Breakthrough for bodies corporate

The only approach to collecting arrear levies and utilities in sectional title schemes has been to follow the laborious debt collection process and wait your turn.

Judgments and more im-portantly, attachments can take years to be effected.

In the time it takes to get a judgment, arrear levies can increase exponentially.

In the past, a body corporate could not disconnect electricity and water when faced with the prolonged non-payment of utility accounts.

This could all but sink a body corporate… until now, said Michelle Dickens, managing director of Tenant Profile Network (TPN) Credit Bureau, who with lawyer Peter Mennen, an associate of SSLR Inc, launched an application in the South Gauteng High Court on behalf of a body corporate who were owed R67 937.58 by owners.

The application included a claim that should the owners not settle the debt immediately and in full, the body corporate could mandate contractors to terminate the electricity and restrict the water supply to the premises.

The court found in favour of the body corporate and ordered the immediate payment of all arrear amounts.

More importantly, the court held that a contractor could be appointed to disconnect the electricity should the payment of the outstanding electricity bill not be made in full.

As for the other utilities, the body corporate was authorised to limit the water supply to six kilolitres a month unless payment was received in full.

The judge was definitive in his ruling. He said that for juristic entities and individuals, the argument that the supply of utilities should be subsidised where the occupant refuses to make payment of amounts legitimately owed was without merit.

This means that no body corporate or individual can be expected to subsidise the utility supply where the occupant is required to refund the owner or the body corporate for their usage. The judgment gives owners and body corporates the power to mitigate damages and collect outstanding amounts more expediently.

Ms Dickens explained that in a predominantly consumer driven environment, where the tenant has been granted ample protection, the courts are finally starting to take cognisance of economic realities and starting to also consider the needs of landlords, agents and body corporates.

“The true impact of this judgment lies in the fact that not only can the body corporate immediately disconnect the utility supply in order to mitigate its damages, it can immediately issue a warrant of execution in respect of the outstanding amounts,” she said.

Mr Mennem issued a warning: “It is essential to remember that a court order is always required before any utilities may be disconnected or restricted. This is regardless of whether the property is a commercial, retail or a residential property.”

* Visit www.tpn.co.za or follow TPN on Twitter @tpnadvice for information.