What happens when certain conduct is not specifically prohibited by HOA agreements and rules?
In our recent article “Is it legal to charge fines for speeding transgressions in estates to a homeowner's levies?” we discussed the recent case in the Supreme Court of Appeal (“the SCA”), Mount Edgecombe Country Club Estate Management Association II RF NPC v Singh and Others 2019 (4) SA 471 (SCA) (“the Mount Edgecombe-case”). The Court held that Homeowner Associations (“HOAs”) (and Body Corporates by extension) are allowed to charge fines to the levies of homeowners for speed transgressions, seeing that the content of an HOA's Memorandum of Association (“MOI”) and conduct rules are contractual in nature, and therefore lawful and binding on the homeowners in that estate as parties to the contract. Since then, the topic has been hotly debated. This article serves to clear up some misconceptions and misinterpretations of the judgment in the Mount Edgecombe – case.
Public Roads or Private Roads – does it matter?
The first controversial part of the judgment that is often being misinterpreted, is whether the roads in an estate are in fact considered to be public roads or private roads. The significance of this, it is often argued, is that the National Road Traffic Act (‘the Act”) will be applicable where the roads are considered to be public roads, but will not be applicable where the roads are deemed to be private roads. It is not, however, that simple.
Firstly, the Court in this judgment held that the roads of this specific estate in question were private roads from inception, and that it never thereafter “acquire(d) the character of public roads”. The Court however did not, as is often argued, hold that all roads in estates are private roads; the Court only applied the test in determining whether the roads were public or private on the specific circumstances of the Mount Edgecombe estate (“the Estate”). It is conceivable that there could, in fact, be circumstances where the roads within an estate could still be found to be public roads when applying the test, for instance where the estate's gates are open for the general public during the day, or where it is a golf estate where the general public will have access to play golf without the invitation of one of the homeowners or residents (this example is, admittedly, debatable).
Secondly, (and this is often overlooked by debaters of the case), the Court held that even if the roads inside the Estate were deemed to be public roads, it could not be said that the Act will have preference just because the roads are classified as public. On this point, the Court held the following: “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”.
It follows that homeowners in an estate are therefore free to agree on more stringent rules than what is provided for in the common law or legislation of the country, for instance implementing a rule that the speed limit in the estate will be 40 km/h, where it normally will be 60 km/h in a residential area (as provided for in the Act).
But what if a certain type of misconduct is not regulated by the agreement?
The question arose what the position would be if a certain type of misconduct, which is normally perceived to be misconduct by the public in general, is not specifically mentioned or regulated in the MOI and/or rules of a private estate. An example would be where the parents of a 10-year-old child permits the child to drive a car in the estate, where the child obviously does not have the required license to do so outside of the private estate, but where this is not specifically prohibited by the estate's rules. Or to put it inversely: Will this conduct be acceptable where there is a specific estate rule that this is permittable in the estate?
It is a well-established rule of contract law in South Africa that provisions in a contract which is against the public interest or good public morals (contra bonos mores) will be void or unenforceable. This means that the homeowners would not be able to agree with each other that in their estate, it is legal to, for argument's sake, use illegal drugs or to beat people up in the estate.
Given the example above of the minor child driving without a license, it is our opinion that this will not be permissible, even if the MOI or conduct rules of a private estate provides that it is. This is because the agreement between homeowners in that estate will then provide for less stringent rules than what is already provided for in the country's common law and/or legislation, and would therefore be against the public interest. It also means then that where specific conduct is not expressly provided for in the estate's rules, the common law and/or legislation of the country will be applicable.
The Court in the Mount Edgecombe-case argued this point as follows: “It cannot be said that ordaining a lower speed limit within the estate than that prescribed by national legislation goes beyond promoting, advancing and protecting the interests of the appellant's members or is unreasonable. This is especially so given the presence of children, pedestrians and animals (both domesticated and undomesticated) upon or in the immediate vicinity of the roads themselves. Rule 7.3.2 goes no further than to record that the operating of any vehicles in contravention of the Act within the estate is prohibited. I fail to see why that would be objectionable…The mere fact that the rules provide additional contractual requirements for the operation of vehicles on those roads does not mean that the rules themselves have a public-law content. Nor does the enforcement of those contractual obligations involve the usurpation of public power. Statutory obligations on members of the public generally are obviously enforceable by the relevant authorities. Contractually binding regulations are enforceable by the parties to the contract, and against them only. There is therefore no conflict between the Act and the rules of the Association, agreed to privately. The position may have been different if the Association had sought to appropriate powers under the Act. That it did not do. With notice to its members and with their agreement, the Association, for good reason, chose to impose a consensual limit of 40 km/h. That left untouched the limit of 60 km/h. In that, the mischief sought to be addressed by the Act was achieved, in as much as 40 is less than 60 km/h” (our emphasis).
From the above quotation of the judgment, it is our opinion that the inverse could be adduced, i.e., that private estate rules providing for less stringent controls than provided for in the country's common law or legislation, will not be enforceable. It is, however, important to understand that where the agreement or the rules do not prohibit a specific action, the HOA will not be able to issue a fine for that misconduct. If the misconduct is against the law of the land, they will at best be able to lay a charge against the perpetrator at the Police, as per normal.
Following the judgment in the Mount Edgecombe-case, it is now established in South African law that homeowners in private complexes or estates are free to agree upon their own rules to regulate the residents' conduct. The rules will however not be enforceable, as being against the public interest, when they provide for less stringent measures than that provided for in the country's common law and/or legislation.
HOAs and Body Corporates should however ensure that the agreements and rules are drafted properly should they wish to be able to issue fines for specific conduct. If the undesirable conduct is not specifically prohibited, fines cannot be legally issued. It is always best to consult with experienced legal practitioners to ensure that provision is made for all eventualities.
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.