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IN THE HIGH COURT OF SOUTH AFRICA

(GAUTENG DIVISION, PRETORIA)

REPUBLIC OF SOUTH AFRICA

 

Case Number: A409/2017

10/10/2018

 

(1)     REPORTABLE

(2)     OF INTEREST TO OTHER JUDGES

(3)     REVISED

 

EVERGREEN PROPERTY INVESTMENTS (PTY) LTD                                        Appellant

 

And

 

LEON JACQUES MESSERSCHMIDT                                                                       Respondent

JUDGMENT

JANSE VAN NIEUWENHUIZEN J

[1]       This is an appeal in terms of the provisions of section 57 of the Community Schemes Ombud Service Act 9 of 2011 ("the Act"), against an order made by an adjudicator on 13 July 2017.

[2]        The appeal lies against the following orders granted by the adjudicator:

"2.       In so far as the Applicant's dispute relating to the rates rebate is concerned order the Respondent to:

2.1      pay the Applicant the total sum of all the rebates which were not paid to him from the time that the City of Johannesburg granted the rebates application to the date of this order;

2.2       pay the Applicant interest on the said sum at the rate used for the calculation of the annual levy increases in respect of each year from the date the City of Johannesburg granted the rebates application to the date of this order;

2.3        credit all future rebates received, in whatever form, by the Respondent on behalf of the Applicant to the Applicant's levy account upon receipt,·

2.4       Submit to the Community Schemes Ombud Services, for its records, the names and unit numbers of the two other dissenting residents.

3.         All actions to be performed by the respondent shall be so performed within 14 (fourteen) calendar days from the date of delivery of this order;

4.          The provisions of this order shall remain confidential between the Applicant and the Respondent, it being in the interest of the Retirement Village to do so."

 

The parties

[3]        The appellant is the owner of Evergreen Broadacres Retirement Lifestyle Village ("the Village"). The Village is a sectional titles scheme under the Sectional Titles Act 95 of 1986 and is a housing development scheme in terms of the Housing Development Schemes for Retired Persons Act 65 of 1988.

[4]        The respondent resides in the Village and is a Life Right Owner in the scheme. The respondent falls in the Phase 1 & 2 category of owners.

 

Dispute a quo

[5]        The respondent's complaint relates to a rates rebate received by the appellant from the City of Johannesburg Metropolitan Municipality (referred to in the pleadings as "CoJ"), which rebate the respondent maintains should have been credited to his levy account.

[6]        It is common cause that the municipality granted a 50% rebate to the appellant in respect of the rates payable for properties in the Scheme.

[7]        The respondent contends that the appellant is, in view of the provisions of the policy, obliged to credit the 50% rebate to his levy account. The appellant does not agree. The appellant's stance is inter alia contained in minutes of a special Evergreen and Broadacres Residential Committee meeting held on 4 May 2016, to wit:

"b. CoJ rates rebate: This difference was around the 50% rates rebate allowed by the CoJ , received by Evergreen but not passed onto the individual Phase 1 & 3 residents, while Phase 3 residents with different LRA's received this rebate. AC and JW put the argument for Evergreen:

•    The Phase 1 & 2 LRA's clearly stated that the levies included rates& taxes, without defining the level of the rates included, so there was no requirement for Evergreen to refund any rates rebate that may be credited by the CoJ.

•    While Phase 1 & 2 residents did not individually receive the rebate, they benefitted because the rebate was shown as income in the village's accounts and so contributed to reducing the overall village costs to the benefit of all residents.

•     Phase 3 residents paid a higher levy than Phase 1 & 2 residents so were in fact subsidising the Phase 1 & 2 levy contributions."

 

Issues on Appeal

[8]          The issues on appeal were twofold, namely:

8.1     whether the adjudicator acted within her authority under the Act, i.e jurisdiction; in granting the order;

8.2     whether the conclusion by the adjudicator that the purported obligation on the appellant in the 2016 rates policy to pass the rebate granted to it on to the respondent is a statutory obligation, which is enforceable by the respondent against the applicant despite it not being incorporated in (and contrary to) the agreement is correct.

 

Jurisdiction

[9]        The appellant contends that the payment of rates and taxes to a municipality does not form part of the administration of a community scheme due to the fact that rates and taxes is a statutory obligation regulated by the relevant legislation.

[10]     Consequently, the dispute between itself and the respondent does not fall within the ambit of the Act and the adjudicator did not have jurisdiction to adjudicate the dispute.

[11]      The jurisdiction of an adjudicator is defined in sections 38 and 39 of the Act, read with the definitions in the Act.

[12]      Section 38(1), reads as follows:

"38(1) Any person may make an application if such person is a party to or affected materially by a dispute."

[13]        A •dispute·is defined in the Act, as:

".. .a dispute in regard to the administration of a community scheme between persons who have a material interest in the scheme, of which one of the parties is the association, occupier or owner, acting individually or jointly. "

 

[14]     To determine which functions are included in the ·administration· of a community scheme, it is apposite to have regard to the definition of "scheme governance documentation: which reads as follows:

"means any rules, regulations, articles, constitution, terms, conditions or other provisions that control the administration of ... a community scheme...."

 

[15]      The relationship between the appellant and respondent is contained in a written Life Right Agreement. The following clauses of the agreement are relevant to the dispute in casu.

"7.    EXPENDITURE FOR CONTROL, MANAGEMENT AND ADMINISTRATION

 

7.1     An estimate, for an initial period of 3 (three) years in advance, of all expenditure for the control, management and administration of the Scheme and all services and facilities concerned is set out in Annexure "H

7.2      The sum of the monthly levies payable by all of the occupants of the Scheme will be sufficient to cover the expenditure as indicated in Annexure "H Should the expenditure exceed the estimate as set out in Annexure "H the Occupant will not be liable for any shortfall, as any shortfall shall be borne and paid by the Seller.

 

8.        LEVIES AND CHARGES

 

8.1      The Occupant shall be liable to pay the levies from the Date of Occupation irrespective of whether the Occupant has taken physical occupation thereof.

8.2      It is recorded that the levy payable by the occupant in terms of this clause 8 specifically excludes water, sewerage, refuse, electricity and any other service charges imposed by the Local Authority in respect of the Unit.

 

9.           FACILITIES AND SERVICES

9.1    The Occupant acknowledges that the Evergreen lifestyle Village healthcare philosophy is based on providing home based care in the Healthcare Centre and the Unit.

9.2     The nature and extent of the basic facilities and services that are to be provided or rendered in connection with the Housing Interest shall include the following:

9.2.1   All rates and taxes,·

9.2.2   Security ;

9.2.3   24 hour response system and emergency nursing care;

9.2.4   Building and public liability insurance;

92.5    Maintenance of all communal property, external maintenance of all buildings and maintenance of all communal gardens;

9.2.6     Provision of monthly accounts;

9.2.7     Engaging, paying and supervising an adequate complement of qualified staff to ensure that all services specified are provided;

9.2.8     Access to and usage of the Lifestyle Centre,·

 

9.3         Additional home based care and related services (including palliative and recuperative care) required by the Occupant shall be available at an additional charge and will be market related, and comparable to other similar services, provided in other institutions comparable in nature to the Scheme. The costs 1nculled shall be for the Occupant's own account and shall be payable by the Occupant directly to the provider I supplier of such additional home based care and related

services.

9.4         The facilities and services referred to above will be available to the Occupant subject to the payment of levies with effect from the Date of Occupation (as set out in Item 6 of the Annexure "A" and provided further that all amounts due by the Occupant as envisaged in this Agreement has been paid in full. The rights and obligations of the Occupant in connection with the utilisation of these facilities and services are more fully explained in the House Rules. The Seller reserves the right to add or to substitute any of these facilities and/or services contained in this clause 9 from time to time provided they are of a similar standard and quality."

 

[16]       Annexure "H" contains the following:

 

“

 

ANNEXURE “H”

 

EXPENDITURE FOR CONTROL, MANAGEMENT AND ADMINISTRATION

1.       An estimate, for an initial period of 3 (three) years in advance, of all expenditure for the control, management and administration of the Scheme and all services and facilities concerned is:

YEAR	LEVY CYLCE	TOTAL
		Basic
1	1 September 2012 -31 August 2013	3 571 185
2	1 September 2013 – 31 August 2014	3 650 418
3	1 September 2015 – 31 August 2015	3 735 277
4	1 September 2015 – 31 August 2016	3 826 162

2.        The sum of the monthly levies payable by all of the Occupants of the Scheme will be sufficient to defray the expenditure as indicated in the table above. Should the expenditure exceed the above estimate in the table above, the Occupant will not be liable for any shortfall, which shall be borne by the Seller.

 

[17]      The aforesaid clauses contained in the Life Right agreement between the parties pertain to the payment of rates and taxes and are provisions in respect of the "control of the administration" of the community scheme as envisaged in the definitions of the Act. Consequently I am of the view that the payment of rates taxes in respect of the scheme falls within the ambit of section 38(1) of the Act.

[18]      The next point pertaining to jurisdiction emanates from the provisions of section 39. Section 39 defines the issues that an adjudicator may adjudicate upon. Both parties are in agreement that the dispute in question pertains to finances. Section 39(1) defines financial issues as follows:

"39      Prayers for relief

 

An application made in terms of section 38 must include one or more of the following orders:

 

(1)         In respect of financial issues -

(a)    an order requiring the association to take out insurance or to increase the amount of insurance;

(b)    an order requiring the association to take action under an insurance policy to recover an amount·

(c)    an order declaring that a contribution levied on owners or occupiers, or the way it is to be paid, is incorrectly determined or unreasonable, and an order for the adjustment of the contribution to a correct or reasonable amount or an order for its payment in a different way,·

(d)    an order requiring the association to have its accounts, or accounts for a specified period, audited by an auditor specified in the order;

(e)     an order for the payment or re-payment of a contribution or any other amount; or

(f)     an order requiring a specified tenant in a community scheme to pay to the association and not to his or her landlord, all or part of the rentals payable under a lease agreement, from a specified date and until a specified amount due by the landlord to the association has been paid· Provided that in terms of such an order-

(i)      the tenant must make the payments specified and may not rely on any right of deduction, set-off or counterclaim that he or she has against the landlord to reduce the amount to be paid to the association;

(ii)      payments made by the tenant to the association discharge the tenant's liability to the landlord in terms of the lease; and

(iii)     the association must credit amounts received from the tenant to the account of the landlord "

 

[19]      The question arises whether the order that the rates rebate be re-paid to the respondent falls within the scope of section 39(1).

[20]      The rates rebate is contained in a document titled "CITY OF JOHANNESBURG PROPERTY RATES POLICY 2016/2017.

[21]      Paragraph 3 of the policy lists the key objectives of the policy. In casu the following objectives are applicable:

"3(b)    specify relief measure for ratepayers who may qualify for relief or partial relief in respect of the payment of rates through exemptions, reductions and rebates as contemplated in section 15 of the Act (Local Government: Municipal Property Rates Act 6 of 2004)

(i)        provide that any rebate contemplated in paragraphs 7 of this Policy is to benefit the owner in occupation of the property.”

 

[22]      Paragraph 7 deals with the categories and conditions of ownership for purposes of rebates for residential properties. Subparagraph (9) pertains to the dispute in casu and reads as follows:

"(9)      Housing Development Schemes for Retired Persons

(a)     This category consists of properties owned by Juristic persons that fall under the Housing Development Schemes for Retired Persons Act, 65 of 1988, as amended.

(i)         It is required that the owner of property shall pass on the benefit of the rates rebate to the registered holder/s of a right of occupation in the Scheme.

(ii)         If the owner fails to pass the benefit of the rebate on to the registered holder/s, the Council may apply the full rating with retrospective effect to the date of commencement of the rebate.

(iii)       The rebate shall be a maximum of 50% of the current monthly rates.

(iv)       Sectionalised schemes for retired person shall qualify to apply as individual for pensioner rebate as stated in 7(2).

(v)         The rebate shall be granted as stated in 7(2)."

 

[23]      Mr C.F. Van der Merwe SC submitted that, having regard to the policy document itself, paragraph 7(9)(a)(i) provides that the owner of the property shall "pass on the benefit" of the rates rebate to the registered holder/s of a right of occupation in the Scheme. The policy does not direct the owner of the scheme to pay the amount of the rebate to the holder of a right of occupation.

[24]      Consequently, the rates policy did not give the respondent the legal right to claim payment of the rebate. Furthermore, paragraph 7(9)(a)(ii) provides for a penalty, in the event that the owner of a scheme fails to pass the benefit on to the holder of a right of occupation in the scheme.

[25]      The adjudicator, in granting an order for re-payment of the rates rebate relied on the contents of paragraph 7(9) of the policy. Due to the fact that the policy does not direct an owner to the rebate to the holder of a right to occupy, the adjudicator could not order re-payment of the rebate amount.

[26]      In support of the aforesaid submission, Mr C.F. Van der Merwe SC relied on the recent authority of Road Accident Appeal Tribunal v Gouws 2018 (3) SA 413 (SCA), in which the statutory power conferred on an official, was restated at424A:

 

"Repositories of power can only exercise such power as had been conferred upon them by law. This is a description of the principle of legality. "

 

[27]     The enabling legislative instrument relied upon by the adjudicator in ordering that the rates rebate must be re-paid to the respondent, does not bestow such power on her.

[28]     Similarly and for the same reasons stated supra, the order that all future rebates must be credited to the respondent's levy is not competent.

[29]      The rates policy does not specify the manner in which a rates rebate should be “passed on” to the holder of a right of occupation in the scheme. Furthermore, should the municipality not be satisfied that the rates rebate is passed on to the respondent as envisaged in paragraph 7(9)(i) of the rates policy, the municipality may invoke the penalty contained in paragraph 7(9)(ii).

[30]     In the premises, I agree with Mr C.F. Van der Merwe SC that the adjudicator went beyond the scope of her powers as defined in section 39(1) of the Act, in issuing the orders that form the subject matter of this appeal.

[31]     Having found that the adjudicator lacked the necessary jurisdiction to adjudicate the dispute between the parties, the second ground of appeal falls away.

 

Costs

[32]      Mr J.C. Uys, counsel on behalf of the respondent, submitted that the respondent should not be burdened with a cost order. His submission is premised on the fact that the Act provides for an inexpensive dispute resolution mechanism. Once an individual obtains an order in his/her favour and the owner of the Scheme chooses to take the order on appeal, the same underlying principle of providing inexpensive access to the resolution of a dispute should prevail.

[33]      I do not agree. Once an appeal is noted in terms of section 57 of the Act, the dispute is removed from the inexpensive dispute resolution procedure provided for in the Act. The appeal is heard in the normal course by a court of appeal and the normal principles pertaining to costs apply.

[34]     Once a respondent decides to oppose the appeal, the normal risks flowing from litigation ensue.

 

Order

[35]     In the result, I propose the following order:

1.          The appeal in terms of section 57 of the Community Schemes Ombud Service Act 9 of 2011 is upheld with costs.

2.          The order made by the adjudicator in terms of section 54 of the said Act is set aside.

3.           The Respondent is ordered to pay the costs of the appeal.

 

 

N. JANSE VAN NIEUWENHUIZEN J

JUDGE OF THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

 

 

I agree

 

 

U BHOOLA AJ

ACTING JUDGE OF THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

 

It is so ordered.

 

DATE HEARD                                              23 August 2018

JUDGMENT DELIVERED                         10 October 2018

 

 

APPEARANCES

Counsel for the Appellant:                               Advocate C.F. Van der Merwe SC and

Advocate R.J. Howie

(011 324 0500/083 602 0189)

(021 423 5253/083 703 3085)

Instructed by:                                                   Edward Nathan Sonnenbergs

(011 269 7600)

Ref: T. Steyn/K Chisaka/L Hufkie/0393014

 

 

Counsel for the Respondent:                            Advocate J.C. Uys

(012 452 8700/082 904 0997)

Instructed by:                                                   Brand Potgieter Incorporated

(011 781 0169)

Ref: C. Potgieter/BP0417

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