Sectional Titles Schemes Management Bill; Community Schemes Ombud Service Bill: proposed amendments

Meeting report

Proposed Amendments to Community Schemes Service Bill
Mr Mongameli Kweta, Senior State Law Adviser, Office of the Chief State Law Advisor, listed the proposed grammatical and technical amendments to the Community Schemes Ombud Service Bill. Also included in these proposed amendments was the proposal that under Clause 39 on page 15, after line 16, the following paragraph be inserted: “(e) an order for the payment or re-payment of a contribution or any other amount.”

Ms M Borman (ANC) asked what the Department’s views were on the submission that suggested making it mandatory for defaulting owners to pay their levies.

Mr Graham Paddock, Department Consultant, answered that the Department viewed this as a challenge as the interests of the communities and those of investor owners needed to be balanced.

The Chairperson said that the Committee would discuss this matter further and would submit a report on its findings.

Mr Kweta continued that there was a proposed amendment under Clause 48, on page 18, form line 2, to omit subsection (1) and to substitute it with the following subsection: “(1) If the ombud does not facilitate a negotiated settlement in terms of section 47, or if such ombud is of the view that a negotiated settlement is unlikely to succeed, the ombud must refer the application together with any submissions and responses thereto to an adjudicator.”

The Chairperson asked whether any provision was made for certificates of referral being provided.

Mr Khwezi Ngwenya, State Law Adviser, Office of the Chief State Law Advisor, answered that for an ombud to refer a matter to an adjudicator, a certificate or notice had to be issued.

Mr A Steyn (DA) said that in Clause 59 (Levies and annual returns), there was little clarity on the proposed funding model. Would the levy amount have to be paid in advance annually?

Mr Ngwenya replied that the business case had been distributed to the Committee. Provision was made for those owners who could not afford this to apply for a discount.

Mr R Bhoola (MF) asked, in relation to the appeal process, why there was both a right to apply to the High Court as well as 30 days to appeal the order.

Mr Ngwenya answered that this was done as a discretionary measure so as not to deny anyone access to the High Court in this regard.

The Chairperson asked where, in relation to dissolution, mention was made of the levies to be divided among the members of the body corporate.

Mr Paddock answered that a provision in the Sectional Titles Act was made for this. Dissolution of schemes was catered for by either unanimous resolution of the owners or by a court order.

Proposed Amendments to the Sectional Titles Schemes Management Bill
Ms Bongiwe Lufundo, State Law Adviser, Office of the Chief State Law Adviser, listed the proposed grammatical and technical amendments to the Community Schemes Ombud Service Bill. Also included in these proposed amendments was the proposal that a new Clause (Clause 6, dealing with Meeting of bodies corporate) be included. This Clause would read as follows:

Clause 6, dealing with Meeting of bodies corporate
“(1)       The meetings of the body corporate must take place at such time and in such form as may be determined by the body corporate.
(2)        The body corporate must, at least 30 days prior to a meeting of the body corporate where a special resolution or unanimous resolution will be taken, give all the members of the body corporate written notice specifying the proposed resolution, except where the rules provide for shorter notice.
(3)        The notice contemplated in subsection (2) must be –
(a) delivered by hand to a member;
(b) sent by pre-paid registered post to the address of a member’s section in the relevant scheme;
(c) sent by pre-paid registered post to a physical or postal address in the Republic of South Africa that a member has chosen in writing for the purposes of such notice.
(4)        A member may be represented in person or by proxy at such meeting.
(5)        When votes are calculated in value, each member’s vote is calculated either –
(a) as the total of the quotas allocated to the sections registered in that member’s name; or
(b) in accordance with a rule made in terms of section 10(2), whichever is applicable.
(6)        When votes are calculated in number, each member has one vote.
(7)        Where the resolution would have an unfairly adverse effect on any member, the resolution is not effective unless that member consents in writing.
(8)        A body corporate or an owner who is unable to obtain a special or unanimous resolution may approach the Chief Ombud for relief.”

Mr A Figlan (DA) asked whether individuals were allowed to hold two or three proxies.

Mr Paddock answered this Clause was permissive as it did not limit this number. If the Committee was concerned around this issue it should insert a provision to such effect.

The Chairperson said that an individual holding more than one proxy was an abuse of power.

Mr Steyn proposed that this number be limited to two.

Mr Bhoola proposed that the number be limited to one.

The Chairperson said that the number should for the present time be limited to one.

Ms Lufundo continued that it had been proposed that Clause 15, which dealt with the Appointment of administrators, be rejected and be substituted with a new Clause which would read as follows:

Clause 15, which dealt with the Appointment of administrators
“(1)       A body corporate, a local authority, a judgement creditor of the body corporate or any owner or other person having a registered real right in or over a unit may apply to a Magistrate’s Court for the appointment of a suitably qualified and independent person to serve as the administrator of the body corporate.
(2)        (a) If a Magistrate’s Court on hearing the application referred to in subsection (1) –
(i) finds evidence of serious financial or administrative mismanagement of the body corporate; and
(ii) there is a reasonable probability that, if it is placed under administration, the body corporate will be able to meet its obligations and be managed in accordance with the requirements of this Act,
The Magistrate’s Court may appoint an administrator for a fixed period and on such terms and conditions as it deems fit.
(b) The remuneration and expenses of the administrator are administrative expenses contemplated in section 3(1)(a)
(3)        An administrator has, to the exclusion of the body corporate, such powers and duties of the body corporate as the Magistrate’s Court directs and must exercise these powers to address the body corporate’s management problems as soon as reasonably possible.
(4)        The administrator must –
            (a) convene and preside at the meetings required in terms of this Act and the scheme’s rules; and
            (b) lodge with the ombud –
            (i) copies of the notices and minutes of the meetings; and
(ii) written reports on the administration process every six months or at shorter intervals as the Magistrate’s Court may direct.
(5)        A Magistrate’s Court may, on application by the administrator or any person or any body referred to in subsection (1) –
            (a) remove the administrator from office;
            (b) replace the administrator;
            (c) extend the term of the administrator’s appointment or amend his or her terms of appointment; and
            (d) may make such order for the payment of costs as the Magistrate’s Court considers fit.” 

The Chairperson asked how long, on average, administrators’ terms lasted for.

Mr Paddock answered that there had been many complaints around administrators who had not been given fixed terms being ineffective. This was mitigated by the inclusion of the necessity for a fixed term.

Mr Steyn proposed that administrators be compelled to report every three months as opposed to every six months as was the case currently.

The meeting was adjourned.