NOMHLANHLA MTSHALI: Body corporates authorised to cut power supply to defaulters

A recent ruling of the High Court in Johannesburg has expanded the authority of body corporates. In this case the body corporate approached the Johannesburg high court, requesting that it order one of its members to pay arrear levies and electricity charges, as well as for the services of an electrician to disconnect the electricity supply.

The High Court was further asked to rule that the member's electricity supply remain disconnected until the amount he owed to the body corporate (including interest) was paid for in full.  

The High Court ruled that the member, as the owner of a property situated in a sectional title scheme, was automatically a member of the body corporate. In addition, it found that there was a tacit agreement between the member and the body corporate.  

This permitted the body corporate to pay the electricity charges on behalf of the residents of the sectional title. The residents would then in turn have an obligation to reimburse the body corporate for such payments. 

In instances where the the body corporate did not recover the payments made on behalf of residents, it would have to continue to advance monies to Eskom on behalf of owners of units who did not pay for electricity consumption. This means a resident who skips paying their levies still enjoys the benefits of having access to electricity and other utilities.

Not only is this onerous to the body corporate, it is unfair to the remainder of the residents who have kept up with payment of their levies. 

The purpose of such levies is to procure funds to manage and administer the affairs of the body corporate, predominantly the maintenance and upkeep of the common property within the sectional title scheme. The body corporate is a nonprofit association and is prevented from deriving income from sources outside of the scope of the Sectional Titles Schemes Management Act. It is therefore dependent on the recovery of levies and municipal charges for its continued existence and financial sustainability. 

A body corporate is managed and represented by a body of trustees who are tasked with managing its affairs in a manner that is the best interest of all members. In this case the trustees resolved that instituting legal proceedings against the member was the best approach open to them. 

One of the challenges residents of sectional titles face is defaults on payment for levies. This ruling has expanded the authority of body corporates. From this case we now know that they have the authority to cut off the electricity supply of a resident who defaults on their levies.

Where to from here? There is still a possibility that this case may be taken on appeal, but this judgment remains valid until that occurs and the judgment is overturned. 

There are a number of pertinent lessons that can be learnt from this case: 

• Agreements are not limited to verbal and written agreements. Tacit agreements, which come into existence based on the conduct of the parties, can also be binding. 
• If you intend to purchase property that is governed either by a homeowners' association or a body corporate, always ensure you ask for and get a copy of the financial statements of the homeowners association or body corporate prior to signing any offer to purchase.  
• The Sectional Titles Schemes Management Act is the primary source of legislation regulating the establishment and powers of body corporates. Should you elect to purchase property such as a flat or a town house that is regulated by a body corporate you need to understand how they operate.
• Although this case deals with a tacit agreement that was established between a body corporate and one of its members, it reiterates the importance of understanding the authority of the body corporate when managing sectional titles.
• A body corporate is managed and represented by a body of trustees. Resolutions of meetings taken by the trustees of a are binding on all members.
• Always review home loan agreements prior to signature. Some of these signed with banks make it compulsory to regularly attend meetings held by trustees of a body corporate. In instances where a property owner cannot attend meetings, one can consider the appoint a proxy. 
• Some home loan terms specify that should a homeowner not attend meetings held by trustees the bank that granted the home loan is permitted to appoint a representative to attend these meeting. This reiterates the importance of attending meetings held by trustees of a body corporate. 

• Mtshali, an attorney, is founder of The Legal Affair.