- Homeowners cannot accept parts of a settlement while rejecting its conditions, reinforcing procedural integrity in HOA disputes.
- Improper disclosure of without-prejudice offers can undermine settlement mechanisms and may have consequences.
- HOAs can resolve disputes confidently without fear of punitive cost orders, encouraging responsible governance.
When sectional title disputes arise over approvals or building plans, the homeowners’ association (HOA) and trustees often face confusion over what a settlement really entails.
Johlene Wasserman, Director of Community Schemes and Compliance at VDM Incorporated, says the Gauteng High Court has now provided much-needed clarity. She explains that a HOA cannot accept the benefits of a settlement offer while rejecting its conditions, including clauses that exclude legal costs.
Wasserman recounts the case of sectional title owner Jennifer Koster, who clashed with the Centurion Homeowners Association over revised building plans. “Initially, the HOA refused to approve Koster’s plans, prompting her to launch a High Court review. Later, the HOA approved the plans under a formal Rule 34 settlement offer, which explicitly excluded any contribution to her legal costs,” she explains.
“This ruling is a textbook example of why settlement mechanisms exist and what happens when they are misused strategically.”
In the ruling, Koster accepted the approval and used it to secure municipal permission and her occupation certificate. “Even after that, she continued litigating, claiming the approval was an independent act and not part of the settlement,” Wasserman says. “The court rejected this argument and made it clear that you cannot take the performance and reject the terms. Settlement does not work that way.”
Wasserman adds that the court also criticised Koster for disclosing the without-prejudice offer in her affidavits, which contravenes Rule 34. By the time the matter was heard, she notes, the dispute was effectively over. The court dismissed the review as moot and made no order as to costs, a decision Wasserman says discourages opportunistic litigation.
Conditional approvals must be respected
Wasserman highlights that the judgment reinforces a simple but crucial principle that when a HOA approves plans or provides relief as part of a settlement offer, all conditions attached must be accepted. “Homeowners cannot cherry-pick favourable elements while ignoring the rest, including clauses about costs,” she says.
She adds that the ruling clarifies the legal nature of HOA decisions. “Sectional title and community scheme decisions fall under contract law and the law of voluntary associations. They are not public administrative acts, so principles from cases like Oudekraal do not apply,” Wasserman explains.
According to her, this provides reassurance for HOA trustees. “The court confirmed that HOAs can resolve disputes responsibly without fear of punitive cost orders, which strengthens the integrity of community-scheme governance.”
For homeowners, Wasserman warns that opportunistic litigation will not be rewarded. “Even if relief is granted, selectively ignoring settlement conditions undermines procedural fairness and will not earn a costs award.”
Guidance for HOA governance and homeowners
Wasserman advises both owners and trustees to take lessons from the judgment. She points out that improper disclosure of without-prejudice offers can undermine settlements and may carry consequences. “Sectional title owners must understand that conditional approvals are part of a package, and treating them as separate administrative concessions will not succeed in court,” she says.
She adds that settlement mechanisms only work if both sides respect the rules. “HOAs can act confidently to resolve disputes pragmatically. Homeowners should approach litigation with integrity rather than looking for technical loopholes,” Wasserman notes.
Courts, she says, are increasingly unwilling to entertain disputes that have become moot after the substantive relief has been delivered. “This is a critical lesson for all parties involved in community schemes,” she adds.
Implications for future HOA disputes
Wasserman says the ruling will influence how future disputes are handled. Conditional approvals must be accepted fully, without-prejudice communications protected, and courts will examine the substance of actions rather than allowing technical reframing. “This judgment sends a clear message: fairness and responsible conduct must guide dispute resolution in sectional title schemes,” she says.
For both owners and trustees, she concludes, the decision reinforces that opportunistic litigation is discouraged and that settlement processes are protected when respected by all parties.
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