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[2018] ZAKZPHC 75
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Body Corporate of Eleka Road No 111 and Others v Qwabe and Others (AR461/2017, AR462/2017, AR463/2017) [2018] ZAKZPHC 75 (7 December 2018)
IN THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL DIVISION, PIETERMARITZBURG
Case No: AR461/2017
Case No: AR462/2017
Case No: AR463/2017
In the matters between:
THE BODY CORPORATE OF ELEKA ROAD NO 111
Appellant (461/2017)
THE BODY CORPORATE OF SAGEWOOD
HOUSE
Appellant (462/2017)
THE BODY CORPORATE OF MILKWOOD
HOUSE
Appellant (463/2017)
and
MBHEKENI
QWABE
Respondent (461/2017)
and
SKUMUZO PHILIP KUBHEKA & 8
OTHERS
Respondents (462/2017)
and
BHEKOKWAKHE SHADRACH DLAMINI & 12
OTHERS
Respondents (463/2017)
JUDGMENT
Vahed J (Kruger J concurring):
[1]
This is a single judgment in the three appeals which were heard
together because they deal with the identical issues and because
they
all have their origins in virtually identical summonses sued out of
the Magistrates Court for the District of Inanda held
at Verulam,
each summons containing the identical cause of action.
[2]
The appeal concerning the Body Corporate of Milkwood House (“the
Milkwood House appeal”) related to identical summonses
issued
against thirteen unit holders in the sectional title development
known as Milkwood House. The Sagewood House appeal relates
to nine
identical summonses issued against nine unit holders in the sectional
title development known as Sagewood House and in
the Eleka Road No
111 appeal there was one action issued against a unit holder in the
sectional title development known as Eleka
Road No 111.
[3]
In all the actions in the Magistrates’ Court spanning the three
appeals summonses and particulars of claim were issued against
the
individual defendants (now respondents in the three appeals) and the
matters were undefended. Ultimately each action came to
serve before
the magistrate during the course of a request for default judgment. A
refusal of the request for default judgment
has resulted in the
appeals that serve before us. I deal below with the cause of action
pleaded and the interaction between the
appellant (through its
attorneys) and the magistrate that culminated in the refusal of the
request for default judgment.
[4]
It is necessary however to provide some background.
[5]
The individual units in each of the sectional title developments are
modest residential accommodation units. At some point in time
it
appears that each of the bodies corporate fell into financial
difficulty resulting in the build-up of a substantial arrear debt
to
the Ethekwini Municipality made up in large part of arrear rates due
by each of the developments. Ultimately, at the instance
of third
parties, loans were procured by each of the bodies corporate to
satisfy the debt due for arrear rates to the Ethekwini
Municipality
and when those loans were not repaid applications to the High Court
were made resulting in an administrator being
appointed to each of
the bodies corporate. That appointment was sought from and made by
the High Court in terms of section 46 of
the Sectional Titles Act,
1986 (“the Act”). In the case of the Milkwood House
appeal the appointment of the administrator
occurred as a result of
an order made on 25 March 2013. For Sagewood House that appointment
was made as a result of an order issued
on 25 May 2015 and for Eleka
Road No 111 the appointment was made as a result of a High Court
order issued on 25 August 2015.
[6]
All of the events relevant to these appeals occurred prior to 7
October 2016, which was the date the Sectional Titles Management
Act,
2011 came into force. Accordingly, and where necessary, the
provisions of the Act as it existed prior to 7 October 2016 apply
to
the determination of these appeals.
[7]
In each case the administrator appointed was Tingaweb (Proprietary)
Limited.
[8]
In each of the actions instituted in the Magistrates Court, and which
is now the subject of these appeals, those appointments were
still
extant, either in their original form, or having been extended by
order of the High Court, as the case may be.
[9]
In the case of each appointment the administrator (i.e. Tingaweb
(Proprietary) Limited) was granted and vested, in terms of the
relevant High Court order, with the following powers and functions:-
“
5.
That the Administrator be and is hereby vested with such functions
and powers of the
Respondent as contained in
Section 37
of the
Sectional Titles Act 95 of 1986
to the extent that such powers are
required to:-
a.
Raise levies and/or
special levies for the repayment of the Respondent’s creditors;
b.
Appoint legal and/or any
other service provider required to facilitate the recovery of any
levies and/or special levies implemented
in terms of 4(a) (sic)
above;
c.
Appoint a managing agent
with a valid fidelity Fund certificate to perform the functions as
provided for in Management
Rule 46
as contained in Annexure 8 to the
Regulations of the
Sectional Titles Act 95 of 1986
in order to give
effect to 4(a) (sic);
d.
Open and operate a
banking account to manage funds recovered in terms of 4(a) (sic) and
which bank account shall be opened and maintained
by a managing agent
or an attorney who is in possession of a valid fidelity fund
certificate;
e.
Procure an insurance
policy for the benefit of the Respondent on such terms as may be
deemed appropriate by the Administrator;
f.
Issue or cause to issued
(sic) certificates in terms of
Section 15B(3)
of the
Sectional Titles
Act 95 of 1986
;
g.
Procure loan finance and
to hypothecate the unpaid contributions as security for the repayment
of the moneys borrowed as envisaged
in
sections 38(e)
and
38
(f) of
the
Sectional Titles Act 95 of 1986
;
h.
To make amendments and/or
additions to the Respondent’s registered Management and/or
Conduct Rules to the extent required
to execute the Administrator’s
mandate under this order;
i.
In general such other
powers and functions as may be required to recover the debt due to
the Respondent’s Creditors, including
but not limited to the
powers and functions contained in:-
i.
Section 37;
ii.
Section 38;
iii.
Section 39.”
[10]
It is clearly apparent that the errors that crept into that Order
were as a result of the careless use, as a precedent, of one
of the
Orders in the other matters where the almost identical paragraph
appears, but numbered as 4 and not 5.
[11]
In each of the summonses the body corporate is the plaintiff and is
described as such. From this point on I use one of the particulars
of
claim issued in the Milkwood House appeal as an example because all
the summonses across all the appeals are virtually identical.
[12]
The particulars of claim contain the following allegations:-
“
5.
On 25 March 2013, Tingaweb (Pty)
Ltd was appointed as Administrator to the Plaintiff in terms of
Section 46 of the Act and as a
consequence of law and the provisions
contained in the Order of its appointment, assumed the powers and
duties of the Plaintiff
to its exclusion. A copy of the Court Order
appointing Tingaweb as administrator of the Plaintiff is annexed
hereto marked “
B
”.
6.
The Defendants unit is situated
within the Magisterial District of Verulam.
7.
In terms of Section 37 of the
Act, the Plaintiff is required to establish a fund for the purposes
of maintaining and administering
the building and to require owners
of the units, whenever necessary, to make contributions to such fund
for the purposes of satisfying
any claim against the Plaintiff.
8.
In terms of the aforesaid
provisions of the Act, the Administrator on behalf of the Plaintiff
established such fund to which the
Defendants were and remain obliged
to pay certain levies.
9.
In terms of Management Rule 31
(4), the Plaintiff may proclaim special levies, due, owing and
payable by the owners in respect of
all such expenses as are
mentioned in Management Rule 31 (1) and which are not and have not
been included in any estimates, made
in terms of Management Rule 31
(2).
10.
Such special levies may be made
payable in one sum or by instalments and as such times as the
Plaintiff may deem fit.
11.
The Administrator on behalf of
the Plaintiff raised a special levy of R1 235 479,62, of
which the Defendants share is
the sum of R92 063,00, payable over 12
months at a monthly instalment of R7 671,92.
12.
The Plaintiff has raised six
instalments of the special levy thus far, totalling an amount of R46
031,52 due, owing and payable
by the Defendant as at 01 August 2016.
A copy of the levy account statement is annexed hereto “
C
”.
13.
The Defendants proportionate
share of the special levies was based on the Plaintiffs participation
quota schedule and the resolutions
of the Administrator on behalf of
the Plaintiff.
14.
The Defendants have made no or
insufficient payments in respect of the reduction of their levies. As
at 01 August 2016, the Defendants
had failed to pay any or the full
amounts owing to the Plaintiff in respect of the said levies.
15.
In terms of Management Rule 31
(6) of the Act, the Plaintiff may charge interest in arrear amounts
at such rates as may be determined
from time to time.
16.
The Administrator on behalf of
the Plaintiff resolved to charge interest at 2% per month compounded
monthly on all arrear amounts.
The resolution raising the special
levies and resolving the interest to be charged on such arrears, as
well as the financial budget
of the Plaintiff, is annexed hereto
marked “D” & “E”.
17.
In terms of Management Rule 31
(5) of the said Act, to which the Defendants are subject, the
Defendants are liable for all expenses
and charges incurred by the
Plaintiff in recovery of arrear levies, including legal costs as
between attorney and client and collection
commission.
18.
Despite demand, the Defendants
has failed to pay the said amount of R43 031,52.”
[13]
In each of the three developments the special levy raised was
different. As the example quoted above reflects the special levy
raised in the Milkwood House matter was the sum of R1 235 479, 62. In
the Sagewood House matter the special levy raised was the
sum of R1
319 923, 09 and in Elelka Road 111 the special levy raised was the
sum of R935 087, 41.
[14]
In each case, depending on how the participation quota was divided
and apportioned, the amounts claimed from the individuals differed.
[15]
Continuing with the Milkwood House example, annexure “E”
to the particulars of claim in each matter contained a schedule
demonstrating the make-up of the special levy. It shows:
“
Total Special
Levy
R1 235 479.62
Total
R1
235 479.62
Expenditure
Loan Extension:
Administrator
fees
2 Year
Provision
R 48 000.00
Managing Agent
Fees 2
Year Provision
R 32
854.40
Insurance
2 Year Provision
R
8 793.36
Legal
Fees
Disbursements
R 128 000.00
Creditor –
BCBS
Loan Arrears
R 972 563.48
EVH Legal
Fees
Costs order
R 45 268.38
Total
R1
235 479.62
”
[16]
Each summons was delivered to the respective defendant (i.e. each of
the respondents), in the overwhelming majority of the cases,
by
pinning to the door of the unit allegedly owned and occupied by that
defendant.
[17]
In due course when no appearance to defend had been received from the
respondents, applications for judgment by default were sent
to the
magistrate.
[18]
The applications served before different magistrates who raised
different queries and ultimately all of them served before the
magistrate who refused the application for default judgment. The
magistrate was requested to provide detailed reasons for the refusal.
I deal with this next.
[19]
I am mindful of the fact that I have already quoted extensively from
the record. It becomes necessary to do so once more. In the
formulation of his reasons for judgment the learned magistrate
a
quo
also said the following:
“
3.10 What
follows is a summary of all the queries raised by different
Magistrates on the request for default judgment
in the matters of
Body Corporate of Sagewood, Body Corporate of Milkwood, Body
Corporate of Hawkstone Lodge and Body Corporate
of Eleka Road no 111;
as well as a summary of the replies received in respect of each
query.
Query 1:
The Court is concerned about
locus standi
of
the Plaintiff – should the administrator not be cited as the
plaintiff in its capacity as administrator”?
Reply:
“We submit that although the administrator
is appointed in
terms of Section 46 and given powers to the exclusion of the
plaintiff, this does not deprive the plaintiff of
its capacity as a
juristic person to sue and be sued in its own name in terms of
Sectional Titles Act. Furthermore
, the administrator is only
appointed for 3 years, and therefore is the actions instituted
against the owners are still ongoing
or the owners decide to bring an
application to remove the administrator, then the administrator would
no longer have
locus standi
as plaintiff. This would be
impractical and incur unnecessary legal costs in having to substitute
plaintiffs in all matters.
The
locus standi
of a
body corporate to sue and be sued is enshrined in the Sectional
Titles Management Act.
An appointed administrator steps
into the shoes of the owners of the body corporate in exercising its
powers and functions, to the
exclusion of the body corporate only to
the extent of the powers conferred upon the administrator by the
magistrates (previously
high) court order. This does not deprive the
body corporate of its capacity as a juristic person to sue and be
sued in its own
name. It was held in the High Court in the matter of
the
Body Corporate of Albany Court 17 Others v Nedbank & 7
others 7480/2006
that the body corporate retains residual powers
to sue and be sued. ( A copy of the judgment was not attached and the
full citation
not given, as such I was not able to verify the
submission).
Furthermore, given that
administrators are temporarily appointed and an application may be
brought by the owners within the body
corporate to remove the
administrator at any time, it simply wouldn’t be practical for
all recovery actions to be instituted
by an administrator whose
appointment would subsequently lapse. Our client submits that this is
and could not have been the intention
of the legislature.”
Findings
:
The explanation given for not citing the administrator is not
understood.
The administrator steps into the shoes of the body
corporate and as such should sue in its name “as administrator”
of the body corporate.
Query 2:
Service is not accepted; show the defendant has knowledge of the
action (Proviso Rule 9 (3)). Who is the “occupant” he/she
is not named in the return of service.
Reply:
“In terms of the
Sectional Titles Act &hellip
;, the unit
address is the
domicilium
address for service of legal
process, and we accordingly submit that there has been valid service
in terms of the rules. In addition,
the sheriffs return of service
indicates that the occupants refused to accept service and therefore
they are aware of the court
process.”
Findings
:
The proviso to
Rule 9
(3) reads as follows:
“
If there is reason to
doubt that process served in terms of this subrule (Rule (9) (3) (d))
has come to the knowledge if the person
to be served, and in the
absence of satisfactory evidence, the court may, in terms of the
first proviso to
Rule 9(3)
, treat such service as invalid”
Service was effected by
“affixing” to the door of the defendants
domicilium
citandi ex executandi
. It is noted on the return of service that
the “Occupants” declined to accept service. This is the
same manner of service
in each matter.
It is noted that in the request
for reasons in terms of
Rule 51
(8) the plaintiff now submits that it
should have been afforded time to confirm the residence of the
defendant and effect personal
service. The plaintiff was given at
least two opportunities to attend to this but elected to rely on the
Sectional Titles Act for
the
domicilium
address. At no stage
during the numerous queries was this request noted. In any event the
balance of the queries as unanswered
would have resulted in the same
outcome.
Query 3:
Copies of all High Court pleadings underlying this matter are
requested including the Judgment granted in favour of Lema
Investments
(Pty) Ltd against the plaintiff.
Reply:
“A copy of the following pleadings are enclosed
as requested:
a)
Copy of the high Court
administrator application appointing TINGAWEB as administrator of the
body corporate, and High Court Order.
b)
A Copy of the application
for default judgment against the body corporate, and a copy of the
High Court Order.”
It is recorded that
none
of these documents were attached to the reply.
Query 4:
Why is the entire special levy claimed over one year when the
administrator’s fees are claimed for 2 years and the court
order
provides for a collection period of three years or more? Why do
you have provision for two years administrator’s fees?
Reply:
“We submit that the special levy was raised
validly by the
administrator and in compliance with the
Sectional Titles Act. The
administrator was entitled to claim their fees in terms of Paragraph
7 of the High Court Order, and we further submit that it benefits
the
owners that 2 years are included within one claim, instead of the
administrator raising further claims and legal costs for
each years
fees.”
Findings
:
This explanation is not understood. No default judgment out of the
High
Court was attached; as such I am not able to confirm the amount
of the initial “debt” for which default judgment was
granted. I am not able ascertain whether costs were awarded, and if
so on what scale. I have not been furnished with a taxed bill
of
costs to substantial the “Costs order” claimed. I am also
not able to confirm the identity of the initial creditor
in whose
favour the Judgment was granted.
The explanation given with
respect to the charging of fees and costs over two years and claiming
same over one year is also not
understood. How this can be “in
the interest of the owners” is anyone’s guess.
Query 5:
Explain the claim for legal fees. Claim for costs is not supported
by a taxed Bill of Costs. Why are legal fees included in the special
levy?
Reply:
“We submit that the Plaintiff is lawfully
entitled to make
provision for expenditure incurred in recovering the special levy
from the owners within the plaintiff’s
scheme, as well as
paying EVH as a creditor of the body corporate in terms of the legal
costs order enclosed under paragraph 3
above. (Being the court order)
The debt to be recovered from
the owners of the body corporate was historical rates debt owing by
the body corporate to the Ethekwini
Municipality. The monies were
loaned by
our client
to the body corporate to pay off
the rates debt owed by them. (underlining my emphasis)
In order to recover these debts,
it was deemed necessary by the High Court that an administrator be
appointed to raise special levies
and rehabilitate the body
corporate. Given that legal action is necessary to recover the
various portions of rates debt, this incurs
legal costs and
administrators fees. Provision has therefore been made for these
costs as part of the special levy. Without provision
for these costs,
the administrator and the attorneys handling the collection matters
cannot be paid, and cannot fulfil the terms
of the High Court Order.”
Findings
:
This is respectfully
legally unsupported by any legislation that I
am aware of. The costs associated in recovery of a debt and in
instituting action and obtaining default Judgment etc. are claimed
in
terms of the Magistrates Court Act.
The unsubstantiated fees of the
administrator are not qualified or substantiated. Further to this the
fees are not those of the
body corporate as submitted, they are those
of the administrator. To suggest that the body corporate will benefit
from recovery
of these fees is disingenuous. The only entity that
will benefit is the administrator. This toing and froing between the
administrator
and the body corporate is of no assistance to the
administrator. The attempt to persuade the court that the body
corporate will
benefit is creates concern that the administrator is
acting solely for its benefit and not for the benefit of the body
corporate.
The issue if the identity of the
“creditor” as “EVH” is of concern. It is
noted that the entity which applied
for the administrator to be
appointed is Lema Investments (Pty) Ltd and not EVH. The fees claimed
are for the benefit of EVH. The
administrator submits that the fees
are legally charged as they are contained in paragraph 3 of the High
Court Order, respectfully
those fees are for the benefit of the
applicant Lema Investments (Pty) Ltd, not EVH. The claim is not
substantiated by a taxed
bill of costs and is in favour of another
entity.
The balance of the “legal
fees” claimed of R 136 000.00 is obscure, there is no basis
whatsoever for this claim. Further
the claims for “contingency”,
“administrator’s fees”, and “insurance”
are similarly obscure
and unsubstantiated, yet they are included in
the capital claim for the purposes of this Judgment.
Note should be made of the
reference to “our client” as being the entity who loaned
the money to the body corporate
when the issue of the “underlying
debt” is considered below. It seems that the attorney acting
for the creditor is
now acting for the administrator and the body
corporate. I will deal with this issue later.
Query 6:
Was the defendant made
aware of the special levy?
Reply:
No response was received to this query.
Query 7:
Court is not satisfied
with the calculation and division of the plaintiff’s claim.
Reply:
There was no reply received to this query other
than that noted
above.
Findings
:
In essence I am not able to confirm whether the administrator was
entitles
to raise the special levy at all or to charge the extra
costs in its capital claim.
3.11 The
plaintiff was given many opportunities to properly respond to the
queries raised, but failed to
do so despite being advised by more
than one Magistrate that if the queries were not properly addressed
the applications would
be refused. They were not properly addressed.
I dismissed the applications
for default judgment
.”
[20]
Before dealing with certain specific issues, and by way of general
observation, I regard the appellants’ responses (where
responses were furnished) to the various queries as unhelpful,
somewhat overbearing, haughty, and at times didactic in tone and
dismissive.
[21]
I intend dealing with certain of those queries and the responses
thereto, but before doing so must dispose of one preliminary issue.
When the records in these appeals first served before us we were
concerned that it might be arguable that the refusal of default
judgment, in the specific context of these appeals, might not
constitute an appealable ruling or order. That concern was raised
because of what this Court said in the unreported judgment delivered
in
Parak NO v Muslim
(KZP Case No AR508/2017 – 22 June
2018). There an appeal against a refusal of default judgment by a
magistrate was also at
issue. We called for additional argument and
are grateful to Mr
Shapiro
(who appeared for the appellants)
for his comprehensive supplementary heads of argument. We are in
agreement with his submissions
that on the facts here the rulings
were finally determinative of the issues. Nothing more need be said
on this score.
[22]
Turing to the appeals I deal firstly with the issue relating to the
standing of the appellants. This formed the basis of for first
query
outlined by the learned magistrate
a quo
.
[23]
Sections 36(6) and 46 of the Act are relevant here. They provide as
follows:
“
Section
36 (6)
The body
corporate shall have perpetual succession and shall be capable of
suing and of being sued in its corporate name in respect
of-
(a)
any
contract made by it;
(b)
any
damage to the common property;
(c)
any
matter in connection with the land or building for which the body
corporate is liable or for which the owners are jointly liable;
(d)
any
matter arising out of the exercise of any of its powers or the
performance or non-performance of any of its duties under this
Act or
any rule; and
(e)
any
claim against the developer in respect of the scheme if so determined
by special resolution.
…
Section
46 - Appointment of administrators
(1) A body
corporate, a local authority, a judgment creditor of the body
corporate for an amount of not less than R500, or any owner
or any
person having a registered real right in or over a unit, may apply to
the Court for the appointment of an administrator.
(2)
(a)
The Court may in its discretion appoint an
administrator for an indefinite or a fixed period on such terms and
conditions
as to remuneration as it deems fit.
(b)
The
remuneration and expenses of the administrator shall be
administrative expenses within the meaning of section 37 (1)
(a)
.
(3) The
administrator shall, to the exclusion of the body corporate, have the
powers and duties of the body corporate or such of
those powers and
duties as the Court may direct.
(4) The
Court may, in its discretion and on the application of any person or
body referred to in subsection (1) remove from office
or replace the
administrator or, on the application of the administrator, replace
the administrator.
(5) The
Court may, with regard to any application under this section, make
such order for the payment of costs as it deems
fit.”
[24]
Mr
Shapiro
submitted that because the body corporate enjoys
perpetual succession and because the administrator in effect stepped
into the
shoes of the body corporate, the natural consequence was
that the administrator became entitled to sue in the all actions in
the
court
a quo
in the name of the body corporate. For that
submission he relied upon the authority of
Body Corporate of
Albany Court v Nedbank
2008 JDR 0392 (W) where, at para 7,
Gautschi
AJ said the following:
“
Mr
Georgiades sought to persuade me that, since section 46(3) provides
that the administrator shall have powers and duties to the
exclusion
of the body corporate, the body corporate has no locus standi to seek
a rescission of an order appointing an administrator.
I do not agree.
In my view, the body corporate would retain a residual power to
rescind an order appointing the administrator.
The position is in my
view akin to the residual powers retained by the board of directors
where a company has been wound-up, to
oppose the confirmation of a
provisional winding-up order or to seek to rescind or appeal the
order. However, even if I am wrong
in this, the other applicants are
owners of units in the scheme, who undoubtedly have the required
legal interest to allow them
to seek a rescission of the order.”
[25]
I have difficulty with understanding why the learned acting judge’s
reasoning with regard to a residual power retained by
a body
corporate to challenge the appointment of an administrator is
sufficient authority for the proposition that Mr Shapiro contended
for. In fact there seems to be authority in this division suggesting
the exact opposite. See in this regard
Grundler NO v Rambadursing
[2011]
3 AllSA 556
KZD.
[26]
In any event it seems to me that upon a proper construction of both
the Act and the Order appointing the administrator, together
and
separately, Tingaweb (Pty) Ltd did not “step into the body
corporate’s shoes” entitling it to litigate in
the name
of the body corporate.
[27]
Section 46(3) of the Act must allow for a consistent interpretation
across all instances where an administrator has been appointed.
The
section does not envisage that for every appointment
all
of the powers and duties of the body corporate become exercisable by
the administrator. In fact the section envisages that in certain
instances only certain of “…those powers and duties as
the Court may direct…” become exercisable by the
appointed administrator. In situations where a Court, in the exercise
of its discretion, leaves a body corporate with some of its
substantive powers and duties and allows others, to the exclusion of
the body corporate, to be exercisable by the appointed administrator,
it would be unthinkable that both could litigate at the same time
(admittedly for different things) in the name of the body corporate.
To avoid that absurd situation the section can only be interpreted to
mean that while an administrator can exercise the powers
and duties
of a body corporate (be they some or all) they must be exercised in
the administrator’s representative capacity
and not in the name
of the body corporate. When the administrator, in the exercise of one
or more of those powers and/or duties,
choses to litigate, he, she or
it must do so
nomine officio
.
[28]
The High Court Order appointing Tingaweb (Pty) Ltd also envisaged it
and the body corporate enjoying separate existence. The administrator
was empowered to,
inter alia
, raise levies and/or special
levies for purposes of generating sufficient funds to repay the body
corporate’s creditors.
To administer the funds so collected by
the administrator, in terms of paragraph 5(d) of the Order, a
separate bank account was
authorised. If it was intended that there
be a seamless “stepping into the shoes” the administrator
could simply have
used the body corporate’s existing bank
account. That too, to my mind, is an indicator that administrator was
not empowered
to function in the name of the body corporate, but
instead separately in a representative capacity.
[29]
In the result I am of the view that the learned magistrate
a quo
was perfectly entitled to and correctly raised the query concerning
standing and I too, like the magistrate, am unable to understand
the
response. On that ground alone default judgment was appropriately
refused.
[30]
I turn now to deal with the question of service of the summonses on
each of the respondents. In terms of the Rules of the Magistrates’
Court the magistrate was clearly empowered to question the adequacy
of the service. The provisions of Magistrates’ Court
Rule
9(3)(d) were referred to in the query and will not be repeated here.
In the exercise of his discretion the learned magistrate
a quo
was entitled to treat the service as invalid. The response that
delivery to the “
domicilium
” address of each of
the respondents was not an answer to the query raised. It must be
remembered that in terms of the Act
and the management Rules the
addresses are deemed to be the “
domicilium
”
address of each of the respondents. The allegations in the
particulars of claim to the effect that the address were
chosen
by the individual respondents is simply erroneous. It was a
provision imposed by law. It might be a different matter if the
addresses
had been deliberately chosen by each respondent. Against
that backdrop, in my view, the query was validly raised.
[31]
The query relating to knowledge on the part of the respondents of the
raising of the special levy was not addressed by the appellants.
In
this regard the magistrate was plainly addressing paragraphs 11, 12,
14 and 18 of the particulars of claim and was enquiring
after
evidence to sustain those allegations. In the absence of a response
the refusal of default judgment was the inevitable consequence.
[32]
It seems to me also that the other queries were validly raised and
dealt with by the learned magistrate
a quo
. No purpose would
be served by a further review of each query and response. That
purpose has already been served by the detailed
extract from the
reasons furnished as set out earlier in this judgment.
[33]
It is by now plainly apparent that the appeal must fail.
[34]
However, the question of costs requires a more careful treatment.
[35]
Prior to the hearing of the appeal we extended an invitation to the
appellants to deliver additional argument on a question raised
in the
following terms:
“
In the event that, for
any reason, the Appeal Court dismisses the appeals why should the
Appeal Court not also order that the Administrator,
Tingaweb (Pty)
Ltd, bear the costs of the appeal and the costs of the actions in the
court
a quo
,
and that no costs whatsoever shall be recoverable from the respective
Bodies Corporate or from the individual members thereof?”
[36]
Again, Mr
Shapiro
, responded promptly and comprehensively, for
which we record our appreciation.
[37]
The main thrust of Mr
Shapiro’s
argument was that having
been appointed by judges of this Division the Administrators’
principal duty was the repayment of
the debts incurred by the Bodies
Corporate. That was a duty considered to be significant by the judges
who made the appointments.
The Administrators were thus going about a
legitimate purpose. Thus, contended Mr
Shapiro
, they ought not
to be burdened with the costs.
[38]
Firstly, in the light of the finding relating to standing it is plain
to me that the appellants either themselves misconstrued
their status
or were ill-advised in that regard. When challenged in that regard
their response made no sense and the single authority
relied upon did
not support their assertions. To burden the Bodies Corporate and the
individual members with the wasted costs incurred
as a result of that
doomed process is unfair in the extreme.
[39]
I am influenced also by the manner in which the magistrates’
queries were dealt with. As I observed earlier in this judgment,
the
responses did not assist but instead appeared to obfuscate matters.
[40]
The query relating to the legal fees and the appellant’s
treatment thereof is particularly instructive.
[41]
I pause to mention that in the magistrate’s reasons quoted
earlier there is a reference, as part of the special levy raised,
to
the sum R136 000,00. This provision emanates from the Eleka Road
No 111 matters. In the Milkwood House appeals the provision
is the
sum of R128 000,00. The treatments are otherwise identical.
[42]
The appellants’ response to the magistrate’s query
demonstrates that the anticipated legal costs associated with the
recovery of the special levy were included in the special levy
itself. In other words, the Administrator, as part of the special
levy, has already made provision for the recovery of the costs of the
actions. Over and above this provision each of the actions
nevertheless made provision for the recovery of the costs on the
scale as between attorney and client from each individual respondent.
Nowhere was any allowance made for the amount already included in the
special levy. For example, the particulars of claim could
have
alerted the particular defendant to the potential for over-recovery
and included a formula for reduction of set-off or something
of
similar effect. The claim for costs was persisted in even after the
learned magistrate raised the query!
[43]
This plain duplication was unconscionable and underscores again my
observations made earlier regarding overall tenor of the responses
to
the magistrates’ queries.
[44]
In my view the Administrator is on any basis obliged to bear its own
costs in each of the appeals and in all of the actions.
[45]
In each of the appeals under Case Nos. AR461/2017, AR462/2017 and
AR463/2017 I make the following Order:
a.
The
appeal or appeals are dismissed.
b.
The
costs incurred in the appeal or appeals shall be borne by Tingaweb
(Pty) Ltd.
c.
Tingaweb
(Pty) Ltd and/or its attorneys shall not be entitled to recover those
costs from the appellant or from the individual members
of the
appellant.
d.
The
costs incurred in each of the actions with which the appeal or
appeals are concerned, instituted in the Magistrates’ Court
for
the District of Inanda, shall be borne by Tingaweb (Pty) Ltd and it
and/or its attorneys shall not be entitled to recover those
costs
from the appellant or from the individual members of the appellant
Vahed J
Kruger J
Case Information:
Date of
Hearing:
9 November 2018
Date of
Judgment:
7 December 2018
Appellants’
Counsel:
W N Shapiro
Instructed
By:
FOURIE STOTT ATTORNEYS
Westville, Durban
Locally Represented
by:
STOWELL & COMPANY
295 Pietermaritz Street
PIETERMARITZBURG
Reference:
Ms S Myhill
Telephone:
033 845-0550