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WILSON J:
1 The applicants are the managing agent and three section owners of a
sectional title scheme in the Maboneng precinct in Johannesburg’s inner city.
They seek relief under sections 9 and 16 of the Sectional Titles Schemes
Management Act 8 of 2011 (“the Sectional Titles Act”). Under section 9, they
seek the appointment of a curator ad litem to investigate whether legal
proceedings should be instituted on behalf of the first respondent, the Body
Corporate, to compel the fifth respondent, Laudefield, to make good on its
debts to the Body Corporate, and to desist from operating two nightclubs on
the ground floor of the sectionally held property. Under section 16, the
applicants seek the appointment of an administrator to run the Body
Corporate’s affairs while the curator ad litem carries out his investigation. The
remaining respondents are the trustees of the Body Corporate.
2 The applicants’ case is that Laudefield has essentially captured the Body
Corporate, in that it corruptly controls the trustees and has induced them to
overlook its ongoing indebtedness to the Body Corporate along with its breach
of zoning regulations and body corporate rules that would ordinarily forbid the
running of a nightclub at the property. The papers disclose that Laudefield’s
nightclubs have caused significant disturbance to at least some of the
applicants’ tenants, who have terminated their leases and left the property.
3 For their part, the respondents deny either that Laudefield exercises any
improper influence over the Body Corporate, or that Laudefield is indebted to
it. Their case on the legality of the two nightclubs at the property is harder to
fathom. However, it seems to me that there is a straightforward dispute of fact
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on the papers about the nature and extent of Laudefield’s indebtedness to the
Body Corporate and the legality of its activities on the property. The question
is really whether that dispute is material to the relief the applicants seek.
4 The respondents also raise a further defence of res judicata. They say that the
nature and extent of Laudefield’s indebtedness has been finally and
definitively determined by a Community Schemes Ombud Service
adjudication order dated 8 December 2025. The respondents say that, in his
order, the adjudicator held that Laudefield’s debt to the Body Corporate had
been settled in full.
5 I will deal first with the plea of res judicata. I will then turn to whether the papers
disclose a case for either form of relief the applicants seek.
Res Judicata
6 It seems to me that the plea of res judicata, even at its broadest, cannot be a
complete answer to the applicants’ case. The applicants seek the appointment
of a curator ad litem under section 9 of the Sectional Titles Act and an
administrator under section 16. The adjudicator was not empowered to
consider the applicants’ entitlement to this relief. Nor did he purport to do so.
His jurisdiction was confined to the questions that he was statutorily
empowered to answer under sections 39 (1) (c) and (e) of the Community
Schemes Ombud Service Act 9 of 2011. Those questions, in the case before
the adjudicator, revolved around whether contributions due by Laudefield
were actually paid to the Body Corporate.
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7 At paragraph 22 of his decision, the adjudicator found that Laudefield had
discharged its obligations under one of two acknowledgements of debt it
entered into with the Body Corporate. If the applicants’ case was limited to the
proposition that Laudefield had failed to discharge that obligation, then they
might in principle have been issue estopped from raising that proposition again
in t hese proceedings, the adjudicator’s finding being res judicata on that
question. However, the applicants’ case goes much further. It is not just that
the acknowledgements of debt ha d not been satisfied. It is, at least in part,
that they should not have been entered into in the first place. The applicants’
overall case is both that Laudefield benefits from impermissibly easy payment
terms with the Body Corporate and that, even on those terms, it has not
discharged its indebtedness. The adjudicator made no finding on that issue.
8 In any event, it seems to me that the adjudicator’s finding on the point was so
poor that it cannot equitably be held to estop the applicants from going behind
it (see, in this respect Prinsloo NO v Goldex 15 (Pty) Ltd 2014 (5) SA 297
(SCA), paragraph 26). The adjudication order consisted, in the main, of a
lengthy summary of the parties’ submissions followed by a two-line assertion
that the one of two acknowledgements of debt had been discharged. The
decision was devoid of the reasons necessary to link the parties’ submissions
to the adjudicator’s conclusion. In those circumstances, I do not think it would
be fair to bind the applicants to the adjudicator’s finding on the relevant issue.
9 Accordingly, I reject the plea of res judicata.
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Relief under the Sectional Titles Act
Section 9
10 Section 9 (3) of the Sectional Titles Act empowers me to appoint a curator ad
litem and to direct him to conduct an investigation of a body corporate’s failure
to institute proceedings to claim damages, recover loss or obtain a benefit in
respect of a matter mentioned in section 2 (7). Section 2 (7) of the Act lists a
series of matters in relation to which a body corporate is capable of suing and
being sued in its own name. Under section 9 (2) of the Act, an owner of a
section may apply for the appointment of a curator ad litem if notice has been
given to the body corporate to institute proceedings to claim the damages,
recover the loss or obtain the benefit said to be due, and those proceedings
are not instituted within one month of the notice being given.
11 Section 9 (3) of the Act gives me the discretion to appoint the curator ad litem
if the body corporate has not instituted the relevant proceedings itself, despite
notice having been given; if there are prima facie grounds on which such
proceedings may be pursued; and if an investigation into such grounds and
into the desirability of the institution of such proceedings is justified. Although
section 9 (3) does not expressly say so, I think that I must also be satisfied
that the proceedings contemplated are proceedings in connection with the
matters set out in section 2 (7). Once I am so satisfied, section 9 (3) envisages
that I should make a provisional order appointing a curator ad litem and set a
return day for the curator to furnish a report setting out whether the relevant
proceedings should be instituted.
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12 I must obviously be satisfied, on the undisputed facts, that the notice to the
body corporate required under section 9 (2) has been given. However, given
the provisional nature of the relief sought, it seems to me that the other
requirements set out in section 9 (3) need only be met prima facie. In other
words, a curator ad litem must generally be appointed if, on the facts
applicants allege, the requirements have been fulfilled, and the respondents
have not cast any serious doubt on those facts (see, for example, Webster v
Mitchell 1948 (1) SA 1186 (W) at 1189).
13 In this case, it seems to me, at least prima facie, that Laudefield has not paid
all that it owes to the Body Corporate, whether under the acknowledgements
of debt or otherwise; that Laudefield enjoys suspiciously easy payment terms
from the Body Corporate; and that Laudefield has set up two nightclubs on the
property which violate the relevant zoning regulations and body corporate
rules, and which have caused a nuisance that the Body Corporate has
declined to address. These facts are set out in the applicants’ founding and
supplementary papers. While those facts are in some respects disputed by
the respondents, they have not been thrown into serious doubt. It also seems
to me that relief concerning any of these controversies is relief connected with
a “contract entered into by the body corporate” and with a matter arising out
of the exercise its powers or “the performance or non-performance of any of
its duties” under the law or its own rules (see sections 2 (7) (a) and (d) of the
Act).
14 It is of course for the curator ad litem to consider whether and to what extent
the Body Corporate may be entitled to relief in connection with these matters,
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or any other matter set out in section 2 (7). It is enough, I think, that I be
satisfied that asking the curator ad litem to investigate the issue would be
justified and that there are, prima facie, grounds set out in the papers for
proceedings to be taken by the Body Corporate against Laudefield for the
payment of its debts and to abate the nuisance caused by its two nightclubs.
15 I am so satisfied. The applicants have identified a curator ad litem, who is
willing to be appointed. The respondents opposed the appointment of a
curator ad litem in principle, but they did not object to the particular curator the
applicants proposed.
16 In these circumstances, a provisional order under section 9 (3) of the Sectional
Titles Act should follow.
Section 16
17 The relief under section 16 is more difficult. The appointment of an
administrator would essentially divest the Body Corporate and its trustees of
all their powers. The appointment of an administrator has, quite rightly, been
described as a “drastic power” which should “normally only be exercised when
[the members of a body corporate] are not in a position properly to perform
the functions assigned to them” or where “the body corporate has not elected
trustees or where for some other reason the affairs of the body corporate are
not being or not capable of being administered in the fashion that the Act
contemplates” (see Herald Investments Share Block (Proprietary) Limited v
Meer 2010 (6) SA 599 (KZD) at paragraph 46).
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18 It follows, I think, that where there is a method, short of the appointment of an
administrator, which has a realistic prospect of correcting any
maladministration within a body corporate, that method ought to be attempted.
It seems to me that favouring one section owner over another to the extent
that the body corporate declines to proceed against that owner when it should
do so would be clear evidence of maladministration, but it would not on its own
justify the appointment of an administrator where relief under section 9 had
neither been pursued nor shown to be ineffective. Section 9 is plainly an
intermediate course of action that may be pursued to deal with a confined
instance of maladministration, especially where a body corporate appears
otherwise to be well-managed and administered.
19 I cannot say that it has been shown that the Body Corporate in this case is
particularly well-run, but nor has it been shown, on the undisputed facts, that
there is “evidence of serious financial or administrative mismanagement of
the body corporate”, which is what section 16 (1) (2) (a) (i) of the Sectional
Titles Act requires. In other words, the papers do not justify the conclusion, at
least on the test applicable to applications for final relief (which is what the
appointment of an administrator would be), either that the Body Corporate in
fact provides Laudefield with unlawful preference and consideration in the
exercise of its powers, or that so treating Laudefield is, in itself, evidence of
the kind of mismanagement that would justify the appointment of an
administrator.
20 Mr. Peter, would appeared for the applicants, argued that to appoint a curator
ad litem without appointing an administrator, would unduly hamper the curator
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in the performance of his functions. I do not think that follows. The curator’s
role is chiefly one of fact-finding. Because he steps into the shoes of the Body
Corporate for the purposes of considering whether proceedings ought to be
brought against Laudefield, he is entitled to full access to all the Body
Corporate’s records, and the trustees of the Body Corporate have a duty of
candour when dealing with any of his inquiries. In addition, I intend to
supervise the production of the report, and the curator will be at liberty, on
notice to the parties, to apply to me in chambers for such relief as he may
require to finalise his report.
21 It is of course possible that the Body Corporate, its officers and its agents may
seek to obstruct or conceal things from the curator ad litem. If that happens, it
will not take the curator long to notice, at which point it may be appropriate to
appoint an administrator, since the threshold of “serious financial or
administrative mismanagement” will likely have been met. But I do not think
that threshold has been reached on the facts as they presently stand.
22 Accordingly, the relief seeking the appointment of an administrator will be
postponed sine die. The applicants will be entitled to revive the application for
that relief if and when the facts justify it.
Costs
23 I think much of the opposition to the relief I will now grant was misconceived,
bordering on unreasonable. However, on balance, it seems prudent to reserve
the costs of the proceedings to date until a clearer picture of the Body
Corporate’s affairs emerges.
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Order
24 For all these reasons –
24.1 Charles Beckenstrater, a partner of Moodie and Robertson
Attorneys, is appointed as provisional curator ad litem for the first
respondent in terms of section 9 (3) of the Sectional Titles Schemes
Management Act 8 of 2011 ("the Sectional Titles Act") to conduct an
investigation and report back to Wilson J on the following issues –
24.1.1 whether the second to fourth respondents determined and
concluded an acknowledgement of debt with the fifth
respondent in a manner which is contrary to the rules
governing the
management of the first respondent; in
circumstances where the second to fourth respondents had
a material interest in the conclusion of the
acknowledgement
of debt, and thereby took a decision in
conflict with the interests
of the first respondent; and/or in
a manner which contravenes their fiduciary dut ies to the
first respondent.
24.1.2 whether the second to fourth respondents have permitted
the renovation of the common property in a manner which
is contrary to the rules governing the
management of the
first respondent ; in circumstances where the second to
fourth respondents had
a material interest in allowing the
construction to take place, and thereby took a decision in
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conflict with the interests of the first respondent; and/or in
a manner which contravenes their fiduciary duties to the
first respondent.
24.1.3 whether the second to fourth respondents have permitted
the fifth respondent to utilise the units it owns within the
body corporate in a manner which is contrary to the rules
governing the
management of the first respondent; in
circumstances where the second to fourth respondents had
a material interest in allowing the fifth respondent to
conduct
itself as it deemed fit, and thereby took a decision
in conflict with
the interests of the first respondent; and/or
in a manner which contravenes their fiduciary duties to the
first
respondent.
24.1.4 whether the second to fourth respondents have managed
the body corporate in a manner which benefits the fifth
respondent to the detriment of the other members of the
first respondent; in a manner which is contrary to the rules
governing the
management of the first respondent; in
circumstances where the second to fourth respondents had
a material interest in benefiting the fifth respondent, and
thereby have managed the affairs of the first respondent in
conflict with its interests; and a in manner which
contravenes their fiduciary duties to the first respondent.
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24.1.5 whether the second to fifth respondents appointed the sixth
to eighth respondents in a manner which contravenes the
rules governing the first respondent.
24.2 The curator ad litem is afforded such powers as are set out in the
Sectional Titles Act, and, without limiting those powers, may gain
access to all books of account of the first respondent, the minutes of
any general meetings convened by its members, and trustees
meetings, together with all correspondence exchanged in that
regard; gain access on reasonable notice to all units and common
areas of the first respondent and to appoint such experts as he or
she deems necessary in order to fulfil the terms of this order; to
interview all trustees and managing agents past or present appointed
by the body corporate in order to investigate the issues set out in
paragraph 24.3.1, and the circumstances surrounding them.
24.3 The curator ad litem is directed to file his report with Wilson J within
two months of the date of this order, or such longer period as Wilson
J may allow on receipt of a written request from the curator.
24.4 Pending the outcome of the curator’s investigation, the fifth
respondent is interdicted and restrained from proceeding with any
construction work at the property, save with the written approval of
the City of Johannesburg.
24.5 The balance of the relief sought in the applicants’ notice of motion is
postponed sine die.