By Prof. Graham Paddock

Do members of a body corporate have direct rights to access necessary financial information within sectional title schemes? 

Image: Prof. Graham Paddock

High Court Rules that Members Can Use the Management Rules

Background: In Montrose Mews Body Corporate v Moela (2023/019308) [2024] ZAGPJHC 198 (https://www.saflii.org/za/cases/ZAGPJHC/2024/198.html), the High Court of South Africa, Gauteng Division, Johannesburg, addressed significant issues surrounding the access to information within a body corporate. Montrose Mews Body Corporate applied for an order reviewing and setting aside a CSOS adjudicator’s order.

Ms. Beauty Mmantho Mokoka, a Montrose Mews unit owner, requested access to specific bank statements. Her request was initially motivated by concerns over a poor auditor’s report and suspicions of an irregular loan made to the body corporate. The Montrose Mews body corporate referred Ms. Mokoka to a PAIA manual, insisting that her request for information should be made under the Promotion of Access to Information Act 2 of 2000 (PAIA). Ms. Mokoka, however, argued that her right to the information was governed by the Sectional Titles Schemes Management Act 8 of 2011 (Sectional Titles Management Act) and its associated regulations, rather than PAIA.

Arguments: The Montrose Mews trustees contended that any request for information by a member of the body corporate should be made under PAIA. They believed that their capacity to disclose information was regulated and constrained by PAIA and the Protection of Personal Information Act 4 of 2013 (POPIA).

Ms. Mokoka, on the other hand, maintained that her request fell under the body corporate’s management rule 26(2), which obliges it to make its books of account available for inspection and copying upon application by a member. She refused to submit a PAIA request, claiming she had a right to the information without having to initiate PAIA procedures.

Court’s Decision: Judge Wilson’s judgment focused on whether PAIA applied to Ms. Mokoka’s request for information and it concluded that PAIA does not apply in this context. The key points of the judgment are:

1. Nature of the Information Sought: The court recognised that Ms. Mokoka requested bank statements reflecting the state of Montrose Mews’ administrative fund and a statement of the fund’s expenditure for specific months. These are considered books of account under the Management Rules, which the body corporate is required to maintain.
2. Right Under Management Rules: Management Rule 26(2) grants members of the body corporate the right to access its books of account “on application.” The court noted that this rule is specific and separate from the general provisions of PAIA.
3. PAIA’s Scope: PAIA is intended to apply where a requester has no pre-existing legal right to the information sought. The court highlighted that PAIA is not meant to encumber statutory rights of access to information, such as those provided under the Sectional Titles Management Act and its regulations.
4. Redaction of Irrelevant Information: While Ms. Mokoka is entitled to access the bank statements, the body corporate may redact information not necessary for her to assess its financial situation. This includes personal information irrelevant to her assessment. The extent of redactions can be challenged on application to CSOS.
5. Costs: The court dismissed the application and ordered Montrose Mews to pay the costs on the ordinary scale, rejecting both parties’ requests for punitive costs.

Conclusion: This judgment clarifies that requests for information under the Management Rules of the Sectional Titles Management Act are not subject to PAIA. Members of a body corporate have direct rights to access necessary financial information, ensuring transparency and accountability within sectional title schemes. The ruling underscores the importance of understanding the specific legal frameworks governing information requests in community schemes and avoids the unnecessary procedural burdens of PAIA in these contexts. The processes for making applications and requests for information will be examined in more detail in Part 2, to follow next month.

Courtesy: Paddocks

Article reference: Paddocks Press: Volume 19, Issue 6.

Weblink: https://www.paddocks.co.za/paddocks-press-newsletter/obtaining-body-corporate-information/

This article is published under the Creative Commons Attribution license.