ADJUDICATION ORDER IN TERMS OF SECTION 53

OF THE COMMUNITY SCHEMES OMBUD SERVICE ACT NO.9 OF 2011

Reference Number: CSOS 1022/GP/23

In the matter between: -

AMDANDA GUMEDE Applicant

and

TRUSTEES OF ROCKWAY GLEN BODY CORPORATE Respondent

ADJUDICATION ORDER

EXECUTIVE SUMMARY

• Relief applied for in terms of the CSOS Act:

1. Section 39 (1) (c)

(1) In respect of financial issues ----

(c) An order declaring that a contribution levied on owners or

occupiers or the way it is to be paid is incorrectly determined or is
unreasonable or and an order for the adjustment of the
contribution to a correct or reasonable contribution.

• Date referred to adjudication:

15 May 2023.
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• Date Adjudication conducted:

25 June 2023.

• Name of the Adjudicator:

P MPAPELE.

• Order:

Granted,

INTRODUCTION

1. The applicant is Amanda Gumede the registered owner of unit 48 within the
respondents’ scheme situated at 8 Deysel Road, Honeydew, Johannesburg,
Gauteng.

2. The respondents are the Trustees of the body corporate of Misty Lake, a legal
entity registered according to the Sectional Titles Scheme Management Act, No.
8 of 2011 (STSMA) and a community scheme as defined in the Community
Schemes Ombud Services Act No.9 of 2011(CSOS Act). The scheme is duly
represented by Lourene Thorburn of Boukorp Property Management (Pty) Ltd, a
managing agent as defined in section 1 of the CSOS Act, duly appointed in terms
of trustee resolutions dated 20 May 2022, situated at Albuca Avenue,
Weltevreden Park, Roodepoort, Gauteng province.

3. This is an application for dispute resolution in terms of Section 38 of the

Community Schemes Ombud Service Act 9 of 2011 (the CSOS Act).

4. The application was made in the prescribed form and lodged with the Community
Schemes Ombud Service (the CSOS) by way of e-mail.

5. The Applicant is seeking relief in terms of Section 39(1)(e) of the CSOS Act in
respect:

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2. Section 39 (1) (c)

(2) In respect of financial issues ----

(c) An order declaring that a contribution levied on owners or occupiers or the

way it is to be paid is incorrectly determined or is unreasonable or and an
order for the adjustment of the contribution to a correct or reasonable
contribution.

6. This matter is adjudicated in terms of the CSOS Act; Practice Directive on

Dispute Resolution, 2019 (as amended) and the Amended Practice Directive
dated 23 June 2020 which provides under paragraph 8.2: “Adjudications will be
conducted on the papers filed by the parties and any further written submissions,
documents and information as requested by the appointed Adjudicator”.

7. The adjudication was conducted on 25th June 2023, and an order is now
determined.

PRELIMINARY ISSUES

8. None.

RELEVANT STATUTORY PROVISIONS

9. Section 1 of the CSOS Act defines-

• "community scheme" as “any scheme or arrangement in terms of which there is
shared use of and responsibility for parts of land and buildings, including but not limited
to a sectional titles development scheme, a share block company, a home, or property
owner's association, however constituted, established to administer a property
development, a housing scheme for retired persons, and a housing cooperative and
"scheme" has the same meaning”.
• "dispute" as “a dispute in regard to the administration of a community scheme
between persons who have a material interest in that scheme, of which one of the
parties is the association, occupier or owner, acting individually or jointly.”

10. Section 38 of the CSOS Act provides-

“Any person may make an application if such person is a party to or affected materially
by a dispute.”

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11. Section 45(1) provides-

“The Ombud has a discretion to grant or deny permission to amend the application or
to grant permission subject to specified conditions at any time before the Ombud refers
the application to an adjudicator.”

12. Section 47 provides-

“On acceptance of an application and after receipt of any submissions from affected
persons or responses from the applicant, if the Ombud considers that there is a
reasonable prospect of a negotiated settlement of the disputes set out in the
application, the Ombud must refer the matter to conciliation.”

13. Section 48 (1) provides-

“If the conciliation contemplated in section 47 fails, the Ombud must refer the
application together with any submissions and responses thereto to an adjudicator”.

14. In terms of Section 50-

“The adjudicator must investigate an application to decide whether it would be
appropriate to make an order.”

15. Section 51 provides for the investigative powers of the Adjudicator-

“(1) When considering the application, the adjudicator may-
(a) require the applicant, managing agent or relevant person-
(i) to give to the adjudicator further information or documentation.
(ii) to give information in the form of an affidavit or statement; or
(iii) subject to reasonable notice being given of the time and place, to come to
the office of the adjudicator for an interview.
(b) invite persons, whom the adjudicator considers able to assist in the resolution of
issues raised in the application, to make written submissions to the adjudicator
within a specified time; and
(c) enter and inspect-
(i) an association asset, record, or other document.
(ii) any private area; and
(iii) any common area, including a common area subject to an exclusive use
arrangement.”

SUMMARY OF RELEVANT EVIDENCE

Submissions by the Applicant

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16. The applicants submit she purchased unit 4 in 2018 within the respondents’
scheme. The unit was registered in her name in 2018. When she purchased
the unit, the respondents did not disclose to her that the building had latent
defects until 5 months later when the insurance company cancelled cover over
the building after ruling it as uninhabitable.

17. The applicant submits that the body corporate was aware of the state of the
building at the time but ignored it and failed to fix the defects but completely
ignored it even after they were told that no unit in the building were to be sold.
Her unit was sold to her, nonetheless.

18. The applicant submit that the respondent had raised a loan on behalf of the
scheme in order to fix the decaying building structure and restore the insurance
cover that had been cancelled. The loan would have to be repaid by unit
owners based on each unit owner’s participation quota. This is howe the
applicant inherited the portion of her unit’s loan obligation.

19. Applicant submits that she had first queried the fact that a special levy was
added on to her account after months of registration of her property. She had
then raised a query with Peter and Jason, a manager of Mansfield, with whom
she was liaising back and forth, via email but they refused to address the query.

20. She was informed by Peter that he had had a meeting with management, and
they had agreed to a settlement figure of R70,000 for the special levy debt,
subject to the condition that it be paid by 28 February 2022.

21. It was then that she decided to borrow a loan from the bank to settle the debt
after she had informed the account manager that she would like to make a
settlement arrangement.

22. She then paid the R70,000 and they sent an agreement letter signed by
agreement.

23. The applicant and the Mansfield concluded an agreement on those terms
including that her levy account be restructured. Applicant was subsequently

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advised by the manager that the body corporate had unanimously accepted the
agreement at its management meeting.

24. The applicant submits that other owners were also making their own similar
arrangements.

25. The applicant submits that she then informed two of the trustees that she had
concluded the agreement with the body corporate and all seemed to be in order.

26. Applicant submits however that when Misty Lake took over as the managing
agent for the respondent after Mansfield, they informed her that they did not
recognise the agreement she concluded with Mansfield, the previous managing
agent, as only the managing agent signed the agreement, but not the trustees,
who ought to have given its consent to the agreement but did not. So, the
agreement was nullified.

27. Applicant submits that she has reached out to Misty Lake on this issue several
times, and the manager Wayne advised her that he had to meet with the
trustees and have their say on the matter, amongst these is a chairperson who
lived in her complex at the time she made the arrangement and payment with
the previous body corporate. She had told him of the agreement, and he
confirmed that he and another trustee were aware of the agreement which he
considered to be good news.

Applicants’ final written submissions

28. The adjudicator requested the applicant to furnish him with final written
submissions, to which the applicant responded on 23 June 2023 as follows:

“Good day Patrick

Thank you for your email.

With regards to the documents, you require on my side I can ask FNB to send me the
registration of my unit which was in 2018 August which after 5montha of it being

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registered to me in January 2019 I was informed of latent defects of the building dating
back 2017 which body corporate did not mention at the time of the sale of my unit. This
negligence on their side had resulted to the building insurance being cancelled many
people advise to vacate the building as it was a danger to live in, but I had nowhere to
go so I stayed while constructions in the building were taking place.

I will also send statements I received from Misty Lake the time of their take over. Sadly,
on my part the other documents pertaining to the loan and why it was taken I do not
have any copy nor a copy of when the loan ends or what agreements might have been
made. I wish I could assist with those documents, but they were never sent to for my
attention as sectional title owner.”

Relief sought by the Applicant:

29. An order that the respondent remove the special levy from her statement of
account as per the signed agreement letter and the conversation she had had
with Mansfield.

30. An order to have her account reconciled and the interest charges as well as the
special levy charged to her account removed.

31. If the new body corporate says the agreement is missing signatures, that should
not be held against her.

Submissions by the Respondent

32. The respondents made submissions dated 05th May 2023 addressed to CSOS.
In their submissions, the respondent specifically states that they address the
issues set out in the paragraphs below directly in response to the relief the
applicant seeks:

33. Special levy added after five months of registration:

33.1 A resolution was passed at a Special General Meeting (SGM) of the

scheme held on 30th April 2019 to impose special levy and a resolution
to fund the special levy via a loan which was approved by 94% of the
quorum present.
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33.2 The loan was required to remedy certain structural defects on the
building that had resulted in the complex structural insurance cancelling
cover over the building due to the nature of these defects and the
certificate of occupancy cancelled as a result.

33.3 The remedial work was thus necessary. Those units who could not pay
the special levy imposed would be funded through a loan which would have
to be repaid with interest.

34. The loa agreement

34.1 Repayment of the loan agreement would start in 2019.

34.2 Some 43-unit owners paid the special levy in one lump sum and were
not subject to the loan repayment terms.

35. Managing Agents

35.1 At the time of the 30 April AGM, the managing agent was Angor.
Mansfield Property Solutions took over the management of the complex
in 2019.

35.2 Misty Lake took over the management of the complex in 2022. At the
time of takeover by Misty Lake, the scheme had not been audited since
2018. The scheme was insolvent, their monthly expenses exceeded their
income by more than R30,000 per month.

35.3 An urgent SGM was called on 6 August 2022 for feedback to the
members and resolution to amend the schemes levies to try and
rehabilitate the scheme’s financials.

36. Section 48 Payment Plan of R70 000 offered and signed by Mansfield Property
Solution

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36.1 Amanda did bring this to the attention of the trustees and Misty Lake.
Misty Lake investigated and found that:

36.1.1 On the 31 May 2019 they were debited the full amount of the loan
portion to the value of R40,245.40.

36.1.2 On 31 May 2019, the member was also debited with the monthly
repayment amount of R670.76 in month one of sixty months which
continued for months and thus were double-debited.

36.1.3 The member was further being charged interest on the inflated levy
account balance.

36.1.4 They have noted no payment from July 2019 to February 2020 and
no interest was charged on arrears.

36.1.5 For the financial year 01 March 2020 to February 2021, only R7900
was received as payment towards the members contribution.

36.1.6 On the 24 February 2022 R70000 was received from the member as
per the Acknowledgement of debt presented to them by Mansfield.

36.1.7 Misty Lake investigated the matter and found double billing. They
reversed the bulk of the loan amount as part of the account rework in
June 2019, amended the interest that was charged and thus redid
the members account from 2019 to date of take on.

36.1.8 This rework thus takes the members account to a balance of R2,
181.38 in credit after rework.

36.1.9 Since the rework was done and communicated to the members the
account was kept up to date until August 2022 when the interest for
the loan was added as resolved at the SGM by the members. This
interest was not taken into account by the previous managing agent
when recovering the monthly repayment amounts.

36.1.10 The member has thus defaulted, interest has been charged on
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the arrears balances and the amount owing is R30, 694.66.

37. Interest on the loan amount added to the levy account.

37.1 Is contained in the minutes of the special general meeting where this
was agreed upon and approved at the meeting which the owner did not
attend.

37.2 The amount of the interest was R14, 769.83. (Whilst minutes do state, a
resolution was tabled before the members and passed, and even so
whether it was passed by a sufficient quorum).

37.3 In summary, the agreement presented and signed with Mansfield was
done out of mandate without the approval of the trustees (No signed
resolution, no minutes of the meeting and the agreement was not signed
in accordance with the act for legal and binding documents). The
agreement is also not signed in accordance with the requirements of the
acts.

37.4 The member’s account was reworked, and incorrect interest and billing
was reversed and after payment of R70 000 they were in credit.

38. The respondents submit that they believe that whilst the agreement is not valid,
the spirit of what it intended to achieve has been met with the rework that they
had one.

Relief sought by the Respondent.

39. None.

EVALUATION AND FINDINGS

40. I have perused the parties’ written submissions.

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41. In evaluating the evidence and information submitted, the probabilities of the
case together with the reliability and credibility of the witnesses must be
considered.

42. The general rule is that only evidence, which is relevant, should be considered.
Relevance is determined with reference to the issues in dispute.

43. The degree or extent of proof required is a balance of probabilities. This means
that once all the evidence has been tendered, it must be weighed up and
determined whether the applicants’ version is probable. It involves findings of
facts based on an assessment of credibility and probabilities.

44. The gravamen of the applicant’s case is that she had signed an
acknowledgment of debt in favour of the respondent on 19 February 2019, in
respect of her unit 84.

45. According to the minutes of the applicants’ special general meeting (SGM) that
was held on 30 April 2019, the procurement of the loan by the scheme, followed
a passing of a resolution at the SGM by 94% of the members that the scheme
obtains a loan to repair the structural defects in the building. The meeting
resolved that those members of the scheme who could not afford to pay a
special levy raised for this purpose in full (17 units in total), would be liable to
repay the loan with interest. Those who paid the special levy (about 3 units)
would not be liable.

46. The passing of the resolution by scheme had followed a cancellation of cover
by the scheme’s structural insurance company on the ground of the nature of
these defects as well as the cancellation of the certificate of occupancy.

47. On 31 May 2019, the applicant was billed an amount of R40, 245.40 for the
special levy.

48. According to the detailed customer Ledgers, on 31 July 2019 the applicant paid
the amount of R40, 245.40, leaving a balance of R14,637.13. The levies again
remained unpaid, and the account fell into arrears so that by 29 February 2020
it was R27,895.72 in arrears.

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49. The applicant continued to make payment of about R1000 per month on
average going forward, which was in excess of the amount of monthly levy
payable, which at the at the time was R772. However, the amount was
cumulatively less than the total amount payable monthly in respect of levies,
loan repayments which were still debited to her account monthly, services and
interest.

50. By 28 February 2021, this cumulative amount had accumulated to an amount

of R45,195.86 and R67, 818.62 by 01st February 2022.

51. On 24 February 2022, the applicant paid the amount of R70,000.00.

52. The adjudicator finds that the payment of the amount of R70,000.00 was
preceded by the acknowledgement of debt agreement that had been signed
between the applicant and Mansfield Property Solutions (hereinafter
“Mansfield”), the respondent’s erstwhile managing agent, prior to Misty Lakes,
assuming the role of respondent’s managing agent with effect from 1 June
2022.

53. From then on Misty Lakes embarked on a restructuring (or, as per respondents’
description, a “reworking”) of the applicants’ levy account, which culminated in
the setting aside of the acknowledgment of Debt aforesaid and debiting of her
levy account with the amount of R14, 769.83, in respect of interest on her
portion of the loan that the respondent alleges had not been debited to her
account.

54. The restructuring or “reworking” of the accounts essentially entailed a review,

correction and revision of the entries in the detailed customer ledgers for the
financial years 2019 to 2020, 2020 to 2021 and 2021 to 2022 in order to reflect
what the respondents considered to be an accurate reflection of the applicant’s
levy account, as set out or modelled on the excel spreadsheets that the
respondent has provided in support of its decision in that regard.

55. Payment of the R70,000.00 by the applicant on 24 February 2022 left a net
payment credit of R2, 181.38, which was the closing balance as of 28 February
2022. This was the opening balance on take on when Misty Lake became the
respondents’ managing agent.
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56. Based on the restructuring and reconciliation of the applicant’s levy account,
the closing balance for the 2019 to 2020, 2020 to 2021 and 2021 to 2022 were
as follows:

56.1 29 February 2020 = R45,195,86.

56.2 28 February 2021 = R45,047,52.
56.3 20 February 2022 = R2, 181,38.

57. For the period ended 28 February 2020 and following the restructuring the
respondents debited the applicant’s account with an amount of R164,00 in
respect of debt collection charges.

58. The amount of R164,00 was carried over to 2022 and to which the following
charges were added in 2022 bringing the charges to a total of R1094, 76.

59. Based on a reconciliation of the applicant’s account commencing at 28

February 2022 when it had an opening balance of R2, 181,38, as at 15 March
2023 the total due by the applicant to the respondents is reflected as per “wcu
current” excel spread sheet as R47, 085.18 against payment by the applicant
of R16, 992.38 leaving a net total amount due by the applicant to respondent
at R30, 092. 80.

60. The total amount billed to the applicant’s account in respect of the loan from 01
March 2019 to 28 February 2028.

61. According to the applicant’s statement of levy account dated 28 June 2023, as
of 19 June 2023 the total amount due by the applicant stood at R42, 275.99.

62. The loan payable by the applicant was determined based on a resolution
passed at a properly constituted SGM of the respondents.

63. In terms of PMR 25 the applicant has an obligation to pay the loan which she
has been paying.

64. The adjudicator notes from the acknowledgment of debt that the amount stated
to be owed by the applicant as of date of signature date is R116,769.07.

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65. The adjudicator notes further that in terms of clause 2.3 of the acknowledgment
of debt, the applicant was required to pay an amount of R70,000.00 by 28 th
February 2022 and that the balance of R46,769.07 would be waived, on
condition that the subsequent monthly levy amounts are paid on due date on or
before first day of every month, failing which the waived amount would become
due and payable.

66. In its submissions in response to the adjudicator’s section 51 request, the

respondents allude to the fact that “the agreement presented and signed with
Mansfield was signed out of mandate without the approval of the trustees (No
signed resolution, no minutes of the meeting and the agreement not signed in
accordance with the act for legal and binding documents).

67. The respondents’ submission aforesaid has not been corroborated by evidence
to that effect. The adjudicator, in particular, notes in that regard that he
requested the respondents to furnish him with a memorandum of agreement
entered into between the body corporate and Mansfield.

68. The respondent failed to furnish such a memorandum. Under the

circumstances, adjudicator is unable to determine whether or not the previous
agent acted out of mandate.

69. The adjudicator notes that the applicant was not privy to any meetings that may
or may not have taken place between the trustees and Mansfield with regard to
this issue. She would have had no way of determining Mansfield’s word that the
acknowledgement of debt was concluded with the approval of the trustees, or
out of mandate.

70. Accordingly, the applicant could not have been reasonably expected to know
whether or not she could rely on Mansfield’s assurances that the trustees had
approved the acknowledgment of debt when she proceed to sign it, unless she
was handed a resolution to that effect, which did not happen.

71. Be that as it may, the primary question that stands to be answered, however, is
whether or not the acknowledgement of debt is valid. If the answer is yes, then

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it is enforceable against the respondent and everything else including billing

errors becomes irrelevant, which is where the matter would end.

72. In that event, the respondents’ act in setting aside the acknowledgement of debt
would be unlawful and in breach of the agreement reached between the
applicant and the body corporate that culminated in the acknowledgment of
debt signed by the applicant.

73. The respondents’ act of reworking or restructuring the applicants’ levy account
and subsequent imposing of the interest amount of R14, 769.83 would also be
unlawful.

74. If, however, the answer to the primary question is in the negative, the
respondent acted lawfully in setting aside the acknowledgment of debt and
restructuring the applicant’s levy and loan account. In that event, the interest
that was not charged on the loan ought to be debited to her account.

75. At this point, and to address the primary question above, the adjudicator notes
the provisions of Prescribed Management Rule (PMR) 25 (1) of the Regulations
to Annexure 8 of the Schedule to the Sectional Titles Schemes Management
Act, 8 of 2011 as follows:

“25(1) The body corporate must, as soon as possible but not later than 14 days after
the approval of the budgets referred to inn rule 17(6)(j)(iv) by a general
meeting, give each member written notice of the contributions and charges due
and payable by that member to the body corporate, which notice must –

(a) State that the member has an obligation to pay the specified contributions and
charges; and

(b) Specify the due date for each payment; and,

(c) If applicable, state that interest at a rate specified in the notice will be payable on
any overdue contributions and charges; and,

(d) Include details of the dispute resolution process that applies in respect of the
disputed contributions and charges; and

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(e) Include details of the dispute resolution process that applies in respect of the
dispute contribution and charges.”

76. The adjudicator further notes from sub-paragraph 6.1 of paragraph 6 of the
minutes of the SGM that the resolution to procure a loan for the scheme was
passed by 94% of the members present and that the loan would be repayable
by all members based on their participation quota.

77. The amount of R116,769.07 was therefore allocated as the applicant’s liability
for the portion of the loan for her unit 48, based on her participation quota as
resolved at the AGM.

78. Accordingly, the payment of the amount of R70,000 by the applicant as

aforesaid, was a compromise in that it was less than the amount of R116,769.07
allocated as a liability for her portion of the loan based on her participation
quota.

79. It follows therefore that the conclusion of the acknowledgement of debt

effectively meant that applicant paid less than as resolved at the SGM, which
meant that the net balance not paid would have to be carried by all the other
members of the scheme in excess of their participation quota to the applicant
benefit, contrary to the SGM resolution passed. The adjudicator therefore finds
that the conclusion of the acknowledgment of debt required the members’ prior
approval.

80. The respondents’ objection to the acknowledgement of debt on the ground that
it has been signed out of mandate and that no resolution or minutes were
provided for it, is therefore valid. However, its validity is not on the ground that
the acknowledgment was concluded without a mandate (for no evidence have
been provided by the respondent in that regard), but because its conclusion by
Mansfield was not in terms of the STSMA and the CSOS Act.

81. In this regard, the adjudicator notes the provisions of Prescribed Management
Rule (PMR) 9 (b) as follows:

“PMR 9 The trustee must ------

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(b) exercise the body corporate’s powers and functions assigned and
delegated to them in terms of section 7(1) of the Act in accordance
with resolutions taken at general meetings and at meetings of
trustees.”

82. Section 7(1) of the Sectional Titles Schemes Management Act, 8 of 2011 states
as follows:

“Section 7(1) the functions and power of the body corporate must, subject to the
provisions of this Act, the rules and any restriction imposed, or
direction given at a general meeting of the owners of section, be
performed and exercised by the trustees of the body corporate holding
office in terms of the rules.”

83. It follows therefore that if the members by resolution had resolved that the
applicant pay R116,769.07, this offer of compromise by the applicant to pay
R70,000 ought to have been referred back to the scheme’s members by
Mansfield for their approval.

84. The fact that Mansfield failed to do that means that they failed to give effect to
the SGM resolution and thus acted contrary to PMR 9(b) and section 7(1) as
aforesaid, which is the de jure legal position by our courts as far as how trustees
and by implication, their managing agents, ought to exercise their powers (i.e.
consistent with the STSMA), which has been confirmed in the recent Judgment
of Zikalala v Body Corporate Selma Court and Another (AR255/2020)
[2021] ZAKZPHC 81; 2022 (2) SA 305 (KNP) (23 September 2021), where
Chetty (Olsen concurring) held as follows:

“[15… the requirement for a resolution of owners was considered in Body Corporate of
Marine Sands v Extra Dimensions 121 (Pty) Ltd and Another 2020 (2) SA 61 (SCA)
where the court was called upon to interpret the provisions of section 32(4) of the
Sectional Titles Act 95 of 1986 (“the STA”) which provided that the basis for the liability
of owners for levy contributions cannot be modified without the written consent of any
owner who is adversely affected by such modification. Mr Anderton for the first
respondent submitted that acceptance of the appellant’s offer would necessarily have
entailed the remaining portion of the unpaid levies being paid by the remaining
members of the body corporate, as a result of the compromise. To that extent, those
members would be ‘adversely affected’ by a decision by the two trustees to encumber

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the body corporate with the unpaid portion of the levies and contributions, amounting
to R28, 619.85. I am in agreement with Mr Anderton 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 STSMA. It appears to me,
however, that the only manner in which the trustees could have been so authorised
was by way of a unanimous resolution of all the members of the body corporate, giving
their consent to compromise the claim.”

85. The court went on to underscore the principle by referring to another similar
case as follows:

“[21] Malan J In considering the resolution to proceed with litigation, Malan J said the
following in paragraph 9 as to the power of (or rather the absence thereof) of body
corporate to compromise on an amount due in respect of levies:

‘The resolution allegedly passed at the special general meeting of the

applicant held on 26 January 2002: The respondent alleges that a resolution

was passed at the special general meeting of the applicant held on 26

January 2002, to the effect that the applicant would not continue with any

litigation against the respondent, and that “previous litigation” would be

cancelled. The resolution was that the dispute between the parties would be

settled by way of discussion, at a meeting, on an amicable basis.

Any such resolution is ultra vires the applicant. In terms of s 37(1)(d), 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.

Moreover, any such resolution is invalid because it is said to have embodied

an agreement between the parties that a resolution of the dispute between

them would be agreed upon at a later meeting.’ (Emphasis added.)’”

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86. The fact that Mansfield did not refer this acknowledgement of debt to the
applicants to in turn refer it back to the members for approval renders it invalid,
thus rendering it liable to be set aside, as being inconsistent with PMR 9(b)and
section 7(1) aforesaid.

87. Accordingly, Misty Lake was entitled to set aside the acknowledgment of debt
and restructure the account in order to determine the amount the applicant
actually owes to the respondents, which it did as indicated above as per
supporting documents for ‘reworking’ the account, consistent with the members
resolution aforesaid.

88. The respondents were thus entitled to re-impose the interest that was
subsequently debited to her account after the reconciliation of the applicant’s
account.

89. In the circumstances, the adjudicator finds that by failing to pay the loan
amount and other charges after the restructuring of her account, the applicant
is in default.

90. Accordingly, the relief the applicant seeks that the special levy be removed from
her account is refused.

91. The relief the applicant further seeks that a reconciliation be done to have the
interest and special charges removed from her account is also refused.

92. The interest on the loan, that was determined by the members to be 15,5%
cannot be removed for the reason aforesaid.

93. The adjudicator also notes as per the updated statement of levy dated 01 June
2023 that the applicants have also debited the respondent’s account with debt
collection charges:

94. Prescribed Management Rule (PMR) 25 further provides as follows:

“25(5) A body corporate must not debit a member’s account with any amount that is

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not a contribution or a charge levied in term of the Act or these rules without
a member’s consent or the authority of a judgment or order by a judge,
adjudicator, or arbitrator”.

95. Section 8 of the Debt Collectors Act, 1998 provides as follows:

“(1) As from the date fixed by the minister in the Gazette, no person, excluding an attorney
or an employee of an attorneys, shall act as a debt collector unless he or she is
registered in terms of this Act, and in the case of a company or close corporation
registered as a debt collector, unless in addition to the company or close corporation
itself, every director of the company or member of the corporation, and every officer of
such company or close corporation, not being himself or herself a director or a member,
but who is concerned with debt collection as the case may be, is registered.”

96. Acting in terms of his powers under section 51 of the CSOS Act, 9 of 2011, the
adjudicator requested the respondents to furnish him with, inter alia, written
confirmation of registration of their managing agent as a debt collector to enable
the applicant to charge debt collection fees charged on 01.01.2022 to
01.02.2022 in the amount of R1,094.76.

97. The respondents failed to furnish the adjudicator with such written confirmation
of registration.

98. Accordingly, the respondents are not entitled to levy the applicant’s account
with such charges.

99. Accordingly, the charges ought to be deducted from the amount of R42, 275.99
determined to be due as at 19 June 2023, as per the respondents’ updated
statement of applicant’s levy dated 28th June 2023.

100. This leaves the balance due to the respondent by the applicant at R41, 181.23.

101. The adjudicator is satisfied with the reconciliation done by Misty Lakes and
therefore does not consider another reconciliation to be warranted.

102. Accordingly, the relief that the applicant seeks that the special levy and interest
be removed from her account is refused.

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103. The relief the applicant seeks that if the new body corporate finds that the
agreement is missing signatures, that must not be held against her is not the
relief that falls within the ambit of section 39.

104. Accordingly, the relief is refused.

105. Alternatively, the relief is refused for reasons aforesaid.

106. The adjudicator has taken judicial notice of the applicant’s plea that without the
acknowledgement of debt arrangement, she would not be able to afford any
repayments of the loan, which seems to have been the motivation for her
application and the relief sought.

107. Accordingly, the adjudicator implores the applicant to approach the

respondents with a view to make a payment arrangement on terms that might
make it reasonably possible for her to repay the loan with interest as per the
members resolution aforesaid, whilst continuing her monthly levies’ payment
going forward.

ADJUDICATION ORDER

108. In the circumstances,

I find for the applicant, but not as claimed in the application,

109. That the acknowledgment of debt signed by the applicant, Amanda Gumede as
agreed with Mansfield Property Solution, the respondents’ erstwhile managing
agent, is invalid. Accordingly, the decision by Misty Lake to set the agreement
aside was correct and valid.

110. The reconciliation conducted by the respondents on the applicant’s levy

account to determine her liability following the setting aside of the
acknowledgement of debt was lawful and consistent with the provisions of
Prescribed Management Rule 9(b) of Annexure 8 to the Regulation
promulgated in terms of the Sectional Titles Schemes Management Act, of

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2011 in order to give effect to the resolution of the SGM regarding the
applicant’s liability for the portion of her loan obligation.

111. The amount of R42, 275.99 determined as due and payable by applicant to
respondent as per respondents’ reconciliation is confirmed as the amount due
and payable by applicant to respondent, subject to paragraph 112 below.

112. The relief the applicant seeks for a reconciliation of its levy account and special
levy as well as interest and other charges to be removed is refused for the
reasons aforesaid, subject to a deduction of collection fees in the amount of R1,
094.76 that was not lawfully levied on the applicant’s account during 01 January
2022 to 01 February 2022 from the amount of R42, 275.99 which leaves the
amount due by applicant to respondent at R41, 181.23 as per respondents
reconciliation, for the reasons aforesaid:

COSTS

113. There is no order as to costs.

RIGHT OF APPEAL

114. Section 57 of the CSOS Act, provides for the right of appeal-

“(1) An applicant, the association or any affected person who is dissatisfied by an

adjudicator's order, may appeal to the High Court, but only on a question of law.
(2) An appeal against an order must be lodged within 30 days after the date of delivery of
the order of the adjudicator.
(3) A person who appeals against an order, may also apply to the High Court to stay the
operation of the order appealed against to secure the effectiveness of the appeal.”

DATED AT JOHANNESBURG ON 25 JUNE 2023.

_________________________
P MPAPELE
(CSOS PART-TIME ADJUDICATOR)

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