Baxter v Ocean View Body Corporate and Others [2022] ZAWCHC 234; 2023 (2) SA 205 (WCC) (16 November 2022)

Did the Body Corporate of Ocean View have the authority to levy a contribution of R23.00 per square metre on the exclusive use balcony areas, and was this decision in compliance with the provisions of section 3(1)(c) of the Sectional Titles Schemes Management Act 8 of 2011?

The case involves Kevin Baxter, the appellant, who is the owner of a unit in a sectional title development scheme known as Ocean View. The first respondent is the Body Corporate of this development, while the second respondent is the Community Schemes Ombud Service, and the third respondent is an adjudicator associated with the Ombud Service.

In November 2021, the Body Corporate made a significant decision to increase the levy charged on the exclusive use balcony areas from R3.00 to R23.00 per square metre. This increase was justified by the Body Corporate as necessary to cover costs related to insurance, maintenance, and to contribute to a 10-year maintenance plan for the scheme. Notably, this increase was also made to operate retrospectively, meaning it would apply to past periods as well.

Dissatisfied with this decision, Baxter lodged a dispute with the Community Schemes Ombud Service. He argued that the contribution levied on the exclusive use balcony areas was incorrectly determined and contravened section 3(1)(c) of the Sectional Titles Schemes Management Act 8 of 2011 (STSMA). He sought a declaration that the contribution should be adjusted to a reasonable amount and requested that any excess amounts paid be credited back to his account.

The adjudicator, however, upheld the Body Corporate's decision, leading Baxter to appeal this ruling in the High Court. The appeal was filed outside the 30-day time limit prescribed by the Community Schemes Ombud Service Act, prompting Baxter to seek condonation for the late filing. The court had to consider whether it had the power to grant such condonation and whether the appeal had merit.

Central to the legal arguments was the interpretation of section 3(1)(c) of the STSMA, which mandates that a Body Corporate must either maintain exclusive use areas and charge owners accordingly or amend the conduct rules to make owners responsible for maintenance without requiring additional contributions. The Body Corporate had adopted a conduct rule that placed the responsibility for maintenance of exclusive use areas on the owners, which Baxter argued prohibited the Body Corporate from levying additional contributions for maintenance costs.

The case ultimately hinged on whether the Body Corporate's decision to levy the increased contribution was lawful and in accordance with the statutory framework governing sectional title schemes.

The ratio decidendi of the case is that a Body Corporate, under section 3(1)(c) of the Sectional Titles Schemes Management Act 8 of 2011, is prohibited from levying contributions for the maintenance of exclusive use areas if the conduct rules of the scheme place the responsibility for such maintenance directly on the owners of those areas. The court determined that the Body Corporate's decision to increase the levy to R23.00 per square metre was incorrect because it conflicted with the statutory requirement that owners of exclusive use areas are responsible for their maintenance costs. Consequently, the court held that the contribution must be adjusted to exclude any costs for which the owners are directly liable, thereby ensuring compliance with the provisions of the STSMA.

The court relied on several cases in its reasoning process, including:
Trustees, Avenues Body Corporate v Shmaryahu and Another 2018 (4) SA 566 (WCC)
Coral Island Body Corporate v Hoge 2019 ZAWCHC 58
Phillips v Direkteur vir Sensus 1959 (3) SA 370 (A)
Kingshaven Homeowners’ Association v Botha and others 2020 ZAWCHC 92
Trustees of Alessio Body Corporate v Cottle and Others 2022 ZAWCHC 233