Why you should think twice before bypassing the CSOS dispute resolution procedures
On 01 June 2021, the High Court (Western Cape Division, Cape Town), delivered a judgment in respect of an urgent application in which relief was sought in relation to the reasonableness of a body corporate’s conduct rule prohibiting short-term letting and the validity of the trustees’ decision to install a biometric access control system.
Interestingly, the Court did not make any findings on the merits of the dispute but focused rather on important questions about the jurisdiction which has been afforded to courts and adjudicators in terms of the Community Schemes Ombud Services Act (“the CSOS Act”).
The Court made a scathing order, striking the matter from the roll, with punitive costs. The dismissal was based on the following two main points:
- Firstly, on the basis that it constitutes an egregious abuse of the process of the High Court; and
- Secondly, on the basis that the application is one that should be dealt with in terms of the dispute resolution procedures which have been established by the CSOS Act, and not by a Court.
The Court held that the issues which the applicants sought to have determined by the Court fell squarely within the express jurisdiction of the CSOS. However, the applicants contended that, although the issues could be granted in terms of the CSOS Act, they were at liberty either to approach the Ombud or to approach the Court and that the Court could not refuse to entertain the application by declining to exercise its concurrent jurisdiction.
The Court rejected this argument and pointed out that the object of the CSOS Act is to provide a mechanism for the expeditious, informal and cost-effective resolution of community scheme disputes via an Ombud, who has been given wide inquisitorial powers whereby such disputes can be resolved as informally and cheaply as possible by means of qualified conciliators and adjudicators, without the need for legal representation, save in certain limited circumstances.
The Court referred to the comments made in an earlier judgment in the matter Coral Island Body Corporate v Hoge 2019 (5) SA 158 (WCC), where Binns-Ward J warned that the compelling constitutional and social policy considerations which informed the introduction of the CSOS Act, including:
- the promotion of quick and affordable access to justice to those who live in sectional title schemes who are not easily able to afford to litigate in the courts, and
- the social utility to be achieved by the provision of a relatively cheap and informal dispute resolution mechanism, were liable to be undermined if courts were to indiscriminately entertain matters that should rather be dealt with in terms of the processes which have been established by the CSOS Act.
After considering the provisions of the CSOS Act, the Court made the following two important observations:
- The legislature intended that the primary forum for adjudication of disputes in terms of the CSOS Act is to be the Ombud service and the adjudicators appointed by it, who are required to have suitable qualifications and the necessary experience; and
- Where specialist administrative or adjudicatory bodies or structures which are not courts proper have been established by statute for the expeditious, informal and cost-effective resolution of particular disputes which involve the application of specialized or technical knowledge or experience, they are the forums which are required to deal with such disputes in the first instance, even though a court may also have jurisdiction to do so.
In light of the above, the Court found:
- That allowing litigants to proceed directly to a court instead of CSOS would undermine the administrative and quasi-judicial processes which have been provided for in the CSOS Act and would result in ‘forum-shopping’ by better resourced litigants; and
- That allowing litigants to bypass the mechanisms provided for in the CSOS Act for the resolution of disputes would allow them to avoid the conciliation process provided for by it, thereby defeating the legislative purpose of having community scheme disputes resolved, if at all possible, by way of an informal, expeditious and cheap mechanism, instead of via the courts.
The Court concluded by stating that where disputes pertaining to community schemes fall within the ambit and purview of the CSOS Act, they are in the first instance to be referred to the Ombud for resolution, and a court is not only entitled to decline to entertain such matters as a forum of first instance, but may in fact be obliged to do so, save in exceptional circumstances.
In each instance, a litigant will have to make out a good cause for why a dispute which can and should be heard by an adjudicator in terms of the CSOS Act should nonetheless be heard by the Court instead. In this regard, the Court noted that convenience will not constitute an exceptional circumstance and neither will an alleged inefficiency or delay in the conciliative or adjudicatory processes or mechanisms which have been provided for by the CSOS Act.
This judgment should serve as an important warning to stakeholders in community schemes that despite some of its inefficiencies, the CSOS dispute resolution process should not be overlooked or underestimated.
Article reference: Paddocks Press: Volume 16, Issue 6.
Specialist Community Scheme Attorney (LLB, LLM), Auren Freitas dos Santos, is the Director of The Advisory, a boutique consultancy specialising exclusively in community schemes law. Contact him at www.theadvisory.co.za if you require any assistance with a dispute in your community scheme.
This article is published under the Creative Commons Attribution license.
Author: Auren Freitas dos Santos – Director of The Advisory