The Committee met with Parliamentary Legal Services Office staff to discuss the proposed amendments to the Sectional Titles Schemes Management Bill. Members raised the point that the ombud needed to be viewed as the first option for people seeking legal remedy, and that the courts should be the last resort. They suggested that electronic media and faxing should be regarded as acceptable methods of delivery of notices to members of the body corporate. They also wanted to limit the number of proxies that an individual could hold.
The Committee then debated the Community Schemes Ombud Services Bill, with the Office of the Chief State Law Advisor giving input. Members approved new definitions regarding the “community scheme”. Members expressed concern about the omission of housing cooperatives from the “community scheme” and it was agreed that the relevant definition be redrafted accordingly. Members discussed why Clause 4 (b) had not clearly recognised the role played by conciliators and argued that conciliators played a significant role in dispute resolution and had to be identified alongside adjudicators. Some discussion was held on whether the terms “mediation”and “conciliation” were synonymous and it was agreed that if they were, there was still no harm done in referring to both. It was agreed that Clause 4(b) should be amended to contain wording relating to training for conciliators, adjudicators and other employees of the Service. Members also noted the need to cater for criminal liability for breaches of Clause 11, and this was done by amending Clause 34 with the addition of a new subclause (h). Members agreed upon a new title for Clause 47, and made the necessary consequential changes to the referencing. Members also debated whether to include a clause that provided that the Service must be self-funded after the first three years and noted that there was a provision that the legislation must be reconsidered after that time. It was noted that government assistance was required in the establishment of the Service. Members then discussed the proposed changes with the Department, which was in agreement with the suggestions and clarified some of the practical issues.
Both Bills were adopted by the Committee, as amended.
Sectional Titles Schemes Management Bill [B20-2010]: Further deliberations
Ms Anthea Gordon, Parliamentary Legal Advisor, read through the proposed amendments to the Sectional Titles Schemes Management Bill (the Bill). She tabled the attached summary of proposed amendments.
Mr A Steyn (DA) said that, under Clause 3(2), the brackets encasing the words “including any magistrate’s court” needed to be removed, as the first port of call should be the ombud.
Mr M Mdakane (ANC) added that the courts should be utilised only once other processes had been exhausted.
Ms Gordon responded that the clause could be amended to state that application to the ombud should be made in the first instance and only if relief was not found here could application could be made to the regular courts. This would prevent situations in which certain people, who had access to lawyers, would automatically choose to have recourse to the courts whereas others without means could not do so.
The Chairperson said that under the new Clause 6(3), electronic media and faxing should be included as a means of delivering notices to members of a body corporate.
Ms Gordon said that she was unsure as to whether such notices could be given electronically.
The Chairperson said that this should be listed as an option, especially in cases where members were abroad.
Ms Gordon responded that this could be listed as an extra option. There could, however, be problems around the traceability of such notices.
The Chairperson said that, in relation to Clause 6(4), the Committee was trying to look at limiting the number of proxies an individual may hold.
Mr A Figlan (DA) said that he supported the issuing of proxies as there were instances in which members were incapable of attending meetings.
Ms Gordon added that in company law this was standard practice in shareholders’ meetings and was done in order to ensure that as many people as possible were included in the process.
The Chairperson said that the number of proxies should be limited at two. The Committee would monitor how this progressed.
Mr A Steyn (DA) asked whether there was a definition for “Advisory Council”.
The Chairperson answered in the affirmative.
Ms Gordon then highlighted (see attached document) a number of proposed technical amendments to the wording, taking the Members through the Bill, and referring to the page numbers and lines in which words should be substituted.
Ms Gordon suggested that in Clause 18(1)(a), at line 2 on page 15, the word “may” should be replaced with “must”.
Ms Gordon then suggested that on page 14, line 7, the words “not more than 9 and not less than 7” should be inserted.
Ms Gordon suggestion that on page 14, at line 8, the words “one must be Chief Ombud” should be inserted.
She added that on page 14, line 10, in subclause (8) there should be inclusion of the reference to “personal”.
She further suggested that on page 14, at line 18, the word “or” should be inserted after “development”
On page 14, at line 10, she said that the whole paragraph should be omitted, and on page 14, at line 20, she suggested the omission of subsection (2).
On page 14, at line 29, she suggested the substitution of the phrase referring to persons, with “one or more persons”.
Similarly, on page 14, at line 29, she suggested that the phrase referring to persons should be clarified by inserting “consisting of one or more of seven persons”.
Ms Gordon suggested that on page 14, line 29, the words “of various racial groups and geographical areas of the Republic including both males and females” should be removed, and instead substituted with the words “”two, of whom one must be the Committee Chairperson”.
Mr A Figlan (DA) suggested the use of the word “diverse” for the above.
The Chairperson explained that the Bill already stipulated that there must be broad representation and so this covered both genders, and other categories of people.
Ms Gordon pointed out that on page 14, at line 41, the word “an” was incorrect and there should be a technical correction using the word “a”.
Ms Gordon then suggested that on page 14, line 49, the word “alternate” should be substituted with “Deputy” and that the remainder read “the members present in the Advisory Council
Ms Gordon then said that on page 14, at line 50, there should be insertion of the phrase “elected Member for the purposes of such a meeting.
Ms Gordon said that on page 14, at line 62, there should be insertion of a reference to the “administrative function“.
Ms Gordon then suggested that on page 15, at line 2, there should be insertion of the phrase ”after consultation with Parliament”.
Ms Gordon finally pointed out that there was a numbering error in Clause 20 on page 13, where the number 9 should be substituted with number 10.
Members agreed that the Sectional Titles Schemes Management Bill presented few technical challenges, and that these would be addressed by the drafters. However, this had identified some gaps, that would be discussed under the Community Schemes Ombud Service Bill.
The comments on this Bill would be discussed with the Department.
Community Schemes Ombud Service Bill (SCOS Bill): Office of the Chief State Law Advisors’presentation
Mr Mongameli Kweta, State Law Adviser, Office of the Chief State Law Adviser presented a list of the the proposed grammatical and technical amendments to the SCOS Bill.
Some Members had expressed concern that housing cooperatives had not been mentioned in the definition of “community scheme”. It was agreed that the relevant definition be redrafted to read: “community scheme” means any scheme or arrangement in terms of which there is shared use of and responsibility for parts of land and buildings, including but not limited to a sectional titles development scheme, a share block company, a home or a property owner’s association, however constituted, established to administer a property development, a housing scheme for retired persons, and a housing co-operative as contemplated in the South African Co-operatives Act, 2005 (Act No. 14 of 2005) and “scheme” has the same meaning.
Members had also noted and proposed that Clause 4(1)(b) should include the training of conciliators alongside adjudicators, as the two areas required specialised skills.
The Chairperson noted that the conciliation process was not provided for in the Bill and suggested that this be rectified to reflect the process on the ground.
It was agreed that the clause should be amended to read: “provide training for conciliators, adjudicators and other employees of the Service.”
Mr Steyn said that Clause 40(c) was flawed because there was no clause in Bill that dealt with the mediation process.
Mr Kweta replied that the process would enhance the Bill and there did not appear to be any dangers of unconstitutionality. This decision was incumbent upon the Committee’s engagement with the Department, which would determine whether it would be viable to include conciliation, as it was a substantive amendment.
Mr Mdakane reiterated the need for the Committee to engage with the Department on the issue of conciliation and its financial implications.
The Chairperson agreed with him.
Mr Kweta noted the new wording for Clause 4(2)(b), which now read that there must be provision of “…education, information, documentation and such services as may be required to raise awareness to owners, occupiers, executive committees and other persons or entities who have rights and obligations in community schemes, as regards those rights and obligations.”
Mr Kweta then moved on to comment on Clause 11(4), dealing with fiduciary duties and disclosure, but said that this was misplaced, because the subject matter of the clause had to do with the disclosure of the interest of a particular member, as well as the fiduciary duty of the member of the Board. The only new inclusion was around an organisation or an enterprise to which a Member may belong. He said this flowed with the subject matter of the whole clause.
He added that another issue was that this clause had not dealt with the consequences of non compliance. On the other hand, Clause 34(1)(c) which dealt with Offences and Penalties, covered the consequences if an organisation or enterprise had not disclosed to the Minister an interest held by a member of the Board. One proposal was that Clause 11(8) be inserted, to deal with non compliance with subclauses (1) to (4).
Mr Kweta then noted that Clause 41(2) now read: “An Ombud may, on good cause shown, condone the late submission of an application contemplated in subsection (1).”
Mr Kweta then reverted to discuss the new proposal around criminal liability in respect of members in Clause 11(4). He suggested that it could be appropriate to insert into Clause 34 (which already dealt with offences and penalties) a new subclause (h), which would make reference to a failure to comply with sections 11(1), (2) and (3). This would then involve an amendment to Clause 11(7). Subclauses 11(1), (2) and (3) would then have been covered, whereas the position in Clause 11(4) would be amplied and dealt with in Clause 34(1)(c).
The Chairperson agreed that these issues would be discussed with the Department.
Discussions between Committee and Department of Human Settlements
The Chairperson welcomed the delegation from the Department of Human Settlements (the Department or DHS) and its consultants, and outlined the gaps to be addressed.
In respect of the Sectional Titles Schemes Management Bill, the Chairperson noted that there were few technical amendments, which the drafters would correct. Members were satisfied with the definitions. Clause 6(3)(d) should be inserted to cater for owners who maybe abroad, in which case an email or fax can be used to serve notices.
Mr Mdakane added that the meeting generally had no other comments or substantive changes to the Bill. The Bill would be tidied up, and then adopted by the Committee.
Discussion around Clauses of Community Schemes Ombud Services Bill
In respect of the Community Schemes Ombud Service Bill the Chairperson summarised the major concerns that the Committee had expressed, firstly in regard to the housing cooperatives, and their omission from the definition of “community scheme”, in comparison to other schemes that had been mentioned.
Prof Graham Paddock, Legal Consultant to the DHS, replied that the Department was happy with the suggestion as it was an improvement. He agreed that housing cooperatives should be included.
Members and the Department then agreed that the new definition would read:
“community scheme” means any scheme or arrangement in terms of which there is shared use of and responsibility for parts of land and buildings, including but not limited to a sectional titles development scheme, a share block company, a home or a property owner’s association, however constituted, established to administer a property development, a housing scheme for retired persons, and a housing co-operative as contemplated in the South African Co-operatives Act, 2005 (Act No. 14 of 2005) and “scheme” has the same meaning.
Clauses dealing with adjudicators, mediation and conciliation
Mr Ngwenya then commented on the discussions around mediation and conciliation. He noted that in the South African context, the terms tended to refer to the same thing.
The Chairperson disagreed, and said that the two were not the same.
Ms M Borman (ANC) agreed with the Chairperson. She also expressed concern that Clause 48(1) which dealt with the referral to adjudicator, conflicted with the practice in
Mr Ngwenya indicated that he agreed on some issues, particularly around the training of adjudicators and other employees. He also agreed with the comment on Clause 47 in relation to matters referred to conciliators for a negotiated settlement.
Prof Cornie van der Merwe, Consultant to the DHS, commented that the Department was not necessarily opposed to the comment, but needed to understand the real issues around the difficulty that the Committee saw with he terms “mediation”and “conciliation”.
Mr Mdakane said that if it was correct that the terms mediation and conciliation were used interchangeably in the South African context, therefore there would be no harm if both processes ere accommodated.
Mr Ngwenya understood the Chairperson’s concerns.
Prof van der Merwe said conciliation would be more expensive than adjudication, but the Chairperson indicated that conciliators would be appointed in the Ombud’s office.
Ms Borman then raised comments on Clause 22. She noted that would not be desirable for another levy to be imposed on owners, but that another clause that indicated that the Service would self-fund would be in order.
Mr Steyn expressed concern that if that proposal was considered, it would only apply to new owners, to the exclusion of existing ones.
The Chairperson thought that Clause 22(b) was in order in principle, but needed to be rephrased.
Prof Paddock indicated that the funding model had tried to match the cost. He added that the proposal by Ms Borman could be achieved, but noted that the property transfer process was already highly taxed and this would increase costs of property acquisition.
Mr Mdakane said the clause should not be amended.
The Chairperson reminded Members that the legislation would be reviewed after three years.
Prof Paddock asked whether the Committee would prefer to have a statement that indicated that the legislation would be reviewed after three years.
Mr Mdakane agreed that it was necessary to alter the wording but did not feel that the word “reviewed” should be used.
The Chairperson said the agencies should be self-sustaining and therefore required something that would enforce that commitment.
Mr Kweta suggested that the three years may not be sufficient for the Service to become self sustaining and proposed that Clause 22(1)(a) could be rephrased.
The Chairperson noted that a recent study had shown an increased annual value of Sectional Titles.
Mr Kweta summarised the proposal that subclause (h) be added to Clause 34(1), and that this would read: “…fails to comply with section 11(1), (2) and (3), is guilty of an offence, and is liable, on conviction, to a fine or imprisonment for a period not exceeding five years or to both a fine and such imprisonment.”
The Chairperson noted that the Committee had agreed that the wording of this clause may be transferred into the regulations, and that the Department should prepare a good report. This was addressed in Clause 29(2).
Mr Mdakane agreed that the issue had been adequately addressed.
Mr Steyn made the point that the Minister could not make regulations on Parliamentary Funds. However he pointed out that the matter would be dealt with when the regulations were presented before the Committee.
The Chairperson asked where Parliament was reflected in the clause.
Mr Ngwenya replied that a reference to Parliament would be inserted in Clause 29(1), after the references to “the Board”, so that it would read: “The Minister must, after consultation with the Board and Parliament,make regulations regarding …”
It was noted that there had been an insertion into Clause 39(1), where subclauses (f)(i),(ii) and (iii) were inserted. These related to the tenant’s duty to make the payments specified, and that no right of deduction, set off or counterclaim against the landlord could reduce the amounts to be paid to the association. It also dealt with the fact that payments made to the association did not discharge the tenant’s separate liability to the landlord under their lease, save that if the tenant paid to the association then this must be credited as if the landlord himself had paid.
The Chairperson asked why the definition of “conciliator” had not been addressed in the definition section.
The title for Clause 47 was amended to contain a reference to “Conciliation”. The title on page 3 for Clause 47 was similarly corrected so that pages 3 and 18 were consistent.
Members agreed that Clause 48(1) be amended to be linked and consistent with Clause 47.
The Chairperson asked whether there would be certificates given.
Prof Paddock replied that these would be given.
Adoption of Bills
Members then proceeded to consider the adoption of each Bill, separately.
They agreed to adopt the Sectional Titles Schemes Management Bill [B20 – 2010], as amended.
Members then agreed to adopt the Community Schemes Ombud Service Bill, as amended.
The meeting was adjourned.
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