Du Rand NO v Faerie Glen Renaissance Scheme

The Faerie Glen Renaissance Scheme (the FGR Scheme) is a sectional title development consisting of 150 units developed on land zoned for dwelling-units for a retirement centre for the aged. The body corporate (respondent) sought to amend management rules 1 and 2 to explicitly state that the Housing Development Schemes for Retired Persons Act 65 of 1988 (the Retired Persons Act) applies to the scheme and to define the scheme as a retirement village with a minimum occupancy age of 50 years. The Ameva Trust (owning one unit through the first five appellants as trustees) and the sixth appellant (another unit owner) opposed the amendments. They argued that the body corporate could not obtain court relief under s 1(3A) of the Sectional Titles Act 95 of 1986 without their written consent as the amendments adversely affected their proprietary rights. The land was zoned under Amendment Scheme 8270 to the Pretoria Town-Planning Scheme 1974 specifically for a retirement centre. The original sales agreements between the developer and purchasers contained age restrictions for occupancy (minimum 50 years) and complied with the Retired Persons Act. The Pretoria High Court (Visser AJ) granted the amendments. The appellants appealed to the Supreme Court of Appeal.

• Whether the Retired Persons Act 65 of 1988 was already applicable to the sectional title scheme before the proposed amendments to the management rules
• Whether the proposed amendments to the management rules adversely affected the proprietary rights of the appellants, thereby requiring their written consent under s 1(3)(c) of the Sectional Titles Act
• Whether the body corporate properly invoked s 1(3A) of the Sectional Titles Act to seek court relief in amending management rules when unable to obtain a unanimous resolution
• Whether the meeting of 22 November 2005 was properly constituted and authorized the application to court
• The interpretation of 'contract' in s 7 of the Retired Persons Act and its application to sectional title schemes

The appeal was dismissed with costs. The amendments to management rules 1 and 2 granted by the Pretoria High Court were upheld.

Where a sectional title development scheme is established on land zoned for retirement housing, and units are alienated through contracts containing age restrictions on occupancy in accordance with the Housing Development Schemes for Retired Persons Act 65 of 1988, that Act applies to the scheme by operation of law. The scheme constitutes a 'housing development scheme' under the Act where 'housing interests' (ownership rights) are alienated for occupation by 'retired persons' (persons 50 years or older) as contemplated in s 7. Amendments to management rules that merely clarify or reflect this existing legal position do not adversely affect the proprietary rights of owners within the meaning of s 1(3)(c) of the Sectional Titles Act 95 of 1986, and therefore do not require the written consent of dissenting owners. The body corporate may properly invoke s 1(3A) of the Sectional Titles Act to seek court relief where it is factually unable to obtain a unanimous resolution, without needing to demonstrate a formally constituted meeting meeting specific quorum requirements.

Snyders JA noted that where doubts exist about whether a body corporate has authority to instruct attorneys to institute proceedings, the proper procedure is to invoke Rule 7(1) of the Uniform Rules of Court. The court also observed that the distinction in the Retired Persons Act between age restrictions for owners versus occupiers is significant – the developer's reservation of the right to sell 20% of units to persons under 50 does not violate the Act because it restricts occupancy age, not ownership age. Streicher JA observed that the definition of 'contract' in s 1 of the Retired Persons Act must be interpreted contextually in s 7 to include contracts with entities (companies, trusts) for occupation by retired persons, not only contracts directly with retired persons, otherwise the legislature's intention would be defeated. The court indicated that only ss 7 and 10 (ministerial exemptions) of the Retired Persons Act were relevant to the ongoing management of the FGR Scheme, as opposed to the initial alienation by the developer.

This case establishes important principles regarding the interaction between the Sectional Titles Act 95 of 1986 and the Housing Development Schemes for Retired Persons Act 65 of 1988. It clarifies that: (1) a sectional title scheme can simultaneously be regulated by both statutes; (2) the Retired Persons Act applies where units in a sectional title scheme are alienated for occupation by retired persons, regardless of whether management rules explicitly state this; (3) municipal zoning requirements and developer sale agreements can establish the applicability of the Retired Persons Act from inception; (4) the Act's restriction on occupancy age applies even when ownership may be held by persons under 50 or entities like trusts; (5) amendments to management rules that merely reflect existing legal obligations do not adversely affect proprietary rights and therefore do not require unanimous consent; and (6) the threshold for invoking s 1(3A) court relief is factual impossibility of obtaining unanimous resolution, not necessarily a formally constituted meeting with precise quorum requirements. The judgment protects the integrity of retirement housing schemes against individual owners seeking to undermine age-restrictive covenants that were part of the original development scheme.