LEVIES AND THE NATIONAL CREDIT ACT. Has the spectre been laid to rest? – Tertius Maree

In the recent past there has been widespread speculation about the applicability ofthe National Credit Act in respect of sectional title levies. With few exceptions the feelings of persons within the industry have been that it does not, and this view isbased upon a distinct feeling that it should not, for a simple but important reason: 

Should a defaulting owner be protected by the National Credit Act, it would simply mean that the burden of his or her levies would be shifted, albeit temporarily, to the other owners. This would be an untenable position as will be more clear when a large percentage of owners should invoke NCA protection, or to take an extreme example, if they all should.

The as yet unreported Kwazulu-Natal High Court case of Dlamini v the Body Corporate of Frenoleen represents the first beacon towards a realistic view on the matter, when it upheld the following arguments:

(a) A body corporate does not supply goods or services to its members, nor does it advance money or extend credit as envisaged by the NCA.

(b) Levies charged by a body corporate to its members do not constitute an ‘incidental credit agreement’ because the levies do not constitute an ‘account tendered for goods or services provided by the body corporate to a consumer.’

(c) Levies are not payable by members by virtue of an agreement as defined in the NCA, but by virtue of the provisions of the Sectional Titles Act. Accordingly the court held that the NCA does not apply to sectional title levies, irrespective of whether interest is raised on arrears or not.

Before trustees and managing agents break open the champagne, it must be remembered that other divisions of the High Court may not hold the same views and that the game may not be over until the Appeal Court delivers its stamp of approval. That cautionary note aside, I am optimistic that other courts, if confronted with the question, are likely to agree with the views of the Kwazulu-Natal High Court.

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