Body Corporate of Fish Eagle v Group Twelve Investments (Pty) Ltd

• Jurisdiction: South Africa
• Court: Witwatersrand Local Division
• Judge: Malan J
• Judgment Date: 26 November 2002
• Citation: 2003 (5) SA 414 (W)
• Hearing Date: 05 November 2002
• Docket Number: 13501/2002
• Counsel: R G Cohen for the applicant. P van Blerk SC (with S R Kruger) for the respondent.

Malan J:

[1] The applicant claims an order for the final winding-up of the respondent. The applicant relies upon the following: I (a) Its claim in the sum of R428 880,68 (less approximately R16 000) in respect of levies and electricity charges levied by the applicant body corporate upon the respondent in terms of s 37 of the Sectional Titles Act 95 of 1986. (b) A demand for payment sent in terms of s 345(1) of the Companies Act 61 J

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of 1973. (c) The failure on the part of the respondent to satisfy the debt or to secure or compound for it to the reasonable satisfaction A of the creditor as envisaged by s 345(1) of the Act. (d) That the respondent is unable to pay its debts.

[2] The applicant relies on both a written demand sent in terms of s 345(1)(a) of the Companies Act and that it is just and equitable that the respondent should be wound-up in terms of B s 344(h) of the Companies Act.

[3] The applicant is The Body Corporate of Fish Eagle, a body corporate established in terms of s 36 of the Sectional Titles Act 95 of 1986. In terms of the Sectional Titles Register, 77 units were established in respect of the applicant body corporate. The C respondent is the registered owner of twenty-two units in the applicant body corporate. Section 37(1) of the Sectional Titles Act requires a body corporate to perform the functions entrusted to it under the Act. This includes the establishment for administrative expenses of a fund sufficient to provide for, inter alia, D the upkeep, control, management and administration of the common property (s 37(1)(a)). Section 37(1)(b) of the Act states that one of the functions of the body corporate is to require the owners of units to make contributions for the purposes of satisfying any claims against the body corporate. Section 37(1)(c) states that another function is the determination of the amounts to be raised for the purposes aforesaid. Section E 37(1)(d) provides that a further function is the raising of the amounts so determined by a levy and contributions on owners of units in proportion to the quotas of their respective sections. Rule 30 of Annexure 8 to the Act requires trustees to levy and collect contributions from members of the body corporate. F

Section 37(2) provides that any contributions levied under any provision of s 37(1) shall be due and payable on the passing of a resolution to that effect by the trustees of the body corporate, and may be recovered by the body corporate by action in any court of competent jurisdiction from the persons who were owners of units at the time when such contributions became due. G

The applicant raised levies and other charges as envisaged in s 37 of the Act and the amounts determined by the applicant were raised by requiring the owners of units in the applicant to pay the levies, as required by the Sectional Titles Act. As such, the respondent was obliged to make payment in full on due date of all levies thus determined by the applicant body corporate. H

The respondent, the applicant alleges, is presently indebted to the applicant in respect of levies and other charges in the sum of at least R428 880,68, less an amount of approximately R16 000.

The applicant sent monthly accounts for levies and electricity charges levied by the applicant. The applicant sets out a detailed I schedule (annexure C), covering the period in respect of the units owned by the respondent from September 1998 until 1 October 2001.

[4] The written demand sent in terms of s 345(1)(a) of the Companies Act refers to an amount in excess of R100, states that the sum is due, J

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owing and payable by the respondent to the applicant, and also states the causa of the indebtedness. A The applicant has proved compliance with the requirements of s 345(1)(a). The registered address of the respondent is first floor, Kingfisher Park, corner Kingfisher and Pheasant Streets, Horison Park, Roodepoort. Proof thereof is found in annexure B, being the certificate issued by the Registrar of Companies. The applicant left the demand at the registered office of the B respondent company as required by s 345(1)(a): the letter was hand delivered by the applicant's attorney. A demand left at the registered office is a demand for such purposes (Wolhuter Steel (Welkom) (Pty) Ltd v Jatu Construction (Pty) Ltd (in Provisional Liquidation) 1983 (3) SA 815 (O) at 824). The letter was served on 21 June 2002 and the period of three weeks is calculated from the C date of service of the demand (National Bank of South Africa Ltd v Leon Levson Studios Ltd 1913 AD 213 at 217 - 18) and expired on 12 July 2002. The notice of motion was issued on 25 July 2002.

[5] The deeming provision has the effect of creating a rebuttable presumption that the company in question is unable to pay D its debts. In Ter Beek v United Resources CC and Another 1997 (3) SA 315 (C) at 331 Van Reenen J, referring to s 68 of Act 69 of 1984, said:

'In view of the fact that in terms of s 68 of Act 69 of 1984 a Court's discretion in regard to the winding-up of a close corporation E operates even in those instances where the application for winding-up is based on a deemed inability on the part of the close corporation to pay its debts, I incline to the view that the provisions of s 69(1) of Act 69 of 1984 are merely supplementary (ie extending what the subject matter includes) and prima facie (irrebuttable). Accordingly, first respondent is not precluded from assailing the 'conclusion of law' . . . which results from a failure to respond to a statutory demand in terms of s 69(1)(c) of Act 69 of F 1984.'

[6] The respondent's defences can be categorised as follows:

(a)

A total amount of R16 877,44 has been paid by the respondent to the applicant, but those payments have not been reflected as credits on the respondent's account with the G applicant. The amount of R16 877,44 is the total of the amounts shown at the foot of columns 1, 2, 3 and 4 of annexure SP2 to the respondent's answering affidavit. The amount of R16 877,44 accordingly falls to be deducted from the sum claimed by the applicant from the respondent. H

(b)

It was the responsibility of the applicant to effect certain repairs to units registered in the name of the respondent, but the applicant failed to carry out such repairs. Accordingly, the repairs were effected by the respondent at a cost to it of R15 695,35. That amount is the total of the six tax invoices annexed I to the respondent's answering affidavit and marked B1 to B6. The total of the repairs has to be deducted from the amount due by the respondent to the applicant.

(c)

The applicant has overcharged the respondent for electricity in an amount of R29 012,18. The calculation of that amount is shown on annexure C to the respondent's answering affidavit. That J

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amount must also be deducted from the amount claimed by the A applicant from the respondent.

(d)

The applicant increased levies payable by members of the applicant, and instituted a special levy. The respondent disputes liability for the payment of such levy increase and also for the payment of such special levy, on the basis that the increase in levies was necessitated by mismanagement of the Fish Eagle complex by B the applicant. Accordingly, in the contention of the respondent, the respondent is not obliged in law to pay the aforesaid increase in levies. The respondent further contends that it is not liable in law to pay the special levy imposed upon members of the applicant body corporate, by virtue of the fact that 'there was more than enough money in its accounts' at the time when the special levy was raised, C and accordingly the imposition of the special levy was unnecessary. The respondent has deducted the increased levies and the special levies together with interest thereon from the amount which the applicant alleges is due to it by the respondent. When these various charges D and levies are subtracted from the total amount which the applicant contends is due to it by the respondent, the balance remaining to be paid by the respondent is R77 755,04. That amount has been tendered to the applicant, and is still tendered by the respondent.

(e)

At a special general meeting of the applicant held on 26 January 2002 a resolution was passed to the effect that E 'the body corporate will not continue with any litigation and previous litigation will now be cancelled. The matter will be settled by way of a discussion, at a meeting, on an amicable basis' (annexure SP4). F

[7] The liability of the respondent to pay the increase in levies imposed by the applicant, and to pay the special levy imposed by the applicant: There is merit in the contention of the applicant that the respondent is not entitled in law to refuse to pay an increase in levies which it contends was unnecessarily imposed and that it is not obliged in law to make payment of a special levy imposed by the applicant upon members of the applicant by virtue of the fact that the G applicant allegedly had sufficient money in its accounts at the time of imposition of the special levy, and accordingly that the special levy was unnecessarily imposed.

Section 37(2) of the Sectional Titles Act 95 of 1986 provides that any contributions levied in terms of s 37(1) of the Act shall be due and payable on the passing of a resolution to that effect by the H trustees of the body corporate, and may be recovered by the body corporate by action in any court of competent jurisdiction from the persons who were owners of units at the time when such contributions became due.

According to annexure SP2 to the respondent's answering affidavit, the total increase in levies (reflected in column 7 of SP2) I amounts to R32 031,24 in respect of the twenty-two units registered in the name of the respondent. According to the same annexure...