Hagan v Directors of De Hollandsche Molen Share Block

The applicant, Anthula Jacqueline Hagan, is the registered owner of unit 137 in De Hollandsche Molen, a share block community scheme. Severe flooding in June 2023 caused substantial damage to the riverbank and properties at the resort. The applicant alleged that the respondents, being the directors of the share block, failed to communicate adequately with residents, failed to implement urgent repairs recommended in the Hans King report, and failed to provide information regarding the scheme’s insurance policy and an insurance claims payout of R1 172 419. She sought orders compelling reinstatement of the riverbank, filling of sand in front of her property, reinstatement of the river-facing portion of her property, review of the insurance policy to ensure proper flood cover, and disclosure of the current insurance policy and claims details. The respondents replied that restoration work had already commenced on 13 September 2023, but further flooding on 25 September 2023 caused renewed erosion. They said additional work depended on a fresh section 30A environmental authorisation submitted on 17 October 2023. Regarding insurance, they stated that Santam had decided to exclude all resort properties from flood risk cover, requiring the scheme to reconsider its insurance strategy.

• Whether the adjudicator should order the association to carry out specified repairs and maintenance to the riverbank and affected areas under section 39(6)(a) and (b) of the CSOS Act.
• Whether the adjudicator could order a review of the insurance policy under section 39(1)(b) of the CSOS Act to ensure adequate flood cover for riverbank properties.
• Whether the applicant was wrongfully denied access to information or documents, namely the details of the insurance claims payout, under section 39(7)(a) of the CSOS Act.
• Whether the applicant, as a member/shareholder in the share block company, had a right to access the requested insurance-related information under the MOI and section 26 of the Companies Act.

The application succeeded in part only. The relief sought under sections 39(6)(a), 39(6)(b), and 39(1)(b) of the CSOS Act was dismissed as without substance, premature, and misconceived. Relief under section 39(7)(a) was granted. The respondents were ordered to provide the applicant with the details of the insurance claims payout of R1 172 419 within 14 days of delivery of the order. No order as to costs.

An adjudicator under the CSOS Act should not grant repair-and-maintenance relief under section 39(6) where the evidence shows that remedial work has already commenced and completion is dependent on obtaining necessary approvals from competent authorities; in such circumstances the relief is premature. Section 39(1)(b) does not authorise an order compelling a general review of a scheme’s insurance arrangements to ensure broader cover, but is directed at requiring action under an insurance policy to recover an amount. A member/shareholder of a share block scheme is entitled, under the scheme’s MOI read with section 26 of the Companies Act, to access information such as insurance claims payout details, and wrongful refusal of such access may be remedied under section 39(7)(a) of the CSOS Act.

The adjudicator observed that the scheme’s latest insurance position, after Santam excluded all properties from flood risk cover, would require review by all members of the scheme. The adjudicator also noted that the scheme’s MOI did not itself provide a process or procedure for members to access association records, though this did not negate the applicant’s substantive entitlement to information.

The decision is significant for community schemes governed by the CSOS Act because it illustrates the limits of CSOS remedial powers and the importance of procedural ripeness. The adjudicator emphasised that repair orders will not be granted where remedial action is already underway and completion depends on statutory or environmental approvals. The case also clarifies that section 39(1)(b) is confined to action under an existing insurance policy to recover an amount and does not readily extend to compelling a broad review or restructuring of insurance cover. At the same time, the ruling confirms the information rights of a member/shareholder in a share block scheme under the MOI and section 26 of the Companies Act, enforceable through section 39(7)(a) of the CSOS Act.