Cape Town – The Gardens Lodge Body Corporate has been found to have charged a complex unit owner a “patently exorbitant” rate on outstanding levies and/or interest.
In the Supreme Court of Appeal (SCA), Norbert Ketzer challenged the body corporate on an amount of R233 383, with interest at the rate of 34.8% per annum, compounded monthly for September 2012 until July 2014.
The claim was based on “outstanding levies and/or interest and/or costs”, of four units within the sectional title scheme administered by the body corporate.
In an affidavit, Ketzer complained that the claim included interest at an exorbitant rate of 38.4% and impermissible charges for “legal monitoring” and collection charges.
“Simply put, interest was capitalised and the capital amount shown as the opening balance in each successive month included both the interest and the other charges.
“The total amount of R233 380 claimed, thus comprised these constituent parts,” the SCA judgment read.
Earlier, the Cape Town Magistrate’s Court had found the claim for outstanding levies in respect of the four units, was “a very simple, straightforward claim”.
The case then went to the Western Cape High Court, which the SCA said had disregarded the contents of a document obtained by Ketzer from the Registrar of Deeds, which appeared to be a unanimous resolution of the trustees of the body corporate, circumscribing the rate of interest and the charges that may be imposed.
Acting Judge of Appeal Zeenat Carelse said: “Before us, the body corporate presented for consideration a recalculation based on the prime bank rate plus 2% which, it was submitted, amounted to a total of R184 103 being due rather than the R233 380 that was initially claimed.
“The offer to recalculate is, regrettably, too late. Mr Ketzer cannot, at this late stage, contest the recalculation. It is not clear to us, nor should it have been to the magistrate or to the high court, that the interest and the other charges could be disentangled from the capital amounts.
“It is clear, however, that the interest claimed was disputed on bona fide grounds. The rate is patently exorbitant and disputed.
“If regard is had to the resolution presented the compelling conclusion is that Mr Ketzer justifiably disputed the rate of interest,” the judgment read.