Are Fines Lawful? – Courtesy Tertius Maree MCS Courier

Recently some doubts have been expressed regarding the legality of fines raised against transgressors in sectional title schemes. One of the arguments in support of the view that they are unlawful is based on section 1(3)(c) of the Act which states in respect of a unanimous resolution that –

where the resolution in question adversely affects the proprietary rights or powers of any member as owner, the resolution shall not be regarded as having been passed unless such member consents in writing thereto’.

If the latter provision should be applicable to a penalty provision in the rules, it would of course be very difficult to adopt a management rule to provide for the imposition of fines.

In my view the proviso in question relates only to instances where a member’s proprietary rights as owner of a section (or holder of a right of exclusive use), or his powers flowing from such ownership, namely his power to vote, are affected. When reading the Afrikaans text (signed by the State President at the time, it is clear that the word ‘proprietary’ relates to and qualifies both ‘rights’ and ‘powers.’

It cannot be said that the imposition of a penalty adversely affects the proprietary rights or powers arising from a member’s position as a registered owner. If that should be true, it would be equally true that the management rules cannot be amended to impose an alternative levies regime whereby some owners are required to contribute proportionally more than before.

The other counter-argument is of course the fact that the proviso referred to relates to unanimous resolutions only, whereas there is nothing to prevent a penalty provision from being included in the conduct rules, requiring only a special resolution.

But that does not mean that fines may be imposed without further ado or that just any old rule will suffice to authorise fines. Before any fines may be imposed, a properly drafted rule, complying with the provisions of the Promotion of Administrative Justice Act, must be adopted. Equally important, when the trustees seek to impose a penalty on an owner, the procedures set out in such rule must be followed to the letter.

 By Tertius Maree

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