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[2021] ZAKZPHC 97
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Ellis v Trustees of Palm Grove Body Corporate and Others (2293/2020P) [2021] ZAKZPHC 97; 2023 (4) SA 608 (KZP) (7 December 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
Case
No: 2293/2020P
In
the matter between:
JAN
CHRISTIAAN ELLIS
APPLICANT
And
TRUSTEES OF PALM GROVE
BODY
CORPORATE
FIRST RESPONDENT
COMMUNITY SCHEMES
OMBUD
SERVICE
SECOND RESPONDENT
S PATHER
N.O
THIRD RESPONDENT
ORDER
(a)
the applicant’s appeal in terms of s
57 of the CSOS Act is upheld;
(b)
the third respondent’s award made on
2 September 2019 is set aside;
(c)
the first respondent is ordered to pay the
applicant’s costs on the scale of an opposed motion;
(d)
until such time as a practice directive is in place, the procedure to
be followed in this division
in appeals brought in terms of s 57 of
the CSOS Act will be as stated in paragraphs 10 and 11 of this
judgment.
JUDGMENT
Delivered on ………………………...
Poyo
Dlwati J
[1]
The issue in this matter is whether the adjudicator, the third
respondent, erred on a point of
law when determining the first
respondent’s complaint against the applicant resulting in the
award that she issued. Put differently,
was her award in accordance
with s 39 of the Community Schemes Ombud Service Act 9 of 2011
(the CSOS Act). This court also
has to determine a procedure to be
followed in this Division pertaining to appeals brought in terms of
s 57 of the CSOS Act.
[2]
During 2017, the applicant was the chairperson of the first
respondent. He was removed from that
position during 2018.
Thereafter, on 8 June 2018, the Trustees of the first respondent
referred a dispute for adjudication to the
Community Schemes Ombud
Service (the second respondent) in terms of s 39 of the CSOS
Act. The second respondent appointed
the third respondent to
adjudicate the dispute. Subsequent to the third respondent’s
adjudication, she made the following
award:
‘
(a)
the respondent, Mr Jannie Christiaan Ellis is found to have acted in
breach of his fiduciary relationship
with the body corporate in
respect of the “new” CCTV installation and the contract
awarded to Chrissonia, as outlined
above;
(b)
As a consequence, the body corporate suffered damages in the amount
of One Hundred and Seventy
Two Thousand Two Hundred and Thirty Five
Rand (R176 235.00) for which he is liable;
(c)
the said sum of R176 235.00 must be paid to the body corporate within
thirty (30) days of the
date of receipt by all parties, of this
order;
(d)
Alternatively, the parties may consent to the completion by
Chrissonia, of the contract for which
it was paid, within thirty days
(30) of the date of receipt by all parties, of this order. If the
parties consent to the alternative
in respect of the Chrissonia
contract, the amount of R159 345.00 must be deducted from the total
amount payable in terms of paragraph
24.3 above, the balance being
R16890.00 to be paid as directed in paragraph 24.3; and
(e)
if no consensus is reached in respect of completion of Chrissonia
contract, the sum specified
in paragraph 24.3 remains due and payable
as directed therein.’
[3]
The applicant, aggrieved by the decision of the third respondent,
exercised his right in terms of s
57(1) of the CSOS Act
[1]
and launched an application in this court and sought an order to set
aside the third respondent’s award. He also sought an
order for
costs against any party opposing the relief sought and that such
costs be costs of the appeal/application. The parties
exchanged
affidavits and the matter was set down as an opposed application
before Seegobin J.
[4]
On 12 March 2021, Seegobin J made the following order:
‘
1.
The late noting and prosecuting of this appeal against the
adjudication order granted by
the third respondent dated 8 September
2019 be and is hereby condoned;
2.
The second and third respondents are directed to deliver a report or
affidavit explaining
whether the third respondent had the requisite
authority to determine the dispute lodged by the first respondent
against the appellant
with the second respondent under case number
C505001803/KZN/18 on or before 5 April 2021.
3.
The application/appeal be and is hereby adjourned sine die to be
enrolled before a full bench
for purposes of determining practice
directives in relation to the procedure to be followed in this
division pertaining to appeals
brought in terms of s 57 of the
Community Schemes Ombud Service Act 2011 (CSOS) and more specifically
whether;
(a)
such appeal be heard before more than one judge; and
(b)
whether appeals in terms of s 57 of CSOS shall be brought
on
notice of motion or in accordance with the provisions of rule 50 of
the Uniform Rules of Court.
4.
Costs in the cause.’
[5]
This matter served before us in terms of that order. Perhaps as a
starting point it is worth noting
that the second respondent issued a
practice directive in 2019 about a process to be followed in lodging
the appeals.
[2]
The directive
seems to be the procedure followed in all the provinces subsequent to
a decision of the Western Cape High Court.
I do not intend to say
much on this practice directive as we deem it not to be binding on
this court other than that we regard
it as a mere directive by the
second respondent on what those intending to lodge such appeals
should do. Indeed, and during argument
on this issue, we were
referred to three matters, where different procedures seemed to have
been followed by the various divisions
of the high court. One matter
is from Gauteng and two from the Western Cape. The first is
Trustees,
Avenues Body Corporate v Shmaryahu and another
,
[3]
the second is
Stenersen
and Tulleken Administration CC v Linton Park Body Corporate and
another
[4]
and the last is
Kingshaven
Homeowners’ Association v Botha and others
.
[5]
[6]
The Western Cape High Court in
Shmaryahu
,
[6]
considered the procedure to be followed in prosecuting an appeal in
terms of s 57 of the CSOS Act. It held that:
‘
[25]
. . . An appeal in terms of s 57 is not a “civil appeal”
within the meaning of the
Superior Courts Act 10 of 2013
. What may be
sought in terms of
s 57
is an order from this court setting aside a
decision by a statutory functionary on the narrow ground that it was
founded on an
error of law. The relief available in terms of
s 57
is
closely analogous to that which might be sought on judicial review.
The appeal is accordingly one that is most comfortably niched
within
the third category of appeals identified in
Tikly and Others v
Johannes NO and Others
1963 (2) SA 588
(T) at 590 –
591.
[26]
The proper manner in which such an appeal should be brought in the
circumstances is upon notice of motion
supported by affidavit(s),
which should be served on the respondent parties by the sheriff. It
would also have been indicated for
the adjudicator, and not just the
Service, to have been cited as a respondent. While the adjudicator
might be expected in the ordinary
course to abide the judgment of the
court, there will be cases in which the adjudicator might
nevertheless consider that it might
be helpful to file a report for
the court in respect of any aspect of fact or law not dealt with in
his or her statement of reasons
that might have assumed significance
in the context of the nature of a particular challenge advanced on
appeal . . .’.
[7]
In
Stenersen
,
[7]
the court noted and observed that in that division (Gauteng), a
practice had developed whereby appellants had successfully dealt
with
the matter by delivering the notice of appeal and followed the
procedures set out in the Uniform Rules of Court for noting
an
appeal. It held that:
‘
The determination
of the questions of fact is exclusively afforded to the adjudicator
who conducts the proceedings inquisitorially
and has powers to
investigate, examine documents and persons, and to conduct
inspections. For this reason, an appeal court should
adopt a
deferential attitude to the determination of the adjudicator on
questions of fact.’
[8]
It
then concluded by holding that ‘[for] or this reason, we also
deem it sufficient for the appeal to be brought by way of
a notice of
appeal, which sets out the grounds of appeal, as opposed to being
brought by way of a notice of motion supported by
affidavit(s)’.
[9]
It differed from
Shmaryahu
as it
believed that the appeal in s 57 was an appeal in the ordinary
strict sense. In its opinion, the court was limited to
the record and
the adjudicator’s order and reasons. In such an appeal, the
question for decision was whether the order of
the statutory body
performing a quasi-judicial function was right or wrong on the
material facts, which it had before it.
[8]
In a similar matter, namely
Kingshaven
,
[10]
also from the Western Cape High Court, the applicant brought
proceedings on notice of motion seeking to appeal the decision of
the
adjudicator. Binns-Ward J again held that such appeals ‘being
limited to questions of law, they do not involve a rehearing
of and
fresh determination of the merits (as distinct from just the result),
and they would not allow for the introduction of additional
evidence
or factual information’. He was of the view that ‘[where]
not expressly provided for by the enabling statute,
the appropriate
form for the bringing to court of a statutory appeal is a matter to
be regulated by the courts with an eye to practicality’.
[11]
He further agreed with the view expressed by other judges ‘seized
of appeals limited to questions of law that it can often
be difficult
to distinguish the factual questions from the legal ones in a
case’.
[12]
And further,
that at times it would be difficult to decide a question of law in
isolation from the facts.
[13]
[9]
Motivating for the motion procedure, Binns-Ward J further held
[14]
that the motion procedure had the added advantage that it informs the
respondent parties what they must do if they wish to oppose
the
appeal, and by when they should do so. He pointed out that the
procedure advocated for in
Stenersen
did not offer such directions. He also stated that sometimes, the
decision in question could be subject to an application for judicial
review, alternatively an appeal in terms of s 57, and in such
circumstances dichotomous proceedings would need to be instituted,
even if they would in all probability be heard together.
[10]
In this division,
[15]
although
not concerned with the procedure to be followed in lodging the s 57
appeal, the court did not raise any difficulties
in adopting the
procedure followed and prescribed in
Shmaryahu.
We do not see any reason to depart from this procedure. Binns-Ward J
has demonstrated in his two judgments
[16]
why it is beneficial to adopt the motion procedure. I do not intend
to repeat his reasons but just to add that that procedure would
enhance the CSOS Act’s objective, namely to have such matters
adjudicated and dealt with expeditiously and cost-effectively.
The
facts contained in those affidavits will assist in bringing the point
of law to the fore as it has been acknowledged that at
times it is
difficult to decide a point of law in isolation from the facts.
[11]
In order to curtail costs, there has to be a limit on the length of
the affidavits to be filed. In my view,
the applicant to such an
appeal will have to file a notice of motion to be served on the
respondents so that they may respond if
they wish to within the time
limits provided for in Uniform Rule 6(5). The affidavit accompanying
such a notice should not be longer
than ten (10) pages, so as to curb
the costs, and it must succinctly state the grounds upon which it is
averred that the adjudicator
erred on a point of law together with a
brief background about the facts leading to such a dispute. Should
the respondent wish
to respond, their affidavit(s) also should not be
longer than (ten) 10 pages with the applicant’s replying
affidavit limited
to six (6) pages. Once the affidavits have been
filed, the appeal will follow the practice directives provided for
opposed motions
including the filing of the heads of argument, should
same be opposed. In this way, the appeal will serve before a single
judge
as an unopposed or opposed motion. A practice directive to this
effect will ensure that the matter does not drag out unnecessarily.
[12]
I turn now to deal with the issues raised in this appeal, namely,
whether the award granted by the third
respondent is in accordance
with the relief, which could be granted in terms of s 39 of the
CSOS Act. If one has regard to
the first paragraph of the award,
which reads:
‘
24.1
the respondent, Mr Jannie Christiaan Ellis is found to have acted in
breach of his judiciary relationship with
the body corporate in
respect of the “new” CCTV installation and the contract
awarded to Chrissonia as outlined above’.
In
my view this is more a declarator which the adjudicator has made
after hearing the evidence and I do not have any difficulties
with
it.
[13]
However, what then follows in paragraphs 24.2 to 24.3 is in my view
an award for damages. This is clear in
the first line of paragraph
24.2, which reads:
‘
as
a consequence, the body corporate suffered damages in the amount of
R176 235.00 for which he is liable.’
The
next paragraph orders the appellant to pay such an amount to the
first respondent. However, as correctly argued by Mr Sewpal,
on
behalf of the appellant, such a relief is not provided for in s 39
of the CSOS Act. Mr Randles, on behalf of the first
respondent,
argued that the relief granted by the third respondent is in
accordance with s 39(1)
(e)
of the CSOS Act
[17]
. This,
however, cannot be. As I have alluded to above, the award made, on a
proper interpretation and reading of the whole award
in context, is
akin to an award for damages consequent upon the finding that the
appellant was found to have breached his fiduciary
duties.
[14]
The principles applicable to interpretation of statutes are trite.
The Constitutional Court in
Independent
Institute of Education (Pty) Ltd v KwaZulu- Natal Law Society and
others
[18]
reiterated the principles laid down in
Natal
Joint Municipal Pensions Fund v Endumeni Municipality
[19]
that a contextual and purposive approach must be applied to statutory
interpretation. It held that courts must have due regard
to the
context in which the words appear, even where the words to be
construed are clear and unambigous. In
Department
of Land Affairs v Goedgelegen Tropical Fruits (Pty) Ltd
,
[20]
Moseneke DCJ held that a contextual approach requires that
legislative provisions are interpreted in the light of the text of
the legislation as a whole (internal context). In my view, therefore,
the proper interpretation of s 39(1)
(e)
refers to a ‘payment or repayment of a
contribution
[my emphasis] or any other amount’. To stretch any other amount
to cover an award for damages would be against the purpose
and
context of the text. In any event, if it were a repayment or payment
of a contribution then such an award would probably have
to be made
against Chrissonia (the applicant’s company) and not the
applicant himself.
[15]
Mr Sewpal submitted that the third respondent erred on a point of law
by conflating the provisions of s 8(4)
[21]
of the
Sectional Titles Schemes Management Act (the
Act) and those of
the CSOS Act. In his contention, she had no jurisdiction to order the
relief that she granted. I agree with this
submission as the duties
and fiduciary relationships of trustees are dealt with under the Act.
If one looks at the facts leading
to the decision and the award, they
were predicated on the appellant’s role as the chairperson of
the body corporate and
that would be when the issues of fiduciary
duties come into play and not a dispute in the community scheme per
se. That issue is
covered by the Act and not the CSOS Act, hence,
such a dispute fell outside the ambit of the CSOS Act and the third
respondent.
[16]
This view was further emboldened by the first respondent in its
answering affidavit
[22]
where
it placed reliance on the provisions of s 8 of the Act. The
complaint itself was premised on the appellant’s breach
of his
fiduciary duty as a trustee and hence the third respondent’s
findings and declarator in that regard.
[17]
Mr Randles was constrained to concede that paragraph 24.4 of the
order was incompetent to be an order and
as paragraph 24.5 was
consequential to paragraph 24.4 it had to fall away. For these
reasons, I do not deem it necessary to deal
with the other issues
raised in the appellant’s heads of argument. To sum up, I am of
the view that the third respondent
erred in entertaining a matter
outside the ambit of the CSOS Act. Her award was not one of the
reliefs to be granted under the
provisions of s 39 therein. The
appeal must therefore succeed. It follows that the costs must follow
the result. The scale,
however, will be that of an opposed motion and
not an appeal as the proceedings were launched on a notice of motion.
Order
[18] In
the result, the following order is made:
(a)
the applicant’s appeal in terms of s
57 of the CSOS Act is upheld;
(b)
the third respondent’s award made on
2 September 2019 is set aside;
(c)
the first respondent is ordered to pay the
applicant’s costs on the scale of an opposed motion;
(d)
until such time as a practice directive is in place, the procedure to
be followed in this division
in appeals brought in terms of s 57 of
the CSOS Act will be as stated in paragraphs 10 and 11 of this
judgment.
POYO
DLWATI J
SEEGOBIN
J
JAPPIE
JP
APPEARANCES
Date
of Hearing:
20
October 2021
Date
of Judgment:
07
December 2021
Counsel
for Applicant:
Mr
Sewpal
Instructed
by:
P
Ramjathan & Associates
Counsel
for Respondent:
Mr
Randles
Instructed
by:
Fourie
Stott Attorneys
[1]
Section
57(1) of the CSOS Act provides that ‘an applicant, the
association or any affected person who is dissatisfied by
an
adjudicator's order, may appeal to the High Court, but only on a
question of law’.
[2]
PART
EIGHT – APPEAL PROCESS
34 WHEN TO LODGE AN
APPEAL
34.1
A person, who is not satisfied with the adjudicator’s order,
may lodge an appeal in the
High Court on the question of law.
34.2
Following the High Court decision in the Western Cape High Court, on
the matter of the Trustees
for the time being of the Avenues Body
Corporate v Shmatyahu and Another the following procedure is
prescribed for all appeals
in terms of section 57 of the CSOS Act
until such time that the Full Bench of the High Court has made a
determination or order
on the process to be followed for appeals
under section 57 of the CSOS Act;
34.2.1An appeal in terms
of S57 is a ‘civil appeal’ within the meaning of the
Superior Courts Act 10 of 2013
.
34.2.2 What
may be sought in terms of
S57
is an order from this court setting
aside a decision by a statutory functionary on a narrow ground that
it was founded on an
error of law.
34.2.3 The
relief available in term of
S57
is closely analogous to that which
might be sought on judicial review.
34.2.4 The
appeal should be brought by notice of motion supported by
affidavit(s), which should be served on the respondent
parties by
the sheriff.
34.2.5 Both the
adjudicator and the CSOS should be cited as a respondent.
34.2.6
Whilst the adjudicator or CSOS might be expected in the ordinary
course to abide the judgment of the court,
there will be cases in
which the adjudicator or CSOS might nevertheless consider that it
might be helpful to file a report for
the court in respect of any
aspect of fact or law not dealt with in the adjudication order.
34.2.7 If
the adjudicator’s order has been registered as an order of
court in terms of S57 of the Act, notice
of the proceedings must be
lodged with the registrar or clerk of the court concerned; for the
expunging of the registration from
the court’s records.
[3]
Trustees,
Avenues Body Corporate v Schmaryahu and another
2018
(4) SA 566
(WCC).
[4]
Stenersen
and Tulleken Administration CC v Linton Park Body Corporate and
another
2020
(1) SA 651 (GJ).
[5]
Kingshaven
Homeowners’ Association v Botha and others
[2020]
ZAWCHC 92.
[6]
Trustees,
Avenues Body Corporate v Schmaryahu and another
para
25, Binns-Ward J with Langa AJ concurring (footnotes omitted).
[7]
Stenersen
and Tulleken Administration CC v Linton Park Body Corporate and
another
para
7 (footnotes omitted).
[8]
Stenersen
and Tulleken Administration CC v Linton Park Body Corporate and
another
para
32.
[9]
Stenersen
and Tulleken Administration CC v Linton Park Body Corporate and
another
para
38.
[10]
Kingshaven
Homeowners’ Association v Botha and others
para
13.
[11]
Kingshaven
Homeowners’ Association v Botha and others
para
15.
[12]
Kingshaven
Homeowners’ Association v Botha and others
para
18.
[13]
Kingshaven
Homeowners’ Association v Botha and others
para
18.
[14]
Kingshaven
Homeowners’ Association v Botha and others
para
23.
[15]
Durdoc
Centre Body Corporate v Singh
2019
(6) SA 45 (KZP).
[16]
The
Trustees for the Time Being of the Avenues Body Corporate v
Shmaryahu and another
2018(4)
SA 566 (WCC) and
Kingshaven
Homeonwers Association v Phillipus Botha and others
[2020]
ZAWCHC 92.
[17]
Section
39(1)
(e)
of the CSOS Act reads: ‘(1) In respect of financial issues –
. . .
(e)
an order for the payment or repayment of a
contribution or any other amount . . .’
[18]
Independent
Institute of Education (Pty) Ltd v KwaZulu-Natal Law Society and
others
[2019] ZACC 47
,
2020 (2) SA 325
(CC) para 4.1
[19]
Natal
Joint Municipal Pensions Fund v Endumeni Municipality
[2012]
ZASCA 13
,
2012 (4) SA 593
(SCA) para 18.
[20]
Department
of Land Affairs v Goedgelegen Tropical Fruits (Pty) Ltd
[2007] ZACC 12
;
2007 (6) SA 199
(CC) para 53.
[21]
Section
8(4) of the section Titles Scheme Management Act 8 of 2011 reads:
‘
Except
as regards the duty referred to in subsection (2)
(a)
(i),
any particular conduct of a trustee does not constitute a breach of
a duty arising from his or her fiduciary relationship
to the body
corporate if such conduct was preceded or followed by the written
approval of all the members of the body corporate
where such members
were or are cognisant of all the material facts’
[22]
Paragraph
34 at page 129 of the papers.