- In both cases, CSOS dismissed or ruled against applicants in high-value property scheme disputes for these technical reasons.
- One matter failed because the applicant lacked legal standing, while another collapsed due to insufficient evidence.
- A community schemes law specialist says the rulings provide important guidance for developers, trustees and property owners.
Two recent rulings by the Community Schemes Ombud Service (CSOS) are being highlighted as important reminders that property disputes can fail long before the underlying issues are considered.
Erin Sutton, a Community Schemes Law Specialist at Van Deventer Dowlath & Marx Incorporated, says the decisions demonstrate that applicants must first establish legal standing and support their claims with objective evidence before CSOS can determine the merits of a dispute.
“The cases highlight the two gatekeepers that determine whether a matter will be heard at all; legal standing and objective evidence,” Sutton said.
CSOS is the statutory dispute resolution body established under the Community Schemes Ombud Service Act, 2011, to resolve disputes involving sectional title schemes, homeowners’ associations, share-block schemes and other community schemes.
It has jurisdiction over financial disputes, governance matters, administrative conflicts, rule enforcement, common property issues and conduct-related disputes.
High-value dispute dismissed before merits considered
The first matter, Rob Hulme v Trustees of Waterford Body Corporate (CSOS13199/FS/25), involved a developer entity seeking to recover about R419 000 in interest paid under protest to obtain a levy clearance certificate.
According to Sutton, the dispute concerned a Section 25 real right of extension, which allows developers to reserve the statutory right to build additional phases in a sectional title development. However, the adjudicator dismissed the application without considering its merits.
Relying on the High Court decision in Durdoc Centre Body Corporate v Singh, the adjudicator found that the developer did not meet the statutory definition of an “owner” or “occupier” under the Community Schemes Ombud Service Act and therefore lacked the legal standing required to bring the application.
“The developer didn’t meet the statutory definition of an ‘owner’ or ‘occupier’, and without locus standi, the case couldn’t even start,” Sutton said.
She said the decision reinforced a strict jurisdictional requirement. “If an applicant does not fall within the narrow definitions of Section 38 and Section 1 of the CSOS Act, the forum cannot hear the dispute. Standing is the first gatekeeper, and it is absolute.”
Levy allocation challenge failed for lack of evidence
The second matter, Barnet and Others v Westlake View Springkell 16 HOA RF NPC, Olive Grove Body Corporate and Capstone 237 (Pty) Ltd, involved owners who alleged that as much as 80% of the scheme’s expenditure had been improperly channelled through a master homeowners’ association, creating an unfair levy burden.
The applicants also alleged that the developer had avoided contribution obligations linked to its Section 25 real rights. According to Sutton, the respondents successfully defended the application by relying on objective documentary evidence.
This included audited annual financial statements adopted at annual general meetings, an independent compliance audit confirming regulatory compliance and statutory record keeping, and legal authority from the Club Kerkira judgment, which limits a developer’s liability to expenses attributable to the area affected by its real rights.
The applicants were unable to produce verified financial data to contradict the audited records. “Evidence is the second gatekeeper,” Sutton said. “CSOS decides matters on a balance of probabilities. Unverified percentages, assumptions, or sweeping claims cannot outweigh audited financials and independent compliance reports.”
Important lessons for community schemes
Sutton said the two rulings provide practical guidance for anyone considering financial litigation before CSOS. Applicants must first ensure they fall within the statutory definitions contained in the Community Schemes Ombud Service Act before lodging a dispute.
They should also be prepared to support allegations involving levies, interest charges or financial mismanagement with quantified expert evidence or objective financial analysis.
She said audited financial statements will generally carry significant weight unless applicants can produce credible evidence showing fraud, systemic error or other objective grounds to challenge them.
CSOS should be approached as a legal forum
Sutton said trustees, directors, developers, managing agents and owners should recognise that CSOS is a legal forum rather than an investigative body. “They sharpen the governance landscape for every community scheme in South Africa. And they underline the importance of approaching CSOS with precision, preparation, and a clear understanding of the statutory framework that governs financial conflicts.”
She encouraged parties to verify their legal standing before filing applications, gather objective evidence before alleging financial irregularities and ensure disputes fall within the statutory framework governing CSOS jurisdiction.
“Used correctly, CSOS is one of the most accessible and cost-effective mechanisms for restoring transparency, accountability, and harmony within residential and industrial schemes,” Sutton said. “These rulings don’t close the door on financial disputes, but they do clarify the rules of engagement.”
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