Body Corporate of Marine Sands v Extra Dimensions 121 (Pty) Ltd

The Body Corporate of Marine Sands is a body corporate for a 19-storey sectional title scheme in Durban consisting of residential and non-residential sections. When the scheme was registered in 1993, the developer determined that non-residential sections (11.68% of floor space) would be liable for 6% of aggregate levies. Extra Dimensions 121 (Pty) Ltd owned six of nine non-residential units, with a participation quota of 4.8409% after a 1997 scheme extension. In August 2012, the body corporate passed a special resolution modifying levy liability which increased Extra Dimensions' monthly levy from R9,134.15 to R19,878.17 (more than double), bringing its levy liability to 10.5349% of total levies while its participation quota remained 4.8409%. Extra Dimensions did not consent to this resolution and sought a declaration that the special resolution and consequent conduct rule amendments were invalid for failure to comply with s 32(4) of the Sectional Titles Act 95 of 1986.

• What is the proper interpretation of the expression 'adversely affected' in s 32(4) of the Sectional Titles Act 95 of 1986?
• Does a special resolution that increases an owner's levy liability more than double require the written consent of that owner under the first proviso to s 32(4)?
• Was the respondent 'adversely affected' by the resolution modifying levy contributions such that its written consent was required?

The appeal was dismissed with costs. The Supreme Court of Appeal upheld the Full Court's finding that the special resolution of 23 August 2012 and the consequent amendments to the conduct rules were invalid.

In the context of s 32(4) of the Sectional Titles Act 95 of 1986, an owner is 'adversely affected' by a special resolution modifying levy liability where the resolution increases that owner's proportional liability for levies. The expression 'adversely affected' must be given its ordinary, literal, grammatical meaning derived from authoritative dictionaries: unfavourable, disadvantageous, having a negative effect. An increase in levy liability is unfavourable both because the owner pays more and because the increased burden attaching to ownership diminishes the value and attractiveness of the property as an investment. Where an owner is so adversely affected, the written consent of that owner is mandatory under the first proviso to s 32(4), failing which the resolution is ultra vires and void. Courts cannot substitute notions of fairness for the clear language of the statute or render statutory provisos nugatory through interpretation.

The court expressly refrained from expressing any view on the correctness of the Full Court's approach or reasoning regarding whether the body corporate could modify levy liability through conduct rules as opposed to management rules, or whether it could effectively amend participation quotas. Ponnan JA stated these questions 'remain for another day'. The court also noted that the facts on record did not establish whether the levy regime prior to the resolution was unfair or that the regime after modification was fair, and that this was not common cause. The court observed that neither party knew the reasons for the developer's original participation quota determination, and that s 32(2) expressly permits the participation quota not to accord with floor area ratio in the case of non-residential sections.

This case establishes the authoritative interpretation of 'adversely affected' in s 32(4) of the Sectional Titles Act 95 of 1986 in the context of levy modifications. It is significant for: (1) definitively rejecting the narrower interpretation in Algar v Body Corporate of Thistledown; (2) confirming that statutory interpretation must adhere to the ordinary meaning of words and cannot substitute notions of fairness for clear legislative language; (3) protecting minority sectional title owners from having their levy burdens increased by majority resolution without their consent; (4) recognizing that increased levy liability is a diminution of ownership rights requiring consent; and (5) affirming the carefully crafted scheme of the Sectional Titles Act which provides different voting thresholds and consent requirements for different types of resolutions affecting owners' rights.