The rules of the scheme will help to determine if fining rules can be imposed by the body corporate of a sectional title scheme. The penalty rule must be in the management rules or conduct rules in order for it to be enforceable.
In sectional title schemes, the body corporate first need to accept the fining rule. This must be accepted by way of a unanimous resolution if contained in a management rule and by way of a special resolution if contained in a conduct rule.
These must then be filed at the Community Schemes Ombud Service for them to be binding. A certificate of approval of the rules must have been issued by the Chief Ombud in terms of section 10(5)(c) & (d) of the Sectional Title Schemes Management Act.
Next, the penalty rule must be reasonable and fair otherwise it won’t be enforceable in terms of section 10(3) of the Act.
The purpose needs to be legitimate for a fine to be imposed for example, it could be for the purpose of preventing the breaking of rules and nuisances. Examples of transgressions could also be listed for the purpose of informing those in the scheme.
The procedure for imposing the fine should apply equally to all owners and occupiers in the scheme and must be reasonable. Trustees can be granted power to put a fine in place, however, the process cannot be deviated from as a result of the rule.
Common law rights to natural justice and due process can’t be ignored in place of the imposed rule.
When dealing with matters of transgression against the fining rule, the accused owner or occupier should be notified in writing and given an opportunity to represent themself at a trustee meeting so as to remedy the situation.
When a fine is imposed in a sectional title scheme, the complainants are required to lodge a written complaint or incident report to either the trustees or managing agent of the scheme.
A written notice of the complaint should then be sent to the owner or occupier who is then given an opportunity to respond to it.
All the details about the complaint should be supplied to the transgressor, namely, the nature of conduct in question and the section of the Sectional Title Schemes Management Act which was breached so that they can be fully informed about all facts pertaining to the complaint.
This will allow for them to defend themself against the complaint. It is also advised that a reference be included in the written notice so that the fine can be imposed if the problem persists along with a warning.
A second notice should be sent by the trustees to the owner or occupier if they continue to transgress.
This should highlight that the repeated conduct and that the person is invited to a trustee meeting where they can defend their actions. They should be given ample notice of this meeting so that they can prepare a defense.
The owner or occupier must be allowed to give their side of the situation at the meeting. They should also be allowed to call witnesses to support their facts and cross examine the executives witnesses.
Any representation made by the owner needs to be taken into account by the trustees. Before the fine is imposed, the opportunity for a hearing should be given.
The evidence from both sides should be discussed without the parties involved and after consideration has been given to the circumstances, a final decision can be made with regards to imposing a fine.
It is important for the rule to set out the amount of the fine that needs to be paid for each of the different categories.
Initial and subsequent fine amounts should be determined by the trustees, these should be approved of by the members in the general meeting.
This should be a reasonable amount proportionate to the purpose of the fine. The warning notice and the fine notice need to set out the amount that will be fined.
A fine cannot be imposed no matter the transgression if due process is not followed. As previously stated, the penalty rule and fining procedure must be reasonable, fair and should be applicable to all members of the scheme.
Warning letters and a hearing will be the first steps before the penalty procedure is to be correctly implemented.
The trustees cannot claim the imposed fine as part of the monthly instalments that the owner pays. The duty to pay fines should not be included with the duty to contribute to the administrative and reserve fund of the scheme.
Fines should therefore be a completely separate amount that is paid by the owner or occupier who it was imposed upon.
Contact us for expert legal assistance with any of your property related matters.
Subscribe to our Newsletter
Estate Agent Training
Bond & Transfer Calculator
Get the latest updates in your email box automatically.