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REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG LOCAL DIVISION, JOHANNESBURG

CASE NO: 38239/2013

Not reportable

Not of interest to other judges

Revised.

26/3/2018

In the matter between:

LOS ANGELES BODY CORPORATE                                                                    Applicant

And

NOAH, PATRICIA NOMBUYISELO                                                            First Respondent

PN NOAH ESTATES CC                                                                       Second Respondent

 

JUDGMENT

 

KEIGHTLEY, J

INTRODUCTION

1. The applicant is a body corporate of a residential sectional title scheme (“the body corporate”).  It seeks an order against the first respondent, in her capacity as the sole member and representative of the now deregistered second respondent, finding her guilty of contempt of court and committing her to a 90-day period of imprisonment, suspended on various terms.  The body corporate contends that Ms Noah is in contempt of a court order issued by the Honorable Judge Tsoka on 16 October 2016 (“the Order”).

2. The Order directed the respondents to render a complete account of the financial affairs of the body corporate for the period 1999 to September 2015, including, but not limited to:

2.1. All management accounts kept for and on behalf of the body corporate;

2.2. All bank statements related to all transactions in which the body corporate had an interest;

2.3. All vouchers of all receipts accepted or received by the respondents on behalf of the body corporate and relating to all and any expenses incurred for and on behalf of the body corporate;

2.4. All correspondence the respondents may have exchanged and received for and on behalf of the body corporate;

2.5. In terms of paragraph 1.5 of the Order, all documents underlying the transfer of Los Angeles sectional title units, known as Section 1; Section 10; Section 27; Section 29; Section 36; and Flat 26 (and Room 8).

3. The Order also directed that “the account is (sic) debated in due course”, and that the respondents were to make payment to the body corporate of whatever amount appears to be due to the body corporate on debasement of the account.

4. The application in respect of which the Order was granted was based on the contention that the second respondent had been appointed as the managing agent of the body corporate since 1999 to 2015.   Ms Noah had also been appointed as the administrator of the body corporate in 2005 for a period of a year.  In essence it was contended that Ms Noah, and/or the second respondent, was and/or were in complete control of the financial affairs of the body corporate for the entire period covered by the Order.  The same case was put forward by the body corporate in the contempt application.  As I indicate in more detail later, the respondents deny this.

5. It is common cause that after the launch of the present proceedings, Ms Noah’s attorney sent a letter to the body corporate’s attorney in which she explained her position in respect of the court order.  In short, she provided certain documentation, clarified her role in respect of the body corporate between the years 1999 and 2015, and indicated that, save for the documents provided, she had no other documents that she was able to provide.  Her response was, belatedly, also set out in an answering affidavit, to which the body corporate replied.  I will deal with the issues placed in dispute by Ms Noah in more detail later.  Following from their response, Ms Noah and the second respondent contend that the body corporate has failed to make out a case for the committal for contempt of court.

APPLICABLE PRINCIPLES

6. The rationale underlying contempt of court proceedings is that a person who fails to obey a court order is guilty of “violating the dignity, repute or authority of the court”.^[1]  Thus, contempt proceedings serve a dual purpose.  They secure the rights of the individual litigant arising out of the court order.  At the same time, they serve the broader public purpose of ensuring that there is compliance with court orders and thus with the rule of law.^[2]

7. An applicant in contempt proceedings must establish the existence of the order, service or notice thereof on the respondent, and her non-compliance therewith.^[3]

8. Until the judgment of the SCA in Fakie, once these three requirements were met, the respondent assumed a reverse onus to demonstrate that her non-compliance was not willful and mala fide. Fakie introduced a change in the law in this regard.  The court held in its judgment that a respondent in civil contempt proceedings in which imprisonment is sought is in the same position as an accused person in criminal contempt proceedings in the sense that her willful and mala fides non-compliance of with the court order must be established beyond reasonable doubt.  In these cases, once the applicant has established the basic three requirements, the respondent assumes an evidentiary (as opposed to a legal) burden to raise reasonable doubt as to whether her non-compliance was mala fide and willful.^[4]

9. The court held in this regard that:

“While the applicant may disavow punishment as a motive …, the means the court is asked to employ remain the same: the public sanction of imprisonment for disobedience of a court order. The invocation of that sanction, in my view, requires conclusive proof. No less than punitive committal, purely coercive committal uses imprisonment, or its threat; and whenever loss of liberty for disobedience of an order of court is threatened it seems to me necessary and proper that the infraction should be proved conclusively.”^[5] (my emphasis)

10. The court appears to have endorsed the finding in Burchell v Burchell,^[6] to the effect that civil mechanisms designed to induce compliance with a court order, short of committal to prison, are competent when proved on a balance of possibilities.  It referred expressly to Burchell in this regard, and later in its judgment held that:

“A declarator and other appropriate remedies remain available to a civil applicant on proof on a balance of probabilities.”^[7]

11. As I have indicated, the body corporate sought the sanction of imprisonment in its Notice of Motion in these proceedings.  To succeed it bears the onus of proving not only the existence of the Order, knowledge on the part of the respondents, non-compliance of the Order, but also that such non-compliance was willful and mala fides.  The only burden resting on the respondents is an evidentiary one, as regards the last element.

HAS THE BODY CORPORATE MET ITS ONUS?

12. A significant feature of this case is that there is an abundance of evidence demonstrating that the affairs of the body corporate over the period covered by the Order were, to put it plainly, in a state of chaos.  The body corporate itself offers the information that its affairs were not always consistently overseen by a board of trustees.  While they seek to attribute some blame for this on what they say is the complete control which Ms Noah assumed over its affairs, they also concede that the state of affairs was attributed mostly to the disinterest of members/owners.

13. It is common cause that there were no less than 3 administrators appointed by the court to deal with the affairs of the body corporate.  Ms Noah was one of them.  It is quite apparent that none of these administrators was able to get the body corporate’s affairs in order.  This is well documented in a judgment of this court in 2008 in the matter of Dempa Investments CC v Body Corporate of Los Angeles.^[8]  That judgment records the inability of the trustees to manage the financial affairs of the body corporate after the appointments of among others, Ms Noah, as administrators had come to an end.  The court found in this regard that:

“The problem can therefore not be laid at the door of the former administrators.”^[9]

14. It also recorded how the trustees had asked various owners to make payments of their levies directly to creditors of the body corporate, such as City Power and Bad Boys Security.  The court noted that the trustees did not appear to have access to a bank account, and that it was not clear what the difficulty was.  In short, said the court, the trustees were engaging in financial management that did not amount to good governance.  The judgment also details how one of the previous administrators attempted to convene a general meeting of the body corporate in terms of the court order appointing them in 2007.  The senior advocate who was delegated to chair the meeting reported that it had been “a fiasco”.  One of the owners asked what he was doing there and intimated that there was no need for the administrators to intervene as the building was being satisfactorily managed by a “de facto body corporate”.  The judgment notes that there was a history of factionalism among the owners, with Ms Noah and other owners being in opposing camps.

15. These observations and findings of the court in 2008 are echoed in the explanation Ms Noah gives in her response to the application for her committal for contempt of court.  I need not go into details in this regard, but she records that the trustees told owners and tenants to make payments to different creditors.  She states that at one point her tenants were told to pay amounts due by them into the account of an attorney who was acting for one of the owners against whom Ms Noah had instituted a criminal complaint concerning financial irregularities.  Ms Noah’s averments in this regard are not fiction: they are supported by the earlier findings of the court to the effect that the trustees of body corporate seemed to be unable properly to manage its affairs.

16. It is also common cause that over the years no less than 14 court cases have been instituted between various parties (including Ms Noah) in relation to the affairs of the body corporate.

17. Another, and related, significant feature of this case is that, contrary to the body corporate’s averment, Ms Noah avers that she was not, as the body corporate says, in complete control of the financial affairs of the body corporate from 1999 to 2015.  In support of her denial on this point, Ms Noah explains her role (and the role of the second respondent) in the affairs of the body corporate as follows:

1999- 2004

17.1. The second responded was appointed as the managing agent in this period.

17.2. Ms Noah lists her duties, as the representative of the managing agent, which included printing levy statements, updating daily payments, preparing levy rolls and disbursement statements for the trustees, and taking steps against defaulting members.

17.3. She only had limited access to bank accounts, restricted to making inquiries.

17.4. Significantly, she says that she discharged her obligations under the supervision of the trustees.  No administrators were appointed during this period.

17.5. Ms Noah was aware of cheque accounts operated by the body corporate.

17.6. Some of the bank documents were attached to court papers in the many court applications that had been instituted over the years between various parties in relation to the affairs of the body corporate.  She had managed to retrieve some of these, which she provided.

2005-2006

17.7. Ms Noah was appointed as administrator during this period.

17.8. She had been able to retrieve a levy roll for November 2006, but no other documents.

17.9. During this period the trustees told tenants and owners where to pay their levies.  She attached deposit slips from her own tenants in support of this averment.

17.10. She recorded that no general meeting was held during this period.

17.11. She attached the financial statements for the body corporate for the period February 2006 to September 2006 to her answering affidavit.

2007 – 2008

17.12. This was the period when Mr Kaye-Eddie was appointed administrator, and the period dealt with in the Dempa judgment.

17.13. The second respondent was appointed by Mr Kaye-Eddie as the managing agent.

17.14. However, it was precluded from opening and operating a bank account.

17.15. All levies and service charges collected were deposited into the account operated by the administrator.

17.16. Ms Noah states that the second respondent could not fulfil its duties as managing agent because of interference by the trustees.  It was during this period that Ms Noah’s tenants were instructed to make payments into the account of the attorney acting for one of the trustees against whom Ms Noah had laid criminal charges.

2009– 2012

17.17. During this period Ms Noah applied for the appointment of an administrator.  Mr Birkenstock was appointed.

17.18. Ms Noah and the second respondent had no role in the management of the body corporate.

17.19. Mr Birkenstock was unsuccessful in taking control of the affairs of the body corporate.

2012-2014

17.20. Ms Noah was appointed as administrator in terms of a court order dated 6 December 2012 for a period of two years.

17.21. In the course of discharging her duties as administrator she succeeded in interdicting three people who were holding themselves out to be representatives of the body corporate, and who were collecting rentals, levies, service charges and the like and depositing them into a bank account they had opened.

17.22. This conduct made the affairs of the body corporate ungovernable, and obstructed Ms Noah in carrying out her mandate effectively.

17.23. During this period most tenants and owners paid directly into various accounts, such as City Power, on the instruction of one of the owners, who is now a trustee and was the deponent to the founding affidavit on behalf of the body corporate in the contempt proceedings.  Deposit slips were attached to Ms Noah’s answering affidavit in support of this averment.

17.24. Ms Noah concluded that during this period there was no proper running of the affairs of the body corporate as a result of the conduct outlined earlier.

2015

17.25. Ms Noah avers that she was not involved in the affairs of the body corporate.

17.26. To her knowledge, the deponent to the founding affidavit and the other trustees were responsible for its affairs and were collecting monies on its behalf.

18. It is important to record that the averment by the body corporate that Ms Noah had complete financial control of its affairs for the whole of the period covered by the court order was stated in the broadest of terms and without any evidence to substantiate it.  The furthest the body corporate goes in this regard is to list what it says were her duties as managing agent.  These duties purported to place Ms Noah (through the second respondent) as being required to manage the financial and other affairs of the body corporate and to keep financial records of all transactions.  Ms Noah denies this and explains what her duties were.

19. As I have already indicated, it is important to note that Ms Noah avers that when the second respondent was managing agent, it carried out its functions under the supervision of the trustees, and that she did not have control of bank accounts.  The body corporate’s reply to this averment confirms that there was friction between Ms Noah as managing agent and the trustees, although it has a different version of who was responsible for the friction.  Wherever the truth lies as to who was to blame for any friction, this is an application for final relief.  Where there are disputes of fact between the parties, the rule laid down in Plascon-Evans applies and I must accept the respondents’ version unless it is palpably implausible, far-fetched or clearly untenable.[10]  I do not find that the respondents’ version falls into any of these categories.  I accordingly accept Ms Noah’s evidence that when she was managing agent she did not have full control of, and responsibility for the financial affairs of the body corporate.

20. The same holds true for her explanation of her role in each of the periods listed earlier.  Counsel for the body corporate accepted at the hearing that Ms Noah’s version must prevail.  This means that the body corporate accepts that she was not the managing agent for the entire period covered under the Order, and nor was she the administrator for this entire period.  She was only administrator for two relatively short periods, and there were at least two other administrators who were appointed during the entire period.

21. It follows that the body corporate’s version that Ms Noah had complete control of the financial affairs of the body corporate during the period 1999 to 2015 cannot be sustained.  In fact, on the evidence before me it appears that the entire period was characterised by an inability by anyone and everyone involved, whether it be the trustees or any of the administrators appointed, or the managing agent, to manage the affairs of the body corporate effectively and in accordance with good management practices.  I do not need to lay blame in this judgment for who should be held responsible.  This court has already noted that the administrators prior to 2008 could not be held to be responsible.  It seems to me from the evidence detailing the history of the body corporate that it was inherently dysfunctional and that blame for that probably lay in many quarters.

22. This is relevant to the question of whether Ms Noah and the second respondent can be found to be guilty of contempt of the Order.  It is common cause that the Order was granted and that Ms Noah knew of the Order.  In view of the approach I adopt, I find it unnecessary to consider the issue of whether or not the body corporate has established non-compliance:  I will assume it has done so.  The real issue is whether it has established that such non-compliance (assuming it is established) was willful and mala fide.

23. In my view, it has failed to do so.  There are two principal, and interrelated reasons why this is so.

24. In the first instance, the Order itself is stated in extremely broad terms.  It requires a complete accounting in respect of every, single aspect of the body corporate’s affairs over a period spanning some 16 years.  It seems to me that it would be virtually impossible to expect anyone to be able to produce the kind of documentation called for in the Order.  For example, how could anyone be expected, on pain of committal to prison, to produce all vouchers for all expenses going back for this length of time?  The same goes for correspondence, and even bank statements.  Most banks do not keep even bank records for such long periods of time.  To this extent, it seems to me that the Order was so broad as to make it impossible of substantive compliance.

25. The second point is that it is quite clear from the evidence before me that Ms Noah was not in full control of the finances for this period.  The only periods when she might be said to have been in control would have been when she was appointed administrator.

26. However, for her first period of administration (2005 - 2006) she has produced a set of financial statements.  Her version, which I must accept, is that despite her appointment the trustees were telling people where to make deposits.  If she is unable to produce further documents for this period, she can hardly be held to be in willful contempt in this context.  After all, this goes back more than 10 years.  Furthermore, in Dempa this court recognised that the chaotic state of affairs of the body corporate immediately after Ms Noah’s term as administrator ended could not be blamed on the administrators.

27. Her second period of administration was 2012-2014.  There is ample evidence from Ms Noah of the legal action she had to take to try to prevent people from unlawfully collecting levies.  She also points out that some of the trustees were undermining her and that she could not carry out her duties as administrator effectively.  Her version in this regard is completely compatible with the established history of dysfunctionality inherent in this body corporate.  As such, she can hardly be held to have been in willful contempt of an order directing her to produce documents and to undertake a debatement of account.

28. Perhaps the most striking feature of this case is that it is quite clear from the evidence before me that it would not be reasonably possible for anyone to render a statement and debatement of account in respect of the affairs of the body corporate for the term covered by the Order, so dysfunctional was its governance.  The trustees themselves were responsible for this governance save for those periods when the body corporate was under administration.  Even in that respect, it seems from the evidence that they interfered with the conduct of the administrators.

29. The body corporate made something of a court order granted by agreement in September 2015.  Ms Noah was a party and she agreed, so the body corporate pointed out, to produce books of account duly supported by vouchers relating to the activities of the building at a special general meeting to be held.  This, says the body corporate, indicates that Ms Noah felt then that she was in a position to do this.  Thus, so the argument goes, there is no reason why she should not be found to be in willful contempt for failing to comply with this Order.

30. It is important to note in this regard that we are not dealing with a contempt of the 2015 Order.  Of further importance is the fact that even on the body corporate’s version, it, i.e. the body corporate, was the applicant (represented by a number of its members) in that matter.  The settlement agreement specifically records that “the applicant (i.e. the body corporate) and the respondent” (Ms Noah) agree to produce books of account” at the meeting (words in brackets added).  In other words, this was not an obligation resting on Ms Noah alone.  It is understandable, given how the body corporate has been managed (or mismanaged as the case may be) by various role-players over the years, why this appears not to have eventuated.  Once again, it seems to me that the existence of the 2015 court order is not indicative of mala fide behaviour on the part of Ms Noah in respect of the Order with which we are currently concerned.

31. For all of these reasons I find that the body corporate has failed to establish that Ms Noah acted in willful and mala fide non-compliance of the Order.

THE CLAIM FOR ALTERNATIVE RELIEF

32. At the hearing of the matter, and perhaps sensing that his client did not have a convincing case in respect of the relief sought in the Notice of Motion, counsel for the body corporate requested the court to consider different relief under the prayer for further and alternative relief.  Counsel submitted that its case was strong enough to show at least a case, on a balance of probabilities, warranting a declarator against the respondents.  Counsel requested that I consider granting an order postponing the application for a committal for contempt, and making a declarator in the form of a direction to the respondents to produce a more limited list of documents, and to give explanations for any inability to do so.  The production of documents sought in the alternative relief introduced an order in more refined terms than what was directed in the original Order.

33. This relief was opposed by Ms Noah.  Her counsel submitted that it was impermissible for the body corporate to shift the goal posts to such an extent in what was clearly an application for committal for contempt of court.  There was no application before the court on the basis that the Order was too vague or broad for purposes of compliance, and hence that it required variation by way of a refinement of the obligations placed on the respondents.

34. I am in agreement with Ms Noah’s submissions in this regard.  Realising, belatedly, that the Order is too broad and onerous to secure a conviction for contempt, it essentially is asking for a variation of the Order.  If the parties were in agreement on this score, things might be different.  However, in my view it is not justifiable to permit applicant to shift its case at this late stage, when no support for the shift is to be found in its supporting affidavits.  A variation, which is essentially what the body corporate seeks, is not a declarator in the sense intended in the case law on contempt of court.

35. For these reasons I decline to grant alternative relief in the form sought by the body corporate at the hearing.

PARAGRAPH 1.5 OF THE ORDER

36. One issue remains.  Paragraph 1.5 of the Order requires Ms Noah to make specific disclosure of documents pertaining to certain transfers of certain units in the sectional title scheme.  Ms Noah does not deal with this specifically in her answering affidavit.  Does this mean that she should be held in contempt on this score?

37. The difficulty for the body corporate in this regard is that it provides very little detail in its founding papers about this paragraph of the Order.  All the body corporate says is that it entered into an agreement with the managing agent, the second respondent, that if owners fell into arrears, it would be entitled to take legal action against them and to execute on the judgment against the defaulter’s unit.  According to the body corporate it was the second respondent’s duty to ensure that the body corporate purchased these units.  The body corporate says that Ms Noah acted contrary to this arrangement and caused various units to be registered in her name.

38. We do not know from the founding papers when these alleged transfers took place.  It is not clear whether they took place when Ms Noah was an administrator, or when there was another administrator on board, or when the trustees themselves were in charge of the affairs of the body corporate.  No dates are given in this regard.  This is important, as it goes to the question of whether Ms Noah can be held to have had control and possession of these documents at the relevant times, and hence to be in willful and mala fide contempt for failing to produce them.

39. In her answer, Ms Noah denies the existence of such an agreement.  She does not deny that she acquired some units, but points out that her ownership was never challenged.

40. In the face of Ms Noah’s denial of the agreement, and in light of the fact the body corporate has not established that Ms Noah was an administrator at the time that these transfers may have taken place, it seems to me that she cannot be found to be in willful non-compliance.  On the evidence before me, it has not been established that she ever had responsibility for proceedings leading to the execution against specific units.  In the circumstances, she cannot be said to be deliberately flouting a court order by failing to provide the broadly defined documents listed in the Order.

41. In this regard, too, I find that the body corporate has not established that Ms Noah is in contempt of paragraph 1.5.

CONCLUSION AND ORDER

42. For all of the above reasons, I find that the applicant has failed to establish its case.  It seems fair to me too that costs should follow the result.  I make the following order:

The application is dismissed with costs.

 

 

 

__________________________________________

R  M KEIGHTLEY

JUDGE OF THE HIGH COURT OF SOUTH AFRICA

GAUTENG LOCAL DIVISION, JOHANNESBURG

 

 

Date Heard: 28 February 2018

Date of Judgment: March 2018

Counsel for the Applicants: Adv Cowley

Instructed by: Swanepoel Attorneys

Counsel for Respondents: Adv Van der Merwe

Instructed by: Michael Popper & Associates Inc

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