Diepwater Trust v The Executive Committee of Kleinplaas Homeowners' Association

Diepwater Trust, the registered owner of property within the Kleinplaas Homeowners' Association (KHOA) scheme, sought relief under the Community Schemes Ombud Service Act 9 of 2011. The dispute followed an earlier CSOS matter (CSOS 3728/WC/22) in which KHOA had been ordered to convene a special general meeting so that members could vote on two special resolutions concerning the applicant's proposed further development of the scheme. KHOA complied and held the meeting on 22 February 2023. Proper notice was given, including summaries of the two proposed resolutions and illustrations of the proposed development, and a quorum was achieved with 20 of 21 owners present in person or by proxy. At the meeting, the applicant's representative explained the proposed development. Only the developer and members represented by it voted in favour of the resolutions; all other members voted against them. The applicant alleged that the executive committee had unduly influenced members, resulting in unreasonable opposition to the resolutions, and asked CSOS to declare that the opposition was unreasonable and to give effect to option 2 of the proposed special resolution. KHOA denied any undue influence, maintained that it had complied fully with the earlier order, contended that members were entitled to vote as they wished without giving reasons, and pointed out that the members who voted against the resolutions had not been joined as parties.

• Whether the opposition by KHOA members to the proposed special resolutions at the special general meeting was unreasonable under section 39(4)(d) of the CSOS Act.
• Whether there was proof that the respondent executive committee unduly influenced members to vote against the proposed development.
• Whether the adjudicator could declare the resolutions passed and give effect to option 2 of the applicant's proposed development on the evidence presented.
• Whether the application was without substance or misconceived and liable to dismissal under section 53(1)(a) of the CSOS Act.

The application was dismissed in terms of section 53(1)(a) of the CSOS Act as being without substance. Each party was ordered to pay its own costs.

For relief under section 39(4)(d) of the CSOS Act, an applicant must prove on a balance of probabilities that opposition to a motion at a general meeting was unreasonable in the circumstances. Where no substantive evidence is produced of undue influence, capriciousness, or unreasonableness in the voting process, and the meeting procedures and declared result stand unchallenged under the association's constitution, the adjudicator cannot override the vote and give effect to the rejected resolution. In such circumstances the application is without substance and may be dismissed under section 53(1)(a).

The adjudicator made ancillary observations that homeowners who purchase into an estate voluntarily bind themselves to the association's rules and that their rights of enjoyment may be limited contractually. The adjudicator also discussed general principles of reasonableness from administrative law, including references to Bato Star and Bushwillow Park, even though the dispositive finding was that there was simply no evidence of undue influence or unreasonable opposition. The decision further noted, without making it central to the result, that the members who voted against the resolutions had not been cited as parties.

This decision is important in the community schemes context because it confirms that a party seeking relief under section 39(4)(d) of the CSOS Act must place substantive evidence before the adjudicator to show that opposition to a motion at a meeting was unreasonable. Mere dissatisfaction with the outcome of a vote, or speculation that members were influenced, is insufficient. The matter also underscores that homeowners' association governance is contractual and that CSOS adjudicators exercise only the statutory powers conferred by the CSOS Act.