Conduct rule dispute resolution

Conduct Rule
21 Dec 2021

In Heathrow Property Holdings No 3 CC and Others v Manhattan Place Body Corporate and Others [2021] 3 All SA 527 (WCC), the Community Schemes Ombud Services is the primary forum for adjudicating body corporate disputes, not the High Court which is intended to be a secondary, supervisory forum.

Property – Community schemes – sectional title scheme: As owners of three loft apartments in a mixed-use sectional title scheme, the applicants in Heathrow Property Holdings No 3 CC and Others v Manhattan Place Body Corporate and Others [2021] 3 All SA 527 (WCC) objected to a conduct rule adopted by the body corporate of the scheme in 2003. The rule acknowledged the right which owners had to let their units but sought to regulate the terms thereof in respect of short-term rentals for periods of less than six months. The respondents explained that the rule was adopted with a view to addressing security issues pursuant to an increase in short-term rentals of residential units in the scheme.

In 2017, other owners of loft units challenged the ambit and application of the rule by referring a dispute in this regard to the statutory Ombud, as provided for by the Community Schemes Ombud Services Act 9 of 2011. The complainants sought to set aside the rule on the basis that it was unreasonable, and sought the setting aside of penalties levied by the trustees as fines. The adjudicator found the rule to be reasonable and fair.

It was held, as per Sher J that the application had been brought on an urgent basis without any basis, therefore, being established. Secondly, the applicants did not set out any instances where they were unjustifiably refused permission to let their units on a short-term basis since February 2020. Consequently, they had no standing to bring an application in that regard.

A further issue raised by the court was that the application effectively sought to bypass the dispute resolution mechanisms, which have been established by the Community Schemes Ombud Services Act. The issues, which the applicants sought to have determined by the court fell squarely within the ambit of the Act, which provided for the determination of such disputes by an adjudicator. The legislature intended that the primary forum for adjudication of disputes in terms of the Act is to be the Ombud service and the adjudicators appointed by it, who are required to have suitable qualifications and the necessary experience (not only in relation to the adjudication of disputes, but also in relation to community scheme governance). The High Court is intended to be a secondary, supervisory forum which is to exercise review and appellate jurisdiction (i.e. oversight over the discharge by the Ombud and its adjudicators of their duties and powers), and not an adjudicatory jurisdiction.

The matter was consequently struck from the roll, with costs, on the scale as between attorney and client.

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(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)
Merilyn Kader

Merilyn Kader joined LexisNexis from practice as an attorney and has a Compliance Management certification. She manages the All South African Reports and the Constitutional Law Reports. Read more about Merilyn Kader

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