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REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA,

GAUTENG DIVISION, PRETORIA

CASE NO: 34613/2014

NOT REPORTABLE

NOT OF INTEREST TO OTHER JUDGES

REVISED

DATE:7 September 2017

In the matter between:

THE KYP-PROP PROPERTIES (PTY) LTD                                              Applicant

And

MEYERSDAL NATURE ESTATE                                                   First Respondent

HOMEOWNERS' ASSOCIATION

FIRSTRAND BANK LIMITED                                                     Second Respondent

JUDGMENT

FISHER J:

[1]      The applicant is the owner of a property in the Meyersdal Nature Estate, a communal residential estate managed by the first respondent. The transfer deeds of the properties in the estate specify that every owner is obliged to become a member of the first respondent and shall be subject to its constitution.

[2]    The applicant seeks a rescission of a judgment taken against it on the basis of outstanding levies and penalties imposed by the first respondent. Such judgement includes an order declaring the property executable. The second respondent is cited for its possible interest as bondholder.

[3]    The first respondent's constitution comprises its Articles of Association and its Community Participation Rules. Clause 23.12 of the Articles provides that " A member shall be obliged to commence and finish a dwelling on his/its property within 4 (four) years of having taken transfer from the Developer. Subsequent owners shall also be bound by this requirement and the period within which to complete the dwelling will not be extended in the event of a resale" .

[4]      Clauses 6.1 and 6.2 of the Community Participation Rules provide, inter alia, that building plans have to be submitted to the Architectural and Aesthetical Committee of the first respondent for approval and that no construction or installation may commence prior to this approval.

[5]       The applicant's plans were approved by the committee on 31 July 2009. The four-year period applicable to the completion of the property was due to expire during 2010. At an Annual General Meeting ("AGM"), held on 27 November 2009 the following was resolved " ...implementation of building construction fines, for non-completed properties, will be extended - The effective implementation of fines for those owners whose property construction is not completed and who is not in possession of an occupancy certificate will be 01 January 2011" .

[6]      Approximately a year later at its AGM, the majority of members of the first respondent resolved that no further extension would be allowed and that penalties of R5,000.00per month would be levied on dwellings that were not completed by 1 January 2011.

[7]     At the beginning of June 2011 the first respondent notified members that all levy accounts had to be brought up to date by noon on Monday, 6 June 2011, failing which, inter alia, owner access cards and builders' access cards would be disabled. Pursuant to this, the first respondent refused access to the applicant's builders. At the time, the applicant was in arrears with levy payments. A spoliation application was brought by the applicant. The applicant succeeded against the first respondent with costs. Costs were taxed in the sum of R82 664.26.

[8]     The first respondent contends that this claim was ceded by the applicant to its attorney. This is disputed.

[9]      The first respondent alleged that the applicant remained in arrears with levy payments and building fines in the amount of R 42,571.20 and R 200,000.00 respectively. The first respondent issued an application claiming these amounts, which was served on the applicant's registered address.

[10]     On 2 July 2014 the in issue judgment was given against the applicant by default. The applicant seeks rescission of this judgment because of the following:

(a)      The applicant was entitled to taxed costs in the sum of R82 664.26. This amount, accordingly, had to be set-off against the monthly levies payable by the applicant to the first respondent;

(b)      It was not resolved that the building fines had to be imposed; alternatively the decision was taken contrary to the provisions of clause 22.3. The trustees' decision to impose a building penalty was arbitrary and made without a proper exercise of discretion. The trustees levied unfair and unreasonable fines; and

(c)          The imposition of- the building fines and penalties constitutes a penalty stipulation in terms of section 3 of the Conventional Penalties Act 15 of 1962 ("the Penalties Act"). The penalty stipulation of R 5,000.00 per month is wholly disproportionate to the actual prejudice suffered by the first respondent. Taking into consideration the facts and circumstances of the matter, no penalty should have been levied, alternatively, the penalty was excessive and subject to reduction by the court in question.

[11]         In order to succeed with a rescission, which in this case is under the common law, the applicant has to show "good cause" , being:

(a)     An absence of willfulness;

(b)    That the application is bona fide and not brought to delay;

(c)          That it has a bona fide defence, which prima facie has some prospect of success (see:De Wet v Western Bank Ltd 1979 (2) SA 1031 (A) at 1042); Chetty v Law Society, Transvaal 1985 (2) SA 756 (A) at 7658-C )

[12]        The applicant alleges that the first respondent's application did not come to its attention. It was delivered to a security guard at the registered address of the applicant. There is no reason to believe that this method of service came to the attention of the applicant. Thus, I find that the applicant has established that it was not in willful default of appearance.

[13]       The applicant relies on the following defences:

(a)        that it had a claim for payment of R82 664.26 from the first respondent, as a result of the taxed costs awarded against the first respondent in the spoliation application and that set off occurred to this extent;

(b)       that the penalties claimed have not been imposed in accordance with clause 22.2 of the Participation Rules which provides, in relevant part, that the penalties imposed for breaches of the rules shall be at the discretion of the Trustees "... who shall take due regard of the nature, circumstances and severity of each.... breach and non-compliance" - the contention being that such due regard has not been taken and that thus the applicant is not bound by such imposition;

(c)          that the fines claimed constitute a penalty in terms of s 3 of the Conventional Penalties Act 15 of 1962 which is wholly disproportionate to the actual prejudice suffered by the first respondent and which should be set aside by the court entirely, alternatively in part.

[14]       Each of these defences raise triable issues and, at least, prima facie, show prospects of success.

[15]       In all the circumstances, the applicant has shown " good cause" as required.

I thus order as follows:

1.  The judgment under this case number handed down on 2 July 2014 is rescinded.

2.  The first respondent is to pay the costs of this application.

D FISHER

JUDGE OF THE HIGH COURT OF SOUTH AFRICA

GAUTENG LOCAL DIVISION, JOHANNESBURG

Date of Hearing: 07 August 2017

Judgment Delivered : 7 September 2017

APPEARANCES:

For the Applicant: Adv Wessels SC Instructed by Hesselink Konig Incorporated.

For the 1^ST and 2^nd Respondent: Adv Strydrom Instructed by Mills &

Groenwald Attorneys.

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