Body Corporate of Bains Game Lodge v Bainsvlei Lodges (Pty) Ltd

In considering whether owners could be absolved from levy payments  the high court decided that  ‘the interlocutory order sought would not push this matter or a part thereof to finality. Even if the order is granted, the question whether a member of a body corporate may be permitted to contribute by paying suppliers directly for the maintenance of common property would remain a live issue during the trial. Viva voice evidence would have to be presented about the purported resolution and when exactly it was taken’.

Essence

Whether owners could be absolved from levy payments high court decided that any order in terms of the notice of motion would at best be an advisory order.

Decision

(6198/2017) [2020] ZAFSHC 83: [2020] JOL 47219 (HC) (22 April 2020)

Order:

Refused application with costs.

Judges

CJ Musi JP

Heard: 12 March 2020
Delivered: 22 April 2020

Related books

CG van der Merwe  Sectional Titles, Share Blocks and Time-sharing (LexisNexis service issue 26 – November 2019) at 

Reasons

Quotations from judgment

Note: Footnotes omitted and emphasis added

[1] This is an opposed motion wherein the applicant sought the following order:

‘Declaring whether the members of a body corporate of a sectional title scheme, as envisaged in the Sectional Titles Schemes Management Act, 1 of 2008, may validly pass a resolution to absolve a member, or members, of that body corporate from making the contributions prescribed by the Sectional Title Schemes Management Act, 8 of 2011, and/or the Regulations issued in terms of the Act;’

[2] The following factual background gave rise to this application. On 28 November 2017, the applicant issued summons against the respondent. It alleged that the respondent, a member of the body corporate, failed or refused to pay contributions and special contributions, levied by the applicant on it. That action is still pending in this Court.

[3] The respondent gave notice of its intention to defend the action. The applicant applied for summary judgment. The respondent opposed the application for summary judgment and duly filed an affidavit resisting it. One of its defences, as set out in the aforementioned affidavit, was that it was absolved, by the body corporate, from paying any contributions.

[4] The respondent alleged that at a properly constituted meeting of the applicant it was resolved that it should not pay any contributions to the applicant. It is common cause between the parties that the minutes of the meeting held on 30 July 2015 read as follows:

‘We have send (sic) two sets of the budgets, first with the Lodge included and thereafter without the Lodge. The reason for this was to show you that it will not have any financial impact on you as owners. The trustees had various meetings with the owner of the lodge to resolve the high debtors problem from their side and came to the solution that it will be better for the complex’s financial position if they carry all expense for the lodge directly and not via payments of levies to the body corporate.’

[5] The respondent alleged that the above ‘resolution’ absolved it from paying levies. The applicant agreed that the purported resolution absolved the respondent from paying levies. It, however, was of the view that it could not lawfully take such a decision. It is for this reason that it resolved as follows, at its meeting held on 25 July 2019:

‘The meeting unanimously voted to proceed with the High Court case to receive the opinion that the decision was not able to be made for Bains Lodges (Pty) Ltd not to pay levies, this Court case will cost roughly R25 000.00.’

[6] Mr Green, for the applicant, contended that neither the Acts nor the Regulations empowers or authorizes a body corporate to absolve any member thereof from paying levies.

[7] Mr Reinders, for the respondent contended that the applicant seeks legal advice under the guise of a declaratory order because the issue will be considered by the Court hearing the pending action.

He further contended that I should not, in terms section 21(1)(c) of the Superior Courts Act (SCA), decide an academic point. He urged me to exercise my discretion against the applicant.

[8] Section 21(1)(c) of the SCA read as follows:

‘A Division has jurisdiction over all persons residing or being in, and in relation to all causes arising and all offences triable within, its area of jurisdiction and all other matters of which it may according to law take cognisance, and has the power in its discretion, and at the instance of any interested person, to enquire into and determine any existing, future or contingent right or obligation, notwithstanding that such person cannot claim any relief consequential upon the determination.’

[9] Section 19(1)(a)(iii) of the Supreme Court Act which is the predecessor of section 21(1)(c) of the SCA was similarly worded.

In Cordiant Trading CC it was said [by CN Jafta JA in the SCA] that the section envisages a two-stage approach.

The two-stage enquiry was explained as follows:

‘During the first leg of the inquiry the Court must be satisfied that the applicant has an interest in an ‘existing, future or contingent right or obligation’. At this stage the focus is only upon establishing that the necessary conditions precedent for the exercise of the Court’s discretion exist.

If the court is satisfied that the existence of such conditions has been proved, it has to exercise the discretion by deciding either to refuse or to grant the order sought. The consideration of whether or not to grant the order constitutes the second leg of the inquiry.’

[10] Our courts have on numerous occasions pointed out that Courts will generally not deal with or pronounce upon abstract or academic points of law, because a Court may not act as an adviser. It is a requirement of the exercise of jurisdiction under this subsection that there should be interested parties upon whom the declaratory order would be binding. It must be binding in the sense, and have the effect, of res judicata.

[11] Declaratory orders are discretionary and flexible. They should be granted only after all the facts and circumstances have been considered.

[12] I accept that the applicant, as a body corporate, has an interest in knowing the ambit of its powers and the extent to which it may grant concessions to its members or absolve them from paying their dues. It has ‘skin in the game’. The first leg of the enquiry is therefore satisfied.

I now turn to consider the second leg thereof.

[13] This application was brought pursuant to the resolution of 29 July 2019. It is clear from the resolution that an opinion about the dispute between the parties was to be sought and not a general advisory declaration about the interpretation of the Acts and Regulations. The relief sought in the notice of motion is general and wide. In essence this Court is asked to advise the applicant on whether a (any) body corporate may, by passing a valid resolution absolve a (any) member from paying levies. It is not the Court’s function to give such advice. The duty of a Court is to resolve fact and context specific controversies.

[14] Mr Green contended that the answer to the question posed in the relief sought would put paid to a legal issue in the proceedings between the parties. In my view it would not.

In Geyser it was correctly pointed out that

‘a legal issue should only be decided at the interlocutory stage of the proceedings if it would result in the final disposal of either the matter as a whole or a particular aspect thereof. The mere expression by the Judge hearing the application at that stage of the proceedings of his or her prima facie views on a particular aspect is of academic interest only and does not advance the matter any further towards finality’.

The order sought in this matter does not finally dispose of the case or a part thereof and it would not advance this matter towards finality.

[15] This is so because first, it is not clear on these papers whether the purported resolution was taken at a properly constituted meeting of the trustees or whether it was a decision taken at an informal discussion with a representative of the respondent. It certainly is not, on the face of it, a decision that was taken at the 30 July 2015 meeting. It seems like a report of the trustees to the section owners. If the ‘solution’ was reached informally, there is no indication that it was ratified by the section owners. There is no indication that the trustees were empowered or given direction to enter into the agreement with the respondent.

This might be contrary to the provisions of section 7 of the Sectional Titles Schemes Management Act which provides that:

‘The functions and powers of the body corporate must, subject to the provisions of this Act, the rules and any restriction imposed or directions given at a general meeting of the owners of sections, be performed and exercised by the trustees of the body corporate holding office in terms of the rules.’

[16] Second, assuming that the ‘resolution’ was validly taken, the applicant is still not out of the woods. The ‘resolution’, it seems, does not absolve the respondent from paying levies. What it does is to make the respondent responsible for a part of the body corporate’s duties. The agreement was that the respondent would pay expenses directly to service providers in lieu of paying levies. This is made plain by the respondent in its affidavit resisting summary judgment. It stated:

‘For the period the (sic) July 2015 – January 2018 the Respondent has directly paid the amount of R1,585,498.57 to third parties for that which is the obligation of the applicant, and that for which the respondent is alleged liable to the applicant in contributions…

If and when the need arises, I shall instruct the respondent’s attorneys of record to counter-claim (probably conditionally) for this amount which far exceeds the claim of the Applicant against the Respondent.’

[17] The summons only states that the respondent failed or refused to pay contributions and special contributions for the period up to and including 31 August 2017. The particulars of claim are silent on when the period commenced. The total amount claimed from the respondent was R1 370 232.68.

On the respondent’s version, it paid more money directly to service providers than what is claimed from it. Even if it paid less than the amount it alleged, there would still not be a question of being absolved from paying as it actually paid service providers for services that were supposed to be rendered or paid for by the applicant. The order sought would not assist in unraveling this conundrum.

[18] It is clear that the interlocutory order sought would not push this matter or a part thereof to finality. Even if the order is granted, the question whether a member of a body corporate may be permitted to contribute by paying suppliers directly for the maintenance of common property would remain a live issue during the trial. Viva voice evidence would have to be presented about the purported resolution and when exactly it was taken.

[19] The order would therefore not be binding on the parties because it would not give rise to res judicata. There is a pending trial whereat the real disputes between the parties can be ventilated and resolved. The piecemeal adjudication of a matter under these circumstances should be deprecated.

[20] An order in terms of the notice of motion would, at best, be an advisory order.

I must therefore, as I hereby do, exercise my discretion against the applicant.

[21] I accordingly make the following order:

The application is dismissed with costs.

Court summary