Owners ‘adversely affected’ by certain decisions of a body corporate must consent in writing to certain special resolutions before they are binding on them.  The High Court rejected an argument that this enables an owner to block a special resolution changing the liability of the owner to contribute to the levies.

Extra Dimensions 121 (Pty) Ltd v Body Corporate of Marine Sands (9015/2014) [2016] ZAKZDHC 1 (5 February 2016) per Masipa AJ.

Excerpts without footnotes

[1]        In Algar v Body Corporate of Thistledown & Others [2010] JOL 26140 (N) the court considered the meaning of the words adversely affected by first looking at the 1971 Act .  In terms of section 24(3) of that Act, a unanimous resolution of members of the body corporate was required the variation of member’s voting rights and liability of contributions to the levy.  The court was of the view that due to the wording of the section, a member of the body corporate could act capriciously and without reason in blocking a change in the basis upon which levies were calculated by not participating in a meeting where such unanimous resolution was to be adopted.

[2]        Theron J found that section 32(4) of the Act reduced the requirement to that of a special resolution which required a 75% majority and the consent of an owner who was adversely affected by the resolution.  The court rejected the argument by the applicant that the fact that he had to pay an increased monthly levy, it meant that he was ‘adversely affected’.  It held that if that was the interpretation to be placed on the words adversely affected, it would have been difficult to envisage any special levy changing the basis upon which levies were calculated.  The result would be that the situation would be the same as that which existed under the 1971 act.  The court found that the result would ‘render the provisions of section 32(4) nugatory’ which could not have been the intention of the legislature.

[3]        The court’s view was that the philosophy underlying the Act is for owners of the units to be treated fairly and that this is reflected in the scheme of the Act as legislature in section 32(4) recognised that when it comes to determination of levies, each scheme may be different.  Since there was no authority dealing with the meaning of the terms, the court after considering cases where the courts made reference to it.  At page 5, the court concluded that in order to arrive at the meaning of the terms ‘adversely affected’ within the meaning of section 32(4) of the Act, all facts and circumstances must be taken into account and not only the fact that a member has to pay more levies.

[4]        The court found it necessary in that case to consider the scheme and found that unlike most sectional schemes, it which comprised of units to which exclusive garden areas are allocated, the vast garden areas at Thistledown are common property open for equal enjoyment by all unit owners.  In addition to this, there were outside buildings forming part of the common property and all unit members derived benefit.  The effect of the levies as they stood meant other members of the body corporate subsidised the applicant when he enjoyed equal access and enjoyment of the common areas.  The special resolution was intended to redress this inequitable situation.  When considering all the circumstances, the court found that the applicant was not adversely affected.

[5]        In Silberberg and Schoeman  where the provisions of section 32(4) were considered, the authors interpreted the phrase adversely affected to mean of detriment to.  It was stated that the effect of the rigid interpretation of the phrase would retain the requirement for unanimous resolution.