Dispute Resolution - Did a judge just find the issuing of CSOS adjudication orders without holding a hearing procedurally unfair?

Administrative Management, Community Schemes Ombud Service

By Ané de Klerk

On 9 May 2023 Acting Judge van Niekerk heard a review application brought by a Homeowners’ Association (HOA) in the Gauteng High Court. The judgment was issued just two days later. Let’s take a closer look at the matter and some of the Court’s interesting findings.

THE CSOS APPLICATION AND ORDER:

After a homeowner had allegedly contravened the HOA’s rules, the HOA followed the internal dispute resolution procedure set out in its Memorandum of Incorporation and Rules and subsequently fined the homeowner for the alleged contravention. Now somewhat ironically, the homeowner claimed that the HOA was guilty of procedural and administrative irregularities regarding the disciplinary proceedings initiated against the homeowner and was successful in obtaining a CSOS adjudication order against the HOA, in which the adjudicator found that the process followed by the HOA was indeed unfair. The adjudicator accordingly ordered that the HOA remove the fine it had placed on the homeowner’s levy statement.

HOW WAS THE ADJUDICATION HANDLED?

After receiving the application for dispute resolution from the homeowner the adjudicator requested and subsequently received written submissions from the HOA as respondent. The homeowner then replied to the HOA’s written submissions a week later, but this reply was not forwarded to the HOA for their consideration and comment. The HOA was not invited to submit any further submissions subsequent to the “replying” submission filed by the homeowner and neither party was invited to submit so-called “final submissions” – either in written form or orally. The adjudicator did not conduct a hearing of any sort – not in person, virtually, telephonically or otherwise. As a result, the HOA applied for a review of the CSOS order based on procedural unfairness.

CAN A CSOS ORDER BE REVIEWED?

As we have discussed in our articles before, section 3 of PAJA stipulates that administrative action may be reviewed on the grounds set out in section 6 of PAJA. An adjudication order is therefore capable of being reviewed.

THE GROUNDS FOR THE REVIEW:

The HOA argued, and both counsel for the homeowner and the judge ultimately agreed that the Adjudicator’s failure to afford the parties a hearing was procedurally unfair.

THE JUDGE’S FINDINGS:

In considering whether the issuing of a CSOS adjudication order without a hearing was procedurally unfair, the Judge focussed on two provisions published by the CSOS in its Practice Directives:

1. Part 5 of the Practice Directive on Dispute Resolution dated 1 August 2019, which requires that parties to a dispute appear before the Adjudicator unless:

– both parties consent; or

– a party fails to appear at an adjudication hearing duly set down.

In which cases the adjudication process may take place in the absence of the parties.

2. Directive 8.3 as contained in the Amendments to the Practice Directive 2019 dated 2 December 2021, which reads:

“The Adjudicator may at his or her discretion conduct the adjudication telephonical/y or virtually. Parties in a dispute are requested to have sufficient data, bandwidth, battery-life or connectivity for the duration of the Conciliation.”

It is interesting to note that the Judge found:

“There is no provision in the Act, the Regulations in terms of the Act, or the Practice Directives issued in terms of the Act which empowers an Adjudicator to exercise his/her own discretion to issue an adjudication order without an adjudication hearing. It is clear that the provisions of the Act, the Regulations in terms of the Act and the Practice Directives envisage a Tribunal where the Adjudicator is enjoined to dispose of disputes between parties in a quasi-judicial manner which requires at its very basic tenant the application of the audi alteram partem principle.”

While I do not disagree with the Judge’s statements about a Tribunal having been envisaged when the CSOS Act was drafted nor with the fact that the audi alteram partem principle must be honored, I find it interesting that the judgment does not make any mention of Directives 8.1 and/or 8.2 of the Amendments to the Practice Directive 2019 dated 2 December 2021 (immediately preceding the one quoted in the order), which reads:

“8.1 Unless otherwise advised or requested and agreed between the Parties, no face-to-face Adjudications will be conducted.

8.2 Adjudications will be conducted based on papers filed by the parties and further written submissions, documents, and information (including evidence in the form of affidavits and photos) as requested by the appointed Adjudicator”

These directives at least appear to be aimed at honoring the audi alteram partem principle without necessarily holding a hearing.

Nevertheless, in this case the Judge found that the Adjudicator’s failure to give both parties the opportunity to properly present and argue their case had rendered the procedure reviewable. One cannot help but wonder whether the result may have been different had both parties been given the opportunity to respond to each other’s written submissions and/or if they were invited to file “final submissions”, as are often called for by adjudicators in practice, or would the result have been the same regardless based on the requirements set by PAJA?

THE ORDER:

The Judge reviewed, set aside and remitted the adjudication order. The CSOS was ordered to hear the matter afresh.

THE COST ORDER:

Interestingly, despite the granting of the review being the result of wrongdoing by the adjudicator, it is the homeowner that was ordered to pay the costs of this high court case. While the homeowner did not do anything that warranted and/or contributed to the warranting of a review, the judge held that, as neither the CSOS nor the adjudicator opposed the HOA’s application to have the order reviewed, the homeowner as the only party to oppose it, was to foot the bill.

Courtesy: The Advisory - Community Schemes Specialists

Specialist Community Scheme Attorney (BA, LLB), Ané de Klerk, is a Director of The Advisory, a boutique consultancy specialising exclusively in community schemes law. Her focus is legal education, which includes presenting seminars and running online and in-person training programs and courses.

Contact him at www.theadvisory.co.za or email [email protected] should you be dissatisfied by an adjudicator’s order and require assistance with lodging an appeal to the High Court.