A Prestigious Cape golf estate has been slapped on the wrist by a courtfor charging property owners exorbitant penalties in a case that couldcurb similar clauses of other developments.

The body corporate of Erinvale, which sports a Gary Player-designedgolf course, multimillion-rand houses and which hosted this year's R5-millionSA Airways Open, was ordered to pay back most of a R280 000 penalty levyby the Cape High Court.

Property experts say the judgment, which found Erinvale's penalty fornot building on time unreasonably high, will set new limits to the conditionsluxury estates impose on their owners.

Erinvale's homeowners' association charged 10 times the annual levyfor late building.

During the time the disgruntled homeowner brought the application, thebody corporate made 20% of its income from building penalty levies.

In that year, the homeowners' association made more than R1.3-millionprofit.

Erinvale had to pay back R225 000 of a R280 000 penalty charged to MurciaLands, a corporation, for the home of one of its directors.

Murcia Lands broke Erinvale's house rules in 1999 when it did not buildby the cut-off date.

Murcia grudgingly paid the penalty, and then took the homeowners' associationto court to get the money back.

Erinvale opposed Murcia's claim, saying the builders on the premiseswere a safety risk and would cost the body corporate money because of extrasecurity patrols.

It also said neighbours would have to replace their curtains and repainttheir homes because of all the dust.

However, acting Judge Geoff Budlender said the crime and inconvenience,although probable, had not been proved.

Budlender examined the penalty levies of two other golf estates, Bell'Airein Somerset West and Steenberg in the South Peninsula, and found they werea considerably lower proportion.

Erinvale paid back the R225 000 and had to pay all the costs of thetwo-year court battle.

The chairman of the homeowners' association's trust, Warwick Ibertson,said the profits the estate made by penalties were taken out of context."That was taken at the height of the penalties being levied. Now the estatemakes virtually nothing from penalties."

Ian Slot, managing director of Seeff Property, said Budlender's judgmentwas "very healthy" for developers and homeowners.

"The judgment sets a clear indication of what a reasonable limit wouldbe for penalty levies. But it also takes cognisance of the ill effectsif homeowners don't comply with building rules."

Charles Alterskye, chairman of property group National Referral Network,said the judgment could make developers re-think the setting of penaltyclauses.

Andrew Golding, chief of the Pam Golding property group, said objectionsagainst penalty clauses were rare. "In principle, golf estates are notlikely to review their policies with respect to penalties because of thisjudgment."

Sunday Times