Henque 1838 CC v Maxprop Holdings (Pty) Ltd and Others

Kirtlington Park is a residential estate in Hillcrest, KwaZulu-Natal, comprising four sectional title development schemes (KP1, KP2, KP3, and KG), each controlled by a body corporate. The schemes share common facilities including security, roads, paddocks, and recreational amenities. In 2008, the four bodies corporate formed the Kirtlington Park Home Owners Association (KPHOA) to facilitate joint administration and management of shared facilities. All members paid equal monthly contributions (R4,500) to defray shared expenses. Henque 1838 CC (Henque) acquired unit 4 in KG on 15 April 2015. Its sole member, Ms Jean Gillespie Thomson, objected to: (1) the KPHOA's assumption of body corporate functions; (2) compulsory KPHOA membership; and (3) equal levies regardless of participation quotas. Henque obtained two previous court orders in 2017 and 2018. As a result, KG stopped contributing to shared expenses after July 2017, though Henque continued to use the shared facilities. Ms Thomson became the sole trustee of KG after the other two trustees resigned, and KG became dysfunctional with no annual general meetings held. The other seven KG members voluntarily continued contributing R2,200 per month to shared expenses. On 2 July 2018, Henque launched a third application seeking repayment to KG of funds allegedly unlawfully transferred from KG's bank account to KP1's account for the benefit of KPHOA.

• Whether a sectional title owner has locus standi to litigate in its own name for repayment to the body corporate of funds allegedly unlawfully paid from the body corporate's bank account
• Whether section 9 of the Sectional Title Schemes Management Act 8 of 2011 applied to the claims asserted by Henque
• Whether section 9 read with section 2(7) of the Act provided a comprehensive statutory regime for the enforcement of claims relating to matters vested in the body corporate
• Whether Henque established its own direct and substantial interest in the relief claimed independent of the body corporate

The appeal was dismissed with costs, including those of two counsel where so employed.

A sectional title owner does not have standing to litigate in its own name for repayment to the body corporate of funds allegedly unlawfully paid from the body corporate's bank account where the claims arise from section 2(7) of the Sectional Title Schemes Management Act 8 of 2011. Section 9, read with section 2(7), provides a comprehensive statutory regime for the enforcement of such claims. An owner wishing to assert rights and claims falling within section 2(7) must follow the prescribed procedure in section 9: serving written notice on the body corporate calling on it to institute proceedings within one month, and if it fails to do so, applying to court for appointment of a curator ad litem to conduct proceedings on behalf of the body corporate. Where the genesis of claims is section 2(7) and not the common law, and where claims are for payment to the body corporate (not the individual owner), the alleged loss is suffered directly by the body corporate, not the individual owner. In such circumstances, the individual owner has not established a direct and substantial interest sufficient to confer standing to litigate in its own name.

The court observed that section 9 finds application precisely when there is disharmony and disunity in the body corporate - the more dysfunctional the body corporate, the greater the need for a curator. The court noted that section 9 serves an important filtering function: on one hand it filters out unmeritorious claims by overzealous individuals, and on the other it ensures that individuals with legitimate complaints have the advantage of the information and funds of their corporation in pursuing legitimate claims. The court also observed that the body corporate is little more than the aggregation of all individual owners - their good is its good, their ill is its ill - reflecting the structural scheme of the Act. The court noted that section 9 is not intended to detract from powers enjoyed by sectional title owners to institute proceedings in their own name where their own rights (such as ownership in their unit) are infringed, but this requires establishing a direct and substantial interest independent of the body corporate.

This judgment clarifies the standing requirements for sectional title owners seeking to enforce claims relating to body corporate affairs under the Sectional Title Schemes Management Act 8 of 2011. It affirms that section 9, read with section 2(7), provides a comprehensive statutory regime that must be followed when claims arise from matters vested in the body corporate. The judgment emphasizes that individual sectional title owners cannot bypass the procedural requirements of section 9 by characterizing themselves as own interest litigants when the claims fundamentally relate to loss suffered by the body corporate. The decision reinforces the principle from Foss v Harbottle that where a wrong is done to a corporate entity, only that entity (not individual members) may take proceedings against wrongdoers, unless specific statutory exceptions apply. It also confirms that dysfunction within a body corporate does not excuse compliance with section 9, as the curator ad litem mechanism is specifically designed to address such situations.