Heathrow Property Holdings v Manhattan Place Body Corporate – Graham Paddock

Obligation of Sectional Title Schemes To Use The CSOS To Resolve Their Disputes And Collect Arrears

In Heathrow Property Holdings v Manhattan Place Body Corporate, the judge examined a sectional title body corporate’s obligation to take disputes to the Community Schemes Ombud Service (CSOS) for resolution, rather than to the high court. He decided that taking such a dispute to court, when it could be taken to the CSOS, is an abuse of the legal process. A body corporate can only approach a high court if there is a compelling reason the dispute cannot be not be dealt with by the CSOS. He pointed out that a CSOS adjudicator has wide inquisitorial powers to requisition evidence, which a judge does not, and can also give orders that a judge cannot. He cautioned that a sectional title dispute cannot be taken to the high court just because this is more convenient or considered more efficient than an application to the CSOS.

These principles apply to the magistrates courts as much as they do to the high courts. The judge stated: ‘it is apparent that the legislature intended that the primary forum for adjudication of disputes in terms of the Act is to be the Ombud service and the adjudicators appointed by it.’  

Parliament dealt explicitly with this issue when it finalized the text of the Sectional Titles Schemes Management Bill, at least in regard to the body corporate’s collection of arrear contributions. Parliament was asked whether schemes were to be given the choice of approaching either the CSOS or the magistrates court to recover debts. After raising the issues of the cost of court proceedings and congestion in the courts, Parliament decided that the CSOS should always be a body corporate’s ‘first choice’.

This is, in effect, what the judge has held—only when there are genuine reasons a matter cannot be heard by the CSOS can it be referred to a court. So when a body corporate refers a matter that is within the jurisdiction of the CSOS to a magistrates court or a high court, the court should refuse to hear it. The opposing party can take exception to the claim on the basis that it is being brought in the wrong forum.

Where body corporate disputes are already being processed by a court, the trustees should consider two other issues:

  • In the case of Coral Island Body Corporate v Hoge 2019 (5) SA 158 (WCC), which was referred to in the Heathrow case, the judge suggested that judges and magistrates should use their judicial discretion in respect of costs to discourage bodies corporate taking cases to court when they could have been taken to the CSOS. So if you go to court rather than to the CSOS, you may not be able to recover your costs from the debtor, in full or at all, which means all other owners may have to pay the irrecoverable costs.
  • In accordance with the ruling in the Marsh Rose case that I dealt with in the last issue, when the court issues a judgment the debt will no longer be included in the amounts the body corporate can claim before issuing a levy clearance certificate—but remember this case is likely to be appealed, so this issue is likely to be revisited by a higher court.

Citation of case: Heathrow Property Holdings No 33 CC and Others v Manhattan Place Body Corporate and Others (7235/2017) [2021] ZAWCHC 109; [2021] 3 All SA 527 (WCC) (1 June 2021)

Graham Paddock is a specialist community schemes attorney, notary and conveyancer. He has been advising clients and teaching students for over 40 years, and was an adjunct professor at UCT for 10 years.

Article reference: Paddocks Press: Volume 16, Issue 11.

This article is published under the Creative Commons Attribution license.

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