“CITY OF TSHWANE NOT OBLIGED TO RESTORE POWER TO A COMMERCIAL SCHEME WITH MASSIVE DEBT
City of Tshwane Metropolitan Municipality v Vresthena (Pty) Ltd and Others (1346/2022) [2024] ZASCA 51 (18 April 2024)
Vresthena, the owner of six of the nine sections in a sectional title scheme on which a shopping centre is erected, leases its units to blue chip retailers. It alleged that, due to a dysfunctional body corporate, the scheme’s municipal account for electricity supply has remained unpaid since 2017. In 2022, by which time the debt had ballooned, the municipality cut the electrical supply to the scheme. Vresthena approached the High Court for relief, including an order that the electricity had to be restored immediately. The application was successful in the High Court, but overturned in the Supreme Court of Appeal. That Court emphasised that, although municipalities were “constitutionally and statutorily obliged to provide their residents with electricity,” there is a reciprocal duty on citizens to settle the municipal account. And, “as a form of credit control, any municipality has a statutory right to terminate such services on notice”. From a sectional title point of view, it is instructive that the Court also warned that sectional title owners cannot “expect the municipality to regulate the Body Corporate’s affairs. A municipality has no right to interfere in the affairs of the Sectional Titles Scheme.”
The details are set out in the judgment and judgment summary below.
The judgment can be viewed here
Summary of the Judgment
CHALLENGING A GOVERNANCE PROVISION DIFFERS FROM A CHALLENGE TO AN HOA’S MANAGEMENT RESOLUTION: CSOS FINDING OVERTURNED
Mooikloof Glen Estates Homeowners’ Association v Solomon and Another (A135/2023) [2024] ZAGPPHC 131 (15 February 2024)
In the Memorandum of Incorporation of a homeowners’ association established in respect of a new development, there is often a provision obliging purchasers of vacant erven to erect buildings thereon within a certain period, failing which they may face penalties. This matter deals with such an owner’s challenge to this requirement on the basis that it is unreasonable and not in the interests of the community as a whole. In the application to the CSOS, the owner was successful. However, this decision was overturned on appeal to the High Court. The Court highlighted that, in essence, the adjudicator failed to distinguish between a challenge to a governance provision in terms of the Community Schemes Ombud Services Act, and a resolution passed by an executive committee of an association regulated by the Companies Act.
The judgment and summary below highlight the consequences of this oversight.
