissed with costs.
K.
E. MATOJANE
Judge
of the High Court
Gauteng
Local Division, Johannesburg
I
agree,
T
H NICHOLS
Acting
Judge of the High Court
Gauteng
Local Division, Johannesburg
Adams
J (Dissenting):
[36]
I have had the benefit of reading the well-crafted judgment of
my colleague, Matojane J.
Regrettably, I do not
agree that the order of the Court
a
quo
should be confirmed and that the
appeal should be dismissed. I do so because, in my view,
section
15B(3)(a)(i)(aa)
of the Sectional Titles Act, Act 95 of 1986 (‘the
ST Act’) and the scheme envisaged by the said section, properly
interpreted,
together with the relevant case law, make it clear that
a Body Corporate has the right to refuse to issue a clearance
certificate
if, in its view, there are monies due to it in relation
to a Sectional Title Unit which is the subject of a transfer.
Secondly,
the order of the trial court is not a competent order if
regard is had to the wording of s 15B(3)(i)(aa).
[37]
In my
view, it is not as clear cut as the first respondent would have us
believe that the charges raised by the Body Corporate were
unlawfully
raised. What is, in my view, unlawful, is the fact that the Body
Corporate, which has as part of its statutory duties
and obligations,
the administration of a Sectional Title Scheme, has been deprived of
the benefit of some R200 000, being
the contributions in respect
of the Unit in question. Even if the Body Corporate’s
entitlement to payment of some of these
amounts is disputed, then, in
my view, the Body Corporate is still entitled to insist on payment of
the amounts due in respect
of the Unit, before issuing a clearance
certificate.
[38]
Therefore,
I am of the view that the real issue in this appeal is whether a Body
Corporate can be compelled to provide a clearance
certificate before
it has received payment of the amounts due, even if the sum due is
disputed by the transferee or by any other
interested party for that
matter. Put another way, the issue in the appeal is whether a Body
Corporate is entitled to refuse to
issue a clearance certificate in
the event of there being a dispute relating to the amount due to it
by the owner of the Unit.
The question is this: What should happen in
the event of the transferee of the Unit not accepting – either
wholly or in part
– the amount which the Body Corporate claims
to be due in respect of the Unit? Can the transferee, for example,
insist on
the transfer being registered before the dispute is
resolved on the understanding that the dispute and the payment will
be resolved
later?
[39]
I
will for the sake of convenience, refer to the appellant as 'the Body
Corporate’ and the first respondent as ‘Mr Steinmuller’
or sometimes simply as ‘the first respondent’.
[40]
In casu
,
the first respondent bought the Unit at a Sale in Execution on 20
January 2018 for the purchase price of R970 000. Thereafter,
during February 2018, the Body Corporate indicated that it would
issue a clearance certificate on receipt of payment of the amount
of
R312 903.21. A summary was also furnished by the Body Corporate,
giving an indication of how this sum is arrived at. In
the nature of
these ‘clearance figures’, a certain portion thereof
related to provision for levies and other charges
for a few months in
advance.
[41]
On receipt of these clearance figures,
Mr Steinmuller immediately went on the defensive and formed the view
that the Body Corporate
was ‘claiming amounts which it
unlawfully raised and which [were] not due by [him]’. On 19
February 2018, the first
respondent caused a letter to be sent by his
attorneys to the Body Corporate making these views known. The said
communiqué
also demanded from the Body Corporate that it
furnished full and precise particulars of how the sum total is
arrived at. This,
so the letter demanded, was to be provided in the
form of the ledger card and other documentation.
On 22
February 2018, the attorneys of the Body Corporate responded to this
demand and, in essence, denied the first respondent’s
entitlement to the requested information.
[42]
On 17 April 2018, the first respondent was able to obtain a
reconciliation of the account relating to the Unit from the Body
Corporate
to the previous owner. What was apparent from the
reconciliation is that right from inception of the account during
April 2014
– presumably when the previous owner took transfer
of the Unit – not one cent was paid on the account. It is
therefore
understandable that from an early stage collection charges
and interest were debited to the account. The very first ‘interest
charge’ debited was an amount of R119.46 on 14 June 2014, and
the first ‘arrear cost liability’ charge of R256.50
was
debited on 14 August 2014. The total amount due as at 14 April 2018,
according to this reconciliation, was R295 044.81,
which was
R17 858.40 less than the amount quoted in the ‘clearance
figures’ presented to the first respondent
by the Body
Corporate during February 2018. This, I think, is understandable. As
already indicated, included in the ‘clearance
figures’
furnished by the Body Corporate was an amount relating to estimated
future levies and charges in respect of the
few months which it would
have taken for the transfer to be registered.
[43]
The total of R295 044.81 consisted of the usual type of
levies and charges raised by Body Corporates, namely levy charges
(comprising
levies, CSOS Levies, and special levies) - R103 324.35;
water consumption and sewerage services in the amount of –
R31 523.02;
arrear cost liability – R12 264.25;
interest charges – R97 137.55; legal fees - R50 615.65.
These charges
were raised during approximately a four-year period
from 14 May 2014 until 14 April 2018.
[44]
The first respondent took issue with and disputed, sometimes
on rather spurious grounds, all but a rather insignificant portion of
this total. The first respondent contended that of the R295 044.81
claimed in the reconciliation, R203 397.53 has either
been
unlawfully raised to the account or was not due by him.
[45]
So, for example, the first respondent disputed the sums
debited in respect of ‘arrear cost liability’ and ‘legal
fees’ – which clearly relates to collection charges and
legal fees necessitated by the fact that the previous owner
right
from the start was defaulting on payment of his monthly levies and
other charges. This objection was ostensibly based on
the fact that
the Body Corporate debited the account without authority.
[46]
Maybe
it is apposite at this juncture to deal with the issue of the legal
charges, which, according to the first respondent, should
not be
included in the payments due under s 15B(3)(a)(i)(aa). The trial
court agreed with the first respondent on this issue. I
don’t.
I find support for my view in
Barnard
NO v Regspersoon van Aminie en 'n Ander
[13]
,
in which the SCA held that, in giving expression to the intention of
the provision [s 15B(3)(a)(i)(aa)] to give effective protection
to
the body corporate, it was clear that the contributions were covered
by the provision and therefore the relevant legal costs
also fell
within the ambit of the provision. I am therefore of the view that
the Body Corporate was entitled to insist on the legal
costs being
paid before issuing the clearance certificate. To say that these
costs should have been taxed, as did the first respondent,
is, in my
view, not sustainable. In that regard, I agree with the contention by
the Body Corporate that, if the transferee insisted
on taxation, then
that can and should be done, but before the clearance certificate is
issued.
[47]
At best for the first respondent, this issue is not as
clear cut as he had the trial Court believe. It is not a dispute
which
can unequivocally be said would have been decided in favour of
the first respondent.
[48]
Secondly, the first respondent questioned the total
interest charged. The first respondent suggests that there may have a
breach of the
in duplum
rule. I am not convinced. Then, the
first respondent rather speculatively suggests that about R55 000
had become prescribed
by the time the clearance figures were issued
by the Body Corporate. What the first respondent conveniently forgets
is that the
Body Corporate had obtained a judgment against the
previous owner for the total due as and at 25 June 2015, being
R43 270.03.
This puts paid to the argument of prescription.
[49]
The point about what is said in the preceding paragraphs is
that the disputes raised by the first respondent are, in my view, not
as obviously in favour of the first respondent as he contends. There
is merit in the counter arguments by the Body Corporate. I
think,
without deciding the point, that the Body Corporate was fully within
its right to insist on payment of the amount of R312 903.21
or
an amount close to that. The trial Court appears to have been of the
view that R250 000 is the maximum amount to which
the Body
Corporate could possibly be entitled to insist on for purposes of it
to issue the clearance certificate.
[50]
All the same, in my judgment, the first respondent
should have paid the R312 903.21 before it could have demanded
that
the Body Corporate issue the clearance certificate. I agree with
the Body Corporate that what the first respondent could and should
have done was to pay the said amount under protest and then challenge
his liability later. Alternatively, he should have brought
an
application for a declaratory order as to the amount lawfully due to
the Body Corporate. What weighs heavily on my mind in forming
this
view, is the fact that the Order of the trial Court had unfairly
deprived the Body Corporate of the protection afforded to
it by s
15B(3)(a)(i)(aa) and the scheme envisaged by the section to receive
contributions from the owners of Units in their scheme.
What is worse
is the fact that since April 2014 the Body Corporate has not received
one cent in respect of levies, service charges
and other
contributions relating to the Unit in question.
[51]
More importantly, the Order does not, in my view, accord with
the letter and the spirit of the said section and I say so for the
reasons which follow.
[52]
As indicated by the wording of the section, as cited in full
in the majority judgment, section 15B(3)(a)(i)(aa) of the ST Act
provides
that the Registrar of Deeds shall not register a transfer of
a unit unless the body corporate has certified that all moneys due
to
it by the transferor in respect of the said unit have been paid. At
the outset, I need to make the point that the construction
of this
section lends itself to the interpretation which I contend for. The
Body Corporate is the entity who must indicate whether
monies are due
to it and how much. And only when all that money, as indicated by the
Body Corporate to be due to it, has been paid,
can the registration
of the transfer proceed. If not, then the transfer
shall not
be registered.
[53]
My interpretation of the section is that payment of
monies due to the Body Corporate shall always and inevitably be
preceded
by the registration of the transfer – that is how the
section is constructed and what its words say. If that requires the
resolution of disputes relating to the amounts due in respect of the
Unit then that should be attended to prior to transfer. The
registration of the transfer shall not be registered unless and until
monies due have been paid. Monies due cannot and will not
be paid if
there is a dispute. Therefore, it stands to reason that the transfer
cannot and will not be registered until the dispute
is resolved.
[54]
As has been held by case law, to which I shall revert to
later on in the judgment, a body corporate is given the power to
resist the transfer of immovable property until moneys due and owing
to it have been paid or until arrangements to pay have been
made to
its satisfaction. It therefore enjoys an effective preference which
translates into a right not dissimilar to that of a
secured creditor
such as a mortgagor.
[55]
In
Nel NO v
Body Corporate of the Seaways Building and Another
[14]
the AD considered the provisions of the section. In that case the
appellant was the liquidator of a company which, at the time
it was
placed in liquidation, was the owner of a number of units in a
sectional title development. These units were mortgaged in
favour of
a bank. The liquidator sold the units by public auction but was
unable to pass transfer to the purchaser because of a
dispute
concerning the interpretation of the provisions of the section.
Grosskopf JA said at 135C - D:
‘
The position then
is that the contested provision, although it did not create a
preference in the ordinary sense, nevertheless gave
the body
corporate a power to resist transfer of units until moneys due to it
were paid. The question at issue was the exact ambit
of this power.'
[56]
I
interpret the aforegoing as authority for the simple proposition that
the scheme of section 15B(3)(a)(i)(aa) contemplates and
creates an
embargo or veto provision as general security for the payment of debt
to Body Corporates. The practical effect of the
section is that a
body corporate will be paid before transfer of immovable property is
effected. A reasonable body corporate might
arrive at an
accommodation where there are insufficient funds available to cover
the total of the debts owing to it – but
is not obliged in law
to do so. See:
First
Rand Bank Ltd v Body Corporate of Geovy Villa
[15]
.
Correspondingly, a reasonable body corporate might arrive at an
accommodation where there is a dispute concerning the amount due
to
it, but is not obliged to do so.
[57]
In interpreting the section, one should also consider
the difficulties experienced by bodies corporate who are faced with
owners who default in their obligations to pay levies and related
costs and the consequent socio-economic problems. These difficulties
weigh heavily with me when I interpret the section. The point is that
this statutory embargo serves a vital and legitimate purpose
as
effective security for debt recovery in respect of contributions to
bodies corporate for water, electricity, rates and taxes,
etc. Thus
they ensure the continued supply of such services and the economic
viability and sustainability of bodies corporate in
the interest of
all its members.
[58]
Moreover,
the trial Court’s interpretation of the section does not, in my
opinion, give effect to the principle – as
inter
alia
per
Tshwane
City v Blair Athol Homeowners Association
[16]
– that a written instrument should be interpreted sensibly and
that the words should not be interpreted so as to have an
unbusinesslike result.
[59]
This point is aptly demonstrated by the
following facts. In April 2018 the Body Corporate issued clearance
figures, indicating that
an amount of about R312 000 should be
paid. At that stage, the account ran up in respect of the Unit was
standing at R295
000. By 14 October 2018 – when the Body
Corporate’s answering affidavit was filed – that total,
according to
the BC, had increased to R369 000. The monthly debits at
that stage, excluding interest altogether, amounted to R3264 per
month.
It’s been three years since then, which means that to
date the account would have escalated by 36 X R3264 = R117 504, none
of which has been paid by the first respondent. The point is that it
makes very little business sense that an amount due to the
Body
Corporate, which changes and increases on a monthly basis, can and
should be allowed to be the subject of a dispute and litigation
before being paid, whilst at the same time the transferee of a unit
is allowed effectively to be exempted from paying his dues
to the BC.
[60]
In sum, my view is that this result
could not possibly have been the intention of the Legislature when it
enacted the section. The
effect of such an interpretation is that it
can lead to a BC ending up in dire financial straits, which, in turn,
would severely
prejudice all the other members and the owners of the
other units – not very businesslike.
[61]
Furthermore, as I have indicated above, the section is
explicit and peremptory, which means that exact compliance is
required and
failure to comply will result in the ensuing act being
null and void. In other words, the registration of a transfer before
payment
of amounts due to a Body Corporate may very well be invalid.
[62]
In sum, having regard to the wording of the section and the
scheme at which it is aimed, the Body Corporate was entitled to
embargo
the transfer as monies due to it had not been paid. For this
reason alone, the appeal should be upheld.
[63]
There is, however, another reason why the order of the Court
a
quo
should not be confirmed, and that relates to its
interpretation of the words ‘provision for payment’.
[64]
The Body Corporate contended that security for payment
is not a form of payment to the Body Corporate or provision for
payment.
I agree. To post security for a payment subject to certain
conditions does not equate to ‘provision for payment’.
Provision
for payment should have exactly the same effect as payment.
In other words, before the registration of the transfer, the Body
Corporate
should be in receipt of payment, which clearly is not the
case if security is provided.
[65]
In the circumstances, I would have upheld the appeal and
substituted the order of the trial Court with the following order:
‘
The
applicant’s application is dismissed with costs’.
L
R ADAMS
Judge
of the High Court
Gauteng
Local Division, Johannesburg
Heard
:
16 August 2021 – in a ‘virtual hearing’ during a
videoconference on the Microsoft Teams digital platform.
Judgment
:
23 September 2021 – judgment handed down electronically
For
Appellant
:
Advocate
K Lavine, together with Advocate Ashil Naidoo
Instructed
by
:
Alan
Levy Attorneys Incorporated, Johannesburg
For
First Respondent
: Advocate C Van
der Merwe
Instructed
by
:
Vermaak
& Partners Incorporated, Johannesburg
For
Second, Third, and
No Appearance
Fourth
Respondents:
Instructed
by
:
No
Appearance
[1]
Bellevue
Motors CC v Johannesburg City Council
1994 (4) SA 339
(W) 342F-G].
[2]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012 4 SA 593
(SCA) paras 603-604D.
[3]
Mkontwana
v Nelson Mandela Metropolitan Municipality (CCT 57/03)
[2004] ZACC
9
;
2005 (1) SA 530
(CC);
2005 (2) BCLR 150
(CC) (6 October 2004).
[4]
See
Pretoria
North Town Council v A.1 Electric Ice-Cream Factory
(
Pty
)
Ltd.
,
1953(3) S.A. 1 (A.D).
[5]
(172/07)
[2008] ZASCA 53
(14 May 2008).
[6]
Euphosia
(Pty) Ltd t/a Gallagher Estates v City of Johannesburg (5052/2015)
[2016] ZAGPPHC 548 (17 June 2016).
[7]
2010
(2) SA 98
(D) para 45.
[8]
Body
Corporate of Marine Sands v Extra Dimensions 121 (Pty) Ltd
2020 (2)
SA 61
(SCA) at para 20.
[9]
Section
25 (5) The body corporate must not debit a member's account with any
amount that is not a contribution or a charge levied
in terms of the
Act or these rules without the member's consent or the authority of
a judgment or order by a judge, adjudicator
or arbitrator." See
also
Nkata
v Firstrand Bank Limited and Others 2016 (4) SA 257 (CC).
[10]
"A
member is liable for and must pay to the body corporate all
reasonable legal costs and disbursements, as taxed or agreed
by the
member, incurred by the body corporate in the collection of arrear
contributions or any other arrear amounts due and owing
by such
member lo the body corporate, or in enforcing compliance with these
rules, the conduct rules or the Act.
[11]
S 37(2) of the Sectional Titles Act 95 of 1986; (Sectional Titles
Schemes Management Act 8 of 2011 s 3(2)).
[12]
Act
8 of 2011.
[13]
Barnard
NO v Regspersoon van Aminie en 'n Ander
2001
(3) SA 973
(SCA).
[14]
Nel NO
v Body Corporate of the Seaways Building and Another
1996 (1) SA 131 (A).
[15]
First
Rand Bank Ltd v Body Corporate of Geovy Villa
2004 (3) SA 362 (SCA).
[16]
Tshwane
City v Blair Athol Homeowners Association
2019 (3) SA 398
(SCA).