Big change for homeowners after High Court ruling

A recent High Court ruling has brought about changes for South African homeowners, clarifying that they cannot accept the benefits of an HOA settlement, such as approved building plans, while rejecting its conditions.

In November 2025, the Gauteng High Court handed down another judgment that will impact property owners, Homeowner Association (HOA) trustees, and community‑scheme managers.

VDM Incorporated’s Director of Community Schemes and Compliance, Johlene Wasserman, described the ruling as firm and practical.

She welcomed the court’s confirmation that a litigant cannot accept the benefits of a settlement offer while rejecting the conditions attached to it, particularly when those conditions relate to costs.

“The High Court’s November judgment is an excellent one that offers important clarity for community schemes. It’s a textbook example of why settlement mechanisms exist, and what happens when they are strategically misused,” she said.

Court records show that the dispute began when homeowner Jennifer Koster clashed with the Centurion HOA over her revised building plans.

When the HOA initially refused to approve her plans, Koster launched a High Court review. But once litigation was underway, the HOA changed course, Wasserman said.

“It approved the plans and delivered them to Koster under a formal Rule 34 settlement offer, marked ‘without prejudice’ and expressly excluding any contribution to her legal costs,” she explained.

Koster accepted the benefit using the approved plans to secure municipal approval and ultimately obtain her occupation certificate.

However, she continued litigating, arguing that the HOA’s approval was an independent administrative act – not part of the settlement offer.

“The court rejected that argument outright. It held that the approval was clearly tendered as part of a conditional settlement, and the fact that the plans were stamped before delivery did not magically detach them from the terms of the offer,” Wasserman explained.

“In simple terms, you can’t take the performance and reject the terms. Settlement doesn’t work that way.”

Wasserman added that the court also criticised Koster for disclosing the without‑prejudice offer in her affidavits – a direct contravention of Rule 34.

“While the HOA had taken a misstep in its procedural response, the court stressed that settlement mechanisms only function when both sides respect the rules,” she said.

By the time the matter was heard, the dispute was effectively over. Koster had already obtained the relief she sought.

“The court dismissed the review as moot and made no order as to costs, noting that awarding costs in these circumstances would encourage opportunistic litigation and undermine the purpose of settlement procedures,” she said.

Practical implications for homeowners and HOAs

Wasserman said the ruling sends a clear and necessary message to anyone involved in HOA or property‑related disputes.

It shows that they cannot accept the benefits of a settlement tender while rejecting its conditions, and Rule 34 offers remain protected.

“Even if one party tries to reframe the offer as something else, like an administrative concession, the court will look at the substance, not the spin,” she said.

“And courts will not entertain litigation strategies aimed at squeezing out a costs order after the substantive relief has already been achieved.”

For HOAs, the judgment reinforces the notion that they can resolve disputes pragmatically without incurring penalties for doing so.

For homeowners and litigants, it’s a warning: selective use of settlement offers will not be rewarded, Wasserman added.

The court also reaffirmed that the High Court retains jurisdiction over HOA disputes, echoing recent guidance from the Supreme Court of Appeal.

“This is welcome clarity in an area that has become increasingly muddled. Ultimately, the ruling champions fairness, procedural integrity, and responsible conduct in community‑scheme litigation,” she said.

Drawing from the judgment, Wasserman explained that there are several practical implications that will shape how HOAs and homeowners navigate disputes going forward.

First, if an HOA approves building plans or similar requests as part of a settlement offer, that approval is conditional.

“A homeowner cannot accept the benefit – such as approved plans – while rejecting the terms, including a ‘no costs’ condition,” she said.

“This prevents parties from cherry‑picking favourable elements of a settlement while ignoring the rest.”

According to Wasserman, parties must also avoid disclosing without-prejudice settlement offers in court documents unless the rules expressly allow it.

“Improper disclosure can lead to adverse cost consequences, even if the party ultimately succeeds on the merits,” she cautioned.

The court draws a firm line

Another practical implication of the judgment, Wasserman said, is that any ongoing legal challenge may become moot if an HOA ultimately provides the relief a homeowner seeks.

“Courts are increasingly unwilling to entertain academic disputes once the substantive issue has been resolved,” she said.

The judgment also confirms that HOA decisions fall under contract law and the law of voluntary associations – not public administrative law, she said.

“This means principles like the Oudekraal doctrine, which applies to public bodies, do not apply to HOAs,” she said. The Oudekraal doctrine comes from a 2004 Supreme Court of Appeal case, Oudekraal Estates v City of Cape Town.

This case established a simple but powerful principle in South African administrative law – if an administrative act is invalid, it still stands and has legal effect until it is formally set aside by a court.

Wasserman explained that the recent court ruling also has an impact on jurisdiction, confirming that the High Court remains a court of first instance for HOA disputes.

“The Community Schemes Ombud Service does not have exclusive jurisdiction, and parties do not need ‘exceptional circumstances’ to approach the High Court directly,” she explained.

Finally, Wasserman said this case has implications for the costs awarded in cases involving HOAs and property owners.

“Even if a homeowner obtains the relief sought, they may not be awarded costs if they did so by accepting a conditional settlement offer while rejecting its terms,” she said.

“This discourages opportunistic litigation and encourages transparent, good‑faith dispute resolution.”

Overall, Wasserman stressed that this judgment marks a significant milestone for community‑scheme governance in South Africa.

“It reinforces that settlement processes must be respected, that conditional offers cannot be selectively exploited, and that HOAs are entitled to resolve disputes without fear of punitive cost orders,” she said.

For homeowners, Wasserman said this case is a reminder that litigation strategy cannot override legal principle.

“The court has drawn a firm line. Fairness, clarity, and procedural integrity must guide how disputes in community schemes are resolved. This judgment strengthens that foundation,” she said.