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[2012] ZAGPPHC 330
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Body Corporate of the Falcons v Rademan and Others (16173/2012) [2012] ZAGPPHC 330 (5 December 2012)
NOT
REPORTABLE
IN
THE NORTH GAUTENG HIGH COURT.
PRETORIA
/ES
CASE
NO: 16173/2012
DELIVERED:05/12/2012
IN
THE MATTER BETWEEN:
THE
BODY CORPORATE OF THE FALCONS
….........................
APPLICANT
AND
MARTINUS
PETRUS RADEMAN
…................................................
1ST
RESPONDENT
HOFFIE
HOFFMEYER
........................................................................
2nd
RESPONDENT
JOHANNA
MARIA
PISTORIUS
...........................................................
3rd
RESPONDENT
LENA
ERSKINE
....................................................................................
4th
RESPONDENT
JACQUES
HODSON
...........................................................................
5
th
RESPONDENT
JUDGMENT
MOLEFE.
AJ
[1]
This is an application concerning the dispute that had arisen between
the former trustees and the newly elected trustees of
the body
corporate of the Falcons, constituted in terms of section 36(6) of
the Sectional Title Act 95 of 1986 ("the body
corporate")
situated at 131 Eastwood Street, Arcadia, Pretoria. The application
is made by the former board of trustees who
cited themselves as the
body corporate. The first to fifth respondents are all newly elected
members of the board of trustees of
the body corporate.
[2]
The applicant seek the following relief:
"1.
Setting aside a resolution taken by the members of the applicant to
terminate the appointment of persons as trustees and
to appoint new
trustees at a special general meeting on 9 February 2012.
2.That
the respondents be interdicted from:
2.1
representing themselves to be the elected board of trustees;
2.2
interfering illegally and contrary to the provisions of the Sectional
Title Act and the Rules issued thereunder, with the business
and
management of the applicant in any way or manner.
3.
That the respondents be ordered to pay the costs of this application
on the attorney and client scale jointly and severally the
one paying
the other to be absolved.
4.That
such further and/or relief be granted to the applicant as the High
Court may deem fit."
A
rider was included by the applicant at the end of prayer 2 "that
the respondents be interdicted from representing themselves
to be the
elected board of trustees until such time as they are duly elected to
act as trustee(s)".
[3]
For the sake of clarity the applicants are hereinafter referred to as
"the former trustees" and the respondents as
"the new
trustees".
[4]
The application is essentially about the management and
administration of a sectional title body corporate by its board of
trustees. The applicants are the former trustees who were elected on
30 July 2011 and were removed from office by the majority vote
on 9
February 2012. They approached the court citing themselves as the
body corporate which is a legal persona. The former trustees
occupied
office as the applicant's board of trustees prior to 9 February 2012.
[5]
During the tenure of the former trustees, the owners of the body
corporate gave notice of the proposed special general meeting
which
was scheduled for 9 February 2012 by circulating a written notice as
required by the Sectional Title Act 95 of 1986 ("the
Act")
and the Regulations issued under the Act.
[6]
At the special general meeting on 9 February 2012 it was decided that
a vote should be cast for the inclusion in the agenda
of an item to
remove the former trustees. The vote was successfully carried out and
the removal of the trustees was added to the
agenda. A vote was cast
and the trustees were removed from office due to "no
confidence". The respondents were appointed
as the new board of
trustees at the same special general meeting on 9 February 2012.
[7]
The newly appointed trustees (the respondents) scheduled an annual
general meeting ("AGM") and convened the AGM on
27 March
2012, where the respondents were again elected as the applicant’s
new board of trustees.
[8]
The former trustees seek that the court should set aside the
resolution taken at a special general meeting on 9 February 2012
to
add an item to the agenda to remove them from office and to appoint
the respondents as trustees as it was irregular. It is their
contention that the notice calling for the special general meeting
did not deal in any way nor specify the proposed removal of
the
trustees and as such the removal took place in direct conflict with
Management Rule 13(e)
1
and is illegal. The result of this illegality is that the decision to
remove the former trustees is to no effect.
[9]
The former trustees also argued that the annual general meeting of 27
March 2012 was not duly convened and that no valid decision
could be
taken at such meeting. This is based on the former trustees’
submissions that the respondents who were ' illegally
appointed",
ostensibly gave" such notice to convene the AGM and as such the
AGM was not duly called and as such no valid
decision could be taken
at the AGM as the AGM was not convened by the "de lure
trustees".
[10]
The following two issues are to be determined in this application:
(a)
whether the election of the new trustees at a special general meeting
on 9 February 2012 was irregular and should be set aside;
if yes
(b)
whether the subsequent election of the new trustees at an annual
general meeting on 27 March 2012 rectified the irregularity.
[11]
The nub of the application concerns a resolution taken at a special
general meeting on 9 February 2012 by the owners, in terms
of which
it was inter alia resolved that the former trustees be removed as
trustees of the applicant whereafter the respondents
were elected as
the new trustees of the applicant. Irrespective of the validity or
not of the resolution, the respondents have
since been duly elected
as the trustees of the applicant at a duly convened annual general
meeting held on 27 March 2012. The validity
of the resolutions taken
at the annual general meeting of 27 March 2012 has not been
questioned by the former trustees nor is it
the subject-matter of any
dispute. Notice of the aforesaid meeting was given to the members of
the applicant and the former trustees.
[12]
A basic premise of the Sectional Title Act is that the purchaser
taking transfer of a unit becomes the owner of his or her
section.
2
It is a matter of fact that a community of sectional owners cannot
function properly and efficiently without a rigid organisation
to
handle the many problems and daily details involved in streamlining
the activities of the scheme. Therefore the Sectional Title
Act
organises the sectional owners in a central management called the
corporate body of which a sectional owner automatically becomes
a
member on registration of a unit in his or her name.
3
[13]
Through membership of the body corporate, owners acquire the right to
take part in general meetings of the association and
to elect
trustees who act as executive organ of the association.
4
Strictly speaking, the body corporate is expected to act in
accordance with the statute and the rules in taking decisions on the
management and administration of wide aspects of communal living.
Thus, the body corporate is a statutory creature: their powers
are
derived either expressly or by necessary implication from the
provisions of the Act and the regulations. The body corporate
is
expressly empowered to enforce the prescribed rules. Membership to it
ensures each sectional owner has a say in the control,
management and
daily operation of the sectional title scheme.
[14]
The body corporate is described by commentators as a juristic person
without an intellect.
5
It acts through its main organs, namely the owners in general
meetings and the trustees. The general meeting sets the standards
and
policies for the management and administration of the scheme; the
trustees on the other hand handle the daily running of the
scheme by
the execution of resolutions and the exercise of the powers and the
performance of the duties of the body corporate.
6
[15]
Although all owners automatically act as trustees from the moment of
the establishment of the body corporate,
7
in reality, sectional title development begins with the election of
the first board of trustees at the first general meeting. Once
the
first trustees have been elected, the operational of the development
is transferred from the developer to the trustees.
[16]
The legal issue to be determined in this case, is whether the
trustees in the form of a body corporate have the powers to overrule
a decision of the majority (owners) to replace them in a general
meeting or add to the agenda an item referring to their competency
in
office. It is against this background that 1 turn to consider the
relief sought by the applicants.
[17]
I will first deal with the special meeting which was held on 9
February 2012. The rules provide for two classes of general
meetings,
namely annual and special general meetings.
8
A special meeting is normally convened whenever the trustees think
fit upon receipt of a written request by sectional owners entitled
to
25% of the total of the quotas of all sections or by mortgage bonds
over not less than 25% of the total number of units.
9
Accordingly, it is still the responsibility of the trustees to
organise the meeting with regard to place, time and notice. If they
fail owners.
The
purpose of requiring substantial report is to ensure that special
meetings are convened for urgent and important matters only,
such as
dismissal of the chairperson or a trustee(s) or a motion to raise
special levy for unforeseen circumstances.
10
[18]
In casu, on 14 November 2011, some of the owners of units in the
scheme gave notice to the former trustees that they wanted
a special
general meeting to be convened. The request was made by more than 25%
of the owners. The former trustees responded to
the request on 28
November 2011 and stated that a special general meeting would be
arranged for 30 March 2012. The owners were
dissatisfied with the
former trustees' response and proceeded to arrange, as owners, the
special general meeting for 9 February
2012. It was at this special
general meeting that the removal of current trustees due to no
confidence point was added to the agenda
and the former trustees were
removed.
[19]
It is my view that the owners in this case were empowered to call the
extraordinary special meeting, to pass a vote of no confidence
and to
remove the trustees. They submitted the notice of the special general
meeting to the body corporate which was signed by
the statutory
prescribed number of owners and I find nothing unlawful about their
actions. Annexure 8 rule 13(e) also supports
my view, in terms of his
rule a trustee may be removed from office before expiry of his or her
term of office by a resolution passed
by a simple majority at a
special meeting of the body corporate.
[20]
At a general meeting held on 27 March 2012, the respondents were
elected as the new trustees for the second time, clearly showing
the
wishes of the majority of the owners. The former trustees were
notified of the annual general meeting of 27 March 2012 and
that an
election of new trustees will take place. They did not take any steps
to prevent the annual general meeting and have clearly
associated
themselves with the validity and the result of the election at the
annual general meeting. Furthermore, in terms of
management rule 11,
any act performed by the trustees shall, notwithstanding that it is
after the performance of the act discovered
that there was some
defect in the appointment or continuance in office of any trustee, be
as valid as if such trustee has been
appointed.
[21]
The issue of the appointment of the new trustees at the annual
general meeting of 27 March 2012 has become purely academic.
Even if
it was found that the resolution taken at the special general meeting
on 9 February 2012 was invalid, (which is not the
case) it is
irrelevant in the face of the annual general meeting held on 27 March
2012. The appointment of the new trustees on
27 March 2012 is
therefore valid.
[22]
Regarding the issue of punitive costs, it would be unfair to grant a
costs order against the against the applicant (“
the body
corporate”) in the circumstances as the applicant is in reality
the former trustees.
[23]
I therefore make the following order:
(a)
The application is dismissed.
(b)
The former trustees are ordered to pay the costs of the application.
Ms
D S MOLEFE
ACTING
JUDGE OF THE NORTH GAUTENG HIGH COURT
16173-2012
HEARD
ON: 12 NOVEMBER 2012
FOR
THE APPLICANT: ADV J VORSTER
INSTRUCTEDBY:
EY STUART INC
FOR
THE RESPONDENTS: ADV AG SWART
INSTRUCTED
BY: JARVIS JACOBS RAUBENHEIMER INC
1
Management
Rule 13 forms part of Annexure 8 to the Act
2
sI
(I) "owner"
3
'
s36(
1
) of the
Sectional Titles Act 95 of 1986
4
See
annexure 8
rule 4(1)
and
section 39
5
">
5
LAWSA
24 (2) 430
6
s39
7
">
7
Annexure
8 r4(2)
8
Annexure
8
rules 51
-
53
9
">
9
Rule
53
10
LAWSA
24 (2) 440