In a seminal ruling, the Supreme Court of Appeal (‘the SCA’) recently settled ongoing uncertainty surrounding the forum in which community scheme disputes should be heard. Providing much-needed clarity, the SCA unanimously confirmed that the Community Schemes Ombud Service Act (‘the CSOS Act’) does not oust the High Court’s inherent jurisdiction. Accordingly, litigants may approach the High Court as a court of first instance – without needing to demonstrate ‘exceptional circumstances’.
The facts of the case
In Parch Properties v Summervale Lifestyle Estate Owners’ Association, Parch Properties (‘the Appellant’) owned garden cottages on an erf neighbouring Summervale Lifestyle Estate, a gated retirement community in the Western Cape. The Appellant sought a declaratory order from the Western Cape High Court to include its property within the Homeowners’ Association constitution’s definition of ‘Area’, which would effectively make the entity a member of the homeowners’ association with voting rights and access to shared facilities.
Key issue: Does the High Court have jurisdiction to entertain the application as a court of first instance?
Some Summervale members opposed the application, contending that the High Court lacked the jurisdiction to hear the matter. Instead, they argued that the dispute should have been referred to the Community Schemes Ombud Service (‘CSOS’) – a statutory body established to handle governance issues and resolve administrative disputes in community schemes. In Heathrow Property Holdings v Manhattan Place Body Corporate, the Western Cape High Court previously held that community scheme disputes should first be referred to CSOS – not the courts – unless ‘exceptional circumstances’ exist. According to that case, the High Court is a secondary forum intended to hear reviews and appeals emanating from CSOS adjudication. This ruling unsurprisingly created procedural uncertainty for parties involved in community scheme disputes.
The SCA’s ruling
In evaluating the purpose of the CSOS Act and its relevant provisions, the SCA found that the legislation never intended to make CSOS the exclusive forum to hear community scheme disputes. According to section 38(1) of the CSOS Act, any person affected by a dispute may apply to CSOS, which clearly indicates ‘a choice of forum’ – not a peremptory requirement. Accordingly, the Act neither explicitly nor implicitly ousts the inherent jurisdiction of the High Court to hear community scheme disputes as a court of first instance. Echoing legal principles articulated in recent case law, the SCA further reaffirmed the strong presumption against the ousting of the High Court’s jurisdiction.
Notwithstanding the Ombud’s broad powers, CSOS was intended to ‘co-exist’ with the judiciary by offering parties, who do not have the means to litigate, access to ‘a relatively cheap and informal dispute resolution mechanism’. As a result, the Appellant was not required to demonstrate the presence of ‘exceptional circumstances’ for the High Court to entertain its application for a declaratory order.
Practical consequences of the SCA’s finding
Although there is no requirement to first approach CSOS or to prove exceptional circumstances before launching an application in the High Court, the Ombud remains a valuable dispute mechanism, particularly for smaller, less complex disputes. The SCA’s judgment, however, confirms that parties to community scheme disputes, including homeowners, trustees, and tenants, are entitled to elect whether to proceed via CSOS or the courts. Ultimately, the choice of forum should be exercised responsibly and guided by the nature and complexity of the dispute, the need for urgent relief, and the financial implications flowing from that choice.
How can STBB help?
If you’re a homeowner, body corporate, developer, or managing agent navigating a community scheme dispute, seek legal guidance before proceeding. To ensure effective resolution, our team of litigation and dispute resolution attorneys assist clients in selecting the most strategic and appropriate route, whether via CSOS or the courts.
For expert legal advice, contact our team at info@stbb.co.za today.
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