San Martinho Body Corporate SS151/1991 v Xin Lui

The applicant, San Martinho Body Corporate SS151/1991, is the body corporate of a sectional title scheme situated at 10 Leicester Road, Bedford Gardens, Ekurhuleni, Gauteng. The respondent, Xin Lui, is the registered owner of unit 170 (door 1107) in the scheme. The body corporate alleged that the respondent had fallen into arrears on the unit's levy account. It sent arrear reminders, a final demand, and notice that the matter would be referred to the Community Schemes Ombud Service (CSOS), but no payment sufficient to settle the debt was made. The applicant, acting through its managing agent under trustee authority, sought an order in terms of s 39(1)(e) of the CSOS Act for payment of the outstanding amount. It placed before the adjudicator a signed mandate and an up-to-date levy history statement reflecting arrears of R57 281.02 as at February 2024, including levies, ancillary charges, CSOS levies, and interest. The respondent filed no submission and did not dispute the claim or enter into a payment arrangement, although the applicant had indicated it would consider writing off 12% of the interest if the full amount were paid over 12 months by agreement.

• Whether the CSOS had jurisdiction under the Community Schemes Ombud Service Act 9 of 2011 to adjudicate the levy dispute between the body corporate and the unit owner.
• Whether the applicant proved on a balance of probabilities that the respondent was indebted to it for unpaid levies and ancillary charges.
• Whether the body corporate was entitled to recover interest on the arrear levy account in terms of the applicable statutory and management rule framework.
• What payment order should be made to resolve the arrears, including whether the amount could be paid in instalments.
• Whether any costs order should be made.

Application upheld. The adjudicator found for the applicant and ordered that the respondent owes the applicant R57 281.02 in respect of levies and ancillary charges, including CSOS levies and interest, up to and including February 2023 as recorded in the order. The amount is to be paid in 12 equal monthly instalments of R4 773.42 commencing on 1 March 2024, with the remaining 11 instalments payable on the first day of each consecutive month thereafter. The order records that interest is already included in the outstanding amount, that the order does not affect the respondent's ongoing monthly levy obligations, and that if the respondent defaults on any one instalment, the full balance becomes immediately due and payable. There was no order as to costs.

A body corporate established under the Sectional Titles Schemes Management Act is entitled and obliged to require owners to contribute levies and related charges necessary for the administration, maintenance and financial functioning of the scheme. Where the body corporate proves, on a balance of probabilities, through uncontested documentary evidence, that an owner is in arrears, CSOS may grant relief under s 39(1)(e) of the CSOS Act for payment of the outstanding amount, including authorised interest and ancillary charges. Interest on arrears is recoverable where charged in accordance with a trustee resolution and the prescribed management rules, and a respondent's failure to answer the claim permits the adjudicator to accept the applicant's version where it is supported by evidence.

The adjudicator observed that defaulting unit owners are effectively subsidised by compliant owners who pay their levies and ancillary contributions timeously. The adjudicator also noted, with reference to prior case law, that interest on arrears is not a penalty but serves to compensate for the loss in value of money and to protect the equity of the original debt. In addition, the order remarked that its purpose was to bring closure to the dispute while considering both the rights and duties of the respondent. No fuller obiter discussion beyond these observations appears from the judgment.

This decision is significant in the community schemes context because it affirms the CSOS adjudication process as an effective mechanism for body corporates to recover arrear levies and ancillary charges from defaulting owners. It reinforces the principle that levy obligations are essential to the functioning of sectional title schemes and that non-paying owners effectively burden compliant owners. The order also illustrates the acceptance of interest on arrear levies where authorised by trustee resolution and the prescribed management rules, as well as CSOS's willingness to structure payment in instalments while protecting the body corporate through an acceleration clause on default.