Section 35(1) states:
‘A scheme shall as from the date of establishment of the body corporate be controlled and managed, subject to the provisions of this Act, by means of rules.’
Sounds simple, but could in fact ‘hide’ many administrative errors. The following are some of the underlying reasons for such errors:
Firstly, it should be understood that the provisions of the Act itself are always conclusive. Accordingly no rule may deviate from or contradict any statutory provision.
Secondly, rules are not just any old rules. To be valid and enforceable a rule must have been made according to the directives of section 35. Accordingly there is no such thing as ‘house rules’ or rules, guidelines, or edicts issued by trustees or by some other informal procedure even if these have been ‘adopted’ by the members.
Thirdly, section 35(3) requires that rules ‘shall be reasonable, and shall apply equally to all owners of units put to substantially the same purpose.’ Accordingly, although it is possible to have different rules for different components within a scheme, rules relating to, for example, a residential component must apply equally to all residential units, in a broader sense. This is a difficult requirement to comply with when drafting rules.
Fourthly, section 35(5)(c) states that amended rules take effect on the date of filing thereof at the office of the Registrar of Deeds. This is where things may start to go wrong: Proper filing of an amended rule does not guarantee that the rule is valid and enforceable, in the sense of compliance with formalities, legality and reasonableness. Because rules filed at the Deeds Registry are not examined, it is possible to file any rule which may, for various reasons, not be enforceable.
Unfortunately the physical integrity of the rules filed at the Deeds Registry is also not guaranteed. Due to uncontrolled tampering many sets of rules filed at Deeds Registries have in the past been corrupted, and may even be completely lost.
The situation will certainly improve once both examination and custody of rules are entrusted to the Ombud, which will hopefully happen in the very near future. However, this will not resolve the issue of rules which may have been lost or corrupted previously.
A further problem relates to the fact that the legislature has, over the years, introduced numerous amendments to the model rules prescribed under Annexures 8 and 9 to the Act. This is not a problem for bodies corporate which have adopted the model rules without amendment, but could pose huge difficulties for bodies corporate which have adopted special rules. The trustees of such bodies corporate usually keep their own working copies consisting of a full set of rules.
Although the copy filed at the Deeds Registries is supposedly the conclusive copy, neither this nor the ‘working copy’ is automatically updated with amendments by the legislature, unless the trustees have diligently incorporated the applicable amendments as they were introduced. (A complicating factor is that not every amendment by the legislature would affect the rules of a scheme where special rules had been adopted).
The end result is that at many schemes rules may erroneously be applied without reference to amendments made by the legislature over time. The Ombud will not assist with this problem and the only solution would be a thorough audit of the rules, preferably before the Ombud takes over responsibility for the rules.