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

• Jurisdiction: South Africa
• Judgment Date: 26 November 2002
• Citation: 2003 (5) SA 414 (W)

Body Corporate of Fish Eagle v Group Twelve Investments (Pty) Ltd
2003 (5) SA 414 (W)

2003 (5) SA p414

Citation	2003 (5) SA 414 (W)
Case No	13501/2002
Court	Witwatersrand Local Division
Judge	Malan J
Heard	November 5, 2002
Judgment	November 26, 2002
Counsel	R G Cohen for the applicant.; P van Blerk SC (with S R Kruger) for the respondent.

Flynote : Sleutelwoorde B

Contract — Validity of — Invalidity by reason of vagueness — Agreement which is incomplete because parties did not reach consensus on essential or material respect is void for vagueness and incapable of being enforced. C

Company — Winding-up — Application for — Application in terms of s 345(1)(a) read with s 344(h) of Companies Act 61 of 1973 — Conditional offer of payment by corporate debtor not sufficient to stave off such liquidation application — Law distinguishing between tender and conditional payment — Tender not constituting payment — Sections 345(1) and 344(f) of Companies Act intending that unconditional payment be made by company in order to D avoid liquidation, not that conditional payment be made and liquidation in that way avoided.

Sectional title — Body corporate — Members — Rights and duties of — Member of body corporate not entitled to withhold payment of levies (including special levies and increase in levies) on ground that member disputes necessity or financial wisdom of decision E to impose such levies — Determination and collection of levies the duties of trustees of body corporate — Trustees, not individual owners, empowered to take decision whether or not imposition of levy necessary — Sectional Titles Act 95 of 1986, ss 37(1), (2), 39(1) read with rules 30, 31 of Annexure 8 to Regulations made in terms of Act. F

Sectional title — Body corporate — Powers of — Resolution ultra vires body corporate — Resolution allegedly passed at meeting of body corporate to effect that body corporate not to continue with litigation against member regarding arrear levies and electricity charges and that G dispute to be settled by way of discussion at meeting — Such resolution ultra vires body corporate — In terms of s 37(1)(d) of Sectional Titles Act 95 of 1986, one of functions of body corporate being to raise amounts by levying of contributions on owners and in terms of s 39(1) of Act trustees of body corporate obliged to perform such function — In law body corporate having no power to pass resolution to effect that it will not carry out duties imposed by s 37 read with s 39 of Act. H

Headnote : Kopnota

An owner in a unit in a sectional title scheme is not entitled in law to refuse to pay an increase in levies which the owner contends was unnecessarily imposed by the body corporate, nor is it entitled to refuse to make payment of a special levy imposed by the body corporate on the members by virtue of the fact that the body corporate allegedly I had sufficient money in its account at the time of imposition of the special levy, and that the special levy was accordingly allegedly unnecessarily imposed. In terms of s 37(1) of the Sectional Titles Act 95 of 1986 a body corporate of a sectional title scheme is required 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, the upkeep, control, management and J

2003 (5) SA p415

administration of the common property (s 37(1)(a)). In terms of s 37(2) of the Act, any contributions levied in terms of A 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 the owners of units at the time when such contributions became due. In terms of s 39(1), read with rule 30 of Annexure 8 to the Regulations made in terms of the Act, the functions B of determining the amounts to be levied upon members of the body corporate, and the levying and collection of such contributions, belongs to the trustees. In terms of rule 31(4) of Annexure 8 to the Sectional Titles Regulations the trustees may from time to time impose special levies upon owners. It is the trustees, and not any individual owner, who are empowered to take a decision whether or not the C imposition of a levy (which would include a special levy) is necessary as contemplated by s 37(1)(b) of the Sectional Titles Act and by rule 31(4) of Annexure 8 to the Sectional Titles Regulations. According to s 37(1)(d) of the Act one of the functions of a body corporate is to determine from time to time the amount to be raised for the purposes aforesaid. No member of the body corporate is entitled to dispute liability for the payment of levies on the ground D that it thinks those levies to be excessive. (Paragraph [7] at 419F - I and 420B - G/H.)

A resolution to the effect that a body corporate of a sectional title scheme would not continue any litigation against a member of the body corporate who owed the body corporate money in respect of levies and electricity, and that 'previous litigation' would be cancelled, and E that the dispute between the parties would be settled by way of discussion at a meeting on an amicable basis (and stating nowhere what the position would be if consensus was not reached at a meeting in due course), is ultra vires the body corporate. In terms of s 37(1)(d) of the Sectional Titles Act, one of the functions of the body corporate is to raise amounts by the levying F of contributions on the owners in proportion to the quotas of their respective sections. In terms of s 39(1) of the Act the trustees are obliged to perform this function. In law, a body corporate has no power to pass a resolution to the effect that it will not carry out one or more of its duties imposed on it by s 37 read with s 39 of the Sectional Titles Act. Moreover, any such resolution is invalid because G it is said to have embodied an agreement between the parties that a resolution of the dispute between them would be agreed upon at a later meeting. Such a so-called agreement creates no enforceable contract. Furthermore, an agreement which is incomplete because the parties did not reach consensus on an essential or material respect is void for vagueness and incapable of being enforced. That is so even where the parties have bound themselves to further negotiations in respect of the 'gaps' in their agreement. (Paragraph [9] at 421G - 422C/D.) H

A tender subject to a condition does not constitute payment. The law distinguishes between a payment and a conditional tender. Section 345(1) and 344(f) of the Companies Act intend that an unconditional payment must be made by a company in order to avoid liquidation, not that conditional tenders may be made and liquidation in that way avoided. Therefore, where in an application for the I winding-up of a company the company tenders payment of a certain amount, less than the amount claimed by the creditor to be owing to it, and it was not an unconditional tender of payment but was tendered in full and final settlement of all indebtedness of the company to the creditor, the creditor will, if it were to accept the tender, waive its right to claim any other amounts from the company. Since the tender was J

2003 (5) SA p416

conditional it did not amount to payment in law of the sum tendered and A that sum accordingly remained due and payable to the creditor. (Paragraph [13] at 426G - 427B.)

Cases Considered

Annotations

Reported cases

Aris Enterprises (Finance) (Pty) Ltd v Waterberg Koelkamers (Pty) Ltd 1977 (2) SA 425 (A): dictum at B 434C - E applied

Bouraimis and Another v Body Corporate of the Towers and Others 1995 (4) SA 106 (D): dictum at 108H applied

Eden Village (Meadowbrook) (Pty) Ltd and Another v Edwards and Another 1995 (4) SA 31 (A): dictum at 40H - I applied

Hart v Pinetown Drive-In Cinema (Pty) Ltd C 1972 (1) SA 464 (D): referred to

Kalil v Decotex (Pty) Ltd and Another 1988 (1) SA 943 (A): referred to

National Bank of South Africa Ltd v Leon Levson Studios Ltd 1913 AD 213: referred to

Nel NO v Body Corporate of the Seaways Building and Another 1996 (1) SA 131 (A): dictum at 137I - 138B D applied

Patel v Adam 1977 (2) SA 653 (A): referred to

Roode v Morkel 1976 (4) SA 989 (A): dictum at 993A - B applied

Reilly v Seligson and Clare Ltd 1976 (2) SA 847 (W): dictum at 849H - 851C applied E

Shell SA (Pty) Ltd v Corbitt and Another 1986 (4) SA 523 (C): dictum at 526D - E applied

Ter Beek v United Resources CC and Another 1997 (3) SA 315 (C): dictum at 331 applied

Wolhuter Steel (Welkom) (Pty) Ltd v Jatu Construction (Pty) Ltd (in Provisional Liquidation) 1983 (3) SA 815 (O): referred to.

Statutes Considered

Statutes F

The Companies Act 61 of 1973, ss 344(f), 345(1)(c): see Juta's Statutes of South Africa 2002 vol 2 at 1-225, 1-226

The Sectional Titles Act 95 of 1986, ss 37, 39: see Juta's Statutes of South Africa 2002 vol 6 at 2-117, 2-118.

Case Information

Application for a final winding-up order in terms of s 345(1) read with s 344(f) of the Companies Act 61 of 1973. The G facts appear from the reasons for judgment.

R G Cohen for the applicant.

P van Blerk SC (with S R Kruger) for the respondent.

Cur adv vult. H

Postea (November 26).

Judgment

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

2003 (5) SA p417

Malan J

of 1973. (c) The failure...