When must I pay my increased sectional title levy?
Body corporates charge levies and unit owners are obliged to pay such levies. But what if a body corporate increases levies? When does the unit owner become responsible for paying such increased levies?
The body corporate of a sectional title scheme is provided with functions and responsibilities in terms of the Sectional Titles Schemes Management Act ("STSMA"), of which a well-known function is to require the owners of the scheme to contribute to the funds of the scheme by way of normal and special levies, in order to maintain the scheme.
STSMA also provides that the liability for payment by the owners of the normal and special levies in the scheme becomes due and payable on the passing of a resolution by the body corporate.
STSMA is further supported by its regulations, which the Minister of Human Settlements can promulgate from time to time. Part of these regulations is the Practice Management and Conduct Rules of the scheme.
With a closer look at the Practice Management Rules ("PMR"), we find that it is stated that the body corporate must provide written notice to the owners of any obligations to pay a new increased levy or any overdue levy as well as the interest that will be charged should the levy not be paid in due time.
This creates confusion between STSMA and its PMRs as to whether the body corporate must first provide written notice to the owners of the scheme before they can take legal action against an owner for not paying their levies, or, whether the levy is due and payable on the date that a resolution is passed by the body corporate that there will be an increased levy or a special levy payable.
This confusion was fuelled by our lower courts that provided orders in which they refused judgments against owners who were in arrears with their levies but where no notice had been given. The reason was that the Magistrates' were of the view that although the liability to pay levies arose from the passing of a resolution by the body corporate, the payment of the levies only became due and payable once notice was provided to the owner who was in arrears.
In two recent cases, the High Court had the opportunity to consider the situation and provide clarity on the apparent conflict between STSMA and its PMR. The High Court found that the lower courts had erred in their judgment. The High Court determined that STSMA was the primary legislation, with the regulations and rules of the STSMA, such as the PMR, being secondary legislation. Accordingly, in considering the answer to the above questions, the primary legislation will take priority and since STSMA does not prescribe that a notice must be given for the debt to become due and payable but provides that upon the passing of a resolution by the body corporate, the body corporate would have the right to claim payment of the levy, it was thus clear that the levy was due and payable by an owner in each consecutive month after the passing of the resolution.
Secondary legislation cannot override the primary legislation, especially where the wording of the primary legislation is clear. The PMR can therefore not impose a pre-condition that a notice must be given before the levy becomes due and payable. The High Court found that the obligation to give notice that was created in the PMR, was purely an administrative procedure to assist in the good management of the scheme.
Importantly, it does not mean that a body corporate need not comply with the PMR. A body corporate must still comply and send out the necessary notification to owners to ensure that they are aware of the increase and the management of the scheme runs smoothly. But the indebtedness to pay any increased levy applies from the date of the body corporate resolution.
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Source: SeymoreDuToit & Basson
