A number of owners of sectional title units have asked me whether they are entitled to withhold the payment of levies if they are dissatisfied with the manner in which the trustees appointed by the body corporate are managing the scheme or if they think that the levies imposed by the trustees are excessive or unnecessary. The mismanagement or perceived mismanagement of schemes often causes conflict between owners and the trustees / body corporate. In a recent case the High Court considered a number of issues relating to the imposing of levies by a body corporate (trustees) and the owners’ obligations in respect of the payment of such levies.
In this case a body corporate instituted action against an owner (a company) that owed money to the body corporate for monthly levies, a special levy and other charges.
The owner raised a number of defences. It contended inter alia (a) that the body corporate had failed to carry out certain repairs to units in the scheme (b) that the body corporate had increased monthly levies unnecessarily and that the increase had been necessitated by the mismanagement of the scheme by the body corporate and (c) that with regards to the special levy it was not liable to pay such levy because the body corporate had sufficient funds in its account when the special levy was imposed.
The court made the following findings:-
• members of a body corporate (owners of units) are not entitled to withhold or refuse to pay levies (including special levies and increases in monthly levies) on the grounds that the owner/s dispute the necessity or financial wisdom of the trustees’ decision to impose such levies.
• An owner may not withhold or refuse to pay a special levy by virtue of the fact that the body corporate allegedly had sufficient money in its account at the time that the special levy was imposed and that the special levy was accordingly unnecessary.
• It is a function of the trustees (and not individual owners) to determine the monthly levy which is payable by owners
• Similarly, the trustees (and not individual owners) are empowered to decide whether or not to impose a special levy.
The bottom line is that if an owner or owners believe that trustees are imposing unreasonable or unnecessary monthly or special levies, such owners are not entitled to dispute liability for the payment of such levies on the grounds that they think that the levies are unnecessary or excessive.
If members of the body corporate (owners) are of the opinion that the trustees are mismanaging a scheme their remedy would be to remove such trustees from offices in terms of the provisions of the Sectional Titles Act. Trustees may be removed from office by a resolution of a general meeting.