The 2021 KwaZulu-Natal high court appeal case of Zikalala v Selma Court Body Corporate and another (Case No. AR255/2020, available from www.saflii.org) dealt with several important issues. This case will be best remembered for the judges’ finding that a sectional title body corporate does not have the power to compromise a claim for outstanding contributions. The judges confirmed that the Sectional Titles Schemes Management Act, its regulations and prescribed rules do not authorise a body corporate to accept a reduced amount in full and final settlement of an owner’s debt to the body corporate.
The judges suggested that because the compromise of such a claim adversely affects other owners, a unanimous resolution is required to approve it. Any body corporate that has compromised such a claim or is considering doing so should take legal advice on the point.
In unpacking the background circumstances of the case, the judges considered another critical issue. Two trustees were informed of the compromise offer, and each of them agreed to it. On the basis of their agreements, the owner was told that the body corporate had accepted the offer.
Citing PMR 9(b), the judges confirmed that even if the proposed compromise had been within the body corporate’s powers, the two trustees would not have had the power to accept it because an appropriate resolution had not approved it. Trustees must bear in mind that they have no power to deal with third parties unless a prior body corporate resolution authorises them.
Graham Paddock is a specialist community schemes attorney, notary and conveyancer. He has been advising clients and teaching students for over 40 years, and was an adjunct professor at UCT for 10 years.
Article reference: Paddocks Press: Volume 17, Issue 7.
This article is published under the Creative Commons Attribution license.