The applicant, Dillo Daniel Nyaphudi, is the registered owner of Unit 1 in Prosperity Mews, a sectional title scheme in Johannesburg. The respondent is Confiance Administrative Solutions (Pty) Ltd, acting in its official capacity as court-appointed administrator of the Body Corporate of Prosperity Mews Body Corporate, having been appointed by the High Court under case number 2022/7469 on 20 April 2022 for 36 months in terms of section 16 of the Sectional Titles Schemes Management Act 8 of 2011. At the scheme’s AGM held on 15 July 2023, the administrator implemented a substantial levy increase, described by the applicant as approximately 176% and by the respondent’s minutes as 138% for all units, effective from 1 September 2023. The applicant challenged the increase under section 39(1)(c) of the Community Schemes Ombud Service Act 9 of 2011, contending that it was unreasonable, insensitive to owners already under financial strain, and out of line with inflation and salary increases. He sought an order setting aside the increase and replacing it with an increase of no more than 20%. The respondent opposed the application, explaining that the scheme had suffered serious governance and financial failures before administration, including no AGMs, no audited financial statements, no levy increases for three years, no maintenance reserve fund, substantial arrear levies, municipal debt, and extensive maintenance backlogs. The respondent argued that the increased levies were necessary to rehabilitate the scheme and bring it into compliance with the STSMA.
The respondent’s jurisdictional objection was dismissed. The applicant’s application was dismissed in terms of section 53(1)(a) of the CSOS Act as being without substance. No order as to costs was made.
The CSOS retains jurisdiction over disputes involving a community scheme notwithstanding the appointment of a court-appointed administrator under section 16 of the STSMA. In determining whether a levy is 'incorrectly determined or unreasonable' under section 39(1)(c) of the CSOS Act, the decisive consideration is the scheme’s actual budgetary requirements and compliance obligations. A substantial levy increase will not be set aside merely because it exceeds inflation or causes hardship to owners, where the increase is shown to be necessary to address financial mismanagement, statutory non-compliance, maintenance backlogs, and the rehabilitation of the scheme. The applicant bears the onus to prove unreasonableness on a balance of probabilities.
The adjudicator observed that sectional title schemes must be managed like businesses and that members have an obligation to question prolonged failures in governance, such as the absence of AGMs, budgets, audited financial statements, and maintenance planning. She also remarked that trustees or administrators will generally be mindful of the broader economic difficulties facing owners in South Africa, but may still be compelled to make unpopular decisions that serve the best interests of the body corporate. The discussion of Bouraimis as still finding application under section 16 of the STSMA was also ancillary to the core decision.
The decision is significant in community schemes law because it confirms that the appointment of an administrator under section 16 of the STSMA does not oust the jurisdiction of the Community Schemes Ombud Service. It also underscores that the reasonableness of levies in a sectional title scheme is assessed primarily against the scheme’s actual budgetary and statutory compliance needs, not against general inflation or the personal affordability of owners. The ruling illustrates the deference likely to be shown to levy decisions made to rescue a financially distressed and non-compliant body corporate.