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[2018] ZAKZPHC 44
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Body Corporate of the Bend v Holgado and Others (17295/2014) [2018] ZAKZPHC 44 (25 July 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-
NATAL
DIVISION
,
PIETERMARITZBURG
Case
No: 17295/2014
In
the matter between:
THE
BODY CORPORATE OF THE BEND
(SS
214/2004)
APPLICANT
and
SHEILA ANNE
HOLGADO
1
ST
RESPONDENT
DANIA INVESTMENTS
(PTY) LTD
2
ND
RESPONDENT
THE
REGISTRAR OF DEEDS
PIETERMARITZBURG
3
RD
RESPONDENT
WAKEFIELDS
PROPERTY MANAGEMENT
(PTY)
LTD
4
TH
RESPONDENT
COLIN
TILBURY
5
TH
RESPONDENT
SARAH
TILBURY
6
TH
RESPONDENT
ROBERT DE
BRUYNE
7
TH
RESPONDENT
ANDREW
SMITH
8
TH
RESPONDENT
ANDRE
NIEMANDT
9
TH
RESPONDENT
ROBFAIR
INVESTMENTS NO. 258 CC
10
TH
RESPONDENT
JOANNE
WHITACKER-SMITH
11
TH
RESPONDENT
ANTHONY FRASER
STEWART
12
TH
RESPONDENT
RIMMEL
INVESTMENTS CC
13
TH
RESPONDENT
BEND HOUSING
VENTURE CC
14
TH
RESPONDENT
4 FELLOW BENDERS
CC
15
TH
RESPONDENT
DAYKEN PROPERTIES
CC
16
TH
RESPONDENT
ROYAL
ALBATROSS PROPERTIES
(PTY)
LTD
17
TH
RESPONDENT
ANDREA
FLUTTER
18
TH
RESPONDENT
COLLIN
HEARD
19
TH
RESPONDENT
GREGORY
DAVIS
20
TH
RESPONDENT
MICHAEL
DAVIS
21
ST
RESPONDENT
CLAUDE
MARTIN
22
ND
RESPONDENT
BRUCE
LAVAGNA-SLATER
23
RD
RESPONDENT
TRUSTEES
OF THE AROUND THE BEND
TRUST
24
TH
RESPONDENT
ROGER
SOLIK
25
TH
RESPONDENT
TRUSTEES
OF JB MCINTOSH FAMILY
TRUST
26
TH
RESPONDENT
ORDER
I
make the following order:
(1) The application
launched by Biccari Bollo Mariano Incorporated under case number
17295/2014 was not authorised by the Body Corporate
of the Bend
Sectional Title Scheme No SS217/04 and trustees; and is therefore set
aside.
(2) The trustees’
meeting of the Bend Body Corporate held on 9 August 2014 was properly
convened and duly constituted and
the resolutions taken thereof
constitute valid and binding resolutions of the trustees of the Bend
Body Corporate.
(3) Wakefields
Property Management is hereby authorised and directed to enter the
minutes of the trustees’ meeting of 9 August
2014 in the minute
book of the Bend Body Corporate.
(4) The trustees’
resolution dated 16 September 2014 is invalid and hereby set aside.
(5) The special levy
to the resolution of 16 September 2014 referred to in the letter of
17 September 2014 from Wakefields Property
Management to the members
of the Bend Body Corporate is hereby set aside.
(6) The notification
in terms of
s 35
(5) of the
Sectional Titles Act 95 of 1986
in
respect of the unanimous resolution passed by the Bend Body Corporate
on 15 June 2009, signed by Anulric Jacobs and David Ralph
Scates,
being the document attached to the first respondent’s affidavit
and marked annexure ‘STH21’, is invalid
and set aside.
The Registrar of Deeds, Pietermaritzburg is directed to expunge the
said notification from its records.
(7) Mr Rodney
Trotter of Stowell & Co Attorneys, acting on the instructions of
any two trustees of the Bend Body Corporate is
authorised to prepare
and lodge a corrected unanimous resolution, in accordance with the
unanimous resolution passed by the Bend
Body Corporate on 15 June
2009.
(8) Mr Martin is
ordered to pay the costs of the main and counter- applications.
(9) A rule nisi is
hereby issued calling upon Biccari Bollo Mariano Incorporated to show
cause on _________ August 2018 why an order
in the following terms
should not be made in the following terms:
(a)
Biccari Bollo Mariano Incorporated is ordered to pay the costs of the
respondents in the main and counter-application de bonis
propriis on
a scale as between attorney and own client
JUDGMENT
Poyo
Dlwati J:
[1]
The main issue to be determined in this application is whether the
applicant is entitled to relief in terms of s 1(3A) of the
Sectional
Titles Act 95 of 1986 (the Act) . However, a point to be determined
in limine
,
raised by the first and second respondents is whether Biccari Bollo
Mariano Incorporated (BBM Attorneys) had authority to represent
the
applicant in launching these proceedings.
[2]
The applicant is the Body Corporate of the Bend, which is a Sectional
Title Scheme situated in the Natal Midlands at D361 off
Loteni Road.
It is a Body Corporate established in terms of the Act and has the
necessary capacity to sue and to be sued. The second
respondent owns
and operates an Hotel which is situated in the scheme and is also the
owner of units 1 and 2 in the applicant’s
scheme. The second
respondent is the erstwhile developer of the applicant’s scheme
and is the owner of unit 19 in the applicant’s
scheme. It also
holds the remaining rights to extend the scheme which right is
reserved in terms of s 25 of the Act. The first
respondent together
with her son, Matthew James Holgado are shareholders of the second
respondent.
[3]
There seemed to have been a long history of unhappiness, mistrust and
acrimony within the residents of the Bend. What promised
to be a
place of peace and tranquillity has turned out to be the opposite. Mr
Claude Egner Martin, the deponent to the founding
affidavit has
blamed this squarely on the first respondent. The brief background to
the application was that there was a belief
amongst the residents of
the Bend that the first respondent was abusing her majority rights
vote in the scheme by promoting and
achieving her own interests and
agenda at the expense of the other residents. She also used her
majority control to appoint majority
trustees in the applicant in
order to exercise unilateral control in the way trustees passed their
resolutions.
[4]
Mr Martin averred that the Management Rules of the scheme from which
the first respondent derived power and control were invalid
and
unenforceable for the following reasons: The Rules were inequitable
and prejudicial to all other members of the scheme in that
the second
respondent as the holder of the right to extend the scheme, obtained
voting rights in respect of the reserved rights
and was also liable
to pay levies for such rights and this, according to Mr Martin was
contrary to the Act.
[5]
Furthermore, the allocation of expenditure which was supposed to be
categorized as either base or as services was initially
allocated as
60 per cent to base and 40 per cent to services and this was supposed
to be considered and determined at each general
meeting. However,
according to Mr Martin, this had always been retained as 60 per cent
/ 40 per cent without any consideration
or deliberation due to the
first respondent’s abuse of her majority votes as she would
simply overrule views, issues and
options of certain members of the
scheme.
[6]
For the above reasons and especially the fact that the first
respondent used her majority votes in the scheme to get her way
with
various issues, Mr Martin and other trustees of the applicant deemed
it fit to launch this application in order to try and
break the first
respondent’s domination of the scheme. Mr Martin and Mr Tweedy,
who in Mr Martin’s view, were the only
qualifying trustees in
the scheme to vote on the issue sought legal advice from Ms Northmore
of BBM Attorneys on two issues namely:-
(a) whether or not
it was in the best interests of the applicant to take steps to oppose
the second respondent’s counter-application
(in which the
applicant was a respondent).
(b)
the first respondent’s tyrannical control of the applicant and
its Board of Trustees.
[7]
From the advice received from Ms Northmore, it was clear to Mr Martin
that the Management Rules of the scheme had to be amended.
In terms
of the Act, this ought to be done by unanimous resolution failing
which it had to be declared invalid and unenforceable
by a court of
law. Mr Martin believed that they would be unable to reach or obtain
a unanimous resolution because of the first
and second respondent’s
attitude hence it was agreed to launch this application in terms of s
1(3A) of the Act.
[8]
According to Mr Martin, with Mr Tweedy’s agreement, a meeting
of trustees was convened for 10 March 2014 in order to resolve
the
appointment of BBM Attorneys. This issue was referred to as: ‘Legal
advice and assistance’ under item 1.2 of the
notice and agenda
of the trustees meeting attached to the founding affidavit as
annexure ‘J’. Mr Martin, Mr Tweedy
and the first
respondent participated in the meeting and its minutes were attached
to the founding affidavit as annexure ‘K’.
The underlined
portions of such minutes were the first respondent’s comments
made after the meeting. I will revert later
in this judgment about
the particular resolution for appointment of BBM Attorneys.
[9]
Subsequently BBM Attorneys were instructed by Mr Martin and Mr Tweedy
to consider amongst other things the Management Rules
of the scheme
and to provide advice about their validity, force and effect and the
first respondent’s control of the applicant
and its trustees.
Initially the first respondent had shown an interest to discuss the
matter on condition that the resolution resulted
in the separation of
the Hotel from the scheme. However, Mr Martin had no faith in this
resolution as according to him even though
this had been previously
discussed the first respondent had been “all talk, no action”
on the issue.
[10]
In any event, Mr Martin and Tweedy were advised by Ms Northmore that
the trustees did not have the authority to conclude a
settlement
agreement relating to the separation of the Hotel from the scheme as
same required a unanimous resolution in terms of
s 17(1) of the Act.
Furthermore an amendment to the terms and conditions of the scheme’s
developmental approval would be
required and the whole process of
separation, if agreed to, would take a significant period of time to
achieve. Nothing seems to
have happened thereafter about the first
respondent’s proposal.
[11]
Thereafter Ms Northmore sent a letter to the first respondent’s
legal representative with the proposed amendment to the
Management
Rules with a view of obtaining a unanimous resolution. That proposal
was rejected by Mr Hendey on behalf of the first
respondent on the
basis that Ms Northmore was not authorised to act on behalf of the
applicant. According to Mr Martin, this was
an indication that a
unanimous resolution could not be approved, hence the need to launch
this application. Mr Martin averred further
in his founding affidavit
that he intended to report to the applicant’s members on these
issues and to ascertain their support
(or lack thereof, as the case
may have been) as to the action to be taken.
[12]
A meeting for those purposes was arranged for 14 June 2014. The first
respondent and Mr Hendey attended. After intense deliberations
it was
agreed that Mr Martin would ascertain the homeowners’ support
on the appointment of a mediator in order to deal, amongst
other
things, with the proposed Rule amendment, levy liability and voting
rights issue. Mr Thornhill, however, who is one of the
homeowners in
the scheme, when asked when he would be building his unit,
indicated that he would not be investing his money
anymore on such a
troubled estate. The relevance of this according to Mr Martin was
that until Mr Thornhill built and registered
his section, no other
section would be built and registered. This meant that the first
respondent would continue to maintain her
dominance.
[13]
According to Mr Martin, various homeowners supported the launch of
this application (to which I shall also refer to as the
main
application) and other conditional reliefs claimed. It was on those
bases therefore that the application was launched so that
the Rules
could be amended in order to be in line with the Act. This, according
to Mr Martin would allow levy liability and voting
rights to be
relative to the size of each owner’s section even though the
first respondent would still hold more than 50
per cent of the voting
rights.
[14]
The first and second respondents opposed the application. They
challenged the appointment of BBM Attorney’s authority
to act
for the applicant in these proceedings. They also filed a
counter-application where various other reliefs were sought.
[15]
The basis for the challenge on BBM Attorney’s authority to act
was based on the fact that Mr Hendey had, on behalf of
the first and
second respondents, advised BBM attorneys in a letter dated 6 August
2014 that they did not hold any authority to
represent the applicant
or its trustees in respect of new litigation concerning the amendment
of the scheme’s Management
Rules. Mr Hendey, in his affidavit
in support of the authority challenge averred that at a properly
constituted meeting of the
trustees of the applicant on 9 August 2014
it was agreed that BBM Attorneys had no authority to represent the
applicant. He further
averred that in that meeting it was agreed that
mediation would be pursued in respect of the issue of the amendment
of the Management
Rules and thus the whole issue about the court
proceedings to amend the Management Rules fell away.
[16]
Furthermore, after the application had been launched, a further
meeting of the trustees was held on 1 February 2015. In that
meeting,
the minutes of
the 9 August 2014 meeting were approved. Savage,
Jooste & Adams attorneys (Savage Attorneys), being Mr Hendey’s
firm,
was approved to defend these proceedings as launched by BBM
Attorneys. In this regard a notice in terms of Uniform rule 7 was
filed
and served on BBM Attorneys and launch a counter-application.
They, however, failed to respond meaningfully to the notice.
[17]
A counter-application was subsequently launched, again on behalf of
the applicant seeking an order declaring that the application
launched by BBM Attorneys was not authorised and ought to be set
aside. The application also sought to have certain Rules of the
scheme deemed invalid and set aside. This meant that a new set of
Rules had to be lodged. The further relief sought included the
setting aside of the meeting and the resolution taken on 16 September
2014 and declaring the meeting of 9 August 2014 to have been
appropriately held. This would then mean that some entries by
Wakefields Property Management (Wakefields) in the scheme’s
minute book had to be rectified accordingly.
[18]
The first respondent, in the affidavit seeking to set aside the
initial proceedings as being unauthorised, averred that she
was
authorised by the applicant in launching the counter-application.
Even though her affidavit is a founding affidavit for the
notice of
motion attached to it, in my view it also served as an answering
affidavit to the main application. The first respondent
averred that
the legal issue referred to in the agenda of 10 March 2014 could not
have been a reference to the main application
but to a
counter-application she had lodged against the Dayken Properties
application (to which various owners had brought an application
seeking to try and avoid costs of maintaining the servitude area
within the scheme). In her view, therefore, attorneys had to be
appointed in order for the applicant to obtain legal advice as to
whether to oppose the counter-application she had lodged.
[19]
She further supported her contention by making reference to various
emails (annexures ‘S7H1’ to ‘STH16’)
that
were exchanged between her and other members of the applicant about
legal fees that related to the counter-application launched
against
the Dayken application. She therefore contended that for those
reasons BBM Attorneys were never instructed and had no authority
to
launch the main application. In any event, so went her contention,
any trustee who attended or did not attend the meeting would
never
had foreseen that BBM Attorneys would be instructed to launch the
application as the issue of the Rules was never on the
applicant’s
agenda with clear precision. In her view, trustees would have
understood this item as relating to the issue of
the
counter-application which was at hand or falsified Management Rules
which the first respondent had complained about.
[20]
Furthermore, the first respondent was not in agreement with the
purported minutes of the meeting of 10 March 2014. In her view
the
only issue where BBM Attorney’s legal advice would have been
sought was in relation to the Dayken properties counter-application
and the validity of certain Management Rules. To this extent the
first respondent challenged Mr Martin to produce an electronic
recording of the meeting as he usually recorded meetings. The further
contention of the first respondent was that even if BBM Attorneys
were instructed in terms of that resolution, her understanding was
that they had to give advice and make recommendations to the
applicant on those issues.
[21]
The first respondent further contended that she, through her legal
representatives, had suggested mediation as a way of resolving
disputes between the parties but this was not heeded to by Mr Martin
and those aligned to him. Instead at another applicant’s
AGM
held on 14 June 2014 Ms Northmore conveyed her advice to the members
of the applicant. The proposed resolution to the Management
Rules was
different to what she had proposed in her letter of 1 April 2014.
Even then, mediation followed by arbitration was still
suggested as a
way to reach an amenable solution to the issue of the Management
Rules. Furthermore, BBM Attorney’s authority
to deal with the
issue was challenged.
[22]
The first respondent further contended that it was evident that the
issue regarding BBM Attorney’s authority to act on
behalf of
the applicant had been accepted as a dispute as demonstrated on an
agenda meant for the applicant’s AGM scheduled
to take place on
9 August 2014 (attached to her affidavit as annexure ‘STH51’).
That meeting was purportedly unilaterally
cancelled by Mr Martin,
which according to the first respondent he had no right to do hence
the meeting proceeded in his absence.
According to the first
respondent, therefore, paragraph 3 of the agenda to that meeting made
it clear that it would only have been
at that meeting that BBM
Attorney’s authority to act to institute these proceedings
would have been approved.
[23]
In a letter accompanying the agenda, Mr Martin had advised the
trustees as to which trustees would be eligible to vote in that
meeting. On 7 August 2014, the first respondent sent Mr Martin an
email advising him about the legal advice she had received about
who
was entitled to vote at the meeting. It was as a result of this
communiqué that Mr Martin purported to cancel the meeting
at
12H55pm on 8 August 2014, which cancellation was not accepted by the
first respondent and other trustees (three out of five
trustees
having been present at the meeting). Various resolutions were taken
at the meeting of 9 August 2014 and the minutes of
that meeting are
annexed to the first respondent’s affidavit as annexure
‘STH59’.
[24]
One of the resolutions taken at that meeting was that mediation on
all issues concerning the applicant had to be explored except
the
amendment of the participation quota Rule which was resolved to be
attended to by Mr Rodney Trotter of Stowell & Co Attorneys.
It
became evident to all concerned at that stage that there was no
unanimity by the trustees of the applicant and this resulted
in the
launch of the main application by BBM’s Attorneys and the
subsequent counter-application by Savage Attorneys.
[25]
The first respondent further contended that a meeting of the trustees
of the applicant seemed to have been convened and held
on 16
September 2014. However, herself, Mr Holgado and Mr Thornhill were
not given notice of that meeting on the basis that they
were
conflicted to vote on the issues that were going to be discussed.
According to the first respondent, Mr James McIntosh was
designated
as a third trustee in such a meeting but as he was an alternate to Mr
Martin, he could not have any status if Mr Martin
was also in
attendance at the meeting. According to the first respondent, this
was done in order to circumvent the issue of the
quorum at the
meeting as without a third trustee there would have been no quorum.
[26]
The minutes of that meeting were attached to the first respondent’s
affidavit as annexure ‘STH63’. It seems
that it was at
that meeting that a resolution was taken to institute these
proceedings (main application) and authorised Mr Martin
to sign all
affidavits. For obvious reasons, the first respondent also regarded
the special levy levied by Wakefields as a misrepresentation
by Mr
Martin. It was for those reasons that she sought an order annulling
the meeting and for Wakefields to expunge these resolutions
from the
minute book.
[27]
Finally, the first respondent contended that none of the proposed
resolutions pertaining to the amendment of the Rules were
ever
discussed in any meeting of the trustees of the applicant. The
applicant therefore could not have launched the main application
with
the relief being sought in terms of s1 (3A) of the Act. Instead the
launch of the counter-application was authorised at the
meeting of
the trustees of the applicant held on 1 February 2015 where the
majority of trustees were in favour of the resolution.
The meeting,
according to the first respondent was also confirming the resolution
that had been taken on 9 August 2014 including
the challenging of
authority of BBM Attorneys in launching the main application. The
first respondent therefore sought the setting
aside of the
proceedings launched by BBM Attorneys and further ancillary relief
related thereto.
[28]
I turn now to deal first with the issue of BBM Attorney’s
authority to launch the main application. It was contended
that this
authorisation was derived from the resolution of the meetings of 10
March 2014 and 16 September 2014 respectively. I
will deal first with
the resolution of 10 March 2014 which is annexure ‘A1’ to
Mr Martin’s affidavit. Perhaps
to fully understand the context
upon which the resolution was taken, one must refer to the agenda and
minutes of such meeting first.
[29]
The notice and agenda to the meeting was dispatched to other trustees
on 2 March 2014 by Mr Martin. The relevant item for purposes
of this
matter is item 1 which reads as follows:
‘
BBC
Board of Trustees Composition, Roles and Responsibilities CM/ALL
1.1
Alternative
trustees
1.2
Legal
advice and assistance’.
[30]
The minutes of the meeting appear as annexure ‘K’ to Mr
Martin’s affidavit. Paragraph 2.2 thereto reads as
follows:
‘
2.2
CM
and GT said that the body corporate needs legal assistance. The
Developer has initiated legal proceedings against the Body Corporate
and has, via its directors and its legal representative, made various
demands and assertions to the Body Corporate, including but
not
limited to the validity or otherwise of certain Management Rules and
the consequent effect on the value of the Developer’s
vote and
the Developer’s liability for contributions to the Body
Corporate. The Body Corporate is in need of independent
legal advice
and assistance in respect of the aforegoing. Therefore it is resolved
that the Body Corporate of the Bend mandate
and appoint Biccari Bollo
Mariano Incorporated to provide legal advice and recommendations to
the Trustees in respect of the above,
and thereafter to defend and/or
initiate, as the case may be, and to represent the Body Corporate in
pending legal proceedings
or whatsoever further legal proceedings may
ensue, and to provide assistance ancillary thereto. The Body
Corporate has not contested
the action within the prescribed period
so the basis for this is flawed’.
[31]
On my reading of the above resolution I get the impression that it
related to a pending application by the developer against
the
applicant. BBM Attorneys had to give legal advice in relation to that
application and make recommendations to the trustees
prior to any
further action. It cannot be said that the resolution as it stands
alluded to, in any way, the relief sought in the
main application.
The relief sought in this application was in my view, never discussed
in any of the meetings of the applicant
(I will revert to this issue
later in the judgment). In my view, if proceedings had to be
initiated, that would have been the recommendation
of BBM Attorneys
and the applicant would have to resolve accordingly.
[32]
This finding is validated by BBM Attorney’s letter of 1 April
2014 (annexure ‘L’ to Mr Martin’s affidavit)
addressed to Savage Attorneys where the following is stated at the
bottom of page 2:
‘
The
Trustees have requested that we consider and
provide
advice
regarding the reasonableness and equal application of the New rule
and the Rule, especially in so far as it effectively places
Mrs
Thornhill-Holgado in a position of control of the Body Corporate, and
in general regarding the validity and enforceability
of those rules.
We have duly done so and we are firmly of the view that both of the
rules are unreasonable and inequitable, and
for those reasons as well
as others, are invalid.
’
(My
emphasis.)
In
my view, this paragraph contains what BBM Attorneys, at that stage,
considered their mandate to be. There is nothing in the letter
that
suggests that even BBM Attorneys, at that stage, considered the
launching of the main application to have been their mandate.
[33]
This is further confirmed by BBM Attorney’s letter (annexure
‘S’) of 1 July 2014 to Savage Attorneys where
they
questioned (page 6 of the letter) how the first respondent could
contend that the decision to appoint an attorney to provide
legal
advice and assistance in respect of the validity of the amended
Management Rule did not fall squarely within the parameters
of Rule
23, being the duties of the applicant. In the second paragraph
thereto Ms Northmore explained the advice she gave to the
applicant
and the way to cure the problem being to ‘take steps to replace
the amended and the original management rules.’
At that stage
still, it was advice and a recommendation to the applicant but there
was nothing about launching the main application.
[34]
The second paragraph concludes by Ms Northmore stating that she had
advised the other trustees that without the support of
the first
respondent for a unanimous resolution, the appropriate recourse for
the applicant would be to approach the court for
relief in terms of s
1(3A) of the Act. In any event, Mr Martin’s concession in his
replying affidavit (paragraph 132) that
there was no indication in
the agenda item as to the nature of or reason for legal advice to be
sought is telling. In fact what
is more astonishing is that the
proposed resolution had been prepared prior to the meeting for
consideration at that meeting which
resolution was then subsequently
approved. If nothing untoward was intended by such a resolution why
did Mr Martin not circulate
the resolution prior to the meeting?
[35]
Furthermore, Mr Martin and Mr Tweedy knew exactly what they wanted to
be achieved at the meeting as they had consulted Ms Northmore
on the
issue. I find that their acts were disingenuous and mischievous in
this regard. Hence I am satisfied that BBM Attorneys
was not
authorised by the applicant at the meeting of 10 March 2014 to launch
the main application. This is furthermore so as Mr
Martin made it
clear in his founding affidavit at paragraphs 51 and 52 that he
intended to report to the applicant’s members
on the
aforementioned issues and to ascertain their support (or lack
thereof, as the case may have been) as to the action to be
taken.
That meeting was arranged for 14 June 2014.
[36]
This then leads me to the resolution of 16 September 2014. Perhaps it
is important at this point to make reference to the minutes
of 14
June 2014 where the issue was discussed. In that meeting the
authority of BBM Attorneys to act on behalf of the applicant
was
challenged but Mr Martin contended that they were properly instructed
as per meeting of 10 March 2014. I agree that BBM Attorneys
was
properly instructed to give advice and recommendation on the issues
that were discussed at the meeting of 10 March 2014 but
this did not
include the institution of the main application.
[37]
At the meeting of 14 June 2014 it was agreed that mediation needed to
be explored in respect of various issues and litigation
had to be
avoided. To this extent Mr Martin was to solicit the views of the
different owners. There was then a response from various
homeowners
about their support for litigation and not mediation. However, I do
not know and it is not clear on the papers what
Mr Martin’s
email to the homeowners encapsulated and I therefore cannot form an
opinion whether the issue was appropriately
referred to in that
email.
[38]
A subsequent meeting was convened for 9 August 2014. However, that
meeting was purportedly cancelled by Mr Martin as he believed
that
the meeting would degenerate and evolve into only fighting about who
was entitled or disqualified to vote at such a meeting.
I will revert
later to this issue. However, it is necessary to refer to the agenda
for the meeting that was to be held. Same is
attached as Annexure ‘V’
to Mr Martin’s affidavit. Paragraph 2 thereto reads as follows:
‘
2.
To discuss, deliberate and vote whether mediation is a viable and
appropriate method to pursue in resolution of the dispute between
the
Trustees on the one hand and the developer and the owner of the Hotel
on the other hand regarding the status and validly(sic)
of the
Management Rules and purported amendments thereto.
3.
If mediation is not approved as an appropriate method to pursue –
to consider, deliberate and vote on whether to proceed
with the
initiation of legal proceedings for relief as contemplated in
section
1(3A)
of the
Sectional Titles Act in
terms of which the Management
Rules pertaining to the calculation and apportionment of levies and
the value of each owner’s
vote are to be replaced by the
proposed new Management Rule and for relief complementary and/or
ancillary thereto, as may be advised
by the Body Corporate’s
attorneys, and that BBM Attorneys be mandated to so act for the Body
Corporate’.
[39]
In my view, therefore, it is evident from this agenda that it would
only have been at the meeting of 9 August 2014 that the
institution
of these proceedings would have been resolved and also BBM Attorneys
would have been authorised to launch the main
application. Mr Martin
therefore believed that it was no longer necessary to schedule any
other meeting but instead circulated
the resolution attached to his
affidavit as annexure ‘Y’ to those trustees that he
believed were not conflicted to
vote on the issues hence it was
signed by three trustees and dated 16 September 2014. That resolution
purported to authorise the
institution of the main application and
for BBM Attorneys to act for the applicant in those proceedings.
[40]
In my view, there can be no reliance on such a resolution as it was
never discussed or put to any meeting of the applicant.
See
Du
Rand NO & others v Faerie Glen Renaissance Scheme
[2010]
1 ALL SA 383
(SCA) para 5. It is evident from the signatures in that
resolution that it was merely caused and circulated amongst those
that
were seen to be in agreement with the changing of the Rules but
not those who were considered to be in opposition of the change.
In
my view, that resolution was not properly taken as firstly, there was
no quorum of the trustees of the applicant to deal with
such a
resolution; and secondly, the issue was never discussed at any
properly convened meeting of the applicant ; and thirdly
there is no
provision in the Management Rules of the applicant that allowed the
trustees to have dealt with the issue by way of
round robin under
circumstances where it was not necessary to do so.
[41]
In fact Mr Martin himself had deemed it necessary that these issues
be discussed in a meeting as they would have been on 9
August 2014
but for whatever reason he changed his mind and deemed it appropriate
to just circulate a resolution for approval without
even the
knowledge of all of the applicant’s trustees That, in my view,
cannot be. In fact there was no quorum either to
have the resolution
passed as it is common cause that Mr McIntosh was Mr Martin’s
alternate. Mr Martin had conceded this
much in his answering
affidavit and stated that Mr McIntosh signed the resolution as a
matter of precaution but not to constitute
a quorum.
[42]
At the very least the agenda of 9 August 2014 should have been
discussed by all trustees. If voting was required, then only
at that
stage maybe that the ones that were seen to be conflicted could not
be entitled to vote. It is only then that the application
in terms of
s 1(3A) of the Act could have been brought. In the circumstances, I
am satisfied that BBM Attorneys had no authority
to launch the main
application and it ought to be set aside. This was made clear from
the onset by the launch of the Uniform rule
7 challenge. See
Unlawful
Occupiers, School Site v City of Johannesburg
2005 (4) SA 199
(SCA) at 207 H-I. It follows therefore that the
resolution of 16 September 2014 is hereby set aside and any
consequences that follow
from it are reversed.
[43]
As Mr
Stewart
on behalf of the applicant argued that both the main and
counter-applications be dealt with and not only the pointin limine.I
proceed then and deal briefly with the other reliefs sought by the
first and second respondents in their counter-application. These
are
related to the Management Rules that were registered in the
Pietermaritzburg Deeds Office subsequent to the AGM of 15 June
2009
and also the validity of the meeting of 9 August 2014 despite ‘the
cancellation’ by Mr Martin. It is quite evident
that every
homeowner in the Bend is not happy with the current Management Rules
that were registered subsequent to the AGM of 15
June 2009 even
though for different reasons.
[44]
Even though for different reasons, Mr Martin conceded in his
answering affidavit (paragraph 71) that the Management Rules in
question were invalid. Whilst Mr Martin purports to deny that the
Management Rules recorded in the Deeds Office subsequent to the
AGM
of June 2009 were incorrect, the objective evidence before me points
otherwise. The minutes of the 15 June 2009 AGM were approved
on 17
April 2010. However, what was signed by Messrs Jacobs and Scates as
reflected in annexure ‘STH21’ was incorrect
if one has to
compare same to the agenda and minutes of the AGM. This is especially
so in paragraphs (iv) and (vi) of the schedule
attached thereto.
[45]
This error is readily conceded by Mr Trotter, the conveyancer
responsible for registering same at the Deeds Office, in his
letter
dated 15 September 2014 and confirmed by his confirmatory affidavit.
This error is patently clear from annexures ‘B’
and ‘D’
of Mr Trotter’s letter. Mr Martin, however, contended that
Messrs Scates and Jacobs had advised him that
there was no error in
those rules and were correct as registered in the Deeds Office. There
were no confirmatory affidavits by
either of them despite Mr Martin’s
undertaking in his affidavit of obtaining same. What Mr Martin said
about them is hearsay
and must be disregarded. See
The
Master v Slomowitz
1961
(1) SA 669
(T) at 672 A-B. As Mr Martin was not a trustee at the
time, he therefore does not have an independent knowledge of what
happened.
[46]
Mr Martin, at paragraph 95.4 of his answering affidavit, conceded
that Messrs Scates and Jacobs amended the draft which was
handed to
them by Mr Trotter even though according to him this was done in
order to accurately reflect what they (Messrs Scates
and Jacobs)
understood and believed to have been a Rule that had been approved at
the meeting. Despite all of this being hearsay,
it is alarming that
Mr Trotter seemed not to have been advised of their amendment which
again supports the first respondent’s
contentions in this
regard.
[47]
As Mr Martin has failed to seriously and unambiguously address this
issue (see
Wightman
t/a J W Construction v Headfour (Pty) Ltd
[2008] ZASCA 6
;
2008 (3) SA 371
(SCA) para 13), I therefore do not believe that there
is a bona fide genuine dispute of fact that I am unable to decide
this issue
on the papers before me, (see
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A) at 634-5). The contrary is true. That the first
respondent has taken a long time to have the records corrected is
neither here
nor there. A notice was served on the Registrar of Deeds
as required by s 56 of the Act and to all the homeowners in the Bend.
None have opposed the relief sought. Accordingly, the Rule must be
amended in accordance with the resolution of 15 June 2009.
[48]
The final issue relates to the status of the meeting of 9 August
2014. The meeting was initially convened by Mr Martin but
he
purported to cancel same on 8 August 2014 at about 12H55pm. This,
according to the first respondent, was after she had sent
to the
other trustees her views and advice about BBM Attorneys authority and
who would be entitled to vote on the issues in the
agenda. Mr Martin,
on the other hand, believed that there was no point in holding the
meeting as it would degenerate into discussing
voting rights despite
other important issues.
[49]
Paragraph 15(2) of the Management Rules of the applicant gives
authority to a trustee to convene a meeting of trustees by notice
of
not less than seven days and specify the reason for calling such a
meeting. As the notice was already given by Mr Martin within
the
required time limits together with the agenda for the meeting, it was
not necessary in my view for the first respondent to
give another
notice relating to the same meeting. This is also more so as there
were no new items added on to the agenda. The issue
therefore is
whether the first respondent was entitled to proceed with such a
meeting despite a purported cancellation by Mr Martin.
[50]
Rule 15(2) makes provision for a trustee to convene a meeting and in
my view this is not only limited to a chairperson. The
first
respondent therefore was entitled to proceed with the meeting which
had initially been convened by Mr Martin who was a trustee
and
chairperson of the applicant. There is no complaint of any prejudice
as a result of the meeting having been held. In my view,
therefore,
the meeting was held in accordance with the Management Rules of the
applicant and it ought to be recorded as such.
[51]
There remains the issue of costs of the two applications. The first
and second respondents challenged the appointment of BBM
Attorneys’
authority to institute the proceedings in the main application prior
to it being launched. Mr Martin despite this
challenge persisted with
the proceedings. BBM Attorneys was also aware of this challenge but
also chose to proceed anyway. In my
view, Mr Martin pursued his
personal gripes with the first and second respondents as demonstrated
in this judgment. I am unable
to find that he was acting in the best
interests of and trying to enforce any Management Rules of the
applicant as required in
terms of the Act. He ought to pay for those
costs personally.
[52]
BBM Attorneys, on the other hand, have not filed any affidavit in
response to the challenge of their authority. I am therefore
of the
view that they must be given an opportunity to respond to the
allegations against them. It will suffice therefore that a
rule nisi
issue for them to show cause why they ought not to be ordered to pay
the costs of these applications with Mr Martin.
Order
[53]
Accordingly I make the following order:
(1) The application
launched by Biccari Bollo Mariano Incorporated under case number
17295/2014 was not authorised by the Body Corporate
of the Bend
Sectional Title Scheme No SS217/04 and trustees; and is therefore set
aside.
(2) The trustees’
meeting of the Bend Body Corporate held on 9 August 2014 was properly
convened and duly constituted and
the resolutions taken thereof
constitute valid and binding resolutions of the trustees of the Bend
Body Corporate.
(3) Wakefields
Property Management is hereby authorised and directed to enter the
minutes of the trustees’ meeting of 9 August
2014 in the minute
book of the Bend Body Corporate.
(4) The trustees’
resolution dated 16 September 2014 is invalid and hereby set aside.
(5) The special levy
to the resolution of 16 September 2014 referred to in the letter of
17 September 2014 from Wakefields Property
Management to the members
of the Bend Body Corporate is hereby set aside.
(6) The notification
in terms of
s 35
(5) of the
Sectional Titles Act 95 of 1986
in
respect of the unanimous resolution passed by the Bend Body Corporate
on 15 June 2009, signed by Anulric Jacobs and David Ralph
Scates,
being the document attached to the first respondent’s affidavit
and marked annexure ‘STH21’, is invalid
and set aside.
The Registrar of Deeds, Pietermaritzburg is directed to expunge the
said notification from its records.
(7) Mr Rodney
Trotter of Stowell & Co Attorneys, acting on the instructions of
any two trustees of the Bend Body Corporate is
authorised to prepare
and lodge a corrected unanimous resolution, in accordance with the
unanimous resolution passed by the Bend
Body Corporate on 15 June
2009.
(8) Mr Martin is
ordered to pay the costs of the main and counter- applications.
(9) A rule nisi is
hereby issued calling upon Biccari Bollo Mariano Incorporated to show
cause on 21August 2018 why an order in
the following terms should not
be made.
(a) Biccari Bollo
Mariano Incorporated is ordered to pay the costs of the respondents
in this application de bonis propriis on a
scale as between attorney
and own client.
________________
Poyo
Dlwati J
APPEARANCES
Date
of Hearing: 20 April 2018
Date
of Judgment: 25 July 2018
Counsel
for the applicant: M E Stewart
Instructed
by: Northmore Montague Attorneys
Counsel
for the first respondent: J D Maritz SC
Instructed
by: Savage Jooste & Adams Attorneys