Townhouse developments and complexes have grown considerably more popular in recent years as people increasingly opt for the improved safety and security, as well as the sense of community, that often comes with cluster living.

Martin Bester, Managing Director of Intersect Sectional Title Services, who sits on the board of the Residential and Sectional Title Committee of SAPOA and is a member of the Sectional Title Regulations Boardadvises that there are predominantly two different types of cluster developments: sectional title schemes and homeowners’ associations, and these differ in the way the scheme is run and where the responsibility lies.

He says in a homeowners’ association you own the house and the erf it is built upon.  “Each unit has its own erf number and each owner is responsible for his/her own rates and taxes, insurance, maintenance, as well as water, sanitation and electricity.”

Bester says that a homeowners’ association, which in the Western Cape is usually registered in terms of the Land Use Ordinance at the City of Cape Town, is usually established to look after the maintenance of the roads, security and communal areas within the complex and a levy is payable by all of the homeowners for this upkeep.

In a homeowners’ association, each owner of an individual property is automatically a member and the homeowners’ association will be responsible for establishing the rules of the development.

According to Bester, when it comes to sectional title property, you own a unit, which comprises the section [which could be a flat or townhouse], and the exclusive use area(s) [which could include parking bays and or gardens, if any] as well as an undivided share in the common property. 

“Sectional title therefore is a form of joint ownership in terms of which parts of buildings or complexes can be exclusively owned, in conjunction with shared ownership of other parts of the buildings and the land.”

“The owners in a sectional title development collectively form a body corporate, which, once established, is responsible for the day to day running of the scheme and the enforcement of the rules, as well to establish a fund to ensure that all bona fide costs are met and that the property is suitably maintained.”

How they are similar

Bester advises that homeowners’ associations are similar to sectional title schemes in that each raise levies in order to offset the costs associated with administering and maintaining the common property.

There is also [limited] control over individual behavior of the members in each, by way of approved rules, he says.

“Both schemes offer a form of communal living, which is attractive to certain people, based on the ‘lock up and go’ and secure lifestyles some offer.”

How they differ

Bester further advises how the two forms of development are different.

A sectional title scheme involves ownership of common property in undivided shares, whereas a homeowners’ association does not, he says.  “In a homeowners’ association, the common property, sometimes referred to as ‘private or common areas’ is usually owned by the association.”

Another fundamental difference, Bester says is that the owner in a homeowners’ association is responsible for the repairs and maintenance as well as the house owners’ insurance for his/her own property; whereas in a sectional title scheme the body corporate is responsible for the repairs and maintenance of the common property, which includes the external parts of the buildings, as well as for  insuring the buildings and fixtures contained in the scheme – and finances are the same by means of the levy raised.

“Sectional title can provide for ownership in different levels on one piece of land that forms part of the common property, whereas in a homeowners’ association each separately owned building is on a separate erf.” 

Also, in sectional title, he says it is usual to have some parts of the common property made subject to specific rights of exclusive use infavourof particular owners or groups of owners.  “This concept is not ordinarily part of a homeowners’ association.”

Additionally, Bester says the common property, sections and registered exclusive use areas in sectional title schemes are shown on one or more sectional plans, whereas the property in a homeowners’ association is shown on a general plan or separate diagrams. 

Often, says Michael Bauer, general manager of the property management company, IHFM, problems arise when an owner (often a new owner) of a sectional title unit plans to renovate his newly acquired property. 

Bauer says this is not permitted without the prior consent of the trustees of the body corporate and the local municipality, especially if the improvement involves structural changes, an extension or an alteration to the external look of the building, or any major building work. 

If electrical work is involved a qualified electrician’s compliance certificate has to be obtained – and the same is necessary if plumbing work is called for: a plumber’s compliance certificate has to be issued on completion of the work. 

“These requirements are often overlooked, especially by those doing kitchen and bathroom renovations,” he says.

Any renovation taken without the trustees’ approval, says Bauer, is likely to be a breach of the scheme’s conduct rules. 

These are usually filed with the Deeds Office and should be an addendum to the Deed of Sale. They vary from scheme to scheme, but owners should make a point of checking them out, not only before applying for permission to alter their unit, but before they sign a purchase agreement. 

The problems caused most commonly by alterations and renovations in sectional title schemes, he says relate to material deliveries and the associated increased risk of theft, noise, dirt and rubble piles. Combined, these can cause severe disruption to body corporate members’ lives. 

“Typically in the worst cases a go-getting, often young, new owner will take transfer of a unit and two or three days later start a major makeover – without the trustees’ consent.  

“This can mean bringing in noisy jackhammers, grinders and floor sanders.  It can also mean having to cart tons of rubble from the unit to the ground floor – in all probability using the lifts.  If the plumbing is to be revamped cutting off the entire scheme’s water supply for a few hours may be necessary.”  

On top of all this, Bauer says the members will find that they have been “invaded” by a group of strangers (the contractor’s staff) who are completely anonymous and may, for all they know, be light-fingered when it comes to other people’s possessions.

He says matters can get even more serious if and when the changes cause damage to the structure, common property, and to neighbouring units e.g. by a support wall being removed.  

“If the owner has gone ahead without the trustees’ consent and possibly without his contractor having the obligatory contractor’s risk insurance, he will be in very serious trouble.”

The correct procedure, Bauer says is first to apply for the body corporate’s permission (submitting plans of the work to be done), then to get their approval of the contractor (and his insurance policy), then to register every one of his employees, preferably with a photograph, and finally to insist that a substantial deposit is paid to cover any damages (this can be a fixed amount or 5-15% of the contract value).  

It has to be remembered, too, that delivery vehicles are also a hazard and can cause damage to common property – and should be covered by the insurance policy. 

It is also important, Bauer says to get photographs of all areas to be worked on before work begins and on completion. These will be excellent evidence if and when an insurance claim arises or the contractor over-claims.  

The trustees, he says have the right to stipulate what hours the contractors will work – and to ban any evening, early morning or weekend work. They can also ban the use of the scheme’s common property for vehicle parking or rubble collection. 

“Sectional title members have to be aware at all times that what might suit them does not always suit other members – and these matters are governed by the conduct rules, which no member can ignore.”

If those conduct rules do not provide for a strict process, then the trustees should amend the conduct rules as soon as possible to cover the body corporate and the owners responsibilities during this process.

28 Mar 2012

About the Author

 Johann le Roux

Johann le Roux is a qualified Chartered Accountant and the business development director at Propell. Propell is a levy finance and collections specialist. The company has been supplying innovative financial solutions to the South African sectional title and Home Owner Association market since 1999 – www.propell.co.za

A Property24 reader asks:

I have tenants and they have been with me for a long time now – always on time with rent and the place is in superb condition. 

The tenants and the Chairman of the Body Corporate are in constant dispute – it has now gone so far that I have received a letter from the Body Corporate lawyers that I need to give them notice – they must be out by the end of March – if they do not hear from me they will take the matter to High Court for an eviction order.

I am not sure what my rights are? I do not want to give them notice as they are the best tenants one can get – I am still waiting for the lawyer I have contacted. We had an arrangement that they would first notify us but they simply ignored it and went straight to the lawyer.

Any advice would be appreciated?

Marlon Shevelew, specialist rental and eviction attorney at Cape-based legal firm Marlon Shevelew and Associates replies:

The answer to this question is that the Body Corporate cannot order an owner to give a tenant notice to leave the premises.

In fact, the Body Corporate can take absolutely no action against the owner, unless the tenant has breached a rule of the Body Corporate.

To determine whether a breach has occurred one would need to take a look at the Management and Conduct rules and determine if a breach has actually occurred.

The mere fact that the trustees are unhappy with the tenant is insufficient to amount to a breach of the rules.

If a breach has occurred, it is true that the landlord is responsible for any consequences flowing from such breach, including paying any penalties associated with the breach.

However, this does not include the right to demand that the landlord evicts a tenant.

This is clear from the judgment of the High Court in Body Corporate, Shaftesbury Sectional Title Scheme v Rippert’s Estate and Others 2003 5 SA 1 (C). 

There, the court was called upon to decide whether it was entitled to issue an ejectment order against persons who continually contravened the conduct rules of the scheme. 

The Body Corporate (applicant) sought a final interdict against the respondents and in the event of non-compliance an order for temporary ejectment until compliance with the interdict.

In the alternative the Body Corporate sought a prohibitory interdict and in the event of non-compliance, leave to apply for an order holding second to fifth respondents in contempt of court and authorising warrants for their arrest. 

The alleged contraventions included drug dealing and prostitution. 

The occupants of one flat admitted that they were employed as “escorts” but denied that they had contravened the conduct rules. They also submitted that they were not bound by the conduct rules since they had not entered into any contract which submitted them to the conduct rules.

The court found that the respondents were bound by the conduct rules in terms of the Act and that no contractual nexus was necessary. 

Having found that the security register at the entrance of the building confirmed a constant flow of visitors who corroborated the admission of one of the respondents that they were “escorts”, the court pointed to the pressing social need in South Africa for sectional title owners and bodies corporate to enforce compliance with the conduct rules.

If necessary, owners and/or occupiers should be deprived of their right to reside in circumstances where there was a constant and deliberate contravention of conduct rules including the non-payment of levies. 

The court then referred to the Spanish Statute on Horizontal Property, which allows a court under certain narrowly defined circumstances to deprive a troublemaker of his or her right to reside in a unit for a period of up to three years depending on the seriousness of the contravention.

It concluded, however, that there was no South African authority to authorise the granting of ejectment orders in the present circumstances. The judge stated further that, if he were wrong in his view that the court was not empowered to grant ejectment orders in the circumstances, the Body Corporate had in any event not provided a legal basis in the conduct rules for an order of eviction.

Although the application for a final interdict followed by an ejectment order in the case of non-compliance failed, the court granted a prohibitory interdict compelling the respondents to abide by the conduct rules. In the event of non-compliance the applicant was granted leave to apply for an order holding the respondents in contempt of court and authorising warrants of arrest. 

In short, before a Body Corporate has the power to evict an unruly occupant, the Act or the Annexure 8 or 9 rules of the scheme must grant it such power. Until such time the only options open to the Body Corporate are to apply for an interdict or to recover fines from the offender if a suitable management or conduct rule is in place.

Defined Roles Help Avoid Conflict

 Much has been written recently about the management industry indictments, the role of the managing agent and how to monitor management. Little has been said, however, about what it takes to make a trustee/managing agent relationship work. The managing agent and board of trustees are a team working together to operate the building in the most efficient, yet highest quality manner possible. Like any team, they must rely on one another and know what the other needs and expects in order to work effectively.

 The best time to establish a good working relationship with your management firm is at the very beginning. But it is never too late to delineate how the two groups intend to work together.

 Put Expectations in Writing

Start by putting in writing what you expect of your managing agent and what is expected of the Trustees (NAMA contract), in order to avoid any future misunderstandings. By instituting a specific policy for how information will be gathered and passed on to the agent, as well as regular performance reviews and meetings, trustees can be sure they’re working with, not against, the agent they’ve chosen. Only by having clear written policies and procedures can the board expect the managing agent to effectively carry out their wishes.

 While the management company has certain contractual responsibilities, the trustees, in turn, must have realistic expectations. The trustees should know the managing agent’s obligations as per the written contract. How many meetings will be attended? Who at the company will be the portfolio clerk, fielding owner complaints and queries and what is the policy and procedure for acting upon them?

 Knowing the answers to these questions will give the trustees a better understanding of what can be expected from the managing agent. The answers should be put into writing and become part of the management contract when it is time to hire a new firm or renegotiate the existing contract. If the reality does not meet the written expectations, then managing agent needs to be told. It should also be noted that if the board of trustees is not doing its share, they’re only hurting themselves. Managing agents should not and cannot be expected to handle everything alone. With these considerations agreed upon, the board can have clear expectations and plan accordingly.

 Develop an Action Plan

 The trustee’s role is to set policy, make decisions and manage all onsite affairs (with input and guidance from the managing agent) and which in larger buildings normally involves the appointment of a building manager. You want to avoid unproductive trustees meetings, multiple calls to the managing agent office regarding the same complaint and conflicting information. In order to do so, trustees must end each meeting with a specific set of goals and action plans for tasks to be performed, deadlines for their completion, and a written list of who is responsible for what.

 Deadlines must be realistic, taking into consideration the resources that are necessary, the time of year, and outside vendors that will be involved. Assignment of tasks must be realistic as well. Too often a particular person, be it a trustee or agent, commits to doing much more than can be reasonably accomplished in the given time period. Be sure to break big projects into smaller steps so that progress is made between meetings and pieces of the project can be assigned to different individuals.

 With trustees that have their thoughts and concerns organized and written down, the managing agent will have a fuller grasp of what needs to be done to assist. Trustees can then take responsibility for projects that are realistic and communicate with the managing agent to assist them.

 Productive Meetings

 The importance of providing the managing agent with minutes of trustees meetings cannot be understated. The only way for management to stay current on building problems and advise the trustees if need be, is if regular meetings are conducted and communications remain open at all times. All members of the trustees/manager team can then hear the same progress reports and have a chance to give input into decisions.

 And remember: the minutes of each meeting are part of the institutional memory of the organization. Minutes, which should include trustees policies and decisions, must be taken at every meeting and reviewed for accuracy at the next.

 Trustee training should also be considered as a way to reduce time spent at trustee meetings and avoid reinventing the wheel every time there is a changeover of trustees. Many trustees discuss the same issues year in and year out with no resolution, or new trustees revisit old issues time and again.

 Problem Resolution

 When dissatisfaction surfaces, it’s important to have an in-house policy for handling conflict. Don’t let unhappiness stew under the surface and remain unresolved. Some schemes have complained about their managing agent for years without ever having a face-to-face meeting or shopping for a new agent. As with any relationship, the best approach is to speak or write directly to the person who can resolve the conflict; if the individual involved does not know there is a problem, there is not going to be a resolution. The discussion of complaints should not be hostile or accusatory, but rather a frank discussion about dissatisfaction and how it can be corrected.

 The management company will need clear input on the problem and should be given the opportunity to resolve the situation. Don’t assume the trustees cannot solve a personality conflict with one agent. Management companies fight hard to get new business and they will be willing to accommodate the board’s needs if the requests are reasonable.

 When it comes to handling problems and complaints within the building, decide who in the building and at the management firm will receive complaints and how they will be acted upon. Establish the system, try it out and make adjustments. In areas of high conflict, like pets or parking, trustees may need to create a special system or assign one individual to handle those complaints and resolve conflicts.

 If the doorman, superintendent or concierge is the recipient of complaints, set up a system where they can pass the information along to the person responsible for solving the problem.

 When problems arise, information should be gathered as to what the problem is exactly and how it can be solved. Make sure that a log of complaints is compiled and the person making the complaint knows what action is being taken.

 Trustees and managing agents should look upon themselves as a team, working for the betterment of the building. With a clear understanding of their responsibilities and a positive strategy for dealing with each other, all members of the team can be assured they’re doing the best possible job for their building. A successful relationship between the trustees and managing agent is one that hinges on the active participation of both groups. Neither group should bear the full burden of responsibility; each should work towards creating a harmonious relationship.

Firstly problems can be cause by Trustees who think that they run the body corporate and happily go ahead and do what they want, how they want, when they want – all at the cost of the body corporate. These “bully” Trustees can spend money like water and do the most peculiar things on a whim. I have see Trustees like this sell very nice lounge furniture (mainly to themselves) to clear the lounge in a retirement village so that they could use it for “exercise classes” thereby depriving the residents of the frail care centre of anywhere to relax. They then went on to ban them from the dining room, because they did not like to eat with the “sick people”! The Trustees lived in their individual townhouses and only used the restaurant on rare occasions. These Trustees only relented when the owners of the frail care units threatened serious legal action if they did not back down.

 A second problem comes from poor general management. Body Corporates who cannot show where money is being used, what is being done about non-payers, people who break the rules and where management is in general chaos, tend to go from better to worse and can only be turned around when they get positive minded trustees who take their task seriously and appoint capable management which can report properly and clearly to the Trustees and at general meeting.

 However the main problem is lack of communication. However well run a Body Corporate which does not communicate with owners AND residents is likely to have problems.  A good managing agent will keep in regular communication with the Chairman of the Trustees about anything out of the ordinary, even if just to let them know that they have attended to an urgent problem that he or she might not yet be aware of. Regular trustees meetings should be held every 3 to 4 month at which the managing agents should go through the current financial situation and any unusual happenings in the building. If large items need to be attended to quotations should be brought to this meeting for a decision to be made by the trustees. Trustees should bring the managing agents up to date with any happenings at the building such as unhappiness with garden services, problem occupants, dog problems etc. After each meeting, including the Trustees meeting, ALL owners and residents should receive a newsletter bringing to their attention any items that the trustees and the managing agents think need to be highlighted (noisy dogs, putting out garbage, not littering the pool area, parking in the wrong place, washing on balconies etc).

 We all know what items MUST be on the AGM agenda, and they are very important, but the ACT says that only business that is on the agenda can be seen too. But how do you get items on to the Agenda for the AGM. No managing agent that I know of sends around a circular to say “We are going to be sending out the AGM notice. Would you like to add an item to the Agenda?”. I do know however managing agents that point blankly refuse to allow discussion about any item that is not on the agenda. To me this is crazy. The AGM is the only meeting at which owners can air their views about a wide variety of subjects. It is the only time many of them get together with other owners in their building and a lot of owners have traveled long distances at great cost and inconvenience – only to be told that they cannot talk to other owners about problems that they are experiencing because  it was not an agenda item.  While we understand that serious decisions involving spending of other than normal maintenance costs cannot be approved in this way, we see no barrier to owners raising issues for discussion. If the item is too serious it will have to go forward to a Trustees meeting, a Special General Meeting or even next years AGM, but most items that are raised are about quite minor things that can easily be handled by those that are at the meeting. Typical examples would be such as; Can we buy some fertilizer for the lawns. We are not happy with the work standard of the gardener. Can we buy some more dustbins. Can we please sort out the noisy dogs and the children that swim without supervision?  In my opinion I cannot see why these day to day housekeeping items cannot be discussed and decided on at the AGM. What do you think?

Regarding Jewish or other religious people I would suggest that unless this done deliberately to annoy or offend or avoid a particular owner it would be decision of the body corporate Trustees when and where meetings are held. For example Muslims cannot come on Friday midday, Jehovah Witnesses cannot come on Saturdays etc. One has to be practical and reasonable.

The same would apply to working people. While I understand what you say about working people, we would have the problem that we could never satisfy everyone. Some people work nights, some people work at great distances, some people work shifts. It is simply impossible to assist all the people all the time. Do people not go to the dentist because they work or are Jewish? No they simply make a plan. Dentist are not open after hours!

In practice the managing agents are also entitled to a home life and office hours. Owners should only be attending an AGM and the Budget meeting a year. While trustees should be attending 4 trustees meetings (including the budget meeting) and the AGM. The reality is that there are only 5 working nights per week – only 4 if you exclude Friday. Assuming that Fridays and weekends are out you are looking at only. 365 – 156 days available ie 209 days a year available. If we take all the holidays and the Christmas period when it is impractical to have meetings we are looking at perhaps 15 days public holidays and 18 days builders break over Christmas and 13 days over the July holidays when meetings wont be attended total another 36 days leaving a balance of useable days of 163. Assuming 1 AGM and 4 Trustees meeting a year it means that there are only days for 33 body corporates to have meeting per firm unless they have duplicate meeting space AND duplicate staff!

As soon as any good managing agent exceeds this number they cannot run any other body corporates!

Bear in mind thought that the staff who have worked a full day already will have to stay after hours at least four nights a week. On top of that most company offices close at 4.30 pm and most meeting start at 5 pm. This means that the staff have to sit around waiting for the start of the meeting. Some body corporates want their meetings to start even later!

The reality of the situation is that unless body corporates are prepared to pay a sizeable sum for these evening meetings that they are going to have to become used to meetings during working hours. It can be done just that if owners cannot attend they need to give a proxy to somebody to attend on their behalf.

Mike

Platinum Global

The managing agent has demanded R3000 for a special levy” and “our managing agent has summonsed me for levy arrears”; or “the managing agent has decided not to fix the roof” and “our managing agent has allowed our block to deteriorate”. Four comments to the Helpline in the space of a single and typical day. Four alarming comments! How can it be that after so many years of Sectional Title in South Africa there is so little understanding of the basic principles of sectional ownership?

Not one of these functions rests with a managing agent. They are functions of the body corporate. Managing agents are not in a position to raise levies, hand-over levy defaulters, make decisions about repairs or be responsible for the state of the building. They act on the instructions of the trustees of the body corporate.

Their role is to assist the body corporate and trustees by providing specialised knowledge about Sectional Title and offering an administrative and accounting service. Very few bodies corporate can adequately manage their own schemes. Managing agents provide an essential service, but they are advisers, not decision-makers.

It is worth repeating. Within the structure of Sectional Title, the members of the Body Corporate are “The Boss”; the trustees are “The Representatives” and the managing agent “The Employee”. This hierarchy is entrenched in the Act and prescribed rules and is not open to negotiation.

One reason for the confusion about the managing agent’s role may be that most correspondence from the body corporate to its members appears on letterheads of the managing agent.

If there is a special levy, owners are notified on the managing agent’s stationery. The notice of intention to hand a defaulter over to an attorney is on the managing agent’s letterhead. In most cases, the letter is even signed by the managing agent, causing many owners to believe that the managing agent is acting independently and not on behalf of the trustees or body corporate. It is a fact that many owners associate a letter from the managing agent with bad news.

The Helpline received a call from an owner who said that as the money raised for a painting levy was deposited in the managing agent’s account, the agent was responsible for carrying-out the work and if he under-budgeted, then he should pay the shortfall! Does that owner understand anything about Sectional Title ownership?

There seems to be some confusion of late as to whether a person can hold more than two proxies or not. 

 The simple answer is ‘yes’: a person can currently hold more than two proxies – there is no limit at the moment.

The simple answer is ‘yes’: a person can currently hold more than two proxies – there is no limit at the moment. 

“At the moment” is key here, and this seems to be where the confusion comes in. Contrary to information being circulated, the proxy limitation has not come into effect yet. In terms of the Sectional Titles Schemes Management Act No. 8 of 2011 (STSM Act), which is not in operation yet, there will be a limit of two proxies for any person. 

Section 6(5) of the STSM Act states the following: “(5) A member may be represented in person or by proxy at such meeting: Provided that a person must not act as a proxy for more than two members.” 

Currently, under the Sectional Titles Act No. 95 of 1986 (the Act), there is no proxy limitation. It is also important to point out that rule 67 prescribed under the Act has not been changed. So unless a scheme has changed this rule, any person can hold any number of proxy appointments. 

What is a proxy?

A proxy is a person who has been appointed by an owner to attend, speak and vote on their behalf at a general meeting. 

Prescribed management rule 67 says that owners may cast a vote at a general meeting personally or by proxy and a proxy need not be an owner of that scheme. The proxy must be appointed in writing and a “proxy form” must be signed by the owner or by his or her authorised agent, who has also been appointed in writing. 

The signed proxy form must be handed to the chairperson before the meeting starts unless it is contained in a registered mortgage bond and the bond is produced at the meeting. A proxy form may include specific instructions on how the proxy should vote – if this is done then the proxy is bound to follow these instructions. 

Currently, one person could lobby other owners to authorise them to appoint the one person as their proxy, allowing the one person to vote for or against a motion in a manner that best suits their needs. 

When the two-proxy limitation comes into effect, this type of “concentration of voting power” in one owner will not be legal and owners will either have to attend meetings or appoint different proxies to have their votes exercised at meetings they cannot attend. – By Paddocks

The growing popularity of arbitration rather than litigation in sectional title property disputes stems from it being both less expensive and faster. 

 “In view of the effectiveness of arbitration it is important that all sectional title trustees and owners know how to go about it,” says Bauer.

This is according to Michael Bauer, GM of property management company IHFM, who points out that the Sectional Title Act’s Prescribed Management Rule 71 was recently amended so that now only the Chief Registrar of Deeds can appoint an arbitrator. 

Although this can delay the process slightly (previously any registrar could act in this way) arbitration is still preferable to litigation, he says. 

The Prescribed Management rule allows for arbitration between an owner (or owners) and the body corporate – or vice versa – and between one or more owners and another owner or owners. 

“In view of the effectiveness of arbitration it is important that all sectional title trustees and owners know how to go about it.” 

The steps in the process are: 

• “Serving”, i.e. delivering a first notice of dispute to the other party. This must state in full the nature of the complaint or dispute.

• Notifying the scheme’s trustees and managing agent of this.

• Waiting 14 days for a response, failing which either of the parties can then demand that arbitration goes ahead.

• Serving a second notice of dispute and proposing two or three suitably qualified and independent persons as arbitrators.

• Allowing three days for a reply, failing which, or in response to which, the complainant can ask the Chief Registrar for an arbitrator to be appointed – who will then guide both parties through the arbitration process.

 Bauer says “thankfully” just the threat of arbitration often brings about a settlement because it is now widely known that the loser may end up having to pay not only what is demanded (if cash is involved) but also the legal costs for himself and his opponent.

He adds that Prescribed Management Rule 71 will fall away when the Community Schemes Ombud Services Bill comes into the effect.