Case discussion on Montrose Mews Body Corporate v Matlose Moela

Case discussion on Montrose Mews Body Corporate v Matlose Moela NO (2003/019308) [2024] ZAGPJHC 198 (7 March 2024)

Introduction

This case was heard on 14 February 2024 and decided on 7 March 2024 by Judge SDJ Wilson (Judge of the High Court, Gauteng Division). This case has given clarity to whether the Promotion of Access to Information Act 2 of 2000 (“PAIA”) applies to an “application” for books of account made by a member of a body corporate under Prescribed Management Rule (“PMR”) 26(2) in Annexure 1 to the Regulations made under the Sectional Titles Schemes Management Act 8 of 2011 (the “STSM Act”).

The parties

The applicant is Montrose Mews which is a body corporate constituted out of a sectional title scheme established under section 36(1) of the Sectional Titles Act 95 of 1985 read with section 2(1) of the STSM  Act. The first respondent is Mr. Moela, who issued the adjudication order in his capacity as an adjudicator appointed by the second respondent, the Community Schemes Ombud Service (the “CSOS”) to decide disputes raised under the Community Schemes Ombud Service Act 9 of 2011 (the “CSOS Act”). The third respondent is Ms. Mokoka who is a member of that body corporate.

Facts

Montrose Mews applied under section 6 of the Promotion of Administrative Justice Act 3 of 2000 (“PAJA”) to review and set aside an adjudication order issued by Mr. Moela whereby he directed Montrose Mews to hand over a number of bank statements to which he concluded Ms. Mokoka is entitled under the STSM Act.

Montrose Mews disagreed with that decision on the basis that Ms. Mokoka’s entitlement to see the bank statements is not regulated by the STSM Act, but by PAIA. Montrose Mews contended that the adjudication order is wrong in law because Ms. Mokoka did not apply under PAIA for the information she sought. Ms. Mokoka contended that PAIA does not apply, and refused to fill out an information request under PAIA. She insisted that she has an unconditional right to the information she sought under the STSM Act and the Regulations made thereunder.

Issue to be determined

The only issue that was at dispute was to determine whether PAIA applies to a request made for information of the nature Ms. Mokoka sought.

Judgement

Judge SDJ Wilson stated that in his view PAIA does not apply to Ms. Mokoka’s request, but that does not mean that Ms. Mokoka is entitled to unrestricted access to the information she had requested. Her right of access to the bank statements springs from Montrose Mews’ statutory obligation, under PMR 26(2) contained in the Regulations in Annexure 1 to the STSM Act to afford her access to its books of account. The purpose of that access is set out in PMR 26(1)(a)(iv) – it is to ensure that Ms. Mokoka has the information of necessary to allow her to “assess the body corporate’s financial situation”. It follows that, where the documents to which Ms. Mokoka has a right of access contain more information than is necessary to achieve that end, the information to which Ms. Mokoka does not need access may be redacted from them. This permits Montrose Mews to protect confidential information that may be contained in the bank statements, so long as sight of that information is not necessary to allow Ms. Mokoka to assess Montrose Mews’ financial situation. Whether and to what extent the information may be redacted is primarily a matter for the body corporate, subject, of course, to Ms. Mokoka’s right to challenge the redactions before the CSOS.

PAIA does not apply to Ms. Mokoka’s request to see the bank statements she demands because it was never intended to apply in situations where a duty to disclose information arises from pre-existing legal relationship between a person seeking information and the person holding that information. PAIA is rather intended to apply where a person seeking information from a private body would otherwise have no right to it. To hold otherwise would lead to absurd results, mostly by imposing an additional burden on the exercise of existing rights of access to information.

Reasons for judgement

In giving his reasons for reaching these conclusions, Judge SDJ Wilson stated that he would:

1. Address the nature of the information Ms. Mokoka sought.
2. Set out her right to receive that information under the STSM Act and its Regulations.
3. Explain why PAIA has no impact on these rights, or the process by which they are exercised.
4. Set out the basis on which limited redactions of the statements Ms. Mokoka sought may be permitted.

The nature of the information Ms. Mokoka seeks

On 30 September 2022, Ms. Mokoka asked to see bank statements reflecting the state of Montrose Mews’ administrative fund, and a statement of the fund’s expenditure for the months of July and August 2022. The request was apparently motivated by what Ms. Mokoka thought was a poor auditor’s report, and her suspicion that an irregular loan had been made to the body corporate.

On receipt of Ms. Mokoka’s request for information, Montrose Mews referred Ms. Mokoka to a PAIA manual it had prepared. Montrose Mews took the view that PAIA applies to any request made by a member of the body corporate for information held by the body corporate. Montrose Mews undertook that any request made under PAIA would not be unreasonably refused, by which it appears to have meant that the request would not be refused, unless PAIA supplied the body corporate with a ground of refusal.

Ms. Mokoka took the view that Montrose Mews’ reliance on PAIA was no more than a tactic meant to conceal information to which she was entitled under the PMRs. Judge SDJ Wilson stated that he did not think that Montrose Mews seized upon PAIA as a reason to obstruct her as the body corporate appeared genuinely to believe that its capacity to disclose information was regulated and constrained by PAIA and by the Protection of Personal Information Act 4 of 2013. Montrose Mews emphasised that the bank statements to which Ms. Mokoka sought access contains information about deposits and withdrawals which are of a confidential nature, and which she is not entitled to see. Montrose Mews contended that the appropriate way to decide whether, and to what extent, Ms. Mokoka had a right to see the bank statements was to follow the process laid out in PAIA for determining whether and to what extent an information request should be acceded to.

Do the PMRs afford a more direct right of access to the bank statements?

Section 10(2)(a) of the STSM Act requires Montrose Mews to abide by the PMRs, unless they are amended with the consent of the Ombud on application by a developer, or unless the body corporate unanimously resolves to amend them, repeal them, add to them or substitute them with other rules. The PMRs have not been lawfully departed from in this case, and they accordingly apply to Montrose Mews. Annexure 1 to the Regulations sets out the applicable PMRs.

PMR 26 requires Montrose Mews to keep “proper books of account”. A book of account is not literally a ledger which must be always open to inspection. It is rather any record or set of records that show such “transactions entered into” by Montrose as it “can reasonably be expected or required” to record, having regard to its “particular trade or calling” (see Horwitz v Rex 1908 TPD 641 at 643).

Sections 3(1)(a) and (b) of the STSM Act require Montrose Mews to establish and maintain an administrative fund (out of which operating expenses are met), and a reserve fund “in such amounts as are reasonably sufficient to cover the cost of future maintenance and repair of common property”. Statements reflecting the state of each of these funds, and the deposits into, and withdrawals from, them are accordingly “books of account” that Montrose Mews is required to keep. This is confirmed in PMR 26(1)(b).

PMR 26(1)(a)(iv) requires that these books of account must contain the “information to allow members to assess the body corporate’s financial situation”. PMR 26(2) requires Montrose Mews, “on application” by any member of the body corporate to “make all or any of [its] books of account and records available for inspection and copying”.

Ms. Mokoka has a right under the PMRs to inspect the statements she wishes to see “on application”. The words “on application” are somewhat of an anomaly in the PMRs. Under PMR 25(7) records of debits and credits on a particular body corporate member’s account must be provided to that member “on request”. PMR 27(4) also entitles a body corporate member to see the documents set out in PMR 25(7)(3) “on request”. The documents listed in PMR 25(7)(3) include, as PMR 27(3)(l) stipulates, records that the Regulations require a body corporate to keep. Since a book of account is plainly a record “required by the Regulations”, the right to records “on request” in PMR 25(7)(3) conflicts, on its face, with the right to a book of account “on application” in PMR 26(2).

The Judge stated that one must accept that PMR 26(2) carves out an exception to PMR 25(7) (3). In other words, the records to which PMR 27(3)(l) refers are all the records required to be kept under the Regulations, except books of account. Therefore, the right to seek such books of account as are necessary to allow a member of a body corporate assess the body corporate’s financial situation may only be exercised “on application”.

PAIA does not apply

Montrose Mews submitted that the words “on application” mean “on application under PAIA”, but the Judge disagreed. He stated that purely at the textual level, the submission is misconceived, as the PMRs postdate the adoption of PAIA by over 15 years. Had the PMRs meant to require a member of a body corporate to apply under PAIA for basic financial information contained in books of account, they surely would have said so and they do not.

In addition, the words the PMRs use seem to be inconsistent with the proposition that the rights of access to information they create are only to be accessed through PAIA. The trigger for the exercise of PAIA rights is the making of a “request” by a “requester” (section 1 of PAIA). This sits uncomfortably with the text of the PMRs. That text draws a distinction between information provided “on request” and information provided “on application”. The information that is to be provided “on request” includes information about a body corporate member’s own account. The intent is clearly to provide the person requesting that information with access to it on demand. But that is clearly not the sense in which PAIA uses the term “request” and “requester”, which connote individuals who seek information that may nonetheless be withheld from them if a ground of refusal is established under PAIA (see, generally, Chapter 4 of PAIA). Besides, the term “application” under PAIA means “application to court” (section 1 of PAIA). That is clearly not the sense in which the term “application” is used in PMR 26(2).

The purpose of PAIA is not to displace other statutes which provide for defined rights of access to information to individuals who are embedded in specific legal relationships. The clearest indication of this is that a “requester” under PAIA may be any person at all, or any other person acting on their behalf. A “requester” need not demonstrate a prior legal relationship with the body from which they seek the information. Anyone can access information under PAIA. Where they seek information from a public body, their reasons for seeking the information are irrelevant (section 11(3) of PAIA). Where a requester seeks information from a private body, they need only show that the information is required to exercise or protect their rights (section 50(1)(a)). This suggests that PAIA requests are meant to facilitate access to information in circumstances where a requester would otherwise have no right to it.

The contrary interpretation would lead to absurdity. In the context of this case, it would mean that a member of the body corporate would have to pay a fee under PAIA to access any information from the body corporate – even information about their own account (see section 54 (1) of PAIA). More generally, though, it would significantly encumber many other statutory rights of access to information. Section 26 of the Companies Act 71 of 2008 delineates a shareholder’s right of access to company records “in addition to and not in substitution for” a requester’s rights under PAIA (section 26 (7) (b)). It seems to me that this stipulation, introduced by amendment, makes clear what is already implicit in this and in other statutory rights of access to information, such as those afforded under the PMRs – that PAIA is meant to supplement those specific rights rather than displace them.

It would be perverse to encumber specific statutory rights of access to information with the machinery of PAIA, which is manifestly designed to kick-in only when no such specific rights exist. It would also be at odds with the Judge’s obligation under section 39(2) of the Constitution, 1996, to promote the spirit purport and objects of the Bill of Rights when interpreting legislation. The right of access to information in section 32 of the Constitution, and general legislation like PAIA that is intended to give effect to it, ought to be read to facilitate rather than encumber the dissemination of information. To subject a body corporate member’s rights under the PMRs to the strictures of PAIA seems to me to be a needless encumbrance, without foundation in the Constitution, or in PAIA itself.

The Judge concluded though by saying that the above does not mean that Montrose Mews ought not to have taken any steps to comply with PAIA, but merely that it means only that PAIA does not apply to the duties of disclosure it owes under the PMRs.

The right to redact irrelevant information

The Judge then had to decide whether Ms. Mokoka was entitled to an unredacted record, and how, if not in terms of PAIA, any limits on her rights of access to the statements she sought were to be determined and policed.

The Judge stated that the use of the word “application” in PMR 26(2) denotes that, although Ms. Mokoka is entitled to the statements she sought, she was not entitled to information in them that is not necessary to allow her to assess the Montrose Mews’ financial situation, and which Montrose Mews has a good faith basis to redact. This would include personal information that is irrelevant to Ms. Mokoka’s assessment of Montrose Mews’ financial state. The word “application” is meant to facilitate a consideration of the extent to which the information to be disclosed under PMR 26(2) is necessary to allow a person entitled to it to assess a body corporate’s financial situation.

That does not mean that all personal information may be redacted per se. Access to some personal information of other body corporate members (their identities and payments they have made to the body corporate, for example), may be a necessary incident of Ms. Mokoka’s rights under the PMRs. That compromise is in the nature of sectional title arrangements, where members of a body corporate have to adopt rules and practices necessary to live together, and manage the property they share. The extent of that compromise in any particular context depends on the nature and application of the STSM Act, and the rules adopted under it. In the case of any disagreement, an application to the CSOS, where it has jurisdiction, will generally be the appropriate way of resolving the dispute, subject to a right of appeal or review to this court.

Order

The review application was dismissed with costs.

Commentary

This case give important clarity on the question of whetherPAIA applies to an “application” for books of account made by a member of a body corporate under PMR 26(2).

Section 32 of the Constitution of the Republic of South Africa, 1996 supplemented by PAIA, that is intended to give effect to it, guarantees the making available of information. We agree that these pieces of legislation ought to be read to facilitate rather than encumber the dissemination of information. PAIA is not intended to apply to situations in which a duty to disclose information arises from a pre-existing legal relationship between a person seeking information and the person holding that information.

The principle is that a person is entitled to be furnished with all available information that affects his interest. PMR 26 requires that the trustees keep books and records that fairly explain the financial position of the body corporate, and owners are entitled to inspect these records. PMR 26(2) provides that on the application of any owner, registered mortgagee, or managing agent the trustees must make all or any of the books of account and records available for inspection and copying by such owner, mortgagee, or managing agent. Furthermore, PMR 27 requires the body corporate to keep governance documents and records that must be available for inspection by the members. The very nature of communal living requires that the inhabitants have reasonable access to information to exercise their rights. 

Trustees are required to apply their minds (in conformity with their fiduciary responsibility) to an application for information under PMR 26(2), and supply such information as are necessary to allow a member of a body corporate assess the body corporate’s financial situation.

WRITTEN BY DR CARRYN DURHAM