Has the court’s jurisdiction in community scheme matters been ousted by the Community Schemes Ombud Service?

November 1st, 2022

Picture source: Gallo Images/Getty

By Lisa Mills

The vexed question of concurrent jurisdiction frequently arises, whether it be concurrent jurisdiction of two different courts, or the jurisdiction of special bodies created by statute and the jurisdiction of the courts. In Heathrow Property Holdings NO 3 CC and Others v Manhattan Place Body Corporate and Others 2022 (1) SA 211 (WCC) the Western Cape Division of the High Court (WCC) held that the court’s jurisdiction has been ousted in respect of all disputes that fall within the ambit of the Community Schemes Ombud Service Act 9 of 2011 (the CSOS Act). Sher J held that the courts are obliged to decline to hear such disputes, save where exceptional circumstances are shown to exist, which will depend on the facts of each particular case. This has been followed in Wingate Body Corporate v Pamba and Another (GP) (unreported case no 33185/2021, 21-1-2022) (Mbongwe J) and Bila and Others v Monterey Body Corporate and Others (GJ) (unreported case no 2021/5060, 18-2-2022) (Friedman AJ). Soon after the Heathrow Property judgment was handed down, the Supreme Court of Appeal (SCA) handed down its judgment in Standard Bank of South Africa Ltd and Others v Mpongo and Others 2021 (6) SA 403 (SCA), which clarified the law relating to the ouster of the courts’ jurisdiction. This article considers whether the decision in Heathrow Property is consistent with the established legal principles articulated in Mpongo.

The CSOS Act

The CSOS Act came into effect on 7 October 2016. One of its stated purposes is to provide a dispute resolution mechanism in community schemes, which include, inter alia, sectional titles schemes, share blocks, homeowners’ associations and housing schemes for retired persons. Disputes subject to the CSOS Act are defined as those regarding the administration of a community scheme between persons who have a material interest in the scheme, one of whom is the association, occupier or owner. After accepting an application, the ombud will consider whether there is a reasonable prospect of a negotiated settlement. If so, he will refer the matter to conciliation. If not, or ‘if conciliation fails, the ombud must refer the application to an adjudicator’ for determination (Banele Mhlongo ‘Resolving disputes with communal living and communal ownership’ (www.news24.com, accessed 2-10-2022)). The adjudication process is inquisitorial, rather than the adversarial, and the powers of the ombud go far beyond those of the courts. An adjudicator may grant equitable relief, unlike a court which is bound to apply established legal principles. ‘The adjudicator must observe the principles of due process of law. The adjudicator is called upon to act quickly, and with as little formality and technicality as is consistent with a proper consideration of the application. The adjudicator must also consider the relevance of all evidence but is not obliged to apply the exclusionary rules of evidence as they are applied in civil courts’ (s 50 of the CSOS Act; Stenersen & Tulleken Administration CC v Linton Park Body Corporate and Another 2020 (1) SA 651 (GJ)). Legal representation is only permitted where there are exceptional circumstances or where the parties all agree. Any person ‘dissatisfied by an adjudicator’s order, may appeal to the High Court, but only on a question of law’ (s 57 of the CSOS Act).

The Heathrow Property judgment

In Heathrow Property the owner of three units in a sectional title scheme applied to court to declare that a conduct rule restricting short-term rentals was unreasonable and void. They also challenged a trustees’ resolution to instal a biometric access system on the ground that this constituted a luxurious improvement which required unanimous consent of all owners. The court held that the issues in the application fell squarely within the jurisdiction of an adjudicator under the CSOS Act. The court distinguished this matter from the cases that deal with concurrent jurisdiction of different courts. Sher J pointed out that an adjudicator has an equitable power to decide what is reasonable in relation to the rules or resolutions of a community scheme and also to direct what should reasonably be done in place of any impugned rule or resolution. A court, on the other hand, ‘is confined to reviewing the legality or rationality of the conduct of a decision-making body and not the fairness thereof, and … generally does not have the power to substitute its own decision’ for that of the governing body (Heathrow Property Holdings NO 3 CC at para 53). Sher J held that, as the adjudicator has powers, which exceed those of the court, his jurisdiction is in substantial respects not concurrent with that of the courts. The judge concluded that, adopting a purposive and sensible interpretation of the Act, it is apparent that the legislature intended that the primary forum for adjudication of disputes in terms of the Act is CSOS and the High Court is intended to exercise review and appellate jurisdiction only.

Is there an ouster of the courts’ jurisdiction in CSOS?

Although the Ombud has powers to grant relief, which the court cannot grant, the question is whether the court’s jurisdiction is ousted in cases where the relief being sought by the litigants does fall within the powers that the court would have. The issue under consideration is the overlap of jurisdiction between the Ombud and the court. The SCA explained the concept of concurrent jurisdiction in the case of Makhanya v University of Zululand 2010 (1) SA 62 (SCA) at para 25. When a statute confers judicial power on a special court it may simultaneously exclude the ordinary power of the High Court (exclusive jurisdiction), or it may confer power on the special court without excluding the ordinary power of the High Court (concurrent jurisdiction). In the latter case the claimant may choose the court in which to pursue the claim.

In Richards Bay Bulk Storage (Pty) Ltd v Minister of Public Enterprises 1996 (4) SA 490 (A) the appellate division explained the correct approach to deciding whether an ouster of jurisdiction can be inferred. It held that if ‘the Act does not do so in express terms, and the question then is whether it contains an implication to that effect. … [And] there is a strong presumption against such an implication’ (para 5). In Metcash Trading Ltd v Commissioner, South African Revenue Service, and Another 2001 (1) SA 1109 (CC) at para 43, Kriegler J noted that, as there was no express ouster of the court’s inherent jurisdiction in the statutory provision concerned, the question was whether such an ouster was ‘necessarily implicit in its terms, while it is trite that there is a strong presumption against such an implication’. In Mpongo, Sutherland AJA, writing for a unanimous court, referred to all three of these decisions in support of the conclusion at para 68 that ‘there is a strong presumption against the ouster of the High Court’s jurisdiction, and the mere fact that a statute vests jurisdiction in one court is insufficient to create an implication that the jurisdiction of another court is thereby ousted.’

In the CSOS Act there is no express ouster of the High Court’s jurisdiction, nor is an ouster necessarily implicit in its terms. The fact that the ombud has wider powers does not imply an ouster of the court’s jurisdiction. There is simply an overlap in situations where a court can grant the same relief as an adjudicator.

Can a court refuse to exercise its jurisdiction?

In Agri Wire (Pty) Ltd and Another v Commissioner, Competition Commission, and Others 2013 (5) SA 484 (SCA) the SCA confirmed that ‘save in admiralty matters, our law does not recognise the doctrine of forum non conveniens, and our courts are not entitled to decline to hear cases properly brought before them in the exercise of their jurisdiction’. In Mpongo, Sutherland AJA explained that there are various common law and statutory mechanisms in place to mitigate any adverse consequences to a defendant who may suffer prejudice due to a plaintiff’s choice of forum where concurrent jurisdiction exists. One example is that ‘a court may refuse to hear a matter over which it has jurisdiction if the plaintiff is guilty of an abuse of process’ (Mpongo at para 59). In Standard Credit Corporation Ltd v Bester and Others 1987 (1) SA 812 (W) at 820A-B, Van der Walt J explained that an ‘abuse of process could be said, in general terms, to occur when a court process “is used by a litigant for a purpose for which it was not intended or designed, to the prejudice or potential prejudice of the other party to the proceedings”’ (Mpongo at para 46). This view was endorsed by the SCA in Beinash v Wixley 1997 (3) SA 721 (SCA) at 734G where the court said that, although there can be no all-encompassing definition of the concept of abuse of process, in general terms, ‘an abuse of process takes place where the procedures permitted by the Rules of the Court to facilitate the pursuit of the truth are used for a purpose extraneous to that objective’. Applying this approach to the facts in Heathrow Property it cannot be said that the owners were abusing the court’s process by bringing their case to the court instead of the Ombud under the CSOS.

How can parties be encouraged to use the CSOS where appropriate?

In an earlier judgment of the WCC in Coral Island Body Corporate v Hoge 2019 (5) SA 158 (WCC), Binns-Ward J noted that the compelling constitutional and social policy considerations that informed the introduction of the CSOS Act, including cheap, expeditious and informal determination of disputes in community schemes, would be undermined if the courts indiscriminately entertained matters that should rather have been brought under the Act. He held that, although the courts do not have the power to refuse to hear such cases, they should use their judicial discretion in respect of costs to discourage the inappropriate resort to the courts in respect of matters that could, and more appropriately should, have been taken to the ombud. The judge referred to the judgment in Goldberg v Goldberg 1938 WLD 83 where the court pointed out that a successful applicant might be awarded costs on a lower scale, or deprived of his costs, or even ordered to pay any additional costs incurred by the respondent consequent upon the case being brought in the High Court. I submit that the approach of Binns-Ward J is undoubtedly the correct approach and one that has been endorsed in a long line of judgments preceding Heathrow Property.

Moreover, the finding in Heathrow Property that the court’s jurisdiction is not ousted where exceptional circumstances are shown to exist falters on the basis that ‘fish cannot sometimes be fowl’, as observed by Sutherland AJA in Mpongo at para 84.

Lisa Mills BA LLB LLM (Maritime) (UKZN) is a legal practitioner and a member of Ubunye Chambers in Durban.

This article was first published in De Rebus in 2022 (Nov) DR 14.