10 October 2018 by Corporate & Commercial Alert

A slow start for the Community Schemes Ombud Service

It has been two years since the Community Schemes Ombud Service Act, No 9 of 2011 (Act) was brought into force. The Act provides for the establishment of the Community Schemes Ombud Service (CSOS). One of the principle functions of the CSOS is to develop and provide for a dispute resolution service – ie to offer a means to resolve disputes arising in relation to community schemes, which are broadly defined to include sectional title schemes, share block companies, homeowners’ associations, retirement housing schemes and housing co-operatives.

Annual Report

The CSOS’s 2016/2017 annual report provides some insight into how it is functioning. As noted, one of the CSOS’s core objectives is to provide a dispute resolution service. The annual report indicates that, in respect of the 2016/2017 financial year, 285 disputes were resolved through conciliation – ie the matters became settled through a conciliation process without the CSOS having to adjudicate a dispute and render an award – which is within the CSOS’s agreed service levels.

However, the report also indicates that, in respect of the 2016/2017 financial year, 315 disputes were not resolved within the specified service levels as per the approved dispute resolution model. This is reportedly due to the current dispute resolution workforce being unable to manage the drastic increase in new applications for dispute resolution. As regards the timelines in respect of the resolution of disputes, the report indicates that only 36% of conciliations were finalised within 40 days, with 64% taking longer than the 40-day target period (against a target of 80% being resolved within 40 days). This is reportedly due to the latter being complex conciliation matters that could not be finalised within the stipulated timelines for resolution.

A further core objective of the CSOS is to promote good governance in community schemes. In this regard, the CSOS has an obligation to ensure that there is a process in place for the registration of community schemes so that they can be sent information about good governance to ensure that the proper governance structures are in place. As at March 2017, approximately 25,000 registration applications were received. However, only 7,434 community schemes were actually registered out of an annual target of 50,000 registrations.

Adjudication Orders

Since its inception, the CSOS has published three adjudication orders, which are the findings of disputed cases heard by it and the orders granted in each matter. The orders all relate to applications brought against body corporates by residents. In two of the three cases, the body corporates in question were ordered to pay for the costs of repairs to the residents’ premises and common property.

The report reflects that, in respect of the 2016/2017 financial year, the CSOS received 912 dispute resolution applications. Of these, 91 were withdrawn (ie not pursued by the applicants); 12 were settled by the parties; 242 were rejected by the CSOS (without a hearing); 45 were referred to other dispute resolution bodies; 95 had no further particulars; 285 were resolved through conciliation; 141 were referred for adjudication; and 1 was finally adjudicated by the CSOS (with the remaining two adjudication orders being in respect of the 2017/2018 financial year).

The fact that the CSOS has only rendered adjudication orders in three matters since its inception two years ago suggests that its resources are severely constrained, and that it is unable to expeditiously resolve disputes at the level required for it to fulfil its statutory mandate. This is borne out by the statistics referred to above pertaining, in particular, to the number of disputes that were not resolved within the specified service levels as per the approved dispute resolution model.

Conclusion

If the CSOS is to be an effective institution and fulfil its mandate it is going to have to improve on the number of new registration applications that it processes (to establish a database of community schemes), and it is going to have to significantly increase its capacity to deal with dispute resolution applications. If it does not do so, it runs the risk of failure. Members of the public will not make use of the service if it cannot be rendered effectively, however laudable its objectives. It is hoped that the CSOS’s 2017/2018 annual report will reflect improved service delivery against the annual targets.

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