I have recently been asked if the PAJA applies to private companies such as a Home Owners Association or Sectional Title Scheme. The question stems from an article in “Die Burger”, 3 November 2018, titled “Die 3P’s – Voldoen julle hieraan”, Sectional Title Scheme expert Tertius Maree, briefly mentioned three Acts of which the acronym starts with the letter P; “POPI, PAIA, and PAJA”.
The “trustees” in a Sectional Title Scheme is the “Management Team” of the Body Corporate, and the failure of trustees to perform their duties will put the Body Corporate in breach of statute and could be held vicariously liable for the acts and/or omissions of the trustees.
Can trustees be held liable under PAJA when enforcing penalties without listening to both sides of the story?
While this might be the case, it is not the PAJA that would be applied, but the general principle of “audi alteram partem”. In any proceedings against someone, be it criminal or civil, it is trite to listen to both sides of the story in order to come to a reasonable, fair and justifiable conclusion.
The purpose of the PAJA is to protect the public from unjust administrative action by an Administrative entity such as a Body Corporate of a Sectional Title Scheme, but it also restricts the administrative action to criminal liability (strafregtelike aanspreeklikheid) and does not apply to civil liability (sivielregtelike aanspreeklikheid) while the matter is still “in-house” handled by the trustees.
Once it crosses the line and goes to Conciliation or Arbitration under the Community Schemes Ombud Act, 2011, the PAJA becomes applicable to the extent that it governs the conduct of the Ombud and its processes. The same would apply if the matter then goes to a court.
One of the conditional phrases to invoke the PAJA is that the “administrator” must be exercising a public power or performing a public function in terms of an empowering provision of an Act of Parliament. In the case of a juristic person, like a Sectional Title Scheme, which is not an organ of state, this “private entity” must be granted the power by a competent authority to enforce the law.
In terms of PAJA, an “administrator” is defined as any organ of state, natural or juristic person taking “administrative action”. For the purposes of PAJA, a Sectional Title Scheme is in fact a juristic person, registered under the Sectional Titles Act, 1971 and its functions are performed by Trustees.
The Trustees stands in a Fiduciary relationship to the Body Corporate and must take all reasonable steps to ensure the Sectional Title Schemes Management Act, and the “Rules” are complied with.
These “Rules” are made by the Scheme, and there are two parts, one dealing with the Management of the Scheme and the other with the Conduct of residents. The Scheme can make any rule it wants, but there are some “prescribed rules” that must be included as well as 10 types of rules it may not have at all.
Now when a resident breaks one of the “conduct rules”, and an administrative action is started, does it fall under PAJA?
In The High Court Of South Africa Kwazulu-Natal Local Division, Durban, Topping AJ in the matter of Singh v The Mount Edgecombe Country Club Estate Management Association Two (RF) NPC found the “relationship between the [Residents] (Applicants) and the [Body Corporate] (Respondent) accordingly has its foundation in contract and I am of the view that it is this contractual nature of the relationship between the parties that should provide the framework in which this application ought to be decided.”
The above matter dealt inter alia with speeding and the subsequent issuance of a fine. The Resident challenged the validity of a Conduct Rule which “authorise and empower the Body Corporate to police the road works within the Mount Edgecombe Country Club Estate Two, including the issuing of speeding fines and/or fines for otherwise contravening any law governing the control of traffic on public roads”.
The challenge was that the Body Corporate has not been authorised by the relevant authority to regulate the speed at which persons may travel on the roads within the estate, is not authorised to police the roads and enforce such speed limit by issuing speeding fines, or otherwise, and is, in any event, contravening every person’s right to equality, as defined in section 9 of the Constitution of the Republic of South Africa, by “haphazardly” applying the law and is also contravening the audi alterim partem principle by requiring residents to pay their fine prior to having a right of appeal.
The court subsequently dismissed the motion with costs, but on appeal, the rules were declared invalid ,suspended for 12 months to afford the Body Corporate time to apply to the competent authority for permission to act as law enforcement officers to enforce speeding within the Estate.
In the appeal, PAJA did not come into play, in that the Body Corporate in this instance performed a public function but it was in fact an unlawful administrative action although in a private law context. Hence the order to “get permission” to enforce the law, which will then make the PAJA applicable.
The view of the Rules of a Home Owners Association or Sectional Title Scheme being “private law”, was reinforced in Abrahams vs Mount Edgecombe Country Estate, a case that dealt with a 70kg St Bernard named Theordore, in which the court ruled that “Whilst rule 5.1.9 reiterates that local authority laws relating to the keeping of dogs must be obeyed, the special rules (for example with regard to the breeds and sizes of dogs [max of 20kg]), which the parties to the contract have agreed to superimpose on municipal law, have no public law content and do not involve the exercise of public power or the performance of a public function. The restrictions imposed by the rules are private ones, entered into voluntarily when electing to buy in the estate administered by the respondent, rather than elsewhere; presumably motivated inter alia by the particular attractions which the estate offers by reason of the controls imposed on it by contract. In my view PAJA finds no application in this case.“
But in the Abrahams case of Theodore, the court upheld that the Conduct Rule was valid and enforceable and ordered the dog to be removed from the Estate despite the fact that PAJA was not applicable.
In conclusion, the application of PAJA on Sectional Title Schemes is not a pure yes or no. If the intention of a rule is to protect the public interest and it is empowered by a competent authority, the answer would be yes, otherwise, PAJA will not apply.
Subsequent to these court rulings and other consultations, the Community Schemes Ombud on 1 August 2018 issued a Circular Notice for the evaluation of Sectional Title Scheme Rules.
The Rules that will automatically be invalid and not be approved by the Ombud, are anything that:
- Prohibits the slaughtering of animals for ritual purposes,
- Allows the disconnection of services for non-payment of levies
- Allows the imposition of fines without due process
- Allows the issuing of penatlies more than double the applicable monthly levies
- Termination of Lease by a trustee or on the instance of a trustee
- Use of specific, accredited or registered providers
- Referrals of disputes for arbitration
- Speed limitation and the issuing of fines in contravention of Chapter D of the National Road Traffic Act,
- Charging interest rates in contravention of the National Credit Act, and
- Any discriminatory rules against any person, particularly domestic workers.