National Home Builders Registration Council v Adendorf and Others (406/2018) [2019] ZASCA 20; 2019 (5) SA 317 (SCA) (26 March 2019)

75 Reportability

Land and Property Law

Brief Summary

Housing — Home Builders Registration — Interpretation of 'person' in terms of the Housing Consumers Protection Measures Act 95 of 1998 — The National Home Builders Registration Council (NHBRC) sought declaratory relief against trustees of Mike’s Trust for constructing homes without registration as required by the Act — High Court ruled that a trust is not a 'home builder' and is not required to register — On appeal, the Supreme Court of Appeal held that a trust is included in the definition of 'person' under the Act, thus requiring registration to carry on the business of a home builder.

Comprehensive Summary

Summary of Judgment

1. Introduction

The matter concerned an appeal in the Supreme Court of Appeal against the dismissal of an application for declaratory and interdictory relief brought under the Housing Consumers Protection Measures Act 95 of 1998 (“the Act”). The appeal required the court to determine whether a trust that conducts building activities falls within the statutory concept of a “home builder” and is therefore obliged to register with the National Home Builders Registration Council.

The appellant was the National Home Builders Registration Council (“NHBRC”), an organ of state established under the Act to regulate the home building industry and protect housing consumers. The first to fourth respondents were individuals cited both in their personal capacities and in their representative capacities as trustees of Mike’s Trust. The fifth respondent was the Minister of Human Settlements of the Republic of South Africa, cited given the statutory context; the substantive dispute centred on the NHBRC’s enforcement of registration requirements against the trust and its trustees.

In the Limpopo Division of the High Court, Polokwane (Muller J), the NHBRC’s application was dismissed on the basis that a trust is excluded from the definition of home builder in sections 1 and 10 of the Act and is not required to register. Leave to appeal was granted by the court a quo. In the Supreme Court of Appeal, the first to fourth respondents abided the decision of the court.

The general subject matter was therefore statutory interpretation within a consumer-protection regulatory scheme for residential construction, focused specifically on whether trust-based property development is subject to the Act’s registration regime.

2. Material Facts

During 2013, an NHBRC inspector conducting a routine inspection discovered that the trustees of Mike’s Trust were constructing a sectional title housing development on a specified property in Polokwane, Limpopo. The development was being undertaken for the benefit of the trust.

It was common cause that the trust initially registered as a home builder in terms of section 10 of the Act for a period of one year, commencing on 24 July 2013 and ending on 24 July 2014, but thereafter failed to renew its registration. Despite the lapse in registration, the trust continued with the construction of new homes on the property while not registered.

The NHBRC served the trust with notices of non-compliance, but the trust refused to comply. This led to the NHBRC launching the application that formed the subject matter of the appeal. The trustees’ primary stance was that, because a trust is not a person, it was not required to register as a home builder under the Act.

By the time the appeal was heard, the construction of the homes had been completed. As a consequence, the NHBRC did not persist with interdictory relief aimed at halting construction, but maintained that it was entitled to declaratory relief clarifying the applicability of the Act to trusts.

3. Legal Issues

The central legal question was whether, on a proper interpretation of the Act, a trust engaged in building homes is included within the term “person” in section 10(1), and thus within the definition of “home builder” in section 1, making registration mandatory before carrying on the business of a home builder.

The dispute was primarily one of law, namely statutory interpretation, though it arose against largely common-cause facts. It concerned the application of interpretive principles to determine whether the statutory scheme, construed contextually and purposively, encompassed trusts notwithstanding that the Act does not expressly define “person” to include a trust.

A related but subsidiary aspect was the clarification that the case was not concerned with conferring juristic personality on a trust. The legal inquiry was instead whether the Act’s regulatory obligations extend to trusts when they function as vehicles for home-building activity.

4. Court’s Reasoning

The court located the interpretation exercise in the Act’s stated purpose as consumer-protection legislation, aimed at promoting housing consumer rights and improving the structural quality of homes. It emphasised that the NHBRC’s role under the Act is to regulate the home building industry, which is achieved in part by requiring registration of home builders and enrolment of homes being built. This framework was treated as central to achieving the Act’s protective and quality-assurance objectives.

In interpreting section 10(1), the court noted that the provision prohibits any “person” from carrying on the business of a home builder unless registered, and that “home builder” is defined as a “person” who carries on that business. Although “person” is not defined and section 10(1) makes no express reference to trusts, the court held that the absence of an express inclusion of trusts did not justify an inference of exclusion. The court stressed that interpretation had to be undertaken in light of the Act’s surrounding context and purpose, particularly its function of protecting housing consumers from incompetent or unscrupulous builders and from defective housing.

A significant component of the court’s reasoning was its reliance on the internal textual indicators within the Act—especially sections 9 and 21—to determine the intended reach of the term “person”. The court pointed out that section 9 (dealing with the NHBRC’s information database) explicitly requires inclusion of details such as the names and identity numbers of the directors, members, trustees, or partners of companies, close corporations, trusts, partnerships, or sole traders. This database exists to assist housing consumers in assessing the track record and reputation of home builders. The court viewed these express references to trusts and trustees as demonstrating that the legislature contemplated trusts as entities operating within the regulated home-building environment.

Similarly, the court treated section 21 (offences) as reinforcing this conclusion. Section 21 provides for criminal liability not only for the contravening “person” but also for “every director, trustee, managing member or officer of a home builder” who knowingly permits a contravention. The court reasoned that these explicit references could not be dismissed as surplusage. On the contrary, they supported the “ineluctable conclusion” that the legislature intended trusts to fall within the regulatory net, with trustees bearing responsibility for compliance.

The court also drew an evaluative conclusion about the consequences of excluding trusts. It held that excluding trusts from the Act would produce an arbitrary and unjust result because it would allow actors to avoid regulation simply by structuring home-building activity through a trust rather than a company or another form of enterprise. The Act was understood to have been intended to cover “any person, entity or institution” engaged in building homes for residential purposes, subject only to express statutory exemptions.

The respondents had relied on two unreported decisions of the Gauteng Division, Pretoria—National Home Builders Registration Council (NHBRC) v Botes NO & others and National Home Builders Registration Council (NHBRC) v Van Rooyen & others—which had held that trusts were not covered by the Act. The court rejected that approach and concluded those decisions were incorrect for the reasons derived from the Act’s purpose and the textual indications in sections 9 and 21.

Finally, on remedy, the court noted that because construction had been completed, interdictory relief was no longer pursued, but declaratory relief remained appropriate to clarify the statutory position and the trust’s status during the relevant period.

5. Outcome and Relief

The appeal was upheld. The order of the High Court was set aside and replaced with a declaratory order confirming that trusts are home builders as envisaged in sections 1 and 10(1) of the Act, and that the first to fourth respondents, in their capacities as trustees of Mike’s Trust, carried on the business of a home builder at all material times.

No order as to costs was made in the appeal or in the substituted order. The absence of a costs order was linked to the public-interest character of the litigation, and the NHBRC did not seek costs.

Cases Cited

Land and Agricultural Bank of South Africa v Parker 2005 (2) SA 77 (SCA).

Natal Joint Municipal Pension Fund v Endumeni Municipality [2012] ZASCA 13; 2012 (4) SA 593 (SCA).

Cool Ideas 1186 CC v Hubbard and Another [2014] ZACC 16; 2014 (4) SA 474 (CC).

National Home Builders Registration Council (NHBRC) v Botes NO and Others [2008] ZAGPHC 301.

National Home Builders Registration Council (NHBRC) v Van Rooyen and Others [2006] ZAGPHC 170.

Legislation Cited

Housing Consumers Protection Measures Act 95 of 1998.

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The Supreme Court of Appeal held that, properly interpreted in context and in light of the Act’s consumer-protection purpose, a trust engaged in the construction of homes falls within the concept of a “person” for purposes of section 10(1) and therefore within the statutory definition of a home builder. Trusts are accordingly required to register as home builders when carrying on the business of home building. The court declared that the trustees of Mike’s Trust carried on the business of a home builder at the relevant times, and it set aside the High Court’s contrary conclusion. No costs order was made.

LEGAL PRINCIPLES

The judgment applied the principle that statutes, particularly consumer-protection regulatory schemes, must be interpreted contextually and purposively, having regard to the text read in light of the statute’s purpose and the broader legislative scheme.

It further applied the principle that the absence of express wording (such as an explicit reference to “trust” in a provision like section 10(1)) does not necessarily entail exclusion where the statute’s context, structure, and other provisions (here, sections 9 and 21) demonstrate legislative intent to include such entities.

The judgment also proceeded on the accepted principle (referred to with citation) that a trust is not a juristic person, while distinguishing that proposition from the interpretive question whether a trust is nevertheless subject to statutory obligations imposed on those carrying on regulated activities.