Sectional Title Body Corporate Rules - 1

An analysis of the various types of rules and a comparison with other types of regulation, leading to an examination of short-term letting rules.

1. REQUIREMENT FOR BODY CORPORATE RULES
The Sectional Titles Schemes Management Act, No. 8 of 2011 ("the STSM Act") requires that all schemes, as from the date of establishment of their bodies corporate, must be regulated and managed by means of rules.¹

2. FOUR TYPES OF RULES
The STSM Act allows a scheme developer or a body corporate to make:
2.1. management rules,
2.2. conduct rules,
2.3. exclusive use rules, and
2.4. rules that modify the variable effects of the participation quotas.²

3. NATURE OF RULES
Historically there has been debate as to the nature of body corporate rules (“rules”). The STSM Act deals definitively with this issue. Its regulations provide that these rules must be considered to be laws made by and for the body corporate of a scheme, and require that they be interpreted as such³. It is now clear that rules are not agreements between the members of the body corporate, and their application and enforceability is not dependent on member agreement.

4. STATUTORY REQUIREMENTS FOR RULES
Rules must:
4.1. be reasonable,
4.2. apply equally to all owners of units,⁴ and
4.3. be appropriate to the scheme.⁵

5. BINDING FORCE OF RULES
Rules bind the body corporate, the owners of sections and any person, such as a tenant, who occupies a section,⁶ but they do not bind any other person. Members are obliged to take all reasonable steps to ensure that their employees, guests, visitors, and any family members who occupy or visit, comply with the body corporate’s conduct rules,⁷ but not with its management rules.

6. BODY CORPORATE RESPONSIBILITIES IN REGARD TO RULES
The body corporate of a scheme is responsible for the enforcement of its rules and for the control, administration and management of the common property for the benefit of all owners. ⁸ It:
6.1. must perform the functions entrusted to it by or under its rules, and
6.2. may exercise the powers conferred upon it by or under its rules.⁹

7. IMPORTANCE OF RULES
Parliament has decided that a body corporate must:
7.1. keep a copy of all rules,
7.2. have the rules available for inspection at trustee and member meetings, and
7.3. deliver copies of the rules to all section owners and occupiers when they first arrive and when the rules are changed,¹⁰
7.4. compile and keep a complete set of all rules, including an index and a prominent reference to any rules that:
7.4.1. confer exclusive use rights,
7.4.2. vary the effects of the participation quotas in regard to the value of votes or the liability for contributions, or
7.4.3. impose a financial or a maintenance obligation on members.¹¹.
In addition, a prejudiced owner has the right to approach the High Court for relief when a body corporate fails to take steps to enforce its rules.¹²

8. SCOPE OF THE POWER TO MAKE RULES
8.1. A body corporate is not entitled to widen the purpose and object of its legislative authority to make rules. This scope is detailed in sections 10 (2) (a) and (b), 10 (7) and (8) and 11 (2) of the STSM Act.

8.2. The body corporate’s rule-making authority is limited to making and amending subsidiary legislative provisions that give effect to and apply the principles established in the STSM and ST Acts.

8.3. The body corporate’s primary function is to control, administer and manage the scheme’s common property, for the benefit of all owners. This is clear from the repeated use of these terms in sections 2 (5), 3 (1) (t) and 4 (i) of the STSM Act. These provisions do not give the body corporate the jurisdiction, function or power to regulate behaviour in sections or dealings with units. However, 10 (2) of the STSM Act has a wider scope and, in giving the body corporate the power to make management and conduct rules, refers to both sections and the common property.

The wider scope of this provision is necessary because the conduct of persons in sections, and not only on the common property, can negatively affect others and may need to be regulated, as it is regulated in the STSM Act and in the prescribed conduct rules.

8.4. Section 10 (2) of the STSM Act in effect gives the body corporate incidental jurisdiction to make rules regulating behaviour within sections, but only when this could be a nuisance to occupiers in other sections or on the common property. The STSM Act also entitles the body corporate to access sections when this is necessary for an inspection, to do maintenance work on items the body corporate must maintain or to ensure that the provisions of that Act and the rules are being observed.¹³

8.5. The STSM Act does not include any provision that authorises the body corporate to regulate owners in their dealings with units, such as unit sales, transfers, mortgages or leases.

9. REGULATION MAY INCLUDE RESTRICTION, BUT NOT PROHIBITION
The interpretation of the word “regulation” used in section 10 (2) of the STSM Act must not be extended to incorporate the concept of “prohibition” or to imply that rules can take away sectional owner’s existing property rights. “Regulation” means “the action or process of regulating a thing or person” while “prohibition” means “the action or an act of forbidding a thing or person” .¹⁴

10. RULES CANNOT RESTRICT UNIT DEALINGS OR SECTION USES
10.1. While a rule can regulate behaviour that is likely to give rise to a nuisance or an abuse of rights which is prohibited in terms of the STSM Act, a rule cannot add to the provisions in that Act or the Sectional Titles Act, No. 95 of 1986 (“the ST Act”) that restrict dealings with units or prohibit the use of sections for particular purposes.

10.2. Where Parliament has decided that it is necessary to restrict an owner’s right to deal with a unit or to limit the purposes for which a section can be used, it has done so expressly in the text of the STSM or the ST Act, for example by:
10.2.1. placing an embargo on the transfer of a unit without a body corporate clearance certificate.¹⁵
10.2.2. making sections subject and entitled to implied servitudes of lateral and subjacent support ;¹⁶
10.2.3. requiring the authority of a body corporate or trustee resolution to extend, subdivide or consolidate a section,¹⁷
10.2.4. prohibiting the use of a section, exclusive use area or the unregulated common property so as to cause a nuisance or other interference with the rights of other owners or occupiers, and¹⁸
10.2.5. prohibiting the use of a section or exclusive use area for an inappropriate purpose.¹⁹

10.3. There is no section in the STSM Act that gives a body corporate the power to:
10.3.1. further restrict an owner’s right to deal with a unit, or
10.3.2. further limit an owner’s right to use a section.

11. DIFFERENCE BETWEEN MANAGEMENT AND CONDUCT RULES
11.1. The purpose of a body corporate’s management and conduct rules is collectively described in the introduction to section 10 (2) of the STSM Act. These two sets of rules “must provide for the regulation, management, administration, use and enjoyment of sections and common property”. This requirement refers to both common property and sections, but not to units. The scope initially appears to be wide, giving the body corporate the power to regulate its own operations and any aspect of the use of the common property and of sections. However, as a statutory provision that serves to limit the rights of individuals, this phrase must be interpreted narrowly and in the context of the STSM Act.

11.2. In the original Sectional Titles Act  ²⁰ body corporate rules were referred to as “Schedule 1” and “Schedule 2” rules.²¹ In the ST and STSM Acts, Parliament distinguished between the body corporate’s two sets of prescribed rules, describing them as “management” and “conduct” rules respectively. It has been argued that a developer or body corporate can include rules that deal with either management or conduct in either set of rules. However, there is a common law presumption that statutes do not contain purposeless provisions. The legislature’s decision to apply different descriptions to each of these sets of rules, already distinct on the basis of how they can be amended, must be taken into account in determining what types of provision can be included in each set.

11.3. The word “management”, used to qualify “rules” in section 10 (2) (a) of the STSM Act, means “the actions and manner of managing” or “the administration of (a group within) an organization” . ²² Accordingly, a “management rule” must be a provision that controls or regulates the functions and powers of the body corporate.

11.4. The word “conduct”, used to qualify “rules” in section 10 (2) (b) of the STSM Act, means a “manner of conducting oneself or behaviour” .²³ Accordingly, a “conduct rule” must be a provision by which the body corporate regulates, manages or administers the behaviour of owners and occupiers in their use and enjoyment of the common property, including exclusive use areas, and of sections.

12. REQUIREMENTS FOR MANAGEMENT RULES
12.1. The prescribed management rules regulate the operations of the body corporate and its members. They do not impose any behavioural obligations on persons in their capacities as owners or occupiers of units. They do deal indirectly with behavioural obligations, but only to the extent that they:
12.1.1. oblige members to take reasonable steps to ensure that their employees, tenants, guests, visitors and family members comply with the scheme’s conduct rules ;²⁴
12.1.2. impose obligations on the body corporate to ensure that members and other occupiers do not do specified things that would conflict with their statutory or common law obligations;²⁵ and
12.1.3. allow the body corporate to carry out section maintenance if an owner fails to do so and the work is necessary to protect the interests of other owners.²⁶

12.2. Any management rule made by a developer or the body corporate must and can only deal with the regulation, management and administration of the body corporate and the rights and obligations of its members. These rules must serve to expand on or fine-tune the “management” provisions of the STSM Act, being sections 2 to 9, 16 and 17 of that Act, for that particular body corporate.

12.3. Subject to the statutory requirements set out in 4, a management rule:
12.3.1. can regulate any issue relevant to how the body corporate is managed, including the appointment, functions and duties of its trustees and the rights and obligations of its members as such,
12.3.2. can include positive and negative obligations on the body corporate, chairpersons, trustees and members, obliging or entitling them to do particular things and restricting their right to do other things,
12.3.3. can confer exclusive use rights²⁷ or impose either a financial or a maintenance obligation on an owner, ²⁸ but
12.3.4. must not conflict with any provision of the STSM or ST Acts, or of any other law, and
12.3.5. cannot validly impose rights or obligations on members in their use and enjoyment of sections, exclusive use areas and the common property, because such provisions can only be included in the conduct rules.

13. REQUIREMENTS FOR CONDUCT RULES
13.1. The prescribed conduct rules regulate the behaviour of owners and occupiers in their use of the common property, an exclusive use area and their sections. These rules expand on and are directly related to the “conduct” provisions of the STSM Act that restrict owners’ rights to use and enjoy their sections, exclusive use areas and the common property, namely sections 13 (1) (a), (d), (e) and (g) of that Act. These provisions oblige owners to use sections, exclusive use areas and unregulated common property without causing nuisance and to use the common property reasonably, without interfering with the rights of other owners and occupiers.

13.2. Any conduct rule made by a developer or the body corporate must and can only deal with the use of sections, exclusive use areas and common property by owners and occupiers.

13.3. Subject to the statutory requirements set out in 4, a conduct rule:
13.3.1. must regulate and/or manage the behaviour of owners in their use and enjoyment of their sections, exclusive use areas or the unregulated common property, ²⁹
13.3.2. can include positive and negative obligations on owners and occupiers, obliging or entitling them to do particular things and restricting their right to do other things,
13.3.3. must serve to support the body corporate’s right to enforce one or more of an owner’s obligations in terms of sections 13 (1) (a), (d), (e) and (g) of the STSM Act,
13.3.4. must be in the best interests of the owners in the scheme, supporting the quality of life of occupiers and/or the value of the units,³⁰
13.3.5. can confer exclusive use rights³¹ or impose either a financial or a maintenance obligation on an owner, ³²
13.3.6. must not conflict with any provision of the STSM or ST Acts, of any other law or of any provision in the prescribed management rules,³³
13.3.7. must not be any wider in its scope than is necessary to address a mischief that has been experienced or is reasonably anticipated in that particular scheme,
13.3.8. must not limit any owner’s right to use a section, an exclusive use area or the common property unless the limitation is contingent on and directly related to the owner’s breach of one or more of his or her obligations in terms of the STSM Act and the provision is a rational and proportionate response to the harm that would be suffered by the body corporate, owners or occupiers as a result of the breach,³⁴ and
13.3.9. cannot deal with a body corporate management issue, because such a provision can only be included in the management rules.

14. REQUIREMENTS FOR EXCLUSIVE USE RULES
14.1. An exclusive use rule, which may be either a management or a conduct rule, must and can only “confer rights of exclusive use and enjoyment of parts of the common property upon members of the body corporate”. ³⁵ This type of rule regulates the use of specified parts of the common property by conferring an exclusive right to use that part of the co-owned common property for a specified purpose; it thus excludes the rights of all other co-owners to use that area.
14.2. An exclusive use rule must:
14.2.1. confer exclusive use rights on one or more members of the body corporate;

14.2.2. specify a particular purpose for the use of each exclusive use area, and
14.2.3. include a scale layout plan showing the location of each exclusive use area. ³⁶

14.3. An exclusive use rule may include provisions:
14.3.1. requiring the holder of the exclusive use rights to make additional contributions to defray the body corporate’s costs incurred in insuring and maintaining the exclusive use area ,³⁷
14.3.2. regulating the body corporate’s and the member’s respective roles in maintenance and repairs in the area, bearing in mind the body corporate’s statutory obligation to maintain all the scheme’s common property,  ³⁸ and 14.3.3. regulating any other aspect that arises directly from the use and enjoyment of the exclusive use area, for example the installation, servicing and maintenance of an item such as an air-conditioning unit, gas cylinders, a water tank or a solar panel, the trimming of tree branches and roots or the maintenance of a fence or wall between exclusive use areas.

15. REQUIREMENTS FOR RULES THAT MODIFY THE EFFECTS OF PARTICIPATION QUOTAS
A rule made in terms of section 11 (2) (a) of the STSM Act must and can only modify one or more of the variable effects of the participation quotas. The developer or body corporate may make rules that:
15.1. allocate a different value to a section owner’s vote, and/or
15.2. modify the liability of the owner of any section to make contributions to common expenses ³⁹ or the body corporate’s unsatisfied judgment debts,⁴⁰ and
15.3. include provisions regulating issues that arise from these modifications.

Graham Paddock
Cape Town, September 2020

Notes

1. Section 10 (1) of the STSM Act.
2. Sections 10 (2) (a) and (b), 10 (7) and (8) and 11 (2) of the STSM Act.
3. Regulation 6 (1) under the STSM Act.
4. Section 10 (3) of the STSM Act.
5. Section 10 (5) (b) of the STSM Act.
6. Section 10 (4) of the STSM Act.
7. Prescribed management rule (“PMR”) 3 (2).
8. Section 2 (5) of the STSM Act.
9. Section 4 of the STSM Act.
10. Section 10 (6) of the STSM Act and PMR 18 (3) (c).
11. PMR 27 (1) (b).
12. Section 9 (1) (b) of the STSM Act.
13. Section 13 (1) (a) of the STSM Act.
14. Shorter Oxford English Dictionary.
15. Section 15B (3) (a) (i) (aa) of the ST Act.
16. Section 28 of the ST Act.
17. Section 5 of the STSM Act.
18. Section 13 (d) and (e) of the STSM Act.
19. Section 13 (g) and (2) of the STSM Act.
20. Sectional Titles Act, No. 66 of 1971.
21. Section 27 (2) of the repealed Sectional Titles Act, No. 66 of 1971.
22. Shorter Oxford English Dictionary.
23. Shorter Oxford English Dictionary.
24. PMR 3 (2).
25. PMR 30.
26. PMR 31.
27. Section 10 (7) of the STSM Act.
28. See PMRs 27 (1) (b) (ii) and 31 (1).
29. Section 10 (2) of the STSM Act.
30. See section 2 (5) of the STSM Act.
31. Section 10 (7) of the STSM Act.
32. See prescribed management rules 27 (1) (b) (ii) and 31 (1).
33. Proviso to section 10(2)(b) of the STSM Act.
34. Section 25 (1) of the Constitution of the Republic of South Africa Act, No. 108 of 1996.
35. Section 10 (7) of the STSM Act.
36. Section 10 (8) of the STSM Act.
37. Proviso to section 3 (1) (c) of the STSM Act.
38. Section 3 (1) (l) of the STSM Act.
39. Section 3 (1) (a) of the STSM Act.
40. Section 14 (1) of the STSM Act.

For Part 2 see Sectional Title Body Corporate Rules - 2