A discussion of Mount Edgecombe Country Club Estate Management Association II RF NPC v Singh and Others 2019 (4) SA 471 (SCA)

If you live in an estate, you probably have first-hand experience of the following scenario: You invite all your friends for a braai at your place to celebrate your birthday and to watch the game. Your buddy Jan decides to drive home that night, despite the fact that you urged him to rather use an Uber. At the end of the month when you receive your levy bill from the Homeowner's Association (“HOA), you notice that it is R1,500 more than usual. On further enquiry, the HOA send you a photo of Jan's car, stating that he drove in the estate at 70km/h on the date of the braai, while the speed limit in the estate is only 40km/h. Is this legal? Is the HOA allowed to add the speed fine to your levy? These questions were answered by the Supreme Court of Appeal (SCA) in the Mount Edgecombe – case.

The First Respondent in that case, Mr. Singh, was a homeowner in Mount Edgecombe Country Club Estate Two (“the Estate”). The Apellant, Mount Edgecombe Country Club Estate Management Association II RF NPC, was an association of homeowners managing the Estate (“The Association”).

The Association's Memorandum of Incorporation (“MOI”) made it obligatory for all homeowners of the Estate to be members of the Association. Relevant clauses of the MOI and conduct rules of the Estate are stated as follows:

Clause 20.1: “The Directors shall have the power to make rules from time to time as well as the power to substitute, add to, amend or repeal same, for the management, control, administration, use and enjoyment of the Estate, for the purpose of giving proper effect to the provisions of the Memorandum and for any other purpose which powers shall include the right to impose reasonable financial penalties to be paid by those Members who fail to comply with the provisions of the Memorandum or the rules.”

Clause 21.1.1: “The Directors may take or cause to be taken such steps as they may consider necessary to remedy the breach of any rules of which a Member may be guilty and debit the costs of so doing to the Member concerned which amounts shall be deemed to be a debt owing by the Members to the Company. In addition, the Directors may impose a system of penalties. The amounts of such penalties shall be determined by the Board from time to time.”

Rule 13.1.11: “Penalties imposed for the breach of or non-compliance with the rules shall be deemed to be part of the levy due by the owner”.

Rule 13.1.10: “Should any resident be aggrieved by any decision made by the Estate Management, he/she may, after having first paid the penalty, lodge an appeal within 7 days of the penalty being paid, to the Board through the Estate Manager. The appeal should contain sufficient facts and/or information relating to the matter which the resident concerned believes would justify a finding by the Board which is different to that imposed by the Estate Management.”

In October 2013, the daughter of Mr Singh was issued three contravention notices for exceeding the estate's speed limit of 40km/h. In all three cases, a penalty of R1,500 was imposed and charged as part of the levy of Mr Singh as homeowner. Mr. Singh appealed against the first two penalties, but not the third. His appeal on only one of the contraventions was successful. He was therefore required to pay R3,000 in penalties for the other two, which he refused to do. The Association subsequently deactivated the access cards and biometric access of Mr Sing and members of his household.

Mr. Singh brough an urgent application in the Durban High Court for spoliatory relief (an order that his access to the Estate must be restored). He furthermore launched an application challenging the legality of some of the Estate's conduct rules, including the so-called “road rules” which empowered the Association to police the road network within the estate. The Court granted the spoliation application, ordering the Association “to re-activate the [first respondent's] access cards and the biometric access of his family”. The Court however dismissed the application challenging the legality of the rules.

Mr. Singh appealed against the dismissal of the application to the full bench of the Court. This appeal was successful, the Court declaring the applicable conduct rules unlawful. The Association then appealed against the order of the full Court to the SCA, insofar as it related to the “road rules”, which stated as follows:

Rule 7.1.2: “The speed limit throughout [the estate] is 40 km/h. Any person found driving in excess of 40 km/h, will be subject to a penalty. The presence of children and pedestrians as well as many undomesticated animals such as buck, monkeys, mongoose, leguaans and wild birds means that drivers need to exercise additional caution when using the roads”.

Rule 7.3.2: “Operating any vehicle in contravention of the National Road Traffic Act within the estate is prohibited”.

The essential question before the Courts was whether the roads in the estate were deemed to be public roads, and therefore subject to the National Road Traffic Act (“the Act”), or whether they were private roads. The Courts below the SCA accepted a concession by the Associations' Counsel that the roads in question were public roads and that the Act was therefore applicable. The full Court therefore held that in agreeing, as between members, speed limits, the erection of traffic signs and installation of speed humps, the Association was seemingly taking over the functions reserved exclusively for the authorities under the Act, and that its conduct in so doing was therefore unlawful.

Before the SCA, the concession that the Estate's roads were public roads was withdrawn as being “erroneously made”. The SCA found that the roads in the Estate were indeed private roads, stating as follows in paragraphs 14 and 15 of that judgment:

“At the inception of the estate, the roads within the estate were private roads. That never changed. The roads did not thereafter acquire the character of public roads. The estate is enclosed by a two-metre-high palisade fence, which is topped with electrified security wiring. All ingress and egress to the estate are strictly controlled. Gated access points are controlled by security guards. Visitors are required to provide the guards with an access code to gain entry to the estate. In respect of owners, biometric scanning is employed. This de facto situation accords with clause 34.9 of the MOI, which provides that the Association is obliged to provide such security in the estate as it deems appropriate, ‘including such security as may be required to control egress and ingress to the Estate, so that only Members, Lessees of Units, guests or invitees, authorised representatives, employees of the [Association] and any other duly authorised persons may be admitted'.

The general public does not have access to the roads within the estate. In this context the word ‘public' does not include persons who are there with the permission of the owners of property within the estate. The public, so it has been held, must be the general public, not the special class of members of the public who have occasion for business or social purposes to go to the estate, and the use of the roads by the public must be more than mere casual or isolated use.”

The SCA however held that, even if the roads of the Estate were deemed to be public roads, the reasoning of the full Court could not be accepted. The Court stated the following in paragraphs 19 and 20 of the judgment:

“[19] When the respondents chose to purchase property within the estate and become members of the Association, they agreed to be bound by its rules. The relationship between the Association and the respondents is thus contractual in nature. The conduct rules, and the restrictions imposed by them, are private ones, entered into voluntarily when an owner elects to buy property within the estate. By agreement, the owners of property within the estate acknowledge that they and their invitees are only entitled to use the roads laid out within the estate subject to the conduct rules. Any third party invitee only gains access to the estate with the prior consent of the owner concerned. Upon gaining access to the estate, responsibility for any breach of the conduct rules by the invitee is that of the owner. In that regard clause 21.2 of the MOI provides: ‘In the event of any breach of the conduct rules for residents by any Lessees of Units, guests or invitees, authorised representatives or any other duly authorised person such breach shall be deemed to have been committed by the Member and the Directors shall be entitled to take such action asthey may deem fit against the responsible Member.'

[20] Any breach of the conduct rules is therefore a matter strictly between the owner concerned and the Association. No sanction is imposed on the third party. The third party's adherence to the rules is thus a matter for the owner who invited him or her onto the estate. It is the owner who has to ensure that the third party complies with the conduct rules or bear the consequence of any sanction imposed in consequence of such non-compliance. There is nothing in the rules which provides for any consequence for a third party who fails to comply therewith. The control of the speed limit within the estate therefore falls squarely within the provisions of the contract concluded between the Association and the owners of the properties within the estate. The rules are obviously enforceable only as between the contracting parties, and not against the public at large.”

It follows that the content of an HOA's MOI and conduct rules are contractual in nature, and therefore lawful and binding on the homeowners in that estate as parties to the contract, for as far as the normal principles of the law of contract apply. The answer to the question of whether fines for speed transgressions by homeowners' guests in estates may legally be charged to the homeowner's levy, can therefore be found in the wording of the estate's MOI and conduct rules. Like any other contract between parties, the content thereof should be scrutinised carefully, and any concerns should be raised first before signature thereof. It is always a good idea to gain legal advice in this regard, too. The content of these documents could, of course, be challenged by using the normal principles of the South African law of contract, and the normal contractual remedies will be available depending on the nature of the dispute.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.