By Auren Freitas dos Santos
In this article, we’ll explore a notable judgment from the High Court of South Africa, Kwazulu-Natal Division. This case involves a sectional title owner (the applicant) appealing against a decision made by a Community Schemes Ombud Service (CSOS) adjudicator (the third respondent).
Key Issue
The main question was whether the adjudicator erred on a point of law in her decision regarding the body corporate’s (the first respondent’s) complaint against the applicant. Put differently, was her award in accordance with section 39 of the Community Schemes Ombud Service Act 9 of 2011 (the CSOS Act).
Background
In 2017, the applicant served as the chairperson of the body corporate. After his removal in 2018, the body corporate trustees filed a dispute with CSOS over a CCTV installation contract awarded to the applicant’s company. The adjudicator found that the applicant had breached his fiduciary duties and awarded R176,235.00 in damages against him.
The Appeal
Unhappy with this decision, the applicant appealed under Section 57(1) of the CSOS Act, which allows appeals to the High Court on legal questions. The appeal focused on two main points:
- Was the adjudicator’s award legally valid under Section 39 of the CSOS Act?
- What is the proper procedure for filing appeals under Section 57 of the CSOS Act?
Court Findings
The High Court examined whether the adjudicator’s decision was consistent with Section 39 of the CSOS Act. The court concluded that while the adjudicator could declare that the applicant breached his fiduciary duties (as this is nothing more than a declarator), the damages awarded as a result of this declarator were beyond the scope of Section 39, which does not allow for damages but rather for payments or repayments of contributions.
The court found that the proper interpretation of s 39(1)(e) (the provision in terms of which the adjudication award was granted) refers to a ‘payment or repayment of a contribution [court’s emphasis] or any other amount’. The court held that to stretch “any other amount” to cover an award for damages would be against the purpose and context of the text.
Procedure for Section 57 Appeals
The court also addressed the procedural norms for Section 57 appeals, noting that different High Court divisions have varied practices. The court referenced several cases to determine the appropriate procedure, concluding that an appeal under Section 57 should ideally be brought by notice of motion supported by affidavits, as outlined in the case Trustees Avenues Body Corporate v Shmaryahu.
The court detailed the procedure as follows:
- The applicant to such an appeal will have to file a notice of motion to be served on the respondents so that they may respond if they wish to within the time limits provided for in Uniform Rule 6(5)
- The applicant’s affidavit should be no longer than 10 pages, and it must succinctly state the grounds upon which it is averred that the adjudicator erred on a point of law together with a brief background about the facts leading to such a dispute
- Respondents’ affidavits should also be no longer than 10 pages.
- The applicant’s replying affidavit should be limited to 6 pages.
- Once the affidavits have been filed, the appeal will follow the practice directives provided for opposed motions including the filing of the heads of argument, should same be opposed.
- In this way, the appeal will serve before a single judge as an unopposed or opposed motion.
Conclusion
The High Court upheld the applicant’s appeal, setting aside the adjudicator’s award as it exceeded the reliefs permitted under Section 39 of the CSOS Act. Additionally, the court set out clear procedures for future Section 57 appeals in the Kwazulu-Natal Division.
This judgment highlights the need for CSOS disputes to stay within the boundaries of Section 39 of the CSOS Act and clarifies that any amounts claimed under section 39(1)(e) of the CSOS Act are limited to levy contributions.
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. Reach out to him at info@theadvisory.co.za for assistance with any disputes in your community scheme.
