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[2013] ZAKZDHC 36
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De Lange v Bell and Others (013203/12) [2013] ZAKZDHC 36 (6 August 2013)
IN
THE KWAZULU-NATAL HIGH COURT, DURBAN
REPUBLIC
OF SOUTH AFRICA
REPORTABLE
CASE NO: 013203/12
In the matter between:
A J DE LANGE
.................................................................................................
Applicant
and
E BELL
................................................................................................
First
Respondent
TOLLNER BODY CORPORATE
...................................................
Second
Respondent
ETHEKWINI MUNICIPALITY
.............................................................
Third
Respondent
--------------------------------------------------------------------------------------------------------------
Order:
(a) The application for
the arbitration award to be made an order of court is dismissed.
(b) The
counter-application relating to the signing of building plans is
dismissed.
(c) Andre Grundler is
appointed, in terms of
section 46
of the
Sectional Titles Act 95 of
1986
, as administrator to the Tollner Body Corporate for a period of
twelve months, with the powers and duties of the body corporate,
to
its exclusion.
(d) The applicant and the
first respondent are directed to hand over to the administrator any
books, documents or other property
of the body corporate which he may
require.
(e) There will be no
order as to costs.
JUDGMENT
DATE: 06 August 2013
PLOOS VAN AMSTEL J
[1] This is a dispute
between the only two members of theTollner Body Corporate, which is a
body corporate as contemplated in
s 36
of the
Sectional Titles Act
1
.
The two units in the sectional title scheme are situated at 35A and
35B Mkhula Road in Westville. One of them is owned by the
applicant
and occupied by him and his wife. The other is owned by the first
respondent and occupied by a tenant. The second respondent
is the
body corporate and the third respondent the Ethekwini Municipality.
Neither of them took part in the proceedings.
[2] The relief sought by
the applicant is for an arbitration award to be made an order of
court in terms of s 31 of the Arbitration
Act
2
and for the appointment of an administrator in terms of
s 46
of the
Sectional Titles Act. In
a counter-application the first respondent
seeks an order directing the applicant to sign certain building plans
relating to alterations
and additions to her unit, and she also seeks
the appointment of an administrator in terms of
s 46
of the Act.
[3] The parties have
never administered the body corporate in accordance with the
provisions of the
Sectional Titles Act. There
are no trustees, the
body corporate does not have a bank account, the members do not pay
levies, there is no fund as contemplated
in
s 37
(1)(a) and there are
no financial statements. In the light of the strained relationship
between the parties and the chaotic state
of the affairs of the body
corporate it seems desirable to appoint an administrator to perform
its powers and duties and get its
affairs in order. Nothing further
needs to be said about this as both parties have asked for such an
appointment.
[4] The real dispute
between the parties relates to alterations and additions to the first
respondent’s unit. It is not disputed
that these were done
without building plans having been approved by the local authority.
The applicant demanded that certain of
the additions and alterations
be removed, the first respondent refused to do so and contended that
the applicant had orally agreed
to them, and so the dispute ended up
before an arbitrator. He handed down an award on 13 September 2012 in
which he
inter alia
ordered the first respondent to remove
certain of the additions and alterations. This is the award which the
applicant wants me
to make an order of court.
[5] The first respondent
resists the application and contends that the award is a nullity as
the arbitrator had no power to order
her to demolish or remove any
structures as such an order amounts to a mandatory interdict, which
is excluded from the operation
of the management rule which deals
with arbitrations.
[6] It is convenient
first of all to consider the legal basis of an arbitration in terms
of the management rules.
Section 35
(1) of the
Sectional Titles Act
provides
that a scheme under the Act shall be controlled and managed,
subject to the provisions of the Act, by means of rules. Subsection
(2) states that the rules shall provide for the control, management,
administration, use and enjoyment of the sections and the
common
property, and shall comprise management and conduct rules, prescribed
by regulation, which may be substituted, added to,
amended or
repealed from time to time by the unanimous resolution of the body
corporate.
[7]
The
management rules prescribed by regulation are contained in annexure 8
to GNR 664 of 8 April 1988, as amended.
Rule 71(1)
provides that the
disputes referred to therein shall be determined in terms of the
rules. Sub-rule (2) provides that if such a
dispute or complaint
arises the aggrieved party shall give notice thereof and if it is not
resolved within fourteen days, either
party may demand that the
dispute or complaint be referred to arbitration. Sub-rules (3) and
(4) provide for the appointment of
an arbitrator, sub-rules (5), (6)
and (8) provide for procedural matters and sub-rule (7) provides that
the decision of the arbitrator
shall be final and binding and may be
made an order of the High Court upon application of any party to or
affected by the arbitration.
[8] It was held in
Body
Corporate Pinewood Park v Dellis (Pty) Ltd
3
that these rules are of a contractual nature. Mpati P
pointed out that the
Sectional Titles Act and
the regulations made
under it do not prescribe a procedure for dispute resolution, nor do
they require the rules to do so. The
rules prescribed by regulation
do provide for the determination of disputes, but in terms of
s
35(2)(a)
of the Act they may be substituted, added to, amended or
repealed by the developer or the unanimous resolution of the body
corporate.
Mpati P referred with approval to
Wiljay
Investments (Pty) Ltd v Body Corporate, Bryanston Crescent and
Another
4
,
where Spoelstra J said the following in connection with the rules
governing bodies corporate under the Act’s predecessor:
‘
These rules
are clearly not intended to define or limit the ownership of
individual owners of sections, units or common property.
The rules,
read with the provisions of the Act, contain a constitution or the
domestic statutes of the body corporate. In this
sense it could
properly be construed as containing the terms of an agreement between
owners
inter
se
and between owners on the one hand and the body corporate on the
other hand.’
Mpati P added that it is
a matter of pure logic that, when a purchaser purchases a unit in a
sectional title scheme after a sectional
title register has been
opened, he or she would be deemed to have consented or agreed to be
bound by the existing rules relating
to that scheme and to future
changes to them introduced by unanimous resolution of that scheme’s
body corporate. He concluded
that, therefore, the arbitration
procedure provided for in management
rule 71
is consensual.
[9] I should also make
reference to s 40 of the Arbitration Act, which provides that the Act
shall apply to every arbitration under
any law passed before or after
the commencement of the Act, as if the arbitration were pursuant to
an arbitration agreement and
as if that other law were an arbitration
agreement, provided that if that other law is an Act of Parliament,
the Arbitration Act
shall not apply to any such arbitration in so far
as it is excluded by or is inconsistent with that other law or is
inconsistent
with the regulations or procedure authorised or
recognised by that other law. In
Vidavsky v
Body Corporate of Sunhill Villas
5
Heher
JA considered that an arbitration under management rule 71 was one
‘under a law’ and that s 40 applied to it.
I
should add that regulation 39 of the regulations
6
which prescribed the management rules provides that the
provisions of the
Arbitration Act 42 of 1965
shall, in so far as
those provisions can be applied, apply
mutatis
mutandis
with reference to arbitration
proceedings under the
Sectional Titles Act.
[10
] There is no need in
this matter to consider whether there is a material difference
between the approaches in
Body Corporate
Pinewood Park
and
Vidavsky.
The arbitration pursuant to
rule 71(1)
must
be approached as one under an arbitration agreement, either because
the arbitration agreement is contained in the management
rules
7
or because, in terms of
s 40
, ‘that other law’
8
is regarded as an arbitration agreement.
9
[11] The question then
arises as to the correct interpretation of the arbitration agreement
as contained in
rule 71.
Sub-rule (1) reads as follows:
‘
Any dispute
between the body corporate and an owner or between owners arising out
of or in connection with or related to the Act,
these rules or the
conduct rules, save where an interdict or any form of urgent relief
may be required or obtained from a Court
having jurisdiction, shall
be determined in terms of these Rules’.
The rule was considered
in
Body Corporate of Greenacres v Greenacres
Unit 17 CC and another.
10
Cloete
JA held that the saving provision in sub-rule (1) ‘save where …
any form of … other relief may be required
or obtained from a
Court having jurisdiction…’ cannot be interpreted
literally as covering any relief which a court
may grant, for then it
would be as wide as the rule itself and operate to negate it, which
would be absurd. He held that it should
be read as follows: save
where an interdict or any form of urgent relief may be required, or
other relief has to be obtained, from
a court having jurisdiction. He
said the following:
11
‘
The purpose
behind the inclusion of the provision was in my view to make it clear
that although the operative part of the rule is
to be interpreted
widely for the purpose of ascertaining what disputes have to be
subjected to arbitration, it is not to be interpreted
as conferring
jurisdiction on an arbitrator to grant all forms of relief which may
be sought consequent upon such determination;
and accordingly, if the
relief sought cannot be granted by an arbitrator, arbitration on a
dispute which would otherwise fall within
the operative part of the
rule, would nevertheless not be competent in terms of the rule.’
His conclusion was formulated
as follows: ‘I therefore conclude
that the arbitration provisions prescribed by
rule 71
are applicable
to disputes described in sub-rule (1) between the parties there
referred to, save where an interdict or any form
of urgent relief is
required, and save where an arbitrator is not competent to grant the
relief sought.’
12
[12] It follows that a
dispute where an interdict may be required is excluded from the ambit
of
rule 71.
The arbitration agreement contained in the rules does not
apply to such a dispute. It was not disputed in argument before me
that
in the circumstances of this case an order directing the first
respondent to demolish a particular structure will amount to a
mandatory
interdict. See in this regard11
Lawsa
2ed par
390where the learned authorsays an interdict is an order of court
which enjoins a party to refrain from doing something,
or orders such
party to do something. Also see
Jafta v Minister of Law and Order
and Others
13
,
where Corbett CJ said orders enjoining the doing of an act are known
as ‘mandatory interdicts’.
[13] Counsel for the
applicant sought to overcome this difficulty by arguing that the
effect of rule 71(1) is to compel the parties
to have their disputes
determined in terms of the rules, save where an interdict or any form
of urgent or other relief may be required
or obtained from a court,
in which case the determination of the dispute in terms of the rules
is optional. He developed this argument
by submitting that the
parties had in fact referred their dispute to the arbitrator by
agreement.
[14] The onus was on the
applicant to establish the existence of such an agreement.
14
It has to be an arbitration agreement other than the one contained in
the management rules as the power of the arbitrator in such
an
arbitration is limited by the saving provision in rule 71 (1). He has
no power or jurisdiction to arbitrate in a dispute where
an interdict
is sought.
15
The issue is not whether the arbitration is compulsory or optional,
depending on what relief is sought. If the arbitration is one
under
rule 71 then the arbitrator’s jurisdiction is limited by the
saving provision. For an arbitrator to have jurisdiction
to hear such
a dispute there must be an arbitration agreement in terms of which
the dispute in question is referred to arbitration.
Section 1
of the
Arbitration Act defines
an arbitration agreement as a written
agreement which provides for the reference to arbitration of any
existing dispute or any
future dispute
relating to a matter
specified in the agreement
16
,
whether an arbitrator is named or designated therein or not.
[15] One normally finds
such an agreement in contractual documents which provide for
arbitration in the event of a dispute arising
out of the contract or
its performance, and a method of determining who will be the
arbitrator. One also finds that parties to
a dispute which has arisen
agree to go to arbitration, and an arbitration agreement is concluded
for that particular dispute. In
the present matter there was no
separate written arbitration agreement. Counsel for the applicant
argued that in the statement
of claim before the arbitrator the
applicant sought orders directing the first respondent to demolish
certain structures, to remove
others and to repair structural damage
to the common property and the applicant’s unit. He contended
that the first respondent
participated in the arbitration proceedings
without objecting to the arbitrator’s power to conduct such an
arbitration and
that therefore she had agreed to him deciding the
issues raised in the statement of claim. There is no substance in
this argument.
The documents presented to the arbitrator did not
constitute or contain a written arbitration agreement as contemplated
in the
Arbitration Act. There
is no averment in them that the parties
had agreed to refer a dispute relating to an interdict for
arbitration. An arbitrator who
lacks the power to hear a particular
dispute cannot acquire such power by the failure of the parties to
take the point. The source
of his power is a valid arbitration
agreement.
[16] I should add that it
was not the applicant’s case that the arbitration was one under
the common law, for which no written
agreement is required.
17
An oral agreement suffices, but it has to comply with the
requirements for a valid arbitration agreement. No such case was made
in the application papers, nor was it contended for in argument
before me.
[17] It seems plain to me
that the applicant sought an interdict from the arbitrator, without
objection from the first respondent,
not because they had agreed that
the arbitrator should have the power to make an award which amounted
to an interdict, but because
neither of them realised that a dispute
where an interdict is sought is excluded from the management rule
which provides for arbitration
between owners.
[18] The result is that
the arbitration agreement contained in the management rules did not
cover the dispute which was put before
the arbitrator, and there was
no other valid arbitration agreement between the parties. It follows
that the arbitrator did not
have the required power to arbitrate the
dispute between the parties or to make the award which he did.
[19] In
Vidavsky
18
Heher
JA said that an arbitration is a quasi-judicial proceeding, and want
of jurisdiction in such proceedings has the effect of
nullity without
the necessity of a formal order setting the proceedings aside. He
said lack of jurisdiction in arbitration proceedings
renders an award
invalid.
[20] There is therefore
no valid arbitration award which can be made an order of court in
terms of
s 31
of the
Arbitration Act. I
realise that the applicant
may be frustrated by this outcome as the ‘award’ in his
favour turns out to be worthless,
but that is the unfortunate
consequence of an invalid procedure. One hopes that the appointment
of an administrator will help the
parties to get the affairs of the
body corporate in order and to live in peace as neighbours.
[21] The first
respondent’s counter-application cannot succeed. She seeks an
order directing the applicant to sign the building
plans in respect
of the improvements and alterations to her unit and, failing that, an
order directing the Sheriff to do so. There
is no basis for such an
order. On the evidence before me some of the additions were effected
to the common property, although the
counter-application is
apparently aimed only at the improvements and alterations to the
first respondent’s unit.
Rule 33
of the management rules
requires a unanimous resolution by the owners in the case of
luxurious improvements on the common property
and a special
resolution in the case of non-luxurious improvements. As far as
improvements and alterations to her own unit are
concerned the first
respondent must follow the procedure in the National Building
Regulations and Building Standards Act
19
relating to the approval of building plans. The applicant cannot be
compelled to give his approval to any of the alterations on
either
the common property or the first respondent’s unit.
[22] With regard to the
question of costs I have to take into account that on the evidence
before me the applicant and the first
respondent were both advised,
apparently by their respective attorneys, to embark on the
arbitration. The applicant initiated the
proceedings by delivering
his statement of claim, although I assume both parties participated
in the appointment of the arbitrator.
The first respondent offered no
challenge to the jurisdiction of the arbitrator and participated in
the proceedings. When someone
later wrote on her behalf and
challenged the validity of the award it was on an obscure basis and
not on the basis that in terms
of rule 71(1) the arbitrator had no
jurisdiction. I must also say that the affidavits before me are
replete with irrelevant and
argumentative matter and do not appear to
be the product of careful thought and preparation. In the final
analysis the applicant
and the first respondent were both
unsuccessful with their applications, save for the appointment of an
administrator, which they
both asked for. In all those circumstances
I consider it fair to make no order as to costs.
[23] The order which I
make is as follows:
(a) The application for
the arbitration award to be made an order of court is dismissed.
(b) The
counter-application relating to the signing of building plans is
dismissed.
(c) Andre Grundler is
appointed, in terms of
section 46
of the
Sectional Titles Act 95 of
1986
, as administrator to the Tollner Body Corporate for a period of
twelve months, with the powers and duties of the body corporate,
to
its exclusion.
(d) The applicant and the
first respondent are directed to hand over to the administrator any
books, documents or other property
of the body corporate which he may
require.
(e) There will be no
order as to costs.
_______________
Ploos
van Amstel J
1
Act
95 of 1986
.
2
Act
42 of 1965.
3
2013
(1) SA 296
(SCA).
4
1984
(2) SA 722
(T).
5
2005
(5) SA 200
(SCA) para [2].
6
GNR
664 of 8 April 1988, as amended.
7
The
approach in
Body Corporate Pinewood Park.
8
The
Sectional Titles Act, read
with the applicable regulations and the
management rules.
9
The
approach in
Vidavsky.
10
2008
(3) SA 167
(SCA).
11
In
para [6].
12
Par
[11].As examples of relief which an arbitrator is not competent to
grant, the learned judge mentioned,
inter alia
, the
appointment of an administrator (s 46 of the Act vests the power to
do so in the Court), and an order that a building shall
be deemed to
have been destroyed (s 48 confers the power to make such an order on
the Court).
13
[1991] ZASCA 1
;
1991
(2) SA 286
(AD) at 295C.
14
Vidavsky
v Body Corporate of SunhillVillas
2005 (5) SA 200
(SCA) para
[17].
15
Body
Corporate of Greenacres v Greenacres Unit 17 CC
2008 (3) SA 167
(SCA).
16
My
emphasis.
17
Butler
and Finsen,
Arbitration in South Africa
, p 4 – 6; 1
Lawsa
2edpara 544.
18
2005
(5) SA 200
(SCA) para [14].
19
Act
103 of 1977.