Directors of Blue Saddle Ranches Equestrian Estate Homeowners Association v PT Metsing and KL Metsing

The applicant, the Directors of Blue Saddle Ranches Equestrian Estate Homeowners Association, is a community scheme as defined in the Community Schemes Ombud Service Act 9 of 2011 (CSOS Act). The respondents, PT Metsing and KL Metsing, are the registered owners of Portion 103 in the estate. As owners, they were members of the homeowners association under the association’s Memorandum of Incorporation (MOI) and were obliged to pay levies and related charges monthly. The applicant alleged that the respondents fell into arrears from 1 November 2022. At the time of the initial application the arrears had grown from R15 322,60 to R27 515,75, and an updated levy statement later reflected a total outstanding amount of R34 483,16. The applicant stated that the respondents had been notified of the arrears by text messages and email and had received monthly levy statements. The respondents filed no submissions. The applicant sought various forms of relief, including payment of arrear levies, declaratory relief confirming membership, payment of future levies, payment within 30 days, and continuing payments until the debt was settled.

• Whether CSOS had jurisdiction under s 39 of the CSOS Act to grant a declaratory order that the respondents became members of the homeowners association upon registration of ownership.
• Whether the respondents were liable to pay the outstanding levies, interest, and legal costs in terms of the MOI.
• Whether CSOS could order payment of future levies and charges not yet due.
• Whether the adjudicator could determine the manner and timing of payment of arrears, including instalments rather than immediate payment within 30 days.
• Whether the applicant was entitled to relief under s 39(1)(e) of the CSOS Act in respect of the arrear amounts claimed.

The application succeeded in part. The adjudicator refused prayers (1), (3), (4) and (5). An order was granted against the respondents jointly and severally for payment of R34 483,16 plus interest at 1% per month compounded monthly and capitalised. The respondents were ordered to pay the amount in monthly instalments of R3 000,00, the first payment being due on or before 31 August 2023 and subsequent payments on or before the last day of each succeeding month. If any instalment is missed, the full outstanding balance becomes immediately due and payable. No order as to costs was made. The order also stated that it does not absolve the respondents from liability for normal monthly levies and ancillary payments.

Under s 39(1)(e) of the CSOS Act, a CSOS adjudicator has jurisdiction to order payment of accrued arrear levies and other amounts due to a community scheme where liability is established under the scheme’s governing instruments, but does not have jurisdiction to grant relief not authorised by s 39, such as declaratory orders or orders compelling payment of future, unaccrued levies. Membership obligations and levy liability in a homeowners association are contractual in nature and enforceable according to the MOI. Where the MOI authorises interest and legal-cost recovery, those amounts may form part of the recoverable debt.

The adjudicator observed that, although it is common to order full payment within a specified period, the extraordinary economic hardship associated with the Covid-19 pandemic justified a more flexible and fair approach by allowing the respondents to pay the arrears in instalments. The adjudicator also remarked that paying off arrears does not entitle members to cease paying ongoing monthly levies, although no enforceable order for future levies could be made within CSOS’s jurisdiction on the pleadings before it.

This adjudication is significant for community scheme disputes under the CSOS Act because it illustrates the limits of an adjudicator’s jurisdiction under s 39. It confirms that CSOS may grant financial relief for accrued levies and related charges, including interest where authorised by the scheme’s governing documents, but may not grant declaratory relief or orders compelling payment of future, unaccrued levies where such remedies fall outside s 39. The decision also reinforces the contractual nature of the relationship between a homeowners association and its members, and demonstrates that adjudicators may structure repayment of arrears by instalments in the interests of fairness while still enforcing the scheme’s financial rights.