Mount Amanzi Share Block Ltd v Body Corporate of Windsor Heights STS (537/2016) [2017] ZASCA 38 (29 March 2017) per Swain JA (Cachalia JA and Nicholls, Coppin and Mbatha AJJA concurring):
The SCA allowed the appeal from the judgment of Mavundla J (case 12240/15 dated 12/4/2016) and ordered the body corporate and its members to pay levies to the owner of the land for services as provided for in a notarial deed. It had not been shown that the owner exercised the unfettered right to determine levies unreasonably or dishonestly. It not enough to simply deny the correctness of such determination. A real, genuine and bona fide dispute of fact had not been established and the owner’s claim was valid and enforceable.
Excerpts without footnotes
[1] The appellant, Mount Amanzi Share Block Ltd, is a share block company in terms of the provisions of the Share Blocks Control Act 59 of 1980, known as Mount Amanzi, whose main object and business is to operate a timeshare scheme in a housing estate. The first respondent is the body corporate of the Windsor Heights Sectional Title Scheme known as Windsor Heights, that administers a housing estate situated on land within the boundaries of the property of the appellant. The 2nd to 21st respondents are owners of the units, and the 22nd to 25th respondents are tenants of owners of units in Windsor Heights.
[2] In order to place the dispute in context it is necessary to briefly examine the history and development of both housing estates. Windsor Heights and Mount Amanzi were developed by an entity known as the De Wildt Trust on a phased basis commencing in 1988. Because of the distance between Mount Amanzi, Windsor Heights and the municipal area of Hartbeespoort (which later became known as Madibeng Local Municipality) the estates could not connect to the water reticulation, sewerage infrastructure and refuse removal services offered by the municipality.
[3] To cater for the absence of municipal services (services), the development of Windsor Heights was made subject to a notarial deed of servitude being registered in which the right of Mount Amanzi to render these services to Windsor Heights, was recorded. An obligation was also imposed upon Mount Amanzi to make its infrastructure, facilities and amenities available to Windsor Heights. In return for the supply of these services and access to Mount Amanzi’s facilities, Windsor Heights was obliged to make payment to Mount Amanzi of levies to be determined by Mount Amanzi annually, in its discretion. Provision was also made for a right of way in favour of Windsor Heights over the property of Mount Amanzi as it was landlocked, having no access to a public road. A servitude of right of way was accordingly necessary to afford to the residents of Windsor Heights, ingress to and egress from their property.
[4] The seeds of dissension inherent in such an arrangement, which should have been apparent from the outset, have now borne fruit. Disagreement arose between the parties because of an increase in the remuneration determined by the appellant in the exercise of its discretion, for the supply of these services to the respondents and access by the respondents to the appellant’s facilities. The respondents accordingly launched an application in the Gauteng Division of the High Court, Pretoria (Mavundla J), based upon the assertion that because the unilateral increase in the levies by the appellant was disputed, payment was sought to be enforced by the appellant by restricting the access of the respondents to the property and facilities of the appellant.
It was alleged that interference with the unrestricted use of the appellant’s facilities and unrestricted access to the property of the appellant, constituted acts of spoliation. An order was sought restoring the free and unrestricted use of the access road and access to the property of the appellant. Pending the final determination of the dispute between the parties in respect of the levies payable, an order was sought directing the appellant to grant the respondents full access to its facilities. In addition, an interdict was sought restraining the appellant from interfering with and/or limiting the use and enjoyment of these facilities by the respondents.
A further interdict was sought restraining the appellant from interfering with and/or interrupting access to its property, the water supply and any other service provided by the appellant to the respondents. The appellant, by way of a counter application, sought a declaratory order that the first respondent was liable to make payment of the levies charged, in terms of the notarial deed of servitude, in respect of the services supplied as well as payment of the arrear levies.
[5] The court a quo granted the respondents the relief claimed in the main application and dismissed the counter application, on the ground that an irresoluble dispute of fact existed on the papers. The appellant was ordered to pay the costs of both applications. Leave to appeal to this Court was thereafter granted by the court a quo.
[6] The respondents alleged they had been spoliated by the appellant in the following respects:
(a) The residents of the respondents’ property and their guests had been denied access to the recreational facilities on the appellant’s property and more specifically the restaurants, shops and tuck shop.
(b) Access by residents of the respondents’ property and their guests to the respondents’ property through the entrance gate to the appellant’s property and via the access road, had been restricted.
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[30] The parties were ad idem that the discretion possessed by the appellant was unfettered but valid and enforceable, provided it was exercised arbitrio bono viri. In NBS Boland Bank Ltd v One Berg River Drive CC & others; Deeb & another v Absa Bank Ltd; Friedman v Standard Bank of SA Ltd 1999 (4) SA 928 (SCA) paras 24, 25 and 30, the following was stated:
‘[24] In sum I am of the view that, save, perhaps, where a party is given the power to fix his own prestation, or to fix a purchase price or rental, a stipulation conferring upon a contractual party the right to determine a prestation is unobjectionable.
[25] All this does not mean that an exercise of such a contractual discretion is necessarily unassailable. It may be voidable at the instance of the other party. It is, I think, a rule of our common law that unless a contractual discretionary power was clearly intended to be completely unfettered, an exercise of such a discretion must be made arbitrio bono viri . .
[30] One further point should be made. It is conceivable, albeit unlikely, that a stipulation may be so worded that an absolute discretion to fix a prestation is conferred on one of the parties. Here again it is unnecessary to express a view as to whether such a stipulation will be invalid as being in conflict with public policy, or whether the fixing of the prestation may only be assailed when it is done in bad faith.’
[31] The respondents’ only challenge was that the appellant had failed to exercise its discretion arbitrio bono viri, which requires a determination of whether it was exercised both reasonably and honestly. (Benlou Properties (Pty) Ltd v Vector Graphics (Pty) Ltd 1993 (1) SA 179 (A) at 188A-C, Absa Bank Ltd v Lombard 2005 (5) SA 350 (SCA) para 19, Blake & another v Cassim & another NNO 2008 (5) SA 393 (SCA) para 22, Indwe Aviation (Pty) Ltd v Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd (No1) 2012 (6) SA 96 (WCC) para 28).
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[39] The respondents deny the averments made by the appellant regarding the budgeted expenses for each of the items set out above, as well as the apportionment of these expenses to each of the houses on Windsor Heights. Accordingly, it has to be determined whether the court a quo was correct in deciding that a resolution of this issue was precluded by an irresoluble dispute of fact on the papers. As pointed out by this court in Wightman t/a JW Construction v Headfour (Pty) Ltd & another 2008 (3) SA 371 (SCA) para 13:
‘A real, genuine and bona fide dispute of fact can exist only where the court is satisfied that the party who purports to raise the dispute has in his affidavit seriously and unambiguously addressed the fact said to be disputed. There will of course be instances where bare denial meets the requirement because there is no other way open to the disputing party and nothing more can therefore be expected of him. But even that may not be sufficient if the fact averred lies purely within the knowledge of the averring party and no basis is laid for disputing the veracity or accuracy of the averment.’
. . . . .
[47] The evidence of the appellant detailing how the increase in levies was calculated and apportioned to the respondents, establishes that the appellant exercised its discretion arbitrio boni viri, namely both reasonably and honestly. The levies determined by the appellant are accordingly valid and enforceable.”