Body Corporate of Greenacres v Greenacres Unit 17 CC

The appellant (Body Corporate of Greenacres) claimed levies and electricity charges from the first respondent (Greenacres Unit 17 CC), the registered owner of unit 17 in the Greenacres sectional title scheme. The owner defended the claim on the basis of set-off, alleging it had undertaken work on common property at its own expense that the body corporate was obliged to perform. The body corporate initially instituted action in the Randburg Magistrate's Court but withdrew those proceedings and instituted arbitration proceedings. The owner delivered a special plea alleging that the dispute was not arbitrable and only a court of law could determine the claim. The arbitrator held that the dispute was arbitrable, but the court a quo (Snyders J) held the contrary and found in favour of the owner.

• Whether Management Rule 71(1) of the Sectional Titles Act 95 of 1986 requires disputes between a body corporate and an owner concerning levies to be determined by arbitration
• The correct interpretation of the saving provision in Management Rule 71(1): 'save where an interdict or any form of urgent or other relief may be required or obtained from a Court having jurisdiction'
• Whether the dispute between the parties concerning levies and alleged set-off fell within the scope of compulsory arbitration under Management Rule 71(1)
• Whether Management Rule 71 conflicts with section 37(2) of the Sectional Titles Act which permits recovery of levies by court action

The appeal was allowed with costs. The order of the court a quo relating to the first respondent was set aside and substituted with an order dismissing the first applicant's application with costs.

Management Rule 71(1) must be interpreted widely in its operative part to require arbitration of any dispute between a body corporate and an owner arising out of, in connection with, or related to the Sectional Titles Act, the management rules or the conduct rules. The saving provision in Rule 71(1) ('save where an interdict or any form of urgent or other relief may be required or obtained from a Court having jurisdiction') must be interpreted narrowly to exclude only: (1) interdicts; (2) urgent relief; and (3) other relief that must be (not merely may be) obtained from a court because an arbitrator is not competent to grant such relief, whether by virtue of provisions of the Act (such as sections 46 and 48) or otherwise (such as orders for inspection or preservation of property). The saving provision does not exclude disputes simply because they could optionally be brought before a court. There is no conflict between Rule 71 and section 37(2) of the Act because the rule applies where there is a dispute, while section 37(2) permits court action where there is no dispute (mere non-payment). A dispute concerning an owner's liability to pay levies, including where set-off is raised as a defence, falls within the compulsory arbitration provisions of Rule 71(1).

The Court noted that the second respondent should not have been joined in the proceedings as the relief sought did not concern it. The Court also noted (in footnote 15) that it was not necessary to decide whether a 'complaint' under Rule 71(2) must give rise to a dispute before arbitration is required, or whether an arbitrator may act as a mediator for complaints. The Court further noted (in footnote 17) that it was not necessary to consider what happens if an owner raises a dispute in court proceedings but does not demand arbitration - whether the court action would continue or whether the body corporate would be obliged to proceed to arbitration. The Court referenced (with apparent approval) Professor Butler's view that the purpose of Rule 71 is to provide an expeditious and inexpensive method of determining disputes. The Court rejected Professor Butler's narrower interpretation of 'other relief' as being limited to urgent relief similar to interdicts.

This is a leading case on the interpretation of Management Rule 71(1) of the Sectional Titles Act and the scope of compulsory arbitration in sectional title disputes. It establishes the proper approach to interpreting the saving provision in the rule and clarifies the relationship between arbitration under the management rules and court action under section 37(2) of the Act. The judgment provides important guidance on when disputes between bodies corporate and owners must be referred to arbitration and when court proceedings remain competent. It emphasizes the Legislature's intention to provide an expeditious and inexpensive method of determining sectional title disputes through arbitration, while recognizing the limits of arbitral jurisdiction.