Africa-Press – South-Africa. A landmark ruling from the Supreme Court of Appeal (SCA) has confirmed that homeowners, bodies corporate and those in residential schemes can bypass the Community Schemes and Ombud Service (CSOS) and take their disputes directly to court.
According to Johlene Wasserman, Director of Community Schemes and Compliance at Sandton-based law firm VDM Incorporated, the ruling ends years of uncertainty around the laws.
Previous rulings by the High Court set a precedent that residents or schemes could only approach the High Court for resolution of their problems after going through CSOS.
Escalation to court could only happen under “exceptional circumstances”, with the common interpretation being that the CSOS held sole jurisdiction over most cases.
However, the new ruling from SCA has rejected this interpretation, ensuring that litigants have full options when looking to handle disputes.
The CSOS was established under the CSOS Act to resolve disputes relating to community schemes, giving those living in community schemes and sectional title units a more affordable way to resolve disputes.
“From disputes around unreasonable levies, misuse of scheme funds, improper conduct by trustees, challenges to AGM decisions, enforcement of conduct rules, to maintenance problems, CSOS is the ideal starting point,” Wasserman said.
The legal expert noted that CSOS orders are also legally binding, making it an ideal route for resolving smaller disputes.
However, the CSOS is also limited, particularly for complex matters or high-value disputes.
In this sense, the laws put a host of administrative and procedural hurdles in front of litigants to get their matters heard by the High Court.
Wasserman stressed that the SCA’s ruling does not undermine the valuable role of CSOS. “CSOS and South Africa’s courts are both available to handle property disputes,” she said.
However, earlier interpretations that required parties to prove exceptional circumstances before approaching the High Court have been decisively rejected.
“Litigants are entitled to proceed either through CSOS or directly to court, depending on their strategic, financial, and practical considerations.”
What changed
Johlene Wasserman, Director of Community Schemes and Compliance at VDM Incorporated
The SCA ruling followed litigation between a retirement village in the Western Cape and a property company that owned cottages on a neighbouring plot of land.
The property company wanted to incorporate these units into the estate by changing the Homeowners’ Association’s (HOA’s) constitution.
Certain groups within the estate opposed the move, raising various procedural issues and concerns about the handling of the proposal.
The company attempted to amend the HOA constitution twice—without challenge from the HOA trustees—but the residents rejected it. The company then bypassed the CSOS, taking the matter to court.
The court found that “exceptional circumstances” existed for the matter to be heard by the court.
However, after the court ruled against the company (siding with the residents), it sought to appeal the ruling and move the matter to the CSOS.
This raised the question of whether the High Court had initial jurisdiction over the case and whether it had erred in hearing the matter in the first place.
The SCA noted that the residents themselves had argued that the matter should have been heard by the CSOS.
It also said that taking the matter to the CSOS would have shown goodwill and intent to resolve the dispute, rather than taking an aggressive stance in court.
Regardless, the Supreme Court said that the CSOS Act does not explicitly or implicitly exclude the High Court’s inherent jurisdiction to hear community scheme disputes.
“Generally, the high court has authority to hear any matter that comes before it, unless the specific law or rule expressly limits that authority or grants it to another tribunal,” it said.
“The fact that the Ombud has wider powers does not imply the exclusion of the court’s jurisdiction. In our view, the Act was designed to co-exist with the court system, providing the parties with a choice of a forum, not to replace it entirely,” the court said.
According to Wasserman, the SCA judgement overrules all High Court decisions that followed the previous, restrictive precedent, bringing uniformity to the country’s jurisprudence.
“It showed that the CSOS Act does not remove the High Court’s inherent jurisdiction; that nothing in the CSOS Act—either expressly or by implication—prevents the High Court from hearing disputes arising in community schemes, and that the existence of CSOS does not exclude the High Court.”
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