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BUSINESS NEWS - A landmark judgment by the Supreme Court of Appeal (SCA) has brought long-awaited clarity to how disputes in community schemes may be resolved—confirming that homeowners, bodies corporate and residential schemes are free to bypass the Community Schemes Ombud Service (CSOS) and approach the courts directly.

The ruling decisively ends years of uncertainty and conflicting interpretations that had shaped community-scheme litigation since the establishment of the CSOS.

Background: Years of confusion over jurisdiction

Since the CSOS was created under the Community Schemes Ombud Service Act, its purpose has been to provide a low-cost, accessible mechanism for resolving disputes in sectional title and other community schemes. Issues commonly handled through the Ombud include levy disputes, misuse of scheme funds, trustee misconduct, improper AGM decisions, enforcement of conduct rules, and maintenance conflicts.

Because CSOS orders are legally binding, many legal practitioners have viewed the Ombud as the natural first step—especially for smaller or straightforward disputes.

However, a series of past High Court judgments created a restrictive precedent: community schemes were expected to exhaust CSOS processes before escalating matters to the High Court. Parties could only approach the courts under “exceptional circumstances,” a test that became increasingly difficult and unpredictable to satisfy.

This interpretation effectively suggested that CSOS had near-exclusive jurisdiction over most community-scheme disputes, creating procedural hurdles for litigants and limiting access to the courts—particularly for complex, high-value, or urgent matters.

The case that changed it all

The SCA ruling arose from a dispute in a Western Cape retirement village between the Homeowners’ Association (HOA) and a neighbouring property company seeking to incorporate additional cottages into the estate by amending the HOA’s constitution.

Although the company attempted to push through constitutional amendments twice—without challenge from the HOA trustees—the broader community resisted the move, citing procedural irregularities and concerns about transparency.

The company then chose to bypass the CSOS and went straight to the High Court. The court acknowledged “exceptional circumstances” and heard the matter, ultimately ruling against the company.

After losing, the company attempted to argue that the dispute should have been heard by the CSOS and pursued an appeal on that basis. This forced the SCA to confront the larger question: did the High Court ever have jurisdiction to hear the matter?

Key findings: CSOS and the high court are parallel avenues

In a ruling welcomed by legal experts, the SCA rejected the idea that the CSOS Act implicitly limits the High Court’s jurisdiction. Instead, it reaffirmed the principle that the High Court has inherent jurisdiction over all matters unless legislation explicitly excludes it.

The court held that:

• The CSOS Act does not restrict or remove the High Court’s jurisdiction.
• The Ombud’s broader remedial powers do not imply that courts are excluded from hearing such disputes.
• The Act was designed to coexist with the court system—not replace it—giving litigants a choice of forum.

The ruling has significant implications for residents, trustees, managing agents and property professionals:

• Litigants now have full discretion on where to take their disputes. Depending on strategic, financial, and practical considerations, parties can choose whether to approach CSOS or go straight to the High Court—without proving “exceptional circumstances.”
• CSOS remains valuable, especially for minor or cost-sensitive disputes. The SCA’s judgment does not diminish CSOS’s role; for everyday community-scheme issues - levies, conduct rules, trustee behaviour - CSOS remains the ideal starting point.
• Complex or high-value cases can go directly to court. For disputes involving constitutional amendments, governance challenges, or intricate legal questions, significant delays or administrative hurdles are now avoidable.
• By clarifying that CSOS and the courts have concurrent jurisdiction, the SCA has ended years of contradictory rulings and uncertainty and provided greater legal certainty for all stakeholders.

A more balanced system going forward

Ultimately, the SCA decision realigns the community-scheme dispute-resolution framework with constitutional principles of court access. It affirms that while CSOS offers an important, affordable service, it was never intended to be the sole gateway for justice.

Community schemes can now navigate disputes with greater flexibility - choosing the forum best suited to the nature and stakes of their conflict.

We are passionate about meaningful and constructive dispute resolution. Contact Jaco Lötter for a free consultation or drop in for a coffee at our office at 27 Marsh Street, Mossel Bay.

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