25/05/2026
Here's an article and insight from Mark Leathers regarding a recent Home Owners' Association case.
The matter concerns a recent ruling by the Community Schemes Ombud Service (CSOS) involving the Ocean Dune Management Association (ODMA). A homeowner successfully challenged a governance structure that effectively transferred the powers of the Pebble Beach Body Corporate from elected trustees to ODMA directors. The adjudicator, S Pather, ruled that Clause 13 of ODMA’s Memorandum of Incorporation was unreasonable under section 39(3)(d) of the CSOS Act because it excluded duly elected trustees from exercising statutory powers reserved for them under the Sectional Titles Schemes Management Act 8 of 2011 (STSMA).
The order is significant because it restores the statutory right of owners to govern their scheme through trustees elected at annual general meetings. Under the STSMA, trustees owe fiduciary duties directly to owners, including duties of honesty, accountability, and proper financial oversight. By replacing trustees with ODMA directors, the governance model created a serious accountability gap, particularly regarding approval of budgets, levies, and financial statements.
Although the adjudicator declined to make findings on allegations of fraud and irregular annual financial statements, holding those issues to be outside CSOS jurisdiction, the ruling addressed the root problem: a structure that bypassed statutorily accountable governance. Importantly, the order does not abolish ODMA or prevent it from fulfilling a coordinating role within the broader development. It simply prevents the association from exercising powers that legislation reserves for the Body Corporate and its elected trustees.
The decision also reduces future legal exposure. A governance arrangement already found unreasonable invites further challenges, derivative actions, and potential claims against directors personally. Compliance with the order would require only modest administrative steps — convening a general meeting, amending the clause, and lodging the amendment with CIPC — at far lower cost than prolonged litigation.
The subsequent decision by ODMA to approach the High Court raises both legal and ethical concerns. Appeals under section 57 of the CSOS Act are limited to questions of law, yet the adjudicator’s findings rested largely on factual evaluation and established principles of reasonableness. Moreover, the STSMA contains peremptory governance provisions that private contractual arrangements cannot override.
Using owners’ levies to defend a clause that deprives owners of statutory participation rights may expose directors to scrutiny under sections 75, 76, 77 and 218 of the Companies Act 71 of 2008. Directors of homeowners’ associations owe fiduciary duties of loyalty, transparency, independent judgment, and proper financial stewardship. They must act in good faith, avoid conflicts of interest, and cannot use their positions for personal or factional advantage.
The adjudication order is therefore corrective rather than punitive. It restores lawful governance, democratic accountability, and owner participation while giving ODMA a practical pathway to compliance. Persisting with review proceedings risks reputational harm, greater litigation exposure, and possible personal liability for directors defending a structure already found contrary to owners’ interests.
