Aggrieved owners of apartments in a five-star hotel in Cape Town have managed to reclaim control of their properties from a rental pool after referring their disputes to arbitration.
The units are in the luxurious Cape Royale Hotel & Spa in Green Point, which was developed in 2008 by Cape Royale The Residence, of which Pascal Phelan is the sole director. Phelan is also the sole director of Cape Royale Luxury Residence, the company that manages the rental pool.
Early this month, the rental pool management company agreed to release the owners of 17 units from their rental pool contracts, allowing them to take ‘possession and occupation’ of their units from the beginning of next month.
When you place your sectional-title unit in a rental pool, you enjoy limited use of the unit, which is managed by a company that lets it to guests on your behalf. You get a share in the rental income generated from the letting of your unit.
Owners of properties in the rental pool in Cape Royale are not satisfied with the management of their units and are disputing their share of rental income.
The owners who have been released from their rental pool contracts are represented by Alec Geldenhuys of Michalowsky Geldenhuys & Humphries Attorneys. Geldenhuys’s clients are claiming damages from the management company.
In terms of the arbitration agreement, the management company has given the owners access to its audited financial statements from 2009 to 2014, as well as its financial records and source documents (an original record, showing the details of a transaction – like an invoice). This will enable the owners to conduct their own audit of the rental pool’s financial affairs.
The parties have agreed to try to resolve any financial disputes during this process, failing which the unresolved disputes will revert to arbitration for a decision.
The arbitrator is Senior Counsel Les Rose-Innes.
In May last year, the hotel’s body corporate was placed under administration after the High Court found that Phelan, who is the chairman of the body corporate, and trustee Bettina Heiberg had failed to fulfil their fiduciary duties to the body corporate.
Judge Vincent Saldanha found that Phelan, in his capacity as body corporate chairman, had also failed to ensure that his interests – in the development company and in Cape Royale Luxury Residence – did not compromise or affect his financial duties to the body corporate.
The body corporate is under administration until May 30, when administrator Nolands Forensics must report back to the High Court on its findings in respect of allegations of gross neglect and incompetence.
Source: www.iolproperty.co.za
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