What You Need To Know About Community Schemes
On 23 June 2020 CSOS acting Chief Ombud, Ndivhuo Rabuli, published answers to 43 frequently asked questions that have bearing on homeowners' associations and body corporates. The questions range from general questions to specific questions relating to registration of community schemes, levies and fees and annual financial statements.
Whilst the whole document will surely be insightful to those wishing to better understand the functioning of community schemes in general or to answer a particular question, the following summary (excerpts) may be interesting:
1. Summary / Excerpts:
"4. Does a chairperson have more powers than the rest of the Trustees?
Only in the instance where there is an equal number of trustees and at a Trustee meeting there is a tied vote (e.g. There are 6 Trustees including the Chairperson, 3 votes in favour of a proposed motion and 3 vote against), then the Chairperson has what is known as a "casting" or deciding vote. However, if there are only 2 Trustees, the Chairperson does not have a casting vote, since the Trustees can only act to co- opt further Trustees or to call a meeting to elect Trustees. The chairperson, therefore, has no more powers than the rest of the trustees. Please see prescribed management rule 14 of the Sectional Titles Schemes Management Act".
"5. What is the Managing Agents responsibility towards unit-owners?
A Service Level Agreement or management agreement is signed between the Agent and the client (being the community scheme), which sets out the duties and responsibilities of the Agent. There is no legislation which deals with the specific duties and responsibilities of an Agent. If the Managing Agent is a registered Estate Agent, then he/it falls under the rules and regulations of the Estate Agency Affairs Board and the Property Practitioners Act."
"7. Can the Trustees lodge an application for dispute resolution with the CSOS if summons has already been issued against a levy defaulter?
Section 42 of the CSOS Act states that an Ombud must reject an application if a summons has already been issued against a levy defaulter for the recovery of levies. When a potential Applicant (i.e. the body corporate in this instance) approaches the CSOS to institute dispute resolution proceedings against a levy defaulter for the collection of outstanding levies, we advise the Trustees to first withdraw legal proceedings against the recalcitrant unit-owner, and then hand the matter over to the CSOS. If the Trustees refuse, then the CSOS cannot take the matter on. The reason for this is that action against a Defendant/Respondent cannot be taken in different forums. The person instituting the action must choose the legal forum in which the legal action is instituted against the Defendant /Respondent and stick to that forum. You have the right to choose either the Court or the CSOS as the legal forum in which to institute and pursue the action, but not both. This is a fundamental principle of the South African Law."
"12. May I install CCTV cameras outside my unit for protection?
Yes, you may, however you need to obtain the Trustees permission and you may not invade anybody else's privacy in the scheme."
"16. Can an owner vote at a General Meeting if there is a judgment or adjudication order against him?
No, he cannot vote at an AGM or SGM for an ordinary resolution, however, the PQ can be counted towards the quorum. The owner can vote for a special or unanimous resolution even if there is a judgment or adjudication order against him."
"17. Must an owner first waive a meeting before a SKYPE / ZOOM / MICROSOFT TEAMS meeting can take place?
Holding an AGM via skype or any other electronic media does not mean that any member of the body corporate needs to waive the right to hold the meeting, it simply means that the meeting is held by utilising of electronic media as long as, in terms of prescribed management rule 10:
"A body corporate may make arrangements for attendance at an annual or special general meeting by telephone or any other method, if the method-
- is accessible to all members and other persons entitled to attend the meeting;
- permits all persons participating in the meeting to communicate with each other during the meeting; and
- permits the chairperson to confirm, with reasonable certainty, the identity of the participants."
It is only if no meeting whatsoever is going to be held, that all members must waive the right to the meeting."
2. Complete Amended Practice Directives
The following amendments to Practice Directive on Dispute Resolutions, 2019 are brought:
Paragraph 14. 1 of the Practice Directive, which provides the respondent or affected person 14 (fourteen) days to submit a response to the Ombud after an application form and accompanying attachments are served on the respondent, is amended to read: "A response may then be submitted to the Ombud within seven (7) days."
Paragraph 14.2 of the Practice Directive, which provides that the applicant has 10 (ten) days to inspect the respondent's submission or to provide a written response to the issues raised in the submission, is amended to read: "Once the Ombud has received a response from the respondent, the Ombud will allow the applicant five (5) days to inspect the submission or to provide any written response relating to the issues raised in the submission."
The following procedures are set out for the conduct of conciliations, adjudications and meetings:
No face-to-face Conciliations, Adjudications or meetings, whether in respect of general meetings or trustees meetings, will be conducted - subject to certain exceptions. The directive requests that parties ensure they have sufficient resources to remain connected for the duration of the proceeding. In order to deal with all conciliation and adjudication matters as expediently and with as little formality and technicality as possible, but in a fair manner, proceedings will continue as set out below, based on written submissions, documents, information & evidence.
Conciliations will be conducted telephonically or virtually, and will proceed as follows:
- The Conciliator will connect the parties on a conference call, which will be recorded, and explain to them the process and their rights and obligations.
- Should the parties reach a settlement, the Conciliator will draft a settlement agreement and read the same to the parties in its entirety, whereafter the parties will be asked to confirm the content thereof. The Conciliator will then send the parties a copy of the pre-read agreement, and the recording confirming the settlement agreement will be deemed to be the Settlement Agreement. The Conciliator will request that the parties sign the agreement and return a signed copy by email for the CSOS file, if possible, where after the file will be finalised and closed.
- Should the parties not reach a settlement, the Conciliator will issue a certificate of non-resolution incorporating a referral to adjudication and request for payment of the adjudication fee. The matter will be referred for adjudication upon confirmation of payment, failing which, after 5 days, the matter will be closed.
Adjudications will be conducted virtually or telephonically, in the Adjudicator's discretion, based on papers filed by the parties and further written submissions, documents and information, as requested by the Adjudicator. CSOS emphasises the requirement of fairness and transparency and to this end, all parties will be copied in on all correspondence at all times and submissions are requested to be in plain English, devoid of legal jargon.
The adjudication will proceed as below, which manner of adjudication is provided for in terms of section 50 and 51 of the CSOS Act, No. 9 of 2011, and must be read in conjunction with Practice Directive, 2019.
- Once the Adjudicator receives the adjudication file, he or she will notify the parties of receipt of the matter and request confirmation that they are in receipt of the others' submissions.
- The Adjudicator will consider the following:
Application for Dispute Resolution/Statement of Claim (submitted by the Applicant), comprehensively setting out -
- the nature of the dispute;
- all evidence, including photos;
- the relief sought in terms of section 39 of the CSOS Act;
- any submission from the applicant to the respondent's reply.
Answer to Application for Dispute Resolution (submitted by the Respondent),
- refuting the Applicant's claim OR admitting the Applicant's claim;
- evidence refuting the Applicant's claim
- setting out the relief required by the Respondent.
- The Adjudicator will request further final submissions or written argument by either party within 5 (five) working days, before he or she will deliberate and publish the Adjudication Order. Parties failing to timeously make written submissions to CSOS and the other party, as requested by the Adjudicator, will be automatically barred from making said submission thereafter save with the specific consent of the Adjudicator.
- The parties are prohibited, on their own accord, from communicating with the Adjudicator other than for the reasons mentioned above.
Meetings are, in terms of the Level 3 Regulations, not allowed to take place on a face-to-face basis and the CSOS recommends that virtual meetings and so-called 'round robin' resolutions be utilised. In view of the current situation, the CSOS will not be apply penalties for schemes that are unable to submit governance documentation within 3 months of an AGM as, required by the Act and Regulations).
Notwithstanding the above, the CSOS takes note that not all persons may not have access to or be conversant with electronic media and as physical meetings will be allowed if
- It is conducted in line with Level 3 Regulations;
- the number of trustees is sufficiently limited; and
- all necessary precautions are taken to mitigate health risks, for example:
o pre- meeting health assessments such as temperature checks;
o the sanitization of surfaces before and after the meeting is conducted;
o masks are worn throughout the meeting;
o social distancing is observed, and;
o one person only takes minutes and types up the minutes.