The appellant was the curator of the insolvent estate of the Smit couple who owned a sectional title unit in Aminie, Pretoria. The first respondent was the body corporate of Aminie. The appellant sold the unit at public auction, and the bond holder purchased it. To transfer the unit, the appellant required a clearance certificate from the body corporate in terms of section 15B(3)(a)(i)(aa) of the Sectional Titles Act 95 of 1986. The respondents demanded payment of R19,183.17, which included: (a) outstanding levies, some more than two years in arrears at sequestration; (b) legal costs incurred in collecting arrears; and (c) interest on these amounts. The appellant disputed that legal costs and levies more than two years old could be required for the clearance certificate.
The appeal was dismissed with costs. The respondents were entitled to withhold the clearance certificate until payment of all outstanding levies (including those more than two years in arrears), legal costs incurred in collecting levies, and interest thereon.
The ratio decidendi is twofold: (1) 'All moneys' in section 15B(3)(a)(i)(aa) of the Sectional Titles Act includes legal costs incurred in collecting outstanding levies, as legal costs are accessory to the principal debt and cannot be separated from it - just as interest is included, so are enforcement costs necessary to give the body corporate effective protection. (2) Levies payable to a body corporate under the Sectional Titles Act do not constitute 'tax' as defined in section 89 of the Insolvency Act, because 'tax' bears its ordinary meaning of compulsory payments to governmental bodies, and section 89(5) provides a restrictive rather than expansive definition. Therefore, the two-year limitation in section 89 does not apply to outstanding levies.
The court observed that section 89(5) of the Insolvency Act should not be interpreted as creating an artificial expansion of the concept of 'tax'. To do so would lead to absurd results, such as monthly installment payments to an ordinary commercial company for the purchase price of immovable property qualifying as 'tax' entitled to preference. The court also noted that the third category of bodies referred to in section 89(5) should be understood as referring to governmental bodies like local authorities, consistent with the first two categories (the State and provincial authorities). The court acknowledged that while certain observations in Nel NO v Body Corporate of the Seaways Building regarding anomalies might have been obiter dicta, the underlying assumption that levies are not 'tax' was necessary to assess the merit of the anomaly argument.
This case is significant because it clarifies the scope of section 15B(3)(a)(i)(aa) of the Sectional Titles Act, establishing that body corporates have an effective preference not only for outstanding levies but also for legal costs incurred in collecting those levies, even in insolvency. It confirms that this preference extends beyond the two-year limitation applicable to taxes under section 89 of the Insolvency Act, as levies are not 'taxes' for insolvency law purposes. The decision strengthens the protection available to body corporates and other unit owners against defaulting owners, ensuring that enforcement costs do not fall on compliant owners. It also overrules earlier unreported High Court decisions holding that legal costs were not covered by the clearance certificate provision.