Can CSOS Adjudicators Award Legal Costs in Arrear Collections?

By Jennifer Paddock

For bodies corporate struggling with escalating arrear levies, the Community Schemes Ombud Service (CSOS) is frequently promoted as a swift, affordable alternative to traditional court proceedings. Yet a persistent question undermines its appeal for levy recovery: 

Can a CSOS adjudicator order a defaulting owner to pay the body corporate’s legal costs incurred in pursuing the arrears?

In most cases, the answer is no. The limitation stems directly from the wording of the governing legislation, creating a procedural hurdle that CSOS adjudicators cannot easily overcome.

The Statutory Barrier: PMR 25(4) and the “Taxed or Agreed” Requirement

Under the Sectional Titles Schemes Management Act 8 of 2011 (STSMA), Prescribed Management Rule (PMR) 25(4) governs an owner’s liability for legal costs in levy recovery:

“A member is liable for and must pay to the body corporate all reasonable legal costs and disbursements, as taxed or agreed by the member, incurred by the body corporate in the collection of arrear contributions or any other arrear amounts due and owing by such member to the body corporate…” [underlining added]

The underlined phrase imposes strict conditions. In a typical CSOS arrears application:

1. Agreement is improbable: A defaulting owner already resisting levy payments is unlikely to voluntarily “agree” to cover the body corporate’s legal expenses.
2. Taxation is unavailable: “Taxed” refers to a formal court process where a Taxing Master assesses and certifies a bill of costs. CSOS lacks a Taxing Master or any equivalent statutory mechanism to perform this function on attorneys’ invoices.

Without meeting one of these two triggers, adjudicators often conclude they lack jurisdiction to award legal costs under PMR 25(4), even when the underlying arrear debt is proven.

CSOS as a “No-Cost” Jurisdiction

The CSOS Consolidated Practice Directives 2025 reinforce this position. Clause 15.135 explicitly states that parties to a dispute resolution application must bear their own costs. Furthermore, any body corporate rule purporting to recover the costs of CSOS processes (including adjudication fees or related expenses) from a member is deemed undesirable and will fail CSOS quality assurance (as outlined in Annexure B).

This aligns with CSOS’s broader policy of promoting accessible, low-cost dispute resolution without shifting legal expenses between parties in standard matters.

The Narrow Exceptions Under the CSOS Act

The Community Schemes Ombud Service Act 9 of 2011 (CSOSA) is deliberately restrictive on costs awards. Section 39(1)(e) empowers adjudicators to order “the payment or re-payment of a contribution or any other amount,” which covers arrear levies and potentially interest, but does not extend to legal costs of the application itself.

The primary costs provision appears in Section 53, allowing an adjudicator to award costs only in exceptional circumstances:

1. Where an application is frivolous, vexatious, misconceived, or lacks substance (Section 53(1)); or
2. Where a party frustrates the adjudicator’s investigative powers (Section 53(2)).

Even then, costs are capped at “the maximum amount prescribed” (Section 53(3)), which, under the CSOS Consolidated Practice Directives 2025 (Clause 15.136), is currently R5,000.

Practical Implications and Alternatives

This restriction creates a real dilemma for bodies corporate: CSOS offers speed and low upfront costs for recovering the levies themselves, but parties generally absorb their own legal expenses. For schemes with significant arrears involving substantial attorney fees, the inability to recover those costs via CSOS may tip the scales toward court action, where taxed costs can be awarded if successful.

However, courts remain more expensive and time-consuming. Some bodies corporate mitigate this by handling simpler CSOS applications internally or via managing agents to minimise fees, and by reserving court action only for pursuing only for complex or high-cost cases.

Conclusion

While CSOS remains a valuable tool for enforcing levy payments under Section 39(1)(e) CSOSA, it is not designed as a full substitute for courts in recovering associated legal costs. The “taxed or agreed” requirement in PMR 25(4), combined with CSOS’s no-cost ethos and limited punitive powers under Section 53, means cost orders are highly unlikely in standard arrear collections.

Bodies corporate should weigh these limitations carefully when choosing a recovery strategy. Early internal reminders, clear communication, and prompt action often prevent escalation, but where legal intervention is unavoidable, consulting specialists to assess CSOS versus court viability is essential.

 

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Article reference: Paddocks Press: March 2026, Volume 21, Issue 3

This article is published under the Creative Commons Attribution license.

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