The recent appellate case of Sable Hills Waterfront Estate CC v Sable Hills Waterfront Estate Home Owner’s Association NPC (199/2016) 2016 ZASCA 170 (24 November 2016) looks at a dispute regarding the obligation of the members of the Home Owner’s Association to pay levies in terms of the Articles of Association which states that the levies are to be apportioned equally between the owners of stands and units in the estate. The issue before the court was whether the reference to stands and units in the Articles of Association was referring to same as reflected in the survey diagram attached to the township plan or to stands and units as (individually) registered in the Deeds Registry?

Background

The appellant in this case was a property developer and had acquired a certain piece of land on which a township register had been opened (the estate). Simultaneously, a sectional title register had been opened over of at least one of the township erven with one sectional unit having been sold and transferred to a third party. Furthermore, certain erven and sectional units were transferred by the developer to further third parties leaving a remaining extent in its own name (the remainder).

The Home Owner’s Association had fixed the levies for the estate at R1750.00 per stand and such payment was to be "apportioned equally between owners of the property (i.e. between stands and units in the estate)". The appellant had argued in the lower court that it was not obliged to pay any levies at all, but, if it was, that the remainder of the property constituted a single stand for the purposes of charging levies. The Association, however, took the view that the appellant was obliged to pay a separate levy in respect of each erf or stand reflected on the township plan and forming part of the remainder. The lower court ruled in favour of the Association resulting in this appeal.  

Arguments before the Supreme Court of Appeal

The appellant argued that the remainder is the only erf recognised as a separate property for the purposes of the Sectional Titles Act and therefore the reference in the Articles of Association must be understood as referring to the single erf that it owns. They further contended that while the erf (the remainder) is shown on the general plan as having been sub-divided into smaller erven for the purposes of the proposed development, these smaller erven do not as yet have any separate existence and until they do they should not be taken into account for the purposes of assessing their liability.

The Association on the other hand argued that clauses in the Articles of Association do not refer to pieces of land as reflected separately in the Deeds Registry, but to the pieces of land shown on the general plan of the township, which for the purposes of determining the obligation to pay levies are to be treated separately. 

Court's Finding

Having looked at the Articles of Association as a whole and the purposes of the provisions thereof, the court favoured the Association’s view and held that the word ‘stand’ as used in the Articles of Association is capable of referring to any defined piece of land, whether or not having a separate legal existence in the Deeds Registry. The court further held that the word 'stands' is used to explain or clarify the meaning of 'erven' where it appears in the definition of 'property' in the Articles of Association.

In light of the above, the court held that the use of the word 'stand' in the Articles of Association was directed at indicating a broader meaning, that erven are those shown on the general plan notwithstanding that they do not yet have a separate existence. The appeal was therefore dismissed with costs, resulting to the appellant being ordered to pay outstanding and future levies for each erf forming part of the remainder.

This case highlights the importance of using plain and clear language in drafting property related documents/agreements especially where two words can be considered to have a similar meaning.