Community Scheme Disputes and the Ombud’s Powers to Resolve Them
“[The Ombud} has been given wide inquisitorial powers whereby such disputes can be resolved as informally and cheaply as possible by means of qualified conciliators and adjudicators, without the need for legal representation, save in certain limited circumstances.” (Extract from first judgment below)
If you have a dispute with anyone in a “Community Scheme” – sectional title, Homeowners Association (HOA) or the like – remember that your first port of call should be the CSOS (Community Schemes Ombud Service).
What disputes can the Ombud resolve?
Disputes are inevitable in any community situation, with sources of conflict ranging from noise issues to problem pets, common area usage disagreements, parking space complaints and so on – the list is endless. Another perennial battleground is owners fighting with administrators (normally a body corporate or Homeowners Association) over levies, rules and regulations, and the like.
The Ombud’s mandate here is wide, with the CSOS promising “affordable, reliable justice” via its conciliation and alternate dispute resolution process for anyone party to, or “materially affected by” any of a wide range of disputes including levy disputes, nuisance complaints, repairs and maintenance disputes, complex meetings, financial, governance and management issues, exclusive use rights and the like – the list is long and widely-worded.
How does it work?
Costs are low and the process is straightforward, with legal representation restricted to cases where the adjudicator and all parties agree to it or where the adjudicator decides that a party cannot deal with the adjudication without it. There are media reports of the CSOS struggling in practice to provide the quick and reliable service promised on its website, but all in all, it should generally be your first port of call. In fact, the High Court has now warned that you will almost always have no choice in the matter.
You must approach the Ombud before you go to court, unless…
The High Court has now stated categorically that, whenever the CSOS has the power to adjudicate a dispute, you have to go that route first and can only go direct to court in exceptional circumstances –
The scene in this first case is an inner-city 10 storey mixed-use sectional title scheme. The parties are on the one hand a group of loft owners unhappy with a new biometric security/access control system and with a new conduct rule limiting their right to lease out their loft apartments on a short-term basis; on the other, the body corporate trying to resolve security issues in the building with the new rules.
The loft owners asked the High Court to intervene as a matter of urgency and were soundly defeated, with the Court ordering them to pay costs on the punitive attorney-and-client scale after finding that “…this is not only a matter which should not have been brought before this Court and should have been taken to the Ombud, but is also one which constitutes an abuse of process…”.
As the Court put it: “…the statutory powers which an adjudicator has in terms of the Act are extremely wide and go beyond the powers which a court has in relation to neighbourly disputes and associations in terms of common law, not only insofar as their reach is concerned, but also in relation to their ambit. In numerous instances an adjudicator has an equity i.e., fairness-based power, not only to decide what is ‘reasonable’ in relation to the conduct of, or the decisions which have been taken by an association such as a body corporate of a sectional title scheme … but also to direct what should ‘reasonably’ be done in place thereof. A High Court does not have such powers.”
Thus: “…where disputes pertaining to community schemes such as sectional title schemes fall within the ambit and purview of the CSOS Act, they are in the first instance to be referred to the Ombud for resolution in accordance with the conciliative and adjudicatory processes established by the Act, and a court is not only entitled to decline to entertain such matters as a forum of first instance, but may in fact be obliged to do so, save in exceptional circumstances…” (emphasis supplied).
Exceptions, said the Court, would include challenges to the “constitutionality or legal validity or status of a particular statutory power or a provision in the Act” plus “in certain instances it is conceivable that the High Court may be approached in the first instance, as a review court.”
Each case will be different so take full advice before deciding whether to approach the Ombud or go straight to the High Court.
Going direct to court when the Ombud has no jurisdiction
Another recent High Court judgment concerned a sectional title scheme dispute in an industrial complex. After their unit was destroyed by fire, the unit’s owners claimed from the scheme’s insurers.
The insurers repudiated the claim on the basis that they had, following a previous fire, suspended the scheme’s fire cover pending the filing of valid electrical and fire equipment certificates of compliance by all the owners of units in the scheme.
The owners approached the Ombud, claiming some R480k from the body corporate for damage to the unit and lost rental on the basis that “the body corporate had negligently failed to comply with its statutory ‘duty of care’ to ensure that the buildings in the scheme were properly insured”.
The CSOS adjudicator said he had no jurisdiction to hear such a matter, and the High Court agreed, holding that the claim was personal to the individual owner “and did not pertain to the scheme itself…”.
Moreover “It was clearly not intended that the Ombud would have the power to adjudicate on delictual claims for damages, which involve weighty considerations pertaining to wrongfulness (which depend on prevailing societal norms and public policy) and fault, and the quantification and determination of the quantum of any damages which may have been sustained pursuant thereto, which are matters which are best left for judicial officers and Courts.”
Arrear levies – when can the Ombud help with collection?
Our courts have held that the Ombud can assist with the collection of arrear levies or contributions, but only where there is a dispute involved.
Thus (to quote from a 2017 High Court judgment): “If the claim for arrear levies or contributions is not disputed, for example if an owner simply ignores a demand for payment or simply refuses to pay, without disputing the amount of the claim or the proper determination of the levy, the Body Corporate can institute legal action in court to recover the arrear levies from the owner … If, on the other hand, the amount of the levy is disputed because it was not properly determined and this dispute is raised after the defaulter had received a demand, the appropriate forum for recovery of the levies would be the regional office of the Ombud service.”
The bottom line
To avoid any mis-steps here, seek professional advice before deciding when and how to take community scheme disputes to the Ombud.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)