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[2015] ZAKZDHC 17
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Woodglaze Trading (Proprietary) Limited v Matshekga N.O. and Another (3164/2014) [2015] ZAKZDHC 17 (2 March 2015)
NOT
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
LOCAL DIVISION, DURBAN
CASE
NO: 3164/2014
In
the matter between:
WOODGLAZE
TRADING (PROPRIETARY)
LIMITED
...........................................
APPLICANT
and
JAMES
MATSHEKGA N.O.
…......................................................................
FIRST
RESPONDENT
NATIONAL HOME
BUILDERS REGISTRATION
COUNCIL
(NHBRC)
..................................................................................
SECOND
RESPONDENT
JUDGMENT
Delivered
on: 02 March 2015
OLSEN
J
[1]
In terms of s 14 (1) of the Housing Consumers Protection Measures
Act, 1998 (“the Act”) a home builder shall not
commence
the construction of a home falling within a category prescribed by
the Minister unless that proposed home has first been
enrolled with
the National Home Builders Registration Council, which is the second
respondent in these proceedings. The applicant
is such a home
builder (duly registered as such under the Act), and it commenced
construction of 96 residential units on property
known as Erf 173
Newlands West, KwaZulu-Natal without having enrolled them as
required by s 14 (1) of the Act. This
was discovered by the
second respondent at a stage when the construction of the units was
far advanced, and resulted in the applicant
facing 96 charges of
commencing construction without enrolment as required by the Act.
These charges were laid before the
second respondent’s
disciplinary committee which was chaired by the first respondent.
A penalty by way of a fine of
R15 000 for each unit was imposed
(i.e. R1 440 000 in all). In this application the
applicant seeks an order
reviewing and setting aside the decision on
the penalty. When the application was launched the applicant
also sought an order
reviewing the suspension of the applicant’s
registration as a home builder, but I was advised that there was no
need for
such relief as that aspect of the matter had been resolved.
[2]
It is not disputed that the units were liable to be enrolled.
Indeed, the applicant pleaded guilty to the charges (albeit
with a
gloss on the plea, which I will deal with later).
[3]
There is no issue between the parties as to the applicant’s
right of access to court for purposes of review, if for no
other
reason than that such proceedings are specifically sanctioned by s 22
(1) of the Act. I therefore turn to the grounds of
review.
Usurping
the Magistrate’s Jurisdiction
[4]
Section 21 of the Act deals with offences. It is provided for
in s 21(1) (b) that any person who contravenes s 14 (1)
of the Act
shall be guilty of an offence and liable on conviction to a fine not
exceeding R25 000, or to imprisonment for
a period not exceeding
one year, on each charge. Sub-section 21 (2) provides that a
Magistrates Court shall have jurisdiction
to impose any such
penalty. The applicant argues that the second respondent’s
disciplinary committee (and the second
respondent) had no
jurisdiction or power to impose any penalty as contemplated by s 21
of the Act.
[5]
In respect of each count the charge put to the applicant before the
disciplinary committee read in its material part as follows.
“
The
home builder is hereby charged under the provisions of the Housing
Consumers Protection Measures Act 95 of 1998 (“the
Act”)
as amended read together with General Regulations 20658 as published
in Government Gazette No. 1409 of 1 December 1999.
… In that
on or about 15 November 2013, during a routine inspection the home
builder was found to have commenced construction
of 96 residential
units situated at Erf 173 Newlands West, KwaZulu-Natal, without
having enrolled the said units with the NHBRC
prior to commencement
of construction thereof. … The home builder failed to make an
application for enrolment of the above
units in respect of all 96
counts, at least 15 days prior to commencement of construction.
Thereby contravening s 14 (1) of the
Act which states …”
[6]
The regulations referred to in the charge sheet are headed
“Regulations Regarding NHBRC Disciplinary Proceedings”.
They contain fairly detailed provisions governing processes before,
during and after a hearing to be conducted by the disciplinary
committee. Regulations 3 (9) to (12) read as follows:
“
(9)
The committee must make its findings based on the balance of
probabilities.
(10) In the pleading
of a charge, the home builder may in addition to any other plea,
plead that it has previously been found guilty
or not guilty on the
charge.
(11) In the event of
criminal proceedings being instituted against the home builder in
terms of section 21 of the Act, the committee
must, in determining
the penalty for contravention, have regard to any sentence imposed by
a competent court and bear in mind the
cumulative effect of any
penalty and any such sentence to avoid double jeopardy.
(12)
A court in imposing any sentence in terms of section 21 of the Act
shall similarly have regard to any penalty imposed by the
committee.”
[7]
Regulation 6 deals with penalties, and the three allowed to be
imposed are:
(a)
a warning;
(b)
a fine not exceeding R25 000; or
(c)
withdrawal of registration.
[8]
It is clear that s 21 of the Act creates offences, and stipulates
maximum sentences that may be imposed on conviction.
There is
no dispute between the parties as to the proposition that guilt would
have to be established beyond a reasonable doubt
in order to secure a
conviction. The disciplinary procedures adopted in the
regulations are of a different hue altogether.
A finding that a
home builder is guilty of the charges put to it does not result in a
criminal conviction. The civil standard
of proof suffices.
A finding against a home builder results in a penalty, not a
sentence. It is clear that what is
contemplated is an
administrative penalty.
[9]
Nothing in the charge sheet, and nothing in the papers, indicates
that there was any intention on the part of the disciplinary
committee to act under s 21 of the Act. The second respondent
and its disciplinary committee did not purport to usurp the
jurisdiction which a court of law would have exercised if the
applicant had been charged under s 21 of the Act.
[10]
There is nothing in s 21 of the Act which expressly or impliedly
conveys that any misconduct rendered an offence by the section
must
be dealt with by a criminal court, or not at all.
[11]
In my view there is no merit in the argument that the decision in
question was made in the wrongful exercise of the court’s
jurisdiction established by s 21 of the Act.
The
Second Respondent’s Code of Conduct
[12]
Counsel for the applicant took a new line on the issue of
jurisdiction in his heads of argument, and pursued it in oral
argument.
The regulations to which I have referred were made in
terms of s 7 (2) of the Act. Section 7 (2) (c) is the relevant
one,
and is to the effect that the Minister shall prescribe:
“
procedures
for disciplinary proceedings before the disciplinary committee in
respect of alleged misconduct of home builders and
make provision for
fines and other penalties to be imposed on home builders who
contravene the code of conduct prescribed by the
Council”.
The
argument is that the disciplinary committee made no findings of
misconduct in relation to the code of conduct, which is a necessary
pre-condition to the exercise of the power to impose a fine under the
regulations read together with s 7 (2) (c) of the Act.
The code
of conduct was not mentioned in the charge sheet.
[13]
This new argument, which recognises the validity of administrative
penalties, but confines them to breaches of the second respondent’s
code of conduct, was not raised in the founding papers. It
accordingly attracted an objection from counsel for the respondents.
The point was entirely new. Not only was it not raised in the
founding papers; the point is jurisdictional in nature, and
it was
not raised before the disciplinary committee. In the result
there was no call on the respondents to produce the Council’s
code of conduct.
[14]
In my view the respondents’ objection is good. There is
no doubt that the code of conduct would have been presented
by the
respondents in answer to the founding affidavits if it had been
contended that the penalties imposed by the disciplinary
committee
fall to be set aside because the misconduct in respect of which they
were imposed did not amount to a breach of the second
respondent’s
code of conduct. The code of conduct applicable at the material
time was that published in Government
Gazette No. 30697 of 1 February
2008. The code was published in accordance with s 7 (1) (ix) of
the Act, which is to the
effect that the second respondent may, by
publication in the gazette, prescribe a code of conduct.
Article 2 (b) of the code,
read with the definition of the term “the
Act” in Article 1, is to the effect that a home builder must
honour all the
obligations imposed on it in terms of the Act and
comply with all the duties of a home builder set out in the Act.
Clearly
a breach of the obligation imposed by s 14 (1) of the Act
amounts to a breach of the second respondent’s code of conduct.
[15]
In the result the new ground of review cannot succeed either:
(a)
because, if it is permissible for this
court to take judicial notice of the code of conduct under s 5 (1) of
the Civil Proceedings
Evidence Act, 1965, I must conclude that a
charge that there has been a contravention of s 14 (1) of the Act
amounts to a charge
of contravening the code of conduct; or
(b)
because the failure of the applicant to
raise this issue in its founding papers meant that the respondents
were deprived of the
opportunity of answering the challenge
inter
alia
by producing a copy of the Gazette
as contemplated by s 5 (2) of the Civil Proceedings Evidence Act;
which renders the failure
to raise this ground of review in the
founding papers fatal to the argument. (
Director
of Hospital Services v Mistry
1979 (1)
SA 626
(A) at 635 – 636.)
Ninety
Six Counts as One?
[16]
The applicant raised two further grounds of review which are
related. They have to do with the fact that there were 96
counts and not one.
[17]
According to the founding affidavit, prior to pleading guilty to each
of the 96 counts, the applicant, through its attorney,
argued that
the 96 counts relate to 96 apartments in one development; and that in
the circumstances there should have been only
one charge. This
contention was based upon the proposition that (I quote from the
founding affidavit) “there would
only be one intention to
commit the unlawful action and not 96 intentions to do so, 96 times
and therefore all of the charges should
really be one count and not
96 counts”. It was contended that the first respondent
was “emphatic” that
the hearing should proceed upon the
basis that 96 charges were legitimately put, but that the point at
issue should be taken into
account when considering the penalty.
The contention is that in the circumstances the applicant was “forced
to plead
guilty”, which would undoubtedly constitute an
irregularity if it were true.
[18]
What the record reveals is that the first respondent put it to the
meeting (rightly or wrongly) that his understanding of the
submission
made by the applicant’s attorney was not that the charges
should be consolidated into one, but that, when accepting
the pleas
of guilty to the charges as framed (which the applicant had already
indicated it would and did tender), the disciplinary
committee was
being asked to bear in mind that the failure to enrol, and the
intention in that regard, was with respect to a single
development
comprised of 96 units. The applicant’s attorney was asked
whether the first respondent had understood him
correctly and an
affirmative answer was given by the applicant’s attorney;
whereupon the pleas of guilty to 96 charges were
accepted.
There is no evidence of any compulsion. It was open to the
applicant’s attorney to state that the applicant
would be
willing to plead guilty to a single charge with respect to the entire
development, but would otherwise plead not guilty
upon the basis that
96 charges could not legitimately be put to the applicant. The
attorney did not do so.
[19]
The related complaint is that the disciplinary committee misdirected
itself in not regarding the 96 charges as one for the
purposes of
sentence. The implication of the argument was spelt out in the
founding papers, where it was stated that it was
compulsory for the
disciplinary committee to regard the 96 charges as one for the
purpose of sentence, as a result of which the
disciplinary committee
could not impose a fine of more than R25 000, being the maximum
stipulated in the regulations for a
single act of misconduct.
[20]
Section 14 (1) of the Act requires the enrolment of a “home”.
A home is defined in s 1 as a “dwelling
unit constructed or to
be constructed by a home builder”. At the hearing before
the disciplinary committee the applicant’s
attorney rightly
conceded that each of the 96 units was a home and had to be
enrolled. In my view there is no doubt at all
about the
proposition that the failure to enrol any one unit was on its own a
breach of the provisions of s 14 (1) of the Act liable
to be charged
as misconduct. At the hearing the applicant’s attorney
called no evidence in support of its proposition
that, as a matter of
fact, there was only a single intentional act, namely, not to
register or enrol a development. Section
14 (1) of the Act does
not deal at all with the enrolment or registration of
“developments”. The applicant self-evidently
intended not to register each one of the 96 homes.
[21]
The respondents did not argue that it was not within the power of the
committee in its discretion to treat the 96 counts as
one for the
purposes of sentence. Indeed the disciplinary committee had
done that on a previous occasion when, in August
2013, the applicant
was found guilty of the same breaches of the Act in respect of a
development containing 42 units. On
that occasion a fine of
R15 000 was imposed in respect of the 42 counts taken as one for
the purpose of sentence. In
the argument before the
disciplinary committee on this occasion a Ms Lugaju, who was
introduced as the “disciplinary hearing
prosecutor”,
classified that earlier sentence as lenient and argued that as a
result of that earlier case the applicant could
have been in no doubt
with effect from August 2013 of its obligation to register rental
units (as opposed to units constructed
for sale). She argued
that the fact that the applicant had not voluntarily applied for late
enrolment of the 96 units now
in issue indicated that the applicant
was
mala fide
,
and that in the circumstances the ultimate penalty of deregistration
of the applicant as a home builder was called for.
That appears
to have been an outcome which the applicant had to avoid at all
costs. In answering the applicant’s attorney
argued that
a fine in a substantial sum with a “large portion”
suspended would be appropriate. He argued that
the disciplinary
committee had a wide discretion in imposing a fine of up to R25 000
per count. Withdrawal of the applicant’s
registration
was, the attorney argued, a penalty to be reserved for what he called
“extreme cases”. The disciplinary
committee appears
to have accepted this argument. In my view the argument
undoubtedly involved a concession that it would
not be proper to take
all counts as one as that would limit the total fine to R25 000.
In the circumstances it is not
open to the applicant to argue in the
present proceedings that the disciplinary committee misdirected
itself in not exercising
a discretion to regard all 96 counts as one
for the purposes of fixing a penalty.
[22]
I should add that the applicant did not proffer any authority for the
proposition that it was compulsory in the circumstances
for the
disciplinary committee to regard all 96 counts as one for the
purposes of determining penalties. I know of no such
authority.
Harsh
Penalties
[23]
In argument the applicant’s counsel made submissions of the
kind normally made in criminal appeals on sentence, in support
of the
proposition that the penalties were tainted by “serious
misdirection and failure to properly apply their minds”,
and
that they fall to be reviewed and set aside on that account. In
essence the complaint is that the disciplinary committee
focused on
teaching the applicant a lesson and giving a message to the public at
large; and that the committee failed to take other
relevant factors
into account, and overlooked the cumulative effect of the fines.
As a result, it is argued, the cumulative
effect is unduly harsh.
In support of these arguments applicant’s counsel referred to
S
v Young
1977 (1) SA 602
(A) at 610 and
S v Fourie
2001 (2) SACR 118
(SCA) para 20.
[24]
Putting aside the fact that in my view these submissions are based
upon an erroneous analysis of the reasons for the decision
given by
the disciplinary committee, the difficulties the applicant confronts
in advancing these arguments are:
(a)
that these grounds of review were not
raised at all in the papers which were confined to the more technical
issues discussed above;
and
(b)
even if one were to take a charitable view
of the papers, and regard them as advancing the proposition that the
penalty should be
reviewed and set aside at least upon the basis of
harshness, no factual foundation has been laid which would enable a
court of
law to conclude that in this particular case the
disciplinary committee, a specialist tribunal, overstepped the mark.
[25]
When considering a criminal appeal the court has a body of law and
precedent to guide it in making an assessment as to whether
a
complaint that a sentence is too harsh can be sustained. In the
present instance the court is confronted with a decision
of a
specialist tribunal made in a particular context where the tribunal
(two of whose members are technical assessors) makes a
decision on
penalty against the background of a specialist’s knowledge
which, it must be said, must also have been available
to the
applicant as an experienced home builder. The papers in this
application, and the record of the proceedings delivered
to the
registrar, are devoid of information which is presumably material to
a consideration of whether or not the penalty per unit,
or the
penalties cumulatively, met the exigencies of the occasion.
[26]
There are some photographs of the buildings in the papers. If the
photographs are representative of the entire development
one can see
that the development is very large indeed, which is unsurprising
given that 96 homes are contained in it. All
that can be said
on the papers is that the investment in the structures must be very
substantial indeed. I have no idea of
what each unit is worth.
I have no idea of what rental return is expected from them. One
would think that this information
would influence one’s
thinking on the question as to whether a fine of R15 000 per
unit, and cumulatively 96 times that
amount, is so harsh that no
reasonable disciplinary committee could have thought it appropriate.
[27]
The papers are devoid of any information concerning the financial
risks attaching to any unit which might not have been built
in
accordance with the standards set by the second respondent.
This, one would think, is also relevant if the argument is
that the
fine is too harsh, especially bearing in mind the fact that the Act
is designed to protect housing consumers, and that
it does this
inter
alia
through the regulation of the
building industry and by maintaining minimum standards for home
builders. (See in this regard
Cool
Ideas 1186 CC v Hubbard and Another
2014
(4) SA 474
(CC) paras 29 and 30.)
[28]
In the circumstances, and without thereby necessarily holding that
the penalties imposed by the first respondent’s committee
were
appropriate, I find that the argument that the decision on the
penalties is reviewable because it is too harsh, or because
the
disciplinary committee misdirected itself by not taking into account
all relevant factors, must fail.
In
the circumstances, I make the following order:
The
application is dismissed with costs, including the costs of two
counsel where employed.
OLSEN
J
Date
of Hearing: FRIDAY, 30 JANUARY 2015
Date of Judgment: MONDAY, 02
MARCH 2015
For
the Applicant: MR M PILLEMER SC
Instructed
by: NAIDOO & COMPANY INC.
8
SINEMBE PARK
LA
LUCIA RIDGE OFFICE ESTATE
(Ref.:
R Naidoo/W068)
(Tel
No.: 031 – 566 5271)
c/o
THE DOCUMENT EXCHANGE
GROUND
FLOOR
SALMON
GROVE CHAMBERS
DURBAN
For
the Respondents: MR K J KEMP SC & MR H S GANI
Instructed
by: PATHER & PATHER ATTORNEYS
30
MASONIC GROVE
DURBAN
(Ref.: Edward
Abraham/jg/N1095)
(Tel.:
031 – 304 4212)