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2009
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[2009] ZAGPJHC 68
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Rijckshof Body Corporate v Urban Hip Hotels (Pty) Ltd and Another (09/32489) [2009] ZAGPJHC 68 (13 November 2009)
IN THE
SOUTH GAUTENG HIGH COURT
(JOHANNESBURG)
CASE NO:
09/32489
In the matter between:
RIJCKSHOF BODY CORPORATE
Applicant
and
URBAN HIP HOTELS (PTY) LTD
First Respondent
SOUTHNET WILDERNESS (PTY) LTD
Second Respondent
J U D G M E N T
ROOS, AJ
:
[1] The
applicant in this matter is the body corporate of a sectional title
development known as Rijckshof which was established
in terms of
section 36(1) of the Sectional Titles Act No. 95 of 1986 (the Act)
and registered as a sectional title scheme under
SS No. 359/2007 (the
Scheme).
The first respondent administers certain parts of the common
property in the Scheme and operates a rental pool pursuant to a
management agreement concluded with it. The second respondent is the
developer of the Scheme. The application was opposed only
by the
first respondent.
[2] The relief sought by the applicant was an order:
“
1
Declaring that neither the Applicant nor the individual members
thereof are parties to, and nor are they bound by any of the
provisions of the Management Agreement entered into between the
Second Respondent and the First Respondent on 15 March 2007;
Ordering and directing the First Respondent, to the extent that
it presently occupies any part of the common property in the
sectional
title scheme known as RIJCKSHOF (SS No. 359/2007) (‘the
Scheme’), to vacate same and to return to the Applicant, any
of its furnishings, equipment or other movables of any nature
whatsoever, used by the First Respondent in connection with the
Scheme and to return all keys to the units which are in the
possession of the First Respondent.
Ordering and directing the First Respondent to account for all
and any income and expenditure it has received and incurred on
behalf of any individual members of the Applicant and to forthwith
make payment to such members, all such amounts as are due to
them;
Granting further and/or alternative relief; and
Ordering
that the costs of this application be paid jointly and severally,
the one to pay, the other to be absolved, by any party
or parties
who may oppose it.
”
[3] The Scheme
comprises 47 luxury self-catering apartments which are administered
and let out by the first respondent as if the
Scheme was a hotel. The
47 apartments are individually owned. To facilitate the letting out
of the apartments the first respondent
occupies common areas in the
Scheme such as the reception and lobby and various offices. It is
from these common areas that the
applicant seeks the first
respondent’s eviction.
[4] The
development of the Scheme was completed during May 2007. The
registration of transfer of the first unit in the Scheme from
the
developer to a purchaser took place on 30 May 2007. In terms of the
Act the applicant was formed on the date of this first
transfer.
1
[5] On 15 March
2007 the respondents concluded an agreement which is stated to be the
“
Preliminary
Heads of Agreement for Management Agreement
”.
The relevant terms of this agreement are:
“
WHEREAS:
Southnet is the owner of certain land known as Erf 168 Roggebaai
situated on the Corner of Ferry and Wharf Street, Cape Town upon
which land a 47 unit apartment block has been erected and developed
by Southnet;
Southnet intends opening a sectional title register over the 47
apartments units which sectional title register will be known as
Rijckshof (hereinafter referred to as the ‘the Rijckshof
Development’);
Southnet has
sold each of the units in the Rijckshof Development to purchasers
and registration of transfer of most of the said
units to the
purchasers will be effected simultaneously with the date of the
opening of the sectional title register;
In terms of the agreement of sale concluded between Southnet and
each of the purchasers of the apartment units:
each purchaser has the election to place the apartment unit
purchased into a rental pool, which rental pool will be managed by
a manager who will make the unit available.
(ii)
Southnet has the power and authority to appoint a rental pool
manager to manage the rental pool on behalf of the purchasers
referred to in C above and to enter into and negotiate the terms and
conditions by which the rental pool manager will be appointed
to
manage the rental pool on behalf of the purchasers of the apartment
units.
Southnet has investigated and had discussions with various rental
pool managers and has agreed to enter into an agreement with Urban
Hip to manage the rental pool of the Rijckshof Development;
…
G. Due to the
time constraints involved the parties have not had the opportunity to
finalize a formal management agreement in respect
of the Rijckshof
Development but wish to show their bona fides and their intentions to
enter into a management agreement until
such time as they are able to
enter into a more formal rental pool management agreement.
The parties hereto wish to record the preliminary heads of
agreement for the rental pool management agreement, which heads of
agreement will be amplified by a more formal rental pool management
agreement to be finalized between the parties before a specific
date.
…
Southnet, by its signature of these heads of agreement, hereby
appoints Urban Hip as the rental pool manager for the Rijckshof
development for a period of 5 (five) years from date of signature
of this agreement.
The main object of Urban Hip shall be to make the apartment
units available for rental on their rental database and booking
system, to rent out the apartment units in the Rijckshof
Development, and to manage and administer the Rijckshof Development
as 5 (five) star accommodation.
Urban Hip shall immediately, on date of signature of this
agreement, commence its duties as referred to in 1.2 above.
…
5.1
The
parties shall conclude a formal rental pool management
agreement
by no later than the opening of the sectional title
register
of the Rijckshof Development.
5.2 Until
such time as the formal rental pool management agreement has been
concluded these heads of agreement shall be binding
on each party and
shall only be amended if set down in writing and signed by all the
parties.
”
(I
shall refer to this agreement as the Management Agreement.)
[6]
The
units in the Scheme were apparently sold in terms of standard
contracts one of which is annexed to the papers as an example.
The
agreement of sale is one concluded between Southnet Projects (Pty)
Ltd or its nominee as seller and Legito Investment 47 CC
as
purchaser. Attached to the agreement of sale is a schedule of terms
and conditions. The relevant terms are:
“
PREAMBLE
The SELLER
has purchased the LAND with the existing buildings thereon and
intends doing extensive alterations to the BUILDINGS
thereon
substantially in accordance with the BUILDING PLAN and
SPECIFICATION.
The SELLER will make a rental pool available to the owners of the
UNITS in the DEVELOPMENT so that in the event that a owner of
the
UNIT does not reside in the UNIT permanently and/or wishes to let
the UNIT the said owner will make the UNIT available for
letting in
the rental pool and the manager of the rental pool can then let out
the UNIT on behalf of the owner.
The SELLER intends to apply for the approval of the DEVELOPMENT
in terms of the ACT and for the opening of the Sectional Title
Register in respect thereof.
…
COMMON PROPERTY:
The portions of the DEVELOPMENT not forming part of any section
and/or unit in the DEVELOPMENT in terms of the ACT and excludes any
EXCLUSIVE USE AREAS.
…
MANAGER:
The SELLER or its nominee who shall manage the RENTAL POOL.
…
It is recorded that the proposed sectional title scheme is run
subject to the provisions of the MANAGEMENT and RENTAL POOL
AGREEMENT
and that it will therefore comprise of non-residential
facilities associated therewith such as an entrance lobby,
restaurant
and administrative units as will appear from the
PROVISIONAL DRAFT SECTIONAL PLAN. The participation quota for both
the residential
as well as non-residential components of the scheme
shall be determined on a like basis for all sections in the scheme
i.e.
the participation quota of a section shall be a percentage
expressed to four decimal places, and arrived at by dividing the
floor area, correct to the nearest square metre, of the section by
the floor area, correct to the nearest square metre, of all
the
sections in the BUILDING comprised in the scheme.
Until the appointment of Trustees at the inaugural general
meeting of the Body Corporate, the SELLER may delegate any or all
of its powers and duties to the MANAGER who shall be entitled to
exercise such powers as the SELLER may determine.
…
RENTAL POOL AND MANAGEMENT AGREEMENT
By the PURCHASER’S signature to this AGREEMENT, the
PURCHASER is deemed to have entered into the MANAGEMENT and RENTAL
POOL AGREEMENT in the following respects:
13.1.1 Should the PURCHASER make his UNIT AVAILABLE for letting
by the MANAGER then the PURCHASER shall be bound by the terms and
conditions of the MANAGEMENT and RENTAL POOL AGREEMENT in respect of
the letting of the UNIT.
13.1.2 The PURCHASER shall be liable to pay the costs incurred and
the fees of the MANAGER for the running and administration of
the
RENTAL POOL and for the management and administration of the
SECTIONAL SCHEME once the SECTIONAL TITLE REGISTER has been opened
at
the appropriate Deeds Registry.
This sale is concluded subject to the imposition of a condition
by the SELLER as developer in terms of Section 11(3)(b) of the
ACT
whereby the PURCHASER as owner of the UNIT may not alienate the
UNIT without written consent of the SELLER until the Body
Corporate
is established and thereafter, of the Body Corporate, which shall
be obliged to grant such consent if the transferee
enters into an
agreement substantially in the form of the MANAGEMENT and RENTAL
POOL AGREEMENT.
…
20.
CONDITIONS
This agreement is subject to the following conditions:
That the MANAGER continues to manage the DEVELOPMENT, SECTIONAL
SCHEME and RENTAL POOL for at least 10 (ten) years after the
signature of this agreement on the terms and conditions of the
MANAGEMENT and RENTAL POOL AGREEMENT.
This sale is concluded subject to the imposition of a condition
by the SELLER as developer in terms of Section 11(3)(b) of the
ACT
whereby the PURCHASER as owner of the UNIT may not alienate the
UNIT without written consent of the SELLER until the Body
Corporate
is established and thereafter, of the Body Corporate, which shall
be obliged to grant such consent if the transferee
enters into an
agreement substantially in the form of the MANAGEMENT and RENTAL
POOL AGREEMENT.
…
MANAGER
The SELLER
records that the SELLER has entered into a contract with
the MANAGER, for the management and administration of the
DEVELOPMENT, the SECTIONAL SCHEME and the RENTAL POOL.
”
[7] Also attached to the sale agreement was the Management and
Rental Pool Agreement referred to in paragraph 13 of the terms
quoted
above (the Rental Pool Agreement). The relevant terms of the Rental
Pool Agreement are:
“
1
PARTIES
The parties to this Agreement are:
1.1.1 The SELLER in the Agreement of Sale to which this RENTAL
POOL AGREEMENT is an annexure.
The PURCHASER in the Agreement of Sale to which this RENTAL
POOL AGREEMENT is an annexure.
The MANAGER, who shall become and be a party to this MANAGEMENT
and RENTAL POOL AGREEMENT, either on the signing hereof, or on
acceptance of the rights and obligations conferred and imposed on
the MANAGER in this MANAGEMENT and RENTAL POOL AGREEMENT.
1.2 The parties agree as set out below.
…
BODY CORPORATE:
The Body Corporate in respect of the DEVELOPMENT consisting of all
owners of UNITS in the DEVELOPMENT.
LETTING OWNER:
Any PURCHASER
in the AGREEMENT who makes his UNIT available to the RENTAL POOL for
letting by the MANAGER.
…
MANAGER:
The SELLER or its nominee.
MANAGEMENT and RENTAL POOL AGREEMENT:
This Agreement, which is an annexure to the AGREEMENT.
…
The OWNER irrevocably and in rem suam, appoints the MANAGER as
his agent, effective from the date upon which the MANAGER commences
his duties as such or the date of commencement of this MANAGEMENT
and RENTAL POOL AGREEMENT, whichever is the later, to:
manage and administer the DEVELOPMENT and the SECTIONAL SCHEME
for a period of 10 years from date of the opening of the SECTIONAL
SCHEME;
...
Furthermore, notwithstanding any Management Rules in respect of
the DEVELOPMENT and SECTIONAL SCHEME, the OWNER and the LETTING
OWNER, agree to be bound by any unanimous resolution, in terms of
the Act, of the BODY CORPORATE, passed by not less than 75%
of the
owners of the Units in the DEVELOPMENT and SECTIONAL SCHEME and
shall be deemed to have been accordingly extended or
renewed, as
the case may be, with the MANAGER (being the MANAGER that is a
PARTY to this MANAGEMENT and RENTAL POOL AGREEMENT).
…
The MANAGER shall manage and administer the DEVELOPMENT and the
SECTIONAL SCHEME for all the owners of units in the DEVELOPMENT
and
SECTIONAL SCHEME and shall make the UNIT available to OCCUPIERS
during the operation of this MANAGEMENT and RENTAL POOL
AGREEMENT.
…
5.3 For the duration of this MANAGEMENT and RENTAL POOL
AGREEMENT, the MANAGER is entrusted with the control and management
of
the DEVELOPMENT and shall be responsible for attending to all such
matters as are normally attended to by the manager of such a
development, and, in particular, the following:
5.3.1 the maintenance of the interior of the UNITS in the
DEVELOPMENT and the SECTIONAL SCHEME and the furniture, furnishings,
fixtures and fittings, appliances and equipment therein;
the replacement through damage or fair wear and tear of all
furniture, furnishings, fixtures and fittings, appliances and
equipment in the UNIT and COMMON PROPERTY;
the control of all room OCCUPIERS and their visitors;
…
SOLE CONTRACTUAL RELATIONSHIP
10.1
The
PARTIES hereto acknowledge that the
AGREEMENT,
the said management contract and this
MANAGEMENT
and RENTAL POOL AGREEMENT
contain
the entire agreement between them and that
no
other conditions, stipulations, warranties and/or
representations
whatsoever have been made by any
PARTY
or their agents other than as set forth in the
AGREEMENT,
the said management contract and
this
MANAGEMENT and RENTAL POOL
AGREEMENT.
10.2 No
variation of this MANAGEMENT and RENTAL POOL AGREEMENT shall affect
the terms hereof unless such variation shall be reduced
to writing
and signed by the PARTIES hereto.
”
[8] For reasons
that are not relevant to this decision the applicant and its
individual members became unhappy with the manner
in which the first
respondent was managing the rental pool. At a meeting of trustees
held on 28 November 2008 the trustees unanimously
resolved to
terminate the mandate of the first respondent as the rental pool
manager. Pursuant to this resolution the trustees
sent a special
resolution to each of the individual owners of units in the Scheme.
The resolution provides
inter
alia
for the chairman of the trustees of the applicant to act for and on
behalf of all members of the applicant and to terminate the
mandate
of the rental pool manager (i.e. the first respondent) on an
appropriate effective date. It is alleged that in excess
of 75% of
the members signed and returned the special resolution.
[9] On 16 March
2009 the trustees of the applicant sent a notice to all owners in the
Scheme seeking approval of a further resolution.
The relevant portion
of the notice is as follows:
“
The
attorneys have further deemed it requisite that the approval by the
members of the above actions be obtained by way of Special
Resolution. In the circumstances, please find attached hereto a draft
resolution, which will strengthen our application, thereby
protecting
all our rights and investment in Rijkshof.
We require
75% approval by the owners, both in number and value.
Your
urgent attendance hereto is vital
.
The signed resolution can be returned to me or any other Trustee as
per the detail below.
”
[10] Attached
to the notice was a special resolution in the following terms:
“
RESOLVED:
1. That the Body Corporate institute Court proceedings against
Urban Hip Hotels for an Order in the following terms:
1.1 declaring UHH to have no contractual rights against Rijckshof
and/or the individual members of Rijckshof;
1.2 evicting
UHH from the Rijckshof premises and ordering UHH to restore
undisturbed possession of Rijckshof to the trustees or
their nominee;
1.3 ordering UHH to account fully to the Rijckshof body corporate
for any and all amounts charged to the body corporate and/or the
individual owners during their period of possession of Rijckshof, and
to reimburse the body corporate and/or the individual owners
to the
extent that any such amounts have not been contractually or otherwise
lawfully charged by UHH.
2. That the Body Corporate take whatever steps, institute such
Court processes and take whatever legal counsel and opinion necessary
in order to investigate and, if necessary, enforce and protect the
rights and claims of the Body Corporate and the members of the
Body
Corporate against Southnet Projects (Pty) Ltd and/or Southnet
Wilderness (Pty) Ltd (jointly ‘the Seller/Developer’),
including, inter alia:
challenging the enforceability of any third party contracts
purportedly concluded by the Developer on behalf of the Body
Corporate;
enforcing the rights of the members of the Body Corporate and
obligations of the Developer in terms of the various agreements of
sale of sections in Rijckshof;
investigating a possible claim for damages against the Developer
for material misrepresentation by the Developer in the course
of
its marketing of the Rijckshof scheme.
That the
trustees
of Rijckshof be and are hereby authorised to take any and all steps
necessary in order to achieve the matters recorded
under paragraphs
1 and 2 above, as well as any matters ancillary thereto.
”
[11] It is
alleged that the resolution was approved by more than 80% of the
members and that no formal objections to the resolution
were received
from any of the members.
[12] It is
alleged that the owners of only five out of the 47 units did not
respond to the notice. Of the five units three are
owned by the
second respondent. These figures were not placed in dispute by the
first respondent. Accordingly I must find that
89,36% of the owners
responded to the notice and approved the resolution attached thereto
and which is quoted above.
[13] On 29
November 2008 the applicant addressed a letter to the first
respondent requiring it to accept and set a date for negotiating
with
the applicant for the conclusion of a formal agreement for the future
operation of the Scheme. The first respondent was required
to set a
date not later than 15 January 2009. After setting out the
applicant’s requirements for the agreement the letter
states as
follows:
“
Should
you find any of the above requirements impossible to comply with,
this letter shall serve as official notice that:
1. Your
services as Hotel Manager at Rijckshof, currently operating as ‘Circa
on the Square’, are then to be terminated
effective 1
st
February 2009; and
2. In such a
case, you are hereby given official notice to vacate the premises of
Rijckshof by not later than 13h00 on the 1
st
of February 2009; and
3. You are
further required to prepare and submit, by not later than 15
th
January 2009, a suitable plan and program for the official handing
over of the hotel operation as a going concern to the Body Corporate,
the date of which should not be later than 30
th
January 2009.
”
[14] On 12
December the first respondent’s attorney responded to the
applicant’s letter of 29 November 2008. Having
stated that they
act on behalf of the first respondent they say:
“
A
management agreement was concluded between the developer of your
sectional scheme, Southnet Wilderness (Proprietary) Limited
(the
developer)
and Urban Hip Hotels on 15 March 2007.
”
This clearly is
a reference to the Management Agreement referred to above.
[15]
Correspondence was thereafter exchanged between the attorneys acting
for the applicant and the first respondent respectively.
On 19
February 2009 the applicant’s attorney wrote to the first
respondent’s attorney. The relevant portion of the
letter is:
“
3. In
your letter to my client dated 12
th
December 2008, you referred to a management agreement allegedly
concluded between your client and Southnet Wilderness on 15
th
March 2007. In my letter of 30
th
January 2009, I advised that the only agreement that I am aware of
between your client and Southnet Wilderness, is a document entitled
‘Preliminary Heads of Agreement for Management Agreement’,
dated 15
th
March 2007. Should your client rely on any contract other than the
‘Preliminary Heads of Agreement for Management Agreement’,
you are hereby called upon to provide me with a copy of such
agreement by Friday 20
th
February 2009, failing which my client’s papers will be drawn
on the basis that no such further agreement exists, and that
your
client claims its rights purely from the aforesaid document.
”
[16] On 24 February 2009 the applicant’s attorney responded to
the aforesaid letter as follows:
“
3 At
the outset we point out that our client reiterates its stance as
recorded in its facsimile to your client dated 12 December
2008. For
your ease of reference, a copy of this facsimile is attached hereto
marked Appendix 1.
4 With respect to your client, kindly note the following:
At no stage was any agreement concluded with your client nor was
this ever intended.
4.2 Our
client has only contracted with individual owners of units that are
situated in your scheme. As recorded in our initial
facsimile,
individual owners had the choice (and still have the choice) to
either participate in the rental poor or not. This is
not a centrally
controlled function as appears to be envisaged by your client.
”
[17] It is
clear that the allegations made in paragraphs 3 and 4 of this letter
as quoted above are contradictory. In the letter
of 12 December the
first respondent relied on the Management Agreement concluded with
the developer on 15 March 2007. In paragraph
3 it purports to
reiterate this contention. In paragraph 4.2 however it contends that
it contracted only with the individual owners
of units in the Scheme.
[18] The applicant contends that neither the Management Agreement
nor the Rental Pool Agreement are valid or enforceable against
it and
that it is accordingly entitled to the eviction order that it seeks
against the first respondent.
[19] The defences raised by the first respondent were:
That the
applicant had no
locus
standi
.
That there had
been a material non-joinder as the owners of the individual units
in the Scheme were the parties with which it
had contracted to
manage the rental pool and they should accordingly have been joined
as parties to the application. It also
contended that Southnet
Projects who was the seller of the individual units in the Scheme
had nominated it as the manager of
the rental pool and that it also
should have been joined as a party.
It contended
further that the contracts between it and the individual owners of
units in the Scheme had not been cancelled and
that it accordingly
was entitled to remain in occupation of the common property
occupied by it to enable it to perform its
functions as rental pool
manager.
19.4 The first
respondent also
contends
that there is a tacit agreement with the applicant that it is
entitled to occupy common property presently occupied by
it in order
to carry out its obligations in terms of the agreements with each of
the individual owners.
[20] When the matter was called counsel for the parties advised me
that an agreement had been reached between the parties that:
The applicant
would no longer oppose the application for condonation by the first
respondent for the late filing of its answering
affidavit which
application was opposed by the applicant until that stage.
The first respondent would not persist with its point that there
had been a material non-joinder.
[21] If an
applicant concedes that a respondent has an existing right to occupy
property an eviction order cannot be granted unless
such right has
been terminated. The
onus
to
prove the termination rests on the applicant.
2
[22] It seems
appropriate to start with the determination of whether the applicant
has
locus
standi
or not. Mr Hitchings for the first respondent did not press this
point in argument. I gained the impression that he regarded
the
locus
standi
point as being coupled to the point of non-joinder which by agreement
the first respondent did not persist with. However he did
not abandon
the defence of
locus
standi
and it remains an issue on the papers. In my view the applicant does
have
locus
standi
for the following reasons:
“
Common
property
”
is defined in the Act as meaning the land included in the Scheme
and such parts of the building or buildings as are
not included in
a section.
“
Section
”
means a section as shown on a sectional plan.
A “
unit
”
means a section together with its undivided share in common
property apportioned to that section in accordance with
the quota
of the section.
Having regard to
the above definitions it is clear that the common property is owned
by each of the individual owners of units in
undivided shares
apportioned in accordance with the quota of the section as shown on
the sectional plans.
“
Body
corporate
”
in relation to a building and the land on which such building is
situate means the body corporate of that building referred
to in
section 36(1) of the Act. Section 36(1) of the Act provides as
follows:
“
With
effect from the date on which any person other than the developer
becomes an owner of a unit in a scheme there shall be deemed
to be
established for that scheme a body corporate of which the developer
and such person are members and every person who thereafter
becomes
an owner of a unit in that scheme shall be a member of that body
corporate.
”
Accordingly every owner of a unit in the Scheme is a member of the
body corporate.
In terms of
section 36(4) of the Act the body corporate is
responsible for
the enforcement of the rules
and
for the control, administration and management of the common property
for the benefit of all owners.
Section 39(1) of the Act provides that the functions and powers of
the body corporate shall be performed and exercised by the
trustees
of the body corporate holding office in terms of the rules.
The applicant
is acting in this matter pursuant to a resolution passed by 89,36%
of the owners of individual units in the Scheme.
The Act provides
that where a resolution has been passed by at least 80% of all
members of the body corporate that it is deemed
to be a unanimous
resolution.
3
Because the
individual owners only own an undivided share of the common
property they cannot individually apply for the eviction
of the
first respondent. Conceivably they could have done so if all the
individual owners joined in the application. However
in terms of
section 36(4) the control of the common property has been removed
from the individual owners and vests in the applicant
who has to
exercise such control for the benefit of all the owners. In my
view therefore it is only the applicant who has
locus
standi
to pursue eviction proceedings. The individual owners would not
have the right to pursue eviction proceedings on the ground
that
they own the property because they have been divested of control of
the property in terms of section 36(4) of the Act.
This view is
supported if it is borne in mind that the applicant is effectively
acting on behalf of the owners pursuant to
the unanimous resolution
authorising it to do so.
[23
]
The next issue that requires determination is whether the first
respondent has a right to occupy the common property in the Scheme
and if so what the source of such right is.
[24
]
In the correspondence from the first respondent’s attorney
referred to above the first respondent relied on both the Management
Agreement and the Rental Pool Agreement despite these allegations
being contradictory for the reasons set out above. In the answering
affidavit the first respondent relied only on the Rental Pool
Agreement which it contended was concluded with each individual owner
and coupled to this it alleged a tacit agreement with the applicant
entitling it to occupy the common property to enable it to
carry out
its obligations in terms of its agreements with the individual
owners.
[25
]
As regards the Management Agreement:
It was
concluded between the first respondent and the developer (the
second respondent) on 15 March 2007 prior to the establishment
of
the body corporate on 30 May 2007 when the first transfer of a unit
in the Scheme was registered.
It is clear
from paragraphs D and E of the Preamble quoted above that the
developer believed it had both the power and authority
to appoint a
rental pool manager and purported to do so in terms of the
Management Agreement. It is not possible to ascertain
on what
basis the developer based its belief that it had both the power and
authority to appoint a rental pool manager. The
developer was not
the seller of the units despite the recordal to the contrary in
paragraph C of the Preamble of the Management
Agreement quoted
above. The seller in each case was Southnet Projects (Pty) Ltd or
its nominee. Mr Porteous for the applicant
submitted that the
court should find that the second respondent as the owner and
developer of the land was the seller’s
nominee. There is no
such nomination in the papers before me. In addition the
contention that the developer was the seller’s
nominee in my
view conflicts with paragraph A of the Preamble to the terms
attached to the Sale Agreement which records that
the seller had
purchased the land with the existing buildings thereon. Mr
Porteous submitted however that even if the developer
had the right
to conclude a Management Agreement with the first respondent that
the applicant was not bound by the terms of
such an agreement
because of the provisions of Rule 50(2)(4) of the Rules applicable
to the Scheme read with section 47(2)
of the Act.
The Rules of the Scheme are the management rules promulgated in
terms of section 35(2)(a) of the Act and contained in Annexure
8 to
the Act.
Rule 50(1) provides that the first meeting of owners shall be held
within 60 days of the establishment of the body corporate.
It
requires 7 days’ notice of such a meeting to be given in
writing and to be accompanied by a copy of the agenda to
be
discussed at the meeting.
Rule 50(2)(iv) provides:
“
(2) The
agenda for the meeting convened under subrule (2) shall comprise at
least the following:
(iv) subject
to section 47(2) of the Act the taking of cession of such contracts
relating to the management control and administration
of the building
as may have been entered into by the developer for the continual
management control and administration of the building
and the common
property and in respect of which the developer shall be obliged to
submit such contracts to the meeting.
”
Section 47(2) of the Act provides:
“
No
debt or obligation arising from any agreement between the developer
and any other person shall be enforceable against the body
corporate.
”
The minutes of
the inaugural general meeting of the body corporate which was held
on 14 June 2007 refers to the cession and
adoption of two contracts
concluded by the developer. They are the Lease Agreement concluded
with Zelkar Investments 39 CC
in respect of the restaurant in the
Scheme and an agreement concluded with Thornburn Security Solutions
(Pty) Ltd for providing
security at the Scheme. There is no
reference to the Management Agreement concluded with first
respondent. Accordingly I must
find that the Management Agreement
concluded with the first respondent was not submitted to the
inaugural meeting as required
by Rule 50(2)(iv) and as a result
thereof that it is not binding on the body corporate pursuant to
the provisions of section
47(2) of the Act.
In any event
it is clear from the terms of the Management Agreement quoted above
that it was intended to be only a preliminary
agreement and that
the parties were to conclude a Management Agreement by not later
than the opening of the sectional title
register. The sectional
title register was opened on 30 May 2007. It is not contended that
a Rental Pool Management Agreement
was concluded with the first
respondent by that date.
In addition in
terms of clause 1.1 of the Management Agreement quoted above the
first respondent was appointed for a period
of 5 years from the
date of signature of the agreement. Apart from the fact that this
is in conflict with paragraphs G and
H of the Preamble and clauses
5.1/2 of the Agreement it is also in conflict with the provisions
of Rule 46(1) which determines
the manner in which the managing
agent is to be appointed in a sectional title scheme. The Rule
provides as follows:
“
46(1)(b)
A managing agent is appointed for an initial period of one year and
thereafter such appointment shall automatically be
renewed from year
to year unless the body corporate notifies the managing agent to the
contrary: Provided that notice of termination
of the contract may be
given by the trustees in accordance with a resolution taken at a
trustee meeting or an ordinary resolution
taken at a general
meeting.
”
25
.10
Apart from the fact that the developer had no right to appoint the
first respondent as managing agent for a period in excess
of one year
the trustees have given notice of termination of the contract
pursuant to a trustee’s resolution per the letter
addressed by
the trustees to the first respondent on 29 November 2008 and which is
referred to above.
Accordingly I
find that even if the developer had the right to conclude the
Management Agreement with the first respondent which
in my view is
doubtful that the terms of such agreement are not binding on the
applicant and that the agreement has in any event
been properly
terminated. Apart from the above it is also apparent from the terms
of the agreement that it did not give the first
respondent the right
to occupy the portions of the common property presently occupied by
it.
[26
]
The next issue to be determined is whether the first respondent is
entitled to occupy the common property in terms of the individual
agreements which it contends it has with the owners of the individual
units. In my view it has no such right for the following
reasons:
The seller in
each case was Southnet Projects (Pty) Ltd or its
nominee.
In terms of
clause 13.1 of the Terms and Conditions attached to the Agreement
of Sale the individual purchasers were deemed
to have entered into
the Management and Rental Pool Agreement on the basis set out in
that clause.
The manager in
the Rental Pool Agreement is defined as the seller or its nominee.
As stated above Mr Porteous submitted that
the nominee was in fact
the developer. For the reasons set out above I find that this
submission cannot be upheld. The first
respondent contends that it
was the seller’s nominee. I cannot uphold this contention for
the following reasons:
There is no
document evidencing the alleged nomination. It is inconceivable
that such a nomination could have occurred orally.
In addition
clause 1.1.3 of the Rental Pool Agreement provides that the
manager shall only become a party to the agreement
if it signs the
agreement or accepts the rights and obligations conferred and
imposed on the manager in the agreement. It
is not alleged that
the first respondent signed the agreement nor is it alleged that
it accepted the rights and obligations
conferred and imposed in
terms of the agreement. There is no document evidencing such an
acceptance and again I find that
it is inconceivable that such an
acceptance could have been oral.
26
.3.2
The contention that the first respondent was the seller’s
nominee was raised for the first time in the answering affidavit.
It
was never raised in the letters written by its attorney on its
behalf. In particular it was not raised in the letter written
in
response to the letter form the applicant’s attorney in which
the first respondent’s attorney was requested to advise
exactly
what right its client was relying upon for the occupation of the
property. It is inconceivable that if the first respondent
intended
relying on the fact that it was the seller’s nominee that it
would not have stated this in response to the said
request.
26
.3.3
Even if the first respondent was appointed as the manager in terms
of the Rental Pool Agreement clause 4.2 of the agreement
purports to
appoint the first respondent as a manager for 10 years. This is in
conflict with the provisions of Rule 46(1)(b) quoted
above and is
therefore unenforceable.
In terms of
clause 4.5 of the Rental Pool Agreement if the first respondent
was in fact appointed as the manager pursuant
to a nomination by
the seller then it is bound by the unanimous resolution of the
body corporate to terminate such appointment.
26
.3.5
Apart from the above it is apparent from the terms of the Rental
Pool Agreement quoted above that on a proper interpretation
thereof
it does not provide the first respondent with the right to occupy the
common property.
In
addition Mr Porteous submitted that in any event the Rental
Agreement was not binding on the applicant as it was not a
party
to the agreement.
[27
]
It remains to consider whether the first respondent is entitled to
rely on the tacit agreement it contends for. There are currently
two
conflicting tests for inferring the existence of a tacit contract.
The first test was stated as follows:
“
In
order to establish a tacit contract it is necessary to show by a
preponderance of probabilities unequivocal conduct which is
capable
of no other reasonable interpretation than that the parties intended
to and did in fact contract on the terms alleged.
It must be proved
that there was in fact consensus ad idem
.”
4
The other test
has been stated to be:
“
A
court may hold that a tacit contract has been established where by a
process of inference it concludes that the most plausible
probable
conclusion from all the relevant proved facts and circumstances is
that a contract came into existence
.”
5
[28
]
I shall assume for the purpose of this judgment that the test as
stated in the
Joel
Melamed
case
is the correct one because it appears in the later of the Appellate
Division’s decisions. Whichever of the tests is to
be applied
however it is clear that what is required is that the court must draw
an inference from the conduct of the parties to
determine whether the
tacit agreement contended for has come into existence.The onus to
allege and prove the facts or conduct
rests on the first
respondent.
6
I am unable to draw any inference in this matter because the first
respondent has failed to set out in its answering affidavit
the
conduct that it relies on for contending that a tacit agreement came
into existence. It has therefore failed to establish the
essentials
of such an agreement and cannot rely on it.
[
29]
For the reasons set out above the applicant is in my view entitled
to an order in terms of prayers 1 and 2 as quoted above.
In my view
it has made out no case in support of the relief claimed in prayer 3.
The accounting it claims can only be claimed
in terms of contracts
concluded between the first respondent and the individual owners.
Whilst I have found that the applicant
has
locus
standi
to claim an eviction of the first respondent for the reasons set out
above this is based largely on the provisions of section 36(4)
of the
Act which vests the control of the common property in the applicant.
There is no similar provision in the Act which would
entitle the
applicant to claim an accounting from the first respondent on behalf
of the individual owners nor has Mr Porteous
for the applicant
referred me to any provision or authority entitling it to do so.
[30] The relief
claimed in prayer 2 is deficient because it does not set a date by
which the first respondent is to vacate the
property nor does it
provide a remedy should the first respondent fail to vacate the
property in terms of the order. Accordingly
I grant the following
order:
1. Prayer 1 of the Notice of Motion is granted.
2. The first
respondent is ordered to vacate the common property in the sectional
title scheme known as Rijckshof (SS No. 359/2007)
(the Scheme) by not
later than 15 December 2009.
3. Should the
first respondent fail to vacate the common property of the Scheme by
15 December 2009 the Sheriff is authorised and
directed to evict the
first respondent from the property.
4. The first
respondent is ordered to return to the applicant all furnishings,
equipment or other movables of any nature whatsoever
used by the
first respondent in connection with the Scheme and to return all keys
to the units which are in the possession of the
first respondent.
5. The first respondent is to pay the costs.
________________________________
J F ROOS
ACTING JUDGE OF THE HIGH COURT
COUNSEL FOR APPLICANT ADV G F PORTEOUS
INSTRUCTED BY ANDREW DE JONGH ATTORNEYS
c/o BOUWER CARDONA INC
COUNSEL FOR FIRST
RESPONDENT ADV B HITCHINGS
INSTRUCTED BY A WOLMARANS INC
COUNSEL FOR SECOND
RESPONDENT NONE
INSTRUCTED BY ROSSOUWS LESLIE INC
DATE OF HEARING
DATE OF
JUDGMENT 13
th
November 2009
1
Section
36(1) of the Act.
2
See
Chetty
v Naidoo
1974 (3) SA 13
(AD) at 20D-21H.
3
See
definition of unanimous resolution in section 1 of the Act.
4
See
Standard
Bank of South Africa Ltd v Ocean Commodities Inc
1983 (1) SA 276
(A) at 292.
5
See
Joel
Melamed and Hurwitz v Cleveland Estates (Pty) Ltd
[1984] ZASCA 4
;
1984 (3) SA 155
(A) at 164G-165G and
Charles
Velkes Mail Order 1973 (Pty) Ltd v CIR
1987 (3) SA 345
(A) at 357H-I.
6
Roberts Construction Co. Ltd v Dominion
Earthworks(Pty)Ltd
1968 (3) SA 255
at 261 D -
F