The Pietermaritzburg High Court heard a matter in which trustees of a body corporate negotiated a discount of levies due by a defaulting owner – Zikalala v Body Corporate of Selma Court and another [2021] JOL 51087 (KZP).
The court held, per Chetty J, that even if the two trustees did give their consent and accepted the appellant’s offer, such acceptance was invalid for want of compliance with their statutory duty under the Sectional Titles Schemes Management Act 8 of 2011 (STSMA).
The body corporate could not even sanction the agreement to give a discount on levies by a special resolution. In the raising of levies a body corporate is performing a statutory duty and levies, so raised, become a statutory debt that cannot be compromised by settlement.
It follows therefore that absent any express or implied power that is accorded to a body corporate in the STSMA, the trustees may not conclude an agreement outside the ambit of the powers given in terms of the STSMA. To the extent that an act is outside the powers given in the STSMA, the body corporate as a creature of statute, will be construed to have acted ultra vires. Likewise, it would not be competent for the body corporate to sanction an act which is ultra vires by way of a special resolution.
Management rule 25 expressly grants to the body corporate the power to impose levies and contributions from owners. Where an owner fails in the obligation to pay such amounts, the body corporate is empowered to take action to recover such amounts, including interest and costs.
The court held that there is no power in the Management rules or the STSMA that permits the body corporate to compromise on its obligation to collect levies or contributions. To the extent that such amounts are owing, it is worth noting that the language employed in Management rule 21(2)(b) precludes a body corporate from ‘refunding to any member a contribution lawfully levied and paid’.
In Malan J in Body Corporate of Fish Eagle v Group Twelve Investments (Pty) Ltd 2003 (5) SA 414 (W) a body corporate that was involved in litigation to collect outstanding levies, resolved at a special general meeting that ‘the body corporate will not continue with any litigation and previous litigation will now be cancelled’.
The court held that :
“Any such resolution is ultra vires the applicant. In terms of s 37(1)(d) (of the STSMA), one of the functions of the applicant body corporate is to raise amounts by the levying of contributions on the owners in proportion to the quotas of their respective sections. In terms of s 39(1) of the Sectional Titles Act, the trustees of the applicant were 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 the duties imposed upon it by s 37 read with s 39 of the Sectional Titles Act.”