By Auren Freitas dos Santos
Welcome to the first instalment of our series titled “A Call for Change: Addressing the Shortcomings of CSOS”. Over the coming months, we will embark on an investigative journey into the workings of the Community Schemes Ombud Service (CSOS), shedding light on its shortcomings in the hopes that increased public awareness may drive necessary reforms.
The inception of the Community Schemes Ombud Service in 2016 was hailed as a beacon of hope, promising quick, affordable, specialised and reliable justice for residents within community schemes nationwide. Yet, as we shall demonstrate in this series, reality has starkly deviated from this vision. Join us as we delve into this critical issue, revealing the repercussions of the CSOS’s shortcomings on community schemes reliant on its services.
In this inaugural article, our focus zeroes in on the CSOS’s struggle to interpret section 3(1)(c) of the Sectional Titles Schemes Management Act and the resulting impact on sectional title schemes.
One of the primary roles of the CSOS is to regulate, monitor, and control the quality of all sectional titles scheme governance documentation. According to the CSOS’s own practice directive, this entails conducting quality assurance whenever a body corporate amends its rules, ensuring fairness, equality, and compliance with relevant legislation and case law.
The CSOS wields considerable power in approving or vetoing rule changes proposed by bodies corporate. However, despite its mandate, our clients have encountered repeated refusals from the CSOS to approve rules aimed at shifting the responsibility of maintaining and repairing exclusive use areas to their users as permitted in terms of section 3(1)(c) of the Sectional Titles Schemes Management Act.
The CSOS contends that exclusive use areas fall strictly under the jurisdiction of the body corporate for maintenance and repair, prohibiting any delegation of responsibility to individual owners. Consequently, none of our clients have received the necessary approval from the Chief Ombud to implement rule amendments aimed at alleviating the financial burden on bodies corporate.
This policy stance underscores the CSOS’s struggle in interpreting section 3(1)(c) of the Sectional Titles Schemes Management Act. It is alarming that the CSOS, a specialised administrative and adjudicatory body mandated by statute to apply technical knowledge in community schemes, faces challenges in interpreting the very laws it’s tasked to uphold.
The correct interpretation and application of section 3(1)(c) of the Sectional Titles Schemes Management Act was eloquently summarised by the Hon. Justice Binns-Ward and the Hon. Acting Justice De Wet in the matter of Baxter v Ocean View Body Corporate and Others (A170/2022) [2022] ZAWCHC 234; 2023 (2) SA 205 (WCC) (16 November 2022).
Ironically, this case involved an appeal against an incorrect Adjudication Order issued by the CSOS, which was subsequently overturned by the Western Cape High Court due the CSOS’s misinterpretation of section 3(1)(c) of the Sectional Titles Schemes Management Act.
Here’s a brief overview of the case: The Body Corporate decided to raise the levy on exclusive use balcony areas from R3 to R23 per square metre. This increase aimed to cover insurance, maintenance, and other expenses, as well as contribute to the scheme’s 10-year maintenance plan. The decision was made retroactively.
The appellant lodged a dispute with the CSOS, seeking orders under s 39(1)(c) of the Community Schemes Ombud Service Act, including a declaration that the contribution levied on exclusive use balcony owners conflicted with s 3(1)(c) of the Sectional Titles Schemes Management Act. The CSOS adjudicator dismissed the appellant’s claims, leading to an appeal to the High Court.
The Court examined section 3(1)(c) of the Sectional Titles Schemes Management Act, which provides that one of the functions of a body corporate is –
“to require the owners, whenever necessary, to make contributions to such funds: Provided that the body corporate must require the owners of sections entitled to the exclusive use of a part or parts of the common property, whether or not such right is registered or conferred by rules, to make such additional contribution to the funds as is estimated necessary to defray the costs of rates and taxes, insurance and maintenance in respect of any such part or parts, including the provision of electricity and water, unless in terms of the rules the owners concerned are responsible for such costs” (Emphasis added by the Court)
Following the examination of this provision, the Court held that the correct interpretation of this provision is as follows:
“Simply said, s 3(1)(c) of the STSMA requires the body corporate to make a policy decision: either the body corporate maintains the exclusive use areas itself and collects the costs of doing so from the owners of the areas, or the trustees amend the conduct rules and make the maintenance (and the costs thereof) the responsibility of the owners (without the need for a contribution towards maintenance)”
In this case, the Body Corporate’s conduct rule assigned maintenance and repair responsibilities to owners with exclusive use rights. Consequently, the Body Corporate was prohibited from levying contributions to cover maintenance costs for these areas, as per the proviso to section 3(1)(c) of the Sectional Titles Schemes Management Act.
Ultimately, the Court found that the CSOS Adjudicator failed to recognise the impact of the proviso to section 3(1)(c) in conjunction with the body corporate’s rule on the determination of the contribution in question.
Despite the Court’s clear ruling, the CSOS continues to resist approving rules aligning with this interpretation, causing frustration and financial burden for community schemes.
As we’ve highlighted in this article, the CSOS’s refusal to adapt its policies in line with legal interpretations presents a significant obstacle to the realisation of justice for community schemes nationwide. We call upon the public to join us in raising awareness and advocating for much-needed reforms within the CSOS.
Through increased public pressure, we aim to compel the CSOS to reassess its stance and enact policy changes that align with the spirit and letter of the law. Let’s work together to ensure that the CSOS fulfils its promises and provides the quick, affordable, specialised, and reliable justice that community scheme residents rightfully deserve.
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. We invite you to reach out to us at info@theadvisory.co.za to share any frustrations you’ve encountered when dealing with the CSOS that you’d like us to address in this series. Your insights are invaluable in shaping our mission to advocate for necessary reforms.
