Must compliance with management reg 25(1) and (2) of the Sectional Titles Schemes Management Act be pleaded in claims for payment of overdue levies?

July 1st, 2023

By Anton Sean Myburgh

In an appeal against a decision of a magistrate’s court in Body Corporate of Kleber v Sehube and Another (GJ) (unreported case no 2021/A3094, 9-11-2021) (Sutherland DJP), the Gauteng Local Division High Court decided that no reference to reg 25(1) or (2) of the Management Rules as per the Sectional Titles Schemes Management Act 8 of 2011 needs to be pleaded to sustain a cause of action to recover levies due and payable by owners.

The High Court held that these specific regulations are for administrative purposes and good order and are not part of the cause of action. The High Court held that the liability to pay levies arises when the resolution to pay is passed. The liability to pay such levies is not dependent on the giving of the notices set out in reg 25(1) and (2).

No doubt it is correct that the liability to pay levies arises when such a resolution is passed by the body corporate. The question that ought to arise is that if there are any procedural steps that a body corporate must take before it may institute legal proceedings to recover overdue levies and interest.

The High Court devoted three paragraphs to the relevance of these two regulations. Respectfully, the judgment in my mind does not really deal comprehensively with the purpose of these two regulations.

By way of s 3 of the Act all the owners are liable to pay levies to a body corporate. The amount and nature of such levies are determined by the body corporate when they pass a resolution to that effect. This resolution also determines, inter alia, when the levies are payable (due date) and the interest rate that will be charged on all overdue amounts.

Logic dictates that the owners should be informed of such a resolution. This is the first purpose of reg 25(1) namely to publish the resolution to the owners so that all the owners know what amounts they are to pay and by when and what interest will be charged on any overdue amounts. As such, I believe that compliance with reg 25(1) is a crucial step before action can be taken to recover overdue levies and also because it is peremptory by the use of the word ‘must’.

There is nothing in reg 25(1), which is at odds with s 3 of the Act and in fact it confirms the liability for levies and provides a mechanism by which the body corporate must publish the resolution to the owners. This regulation is essential to enforce the resolution and the liability that arises therefrom. In the absence of compliance with reg 25(1) the resolution would be nothing more than a secret decision made by the body corporate.

There is a further reason why the resolution must be published to the owners and that is so that any owner may challenge the levies raised by way of the dispute mechanisms set out in the Act and regulations and which must be informed of in the reg 25(1) notice.

Regulation 25(2) is triggered if an owner does not pay the levy by the due date. If the levy is overdue a body corporate must comply with reg 25(2). It is the next compulsory step that the body corporate must take in the process to recover overdue levies. When the levy is overdue this also triggers interest on the overdue amounts at the rate that was passed by the resolution. The daily amount of interest must be set out in this notice, and this is so that the owner can determine the exact amount to be paid, inclusive of interest on any given day.

Importantly, the notice must inform the owner that if the overdue amount and interest is not paid within 14 days from giving of the notice, the body corporate intends to act for the recovery thereof.

Taking action to recover overdue amounts, in my mind and in the context, can only mean legal action or proceedings.

Because the word ‘must’ is used, it follows that the body corporate must afford 14 days to the owner before it may take action to recover the amounts. In my opinion, the only reasonable interpretation that can be attributed to this regulation is that a body corporate may not sue until the notice has been given and until the 14 days have lapsed. The purpose of the notice and its content is to afford the owner a period of 14 days before legal proceedings are instituted against the owner to make payment so that legal proceedings can be prevented with the associated costs.

The purpose of reg 25(1) and (2) is, therefore, to confirm the liability for levies, to publish the amounts and due dates to the owners and to afford 14 days to the owner to pay overdue amounts and the interest thereon before legal proceedings are instituted.

As such, these regulations respectfully are not only administrative and for good order but serve to prescribe compulsory steps by the body corporate with a view to the institution of legal proceedings. They are procedural requirements to be able to institute legal proceedings.

There are many regulations and statutes that prescribe compulsory steps before legal proceedings may be instituted and averments that these steps were complied with are, therefore, essential to establish the right to institute the legal proceedings. These issues are, therefore, to be distinguished from the issue of liability for that purpose.

While it can be argued that the wording of these regulations does not specifically say that legal proceedings may not be instituted unless the regulations are complied with and the 14-day period has run out, I believe that in the context, that is what the regulator had in mind. It would be at odds with reg 25(2) to reason that action may be taken by way of legal proceedings before the 14-day period has run out.

An owner who receives such a notice will, therefore, know that he has 14 days to pay in order to prevent the institution of legal proceedings and that no such proceedings will be instituted until the 14-day period has run out.

No doubt body corporates, by this decision of the High Court, will contend that pleading compliance with these two regulations is not required for purposes of legal proceedings to recover overdue levies and interest. However, I would suggest that this may not be aligned to the aim and purpose of these regulations and would advise to rather comply with the regulations and to only institute action after the 14 days have lapsed and to plead compliance therewith to be on the safe side.

Anton Sean Myburgh BLC (UP) LLB (Unisa) is a legal practitioner at Anton Myburgh Attorneys.

This article was first published in De Rebus in 2023 (July) DR 7.