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Four fundamental CSOS issues explained

At JLM Property, we pride ourselves on our property management services. We want to help our clients learn and understand a bit about the ‘behind the scenes’ of property management solutions and community schemes. Over the last few years, many community scheme stakeholders have expressed complaints and issues with the CSOS (Community Schemes Ombud Service). It’s unfortunate that these poor service practices are ongoing and not many people fully understand what’s going on, or what the issues are. In this article, Graham Paddock from Paddocks guides us through the top four fundamental CSOS issues and explains each for better understanding.

The issues covered are those such as inflating scheme levies caused by the CSOS not charging proper service fees, CSOS adjudicators not awarding costs, unpublished adjudication orders, and the CSOS not having access to sectional title governance documents. Read on for more information about these issues and why they should be resolved.

Four fundamental CSOS issues explained

Community scheme stakeholders are not happy with the Community Schemes Ombud Service (“CSOS”). There is an ever-increasing number of complaints about poor service and operating practices. An example of one such criticism is Auren’s article in this edition of Paddocks Press. It is legitimate to criticise a state-owned National Public Entity such as the CSOS when it is not performing its functions as it should, particularly when it is directly funded by the people it is failing to serve adequately.

To prompt further constructive discussion and criticism of the CSOS’ role, I am working through the CSOS Act, the regulations, the Circulars and Practice Directives, identifying areas that need attention. This is a long process, which I am undertaking as background work in revising the notes for the Paddocks Dispute Resolution in Community Schemes course. Without focusing on the general quality of the published CSOS orders, I will cover four other ‘high level’ issues I have identified.

CSOS DOES NOT CHARGE PROPER SERVICE FEES, THUS INFLATING SCHEME LEVIES

The Community Scheme Ombud Service Act No. 9 of 2011 (“the CSOS Act”) and the general Regulations explicitly require the CSOS to charge for the services it renders to community scheme stakeholders on a ‘cost recovery’ basis. (Section 22 and Gen Reg 12). This means that the fees the CSOS charges for conciliation, adjudication and other services should be sufficient to cover its associated costs, and the levies it charges community schemes should not be used to cover these costs. The regulated fees for applications (R50,00) and adjudications (R100,00) are so low that they encourage opportunistic applications and cannot cover CSOS’ associated costs.

The statutory principle is that those who use the CSOS services should pay the associated costs. The levies the CSOS is entitled to collect from community schemes should only be applied to the CSOS’ other expenses, including proper record keeping, publishing orders and the training of conciliators, adjudicators and those involved in community schemes. The CSOS should raise realistic fees for services, and reduce scheme levies to cover only other CSOS expenses.

CSOS ADJUDICATORS DO NOT GENERALLY AWARD COSTS

A CSOS adjudicator is obliged to apportion liability for costs in any order where the parties do not qualify for a waiver of adjudication fees. (Section 54(1)(b) of the CSOS Act). In practice, very few published CSOS orders include a costs award. This means that a successful party is unable to recover costs, which again encourages opportunistic applications and penalises successful parties. The CSOS should ensure that all adjudication orders include a costs award, except where the parties are granted a waiver of adjudication fees.

CSOS ADJUDICATION ORDERS ARE NOT PUBLISHED

The CSOS is obliged to publish all orders made under the CSOS Act, including reasons for such orders, making them available for public inspection. (Section 58(2) of the CSOS Act.) Thousands of orders have been issued, but only a few hundred have been published. This means that the public cannot see, learn from, comment on and criticise these unpublished orders. The CSOS should take steps to publish all the orders it has issued.

CSOS HAS NOT TAKEN OVER SECTIONAL TITLE GOVERNANCE DOCUMENTS

One of the CSOS’ seven core functions, which it identified as its second most important strategic objective in 2014, is to take custody of sectional title governance documents, including scheme rules, certificates and other documents currently held by deeds registries. (Section 4 of the CSOS Act.) It has not done so, and this is part of a wider issue of the CSOS not exercising its investigative powers.

Ready access to these documents is necessary to allow CSOS officials and the public to verify a sectional title scheme’s rules. In practice, CSOS officials rely on the disputants to tell them which scheme rules apply. The CSOS should perform its explicit statutory mandate by taking custody of these documents and, with the new rules approved by the chief ombud, making them readily accessible to the public at a reasonable fee.

SO WHAT CAN WE DO TO HELP THE CSOS IMPROVE?

I suggest that you examine your own experiences with the CSOS and, if you believe that you have been unfairly treated or received poor service, address a constructive email to the CSOS’ chief ombud. Briefly explain the situation and make your own suggestions for improvement.


This article was written by Graham Paddock from paddocks.co.zaLink to the original article

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 17, Issue 5.

This article is published under the Creative Commons Attribution license.

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