The CSOS is immune from a cost order if party to a court appeal process that goes against and overturns an adjudication order by the CSOS.
The CSOS was established in terms of the Community Schemes Ombud Service Act to regulate the conduct of parties within community schemes, to ensure good governance practice in community schemes and to create an alternative dispute resolution service for all community scheme members.
On 17 June 2022, the Western Cape High Court handed down a judgment in terms of which it declared that the Community Schemes Ombud (“the CSOS”), its staff members and its adjudicators are all immune from costs orders in respect of legal proceedings instituted against the CSOS in the High Court.
The judgment in question was handed down in respect of an application made by the CSOS against the Stonehurst Mountain Estate Owners Association, where the CSOS challenged a cost order against it in favour of the Association, after the Association successfully appealed an Adjudication Order handed down by a CSOS adjudicator.
The CSOS successfully challenged the cost order in terms of section 37(1) of the Community Schemes Ombud Service Act (“the Act”), where its states that “In performing their functions in terms of this Act, the chief ombud, an ombud, a deputy ombud and an adjudicator have the same privileges and immunities from liability as a judge of the High Court.”
The Judge considered the provisions of the Act and confirmed that that the chief ombud, an ombud, a deputy ombud and an adjudicator acting for the CSOS are indeed all immune from a cost order. In addition, the Judge held that in terms of section 33 of the Act, the CSOS and any of its employees are only liable for loss or damage if they act unlawfully, in a grossly negligent manner, or in bad faith.
In this case the judge stated that although the ruling of the adjudicator may have been wrong in law and appealable in terms of “the Act”, the issue of costs against the CSOS and/or the adjudicator should not even have arisen in relation to the appeal in light of Section 37(1) of “the Act”. The Judge therefore ruled in favour of the CSOS that there could be no order to costs against the CSOS in respect of the appeal.
This judgment is problematic in that it absolves the CSOS from any liability in respect of successful appeals against incorrect adjudication orders. It effectively means that neither the CSOS appointed adjudicator, nor the CSOS itself can be held to account for a poorly considered ruling following an adjudication, The CSOS can thus effectively act with impunity, and rule on a matter in any way they see fit without necessarily applying the law without any financial consequence, despite the only legal method of setting aside an adjudication order being through the courts, when a party considers that the adjudicator has made an error in law when issuing an adjudication order.
Information about the CSOS, and the role the CSOS plays in the management of community schemes may be found on the CSOS website – www.csos.org.za
