Sectional Title - An overview of potential claims for relief under section 39 of the CSOS Act

By Prof. Graham Paddock

Graham Paddock

Section 39 of the Community Schemes Ombud Service Act of 2011 (CSOS Act) provides a list of specific orders that can be sought through applications to the CSOS. These orders can be categorised into financial, physical, and administrative scheme management orders.

FINANCIAL MANAGEMENT ISSUES

ORDERS FOR INSURANCE (39(1)(A) AND (B))

These orders allow applicants to ensure that the association adequately insures the property and takes action under existing policies to recover amounts owed. The social purpose is to safeguard financial stability and protect assets within the community scheme. However, the scope includes potential complexity regarding the specifics of policy terms and the adequacy of insurance amounts. Applicants might face difficulties proving the inadequacy of the insurance or that the association failed to act on a policy without good reason.

CONTRIBUTIONS AND LEVIES (39(1)(C) AND (E))

These orders address the fairness and accuracy of levies and contributions, allowing for adjustments if contributions are incorrectly determined or unreasonable. They aim to maintain financial fairness among members. However, the difficulty of proving what is “fair” or “unreasonable” can make it challenging for applicants to provide compelling evidence of improper calculation or distribution of contributions.

AUDITS (39(1)(D))

This order requires auditing the association’s accounts to promote transparency and financial accountability. The social purpose is clear, but specifying the audit period and choosing an auditor can be challenging. Applicants might face difficulties justifying the need for an audit and selecting an independent auditor.

RENTAL PAYMENTS (39(1)(F))

This provision enables an association to collect rental payments directly from tenants if the landlord is in arrears, ensuring necessary funds for scheme operations. The social purpose is to secure financial stability, but tenant rights and landlord obligations can vary widely, so this aspect needs to be investigated. Applicants might also struggle to demonstrate the necessity of the drastic step of bypassing the landlord and address the difficulties of ensuring tenant compliance.

PHYSICAL MANAGEMENT ISSUES

NUISANCES AND HAZARDS (39(2)(A)-(D))

Orders in this category aim to address and mitigate nuisances, hazards, and illegal attachments within the scheme, ensuring safe and pleasant living conditions. The social purpose is clear, but defining what constitutes an objective nuisance or hazard can be challenging. Applicants might face difficulties providing evidence and proving the extent of the nuisance or hazard.

REPAIRS AND MAINTENANCE (39(6)(A) AND (B))

These orders compel the association or relevant individuals to carry out necessary repairs and maintenance, preserving the property’s integrity and functionality. The social purpose is to maintain the property in good condition, but the specifics of defining the required repairs can be an issue. Applicants might also struggle to demonstrate the necessity and urgency of the repairs.

IMPROVEMENTS AND EXCLUSIVE USE (39(6)(C)-(G))

These provisions address proposals for improvements and the granting of exclusive use rights, ensuring that decisions regarding common areas and facilities are reasonable and beneficial to the community. The social purpose is to balance individual needs with community interests, but the reasonableness of improvements and exclusive use rights are inherently complex. Applicants might face difficulties proving that the association’s decisions were objectively unreasonable.

ADMINISTRATIVE MANAGEMENT ISSUES

GOVERNANCE DOCUMENTATION (39(3)(A)-(D))

Orders under this section focus on the validity and reasonableness of scheme governance provisions, ensuring that rules are fair, legally sound, and reflective of the community’s needs. The social purpose is to ensure good governance, but the validity and reasonableness of the provisions can be contentious. Applicants might struggle to demonstrate that the provisions are objectively invalid or unreasonable.

MEETINGS AND RESOLUTIONS (39(4)(A)-(E))

These orders ensure the proper conduct of meetings and the validity of resolutions, addressing issues related to convening meetings, resolution validity, and protecting individual rights. The social purpose is to ensure transparency and fairness in decision-making, but the complexity of this area of law and practice can make the invalidity of meetings and resolutions difficult to prove. Applicants might face difficulties providing evidence and proving invalidity.

MANAGEMENT SERVICES (39(5)(A) AND (B))

These provisions regulate the conduct and termination of managing agents, ensuring management services are performed according to agreed terms and codes of conduct. These orders should be read in conjunction with regulations under the Property Practitioners Act of 2019. The social purpose is to ensure effective management, but the terms of the contract and the right to terminate can be subject to different interpretations. Applicants might face difficulties proving non-compliance or justifying termination.

ACCESS TO INFORMATION (39(7)(A))

This order ensures transparency by granting members access to information and documents, upholding principles of openness and accountability within the community scheme. The social purpose is clear, but specifying the information and documents required can be challenging. Applicants might face difficulties justifying their need for the information and ensuring compliance.

CATCH-ALL PROVISION (39(7)(B))

This flexible provision allows the Chief Ombud to propose any necessary order to address unique or unforeseen issues, ensuring comprehensive dispute resolution capabilities. The social purpose is to provide a catch-all solution, but the specifics of the requested order need to be considered in detail, to ensure they will be legal and enforceable. Applicants might struggle to demonstrate the necessity and appropriateness of the proposed order.

CONCLUSION

Section 39 of the CSOS Act provides a mechanism for addressing a wide range of disputes within community schemes. However, applicants must navigate potential ambiguities and challenges in proving their claims, which means they must prepare thoroughly and understand the scheme’s legal framework.

Given that CSOS administrative staff and adjudicators may not have access to all scheme documentation, all CSOS applications should be supported not only by compelling evidence, pertinent correspondence, and relevant extracts from meeting minutes but also by the relevant scheme rules, and other governance documents. Applicants dealing with complex issues should, before submitting their applications, consider seeking advice from attorneys, accountants or other technical experts who specialise in community scheme disputes, particularly when the adjudicator’s decision is likely to be based mainly on a disputed interpretation of the law or a provision in a scheme governance document or a rule.

Finally, I suggest that applicants should include in their application a draft wording of the order they want the adjudicator to make.

Courtesy: Paddocks

Article reference: Paddocks Press: Volume 19, Issue 5.

Weblink: https://www.paddocks.co.za/paddocks-press-newsletter/potential-claims-for-relief-under-section-39-of-the-csos-act#mce_temp_url#

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