The Body Corporate of San Sydney v Shivani Singh and Others

The Body Corporate of San Sydney (appellant) is a sectional title scheme comprising eight registered units. The developer originally reserved the right to extend the scheme, which lapsed on 30 March 2013. The right to extend the scheme then vested in the body corporate under s 25(6) of the Sectional Titles Act 95 of 1986 (STA). The developer had constructed three additional buildings (buildings 9, 10 and 11) on the common property despite having no right to do so, and these buildings were completed with certificates of occupancy issued. The body corporate concluded an agreement on 11 May 2018 to sell and cede its right of extension to HF Property Investments (Pty) Ltd (HFP) for R500,000. HFP would complete the registration process, remedy waterproofing defects, and sell the units to occupiers or third parties. The body corporate required written consent of all unit owners and bondholders under s 5(1)(b) of the Sectional Titles Schemes Management Act 8 of 2011 (STSMA). When consent was not forthcoming from all parties, including the first respondent (Shivani Singh, owner of unit 2), the body corporate applied to court for an order directing the respondents to provide consent or for the Sheriff to sign on their behalf.

• Whether the sale agreement constituted an alienation of part of the common property requiring authority under s 17(1) of the STA and s 5(1)(a) of the STSMA
• Whether a unanimous resolution of body corporate members was required to authorize the transaction
• What constitutes 'good cause in law' for withholding consent under s 5(1)(b) of the STSMA
• Whether the body corporate provided sufficient information to unit owners to enable informed consent
• Whether the first respondent was entitled to withhold her consent to the alienation or cession of the right of extension

1. The appeal is upheld to the extent set out in paragraph 3 but is otherwise dismissed. 2. Each party is directed to pay its own costs of the appeal. 3. The order of the high court is set aside and substituted with: (a) The respondents are directed to sign whatever consent is required for: (i) the applicant to obtain a Certificate of Real Right in respect of the extension of the San Sydney Sectional Title scheme by addition of buildings 9, 10 and 11 as required by s 25(6) of the STA read with s 5(1)(b) of the STSMA; and (ii) the exercise of that right of extension by the applicant as contemplated by s 5(1)(b) of the STSMA. (b) Should the respondents fail to sign such consent(s) within seven days of written request, the Sheriff is authorised to sign on their behalf. (c) The further relief sought is dismissed. (d) Each party is directed to pay its own costs of the application.

1. The alienation and cession of a right of extension of a sectional title scheme does not constitute alienation of common property requiring authorization under s 17(1) of the STA and s 5(1)(a) of the STSMA (which requires unanimous resolution). 2. Such alienation or cession is governed by s 5(1)(b) of the STSMA, which requires written consent of all owners and mortgagees. 3. The extension of a scheme by erection of further buildings on common property affects participation quotas and dilutes the percentage of undivided shares in common property, but does not involve alienation of the common property itself. 4. This is because of the unique nature of sectional title ownership, where ownership consists of separate ownership of a section coupled with bound common ownership of common property, and the common law principle of accession (omne quod inaedificatur solo cedit) does not apply. 5. 'Good cause in law' for withholding consent under s 5(1)(b) must be accorded meaning according to text, context and purpose, and includes anything objectively contrary to the best interest of the owner, body corporate or scheme. 6. An owner may have good cause in law to withhold consent where the body corporate has not provided sufficient material information to enable the owner to make an informed decision about the proposed transaction. 7. Body corporates have an obligation of transparent disclosure and constructive engagement with unit owners in matters affecting sectional ownership and communal property rights.

The Court observed that the predicament called for considerably more transparency and cooperation between the parties, and that with full and candid disclosure, a mutually acceptable arrangement should be possible. The Court noted that mediation could be a viable remedy and that alternative dispute resolution processes are available under the Community Schemes Ombud Services Act 9 of 2011. The Court also noted that the mandatory requirements of rule 41A(2) (which came into operation on 9 March 2020) were not yet applicable at the time the application was brought, but would have been relevant. The Court commented that in the spirit of communal ownership and the legal obligations it imposes in matters of sectional title ownership, parties need to engage constructively to achieve mutually acceptable resolutions. The Court also observed that both the appellant and respondent were, to a greater or lesser extent, to blame for the failure to engage constructively. The Court noted concerns about whether the transaction was entirely at arm's length given the relationship between HFP's director (son) and the original purchaser (mother), and that this warranted closer examination. The Court also noted that clarity was needed regarding the possibility and merits of any enrichment claim by the developer's insolvent estate.

This judgment provides important clarification on the distinction between alienation of common property (requiring unanimous resolution under s 5(1)(a) of the STSMA) and the alienation or cession of a right of extension (requiring written consent under s 5(1)(b) of the STSMA). It establishes that the cession of a right of extension does not constitute alienation of common property due to the unique nature of sectional title ownership where the common law principle of accession does not apply. The judgment also provides guidance on what constitutes 'good cause in law' for withholding consent under s 5(1)(b), emphasizing the importance of transparent disclosure and the provision of sufficient information to enable owners to make informed decisions. The case highlights the duties of body corporates to engage constructively with unit owners in matters of communal ownership and to provide full material information when seeking consent for significant transactions affecting the scheme. It underscores that owners have a direct and substantial interest in decisions affecting their participation quotas and undivided shares in common property, even where common property itself is not being alienated.