Gauteng Business News

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PROPERTY: Arbitrators in Sectional Title Disputes Not Playing the Game


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The essence of arbitration has been eroded, and expectations of a quicker, cheaper forum to resolve the many types of disputes within sectional title complexes lacks credibility. Marina Constas, a specialist sectional title attorney and a director at BBM Attorneys, lays the blame for this at the feet of arbitrators themselves.

"I am, and always will be, a proponent of arbitration as opposed to a court hearing. A properly run arbitration headed up by a robust arbitrator trumps the Magistrates’ Court or High Court process. In terms of the Standard Rules of Arbitration, the arbitrator has the discretion to hold the hearing informally and to dispense with certain rules of court. But many arbitrators have lost their way and become too focused on the financial side of the arbitration, charging exorbitantly high fees and often treating the process like High Court litigation.”

She pointed out that, in sectional title complexes where people lived in close proximity, problems were inevitable. Arbitrations could arise over noise, failure to maintain exclusive use areas, an owner unlawfully extending his section, trustees’ failure to maintain a building, the keeping of pets or even the removal of satellite dishes or illegal structures. Many revolved around the enforcement of conduct rules and the collection of arrear levies.

Constas said Management Rule 71 currently dealt with the knotty issue of dispute resolution. Although there was minimal chance of it happening, parties involved in a dispute could agree on an arbitrator or request that the Registrar of Deeds appoint one. However, how an individual landed up on the selection panel was questionable. She said it was clear that Deeds Office personnel did not wish to be lumbered with the arduous task or appointing arbitrators, resulting in waits of between one and two months when the process should take just seven days.

She said sectional title matters were distinguishable from commercial disputes where parties’ only link was contractual or delictual. “Where disputes arise between owners or between the owners and the Body Corporate, it must be remembered that those involved have to continue living together. The types of disputes are often personal and filled with tension.”

For this reason, she said, arbitrators needed to resolve disputes in effective, efficient, credible and affordable ways. An arbitrator had a responsibility to hear the matter quickly without creating more stress than was necessary.

According to Constas, prohibitively high fees were discouraging parties from resolving matters via arbitration in the first place. She said, in one case, the arbitrator’s bill amounted to R9 000 before the merits of the matter had even been heard during a preliminary hearing. The decision, on a technical point, was incorrect. “This is unacceptable and has unfortunate implications. A sectional title arbitration should be run with a background knowledge of the industry. At the most, a retainer of R10 000 should be requested. A reasonable fee for the entire matter, unless it is extremely complex, should be between R8 000 and R15 000. We have a few cowboys out there at the moment who are exceeding that figure by far.”

She said that it was encouraging that, when an Ombudsman was appointed this year, a panel of sectional title adjudicators would be appointed and arbitrators would be properly vetted.

However, she also cautioned that other, more worrying issues, were waiting in the wings. Currently, an award by an arbitrator is not subject to appeal but only to review. “The only recourse you have to overturn an award is to approach the High Court on the basis that the arbitrator showed bias, exceeded his powers or followed incorrect procedure. The merits of the award cannot be attacked.”

However, in terms of the new Community Schemes Ombudsman’s Bill, an award may be appealed. “This is undeniably a weakness in the legislation. We are going to be faced with disgruntled losers going on appeal, spending more money and dragging matters on for months, if not years. I fear that the appeal process will completely undermine the purpose of arbitration. Dragging on appeals is certainly not healthy for the owners, a complex or for the industry.”

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