Court’s decision a ‘wake-up call’ for sectional-title schemes
A RECENT court case has reinforced the fact that the body corporate of a sectional-title scheme is responsible for the maintenance and upkeep of the common property and may be liable for damages if its negligence in this regard results in personal loss or injury.
This means that, if you are an owner of a sectional-title property, you are partly responsible, as a default member of your body corporate, to ensure the scheme as a whole is well maintained and, as a safety measure, that it has liability insurance in place.
Although the property management function may be outsourced to an agent, the responsibility for maintenance ultimately lies with the body corporate and its board of trustees.
The “common property” comprises areas and structures in the scheme that are commonly used by the residents and that do not fall within any owner’s sectional-title unit. In the case of a townhouse development, it may include a clubhouse, swimming pool, common sports or play areas, roads and an outer boundary wall. In the case of a block of flats, it would include the outer structure of the building, stairwells, corridors and lifts.
The monthly levy paid by owners to the body corporate primarily covers the maintenance of the common property.
In a case decided by the Western Cape High Court last month (Eze v Adderley Body Corporate and Another), a man successfully sued a body corporate for compensation after part of a wooden ceiling structure fell on him, injuring him.
On March 16, 2016, Stephen Eze, a Nigerian who had lived in South Africa for 11 years, was walking to his uncle’s shop in Adderley Street, Cape Town, when he was struck by falling wood from the ceiling that overhangs the pavement adjoining the Adderley Building.
While no-one witnessed the wood falling from the ceiling, the property manager of the Adderley Building, who had arrived on the scene almost immediately, testified that the ceiling had been in a state of disrepair at the time – there was a hole in it, caused by water damage – and the body corporate had been aware of it.
In her judgment, Judge Constance Nziweni said the body corporate had a “duty of care” to keep the building in a clean and safe condition, that it was regularly inspected and maintained, and any defects promptly repaired, and that the public be alerted through warning signs of defects and safety risks, and prevented from walking in dangerous areas.
She said it could not have been a mere accident that falling timber had injured Mr Eze.
“While it is undeniable that there is nothing extraordinary about a person being injured by a fruit falling down from a tree, it is equally undeniable that it is unusual for a person to be injured by an object falling down from the ceiling.
“Planks do not ordinarily fall from a ceiling if proper care has been taken to see that the ceiling is safe,” the judgement said.
Therefore, it was obvious that, “in the ordinary course of things, the presence of a hole in the ceiling and fall of rotten planks from the same hole do not occur in the absence of negligence”.
The judge ordered the defendants, the Adderley Body Corporate and its managing agent, Permanent Trust Property Management, to pay damages to Mr Eze for the injuries he suffered and his costs of the lawsuit.
In a blog on the case, law firm STBB commented: “This is a wake-up call for trustees to properly deal with their responsibility to keep the buildings in the scheme in good repair. Failure to do so can be found to be negligent and saddle the scheme with unexpected additional expenses.”
As insurers, we could loftily argue that it is our duty to protect against possible moral hazard, but what this stark lens at times misses is that, when you’re serving a country whose socio-economic status reads as “it’s complicated”, you cannot be too prescriptive in how you apply these concepts, and you need to constantly exercise contextual judgement.
One better than this comprehension is intentionally designing products that speak to the realities of our market – for example, by offering flexible payment mechanisms on the understanding that many policyholders form part of the informal economy and don’t get a salary on a fixed date every month.
We have often heard funeral plans referred to as “township savings policies”. This term is used cynically, epitomising a very short-sighted view of the market and how these products are typically utilised.
As long as people are not venturing outside the legal parameters of our policies, insurers need to understand that our clients are not being dishonest; they’re using their insurance to survive. If you had spoken to the uncle when he was still alive, he might have told you that his legacy was for his family to be kept safe and warm.
To help his nephew get a good education. To buy his brother shoes that might impress a prospective employer and help his sibling put food on the table.
Had he been alive and could have helped them all, he would have – and they, in turn, would do the same for him. This culture of reciprocity is one that is deeply engrained within the African psyche and is something that we, as insurers, should acknowledge and celebrate, rather than ignore or red tape away.
Hieckmann is the executive: strategy, business transformation and business optimisation at Metropolitan.
which may not allow you to retire comfortably. SARS allows taxpayers to save a maximum of R36 000 per tax year and R500 000 in your lifetime tax-free and there are tax implications for overcontributing. You can incur a tax penalty of 40% on any amount over the contribution limits.
There are also estate-planning benefits. If your TFI is structured as a life policy, the investment can be paid to your beneficiaries immediately and there are no executor fees.
Maximise your tax benefits
Ultimately, it’s up to investors to decide which investment vehicle best suits their needs. It’s not necessarily an either/or decision. Combining an RA with a TFI might provide the best outcome from a liquidity and tax-saving perspective since it offers the best of both worlds.
I urge investors to speak to their financial advisers well before February 29 if planning to make use of the tax concessions.
Annual tax benefits are forfeited if you don’t make use of them before the tax year-end. Make sure you send your instructions, supporting documents and payment well before the deadline.
Rossouw is the head of tax at Allan Gray.