Body Corporate of San Sydney v Singh and others
| Jurisdiction | http://justis.com/jurisdiction/166,South Africa |
| Judge | Gabriel AJ |
| Judgment Date | 23 June 2023 |
| Citation | 2023 JDR 2390 (KZD) |
| Hearing Date | 09 May 2023 |
| Docket Number | D10058/2018 |
| Court | KwaZulu-Natal Local Division, Durban |
Gabriel AJ:
Summary
This case concerns the interpretation and application of sections 25(6) and 17
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of the Section Titles Act 95 of 1986 (“STA”), read with sections 5(1)(a) and (b) of the Sectional Titles Schemes Management Act 8 of 2011(“STSMA”).
The applicant instituted this application during August 2018. When the matter was argued before me, as an opposed motion, only the first respondent opposed the application and the applicant limited the relief that it sought to the first respondent. I will refer to the first respondent simply as “the respondent.”
After hearing argument, I requested counsel to provide further submissions to me on the applicability of the decision of Satchwell J in Torgos (Pty) Ltd v Body Corporate of Anchors Aweigh and Another 2006 (3) SA 369 (W), which I had come upon in my research. They did so and I am grateful to counsel and to their instructing attorneys for those further arguments.
The applicant has approached this Court to declare that the respondent has no “good cause in law” to refuse to consent to it exercising and ceding certain rights to extend the sectional scheme, in which the respondent is a property owner. If the applicant is correct in its arguments, then it seeks orders declaring so and it seeks certain consequential orders directing or securing the respondent’s consent. Although the affidavits in the application are voluminous, with layers of factual detail, the basic facts are common cause between the parties (save for their respective interpretation of the legal effect of those facts).
Sectional Ownership
The applicant is a body corporate and was established in terms of section 36(1) of the STA. It administers the development scheme known and registered as
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the San Sydney scheme in terms of the STA and the STSMA. The respondent is the registered owner of Unit 2 in the San Sydney scheme and is therefore a member of the applicant.
The STA provides a legal framework for sectional ownership. The Supreme Court of Appeal has described this as follows:
“Sectional title ownership consists of three elements, namely individual ownership of a section, joint ownership of the common parts of the sectional title scheme and membership of a body corporate. The registered title-holder of a unit is the owner of the section, joint owner of the common parts of the scheme and a member of the body corporate. Thus, a person, buying into a sectional title scheme, enters into a series of interlocking relationships. The [STA] introduced several new concepts into our law. By providing for the division of land and buildings comprising a development scheme into sections and common property, it created an entirely new composite res, called a unit, which consists of a section and an undivided share in the common property. The section is considered the principal component, with the undivided share in the land and other common property inextricably linked thereto as an accessory. The Act [STA] also created an entirely new form of composite ownership, namely separate ownership of a section coupled with joint ownership of the common property. Sectional owners own the common property collectively in undivided shares in accordance with the provisions of the Act.” [1]
In that context bodies corporate such as the applicant are given functions in section 3 and powers in section 4. The general import of these powers and
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functions is that a body corporate such as the applicant, is required to administer and manage the scheme and manage the common property in the interests of its members. [2] Bodies corporate act through their trustees and their roles and responsibilities are regulated by sections 6 and 7 of the STSMA. [3]
Bodies corporate also have “additional powers” and these are regulated through section 5 of the STSMA.
These matters are also regulated by:
Part II of the STA which deals with “development schemes, sectional plans and sectional title registers” in sections 4 to 14;
Part III of the STA which deals with “registration and common property,” in sections 15 to 19; and
Part IV of the STA which deals with “subdivision, consolidation and extension of sections,” in sections 20-24.
Part V of the STA deals with the “extension of schemes.” In summary, it enables a developer, when applying to register a sectional plan, to reserve in a condition, the right to extend the scheme over common property (section 25(1)). That right must be exercised within the period stipulated or it lapses and vests in the body
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corporate.
Section 25(6) provides:
“If no reservation was made by a developer in terms of subsection (1), or if such a reservation was made and for any reason has lapsed, the right to extend a scheme including land contemplated in section 26, shall vest in the body corporate which shall be entitled, subject to this section, section 5(1)(b) of the Sectional Titles Scheme Management Act and after compliance, with the necessary changes, with the requirements of paragraphs (a), (b), (c), (d) and (g) of subsection (2), to obtain a certificate of real right in the prescribed form in respect thereof: Provided that the body corporate shall only exercise, alienate or transfer such right with the written consent of all the members of the body corporate, the mortgagees of the units and real rights over the units, and the holders of registered real rights over the units in the scheme and who shall not withhold such consent without good cause in law.”
Section 25(6) was considered and applied in SP and Catering Investments (Pty) Ltd v Body Corporate of Waterfront Mews and Others 2010 (4) SA 104 (SCA), where the content of the right in section 25(1), reserved by a developer to extend the scheme, was explained as follows, at paragraph 9:
“. . . The right is one which the developer has reserved for the period expressly stipulated in his application. It is a right to construct the additional buildings, or extend the existing ones, on the common property, to divide them into sections and to confer rights of exclusive use in respect of them. That is the content of the right. It is to be distinguished from the obligation to perform the work which is defined in s 25(13).” [4]
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The import of section 25(6) is:
“. . .[I]f no right is reserved in terms of ss (1) at inception of the scheme or if a right has been reserved but has lapsed, the right to extend the scheme will vest in the body corporate.” [5]
Within this context, the applicant asserts a right to “exercise” and “cede” the right to extend the scheme, in terms of section 25(6) of the STA.
The Facts and Arguments
It is common cause in this application that the developer’s right to extend the scheme lapsed on or about 31 March 2013 and that the right to extend the scheme vested thereafter in the applicant.
The applicant contends that it is entitled to “exercise” and “cede” the right to extend the scheme to a third party, HF Property Investments (Pty) Ltd (“HF Property”). It did so by concluding an agreement with HF Property on 11 May 2018 (“the agreement”). [6]
The preamble to the agreement records that the developer [7] had constructed
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units 9, 10 and 11, for which certificates of occupancy had been issued by the local authority, and that the developer had purportedly sold these units to the present occupiers of those units. The preamble records that all of this occurred despite the fact that the developer’s right to extend the scheme had lapsed, with that right vesting in the applicant from about 1 April 2013.
The preamble describes the intentions of the applicant and HF Property as follows:
the applicant intends to extend the scheme to enable units 9, 10 and 11 to be registered at the Deeds Registry as sectional title units in the San Sydney scheme; and
HF Property intends to purchase the right “to take the necessary steps to register buildings 9, 10 and 11 as sectional title units in the San Sydney scheme and to pass title of such units.”
Clause 2 of the agreement deals with the applicant’s “sale of [the] real right to extend the scheme.” It provides:
The BC sells to HF Prop the right to complete buildings 9, 10 and 11 on the common property and to divide such buildings into sections and the common property, for its personal account, subject to the fulfilment of the suspensive conditions below [in clause 3] and on the terms and conditions contained in this agreement (“the real right”).
HF Prop agrees and undertakes to complete the buildings 9, 10 and 11
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strictly in accordance with the building plans already approved by the local authority. HF Prop acknowledges that any deviation from such approved plans shall require the written consent of the Trustees of the BC.
HF Prop shall procure the registration of the sectional plans of extension in respect of buildings 9, 10 and 11 within one (1) year of the date of fulfilment of all suspensive conditions, failing with the right shall lapse and all rights to extend the scheme in terms of section 25 of the Act shall again vest in the BC.”
In terms of clause 3 the parties acknowledged that “the exercising, alienation and/or cession by the BC of a right of extension of the scheme requires the written consent of all owners in the scheme as well as the written consent of the mortgagee of each unit . . . provided that an owner or mortgage may not withhold such approval without good cause in law.”
The remainder of clause 3 deals with the mechanics of how the applicant would secure the consent of the owners, including by...
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