High Court Warns Bodies Corporate on Excessive Levy Collection Costs

The judgment in Centenario Body Corporate v Mlotya (2024/136216) [2026], delivered on 10 March 2026 by the Gauteng Division of the High Court, represents a watershed moment for Sectional Title law in South Africa. The case centered on the recovery of arrear levies and, crucially, the skyrocketing legal costs associated with such debt collection.

The ruling, delivered by Judge J Fisher serves as a stern warning to Body Corporates and their legal representatives that the courts will no longer "rubber-stamp" enforcement orders where legal fees are disproportionate to the underlying debt.

1. Factual Background and the "Cost Spiral"

The matter originated as a seemingly routine application for summary judgment. The respondent, Thandeka Mlotya, was a homeowner within the Centenario scheme who had fallen into arrears. At the time the matter reached the High Court, the principal debt, the unpaid levies, amounted to just under R18,000.

However, the litigation had spiralled. By the time the Body Corporate sought a final order, the legal costs and collection fees added to Mlotya’s account had escalated to nearly five times the original debt. The applicant sought not only the arrears but also an order declaring the property executable (allowing it to be sold at auction) to satisfy this inflated total.

2. The Verdict: A Refusal to Grant Judgment

In a decisive move, the High Court refused to grant summary judgment for the full amount claimed. While the court acknowledged that the levies were indeed owed, it blocked the enforcement of the legal costs that had been unilaterally added to the owner’s account.

The court's verdict effectively "paused" the recovery process, demanding a rigorous justification for the costs incurred. The judge ruled that the Body Corporate could not proceed with the attachment of the property based on a debt largely comprised of un-taxed and potentially excessive legal fees.

3. Judicial Motivation: Proportionality and Governance

The motivation provided by Fisher J focused on three primary legal and ethical pillars: proportionality, fiduciary duty, and the abuse of legal process.

3.1 The Principle of Proportionality

The judge highlighted a "disturbing trend" in community scheme litigation where the "tail wags the dog"—meaning the legal costs become the primary driver of the litigation rather than the recovery of the debt itself. The court held that it is inherently unjust to deprive a person of their home over a debt of R18,000 when that debt has been artificially inflated to nearly R100,000 through aggressive legal maneuvering.

3.2 Oversight and the "Blank Cheque" Fallacy

A key motivation for the judgment was the critique of how Body Corporates manage their legal service providers. The court noted that:

3.2.1  Trustees cannot abdicate responsibility: Trustees often hand debt collection to attorneys and then fail to monitor the billing.

3.2.2  The Problem with Acknowledgements of Debt (AODs): The applicant argued that the owner had signed an AOD agreeing to pay all legal costs. Fisher J dismissed this as a justification for overcharging, stating that an AOD is not a "blank cheque" that bypasses the court's oversight or the requirement that legal fees be "reasonable and taxed."

3.3 Constitutional Considerations

Fisher J alluded to the constitutional right to housing (Section 26). When a Body Corporate seeks to sell a member's home to recover a small debt, the court must act as a gatekeeper. The judge motivated that allowing such an execution for a debt primarily composed of legal fees would constitute an "abuse of the process of court" and a violation of the spirit of the law.

4. Impact on Sectional Title Management

The motivation in Centenario v Mlotya places a new burden of proof on Body Corporates. Following this ruling, schemes must demonstrate that:

4.1  The costs are taxed: Attorneys cannot simply add "attorney-and-client" costs to a ledger without a formal taxation process or a court order.

4.2  Alternatives were explored: The court questioned why cheaper alternatives, such as the Community Schemes Ombud Service (CSOS), were not used to resolve the initial R18,000 dispute before escalating to High Court litigation.

5. Conclusion

The Centenario judgment marks a departure from the historical leniency shown toward Body Corporates in debt recovery. By refusing to validate a "cost-plus" approach to litigation, the Judge has forced a reimagining of how community schemes must handle arrears.

The motivation behind the verdict sends a clear signal: the financial survival of a Body Corporate (which relies on levies) does not grant it the license to pursue recovery through "predatory" legal practices.

For trustees, the message is clear—oversight of legal spending is a fiduciary duty that cannot be ignored without risking the dismissal of their claims in court.