Sectional Titles Schemes Management and Community Schemes Ombud Service Bills: consideration of negotiating mandates

NCOP Public Services

28 March 2011
Chairperson: Mr M Sibande (ANC, Mpumalanga)
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Meeting Summary

The Committee considered negotiating mandates from the provinces on the Sectional Titles Schemes Management Bill [B20-2010] and the Community Schemes Ombud Service Bill [B21-2010]. Some of the mandates were still coming in as the meeting was about to commence.

The Department of Human Settlements responded as best it could to the inputs made on the Bills given the limited time it had to peruse some of the mandates.

Concern was expressed that provinces were insufficiently consulted on the drafting of regulations for pieces of legislation. When departments referred to Parliament they often only referred to the National Assembly or its portfolio committees. The National Council of Provinces was not always taken onboard. The provinces would not simply rubberstamp bills which had provincial implications.

The Committee agreed that the Department send it a written copy of the responses on inputs on the Bills. Many of the issues raised by the provinces were best suited to be included in the regulations. The provinces had consequently asked the Department to include them during the regulations drafting process.

Meeting report

Sectional Titles Schemes Management and Community Schemes Ombud Service Bills
The Chairperson suggested that the Committee deal with the Sectional Titles Schemes Management Bill [B20-2010] first. Three provinces, namely, the Western Cape, Mpumalanga and Limpopo, supported the Bill without amendments. Responses were still being forwarded to the Committee as the meeting was about to commence.

Mr Z Mlenzana (COPE, Eastern Cape) felt that the Bills were interlinked and should be treated as such. He suggested that provinces be allowed to present their negotiating mandates and thereafter discussions could take place. He noted that the Eastern Cape could be added to the list of provinces which supported the Bill with proposed amendments.

Mr D Feldman (COPE, Gauteng) stated that it seemed that all the provinces supported the Bill.

The Chairperson stated that all the provinces might be in support of the Bill but some had suggested amendments along with their support of the Bill. He asked the Department to comment.

Mr Kwezi Ngwenya, Director: Legal Framework, Department of Human Settlements, stated that the Department would respond to the amendments that had been suggested by some of the provinces.

The Chairperson stated that KwaZulu-Natal, Northern Cape, Gauteng, Eastern Cape, North West Province and the Free State supported the Bill with amendments.

Mr Ngwenya stated that he would respond to negotiating mandates of provinces where proposals and amendments were made.

Western Cape
Community Schemes Ombud Service Bill
Mr Ngwenya, instead of speaking to the Sectional Titles Scheme Bill, spoke first to the comments made on the Community Schemes Ombud Service Bill.  The first was about the appointment of board members and the concern that they would not be properly trained. He noted that it was a valid concern, but there were procedural requirements for the appointment of board members. The Department did take its induction sessions seriously. Policy imperatives were also taken into consideration. Board members were required to have certain kinds of expertise. A board member should have the knowledge to perform its fiduciary function. The Department had a dedicated directorate which handled the induction process and training. The issue of training of board members was thus covered. He stated that the Department had given the same explanation to the province and it had been acceptable.
The second suggestion was the deletion of Clause 22(b) which dealt with funding of the board itself. The general intention of the Bill was to allow for the collection of levies so as to be self sufficient. The idea was not to burden the state. There were exceptions applicable to the poorest of poor who could not afford to pay levies. The poor could approach the Minister to with a request to exempt them from paying levies.

Community Schemes Ombud Service Bill
Reference was made to Clause 4(2) (b) which stated that education, information and documentation, etc should be provided by the Service to owners and occupiers, for example. The province recommended that specific mention be made that education and information, etc, should be provided for disabled persons.

Mr Ngwenya felt that it would be politically correct to include disabled persons but specifically stated that it would be taking it too far. As the provision stood, it included other persons including disabled persons.

Sectional Titles Schemes Management Bill
Clause 8 dealt with the fiduciary position of trustees. KwaZulu-Natal proposed the insertion of a sub clause 5 which made provision for the punishment of trustees and bodies corporate who committed crime. The punishment would either be a fine or imprisonment or both.

Mr Ngwenya stated that no specific provision was needed as common law covered it. Persons would be held accountable in terms of common law.

Clause 10 dealt with the rules of sectional title schemes and a proposal was made that within the clause a provision should be made for the state to set rules for bodies corporate.

In principle the Department of Human Settlements supported that the state should set rules for bodies corporate. The reality was that over time people’s needs changed. The Department supported the principle behind the suggestion but that a provision should not be included in the principle act itself but rather in rules and regulations. If contained in the rules and regulations there was flexibility for the community to change it if need be.

The Chairperson halted proceedings as he noticed that Mr Ngwenya was not only dealing with the negotiating mandates on the Sectional Titles Schemes Management Bill as was agreed to but also with those of the Community Schemes Ombud Service Bill at the same time. He told Mr Ngwenya to continue as he was.

Community Schemes Ombud Service Bill
The suggestion was to amend Clause 57(1) which dealt with the right of appeal. The applicant had the right to appeal to the High Court regarding an adjudicator’s decision on a question of law but not on fact. The suggestion called for the right of appeal on both a question of law and of fact.  

Mr Ngwenya explained if the right of appeal was extended on a question of fact there would be huge delays caused on the decision of the adjudicator becoming final. The matter would be dragged out by persons who could afford the legal fees to go to High Court. The intention was for the Ombuds to be the first court of instance and for the matter to be concluded. Parties should only be allowed to appeal on a question of law. It was in line with all best practices and international practices. He stated that, in the event that the Committee or Parliament felt that an appeal on question of fact should be allowed, a requirement should be set that leave to appeal should be obtained from the Chief Ombudsman. A further requirement should be that the appeal must have a reasonable chance of success and not prejudice any other person.  

North West Province
Sectional Titles Schemes Management Bill
The suggestion was made that backyard dwellers and flat rentals should be covered by the Bill.

Mr Ngwenya stated that the real essence of both Bills was not to cover persons who rented. The Rental Housing Act covered disputes between landlords and tenants. Flat rentals and backyard dwellers were covered by the Act as well.

Free State
Sectional Titles Schemes Management Bill
Reference was made to Clause 2(8) which required that a developer had to convene a meeting of the members of the body corporate not more than 60 days after the establishment of the body corporate. The suggestion was made to reduce the period to 30 days.

Community Schemes Ombud Service Bill
Clause 3(3) spoke about the Service establishing a national head office and where necessary regional offices.  The issue was whether the Service would have a presence in each province.

Eastern Cape Province
Sectional Titles Schemes Management Bill
The province suggested that the existence of two pieces of legislation dealing with sectional titles might create confusion. It was proposed that the long title of the Sectional Titles Act, 1986 (Act 96 of 1986) be amended and it should be referred to as the Sectional Title Registration Act. This would ensure that members of the public knew that Act 96 of 1986 dealt with registration of sectional titles and that the Bill dealt with the management of sectional titles. The Bill had to address the relationship between the municipality, the sectional title owner and the body corporate, especially when the body corporate owed money to the municipality. It also had to address problems that arose when developers registered a real right over sectional titles that spanned over 50 years. It allowed developers to take up to 50 years to develop the property. Often developers did not complete the infrastructure of the development, such as water, sewage and electricity, and there was no way that the body corporate could force the developer to complete the scheme. The Bill further had to address how a dispute between a developer and sectional title holders would be dealt with, and it must deal with schemes with commercial and residential components combined, for example, where there were shops at the bottom and flats on top of a building. The Bill also had to deal with schemes that offered a combination of various schemes in one, such as life rights and time share. The Bill needed to address the issue of where sectional title schemes commenced as rental schemes (rent to buy). It was proposed that the South African Local Government Association (SALGA) and the National Home Builders Registration Council (NHBRC) be represented in the Sectional Titles Schemes Management Advisory Council as was envisaged in Clause 18.
The Bill had to address the situation with how the affairs of the body corporate should be conducted in situations where there was no trustee.

Professor Graham Paddock, consultant to the Department, responded that the Department was not in support of the suggestion, since the Act dealt with survey and registration issues and no longer dealt with management issues. The Bill did not cover such a relationship. The right of a developer to extend a scheme was limited at present. The suggestion was 50 years. Disputes were to be dealt with by the Ombuds Act. It was a way in which people could obtain redress. The scenario was covered by the regulations on the Sectional Titles Act. There were practical implications and it was covered by regulations. Rental issues were covered by the Rental Housing Act. SALGA and the NHBRC were not involved in sectional title issues. The situation would be covered by regulations and not the Act.

Community Schemes Ombud Service Bill
The province wished the Ombuds to undertake education and training.

Prof Paddock stated that the Bill made provision for the Ombuds to provide education and training.

Northern Cape
The province suggested that the Ombuds structure should advise Members of the Executive Council (MECs) at provincial level.

Mr Ngwenya stated that the Ombuds should be a national structure which would be decentralised. The intention was for it to have regional offices. The provinces had to play a prominent role once regional offices were in place. The intention was to have authority vested in the national Minister over the Office of the Ombuds. The issue was about capacity. The Department made sure that the interests of the provinces were protected.

Mr Morris Mngomezulu, Chief Director, National Department of Human Settlements, noted that the establishment of separate entities in various provinces had a huge cost attached to it. It meant that there would be nine provincial boards. It was more cost effective to have a national entity with regional offices.

A representative from the State Law Advisor’s Office was in agreement with the explanations given thus far by the Department.

The Chairperson asked if Members agreed with the amendments as tabled.

Mr Mlenzana stated that the Eastern Cape supported the proposed legislation even though it had commented on it. The province was well aware of the responses that the Department would be giving to the comments made. He asked that the province be consulted during the drafting of the regulations.

Advocate Jan Tladi, Chief Director: Legal Services, Department of Human Settlements, responded that the Department, when drafting regulations, would do so in consultation with Parliament before the regulations were sent to the Minister. The National Council of Provinces (NCOP) formed part of Parliament hence consultation would take place.

Mr D Neer, Chairperson of the Housing Portfolio Committee, Eastern Cape Provincial Legislature, accepted that many of the province’s concerns would be covered by regulations but the problem was that the province was never taken onboard when it came to the drafting of regulations for pieces of legislation.

Mr Mlenzana made the point that when departments often referred to Parliament they often only referred to the National Assembly or its portfolio committees. The NCOP was not always taken onboard. He stated that the provinces would not simply rubberstamp bills which had provincial implications.

Mr M Jacobs (ANC, Free State) pointed out that the Free State’s comments on Clause 2(8) of the Section Titles Schemes Management Bill had not been responded to. He asked what the normal practice was of ombudsman on the right to appeal.

Prof Paddock, referring to Cause 2(8) of the Section Titles Schemes Management Bill, stated that the suggestion to reduce the period in the Clause from 60 days to 30 days would not be practical. The 60 day period was already short given the things that needed to be done and lodged by the developer. For example, the developer needed to give 30 days notice and had to obtain documentation from the Deeds Office.

On the right to appeal against the Ombud’s decision, the Department had followed the Australian model which had worked well for many years. There were appeals on question of law but not on question of fact.

Mr Tlali stated that many of the mandates had not been received by the Department beforehand. If the Department had received mandates well in advance perhaps more comprehensive responses could have been given. More comprehensive responses would be forwarded to the Committee.

Mr H Groenewald (DA, North West), who was from a rural area, asked how rural ownership and traditional leaders would be covered by the two Bills.

Mr Tlali stated that if rural areas and traditional leaders had sectional titles then the legislation would be applicable. Otherwise the legislation did not affect them.

Mr Feldman stated that the reality was that provinces differed from one another and so did their concerns. He asked the Department to liaise directly with provinces on concerns that were raised.

Ms M Themba (ANC, Mpumalanga) asked the Department to provide the Committee with a written copy of the explanations that had been given in the meeting. It would assist Members to better understand the explanations given.

The Chairperson agreed with Ms Themba’s request for a written copy of the explanations given. He noted that most of the things that affect provinces were about implementation at provincial level. How was the Department to deal with the issue of regional offices of the Ombuds? What regulations would ensure that local communities would have access to these regional offices?  He also asked the Department to quantify the value of the revenue to be generated by levies.

Mr Ngwenya referring to regional offices of the Ombuds, stated that the Department was monitoring the implementation of the legislation. Regional offices would be established in consultation with the provinces. The National Chief Ombuds would appoint regional Ombuds. The collection of levies was being done so as not to overburden Government and the fiscus.

The Department added that there were national entities which had regional offices. The same principle applied to the Office of the Ombuds. As was done in the past the Department would return to Parliament regarding the drafting of regulations applicable to the two bills. 

The Chairperson noted that Members needed to be more conscious of timeframes when they returned to the provinces. The Committee should also utilise parliamentary liaison officers which were in direct contact with provinces. He asked the Department to forward the written response on the provinces’ comments to the Committee as soon as possible. The provinces were informed that the process on the Bills might have to be finalised during the upcoming recess period of Parliament.

The meeting was adjourned.


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