Daphne Lambert v Millward Place Body Corporate

The applicant, Daphne Lambert, is the registered owner of unit 1 in the Millward Place sectional title scheme and therefore a member of the respondent body corporate. She lodged a dispute with the Community Schemes Ombud Service under section 38 of the Community Schemes Ombud Service Act 9 of 2011, seeking relief under section 39(1)(c) concerning financial issues. The dispute concerned legal fees and related interest that had been added to her levy account over time. The papers indicated that legal proceedings had been instituted in the Johannesburg West Magistrates' Court in relation to arrear levies and electricity usage, but those proceedings were later suspended. The applicant alleged that she had already paid amounts toward legal costs, including R9 000 and a further R5 000 in February 2023, yet interest continued to be charged on the full outstanding amount. The respondent body corporate stated that the scheme had previously experienced financial difficulties, including disconnection of electricity by the City of Johannesburg, and that although the applicant had been making payments toward arrears since May 2023, more was required when utilities were included. The restoration of the applicant's electricity supply was no longer in dispute. A certificate of non-resolution was issued after conciliation failed, and the matter proceeded to adjudication on the papers.

• Whether the legal fees and costs added to the applicant's account were incorrectly determined or unreasonable under section 39(1)(c) of the CSOS Act.
• Whether the body corporate had lawfully debited the applicant's account with legal fees and interest without proof that such costs had been taxed, agreed to, or consented to as required by Prescribed Management Rule 25(4) and (5).
• Whether the applicant was entitled to rectification of her account by deducting improperly charged legal fees and related interest.
• Whether a costs order should be made in the CSOS adjudication.

The application was granted. The respondent body corporate was ordered, under section 54(3) of the CSOS Act, to determine the exact amount of legal fees/costs and related interest charged to the applicant's account in non-compliance with Prescribed Management Rule 25(4) and (5), and to rectify the applicant's account by deducting those amounts on or before 31 January 2024. No order as to costs was made.

A body corporate may recover levies necessary for the functioning of a sectional title scheme, and an owner is generally not entitled to withhold levies merely because of a dispute. However, legal fees and collection costs may not lawfully be debited to a member's account, together with interest on those amounts, unless they comply with Prescribed Management Rule 25(4) and (5), including being taxed, agreed, or otherwise properly authorised. Where such compliance is absent, CSOS may order the account to be corrected by deducting the improperly charged legal fees and related interest.

The adjudicator made broader observations that levies are the 'lifeblood' of shared living schemes and that non-payment can destabilise a scheme and prejudice the collective interests of owners. The adjudicator also noted, by reference to authority, that members cannot withhold levy payments because they dispute the wisdom or necessity of levy decisions. These remarks provided context on the importance of levy collection, but the decisive issue was the unlawfulness of the legal costs debited to the applicant's account.

This decision is significant in community schemes and sectional title governance because it affirms that, while owners must continue paying levies and may not withhold them because of disputes, a body corporate cannot simply add legal collection costs and interest to an owner's account unless those charges comply with the statutory and prescribed management rules. The matter illustrates CSOS's remedial power under section 39(1)(c) and section 54(3) of the CSOS Act to scrutinise financial charges levied by a body corporate and to order rectification of an owner's account where charges are not properly authorised.