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[2017] ZASCA 38
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Mount Amanzi Share Block Limited v Body Corporate of Windsor Heights Sectional Title Scheme and Others (537/2016) [2017] ZASCA 38 (29 March 2017)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
reportable
Case No: 537/2016
In
the matter between:
MOUNT
AMANZI SHARE BLOCK
LIMITED
APPELLANT
and
THE BODY CORPORATE OF
WINDSOR
HEIGHTS
SECTIONAL TITLE SCHEME
FIRST
RESPONDENT
SKY
AFRICA PROPERTIES 24
CC
SECOND
RESPONDENT
WALTER
SZEZINSKI
THIRD
RESPONDENT
ERIKA
SZEZINSKI
FOURTH
RESPONDENT
IRFAAN
KHOTA
FIFTH
RESPONDENT
NICO
VAN
ECK
SIXTH
RESPONDENT
WILHELMINA
VAN
ECK
SEVENTH
RESPONDENT
INA
VAN
STADEN
EIGHTH
RESPONDENT
THEUNS
F
DREYER
NINTH
RESPONDENT
DINA
SCHOEMAN
TENTH
RESPONDENT
ALBERTUS
SCHOEMAN
ELEVENTH
RESPONDENT
GINA
JACOBS
TWELFTH
RESPONDENT
GIDEON
JACOBS
THIRTEENTH
RESPONDENT
MARIUS
PRETORIUS
FOURTEENTH
RESPONDENT
MELISSA
PRETORIUS
FIFTEENTH
RESPONDENT
ERIC
RYCROFT
SIXTEENTH
RESPONDENT
ISOBEL
RYCROFT
SEVENTEENTH
RESPONDENT
LIANIE
SCHNAAR-CAMPBELL NO
EIGHTEENTH
RESPONDENT
EDWARD
AUCAMP
NINETEENTH
RESPONDENT
CLIVE
GOMEZ
TWENTIETH
RESPONDENT
LIZEL
GOMEZ
TWENTY-FIRST
RESPONDENT
MARY
ANNE VAN DER WESTHUIZEN
TWENTY-SECOND
RESPONDENT
FRED
TRENTELMAN
TWENTY-THIRD
RESPONDENT
JACO
SWART
TWENTY-FOURTH
RESPONDENT
LIANA
SWART TWENTY-FIFTH
RESPONDENT
Neutral
citation
:
Mount
Amanzi Share Block Limited v The Body Corporate of Windsor Heights
Sectional Title Scheme & others (
537/2016)
[2017] ZASCA 38
(29 March 2017)
Coram
:
Cachalia and Swain JJA and Nicholls, Coppin and Mbatha AJJA
Heard
:
10 March 2017
Delivered:
29
March 2017
Summary
:
Deed of servitude : right to supply services to other party to deed :
right to determine levies payable for services : bare denial
of
correctness of determination : real, genuine and bona fide
dispute of fact not established : discretion to determine levies
exercised reasonably and honestly : claim valid and enforceable.
ORDER
On
appeal from
:
Gauteng Division of the High Court, Pretoria (Mavundla J sitting as
court of first instance.)
(1)
The appeal succeeds with costs.
(2)
The order of the court a quo is set aside.
(3)
The following order is granted in respect of the main application:
‘
The
application is dismissed with costs’
(4)
The following order is granted in respect of the counter application:
‘
(a)
It is declared that the first applicant, the Body Corporate of
Windsor Heights Sectional Title Scheme, is liable to the respondent
Mount Amanzi Share Block Ltd, for levies budgeted by the respondent
in its 2014 budget, in terms of Notarial Deed No K8235/1996,
calculated as 7.6% of the total budgeted expenses of the respondent
for 2014, in respect of the following services;
(i)
Security services.
(ii)
Sewerage, removal of refuse and rubble and supply of water.
(iii)
Public liability insurance.
(iv)
Contribution to salaries for staff providing services.
(v)
Maintenance of gardens and grounds.
(vi)
Electricity for the illumination of the common area.
(vii)
Telephone expenses.
(viii)
Contribution to salaries for staff at the front office and reception.
(b)
The first applicant is ordered to make payment of the sum of R40
208.75 per month to the respondent, for a period of 12 months
commencing on 1 October 2014, being the applicants’ total
monthly share of the respondent’s budgeted expenses for 2014.
(c)
The first applicant is ordered to make payment of interest on each of
the monthly payments from the day of the month in which
each payment
fell due, at the statutory prescribed rate of interest, to date of
payment.
(d) The applicants are
ordered to pay the respondent's costs jointly and severally, the one
paying the other to be absolved.’
JUDGMENT
Swain
JA
(Cachalia
JA and Nicholls, Coppin and Mbatha AJJA concurring):
[1] The appellant, Mount
Amanzi Share Block Ltd, is a share block company in terms of the
provisions of the Share Blocks Control
Act 59 of 1980, known as Mount
Amanzi, whose main object and business is to operate a timeshare
scheme in a housing estate. The
first respondent is the body
corporate of the Windsor Heights Sectional Title Scheme known as
Windsor Heights, that administers
a housing estate situated on land
within the boundaries of the property of the appellant. The 2
nd
to 21
st
respondents are owners of the units, and the 22
nd
to 25
th
respondents are tenants of owners of units in
Windsor Heights.
[2] In order to place the
dispute in context it is necessary to briefly examine the history and
development of both housing estates.
Windsor Heights and Mount Amanzi
were developed by an entity known as the De Wildt Trust on a phased
basis commencing in 1988.
Because of the distance between Mount
Amanzi, Windsor Heights and the municipal area of Hartbeespoort
(which later became known
as Madibeng Local Municipality) the estates
could not connect to the water reticulation, sewerage infrastructure
and refuse removal
services offered by the municipality.
[3] To cater for the
absence of municipal services (services), the development of Windsor
Heights was made subject to a notarial
deed of servitude being
registered in which the right of Mount Amanzi to render these
services to Windsor Heights, was recorded.
An obligation was also
imposed upon Mount Amanzi to make its infrastructure, facilities and
amenities available to Windsor Heights.
In return for the supply of
these services and access to Mount Amanzi’s facilities, Windsor
Heights was obliged to make payment
to Mount Amanzi of levies to be
determined by Mount Amanzi annually, in its discretion. Provision was
also made for a right of
way in favour of Windsor Heights over the
property of Mount Amanzi as it was landlocked, having no access to a
public road. A servitude
of right of way was accordingly necessary to
afford to the residents of Windsor Heights, ingress to and egress
from their property.
[4] The seeds of
dissension inherent in such an arrangement, which should have been
apparent from the outset, have now borne fruit.
Disagreement arose
between the parties because of an increase in the remuneration
determined by the appellant in the exercise of
its discretion, for
the supply of these services to the respondents and access by the
respondents to the appellant's facilities.
The respondents
accordingly launched an application in the Gauteng Division of the
High Court, Pretoria (Mavundla J), based upon
the assertion that
because the unilateral increase in the levies by the appellant was
disputed, payment was sought to be enforced
by the appellant by
restricting the access of the respondents to the property and
facilities of the appellant. It was alleged that
interference with
the unrestricted use of the appellant's facilities and unrestricted
access to the property of the appellant,
constituted acts of
spoliation. An order was sought restoring the free and unrestricted
use of the access road and access to the
property of the appellant.
Pending the final determination of the dispute between the parties in
respect of the levies payable,
an order was sought directing the
appellant to grant the respondents full access to its facilities. In
addition, an interdict was
sought restraining the appellant from
interfering with and/or limiting the use and enjoyment of these
facilities by the respondents.
A further interdict was sought
restraining the appellant from interfering with and/or interrupting
access to its property, the
water supply and any other service
provided by the appellant to the respondents. The appellant, by way
of a counter application,
sought a declaratory order that the first
respondent was liable to make payment of the levies charged, in terms
of the notarial
deed of servitude, in respect of the services
supplied as well as payment of the arrear levies.
[5] The court a quo
granted the respondents the relief claimed in the main application
and dismissed the counter application, on
the ground that an
irresoluble dispute of fact existed on the papers. The appellant was
ordered to pay the costs of both applications.
Leave to appeal to
this Court was thereafter granted by the court a quo.
[6]
The respondents alleged they had been spoliated by the appellant in
the following respects:
(a)
The residents of the respondents’ property and their guests had
been denied access to the recreational facilities on the
appellant's
property and more specifically the restaurants, shops and tuck shop.
(b) Access by residents
of the respondents’ property and their guests to the
respondents’ property through the entrance
gate to the
appellant's property and via the access road, had been restricted.
[7] The appellant
conceded that there had been a temporary denial of access to the
appellant's recreational facilities but justified
this on the basis
of a request by the deponent to the respondents’ founding
affidavit, Mr Gideon Jacobs, a trustee of the
first respondent, to
restrict access to these facilities in an endeavour to reduce the
levies raised by the appellant. In a memorandum
dated 12 March 2014
sent by the appellant to the trustees of the first respondent,
reference was made to discussions and correspondence
during the
previous year between the parties, regarding the use of the servitude
road, access control to Windsor Heights and use
of the appellant's
facilities. It was recorded that at an on-site meeting attended by
authorised representatives of the appellant
and the first respondent,
an agreement in the following terms was reached:
‘
.
. . your members in the main do not use the facilities of the share
block [Mount Amanzi] and furthermore are not prepared to pay
the
charges calculated in this regard that you requested that we
immediately cease offering access to the members and guests of
Windsor Heights until the impasse is resolved one way or the other.
We
confirm that acting on your request we implemented the restriction
with immediate effect as agreed.
We
confirm that you would provide us with a circular for distribution at
the gate and we await same.
We
further confirm that your Legal representative Mr Tom Dijsel met with
our legal representative requesting a cessation of the
restriction
but given the confirmation of the arrangement, we can't at this stage
agree to the cessation of your request and the
rules flowing from
same.’
Reference was also made
to twelve ‘rules’ allegedly requested by the
representatives of the first respondent as a guideline,
one of which
reads as follows:
‘
11.
Use of resort facilities by Windsor Heights residents or their guests
is strictly prohibited.’
[8] The contents of the
memorandum were also sent to the first respondent's attorneys Messrs
Theron & Henning, who replied by
way of a letter dated 28 March
2014, in the following terms:
‘
6.
It
was suggested by W/H [Windsor Heights] and accepted by M/A [Mount
Amanzi] that the residents and their guests should not use
the
facilities of M/A until the "impasse" regarding the
additional levies is resolved.
It was never even contemplated by W/H that M/A would "immediately
cease offering access" to residents and/or visitors
(
unless
this "access" refer to the facilities of the resort!?)
The
status
quo
should continue especially since the refusal of W/H to pay whatever
is demanded by M/A may lead to court action and the "impasse"
may endure for some time.’
(My
emphasis).
It was therefore
acknowledged by the respondents’ legal representative, that
there was an agreement that the residents and
guests of the
respondents would not use the facilities of the appellant until such
time as the ‘impasse’ was resolved.
The only concern of
the writer was that access to the appellant's property itself not be
denied.
[9] In a letter dated 18
April 2014 the appellant's representative replied stating as follows:
‘
Windsor
Heights owners’ rights to use Mount Amanzi facilities are
subject to Windsor Heights paying a levy to Mount Amanzi
the quantum
of which is determined by Mount Amanzi unilaterally levying an amount
reasonable in their discretion.
.
. .
The
amounts levied are due and payable however we confirm that your Body
Corporate opted out of the usage of the facilities on the
common
property, and as a result the Share Block is prepared to waive the
levies raised in respect of this line item, upon confirmation
of the
arrangement by yourselves, but unfortunately it appears that this
decision taken at the last meeting by your appointed subcommittee
meeting has not been accepted by or possibly not conveyed to some of
your members.
In
the interim the agreement as concluded with your subcommittee
remains, and we look to the Body Corporate for due payment of the
account now overdue.’
[10] In reply Elsa Kruger
Attorneys (who it appears had replaced Messrs Theron & Henning as
the legal representatives of the
first respondent) in a letter dated
28 June 2014 stated that:
‘
As
a result of the above mentioned dispute, the residents and/or the
tenants and/or guests are not allowed to use the facilities
of Mount
Amanzi, with specific reference to the shop, swimming pool/s,
restaurant and interference with unrestricted access via
the Mount
Amanzi gate, previously enjoyed by the owners and/or tenants and/or
guests. Mount Amanzi’s interference alternatively
prevention of
the owners and/or guests and/or their tenants from using the
facilities without a court order is unlawful and constitutes
an act
of spoliation.’
An undertaking in writing
was requested inter alia:
‘
2.
That the full use and enjoyment of all Mount Amanzi’s
facilities will be restored to the owners and/or their tenants and/or
their guests, with immediate effect.’
[11] A reply by the
appellant's representative dated 6 July 2014 states in part that:
‘
It
is clear from your communication that your client has not fully or
correctly informed you, as to the negotiations between the
parties
and the agreements reached regarding your clients agreed levy
liability and requests for a commensurate cessation of access.’
The first respondent's
attorneys were invited to obtain the correct information from the
first respondent and it was alleged that:
‘
.
. . [Y]our clients have chosen to (again) renege on their own
undertaking and requests.’
[12] Ms Du Toit, the
resort manager of the appellant, stated in a confirmatory affidavit
that after this agreement was reached:
‘
Many
of the members of the first applicant [Windsor Heights] and their
children continued to make use of the facilities of the respondent.
They still do so today. I was, therefore, surprised when the
respondent [Mount Amanzi] was served with the papers in these
proceedings
claiming interdictory relief to compel the respondent to
make available to the members of the first applicant all of its
facilities
. . .’.
These allegations were
simply ignored but not denied by the respondents.
[13] In addition Ms Du
Toit stated that:
‘
Subsequent
to the meeting of 10 February 2014 I instructed the staff of the
respondent [Mount Amanzi] to implement the rules
imposed by
agreement at the meeting . . . Application of the twelve rules by the
staff of the respondent [Mount Amanzi] gave rise
to uncouth behaviour
by some of the members of the first applicant [Windsor Heights]. It
soon became evident that some of the members
of the first applicant
[Windsor Heights] insisted on making use of the facilities of the
respondents and others not. Those who
preferred to make use of the
facilities of the respondent ignored the agreement reached by the
first applicant and the respondent
at the meeting of 10 February 2014
and ignored the twelve rules referred to above.’
The
respondents denied these allegations and maintained that the
instructions that were given by the appellant to its staff to deny
access to these facilities, were given without confirmation by the
first respondent that the contents of the memorandum were accurate.
It was alleged that because the contents of the memorandum were not
considered accurate, it was not presented to the owners who
were
unaware of the alleged agreement. The respondents asserted that the
owners were not in favour of relinquishing use of the
facilities of
the appellant, in order to settle the levy dispute.
[14]
The letter from the first respondent’s erstwhile attorneys,
Messrs Theron & Henning (the existence and content of
which was
admitted by the respondents), in which it was acknowledged that the
residents and guests of the first respondent would
not utilise the
recreational facilities of the appellant, until such time as the
‘impasse’ concerning the increased
levies was resolved
between the parties, contradicts this assertion. It is therefore
difficult to see how the contents of the memorandum
on this important
issue, could not be considered accurate by the respondents. The first
respondent’s attorney, Ms Elsa Kruger,
in demanding the
immediate restoration of the use and enjoyment of the appellant's
recreational facilities, despite the prior acknowledgement
by her
predecessor of the agreement, could only have been done on the basis
of new instructions from the respondents that the agreement
had not
been concluded. It was not alleged that the subcommittee of the first
respondent with whom the appellant alleged it had
concluded the
agreement, lacked the necessary authority to do so without the
approval of the owners.
[15]
Any temporary denial by the appellant of the respondents’
access to its recreational facilities was justified in terms
of this
agreement. In any event it is quite clear in the light of Ms Du
Toit’s uncontested evidence, that any denial of access
was
temporary and had not been implemented for some time when the
respondents launched the application. On a conspectus of the
evidence
it is clear that the respondents failed to establish, that they were
spoliated by a denial of access to the appellant's
recreational
facilities.
[16]
I turn to consider the respondents’ allegation that residents
of Windsor Heights and their guests’ access to the
respondents’
property, via the entrance gate to the appellant's property was
restricted, and that they were accordingly spoliated.
It is clear
that even on the respondents’ version of events access via the
entrance gate was ‘not necessarily completely
restricted but
made inconvenient and difficult, especially for guests and
contractors . . .’ of the respondents. The nature
and degree of
the restriction on access complained of was the result of reasonable
security arrangements imposed by the appellant
at the access gate to
its property. This the appellant was clearly entitled to do. That the
respondents dispute the efficacy of
these arrangements and complain
that they render access to their property difficult and inconvenient,
does not on the evidence
justify a claim that they were spoliated.
[17] In this regard the
court a quo concluded that:
‘
In
casu, it is common cause that the applicants [respondents] had access
to the respondent's [appellant’s] property and facilities.
It
is also common cause that respondent [appellant] has since raised its
levies and thereby restricted the aforesaid access subject
to payment
of the increased levies. It is common cause that there is a dispute
between the parties in respect of the increased
levies. Absent an
agreement between the parties, the implementation of the levies is,
in my view, tantamount to despoiling the
applicant's right to access
to the facilities.’
The
finding that it was common cause that the appellant had raised the
levies and restricted the respondents’ access to the
appellant's property subject to payment of the increased levies, was
a material misdirection by the court a quo. The alleged denial
of
access to the appellant’s recreational facilities, as well as
the respondents’ property was the central issue. As
a
consequence of this misdirection the court a quo failed to properly
consider the evidence and decide whether the respondents
had
established that the appellant had denied the respondents’
access to the appellant's recreational facilities and the
respondents’ property. The allegation by the respondents that
the appellant’s motivation was to coerce payment of the
levies
without a court order, was irrelevant to this primary enquiry.
[18]
It is clear that at the time the respondents launched the spoliation
application, access to the respondents’ recreational
facilities, as well as the respondents’ property, had not been
prevented by the appellant. The respondents accordingly failed
to
prove that the right to use the appellant's property by way of access
to the appellant's recreational facilities, as well as
access to
Windsor Heights, via the right of way as provided for in the
servitude, was denied by the appellant. The court a quo
accordingly
erred in concluding that the implementation of the levies was
tantamount to despoiling the respondents of their right
of access to
the recreational facilities of the appellant.
[19]
The court a quo also granted an order directing the appellant to
grant the respondents full access to the appellant's recreational
facilities, pending the final determination of the dispute concerning
the levies. An interdict was also granted restraining the
appellant
from interfering with, or in any way limiting the use and enjoyment
of these facilities by the respondents, as well as
their access to
Windsor Heights. The appellant was also interdicted from interfering
with, or interrupting the respondents’
water supply, as well as
any other services provided to the respondents by the appellant.
[20]
It is trite that in order to obtain the interdictory relief granted
by the court a quo, the respondents had to establish a
well-grounded
apprehension of irreparable harm if the interim relief was not
granted, pending a resolution of the dispute. The
evidence
established that the respondents were not despoiled of their rights
of access to the recreational facilities of the appellant
and their
property, and also established the absence of a well-grounded
apprehension that the appellant would deny these rights
to the
respondents, in the future. The uncontested evidence of Ms Du Toit
was that the occupants of Windsor Heights and their children
continued to make use of the appellant's recreational facilities at
the time the application was launched. The respondents also
conceded
that although access via the appellant’s entry gate was not
completely restricted, it was made inconvenient and
difficult. This
was the result of reasonable security arrangements imposed by the
appellant.
[21]
Respondents’ counsel submitted by reference to the ‘twelve
rules,’ referred to above and mentioned in the
affidavit of Ms
Du Toit, that the threat of their enforcement by the appellant
established a well-grounded apprehension on the
part of the
respondents that they would be denied access to Windsor Heights.
Although the respondents denied they had agreed to
these rules, it is
quite clear their objective was to enhance the security of both
estates and they would have had no impact upon
the respondents’
access to their property.
[22]
The court a quo should not have granted an interdict restraining the
appellant from interrupting the respondents’ water
supply. In a
letter dated 8 May 2014, written by the appellant's resort manager,
it was stated that a failure to pay the outstanding
amount of
R4635.90 owed by the respondents for water supplied by the appellant,
would result in a limitation to the supply. This
amount was paid by
the respondents on the following day. No further threats were made by
the appellant to reduce or terminate the
water supply to the
respondents. Accordingly, at the time the application was launched by
the respondents, nine months later during
February 2015, they could
not reasonably have apprehended that the appellant would interfere
with the supply. No evidence was furnished
by the respondents to
establish any apprehension on their part that other services supplied
by the appellant, would be interfered
with. The court a quo
accordingly erred in granting any of the relief sought by the
respondents.
[23]
I turn to consider the appellant's counter application and whether
the appellant validly determined the levies payable by the
respondents. The court a quo did not deal with the merits of this
issue, finding that an irresoluble dispute of fact arose on the
papers. It was disinclined to refer this issue for the hearing of
oral evidence and dismissed the counter application with costs.
[24]
The respondents challenged the validity of the appellant’s
determination of the levies on two grounds:
(a)
The respondents alleged that at a meeting of the representatives of
the first respondent and the appellant, held on the 23 February
2011,
a compromise was reached between the parties in respect of the levy
dispute. This precluded any subsequent variation of the
levies by the
appellant, otherwise than in accordance with the compromise and;
(b)
The appellant, in determining the levy payable by the respondents,
failed to exercise its discretion
arbitrio boni viri,
being
the requirement when a discretionary power to fix performance is
exercised.
[25] The respondents rely
upon the minutes of a meeting held on the 23 February 2011, between
representatives of the appellant and
the respondents, for their
contention that the levy dispute was compromised. The relevant
portion reads as follows:
‘
Decision
It
was agreed that the levy increase for March 2011 (R 2234.44) will be
effective until September 2011, when from then onwards a
yearly
increase will be effective every September at the same rate as MA
[Mount Amanzi] shareholders. WH [Windsor Heights] trustees
will
correspond with their managing agent, Pro Admin, for a quote on the
legal document.’
[26] The appellant denies
that any compromise was reached and relies on the preceding passage
where a request by the respondents
for a formal legal document, was
couched in the following terms:
‘
It
was requested that a legal addendum be made to the contract on the
levy clause to secure stability in the future.’
Seen in context, the only
contract between the parties containing a ‘levy clause’
was the notarial deed, which the respondents
wished to alter by way
of a ‘legal addendum.’ The later reference to a quote
being obtained in respect of ‘the
legal document’, was
clearly a reference to the so-called ‘legal addendum’ to
the notarial deed. Consistent with
this understanding are the
contents of a letter to the first respondent, dated 18 April 2014:
‘
We
wish to again place on record that the Notarial rights registered
against the respective properties are still intact in that
same can
only be amended by the registration of a bilateral notarial deed.
Your
contention that the decision taken at the Windsor Heights meeting
held on 23 February 2010 and approved by your Mr Gideon Jacobs
on 14
April 2011 overrides the Notarial rights is therefore factually and
legally incorrect.’
[27]
According to the appellant, the first respondent’s request
that there be an annual increase in the levies at a fixed
percentage
rate, was not acceptable. Even if the appellant had been agreeable,
both parties appreciated that for the agreement
to be valid and
enforceable the notarial deed would require amendment by a ‘legal
addendum.’ The discretion vested
in the appellant to vary the
levies annually, would have to be replaced by an automatic annual
increase in the levies, at a fixed
percentage rate.
[28]
The respondents argue that although the agreement was not recorded in
a ‘so-called legal document’, a compromise
was reached.
This agreement (compromise) did not amount to an amendment of the
notarial deed. However, a removal of the appellant's
discretion to
vary the levies annually, would constitute an impermissible variation
of the provisions of the notarial deed. The
appellant was accordingly
not precluded from thereafter determining the levies payable by the
respondents, in the exercise of its
discretion.
[29]
The respondents allege that the appellant failed to exercise its
discretion
arbitrio boni viri
, in determining the levies
payable by the respondents
.
The discretion conferred upon the
appellant is contained in these core provisions of the notarial deed:
(a)
The use of recreational facilities is referred to in the notarial
deed in category E under the heading
‘
Gebruiksregte
en Fasiliteite’
,
in
the following terms:
‘
E1
Die partye en hul regsopvolgers is verplig om lede, gaste en
verbruikers van elk se onderskeie eiendomme toe te laat om
gesamentlike
fasiliteite geleë in hul eiendomme vrylik te
gebruik.
E2
Die eienaar van die
Dienende eiendom en/of sy regsopvolgers is
verplig om die eienaar van die Heersende Eiendom ’n
akkommoderingsfooi / heffing
jaarliks as teenprestasie hiervoor te
betaal. Hierdie heffing word deur die eienaar van die Heersende
Eiendom in sy eie diskresie
bepaal
.’
(b) The provision of
water and services is referred to in the notarial deed in category B,
under the heading ‘Water- en Dienstevoorsiening’
in the
following terms:
‘
B.1
Die eienaar van die Heersende Eiendom is geregtig om water en dienste
aan die Dienende Eiendom te verskaf. Waar die Eienaar
van die
Heersende Eiendom sy regte uitoefen om water en dienste aan die
Dienende Eiendom te verskaf, is die Dienende Eiendom verplig
om van
sodanige gebruik te maak.’
‘
B.7
Die eienaar van die Heersende Eiendom bepaal die koerse vir betaling
ten opsigte van elke diens gelewer, jaarliks in eie diskresie.
Hooflyn instandhouding en instaleringskostes word by sodanige koerse
ingereken.’
(c) The provision of
water for irrigation is referred to in the notarial deed in category
G, in the following terms:
‘
G.3
Die eienaar van die Dienende Eiendom en/of sy regsopvolgers is
verplig om besproeing vir sy tuin en terrein vanaf die Krokodil
Rivier soos voorsien deur die Heersende Eiendom, te gebruik, en mag
nie water uit die drinkwater reservoir hiervoor aanwend nie,
sonder
die toestemming van die Heersende Eiendom nie.
G.4
Die eienaar van die Heersende Eiendom sal ’n heffing vir
sodanige besproeing gebruik hef, welke heffing jaarliks deur
hom
bepaal sal word.’
[30] The parties were ad
idem that the discretion possessed by the appellant was unfettered
but valid and enforceable, provided
it was exercised
arbitrio bono
viri.
In
NBS Boland Bank Ltd v One Berg River Drive CC
&
others; Deeb & another v Absa Bank Ltd; Friedman v Standard Bank
of SA Ltd
1999 (4) SA 928
(SCA) paras 24, 25 and 30, the
following was stated:
‘
[24]
In sum I am of the view that, save, perhaps, where a party is given
the power to fix his own prestation, or to fix a purchase
price or
rental, a stipulation conferring upon a contractual party the right
to determine a prestation is unobjectionable.
[25]
All this does not mean that an exercise of such a contractual
discretion is necessarily unassailable. It may be voidable at
the
instance of the other party. It is, I think, a rule of our common law
that unless a contractual discretionary power was clearly
intended to
be completely unfettered, an exercise of such a discretion must be
made
arbitrio bono viri
. . .
[30]
One further point should be made. It is conceivable, albeit unlikely,
that a stipulation may be so worded that an absolute
discretion to
fix a prestation is conferred on one of the parties. Here again it is
unnecessary to express a view as to whether
such a stipulation will
be invalid as being in conflict with public policy, or whether the
fixing of the prestation may only be
assailed when it is done in bad
faith.’
[31]
The respondents’ only challenge was that the appellant had
failed to exercise its discretion
arbitrio bono viri
, which
requires a determination of whether it was exercised both reasonably
and honestly. (
Benlou Properties (Pty) Ltd v Vector Graphics
(Pty) Ltd
[1992] ZASCA 158
;
1993 (1) SA 179
(A) at 188A-C,
Absa Bank Ltd v
Lombard
2005 (5) SA 350
(SCA) para 19,
Blake & another v
Cassim & another NNO
[2008] ZASCA 67
;
2008 (5) SA 393
(SCA) para 22
, Indwe
Aviation (Pty) Ltd v Petroleum Oil and Gas Corporation of South
Africa (Pty) Ltd (No1)
2012 (6) SA 96
(WCC) para 28).
[32]
The appellant provides the respondents with the following services,
which form the basis for the appellant’s determination
of the
amounts payable by the respondents, in respect of the disputed
levies:
(a) 24-hour security
services;
(b) Sewerage, rubble and
refuse removal and the supply of water for consumption and
irrigation;
(c) Insurance against
public liability claims;
(d) A salary contribution
for staff who provide, maintain or oversee the services and
facilities provided to the respondents;
(e) Maintenance of
gardens and grounds;
(f) Electricity costs for
the illumination of the common area;
(g) Telephone expenses;
and
(h)
Contribution to the salaries of staff who work at the front office
and reception area.
[33]
Before dealing with the manner in which the appellant calculated the
levies, it is necessary to deal with a preliminary argument
advanced
by counsel for the respondents. This was that the services outlined
above were not referred to in the deed of servitude
and the
respondents were accordingly not obliged to accept their provision by
the appellant, nor pay for them. However, Clause
B1 of the notarial
deed of servitude however provides that the appellant (as owner of
the dominant property) is entitled to provide
water and services
(‘dienste’) to the respondents (as owners of the servient
tenement). Where the appellant exercises
its right to do so, the
respondents are obliged to make use of the services provided by the
appellant. In addition, clause B7 provides
that in respect of every
service provided by the appellant (‘ten opsigte van elke diens
gelewer’) the appellant is
entitled to determine, annually in
its discretion, the amounts to be paid by the respondents for the
services provided. There is
accordingly no basis for this argument.
[34]
The manner in which the appellant calculated the levies payable by
the respondents for these services, were as follows:
(a) Security: The
appellant averred that security was provided 24-hours a day, seven
days a week. This included manning the entrance
and exit gate, as
well as a full-time security patrol and an electrified security fence
around the perimeter of the entire property,
which included the
respondents’ property. The security service was contracted out
by the appellant and an amount of R1 049
836.00 had been budgeted for
the 2014/15 financial year which ran from 1 October 2014 to 30
September 2015. The first respondent
denied these averments and
maintained that it did not rely on the appellant's security. No
details were however furnished by the
respondents of the security
that they had arranged to protect the residents and properties on
Windsor Heights. This is of particular
relevance in the context of
clause D4 of the deed of servitude:
‘
Die
partye is elkeen aanspreeklik vir sy eie sekuriteitsdienste.’
If
the respondents had assumed responsibility for their own security
services and did not rely on the appellant's security, full
details
should have been supplied to justify their refusal to contribute to
this expense. In addition, because there is a single
gate situated on
the boundary of the appellant's property, which serves as the entry
to and exit from both properties, the appellant
is entitled to impose
security measures at the gate to protect its residents. Although the
respondents dispute the efficacy and
reasonableness of the security
measures imposed by the appellant at the gate, they obviously benefit
the respondents. No details
are furnished by the respondents of any
security arrangements provided by them at the gate. The respondents
are accordingly obliged
to contribute to these expenses.
(b)
The treatment of sewerage, removal of refuse and rubble and the
supply of water for human consumption and irrigation: The appellant
states that an amount of R702 200.00 was budgeted for the
sorting of wastewater and its purification. This water is used for
irrigation purposes and the appellant provides and charges the first
respondent with water pumped from the Crocodile River for
irrigation.
The tariff utilised in the annual budget for 2014/2015 is alleged to
be on a par with the municipal sliding scale tariff
for water of this
nature. The budgeted figure includes provision for repairs,
maintenance and replacement of the infrastructure
over a period of
time, as well as the costs relating to the purification of the water.
By reference to a municipal account tariff
schedule, R6.67 is levied
per kiloliter of water used. All drinking water which is sourced from
boreholes on the respondent's property,
is analysed and tested by a
laboratory accredited by the local authority. A certificate of
analysis of the tested water, is issued
on a monthly basis. The
respondents’ reply is that the first respondent pays for the
sewerage, refuse removal and water per
meter reading, but does not
know exactly how much the appellant is paying for the water. From the
invoices supplied, the first
respondent maintains that it is paying
the appellant R6.67 per kiloliter of water. Although the respondents
are paying for the
water supplied to them at the applicable rate,
this payment makes no allowance for repairs, maintenance and
replacement of the
infrastructure needed to supply the water. The
costs of testing the drinking water and purifying the water, is also
not covered
by the tariff rate.
(c) Insurance for public
liability: The appellant states that due to the nature of the resort
and its use by members of the public,
including the occupants of
Windsor Heights and their guests, it is obliged to have adequate
insurance cover against claims arising
from incidents which may occur
on the appellant's property, as well as the respondent's property.
The annual premium of R59 132.00
for cover of R50 million,
is a shared cost included in the levy calculations. The respondents
deny these averments and maintain
that the first respondent is
indemnified in this regard by Clause A.3.3 of the notarial deed,
which provides as follows:
‘
[D]
Die eienaar van die Dienende Eiendom vrywaar die eienaar van die
Heersende Eiendom, sy regverkrygendes en/of sy regsopvolgers
uitdruklik van enige aanspreeklikheid vir skade van watter aard ookal
wat derdes mag ly as gevolg van die gebruik van die pad deur
hulself
of deur andere, of as gevolg van die toestand of aard van die pad.’
As
pointed out by the appellant, this indemnity relates only to the use
of the road which forms the right of way. The public liability
insurance covers more than a liability arising from the use of the
road.
(d)
Contribution to salaries for staff who are employed to provide,
maintain or oversee the services and facilities offered to the
respondents: The appellant states that certain members of staff are
assigned specific tasks relating to the provision of these
services.
These costs total a budgeted amount of R2 190 974.00, which according
to the appellant, have to be shared on an equitable
basis by the
recipients of these services. The respondents deny these averments.
(e) Maintenance of
gardens and grounds: The appellant states that due to the layout of
the resort and general open access to all
common areas by the
residents of the resort, including the residents of Windsor Heights,
these areas need to be constantly maintained.
This is a general cost
to be shared by all who have access to the gardens and grounds. The
budgeted costs for the service are R483
893.00 per annum which is
allocated to each unit/house on a pro rata basis. The respondents
deny these allegations in reliance
upon Clause C.1 of the notarial
deed which provides as follows:
‘
Die
partye kom ooreen dat elkeen verantwoordelik is vir die
instandhouding van gemeenskaplike areas geleë op hulle
onderskeie
eiendomme.’
The
appellant however points out that the levies do not include a charge
for the maintenance of the respondents’ common property,
nor
any charge for the maintenance of the appellant's common property.
(f)
Electricity for the illumination of the common area: The appellant
justifies this item on the basis that all persons have access
to the
common area after dark. Lighting is essential to ensure effective
patrolling of these areas and the safety of residents.
The budgeted
annual cost of R941 047.00 is 30 per cent of the total annual
electricity budget of R5 087 300.00. The respondents
deny these
allegations.
(g)
Telephone Expenses: The appellant avers that the first respondent
requires the appellant to contact its members telephonically,
before
allowing third parties access to any house in Windsor Heights. The
respondents deny these averments and maintain that they
did not
request access control in respect of the resort, which was done at
the instance of the appellant. However the minutes of
a meeting held
between representatives of Mount Amanzi and Windsor Heights on 3 June
2010 record that ‘All visitors report
to MA reception to get a
day pass and the residents are contacted and supposed to fetch their
guest at the gate . . .’. In
addition the minutes of the
meeting held on 23 February 2011(referred to above), record that ‘A
WH log book will be kept
at reception for a record of visitors to WH
as well as cell phone confirmations by the resident . . .’. A
copy of these minutes
was attached to the respondents’ founding
affidavit in support of the respondents’ contention that a
compromise had
been reached with regard to the calculation of the
levies. No allegation was made that the minutes were incorrect in
this respect.
They recorded clearly that this arrangement existed and
was in place for some time. The total budgeted cost is the amount of
R272
346.00 per annum.
(h)
Contribution to the salaries of staff at the front office and
reception area: The appellant states that this expense relates
to the
clearance of guests wishing to gain access to Windsor Heights, the
completion of access indemnity forms, the issuing of
access discs and
liaison with the security service provider. A total amount of
R642 071.00 is budgeted for this item. The
respondents deny
these allegations and again rely upon Clause A.3.3 of the notarial
deed which they allege provides an indemnity
in this regard. However,
this indemnity only relates to the use of the road forming the right
of way.
[35]
The appellant calculates the budget expenses and the levy per house
on the following basis. There are 166 units/chalets on
the
appellant's property. Windsor Heights has 14 residential units and
four unbuilt stands on the respondent's property, all of
which
benefit from the services provided by the appellant. A residential
guesthouse unit known as Golden Pond having three residential
units,
together with a private whole ownership house, are also situated on
the respondents’ property. The total residential
units on the
properties of the appellant and the respondents numbers 184.
[36]
The appellant has allocated the expenses relating to the
services supplied, on the basis of the total number of houses
situated respectively on the properties of the appellant and the
respondents, as a percentage of the total number of houses on
both
properties. On this basis the appellant's share of the expenses is
90.2 per cent, being 166 houses out of the total number
of 184
houses. The first respondent’s share of the expenses is 7.6 per
cent, being 14 houses out of this total number. On
this basis Golden
Ponds share is 1.6 per cent, and the share of the private sole
ownership house is 0.5 per cent.
[37] The total
amount budgeted by the appellant for the financial year commencing on
1 October 2014 to 30 September 2015
in respect of the items set out
above, was R6 341 499.00. The amounts allocated to the respondents in
respect of each of the above
items, based upon a 7.6 per cent share
of the budgeted expenses, were as follows:
•
Security
– total budgeted expense R1 049 836 – 7.6 per cent
share – R79 879.
•
Sewerage,
removal of refuse and rubble and supply of water – total
budgeted expense R702 200 – 7.6 per cent share
– R53
428.
•
Public
liability insurance – total budgeted expense – R59 132
– 7.6 per cent share – R4 499.
•
Contribution
to salaries for staff providing services – total budgeted
expense – R2 190 974 – 7.6 per
cent share –
R166 705.
•
Maintenance
of gardens and grounds – total budgeted expense –
R483 893 – 7.6 per cent share – R36 818.
•
Electricity
for the illumination of the common area – total budgeted
expense – R941 047 – 7.6 per cent share
– R71
601.
•
Telephone
expenses – total budgeted expense – R272 346 –
7.6 per cent share – R20 722.
•
Contribution
to salaries for staff at the front office and reception area –
total budgeted expense – R642 071 –
7.6 per cent
share – R48 853.
[38]
The respondents’ 7.6 per cent share of the total budgeted
expenses of R6 341 499.00 for 2014, in respect of
these
items was R 482 505.00 for the year. In order to calculate the annual
contribution of each of the houses on Windsor Heights,
this amount
was divided by 14, to produce an annual contribution for each of the
houses of R34 464.64. In order to determine the
monthly contribution
of each of the houses on Windsor Heights this amount was divided by
12, yielding a monthly levy of R2872.05.
The total monthly levy
payable by the respondents for 2014 was accordingly R40 208.75 (R482
505.00 ÷ 12).
[1]
[39] The
respondents deny the averments made by the appellant regarding the
budgeted expenses for each of the items set out
above, as well as the
apportionment of these expenses to each of the houses on Windsor
Heights. Accordingly, it has to be determined
whether the court a quo
was correct in deciding that a resolution of this issue was precluded
by an irresoluble dispute of fact
on the papers. As pointed out by
this court in
Wightman t/a JW Construction v Headfour (Pty) Ltd &
another
[2008] ZASCA 6
;
2008 (3) SA 371
(SCA) para 13:
‘
A
real, genuine and bona fide dispute of fact can exist only where the
court is satisfied that the party who purports to raise the
dispute
has in his affidavit seriously and unambiguously addressed the fact
said to be disputed. There will of course be instances
where bare
denial meets the requirement because there is no other way open to
the disputing party and nothing more can therefore
be expected of
him. But even that may not be sufficient if the fact averred lies
purely within the knowledge of the averring party
and no basis is
laid for disputing the veracity or accuracy of the averment.’
[40]
The respondents submit that they do not have knowledge relating to
the de facto expenses incurred by the appellant. It is alleged
that
these facts lie exclusively within the knowledge of the appellant and
cannot be tested in application proceedings. The respondents
can only
attack the basis upon which the calculation was done, by denying the
de facto expenses claimed by the appellant. The respondents
allege
that they do not have a version in respect of the de facto expenses.
Insofar as the appellant endeavours to impose a levy
on the
respondents, the respondents are prejudiced as they are not in a
position to test the veracity of the allegations by, inter
alia,
obtaining discovery of source documents or cross-examining the
appellant's witnesses.
[41]
Central to the respondents’ contentions is an allegation that
they lack knowledge of the appellant's de facto expenses.
The
validity of this assertion requires an examination of the interaction
between the parties, before the appellant increased the
levies. It is
common cause that it has always been the practice to convene meetings
between the appellant and the respondents to
discuss matters of
mutual interest, including the determination of the levies payable by
the appellant. These meetings took place
regularly from 2009 to 2013.
During April 2013, 18 months before the budgeted levies were imposed,
a meeting was arranged between
the appellant and the first
respondent's trustees. At this meeting the first respondent's
representatives were informed that the
levies would be reviewed and
increased to reflect the actual expenses incurred by the appellant,
in respect of the respondents’
properties. The respondents
state that although they were informed that the levies were to be
reviewed and increased, no specific
figures were mentioned in
relation to what the respondents describe as ‘an exorbitant
increase’.
[42] A second meeting
took place on 30 September 2013 at which representatives of the first
respondent were present. The appellant
annexed to its affidavit a
transcript of what was discussed at the meeting. It is clear that a
detailed discussion took place between
the parties which included
reasons for the increase in the levies as well as the basis for their
calculation. This is confirmed
by the minutes of this meeting relied
upon by the respondents, in which the following is recorded:
‘
4.2
PROPOSED ADDITIONAL CONTRIBUTION TO MOUNT AMANZI AS PER THEIR BUDGET,
FOR THE SCHEME AS A WHOLE
4.2.1
It was discussed at some length why the scheme [Windsor Heights] has
to date contributed a nominal amount per month for utilising
the
amenities of the resort.
4.2.2
It would appear as if the basis of that annual contribution payable
on a monthly basis, was totally incorrect and has now
been revised.
4.2.3
The result is that Windsor Heights is expected to contribute about 7%
(their estimate) of the total expenditure of the resort.
As long as
the substantial increase (which was calculated as far as the increase
is concerned as per the agreement of 23 February
2011) is payable
with effect from the 1
st
October 2013, Mount Amanzi will
not implement the reasonable contributions retrospectively.
4.2.4
The contribution is only for items of common interest to the parties,
like roads, security etc. See copy of the budget attached.
4.2.5
John Meyer confirmed that they are even prepared to assist the scheme
in the payment of the substantial amounts by allowing
a reduced
amount initially, on condition that the full amount be paid at the
end of the financial year.’
Attached
to the minutes is a document entitled ‘Mount Amanzi Share Block
Budget Allocation for 2013’, containing the
same items as set
out in the appellant's budget for 2014 referred to above, save for
the item ‘sewerage and rubble removal’
which is replaced
by the item ‘repairs and maintenance amenities’.
The budgeted amounts in respect of each of
these items are set out,
as well as the 8 per cent contribution required at that stage, from
Windsor Heights.
[43] It is common cause
that this meeting was followed by a power point presentation by the
appellant on 10 February 2014, to which
the first respondent's
members and trustees were invited. The presentation was well attended
and annexed to the appellant's affidavit
are printed copies of the
slides utilised at this presentation. Details of the items in respect
of which the respondents were obliged
to contribute, as well as the
levies payable in respect of each item and their apportionment to
individual owners, were clearly
set out. This presentation was
followed by a written memorandum dated 12 March 2014, referred to
above, which was sent by the appellant
to the first respondent. For
present purposes the relevant portion of the memorandum reads as
follows:
‘
It
is common cause that the servitude is explicit in defining access as
well as defining the charges that the Share Block may levy
in respect
of the use of its facilities/services and amenities. Against this
background and by approaching the matter on the basis
of zero based
expenditure budget, the Board revised the contribution payable by the
Body Corporate to bring it in line with the
actual costs of
performing the services or offering the use of the facilities.’
The
response of the respondents was that they received the memorandum,
but did not agree with its contents.
[44]
The appellant took considerable care to inform the respondents of the
need for an increase in the levies and the manner in
which they were
to be calculated. The apportionment of the appellant's expenses to
the respondents was clearly explained. Counsel
for the respondents
was unable to refer to any instance where the respondents had
requested further information from the appellant,
relating to the
calculation of the increased levies. The evidence reveals an obdurate
refusal by the respondents to engage in meaningful
dialogue with the
appellant, to resolve the impasse which had arisen. Instead, reliance
was placed upon a so-called ‘compromise’
allegedly
concluded between the parties, which removed the appellant's
discretion to increase the levies. Even if concluded, such
an
agreement was clearly unenforceable.
[45]
The respondents were furnished with details of the appellant's de
facto expenses but chose not to request any details of their
composition. Seen in this context, although it may be said that this
information lay peculiarly within the knowledge of the appellant,
no
basis was laid by the respondents for disputing the veracity, or
accuracy of the expenses of the appellant. The manner in which
these
expenses were apportioned to the individual owners of property in
Windsor Heights was clearly explained.
[46]
The only ground upon which the respondents contended that the
appellant exercised its discretion unreasonably, was that the
increase in the levies from R357.81 to R2872.05 per house on the
respondents’ property, was ‘exorbitant’. The
minutes of the meeting on 30 September 2013 relied upon by the
respondents, however recorded that, the respondents had ‘to
date contributed a nominal amount per month for utilising the
amenities of the resort’ and that ‘the basis of that
annual contribution payable on a monthly basis, was totally incorrect
and has now been revised.’ When regard is had to the
nature and
extent of the services supplied and amenities provided by the
appellant, the respondents’ contribution to the
expenses of the
appellant, has been woefully inadequate. In the absence of any other
basis upon which the respondents may have
contended that the
appellant’s expenses, or their apportionment to the respondents
was unreasonable or dishonest, a bare
denial of their determination
by the appellant, was insufficient to raise a real, genuine and bona
fide dispute of fact. The court
a quo accordingly erred in dismissing
the appellant's counter application for this reason.
[47]
The evidence of the appellant detailing how the increase in levies
was calculated and apportioned to the respondents, establishes
that
the appellant exercised its discretion
arbitrio boni viri
,
namely both reasonably and honestly. The levies determined by the
appellant are accordingly valid and enforceable.
[48]
No argument was advanced by the respondents in support of a
submission in the respondent's heads of argument, that the principle
of passivity in the law of servitude, meant that the respondents were
not obliged to pay for any services rendered by the appellant.
The
argument is spurious. The services that the appellant elects to
supply to the respondents and which they are bound to accept
in terms
of the deed of servitude, includes the reciprocal obligation to make
payment for these services, in an amount to be determined
by the
appellant, in the exercise of its discretion.
[49] The following order
is therefore made:
(1) The appeal succeeds
with costs.
(2) The order of the
court a quo is set aside.
(3) The following order
is granted in respect of the main application;
‘
The
application is dismissed with costs’
(4) The following order
is granted in respect of the counter application;
‘
(a)
It is declared that the first applicant, the Body Corporate of
Windsor Heights Sectional Title Scheme, is liable to the respondent
Mount Amanzi Share Block Ltd, for levies budgeted by the respondent
in its 2014 budget, in terms of Notarial Deed of Servitude
No
K8235/1996, calculated as 7.6% of the total budgeted expenses of the
respondent for 2014, in respect of the following services;
(i) Security services.
(ii) Sewerage, removal of
refuse and rubble and supply of water.
(iii) Public liability
insurance.
(iv) Contribution to
salaries for staff providing services.
(v) Maintenance of
gardens and grounds.
(vi) Electricity for the
illumination of the common area.
(vii) Telephone expenses.
(viii) Contribution to
salaries for staff at the front office and reception.
(b) The first applicant
is ordered to make payment of the sum of R40 208.75 per month to the
respondent, for a period of 12 months
commencing on 1 October 2014,
being the applicants’ total monthly share of the respondent’s
budgeted expenses for 2014.
(c) The first applicant
is ordered to make payment of interest on each of the monthly
payments from the day of the month in which
each payment fell due, at
the statutory prescribed rate of interest, to date of payment.
(d) The applicants are
ordered to pay the respondent's costs jointly and severally, the one
paying the other to be absolved.’
_________________________
K
G B Swain
Judge
of Appeal
APPEARANCES:
For Appellant: H F Jacobs
SC
Instructed by: MacRobert
Incorporated, Pretoria
Claude
Reid Incorporated, Bloemfontein
For Respondent: D
Prinsloo
Instructed by: Elsa
Kruger Attorneys, Centurion
Webbers, Bloemfontein
[1]
Counsel
for the appellant submitted that the amount of R40 280.00, claimed
in para 2 of the notice of motion in the counter application,
being
the total monthly levy payable by the respondents, was produced by
dividing the amount of R482 505.00 (being the total
annual levy
payable) by 12. This submission is incorrect. The calculation
produces an amount of R40 208.75 which will be reflected
in the
order.