Major legal win for homeowners in South Africa

A recent court case has confirmed that homeowners and community schemes can bypass CSOS and take disputes directly to court, ending years of uncertainty and strengthening legal options.

VDM Incorporated’s director of community schemes and compliance, Johlene Wasserman, said the ruling by the Supreme Court of Appeal on the ‘Summervale Lifestyle Estate’ case is a landmark win for homeowners.

Following the case, homeowners, bodies corporate and residential schemes can officially bypass the Community Schemes and Ombud Service (CSOS) and take their disputes directly to court.

“This decision, which has ended years of uncertainty, is critical for parties facing complex or high-value legal battles,” Wasserman said.

“While it doesn’t undermine the valuable role of CSOS, it does empower stakeholders to choose the forum they prefer, without any of the procedural hurdles that may previously have limited their options.”

Summervale Lifestyle Estate is a retirement village that caters for the over 50s in Gordon’s Bay in the Western Cape.

Parch Properties 72, a company that owns several cottages on the adjacent plot, sought to incorporate the units into the estate by amending the Homeowners’ Association (HOA) constitution.

While some residents were in favour, the ‘Venter group’ vigorously opposed it, arguing that the character of the estate could be changed for the worse since the cottages could be rented out to people of any age.

The Venter group also held fast to the fact that the cottages were on a separate piece of land and not originally part of Summervale.

The group also expressed concerns about fairness, property rights, and the manner in which the proposal was handled.

“The Summervale HOA didn’t oppose Parch’s request and tried on two occasions to change the constitution, but many residents were against it,” Wasserman said.

“As a result, Parch took the matter to court, choosing to bypass CSOS.” The court, however, denied Parch’s request for a declaration that the cottages be included in Summervale.

It found the residents’ refusal to change the constitution to be reasonable and justifiable, and Parch was ordered to pay legal costs.

The Landsmeer Judgment

According to Wasserman, another precedent-setting property-related court case involved the Landsmeer HOA.

In 2021, an amendment was made to the Landsmeer HOA’s Memorandum of Incorporation (MOI), which exempted the developer, who held most of the voting power, from paying levies for an extended period.

The minority who voted against the amendment took the matter to the Gauteng High Court. The judge sided with the minority, saying the special resolution was oppressive, unfairly prejudicial, and an abuse of majority voting power.

The court also granted an order to amend the MOI by removing the offending clauses, and ordered the respondents to pay the applicants’ costs, including those for senior counsel.

“This 2024 ruling was a clear message that majority power cannot be used to sidestep financial obligations at the expense of ordinary members,” Wasserman said.

“It also strengthens protection under Section 163 of the Companies Act, ensuring that homeowners’ associations operate with transparency and fairness.”

Wasserman explained that CSOS and South Africa’s courts are both available to handle property disputes, with the Summervale ruling emphasising that the “exceptional circumstances” rule is not applicable.

“Earlier interpretations that required parties to prove exceptional circumstances before approaching the High Court have been decisively rejected,” she said.

This means that litigants are entitled to proceed either through CSOS or directly to court, depending on their strategic, financial, and practical considerations.

“The Supreme Court of Appeal judgement overrules all High Court decisions that followed the restrictive Heathrow precedent, bringing uniformity to the country’s jurisprudence,” she explained.

It showed that the CSOS Act does not remove the High Court’s inherent jurisdiction and that nothing in the CSOS Act, either expressly or by implication, prevents the High Court from hearing disputes arising in community schemes.

According to Wasserman, the case also makes it clear that the existence of CSOS does not exclude the High Court.

She explained that CSOS was established to resolve disputes relating to community schemes and it’s more affordable than going to court.

“From disputes around unreasonable levies, misuse of scheme funds, improper conduct by trustees, challenges to AGM decisions, enforcement of conduct rules, to maintenance problems, CSOS is the ideal starting point,” she said.

“And CSOS orders, such as court judgements, are legally binding, too. That said, its limited reach means the High Court remains fully open to litigants.”