IN THE HIGH COURT OF SOUTH AFRICA (CAPE OF GOOD HOPE PROVINCIAL DIVISION)

Case no: 5418/05

In the matter between:

and

L. F. VAN HUYSSTEEN N.O. (in his capacity as Arbitrator in
a dispute between the applicant and second and third

and
									CASE NO. 787/2006

In the matter between:

and

JUDGMENT

ELOFF, A. J.

[1] The applicant in both applications before me is a Home Owners' Association as contemplated by and established in accordance with the provisions of section 29(1) of the Land Use Planning Ordinance, No 15 of 1985 (Cape) ("LUPO"), known as the Berg en Dal Estate (Incorporating Mountaindale Estate) Home Owners' Association. In approximately 1992, the Berg en Dal Home Owners' Association came into being when its constitution was approved by the relevant Local Authority, being the City Council of Cape Town. Subsequently, and in about 1994, the Western Cape Regional Services Council ("the RSC") approved of the rezoning and subdivision of erf 4670, Hout Bay, for purposes of the establishment of a township thereon. The RSC, following the requirements of section 29(1) of LUPO, imposed, as one of the conditions of approval, that before any land unit was transferred or built upon, a Home Owners' Association be established. The result was the establishment of the Mountaindale Home

Owners' Association. In about 2002, the Berg en Dal Estate Home Owners' Association and the Mountaindale Estate Home Owners' Association became amalgamated with one another, and the applicant was born from such amalgamation. On 1 September 2002, the constitution of the applicant, incorporating Mountaindale Estate, became of force. The applicant is, by virtue of the provisions of section 29(2)(a) of LUPO, a body corporate which is governed by such constitution.

1.	Was the dispute which the Arbitrator determined amenable to arbitration?
2.	Did the Arbitrator exceed his jurisdiction by determining a dispute that had not been referred to him for determination?
3.	Did the Arbitrator determine that the applicant did not have the legal standing to make an application for the imposition of additional conditions in terms of section 42 of LUPO, as contemplated by prayer (b) of the notice of motion in the first application?

Was the dispute which the Arbitrator determined, amenable to arbitration?

[9] 	As emerges from paragraph [5] above, and as will appear more fully below under the rubric "Did the Arbitrator exceed his jurisdiction by determining a dispute that had not been referred to him", the question that the Arbitrator determined was whether the applicant's constitution empowered the applicant to make an application for the revision of the site development plan.

"...is a term of convenience, shorthand for the cumbersome expression 'rights, duties and capacities'. A person's status is his or her overall legal position in relation to other persons and the community: the aggregate of his or her various rights, duties and capacities".

He added:

(a)       entities incorporated in terms of a general enabling enactment such as companies, banks and co-operatives;

(c)	associations that comply with the common law requirements for the recognition of juristic personality, such as churches, political parties and trade unions.

[16]	It follows logically that the status of each of these entities or associations relates, in the first place, to the fact of its existence, and the nature thereof. In the case of an incorporated company, its status is determined, firstly, by its incorporation in accordance with statutory prescripts. Its nature is dictated by the type of company that is incorporated, being, eg, a public company, a private company, or a company incorporated in terms of section 21 of the Companies' Act, no 61 of 1973 as amended. Its status can then subsequently be or become altered, eg by the conversion from a private company to a public company, or to a close corporation. Its status in respect of its rights, duties and capacities, (to borrow professor Boberg's terminology) can also be affected by supervening events, eg when it is wound up, dissolved, placed in judicial management, or deregistered. At

least some of these events can be brought about by the company itself, eg by way of a voluntary winding up.

[18]	Section 29 of LUPO contemplates the coming into being of a Home Owners' Association upon the approval of its constitution by the Local Authority in question. I assume that the applicant came into being when the combined constitution of the Berg en Dal Estate Home Owners' Association and the Mountaindale Estate Home Owners' Association was approved by the Local Authority. Clause 87 thereof, incidentally, permits amendments thereof by way of a special resolution adopted by a special general meeting of the members. I do not believe that the question that the Arbitrator determined is one concerning the applicant's status, within the meaning of that term as used in section 2 of the Act.

[19]	I now turn to Mr Rosenberg's second argument relating to the arbitrability of the question determined by the Arbitrator. Paragraph 80 of the applicant's constitution provides:

"ARBITRATION

80 Any disputes, questions or differences arising at any time between Members or between Members and Trustees out of or in regard to:
80.1 any matters arising out of this Constitution; or
80.2. the rights and duties of any of the parties mentioned in this Constitution; or
80.3. the interpretation of this Constitution

shall be submitted to and decided by arbitration on notice given by any party to the other interested parties.

[20] 	In my view, the question that the Arbitrator determined fell squarely within the ambit of paragraph 80.3 of the applicant's constitution. What the Arbitrator considered to be necessary, was for him to interpret the applicant's constitution so as to determine whether it enclothed the applicant with the power to make the application for the revision of the site development plan. His determination does not bind anyone other than the parties thereto. I, therefore, disagree with Mr Rosenberg's second argument as to the arbitrability of the question determined by the Arbitrator.

Did the Arbitrator decide an issue that had not been referred to him for determination?

absence of a clear definition of the disputes or issues in an agreement or reference to arbitration may impugn its validity.

"14. Neither at the time of the approval of the zoning and subdivision of Erf 4670, nor at the time of the approval of subdivision of Erf 5966, when Erf 8242 came into existence, or at any time thereafter, was/were any separate condition/s imposed or registered by the relevant statutory or any other official authority relating to building height restrictions and/or a coverage/bulk factor other than 50% in respect of Erf 8242.

15.    As a result of the aforegoing:
15.1.	The building height restriction/s prescribed by the relevant zoning scheme i.e. 8 metres to a point midway between the eaves and a ridge in the case of a pitched roof, was applicable to Erf 8242 at all relevant times.
15.2.	The coverage/bulk factor of 50% was applicable to Erf 8242 at all relevant times.

17. 	Thereafter [being after the amalgamation of the Berg en Dal Estate Home Owner's Association and the Mountaindale Estate Home Owner's Association referred to above] during or about November 2003, the Defendant purported to adopt a resolution which purported to authorise them to make application to the City of Cape Town (South Peninsula Administration) for the approval of a proposed amendment of the officially approved site development plan and agricultural guidelines in order to enable them to introduce stricter height restrictions, and a more restrictive method of calculation of those height restrictions and a new coverage/bulk factor of 36% in respect of dwellings of more than one storey, inconsistent with those allowed by the relevant zoning scheme pertaining to, inter alia, Erf 8242,

18.1	Defendant purported to adopt the resolution referred to in paragraph 17 above while other proposed restrictive provisions would only affect those owners with vacant land while owners who had already built in excess of the newly proposed restrictions would remain unaffected without having consulted with Claimants who afforded them the opportunity of making representations which constituted an unfair discriminatory decision which is not in accordance with the rules of natural justice, including the audi alteram partem rule.
18.2.	The Defendant not being the registered owner of Erf 8242 has no power or jurisdiction to apply for the amendment of the conditions imposed when the township was approved, alternatively, the application amounts to a departure application in terms of section 15 of LUPO which only the owner could apply for.
18.3.	The Defendant in any event has no power to make the application in the absence of an approval or authority obtained from its members at a meeting which was duly called and constituted in terms of the provisions of its purported constitution, which did not occur.
18.4.	When the Claimants purchased Erf 8242 they obtained a vested statutory right to build in accordance with the height restriction of 8 metres and coverage/bulk factor of 50%, both calculated in accordance with the relevant zoning scheme regulations which cannot be deprived without compensation as provided in Section 25 of the Constitution of the Republic of South Africa.

[23]	In its plea in the arbitration proceedings, the applicant, as defendant, stated as follows:

It is admitted that at the time of the sub-division of Erf 5966 no conditions were imposed additional to those which had been imposed upon the sub-division of Erf 4670 Hout Bay. Save as aforesaid, and to the extent that they are inconsistent therewith, the allegations in these paragraphs are otherwise denied. Without derogating from the generality of its denial, the Defendant pleads that upon a proper construction of the conditions of sub-division read with the provisions of s29(1) of LUPO and the constitution of the homeowners' association the design and development of any building of Erf 8242 falls to be controlled by the Homeowners' Association and that accordingly any development parameters applicable in terms of the zoning scheme regulations are liable to be limited or modified having regard to the Homeowners' Associations' obligation to exercise control over building in the context of its duties in respect of the promotion, advancement and protection of the communal

and group interests of the members of the association generally.

It is admitted that the defendant adopted the resolution described in this paragraph. Defendant denies the implication and the Claimants' use of the word 'purported' that the resolution was invalidly adopted.

The allegations in this paragraph are denied.

The allegations made in this sub-paragraph are denied. Defendant pleads in any event that the adoption of the resolution to make an application to the local authority did not constitute a decision which affected the claimants' rights. To the application to the local authority was in any event not amenable to determination without a process of advertisement and consideration of any objections received consequent thereto as contemplated in terms of s42(c) and (4) of LUPO. Any determination by the local authority will furthermore be amenable to appeal to the 'Administrator' in terms of s44 of LUPO.

Defendant pleads that any party with sufficient interest is entitled to make an application for the variation of conditions imposed in terms of s42 of LUPO. By virtue of its aforementioned objects the Defendant is vested with sufficient interest to make application for the variation of the conditions imposed upon the subdivision of all the constituent parts of The Berg en Dal Estate (incorporating Mountaindale Estate).

The allegation in this sub-paragraph is denied. In notification of the aforegoing the Defendant pleads that the adoption of the resolution occurred within the plenary powers of the Trustee Committee provided in terms of clause 34 of the constitution ...

The allegations made in this sub-paragraph are denied. In any event the issue of alleged deprivation of property (which is denied) and any right to compensation which notionally might arise from any determination which might be made by the local authority (or the 'Administrator' on appeal in terms of s44 of LUPO) have no bearing on Defendant's right to apply for a variation of the conditions imposed in terms of s42 of LUPO. Defendant pleads that the Claimants are not entitled in law to pre-empt the determination of the application by means of these proceedings.

In the premises the conclusion pleaded in this paragraph is denied."

[24]	The Trust requested further particulars of the applicant for purposes of preparation for the arbitration. It is necessary to quote the following paragraphs of the Trust's request for particulars for preparation for the hearing:

2.1    For purposes of the construction relied upon by the Defendant in this paragraph, the Defendant is requested to specify:

2.1.1 on exactly which conditions of subdivision does it rely?

2.1.2 on exactly which provisions of the constitution of the homeowners' association does it rely?

3.1.	Is it the Defendant's case that it has the power, in terms of the particulars pleaded in paragraphs 6 and 12 of its plea, to amend the building height restrictions and coverage/bulk factor pleaded in paragraph 15 of the statement of claim oris it the Defendant's case that it merely has the power to apply for the said amendments in accordance with the relevant statutory provision?
3.2.	If the latter, is it the Defendant's case that it is legally entitled to make the application without:

3.2.1.the owner's authority?
3.2.2.	without giving the owner an opportunity to make representations?"
The applicant, as defendant, responded as follows to these requests for particulars:

2.1	The defendant relies on the conditions of sub-division read as a whole, but without derogation from the generality of the aforegoing, particularly on those conditions described in paragraph 4.2 of the defendant's plea.
2.2	The defendant relies on the constitution of the Homeowners' Association of Berg en Dal Estate (incorporating Mountaindale Estate), ... read as whole, but without derogation from the generality of the aforegoing, particularly on clauses 1-4, 6, 9, 11, 20, 21, 24,34, 35 and 38

3.
AD PARAGRAPH 3

The particulars sought in terms of this paragraph are not relevant to the issue before the Arbitrator in terms of the claimants' statement of claim. The sole issue before the Arbitrator is whether the defendant's action in applying for the amendment of certain conditions in terms of section 42 of Land Use Planning Ordinance was legally competent. The defendant contends that the issue referred for arbitration by the claimant raises matters of both public and private law and contends further that only the matters of private law, being the competence of the trustees of the defendant to make this application within the ambit of the powers in terms of the defendant's constitution are arbitrable."

[25]	Mr Rosenberg contended that the question determined by the Arbitrator, to which I alluded in paragraph [5] above, does not feature in any of the paragraphs of the pleadings quoted above. Before elaborating upon his argument and that of Mr le Roux , who appeared for the second and third respondents, I highlight the undermentioned passages contained in the Arbitrator's award, which seem to me to be relevant to a determination of the question under discussion.

Having alluded to some of the relevant facts and to paragraph 18 of the Trust's statement of claim (quoted in full above), the Arbitrator recorded that:

"In Brunt's heads of argument furthermore specific submissions are made that the HOA [a reference to the applicant] constitution does not empower it to apply for the restrictions.

The Arbitrator proceeded as follows:

5.3 It is therefore necessary to analyse and interpret the HOA constitution to ascertain whether the HOA has the power to make such an application. This is a matter between Brunt and the HOA.
Although this line of enquiry is not expressed or raised in the statement of claim, it was pleaded to on behalf of the HOA, and extensively dealt with in argument by both parties. There is obviously no prejudice involved and I am, as also mentioned before, entitled to decide the matter on the basis as set out above.

(emphasis supplied)

The Arbitrator then analysed some of the paragraphs of the applicant's constitution, and concluded as follows:

"5.14 In so far as the HOA has any power regarding building parameters, it merely has supervisory powers as set out in clause 20.2.
5.15 Again it is clear from the above that it was never intended that between a member of the HOA on the one and the HOA on the other, the HOA would have any power at all regarding

later amendments to the basic building parameters applicable to each Erf, including building heights and bulk factors.

findings in paragraph 5.8 and 5.15,1 grant an order in terms as requested by claimants in paragraph (a) of the statement of claim - the decision is invalid and is hereby set aside."

Having regard to the wording of the relief sought by the Trust in paragraph (a) of its statement of claim, it is plain that the "decision" which formed the subject matter of the Arbitrator's Award embodied in clause 6.1 thereof was that of the applicant, to make application to the South Peninsula Administration for a revised site development plan and amended architectural guidelines. It did not relate to an application which the applicant apparently intends to make for the imposition of additional conditions in terms of section 42 of LUPO, referred to in prayer (b) of the notice of motion in the first application, and in prayer (a) of the notice of motion in the second application.

[27]	In developing his argument to the effect that the Arbitrator had indeed decided a question that fell beyond the ambit of the disputes arising from the pleadings, Mr Rosenberg submitted that none of the allegations made by the Trust in its statement of claim raised the question determined by the Arbitrator. He submitted that the allegations made in paragraph 18.3 of its statement of claim (quoted above) were based on the premise that the applicant's constitution in fact embodied a power to make the application referred to in prayer (a) of the Trust's statement of claim, but that the complaint made therein was that the applicant's members had not at a duly convened meeting, authorised the applicant to make such application.

statement of claim. Rather, he based his case on the contents of paragraph 6 of the applicant's plea (quoted above) and on the responses provided by the applicant in paragraphs 2.2 and 3 of its reply to the Trust's request for further particulars for preparation (also quoted above). It is, accordingly, necessary to analyse the allegations made in these paragraphs, and I do so below:

(a)	Paragraph 6 of the applicant's plea purported, according to the heading thereof, to constitute a response to paragraphs 14 and 15 of the Trust's statement of claim. I say "purported", because only the first two sentences of paragraph 6 of the applicant's plea related to paragraphs 14 and 15 of the statement of claim. The remainder thereof did not constitute a factual or legal response to paragraphs 14 and 15 of the statement of claim.

(b)	Turning, then to the applicant's further particulars, it is important to note that the Trust combined paragraphs 6 and 12 of the plea for purposes of posing the questions contained in paragraph 3 of the request for particulars, quoted in paragraph [12] above. The first of these, unsurprisingly, attracted the responses contained in paragraph 2 of the applicant's reply.

Did the Arbitrator determine that the applicant did not have the legal standing to make an application for the imposition of additional conditions in terms of section 42 of LUPO (as contemplated by prayer (b)) of the notice of motion in the first application?

[28] Since the consequence of my finding in relation to the question as to whether the Arbitrator determined an issue that had not been referred to him for determination is that it be answered in the affirmative, this question falls away, and so does the relief sought in paragraph (b) of the notice of motion in the first application.

[29] Mr Rosenberg asked, albeit somewhat faintly, that even if the relief sought in the main application is granted, the second application should also be successful.

[31] 	My difficulty with this relief is that it relates to a contemplated "application" that the applicant intends to make to the Administrator or the Local

Authority that one or the other of these two functionaries (obviously, in the case of the Administrator, his successor-in-law) exercises some or all of the discretionary powers with which he or she is enclothed by virtue of section 42(3) of LUPO. That section does not, either in express, nor, in my view, in implied terms, provide for anyone to apply to the applicable functionary to exercise any of the powers therein mentioned. There is no evidence before me to the effect that a practice has developed according to which an interested party can make such an application. I can, accordingly, not conceive of any legal basis upon which I can grant the relief sought.

[33]	The order which I make is the following:

1.	The application launched under case number 5418/05 succeeds, and the relief sought in paragraph (a) of the notice of motion in that application is granted.
2.	The second and third respondents are, in their capacities as trustees of the Chris Brunt Trust directed to pay the costs of the application in case number 5418/05;
3.	The second and third respondents' counter application for the first respondent's award dated 28 April 2005 in the arbitration proceedings between the second and third respondents, on the one hand, and the applicant on the other for such award to made an order or court in terms of section 31 of the Arbitration Act, no 42 of 1965, is refused with costs;
4.	The applicant's application in case number 787/06 is dismissed with costs.
ELOFF, AJ
Counsel for applicant: Mr S Rosenberg, SC 
	Applicant's attorneys: Minde Shapiro and Smith,
	Ref: MM Smith/R Smit
	Tel: 021 918 9000

Counsel for second and third respondents: Mr JA le Roux, SC 
Second and Third Respondents' attorneys: De Klerk & van Gend
Ref S Duffett

No appearance for first respondent