FAST FORWARD FOR THE OMBUD

BY BLAKE WILKINS

Eyeball-to-eyeball confrontations are not common in most community housing schemes.

Sneaky manoeuvrings and glazed-honey whisperings are more likely in the hallowed hallways of pricey apartment blocks and slinky multi-unit complexes.

Enter stage left on 7 October 2016 the long-awaited Community Schemes Ombud Service Act (CSOS) with a cast-iron brief that includes providing a cost-effective dispute resolution package for owners and residents of community schemes.

Providing a service of this nature sounds pretty simple, right?

Nope.

Thousands of community schemes in South Africa have not registered with CSOS as required by the CSOS Act. Marching in tandem with the new act came the Sectional Titles Schemes Management Act (STSMA) and its regulations. Those two acts ushered in an entirely new, more complex environment for volunteer trustees and directors. And provided ombud staffers with challenges not anticipated when the acts were drawn up.

Community schemes include sectional titles developments, share block companies, home or property owners’ associations (inclusive of non-profit companies and common law associations), housing schemes for retired people, and housing co-operatives.

All Sectional Title developments fall under STSMA and its regulations (including the prescribed management and conduct rules) and CSOS while all remaining community schemes are subject to the requirements of CSOS and other legislation.

The concept of using an ombud service to efficiently and cost-effectively address complaints by members of the public has become entrenched in various sectors of the South African economy in recent years. However, it was a first for the rapidly expanding community housing sector that boasts an estimated 120 000 schemes. Many of those have yet to register with CSOS.

Peer review

There has been consistent criticism of the brutal restriction in the CSOS Act that precludes applicants or respondents from appealing to the high court to review rulings handed down by arbitrators unless the appeal talks specifically to a point of law.

CSOS is currently addressing this thorny issue by introducing a system of peer review under the watchful eye of a recently appointed acting chief arbitrator. As yet the ombud’s office has provided no clarity about how the review system will work.

The change, depending on its efficacy, will introduce a dash of reality to the ombud service’s positioning statement: affordable, reliable justice. Taking a dispute to the high court is not an affordable option. As a result, too many disputed rulings by arbitrators have fallen at this hurdle.

However, the issue of affordability is a two-edged sword. Bear in mind that to lodge a complaint with the ombud at a cost of only R50, one needs to have at least a working knowledge of the reams of legislation directly impacting community schemes.

While that may sound easy in principle, in practice it’s a challenge akin to piloting a broomstick without magic as a fallback position.

The CSOS Act prohibits applicants or respondents from being represented by a lawyer at an arbitration hearing unless special circumstances exist. Ignorance of the law is not considered a special circumstance.

There is no such prohibition on either party dipping into their pockets to pay for legal advice to draw up a complaint or to respond meaningfully to a complaint accepted as valid by the ombud.

The alternatives to seeking and paying for legal advice are to take the thorny DIY route or compromise by calling in assistance from a layperson experienced in the tangled web of property legislation.

If you go the DIY route, be prepared to be shown a red card if your complaint does not fall within the boundaries of the relatively narrow complaint criteria.

Once your application has been accepted as valid, it goes forward to reconciliation. If that fails, the next step is arbitration. A number of part-time arbitrators have been appointed in the various provinces.

The number of accepted applications has been climbing year on year. Additional part-time arbitrators have been appointed but more are needed. CSOS does not stipulate a cut-off date for the hearing of an application. Some applicants have waited nearly three years before a hearing takes place. Surely such delays are not acceptable?

But at least the ombud service has introduced a new facility to deal with urgent applications. This overdue option is likely to become popular.

What will put even more pressure on the ombud service is waiting just around the corner.

At present, the ombud service has no means of forcing community schemes to register. That will change soon as new legislation will give ombud staff the tools to pursue errant community schemes. With more schemes registered, more disputes will arise.

Community scheme lurking in the shadows will be identified relatively soon. CSOS is currently cleaning data gleaned from various other government agencies to identify those schemes that have not yet registered.

More gaps

But other changes are needed to close gaps that are being exploited by property owners and others.

Rampant multi-apartment holiday letting is possibly the most contentious issue that has sent the CSOS at national level and the Democratic Alliance at provincial level in the Western Cape scurrying away. Cash-hungry property speculators have bought up apartments in Cape Town and elsewhere to rent out as short-term holiday units.

With limited numbers of permanent residents in many apartment blocks, trustees and directors have made sure they have the votes of absentee owners to drive through changes to the rules that permit high volume holiday traffic. With huge profits (pre-Covid) rolling in for owners of multiple apartments, the DA-controlled City of Cape Town has ruled that such operations do not constitute a business.

Hoteliers, with the support of property owner pressure groups, approached the national Department of Tourism in 2019 to intervene. Draft regulations that included mooted restrictions on holiday letting were published for comment. A few months later Covid struck.

CSOS, with the keyword community in its title, took the easy route and ruled that the issue of whether or not to allow holiday letting in a development should be decided at body corporate level. The problems arising from a single owner buying up and holiday renting multiple apartments in a single block of flats was scrupulously overlooked.

The launch principle of holiday letting in sound: letting a room or rooms in your home to holidaymakers to earn extra income. Where the principle shatters is when wealthy property owners buy up units with the sole intention of renting them out for short-term stays, destroying the privacy, security and sense of community for permanent residents.

All too often the property owners running such operations are trustees or directors of a homeowners association.

That brings me to another two perceived gaps in the CSOS legislation: the lack of a code of ethics for trustees in the case of sectional title developments, and a prescribed term of office for trustees and directors.

Code of ethics

There are codes of ethics at all levels within CSOS with the stark exception of trustees. It’s quite possible that I missed spotting the relevant code for trustees as I studied the relevant legislation.

I’m also aware, after having been intimately involved with the management of three community schemes in various parts of the country, that trustees and directors are volunteers who give up their time free of charge to ensure these schemes are properly run.

And with the legislation governing such schemes becoming more complex and demanding, I get the sense that officialdom is loathe to dampen the volunteering spirit. A just method must be developed that forces elected representatives to stand down if they are found to have acted unethically.

Prescribed time limits to remain in office

Some trustees and directors have been re-elected year after year for 15 to 20 years. In many cases, they have given and continue to provide sterling service. But there is extensive precedence for terms of office to be prescribed. Even the president of a country can serve only two terms unless they ‘trump’ themselves out of office.

A range of different types of organisations allow directors or board members to serve for two or three years. That includes members of the CSOS board. Why then are trustee treated differently?

It is common practice that at the end of a prescribed term, the incumbent is precluded from standing for re-election. In some cases, the incumbent can put his or her name forward if no one else seeks election. There are good reasons for placing a limit on the time a person can serve as a trustee or board member.

In my view, certain aspects of CSOS legislation need to be strengthened. A tough approach will ensure trustees and directors meet ethical demands. Am I being naive in believing that trustees and directors should not see personal gain as the primary motivation for seeking election?

Alternatively, a new model to better manage community schemes on a professional basis needs to be researched and implemented. But that’s a subject for another day.