Waylodge & Sussel Trust v Dalrie Hof Body Corporate and Trustees of Dalrie Hof Body Corporate

The applicant, Waylodge & Sussel Trust, is the registered owner of commercial units 7, 8 and 9 in the Dalrie Hof sectional title scheme in Parow, Cape Town. It complained that for many years the body corporate had charged levies to the commercial sections at a higher rate than other sections and not in proportion to the participation quotas of the units. The applicant relied on section 3(1)(f) of the Sectional Titles Schemes Management Act 8 of 2011 and clause 25 of the scheme's management rules, which did not provide for different levy rates for residential and commercial units. The respondent body corporate contended that levies had been divided among three sectors—shops, garages and flats—and that those different tariffs appeared in budgets approved since 2010. The respondent also stated that it did not have the original plans showing how the sections were registered, but maintained that the applicant knew of the levy structure for years and had not attended meetings. The applicant sought an order adjusting the levies to a participation quota basis and repayment of the alleged overcharge for the preceding five years.

• Whether the body corporate was entitled to levy higher contributions on the applicant's commercial sections on a basis other than participation quota where the management rules did not authorise differentiated levy rates.
• Whether approval of annual budgets at AGMs could validate a levy structure inconsistent with section 3(1)(f) of the Sectional Titles Schemes Management Act and the scheme's management rules.
• Whether the adjudicator had power, and whether it was just and fair, to order retrospective reimbursement of alleged levy overpayments for the previous five years under section 39 of the CSOS Act.

The application was partially granted. The second respondent was ordered to recalculate the levies charged to the applicant's sections based on the allocated participation quotas of each section within 10 working days of the order, to be implemented prospectively. The applicant's claim for reimbursement/repayment of alleged overcharges for the past five years was refused. No order as to costs was made.

Where a sectional title scheme's management rules do not authorise a different method of levying contributions, and there has been no valid adoption of another permissible method such as nominated values, the body corporate is obliged under section 3(1)(f) of the Sectional Titles Schemes Management Act to levy contributions in proportion to the participation quotas of the respective sections. A contrary levy structure, even if reflected in budgets approved at AGMs, is unreasonable and liable to be corrected under section 39(1)(c) of the CSOS Act.

The adjudicator observed that it would not be in the interests of justice or fair in the circumstances to order retrospective reimbursement for five years, and noted more generally that CSOS adjudicators are creatures of statute whose powers are confined to section 39 of the CSOS Act. The adjudicator also remarked that parties in section 54 adjudications generally bear their own costs, and that the circumstances did not justify a costs order.

This adjudication confirms in the community schemes context that a body corporate may not impose differentiated levy structures on categories of sections, such as commercial units, unless the deviation from participation quota is properly authorised by the governing legal framework and scheme rules. AGM-approved budgets cannot legitimise a levy method inconsistent with the STSMA and unamended management rules. The matter is also significant for illustrating the limits of CSOS adjudicators' remedial powers, especially regarding retrospective monetary relief.