Critical Perspectives on the Allocation of Participation Quotas to Sections in Mixed-use Sectional Title Schemes; the Adjustment of Quotas after Extensions to the Scheme by the Addition of Non-residential Sections; and the Modification of Quotas by the Body Corporate in Mixed-use Schemes

Author: CG van der Merwe

ISSN: 1996-2193
Affiliations: BA LLB BA (Hons) and BCL (Oxon) LLD, Research Fellow, Department of Private Law, Stellenbosch University, Emeritus Professor in Civil Law, University of Aberdeen
Source: Stellenbosch Law Review, Volume 31 Issue 2, 2020, p. 179 – 200


This tale of three courts tells the story of how three South African courts, starting with the Durban Division, followed by the Pietermaritzburg full court, and culminating in the Supreme Court of Appeal, addressed the tribulations encountered in a single mixed-use sectional title scheme. In a mixed-use scheme, the developer has unfettered discretion, first, to allocate quotas to each non-residential section in the scheme, and second, to allocate a percentage of the total participation quotas to the non-residential component of the scheme. The legislation intended that a fairer result would be achieved if par value, as opposed to floor area, were used for the allocation. I propose that the developer should be compelled to disclose the formula he or she employs, both for allocating quotas to commercial sections and for allocating the percentage to the non-residential component. This will facilitate the adjustment of, first, commercial sections’ quotas; and second, the initial percentage allocated to the non-residential component where that component is enlarged by the addition of a further commercial section to the scheme. In the instant case, this never happened, with dire consequences for the body corporate. The Sectional Titles Schemes Management Act 8 of 2011 allows the body corporate to modify the ratio for levy contributions by adopting a special resolution authorising the insertion of a modifying formula in the rules of the scheme. I contend that the insertion in a conduct rule, and not a management rule, would suffice. As the New South Wales and German legislative templates for the promulgation of the first Sectional Titles Act 66 of 1971 do not contain a proviso requiring the written consent of an owner adversely affected by the modification, I propose that this proviso should be eliminated and that the ombud service should be authorised to modify an existing method of allocation that is blatantly unfair and causes grave disharmony in the scheme.