A recent High Court ruling has sent a warning to bodies corporate and residential estates across South Africa.
Levy collection practices that allow legal costs to spiral far beyond the underlying debt may not stand up in court, even where the arrears themselves are not disputed.
In a judgment handed down on 10 March 2026, the High Court of South Africa refused to grant judgment against a homeowner living in a gated community.
The homeowner owed just under R18,000 in unpaid levies after legal costs ballooned to nearly five times that amount.
The case has highlighted and criticised how levy arrears are pursued in estates, gated communities, or sectional title schemes.
This is the feedback from Johlene Wasserman, Director of Community Schemes and Compliance at VDM Incorporated, who said the ruling signals a shift in how courts approach these matters.
“The ruling reflects growing judicial concern about how levy arrears are pursued. Levy arrears are the financial lifeblood of community schemes,” she said.
“However, this judgment is a clear warning that recovery processes cannot be allowed to run out of control.”
She added that courts are not prepared to simply rubber-stamp enforcement where legal costs appear excessive or poorly supervised.
Wasserman explained that the judgment comes at a time when levy recovery disputes are increasingly under scrutiny.
This is particularly due to rising legal costs affecting not only defaulting homeowners but also trustees and managing agents responsible for governance.
“The ruling makes it clear that courts are scrutinising not just whether levies are owed, but whether the methods used to recover them are fair, transparent, and proportionate,” she said.
As the matter progressed, the legal fees escalated dramatically, which prompted the Court to examine whether the costs being claimed were lawful, reasonable, and proportionate.
The Court ultimately found that the issue had shifted beyond unpaid levies to a broader question about the justification of those costs.
“On that basis, the homeowner was granted leave to defend the claim rather than facing immediate judgment,” said Wasserman.
Excessive recovery fees can place homeowners under severe
A key issue in the case was the use of acknowledgements of debt (AODs), commonly used by bodies corporate to formalise repayment arrangements.
Wasserman warned that these agreements are not beyond challenge. “The Court made it clear that an AOD is not a blank cheque,” she said.
“If an acknowledgement of debt includes questionable or potentially unlawful charges, those charges will be open to challenge. Signing an AOD does not automatically make every line item enforceable.”
The judgment also highlights governance concerns, particularly where levy recovery processes appear to be driven largely by attorneys with limited oversight from trustees.
“For the Court, the process appeared to be attorney-driven right from the early communications with the homeowner through to the structuring of the AOD,” said Wasserman.
“This prompted serious questions about whether trustees of the scheme had effectively ceded their oversight role.”
She stresses that responsibility cannot be delegated away. Trustees cannot abdicate responsibility simply because a matter has been handed to attorneys.
“The ultimate accountability for fair and lawful governance always remains with the body corporate,” she said. The Court also raised concerns about the broader impact of excessive legal costs on homeowners.
The Court warned that excessive recovery fees can place homeowners under severe financial pressure and, in extreme cases, contribute to their property being attached or insolvency proceedings.
“This judgment underscored a growing judicial sensitivity to the real-world impact of disproportionate levies and legal costs,” she added.
