Geoffrey John Thomson v Trustees of Sparrowgate Body Corporate

The applicant, Geoffrey John Thomson, is an owner of a unit in Sparrowgate, a community scheme administered by the respondent body corporate. He brought an application under section 38 read with section 39(4)(a) of the Community Schemes Ombud Service Act 9 of 2011 seeking an order compelling the respondent to call an annual general meeting (AGM) as soon as possible, alternatively that the managing agent, Astrodon, be instructed to call the AGM. The applicant alleged that the body corporate had failed to hold an AGM within the period required by the Prescribed Management Rules, had not presented financial statements timeously, and was operating without an approved budget. He also raised complaints about the trustees’ handling of levy and electricity payments, the use of an ABSA bank account, alleged failure to pay municipal accounts, and deterioration of the complex. The respondent did not dispute that no AGM had been held as required, but contended that it could not convene the AGM because its former managing agent, Astrodon, had allegedly withheld owners’ contact details, records, and funds after termination of its mandate. The respondent also sought counter-relief compelling the applicant to pay levies into the ABSA account and compelling Astrodon to release funds and records.

• Whether the respondent body corporate was under a mandatory legal duty to hold an AGM within four months after the end of its financial year in terms of clause 17(1) of the Prescribed Management Rules.
• Whether the respondent’s explanation that it lacked owners’ contact details and access to records due to the conduct of the former managing agent excused its non-compliance with that duty.
• Whether the applicant was entitled to relief under section 39(4)(a) of the CSOS Act requiring the association to call a general meeting.
• Whether the respondent’s counter-application could be entertained when it had not been brought in compliance with section 38 of the CSOS Act.

The applicant’s relief in relation to prayer (a) was granted. The respondent was ordered to call an AGM within 90 days of receipt of the order. The respondent’s counter-application was refused. No order as to costs.

Clause 17(1) of the Prescribed Management Rules imposes a mandatory duty on a body corporate to hold an AGM within four months after the end of each financial year. Where it is common cause that no AGM was held, administrative difficulties such as the alleged withholding of member details by a managing agent do not, without adequate proof of reasonable enforcement and alternative steps, excuse non-compliance. An adjudicator may therefore grant relief under section 39(4)(a) of the CSOS Act compelling the body corporate to convene the meeting. Further, counter-relief not brought in accordance with section 38 of the CSOS Act is procedurally defective and may be refused.

The adjudicator observed that legal counsel is not necessary to enforce a CSOS order and that a party can request enforcement to be executed by the sheriff of the court. The adjudicator also commented that the respondent could, among other measures, engage scheme members directly to obtain the necessary details for convening an AGM. These remarks were ancillary to the main finding on the respondent’s duty to hold the AGM.

The decision reinforces that a body corporate’s obligation to hold an AGM under the Prescribed Management Rules is mandatory and cannot be avoided by administrative difficulties or disputes with a managing agent. It also illustrates the CSOS adjudicative approach to enforcing governance duties in community schemes and confirms that counter-relief must be pursued through a properly instituted application under section 38 of the CSOS Act.