Levies are the lifeblood of shared living schemes

Living in a sectional title scheme comes with the benefit of shared costs for security, maintenance, and insurance. However, these benefits rely entirely on the financial contributions of every owner. What happens when an owner stops paying?
A 2024 adjudication order from the Community Schemes Ombud Service (CSOS), Marula Lofts Body Corporate v KS Bonga, provides a clear answer. Below, we break down the case summary and answer common questions regarding the legal duty to pay levies in South Africa.

The Case: Marula Lofts Body Corporate v KS Bonga (CSOS 7032/GP/23)

I. Summary of the Facts

Marula Lofts Body Corporate (the applicant) instituted dispute resolution proceedings against KS Bonga (the respondent), the registered owner of Unit 81 within the scheme, regarding unpaid levy contributions. The applicant sought to recover an outstanding amount of R16,455.21, which included interest charged at 24% per annum, following the respondent’s failure to settle the account despite demands. The matter was referred to adjudication after conciliation failed. Although the respondent was invited to make submissions, they failed to respond to the allegations or dispute the facts.

 

II. Legal Question

Is the applicant entitled to an order for the payment of arrear contributions and interest from the respondent in terms of section 39(1)(e) of the Community Schemes Ombud Service Act?

 

III. Ratio Decidendi (Reasoning)

The adjudicator reasoned that the Body Corporate is statutorily obliged under the Sectional Titles Schemes Management Act (STSMA) to perform its functions, which includes the authority to raise levies via trustee resolutions.

 

The adjudicator emphasized that levies are the “lifeblood” of a community scheme, essential for maintenance and upkeep, and that non-payment by a member negatively impacts the collective interest of the scheme. Furthermore, Management Rule 21(3)(c) permits the charging of interest on overdue amounts if authorized by trustee resolution.

 

Citing The Body Corporate of Fish Eagle v Group Twelve Investments (PTY) Ltd, the adjudicator noted that a member may not withhold levies simply because they dispute the financial wisdom of the expense. Consequently, as the applicant provided sufficient evidence of the debt and the respondent failed to dispute the facts, the applicant successfully discharged the onus of proof on a balance of probabilities.

 

IV. Finding

The order was granted in favour of the applicant, directing the respondent to pay the outstanding amount of R16,455.21.

 

Deep Dive: The Duty to Pay Levies (Q&A)

Based on this adjudication order, here are the critical answers every Sectional Title owner and trustee needs to know about levy compliance.

The Duty to Pay

Q: Why is it critical for members to pay their levies?

 

A: Levies are explicitly described in the order as the “lifeblood of shared living schemes”. They are essential because the costs for the maintenance, repair, and upkeep of the scheme—including security and insurance—are shared between the members.

 

Q: What is the legal authority that allows a Body Corporate to charge levies?

 

A: The authority to raise levies comes from the Sectional Titles Schemes Management Act (STSMA) and the passing of a trustee resolution to that effect. The Body Corporate is obliged to perform these functions entrusted to it by the STSMA.

 

Q: Who is responsible for paying these contributions?

 

A: The responsibility lies with the owner(s) of the respective units at the time the resolutions raising the levies were passed. In this case, the respondent was liable by virtue of his ownership of a unit in the scheme.

 

Failure to Pay

Q: Can a member withhold levy payments if they disagree with the Body Corporate’s financial decisions?

 

A: No. The adjudicator referenced the matter of The Body Corporate of Fish Eagle v Group Twelve Investments (PTY) Ltd, which held that a member cannot withhold levies on the grounds that they dispute the necessity or financial wisdom of the decision to impose those levies.

 

Q: What are the consequences for the scheme if a member fails to pay?

 

A: The non-payment of a levy can seriously destabilize a scheme. Failure to pay negatively affects the collective interests and the investment of all owners within the scheme.

 

Q: Can the Body Corporate charge interest on overdue levies? A: Yes. Under Management Rule 21(3)(c), the Body Corporate may charge interest on any overdue amount. This requires a written trustee resolution and must be in accordance with the National Credit Act. In this specific case, interest was calculated at 24% per annum.

 

Q: How does the Body Corporate recover outstanding levies if a member refuses to pay?

 

A: Levies may be recovered by way of an application to the Community Schemes Ombud Service (CSOS). If the internal remedies are exhausted and the member fails to settle the account, the trustees may resolve to proceed with legal action via CSOS to obtain an order for payment.

 

Q: What happens if the respondent does not defend themselves during the adjudication?

 

A: If the applicant provides sufficient evidence (such as a breakdown of the contribution statement and reasons for the levies) and the respondent fails to dispute the facts, the adjudicator may grant the order on the basis that the applicant has discharged the onus of proof.