City of Tshwane Metropolitan Municipality v Body Corporate of Faeriedale

Does the Body Corporate have the power to sue on behalf of individual sectional title owners? 

THE FACTS

Tree felling on municipal land caused damage to both the common property and two individual units of a sectional title development. It is trite that sectional title insurance covers both common and private ownership. The insurer, having paid the damage i.r.o both, claimed compensation in the name of the body corporate for damage to both the common and private property from the municipality. The Magistrates Court granted the claim which was upheld by the High Court on appeal. The municipality then appealed to the Supreme Court of Appeal who overturned the High Court decision.

THE JUDGEMENT

The issue to be decided by the appeal court was whether the body corporate, established in terms of sec.36(1) of the Sectional Titles Act (STA), had the power to claim compensation for damages caused to the property of individual owners of the sectional title scheme.   

On a proper interpretation of secs.36 and 37 of the STA, the court found

• firstly, that sec.36(b) authorised the body corporate only to sue for damages to the common property; and
• secondly, that the body corporate could not rely on sec.36(d) which gave it the power to sue for any matter arising out the exercise of any of its powers under the act, because
• thirdly, sec.37(1)(j) charged the body corporate with the responsibility to maintain the common property (the court distinguished the provisions of sec.37(1)(f) and (h) from the issue that had to be decided), and that
• fourthly, sec.44(1)(c) placed the responsibility in respect of sectional title units on the shoulders of individual owners. 

As the original claim did not distinguish between the amounts claimed for damage to common property and that for damage to individual units, the whole of the claim had to be dismissed. 

WHAT DOES THIS MEAN FOR SECTIONAL TITLE MANAGEMENT?

Some media suggested that this judgement had the effect that sectional title owners now had to take out individual insurance for their units.  This should not be necessary.  The trustees of the body corporate should ensure, through their insurance brokers, that the policy covers both common property and individual units.  Both should act as plaintiffs, the claims should be clearly distinguished and i.r.o those items which are indivisible such as electricity conductors, water and sewerage pipes, the claim should, if required, be a joint claim.   

Bodies Corporate should, through their rules or by agreement, create a modus operandi for dealing with claims by individuals.  It is important for the body corporate to have grip on all claims in terms of the policy.