This Act has been in existence since 2011 and as of 7 October 2016 has now come into operation.
The Act establishes an Ombud Service which:
- provides for dispute resolution;
- regulates, monitors and controls the quality of all affected Scheme governance documentation, for example their constitutions and their rules;
- provides a central repository for governance documentation relating to all the Schemes in the country and to allow public access thereto, either electronically or by other means.
The current Administration of the Scheme is run from offices in Sandton, Johannesburg. There are three provincial offices established i.e. one in Gauteng to address matters in Gauteng, Limpopo and North West; one in Kwa-Zulu Natal to deal with matters in Kwa-Zula Natal, the Free State and Mpumalanga; and one in the Western Cape which deals with matters within the Western Cape, Eastern Cape and Northern Cape.
A remarkable aspect of this Ombud Service is that, apart from the original R40 million allocated by the government to establish the body, it seems intended that it be largely self-funded. It will charge each member of a scheme falling under its jurisdiction a maximum of R40.00 per month. The actual amount will be “the lesser of R40.00 or 2% of the amount by which the monthly levy charged by the Scheme exceeds R500.00.” Units with monthly levies of R500.00 per unit or less are therefore entitled to a 100% waiver. Once the levy payable exceeds R2 500.00 the fee will be capped at R40.00.
The Ombud Service will also charge for providing its specific services, as set out below. Its financial affairs however remain subject to oversight and scrutiny in terms of the Public Finance Management Act.
Section 38 of the Act deals with “Applications”. This is where it starts dealing with the procedure to be followed in the event that you are party to a dispute that you wish to have adjudicated by the Ombud Service.
The Act also sets out examples of the relief that you can ask the service to grant. This gives insight into what it is that the service can do. There are 8 categories.
The first set of examples relate to financial issues and envisages the situation where a member of a Scheme is unhappy with the insurance arrangements which the Scheme has taken out on their behalf.
It also envisages the situation where the Scheme is not managing the finances properly. It contemplates a person seeking an order in terms of which the Scheme must have its finances audited, or must pay or refund a members contribution “or any other amount”, or requiring a tenant of an owner to pay the rental directly to the Scheme in part settlement of the owners debt.
That the Ombud will have the power to force a body corporate or homeowners association to pay or refund a member indicates that members will have the widest scope to challenge levies or penalties imposed by the Association. This could cause chaos to the administration of the Scheme, if improperly handled by the Ombud Service.
The second set of examples relates to behavioural issues and deals with nuisance, animals and misconduct relating to the illegal placement or attachment of any article to any property controlled by the Scheme.
The third set of examples relates to compelling the Scheme to create new rules of governance or to set aside existing rules if they are unreasonable or unfair.
The fourth set of examples relates to the convening of meetings or a declaration that a meeting that has already been held was not validly convened or that any resolution passed at such a meeting was void or invalid or unreasonable.
The fifth set of examples relates to disputes between the Scheme and its managing agents and the Ombud Service will have the power to confirm the termination of managing agent’s contract.
The sixth set of examples relates to maintenance and repairs, improvements and alterations. This set of examples also includes the following example:
“an order declaring that an owner or occupier reasonably requires exclusive use rights over a certain part of a common area, that the association has unreasonably refused to grant such rights and requiring the association to give exclusive use rights to the owner or occupier, on terms that may require a payment or periodic payments to the association, over a specified part of a common area;”
The seventh and final set of examples relates to the wrongful withholding of information or documentation and the Ombud Service will have the power to order a Scheme to make such information or documentation available.
The final line in this section of the Act is a catch all sentence which further expands the jurisdiction of the Ombud Service. It reads:
“in respect of general and other issues – any other order proposed by the chief ombud.”
Members with a gripe against their Association will however not be able to approach the Ombud Service until such time as they have exhausted all internal remedies that might be available in terms of their existing constitution or rules
There are also time limits for certain types of applications, although they are not set in stone. If a person seeks an order declaring a decision of an association to be void such an application needs to be made within 60 days after the decision has been taken. This period can only be extended by the Ombud Service “on good cause shown”. There are no time limits for other types of claims so it could be assumed that the ordinary laws of prescription will apply there.
Once a person has successfully lodged an application, the Ombud Service is obliged to give notice of the application to all affected parties and they are invited to make their own written submissions.
The applicant then gets the right of reply to issues raised by the affected parties in their replying papers only.
The first stage of the dispute resolution process is conciliation. This is where the parties are encouraged by a Conciliator to come to an agreement themselves. If this is unsuccessful the matter is referred to an adjudicator and the parties have the opportunity to agree on who that adjudicator should be. If the parties can’t agree, the adjudicator is appointed by the Ombud Service. The fees of this adjudicator have to be secured in advance by the parties.
According to the Regulations of the Act, the fee payable at application is R50.00 while the fee payable for Adjudication is R100.00. A copy of any scheme governance documents or any other document obtained electronically or provided as hard copy by the Service will be charged at R8.00 per copy.
The regulations go on to say that “[a]ny person or category of persons whose monthly net household (gross income less PAYE) income is below R5 500.00 are entitled to a 100% waiver of application and adjudication fees.” And that “[a]ny person or category of persons who may not qualify in terms of the above criteria may lodge an application for discount and/or waiver for consideration by the Chief Ombud….”
The process which the adjudicator follows will be of an inquisitorial nature, unlike the adversarial process in our courts at present, where the judge or magistrate sits back and allows the parties to present their cases as they see fit. The adjudicators of the Ombud Service will play an active part in the adjudication process.
The Act provides that they must observe the principles of due process of law but that they must also act quickly and with as little formality and technicality as is consistent with the proper consideration of the matter.
The powers of the adjudicator extend to calling other people in to give evidence which might be relevant, calling for other information or documentation and inspecting assets, records documents or places.
As regards legal representation, the point of departure is that the parties to the dispute are not entitled to legal representation during the adjudication process, unless everybody agrees otherwise or if the adjudicator allows such representation, after considering the questions of law which will be raised, the complexity and importance of the dispute or the comparative ability of the parties to represent themselves.
These provisions will however not prevent any party to the dispute having their initial submissions to the adjudicator prepared by their legal representatives.
An adjudicator is able to dismiss an application if it is frivolous, vexatious, misconceived or without substance, or if they have been procedural irregularities.
If an adjudicator makes an award against one of the parties the adjudicator can make the losing party pay the successful party’s costs, to compensate him for losses relating to the application.
The award of an adjudicator is subject to a limited right of appeal. A person can only appeal on points of law. This appeal must be made to the High Court and must be made within 30 days after delivery of the order. What this means is that the findings of fact that are made by the adjudicator will not be able to be overturned on appeal. It is only if the adjudicator has incorrectly applied the law to the facts, as accepted by the adjudicator, that there will be a right of appeal.
Any order for payment of an amount of money will be treated as if it is an order of court. There is no jurisdictional limit to the size of the award that an adjudicator can make.
The final portion of the Act obliges every Scheme which falls under the jurisdiction of this Act to pay an annual levy to the Ombud Service. In terms of Chapter three of the regulations of the Act, the levy formula is such that each unit shall be liable for “the lesser of R40.00 or 2% of the amount by which the monthly levy charged by the Scheme exceeds R500.00.” Units with monthly scheme levies of R500.00 per unit or less are therefore entitled to a 100% waiver.
These levies are payable by the Scheme to the Ombud quarterly and shall be collected as of 7 January 2017 – as per the regulations, 90 days after proclamation.