What to do when you cannot obtain a special or unanimous resolution

By Auren Freitas dos Santos

Not many people know that in August 2021 the Community Schemes Ombud Service (CSOS) issued a Practice Directive called “Approval of Special and Unanimous Resolution process in terms of the STSMA”.

The objective of the directive is to clarify the implementation of the approval of a unanimous and special resolution in terms of section 6(9) of the Sectional Titles Schemes Management Act (the STSMA) and to provide guidance to applicants on the filing process.

Section 6(9) of the STSMA states that a body corporate or an owner who is unable to obtain a special or unanimous resolution may approach the chief ombud for relief.

The scope of application of the directive applies to Sectional Title Schemes defined in terms of the STSMA, all persons who own or manage such schemes, and the CSOS. The directive only applies to applications in terms of section 6(9) of the STSMA and does not apply to homeowners associations or any other community scheme besides those mentioned above.

The directive outlines the filing process for applicants. Applicants must complete the Application for Approval of Special or Unanimous Resolution Form – Form ST1. The form can be downloaded here. The completed form can be submitted to the CSOS, either online, by post, email, or hand-delivered to any of the CSOS’s Regional Offices.  The email address is sectionaltitles@csos.org.za.

The applicant is responsible for ensuring that all relevant information has been submitted to make their case and that the application form meets legislative requirements. If an application is not clear and legible, the applicant will be requested to submit a revised application.

The directive also provides information about the community scheme approval process. Before submitting an application to the Chief Ombud for the approval of a special or unanimous resolution, the applicant must ensure that the matter relating to the resolution was tabled at the general meeting or through a round-robin. The notice of the meeting for approval of a special or unanimous resolution is 30 days.

Before the Chief Ombud can approve the application, at least more than 75% of members entitled to vote both in number and value should have voted in favour of the unanimous resolution and at least more than 50% of members entitled to vote both in number and value should have voted in favour of the special resolution.

The directive also outlines the supporting documentation that applicants must provide, including:

1. Notification for the meeting and proof that all owners received the notice,
2. Minutes of the general meeting indicating the number of members who attended or were represented,
3. Confirmation by trustees indicating votes, both in number and value, of members who voted in favour of the resolution, and
4. Any other documents in support of the application.

The Chief Ombud will evaluate the application to approve the resolution, taking into account its legality, reasonableness, and fairness to all members of the scheme. To make this assessment, the Chief Ombud will consider the following factors:

1. The objective of the STSMA and its associated Regulations;
2. The reasons provided by members who voted against the resolution if any;
3. The intended objective and purpose of the resolution; and
4. Whether the resolution will improve the living conditions of scheme members or promote effective governance within the community scheme.

The Chief Ombud may reject any application that does not comply with the requirements set out in the STSMA or this Practice Directive.  There are several grounds for the rejection of an application, including but not limited to:

1. If the dispute is part of, or closely related to, existing court proceedings;
2. If the applicant fails to provide the requested additional information within 14 (fourteen) days;
3. If the application does not fall within the scope of section 6(9) of the STSMA; and
4. If the application fails to meet the necessary requirements.

In summary, the Practice Directive issued by the CSOS provides guidance to applicants on the procedures and content requirements for approval of unanimous and special resolution applications. The directive clarifies the implementation of the approval of a unanimous and special resolution in terms of the STSMA, outlines the filing process for applicants, and provides information about the community scheme approval process and the supporting documentation that applicants must provide.  This is a very useful mechanism to assist bodies corporate and owners who are unable to obtain a special or unanimous resolution. A copy of the full Practice Direction is available on our website here.

Specialist Community Scheme Attorney (LLB, LLM), Auren Freitas dos Santos, is a Director of The Advisory, a boutique consultancy specialising exclusively in community schemes law.

Contact him at www.theadvisory.co.za or email info@theadvisory.co.za if you require any assistance with your application in terms of section 6(9) of the STSMA..