Attorneys’ fees

Costs of going to court to recover levies is a hot topic. In October 2016,  legislation was promulgated for Bodies Corporate which only allows recovery of legal fees on a party and party scale, i.e. the legislated tariff of fees as set out in Court rules. These fees are very low and unfortunately most attorneys refuse to work for these fees. This is a big risk for a scheme since, if you are paying fees on the attorney-client scale, you will only recover approximately half or less than that from the debtor, depending on what your attorney charges.  Put another way, any surplus attorney charges over and above the tariff would be a financial loss for the scheme.

Something to consider when choosing your attorney, is an agreement as to what tariff you will be charged.  There could be scope to negotiate a fee with a firm of attorneys on the basis of the volume or work supplied to them.  Trafalgar has done this and has selected a panel to work on an agreed fee, which minimises the risk in respect of fees to bodies corporate and Home Owners Associations.

The legal process

Letter of Demand

The legal process is a slow and convoluted one.  Generally speaking, the process is initiated through a letter of demand sent by registered post (and email where possible) with time limits set before summons can be issued in terms of, inter alia, the National Credit Act (usually 14 days).

Summons

Should the debtor remain in default, summons is then issued.  This generally takes three weeks.  The sheriff is then instructed to serve it.

The summons is generally served at the unit address, being the domicile, or any other address that can possibly be found (in many cases, service on the individual at a different address will be required).  In the case of a vacant plot of land, one will need to find an alternative address for service.  Service on a security guard where a vacant plot is located will not be sufficient, i.e. judgment will not be granted in such a case.

Return of service

Once the sheriff has served the summons, he provides the attorneys with a return of service, which is certification that he has attended to his legislative duties. Thereafter, a period of 10 days must elapse before a request for default judgment can be made.

Default judgment

A request for default judgment is made where the unit owner or the owner of the property has been served but has not responded to the summons.  Judgment will then be given by default. This is dealt with by magistrates in chambers or judges in chambers and unfortunately, this can take several months.

Warrant of execution

After the judgement is granted a warrant of execution is issued and the execution process kicks off. Again, the first port of call would be the unit itself, where firstly, movables must be attached and sold in execution.

Only thereafter can immovables be attached, such as the property or the unit itself.  This is the end-result that we are looking for, because in that process all funds would be recovered from the unit owner. The legal process is protracted and can take between six months to a year before a matter is resolved.  Unfortunately, this is something that can’t be helped as one is dependent upon the court process and the Sheriff. (The matter is even more complicated where a unit is the primary residence of the debtor.)

Summary judgment

There is also the further possibility that once the summons is served the unit owner or the owner of the property will defend the matter.  Once the matter is defended, the appropriate step is to apply for summary judgment, where it is clear that the defence is only to buy time.  In other circumstances, the matter must go to trial.

Summary judgment is enrolled in a matter of months, instead of over a year for a trial.  If successful, judgment is given and one can proceed with a warrant of execution as described above.

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