Page 83 - Q&A

Can a body corporate institute action against
the sectional title developer?

October 2020
“In our sectional title scheme, it has become clear that many of the structures
on the common property have been poorly built and are defective. However,
the body corporate is uncertain whether it can take action against the
developer for these defects and accordingly nothing is happening. Surely the
body corporate should be able to do something?”
The Sectional Title Scheme Management Act 8 of 2011 (STSMA), bestows on the
body corporate certain rights and responsibilities of which the most common
one is to administrate an account for the repair, maintenance, management
and administration of the common property.
The STSMA also establishes that a body corporate is a legal entity that can sue
or be sued in its own name in respect of the following:
1. Any contract entered into by the body corporate. Property
2. Any damage to the common property.
3. Any matter in connection with the land or building for which the body
corporate is liable.
4. Any matter arising out of the exercise of any powers or performance or
non-performance of its duties
5. Any claim against the developer in respect of the scheme if so determined
by special resolution.
As the common property is owned jointly by all sectional owners of the scheme
in undivided shares, the above empower a body corporate to sue in its own
name to recover damages arising from damages caused to any part of the
common property including taking action against the developer.
The question that follows from this is whether a special resolution is required
(point 5) in order for a body corporate to take action for damage to the
common property (point 2). This aspect was recently considered by our courts
where it was held that if action is instituted by a body corporate against a
developer under point 2, no special resolutions are required to proceed with
action against the developer. Point 5 therefore does not limit the rights of the
body corporate under point 2 but rather provide the body corporate with an
extra power to sue developers where the claim is one “in respect of the scheme”
for example, to compel performance of an obligation resting on the developer
under the scheme, such as handing over all contracts concluded before the
body corporate was established or payment of levies for units still registered in
its name etc.

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