By Auren Freitas dos Santos
In a recent Judgment handed down on 2 September 2024, the Western Cape High Court addressed a pivotal issue concerning the jurisdiction of the Community Schemes Ombud Service (CSOS) over disputes in sectional title schemes. At the centre of the case was a disagreement regarding alterations proposed by an unit owner in a sectional title scheme, which the Body Corporate had repeatedly opposed, despite the alterations having municipal approval.
Over the years, the Body Corporate raised various objections, leading the owner to seek relief from CSOS. After CSOS initially dismissed his application, he reapplied, but his complaint was once again dismissed due to questions surrounding jurisdiction.
The High Court’s ruling in this case brings clarity to an essential legal question in the sectional title landscape: Which provision applies when body corporate resolutions are blocked on potentially unreasonable grounds? The court closely examined two legal provisions that were central to the dispute: section 6(9) of the Sectional Title Schemes Management Act (STSMA) and section 39(4)(d) of the Community Schemes Ombud Service Act (CSOS Act).
The Legal Provisions in Question: Section 6(9) of the STSMA and Section 39(4)(d) of the CSOS Act
- Section 6(9) of the STSMA – This provision allows a unit owner to approach CSOS if the body corporate unreasonably refuses to pass a special or unanimous resolution. Essentially, it gives the Chief Ombud the authority to override the body corporate’s decision if the refusal is deemed unreasonable.
- Section 39(4)(d) of the CSOS Act – This provision empowers an adjudicator to declare that opposition to a motion at a general meeting was unreasonable and, if so, to order the implementation of the motion as initially proposed. Section 39(4)(d) provides a pathway for relief when a motion fails to pass due to unreasonable objections.
The Adjudicator’s Decision and the High Court’s Analysis
In his initial application, the owner sought relief under section 39(4)(d) of the CSOS Act, arguing that the Body Corporate’s opposition was unreasonable. However, the CSOS Adjudicator dismissed his application, asserting that jurisdiction over the matter lay under section 6(9) of the STSMA, not section 39(4)(d) of the CSOS Act. The Adjudicator suggested that only the Chief Ombud had the authority to handle such disputes, thereby implying that section 39(4)(d) did not apply in this context.
The owner appealed to the High Court, which examined whether the Adjudicator’s interpretation was legally sound. Specifically, the High Court needed to determine whether CSOS had jurisdiction to assess the reasonableness of opposition to a motion under both section 6(9) of the STSMA and section 39(4)(d) of the CSOS Act, or whether one provision should take precedence over the other.
The High Court’s Ruling: Both Provisions Can Apply
The High Court found that the Adjudicator had misinterpreted the jurisdictional scope of the CSOS Act. According to the High Court, both section 6(9) of the STSMA and section 39(4)(d) of the CSOS Act provide viable legal pathways for unit owners to challenge unreasonable body corporate decisions. The court clarified that section 39(4)(d) does not exclude section 6(9) and can be used as an independent avenue for relief in cases where a motion was unreasonably opposed at a general meeting.
Therefore, the court held that the CSOS Adjudicator indeed had the authority to decide on the reasonableness of the Body Corporate’s opposition to the proposed alterations under section 39(4)(d). The dismissal of the owner’s application due to jurisdictional issues was an error, and the court set aside the Adjudicator’s decision.
The Impact of the Judgment: Broader Avenues for Relief in Community Scheme Disputes
The High Court’s decision has significant implications for disputes within community schemes. By affirming that applicants can rely on either section 6(9) of the STSMA or section 39(4)(d) of the CSOS Act depending on the relief they seek, the ruling expands the options available to unit owners who face unreasonable refusals from their body corporate.
The court remitted the case back to CSOS, instructing it to reconsider the owner’s application based on the merits, rather than dismissing it on jurisdictional grounds. This judgment underscores that applicants in similar cases should have access to CSOS relief, regardless of whether their case is framed under section 6(9) or section 39(4)(d).
Key Takeaway
For body corporate members and trustees, this judgment serves as a reminder of the oversight mechanisms in place to ensure fairness in community scheme governance. The ruling clarifies that when body corporates act unreasonably in blocking member proposals, CSOS is empowered to provide an avenue for relief, offering a vital check on community scheme decision-making.
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 should you require any assistance with your application for dispute resolution.
