Homeowners gain direct access to courts after landmark Supreme Court ruling

Homeowners, corporate bodies, and residential schemes can now bypass the Community Schemes and Ombud Service (CSOS) and bring their disputes directly to the appropriate authority court following a recent ruling by the Supreme Court of Appeal in the “Summervale Lifestyle Estate” case.

This is according to Johlene Wasserman, director of Community Schemes and Compliance at Sandton-based law firm VDM Incorporated.

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

Summervale Lifestyle Estate is a retirement village for the over-50s in Gordon’s Bay, Western Cape. Parch Properties 72, a company that owns several cottages on the plot next door, wanted to incorporate the units into the estate by changing 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 altered for the worse, as the cottages could be rented 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, and they expressed concerns about fairness, property rights, and the way the proposal was handled.

The HOA tried on two occasions to change the constitution, but many residents were against it. As a result, Parch Properties 72 Ltd took the matter to court, choosing to bypass the CSOS.

The court, however, denied Parch’s request for a declaration that the cottages be included in Summervale, and it found that the residents’ refusal to change the constitution was reasonable and justifiable.

Another precedent-setting property-related court case involved the Landsmeer Homeowners’ Association.

“Following an amendment to the HOA’s Memorandum of Incorporation (MOI) in 2021, which exempted the developer (who held most of the voting power) from paying levies for an extended period, the minority who voted against it took the matter to court. The judge sided with the minority, saying the special resolution was ‘oppressive, unfairly prejudicial, and an abuse of majority voting power’,” Wasserman explained.

The court also granted an order to amend the MOI by removing the offending clauses.

“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.

She added that it also strengthens protection under Section 163 of the Companies Act, ensuring that homeowners’ associations operate with transparency and fairness.

The 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 court have been decisively rejected, so litigants are entitled to proceed either through CSOS or directly to court, depending on their strategic, financial, and practical considerations,” Wasserman said.

The 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. CSOS orders are legally binding,” Wasserman explained.