By Prof. Graham Paddock
Reading time—4 minutes.
1. This issue arises regularly. To some people, it seems obvious: if an owner fails to pay levies, the body corporate should be able to cut off electricity and water supplies to the unit until the levies are paid. However, that would be illegal, as will be explained. This article examines four possible solutions to the problem.
A. Pre-payment meters: Prescribed management rule 29(4) sets out a process that will authorise the body corporate to install separate pre-payment water and/or electricity meters on the common property. The supply is then automatically disconnected if the owners or occupiers do not make payments. The meters can be installed by arrangement with the local municipality or a private supplier.
B. Owner agreement: A body corporate can disconnect a utility supply if the owner formally agrees to this. However, in most cases, the owner is unlikely to agree to disconnection.
C. Rent diversion: If a tenant occupies the unit in question, section 39(1)(f) of the Community Schemes Ombud Service Act of 2011 allows an adjudicator to order the tenant to pay rent to the body corporate instead of to the owner (similar to a ‘garnishee order’ on a salary).
D. Court order: A High Court can give an order authorising disconnection or reduction of water and/or electricity supplies to units.
2. A body corporate’s disconnection of water or electricity supplies to a unit without an owner’s agreement or the authority of a court order is illegal and contrary to the principles of South African common law. It is known as an ‘act of spoliation’. The body corporate cannot ‘take the law into its own hands’ to collect outstanding levies; nor can it suspend other services to ‘persuade’ the owner to pay the arrears: it must use the Community Schemes Ombud Service (‘CSOS’) and/or court processes to collect levies.
3. In the recent case of Lion Ridge Body Corporate v Alexander and Others (Case no. 17074/2022 in the Gauteng Local Division of the High Court – available at www.saflii.org) the body corporate asked the court for orders:
- confirming four owners’ debts for water and electricity consumed and arrear levies,
- authorising the body corporate to disconnect the electricity supply to their units,
- limiting the water supplied to each unit to not more than six kilolitres per month until the arrears are paid, and
- making the owners liable for the cost of disconnecting, limiting, and reconnecting the owners’ electricity and water supplies.
4. The body corporate’s application referred to sections 2(5), 4(h) and 4(i) of the Sectional Titles Schemes Management Act of 2011 (the ‘STSM Act’—incorrectly referred to in the judgment as the Sectional Titles Act). The body corporate argued that under section 2(5) it must enforce its rules, that section 4(h) of the STSM Act entitles it to contract with owners and occupiers for the provision of amenities or services and that section 4(i) empowers it to do all things reasonably necessary for the enforcement of its rules. However, the body corporate could not show any agreement with the owners or identify the rules it was supposedly attempting to enforce.
5. The judge analysed the body corporate’s position, noting that it is not an ordinary commercial entity but one operated under the STSM Act. He confirmed that it has the power to enter into agreements with owners and to make laws for its administration. He looked at prescribed management rule 25, that sets out the procedure a body corporate must follow to collect a debt from an owner, noting that it may not debit any amount that is not a levy or a charge provided for in the STSM Act or the scheme’s management rules unless it first takes judgment for that amount or the member consents.
6. The third issue the judge examined and described as probably the most important was the owners’ Constitutional rights, namely, their rights:
- to be protected against arbitrary deprivation of property (section 25 (1) of the Constitution, 1996),
- to sufficient water (section 27(1)(b) of the Constitution),
- to receive electricity from a municipality, even where the electricity is transmitted through an intermediary such as the body corporate (the judge described this as a public law right and cited the Constitutional Court case of Joseph v City of Johannesburg (2010 (4) SA 55), and
- to adequate housing (section 26 of the Constitution).
7. Other relevant issues are:
- the CSOS statement that rules that cater for ‘Disconnection of electricity or essential services for non-payment of levies’ will be considered undesirable for quality control purposes and regarded as non-compliant when submitted for approval (see CSOS Circulars 1 of 2018—item 7.2 and 1 of 2019—Annexure A, item 2), and
- Prof. CG van der Merwe’s view that a body corporate rule allowing the trustees to disconnect an owner’s electricity supply in the event of non-payment of their levies is invalid (see Sectional Titles (Lexis-Nexis) at par 13 5).
8. In my view, trustees and managing agents struggling to recover substantial charges for electricity or water consumption as well as arrear levies should:
- concentrate their efforts on installing pre-payment meters so that when disconnection is appropriate, it occurs due to the owner’s non-payment and without the body corporate taking any action,
- start legal action against persistent levy defaulters without delay, and
- when applying to CSOS for an order confirming any debt concerning a tenanted unit, consider also applying for a rent diversion order.
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 9.
This article is published under the Creative Commons Attribution license.
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