High Court flags excessive levy collection costs

• Court blocks enforcement where legal costs outweigh the original levy debt
• Acknowledgements of debt do not legitimise excessive or unlawful charges
• Trustees remain accountable, even when attorneys drive recovery

Court draws a line on levy recovery

A recent High Court ruling has sent a clear message to bodies corporate: levy recovery cannot come at any cost.

In the case of Centenario Body Corporate v Thandeka Mlotya, the Johannesburg High Court refused to grant judgment against a homeowner owing just under R18,000 in unpaid levies after legal costs escalated to nearly five times the original debt.

The ruling signals a shift in how courts approach levy disputes—placing equal weight on proportionality, fairness, and governance, not just the existence of arrears.

Why it matters

Levy collections are the financial backbone of community schemes. But this judgment highlights a growing judicial stance: How the debt is recovered is just as important as the debt itself.

For trustees and managing agents, this raises the bar on:

• Oversight
• Transparency
• Cost control

Expert insight‍

Johlene Wasserman, Director, Community Schemes and Compliance at VDM Incorporated, says the ruling reflects a broader shift in judicial thinking.

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“Levy arrears are the financial lifeblood of community schemes, yet this judgment is a clear warning that recovery processes cannot be allowed to run out of control. Courts are not prepared to simply rubberstamp enforcement where legal costs appear excessive or poorly supervised.”

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‍From routine recovery to a cost dispute

What began as a straightforward levy collection matter evolved into a far more complex legal dispute.

As costs escalated, the Court shifted its focus, questioning whether the legal fees were lawful, reasonable, and proportionate.

The result: The case was no longer just about unpaid levies, but about whether the costs themselves could be justified.

The homeowner was ultimately granted leave to defend the claim.

Acknowledgements of debt under scrutiny‍

The ruling also places Acknowledgements of Debt (AODs) under the spotlight.

Often used to formalise repayment terms, AODs are widely relied upon by bodies corporate. However, the Court made it clear: An AOD is not a blank cheque.

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“If an acknowledgement of debt includes questionable or potentially unlawful charges, those charges will be open to challenge,” Wasserman notes.

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This creates risk for schemes using standard-form AODs without properly interrogating each cost component.

Warning against legal cost spirals

A key concern raised by the Court was the escalation of legal costs driven by attorney-led processes with limited trustee oversight.

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“Trustees cannot abdicate responsibility simply because a matter has been handed to attorneys. The ultimate accountability always remains with the body corporate,” says Wasserman.

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The Court also highlighted the real-world impact:

• Financial strain on owners
• Risk of property attachment
• Potential insolvency outcomes

Excessive legal costs are no longer just a legal issue, they’re a governance failure.

Implications for Community Schemes

The message to trustees, managing agents, and property professionals is clear:

• Recovery processes must be proportionate
• Legal costs must be defensible
• Oversight cannot be outsourced

Schemes that fail to manage this risk may find routine collections turning into costly legal setbacks.

Reshapes the future

‍This judgment is likely to reshape levy recovery practices across South Africa. Expect: 

• Greater scrutiny of legal fees
• More challenges to AOD structures
• Increased accountability for trustees

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As Wasserman concludes: “In today’s environment, bodies corporate must ensure that their recovery processes are not only effective, but fair, transparent, and capable of withstanding judicial scrutiny.”

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