Sectional Title - Obtaining Body Corporate Information (Part Two)

By Graham Paddock

Image: Graham Paddock from Paddocks

The Distinctions between Member Requests and Applications under 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 ruled that members can use the body corporate’s management rules and do not have to use the Promotion of Access to Information Act 2 of 2000 (PAIA) when making application to inspect the body corporate’s financial records. This case highlighted the distinctions between obtaining information “on request” and “on application” within the framework of the Sectional Titles Schemes Management Act 8 of 2011 and its accompanying regulations. A more general report on this case was given in the previous edition of Paddocks Press.

The judgment explained the procedural nuances and rights of body corporate members regarding information access:

Direct Right of Access Under Management Rule 26(2): This rule provides members, unit bondholders and the managing agent with a direct right of access to the body corporate books of account and other records. This right is distinct from the general access provisions under PAIA.

“On Request” vs. “On Application”: A crucial aspect of the judgment was the distinction between obtaining information “on request” and “on application”:

“On Request”: This term is used in Management Rule 25(7)(3) and pertains to specific records such as debits and credits on a member’s account. These documents must be provided to the member upon simple request, signifying immediate and unconditional access.

“On Application”: Conversely, Management Rule 26(2) stipulates that access to books of account and records necessary to assess the body corporate’s financial situation must be made “on application.” This implies a formal process where the member must apply for access, allowing the body corporate some discretion in handling the request.

Implications of the Distinction: The distinction is significant because it delineates the procedural obligations of the body corporate and the rights of its members. While “on request” implies a straightforward, almost administrative provision of information, “on application” suggests a more controlled process where the body corporate can evaluate the necessity and scope of the information requested.

Practical Application

In the Montrose Mews case, Judge Wilson clarified that while members are entitled to access information to assess the body corporate’s financial situation, this does not grant unrestricted access to all details within the records. The body corporate retains the right to redact information not pertinent to the member’s assessment needs, particularly where personal information of other members or sensitive financial details are concerned.

Conclusion

This judgment deals with an important aspect of the administrative management of sectional title schemes, confirming the need for transparency that is not unduly delayed or unnecessarily frustrated while taking into account the body corporate’s potential need to protect sensitive information. It confirms that PAIA does not override the specific access rights provided under the prescribed management rules. It clarifies the legal framework that supports consumer protection rights and the importance of understanding the procedural distinctions between requests and applications under the management rules. To avoid having to explain these distinctions to every person who expresses a wish to obtain access to body corporate records, trustees and managing agents might consider having separate Request and Application forms that make the distinction clear. 

Courtesy: Paddocks Press

Cape Town, June 2024

Article reference: Paddocks Press: Volume 19, Issue 7.

Web Link: https://www.paddocks.co.za/paddocks-press-newsletter/obtaining-body-corporate-information-2/

This is the second article in a series of two. To read Part One click here.

This article is published under the Creative Commons Attribution license.