By Auren Freitas dos Santos
In a recent High Court matter, a Cape Town-based body corporate sought to recover R1,104,323.11 in alleged arrear contributions dating back to December 2018 from an owner of three units in the scheme. The case hinged on a critical legal question: were the contributions lawfully raised in accordance with the Sectional Titles Schemes Management Act (STSMA)?
The Facts
For many years the body corporate had followed what it believed to be an established and acceptable process: owners approved the annual budget at the AGM, after which the chairperson—who was also the scheme’s developer—signed a trustee resolution confirming the levies.
The owner, however, disputed the validity of these resolutions. He argued they were either non-existent or improperly executed. In particular, he noted that the resolutions were signed by only one trustee, which contravenes Prescribed Management Rule (PMR) 10(1)(b). This rule requires either the signatures of two trustees or one trustee plus the managing agent for a trustee resolution to be binding.
The body corporate argued the owner was being overly technical. It contended that the resolutions—though not perfect—should still be considered valid in substance.
The Court’s Findings
The Court was asked to determine whether the levies had been lawfully raised in terms of section 3(2) of the STSMA, which provides that owners become liable for contributions only once a valid trustee resolution is passed.
The Court rejected the body corporate’s position and dismissed its claim. It found that the failure to comply with PMR 10(1)(b) was fatal. Because the resolutions approving the levies were signed by only one trustee and not co-signed by another trustee or the managing agent, they failed to satisfy the requirement of section 3(2) of the STSMA. The resolutions were therefore invalid and not binding. As a result, the Court held that no enforceable levies had been raised, and the body corporate could not recover the contributions in question.
Key Lessons for Trustees
This case highlights an important principle: strict compliance with the STSMA and the prescribed rules is not optional. Informal or historically accepted practices cannot override legal requirements. Even well-intentioned practices, if not strictly aligned with the law, can expose the body corporate to unnecessary litigation and financial loss.
Here are three key takeaways for trustees:
1. Know and Follow the Law
Trustees must understand and comply with their duties under the STSMA. This includes raising levies through properly adopted and signed resolutions that meet the requirements of PMR 10(1)(b)..
2. Get the Paperwork Right
As seen in this case, resolutions must comply with Regulation 10(1). A resolution signed by only one trustee—without the co-signature of another trustee or the managing agent—is invalid. Familiarity or “the way things have always been done” does not excuse non-compliance.
3. Seek Legal Advice Early
Had the trustees obtained legal advice at the outset, the dispute may never have reached court. Trustees often act in good faith but misunderstand the procedural requirements imposed by law. A brief consultation with an attorney experienced in community schemes law can prevent costly mistakes.
Conclusion: Compliance Is the Cheapest Insurance
The good news is that these risks are entirely avoidable. Trustees don’t need to be legal experts—but they must know when to seek expert legal advice. As this case shows, getting the process wrong can delay levy recovery, jeopardise the scheme’s financial health, and expose trustees to litigation.
Trustees are custodians of their schemes. Their decisions affect not only the body corporate’s operations but also the rights and finances of individual owners. In community scheme governance, a “better safe than sorry” mindset isn’t just good advice—it’s essential.
If your body corporate is unsure about levy procedures, resolution formalities, or any governance issue, don’t wait for a court case to find out what went wrong. Legal guidance today can prevent legal problems tomorrow. Contact us at info@theadvisory.co.za for expert guidance and a no-obligation quote.
Specialist Community Scheme Attorney (LLB, LLM), Auren Freitas dos Santos, is a Director of The Advisory, a boutique consultancy specialising exclusively in community schemes law. Reach out to him via email at info@theadvisory.co.za to request an obligation-free quotation if you have questions about sectional title legal compliance.
