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[2015] ZAWCHC 107
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Ruiters v Minister of Human Settlements and Another (13669/14) [2015] ZAWCHC 107; 2016 (1) SA 239 (WCC) (12 August 2015)
Links to summary
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No.
13669/14
DATE:
12 AUGUST 2015
In
the matter between:
FRANCOIS
JOHAN
RUITERS
..............................................................................................
Applicant
And
THE
MINISTER OF HUMAN
SETTLEMENTS
.....................................................
First
Respondent
NATIONAL
HOMEBUILDERS’ REGISTRATION
COUNCIL
.................................................................................................................
Second
Respondent
JUDGMENT
DELIVERED
ON 12 AUGUST 2015
INTRODUCTION
[1]
The applicant is the owner of Erf 21811
Kuils River (“the property”). The first respondent is the
Minister of Human
Settlements (“the Minister”). The
second respondent is the National Home Builders Registration Council
(“the
Council”). This matter concerns the validity of a
decision taken by the Minister on 22 May 2014, when she confirmed an
earlier
decision by the Council refusing applicant an exemption from
registering as a home builder and from enrolling the construction of
a home on the property. It is common cause that the Minister’s
decision constitutes administrative action reviewable
under
section 6
of the
Promotion of Administrative Justice Act 3 of 2000
.
[2]
The applicant presently seeks to review and
set aside the Minister’s decision, as well as her confirmation
of the Council’s
refusal of his exemption application, and a
direction that he should make application for late enrolment in terms
of s.14A of the
Housing Consumers Protection Measures Act No. 95 of
1998 (“the Act”). The applicant also claims a declaratory
order
to the effect that, in the event of the review succeeding,
applicant should be recognised as an “owner builder” in
terms of the provisions of the Act, with exemption from the
provisions of sections 10 and 14 thereof.
BACKGROUND
FACTS AND CIRCUMSTANCES
[3]
During February 2012 the City of Cape Town
approved certain building plans for a new house that had been
submitted to it by the
applicant, in terms of s.4 of the National
Building Regulations and Building Standards Act No. 103 of 1977 (“the
Building
Regulations Act”). The applicant then commenced
with the construction of his home.
[4]
On 1 August 2012 the Council served a
notice of non-compliance with the provisions of s.14(1) of the Act on
the applicant. The non-compliance
report stated that, as a home
builder, applicant had commenced the construction of a home prior to
enrolment by the Council.
The applicant was required to achieve
compliance by 8 August 2012.
[5]
Applicant contends that he is in fact an
owner builder as defined in s.1 of the Act; that is, “
a
person who builds a home for occupation by himself.
”
The Minister counters this by alleging that applicant was a home
builder, until such time as he brought an application
for an
exemption “
based on the fact that
he is an owner builder
”.
[6]
In
any event, the applicant submitted an exemption application to the
Council on 12 September 2012 in terms of s.10A
[1]
and s.29
[2]
of the Act. He
alleges that this was in order to qualify as an owner builder.
This qualification would exempt him from
complying with the
provisions s.10 and s.14 of the Act.
[7]
The application was constituted by a
covering letter and the Council’s pro-forma questionnaire that
had to be completed and
signed by an applicant. In his covering
letter applicant stated that he was an owner builder, building his
own house in stages
as funds became available. The building
project would occur over a period of time. His plans had been
approved by the
municipality and he had appointed an engineer to
assist him with the structural designs of the building project.
The engineer
would perform regular site visits as and when required.
[8]
The questionnaire commenced with a
statement (typed in bold) to the effect that the applicant, being the
owner of the property,
was applying to be classified as an owner
builder as defined in s.1 of the Act; and also to be granted
exemption from the requirements
of the Act as provided for in s.29.
In support of his application the applicant warranted that he
understood the implications
of the exemption and his home not being
enrolled under the requirements of the Act. He would occupy the
property and not
sell it within five years. He was aware that
he would have no warranty protection as laid down in the Act; and
that he might
not be able to sell the home in the future, as an
enrolment certificate would normally be called for upon resale.
He was
aware that the house he intended building would have to comply
with the requirements of the Building Regulations Act. He would
be fully responsible for administering the whole building project and
purchasing all building material, employing and monitoring
artisans
and labourers and the quality of materials and workmanship.
[9]
In this questionnaire applicant also denied
that he would be receiving progress payments directly from a banking
institution that
was providing mortgage finance. He indemnified
the Council and held it free from blame against any claim that might
arise
out of the granting of the exemption.
[10]
In essence it would appear that if
applicant was granted the status of an owner builder he would have
had to occupy the property
and not sell the house for five years.
He would have had no warranty under the Act, and the Council would
have been indemnified
for any claim against it that could arise out
of the granting of an exemption from the provisions of the Act.
[11]
On 18 September 2012 the Council advised
the applicant by letter that his application had been rejected. The
requirements for satisfying
the Council contained in subsections
29(a), (b) and (c) were not dealt with in the letter. Instead
the Council quoted s.10A
of the Act and then stated the following:
“
3.
Sections 10 and 14 of the Act prohibit the commencement of
construction of a home prior to registration of home builder and
enrolment of a home. Accordingly, exemption of sections 10 and
14 of the Act can only be made prior to construction.
”
As
a result thereof the Council contended that the applicant’s
application for exemption did not fall within the ambit of
the Act.
[12]
The
Council’s letter went on to say that it had come to the
Council’s attention that the applicant had already commenced
construction; that such conduct was a criminal offence in terms of
s.21 of the Act; and that the Council reserved its rights to
institute criminal proceedings against him. Applicant was also
requested to bring an application for late enrolment of his
property,
in terms of s.14A of the Act
[3]
,
before the close of business on 19 September 2012. Failing this
the Council would instruct its attorneys to proceed with
an interdict
application in terms of s.20 of the Act.
[13]
In the answering affidavit filed on behalf
of the Minister it is alleged that the Council could not exempt
applicant from something
that he had already done. His duty was to
register as a home builder and to enrol the home before commencement
of construction.
[14]
On 5 November 2012 applicant’s
attorney lodged an appeal with the Minister against the decision of
the Council. It was contended
therein that the Council erred in
finding; firstly, that an application for exemption in terms of s.10A
and s.29 can only be made
prior to the construction of a home;
secondly, that applicant’s application fell outside the ambit
of the Act because it
was submitted after construction had
commenced; and thirdly, that applicant was bound to apply for
late enrolment in terms
of s.14A.
[15]
On 17 January 2013, before this
appeal was heard, the Council’s Registrations Committee
approved an updated owner
builder training manual for the period up
to 9 November 2012. The Council refers to this as “
a
policy
”. It was not a Home
Building Manual, published by the Council in terms of s.12 of the Act
and which contains the NHBRC
Technical requirements and guidelines
with which home builders must comply.
[16]
On 8 March 2013 the Council submitted a
report on the appeal to the Minister in which it gave reasons for
rejecting the application.
The report concluded that the 2004
training manual only authorised exemption from s.10 and s.14 of the
Act, on condition that an
applicant had not commenced with the
construction of a home. The Council pointed out that in his
application the applicant
had indicated that he had already commenced
construction. As a result the Council rejected the application
in line with the
2004 “
policy
”.
[17]
However, the Council also stated that the
amended 2012 policy did provide for the possibility of owner builder
exemption, even where
construction of a home had commenced. The
Council pointed out nevertheless that applicant’s application
had been submitted
– and a decision to reject it had occurred –
before the resolution of 17 January 2013 which had put the
content
of the 2012 manual into effect. The Council added that prior
to this amendment of the policy the Council had rejected several
applications
in similar instances where construction of a home had
already commenced. The Department was therefore asked to take
into
consideration the implications of retrospective application of
the 2012 policy.
[18]
The Council recommended that the appeal
should be dismissed; firstly, in line with the policy that was
applicable at the relevant
time; and secondly, due to the fact
that similar applications had been rejected in line with this
policy. The Council
expressed concern that there might be a
flood of cases, such as the applicant’s, on appeal.
[19]
On 13 March 2013 this report and the 2012
manual were provided to the applicant. On 4 April 2013 the
applicant supplemented
his appeal.
[20]
On 17 July 2013, some ten months after
applicant had lodged his application for exemption, the Council was
granted an interim interdict
against the applicant arising from his
failure to adhere to the non-compliance notice.
[21]
On 12 August 2013 the Minister’s
representative apologised to the applicant for the delay on the part
of the Minister in deciding
the appeal and alleged that this was due
to a change of ministers. An indulgence, until 21 August 2013,
was requested.
[22]
On 30 October 2013 the applicant launched a
mandamus
application in which he sought to compel the Minister to make a
decision. Notice of opposition was served on 18 November 2013,
but no
answering papers were filed. On 20 November 2013 the State Attorney
requested a further indulgence because the Minister
was out of the
country. On 27 January 2014 there was a further request
for an indulgence to 3 March 2014 because
the Minister was in
Zambia.
[23]
On 11 February 2014 applicant launched a
Chamber Book application which was also opposed by the Minister.
A second Chamber
Book application, on 27 March 2014, resulted in an
order that the Minister produce her ruling in the appeal within 10
days failing
which applicant could set the matter down on the
unopposed roll.
[24]
On 16 May 2014 the Director-General of
Human Settlements directed a memorandum to the Minister in order to
appraise the latter of
the pending appeal. It was pointed out
that the 2012 policy did provide for the possibility of an owner
builder making an
application to qualify for an exemption, even where
the construction of a home had already commenced. The
aforementioned
approach of the Council in applying the new policy was
reiterated. The Director-General recommended that the Minister
should
dismiss the appeal and confirm the Council’s advice that
the applicant should make an application for late enrolment in terms
of the Act.
[25]
On 22 May 2014 the Minister eventually made
a ruling. She noted that the statutory function of the Council,
inter alia
,
is to provide protection to housing consumers in respect of the
failure of home builders to comply with the Act. She also
noted
that the applicant had undertaken not to sell his house for five
years, thereby indemnifying the Council against any financial
claim
by a housing consumer. She noted further what applicant had
stated in support of his appeal; namely, that after receiving
approval of his plans from the City no one had made him aware that he
had to comply with the Act.
[26]
In the Minister’s evaluation she
noted that the Council had amended its policy to permit an applicant
to qualify for exemption,
even where construction of a home has
commenced. She accepted that applicant is an owner builder.
Her ruling expressly
disavowed making any determination as to whether
or not the application for exemption fell within the ambit of the Act
at the time
the decision was taken by the Council. The Minister
made her ruling with reference to s.29(1)(b) of the Act. No
facts
motivating this conclusion were referred to.
[27]
The Minister ruled that the appeal was
dismissed; that the decision by the Council to refuse applicant
an exemption was confirmed;
and that the applicant was directed
to make an application for late enrolment as prescribed. The
Minister therefore stood
by the decision of the Council; but she did
not address the legal principle relied upon by the Council to reject
applicant’s
application, and set out by the Council in its
rejection letter to the applicant.
THE
HOUSING CONSUMERS PROTECTION MEASURES ACT NO. 95 OF 1995
[28]
The
Act commenced on 4 June 1999. It was intended to make provision
for the protection of housing consumers and to provide
for the
establishment and functions of the Council. Accordingly, the
Council was established as a juristic person.
Section 10 of the
Act
[4]
required
registration of home builders. According to s.10(3)
registration is dependent on the Council being satisfied
that the
home builder (a) meets the requirements by the Minister; (b)
will meet its obligations in terms of the Act; (c)
has appropriate
financial, technical, construction and management capacity in order
to prevent housing consumers and the Council
from being exposed to
unacceptable risks. A housing consumer is defined as a person
who is in the process of acquiring or
has acquired a home and
includes such person’s successor in title.
[29]
It
is evident from the provisions of Chapter III of the Act, which deals
with the protection of housing consumers, that such persons
are
intended to receive protection from home builders. This object
is given effect to by requiring a home builder to ensure
that a
written agreement signed by the parties is concluded between the home
builder and housing consumer for the construction
or sale of the home
by the home builder. This must set out all material terms and
have attached to it the specifications
pertaining to the materials to
be used and the plans reflecting the dimensions and measurements
approved by the local government
body. Such an agreement is
deemed to include warranties, enforceable by the housing consumer
against the home builder in
any court, that the home is constructed
in a workmanlike manner, is fit for habitation, is constructed in
accordance with the NHBRC
technical requirements and the terms, plans
and specifications of the agreement.
[5]
[30]
The last-mentioned requirements are
prescribed in terms of s.7(2)(d) by the Minister. They apply to
a home builder for the
design and construction of prescribed homes.
[31]
A
home builder is required, upon demand by the consumer, to rectify at
his own cost any major structural defects caused by non-compliance
with the NHBRC technical requirements and occurring within an agreed
period not less than five years from occupation. The
home
builder must also rectify non-compliance with or deviation from the
terms, plans and specification of the agreement related
to design,
workmanship or material of which he is notified within an agreed
period of not less than three months from occupation
date; and he
must repair roof leaks attributable to workmanship, design or
materials that he is notified of within an agreed period
of not less
than twelve months from occupation date.
[6]
These rights are transmissible by sale or disposal.
[7]
The correlative obligations would continue to rest upon the home
builder.
[32]
Furthermore,
a home builder may not demand or receive a deposit, or any other
consideration unless an agreement has been concluded
and the
provisions of section 14(1) or 14(2) have been complied with.
[8]
Section 14 provides that a home builder may not commence construction
unless prescribed documents, information and the fee
have been
submitted and accepted by the Council, and the Council has issued a
certificate of proof of enrolment.
[9]
[33]
A
home builder may not commence construction of a home to be financed
by state housing subsidy unless similar requirements have
been
met.
[10]
Furthermore, no
home builder can complete the construction of a home begun by another
home builder without assuming the obligations
of the first home
builder.
[11]
[34]
The
Council is required to establish a fund for the purpose of providing
assistance to housing consumers when a home builder fails
to meet
obligations to rectify major structural defects in the consumer’s
home caused by non-compliance with NHBRC Technical
requirements and
occurring not less than five years from occupation date by the
housing consumer and notified to the home builder.
The Council
is bound to pay an amount out of this fund for rectification in the
various circumstances set out in s.17 of the Act.
[12]
[35]
Section 14A, was not part of the original
Act. It was inserted by Act No.17 of 2007. It provides
for late enrolment
and non-declared late enrolment by a home
builder. It authorises the Council to require a home builder to
satisfy the Council
that a construction that is started before the
home builder submits an application for enrolment of the home is in
accordance with
the NHBRC technical requirements; and to take prudent
measures to manage the risks pertaining to the fund. The
Council may
nevertheless prescribe disciplinary measures for late
enrolment and non-declared late enrolment.
[36]
Section 10(2), which does not form part of
Chapter III, prohibits a home builder from constructing a home unless
that home builder
is registered with the Council.
AMENDMENTS
TO THE ACT
[37]
From all of the above it is apparent that
the protective measures in the Act are directed at protecting housing
consumers from home
builders. There is no reference in the
above protective provisions to owner builders. Nor are any
duties placed upon
them.
[38]
Previously owner builders were not
regulated by the Act. Amendment Act No.17 of 2007, which
commenced on 9 April 2008, introduced
such regulation. “Owner
builder” is defined as:
“
(a)
a person who builds a home for occupation by himself or herself;
or
(b)
a person who is not a registered home builder and who assists a
person contemplated in paragraph (a) in the building of his
or her
home.
”
[39]
In essence an owner builder is
characterised by the fact that he or she builds a home. This
differs from a housing consumer
who “
acquires
”
a home built by somebody else. An owner builder is therefore
not a housing consumer whom the Act needs to protect
or intends to
protect, or subjects to regulation for that purpose. The Act
does, however, impose regulation on an owner builder
which eliminates
potential prejudice to housing consumers where the genuineness of a
builder’s status as an owner builder
has not been established.
[40]
Whether a builder is an owner builder is a
question of fact. If the builder complies with the definition
of an owner builder,
he or she cannot adversely affect the interests
of housing consumers in the various situations which the Act seeks to
regulate
by means of the protective measures described above.
However, uncertainty as to whether a builder is a home builder or
owner
builder may lead to abuse and compromise housing consumers.
Therefore the Amendment Act redefined a home builder to include an
owner builder conditionally.
[41]
The following definition of “home
builder” was substituted by Amendment Act:
“’
Home
builder
’
means
–
(a)
a person who carries on the business of
a home builder;
(b)
an owner builder who has not applied for
exemption in terms of section 10A.
”
[42]
As
a result of these amendments, save for one exception
[13]
all persons who construct or sell new homes become subject to
regulation in terms of the Act. This includes an owner
builder.
He or she is treated as a home builder until
application is made for exemption in terms of s.10A. Until that
time an owner
builder remains subject to the same duties, and
consequences for breach of such duties, as a home builder.
[43]
Examples of such consequences may be
criminal liability, under s.21(1)(b) of the Act, for contravening
s.10(2) thereof (by constructing
a home before registration as a home
builder) and contravention of s.14(1) (commencing construction of a
home before obtaining
a certificate of proof of enrolment.)
These consequences are an inducement to an owner builder who has not
applied for exemption
to do so before commencing building.
[44]
Two main consequences arise from part (b)
of the above definition of home builder. Firstly, if an owner
builder has not applied
for exemption in terms of s.10A he or she
remains subject to the duties resting upon a home builder and the
consequence of breach
of such duties. Secondly, if such
application for exemption has been made no such duties or
consequences arise.
[45]
Counsel for the Minister contends that a
literal interpretation and application of part (b) of the definition
of an “
home builder
”
would undermine the purpose of the amendments introduced by the
Amendment Act because;
[a]
it would allow any builder to define him or
herself as owner builder and thus avoid complying with the Act by a
mere submission
of an application for an exemption;
[b]
even if later found not to qualify for an
exemption from s.10 and s.14 of the Act, such a builder could then
not be visited with
the sanctions provided for in the Act because by
submitting the application, the Act ceased to apply;
[c]
the exemption process would be rendered
meaningless if the owner builder is already in effect exempted from
the moment that he or
she makes application.
[46]
These submissions ignore the jurisdictional
requirement for exemption; namely, that the applicant must be an
owner builder. That
is the avenue for escape from the consequences of
literal interpretation contended for by counsel. An applicant for
exemption must
establish, as a matter of fact, that he or she is an
owner builder. Upon a conspectus of part (b) of the
definition
of home builder, read with s.10A (which must in turn be
read with s.29 of the Act), it appears to be incumbent upon the
Council,
when it is faced with an application for exemption, to
investigate and establish the jurisdictional fact for an application
for
exemption, namely that an applicant is in fact an owner builder.
If the Council is not satisfied that an applicant is a
bona
fide
owner builder, the duties of a
home builder and consequences of breach of those duties by a home
builder continue to apply to the
applicant. However, if an
applicant satisfies the Council that he or she is a
bona
fide
owner builder, the duties that
rest upon a home builder and consequences of breach of those duties
cease to exist from the time
that the owner builder applies for
exemption.
[47]
Furthermore, if a builder does comply with
the definition of an owner builder he or she cannot conceivably harm
the interests of
housing consumers or the Council in any way which
requires regulation under the Act.
THE
SITUATION OF THE APPLICANT
[48]
It is common cause that the applicant is
the owner of the immovable property on which he has commenced to
build. As the owner
of Erf 21811 the applicant has certain
common law rights. One of these is to use and enjoy his
property by erecting a building
on the land.
[49]
Section 25(1) of the Constitution protects
this property right. It provides as follows: -
“
25.(1)
No one may be deprived of property except in terms of law of general
application, and no law may permit arbitrary deprivation
of
property.
”
[50]
The
property that is protected by this section includes not only
applicant’s ownership of the erf, but also the bundle of
rights
that make up his ownership, such as his aforementioned right to use
the property. Were this right to be interfered with
by the Act,
applicant would be considered to have been deprived of his property
to the extent of that interference.
[14]
[51]
One law of general application which
justifiably limits applicant’s use right is s.4 of the Building
Regulations Act.
This prohibits the applicant from building
without approved plans. The provisions of the Act exclude
arbitrary deprivation
of the property rights of use. They
ensure building standards. By comparison, no provision in the
Housing Consumer
Protection Measures Act prohibits an owner builder
from commencing to build on his or her property before an application
for exemption
is brought in terms of s.10A. Although an owner
builder may be deemed by definition to be a home builder, that same
definition
requires an applicant to be dealt with as an owner builder
from the time that such an application for exemption is made.
In my view it would be arbitrary to deprive a
bona
fide
owner builder of his or her right
continue to build on his or her property as the Council would appear
to have done. Such
a prohibition would be irrelevant to the
purpose of the Act, namely to protect housing consumers.
[52]
Should the present applicant in fact be an
owner builder the Act as it stands would not deprive him of the
liberties associated
with this status because he built without
fulfilling the duties of registration and enrolment before he applied
for exemption.
The only consequence of his conduct in that
regard may be that he could be visited with criminal liability.
[53]
In his founding affidavit applicant denies
that he is a home builder as defined in the Act. He alleges
that he is neither
in the business of home building nor has he any
intention of entering the business of home building. To the
first-mentioned
allegation the Minister answers that the applicant is
a home builder; unless he applies for an exemption based on the
fact
that he is an owner builder. The Minister alleges that she
has no knowledge of whether applicant is in the business of home
building or intends to enter it. However, in her ruling she
stated: “
The Applicant is
such an owner builder
.”
[54]
This Court is not equipped, in motion
proceedings, to investigate fully and satisfy itself that the
applicant is a
bona fide
owner builder. That power is vested in the Council by s.29 of
the Act. In my view it would be inappropriate for the
Court to
usurp that power, or to reach a conclusion in these review
proceedings based on the ordinary principles used for analysing
and
weighing evidence in motion proceedings.
[55]
If the applicant does satisfy the Council
that he is an owner builder, immunity from the provisions of s.10(2)
and s.14(1) would
rest on him from the date of his application for
exemption, and he would not have to be subjected to the requirements
of s.14A.
THE
MINISTER’S CONTENTIONS
[56]
The
Minister’s primary argument is that the Act precludes the
Council from granting an exemption to an owner builder who has
commenced with construction. For this submission the Minister
relies on the dicta of the Constitutional Court in
Cool
Ideas 1186 CC v Hubbard
[15]
[57]
In the alternative to the above, the
Minister contends that the applicant failed to satisfy the Council:
[a]
that he was technically competent to
undertake the construction of the home; and/or
[b]
that the construction already undertaken
complied with the NHBRC technical requirements; and
[c]
the granting of the exemption would not
undermine the objectives of the Act and/or the effectiveness of the
Council as contemplated
by s.29(1)(b) of the Act.
Premature
construction
[58]
As stated above no provision of the Act
expressly provides that application for exemption must be brought
prior to commencement
of construction, or that exemption may not be
granted to an owner builder who has commenced building before
applying or exemption.
The only considerations raised by the
Act are whether the applicant fulfils the definition of an owner
builder and satisfies the
Council as to the criteria mentioned in
subsections 29(1)(a), (b) and (c). This stands in contrast to
the peremptory provisions
of sections 10(2) and 14(1), pertaining to
home builders, where it is clearly stipulated that compliance must
take place prior
to construction.
[59]
The purpose of the Act would not be
undermined if an owner builder is allowed to build before making
application for exemption;
because consumers do not need protection
from an owner builder as they do from a home builder.
The
Cool Ideas case
[60]
The
judgment in the
Cool
Ideas
case in the Supreme Court of Appeal
[16]
identified the following question for resolution by the Court,
namely; “
What
consequences follow upon a home builder failing to register as such
but who nonetheless undertakes a building project.?
”
Ultimately the Constitutional Court found that the Act is not capable
of being construed as permitting after the fact
registration of a
home builder when construction has already commenced (or may even
have been completed). The provisions
of the Act lead to the
conclusion that the statute envisions registration of a home builder
before construction commences.
The purpose of these provisions
is to protect housing consumers.
[17]
In the present matter the legal and factual questions posed by
the decisions of the Council and the Minister, are different.
They
respectively relate to an alleged and admitted owner builder, and not
a home builder. They do not embrace circumstances
where it is
necessary to protect housing consumers.
Technical
Competence
[61]
The
provisions of the Act relating to an owner builder do not expressly
require proof of his or her technical competence. No law
of general
application limits the use of an owner builder’s property on
the basis that he or she is not technically competent
to construct
his home. The limitation in the Act based on lack of technical
construction capacity relates only to a home
builder.
[18]
The construction of a building by an owner builder, however, is
required to comply with plans approved by the local authority
as
provided for in the National Building Regulations Act. A
certificate authorising occupancy will only be granted in terms
of
s.14 of this Act if the building has been erected in accordance with
the provisions of the Act and the conditions on which approval
was
granted; and an electrical certificate of compliance with applicable
laws has been issued; and certificates relating
to design,
erection and installation of the structural, fire protection and fire
installation systems have been submitted.
Compliance
with NHBRC technical requirement
[62]
If an applicant for exemption satisfies the
Council that he or she fulfils the definition of an owner builder,
that would be sufficient
to eliminate him or her from regulation as a
home builder. Such regulation, under s.10(2), s.14(1), s.14A,
as well as the
NHBRC Technical requirements prescribed under
s.7(2)(d), only apply to a home builder. The Act does not
require an applicant
who satisfies the Council that he or she is an
owner builder also to satisfy the Council that the construction
complies with NHBRC
technical requirements.
Underming
the objectives of the Act and/or the effectiveness of the Council
(S29(1)(b))
[63]
The Minister made her decision with
reference to the criteria in s.29(1)(b) of the Act. The Council
do not appear to have
considered these criteria. Because an
owner builder poses no apparent risk to a housing consumer an
applicant for exemption
who satisfies the Council that he or she is
an owner builder would not appear to undermine the objects of the
Act. An undertaking
such as the one made by the applicant, to
occupy and not to sell the owner builder’s house for five
years, coupled with indemnification
of the Council from claims by
housing consumers, would appear to eliminate the chance of
undermining the effectiveness of the Council.
Furthermore,
severe prejudice to a
bona fide
owner
builder would result if exemption was not granted; because the
burdens of protecting housing consumers would be imposed
on him or
her for no reason. This would not be in the public interest.
Prima facie
therefore
a proven owner builder satisfies the requirements of sub-sections
29(1)(a), (b) and (c).
[64]
The Minister accepted in her reasons that
the applicant was an owner builder.
Prima
facie
at least the conclusions above
had to follow. In passing it should be noted that s.29 is
framed in broad general terms.
It avails “
a
person or a home
” with exemption
from any provision of the Act. Passage through the criteria
mentioned in s.29, for persons other than
applicants in terms of
s.10A, may not be as self-evident as for an owner builder.
THE
DECISION OF THE COUNCIL
[65]
From the reasons given by the Council for
its refusal to grant the applicant exemption, it would appear that
the Council did not
investigate and try to satisfy itself whether the
s.29(1) criteria were established, or whether in fact the applicant
was an owner
builder. Instead it based its rejection of the
application on the ground that applicant commenced building before
making
his application for exemption. The Act does not
authorise the Council to reject an application by an owner builder on
this
ground. Nor does it prohibit an owner builder from
commencing building before making application for exemption.
Nowhere
in the papers does it appear that the Council ever doubted
that applicant was an owner builder. It would therefore be
appropriate
for the Council to reconsider the application for
exemption and base its conclusion upon a proper application of the
Act and all
the relevant factors.
THE
DECISION OF THE MINISTER
[66]
The Minister found against the application
for exemption in terms of s.29(1)(b) of the Act. Although no
facts were referred
to by the Minister in that regard, the only
possible inference is that the exemption was not granted because the
Minister believed
that to do so would undermine the objectives of the
Act or the effectiveness of the Council. Having regard to the
Minister’s
acceptance that the applicant is an owner builder
her conclusion is irrational. If the applicant is to be
regarded as an
owner builder his activities could not threaten the
interests of housing consumers, which is the main purpose of the
Act.
Because the applicant has undertaken to occupy the house
he builds and not sell it for five years, and because he has
indemnified
the Council, the effectiveness of the Council cannot be
undermined by the applicant. The decision of the Minister
therefore
bears no relationship to the purposes for which she made
the decision.
CONCLUSION
[67]
In all the circumstances the Minister
misdirected herself in concluding that the applicant did not meet the
requirements of s.29(1)(b).
The Council has not yet satisfied
itself on the relevant factors. Its previous decision is
tainted by an error of law.
This Court is in no position to
substitute its own decision for that of the Council. I
therefore make the following order:
[a]
The decision of the Minister, dated 22 May
2014, is set aside.
[b]
The matter is referred back to the Council
for determination as to whether the applicant is entitled to
exemption in terms of s.10A
and s.29 of the Housing Consumers
Protection Measures Act.
[c]
The first respondent shall pay the
applicant’s costs, including the costs of the
mandamus
application instituted by applicant on
1 November 2013 under case number 18036/13.
DONEN
AJ
[1]
S10A
provides as follows:
“
10.A
Owner builder exemption. -
An
owner builder may, in terms of section 29, apply to the Council for
exemption from sections 10 and 14.
[2]
Section
29 provides as follows:
“
29.
Exemption. – (1)
the
Council may, on application made to it in the format prescribed by
the Council by notice in the Gazette, in exceptional circumstances
and on the conditions that the Minister may prescribe in general or
in any particular case, exempt a person or a home from any
provision
of this Act, if the Council is satisfied that:
(a)
the granting of the exemption would
be in the public interest;
(b)
the granting of the exemption would
not undermine the objectives of this Act, or the effectiveness of
the Council; or
(c)
should the exemption not be granted,
the effect would be extremely prejudicial to the interest of the
applicant and housing consumers.
”
[3]
Section
14A provides as follows:
“
14A
Late enrolment and non-declared late enrolment
(1)
Where a home builder-
(a)
in contravention of section 14 submits an application for the
enrolment of a home to the Council after construction has started;
or
(b)
does not declare the fact that construction has commenced at the
time of enrolment and the Council becomes aware of that fact,
the
Council shall require the home builder to satisfy the Council that
the construction undertaken at the time is in accordance
with the
NHBRC Technical Requirements and shall take prudent measures,
contemplated in section 16 (1), to manage the risks pertaining
to
the fund.
(2)
In the case of late enrolment and non-declared late enrolment, the
home builder shall-
(a)
submit to the Council such documentation and information as may be
prescribed in the Council Rules;
(b)
at the request of the Council, pay a prescribed late enrolment fee
in an amount determined by the Council for a special inspection
to
be undertaken by the Council to enable an inspector to determine
compliance with NHBRC Technical Requirements, prior to the
acceptance of enrolment;
(c)
at the request of the Council, and prior to the acceptance of the
enrolment, rectify any defects detected during the inspection
contemplated in paragraph (b)-
(i)
that may influence the structural integrity of the home; or
(ii)
that constitute non-compliance with the NHBRC Technical
Requirements,
at
the home builder's cost and under the supervision of a competent
person appointed by the home builder;
(d)
at the request of the Council, in circumstances where an inspector
is unable to determine compliance with the NHBRC Technical
Requirements, for whatever reason, appoint a competent person-
(i)
to inspect the home; and
(ii)
to complete a late enrolment report in the form prescribed in the
Council Rules to confirm compliance with the NHBRC Technical
Requirements;
(e)
undertake any work, and pay for any costs resulting from such work,
to expose work already done in order to enable the competent
person
to address all questions raised in the late enrolment report
contemplated in paragraph (d) (ii); and
(f) at the
request of the Council provide any surety, guarantee, indemnity or
other security considered reasonable by the Council
to satisfy its
obligations under section 16 (1).
(3)
Notwithstanding the provisions of this section, the Council may
prescribe disciplinary measures for late enrolment and non-declared
late enrolment which are not inconsistent with this Act.”
[4]
Sections
10(1) and (2), which commenced on 1 December 1999, provide
as follows:
“
10
Registration of home builders.
–
(1) no person shall –
(a)
carry on the business of a home
builder; or
(b)
receive any consideration in terms
of any agreement with the housing consumer in respect of the sale or
construction of the home,
unless that person is a registered home
builder.
(2)
No home builder shall construct a home unless that home builder is a
registered home builder.
”
[5]
See
Sections 13(1) and (2) of the Act.
[6]
Section
13(2)(b) of the Act.
[7]
Section
13(4)
[8]
Section
13(7)
[9]
Section
14(1)
[10]
Section
14(2)
[11]
Section
14(7)
[12]
Section
17 provides as follows:
17.
Claims and Recourse. – (1)
Subject
to subsection (2), the Council shall pay out the fund established
for that purpose in terms of section 15(4), an amount
for
rectification where –
a)
within—
(i)
five years of the date of occupation, a major structural defect has
manifested itself in respect of a home as a result of
non-compliance
with the NHBRC Technical Requirements and the home builder has been
notified accordingly within that period;
(ii)
12 months of the date of occupation, a roof leak attributable to
workmanship, design or materials has manifested itself
in respect of
a home and the home builder has been notified accordingly within
that period;
[Para.(a)
substituted by s.8 (a) of Act No.17 of 2007.]
(b)
the home builder is in breach of the home
builder’s obligations in terms of section 13
(2)
(b)(i)
regarding the rectification of such
defect;
(c)
the relevant home was constructed by a registered home builder, had
been enrolled with the Council and, at the occupation
date, the home
was enrolled with the Council subject to section 14(4), (5) and (6);
(d)
the home builder no longer exists or is unable to meet his or her
obligations; and
(e)
in the case of a home that has been enrolled with the Council on a
project basis in terms of section 14(2), the application
has been
made by the MEC pursuant to an agreement in terms of section
5(4)(c).
(2)
Subject to subsections (3), (4)and (5)—
(a)
subject to section 7(2)(e), reduce any amount that may be expended
in terms of subsection (1);
(b)
in exceptional circumstances prescribed by the Council, instead of
having a defect rectified, make payment to the housing
consumer in
full and final settlement of any claim; or 22
(c)
refuse any claim.
[Sub-s.
(2) substituted by s.8(b) of act No.17 of 2007]
(3)
Prior to exercising its powers in terms of subsection (2), the
Council shall consult with and
make
recommendations to the Minister in respect of its obligations under
section 16(1) and (6).
(4)
The Minister shall make a decision on any recommendation
contemplated in sub-section (3) within a period of three months.
(5)
The Council may not
(a)
exercise its powers in terms of subsection (2); or
(b)
prescribe increased enrolment fees or late enrolment fees under
section 16(6),
[Para
(b) substituted by s.8(c) of Act No.17 of 2007]
unless
the Minsiter has approved such action or the period referred to in
subsection (4) has expired.
(6)
Subject to section 17(1), no housing consumer shall have a claim
against the Council pursuant to the failure of a home builder
to
meet his or her obligations in terms of this Act.
(7)
If the Council has incurred costs or expenditure contemplated in
sub-section (1), a home builder who fails to meet his or
her
obligations in terms of section 13(2)(b)(i) shall, on demand by the
Council, reimburse the Council with all reasonable costs
or
expenditure incurred by the Council as a result of the failure of
the home builder.
(8)
If a home builder registered in terms of section 10(6)(b) fails to
meet his or her obligations in terms of section 13(2)(b)(i),
the
home builder having constructed a home enrolled with the Council in
terms of an agreement concluded pursuant to the provisions
of
section 10(7) shall be liable to perform the obligations of the
defaulting home builder in terms of section 13(2)(b)(i) or
to
reimburse the Council in respect of the costs or expenditure of the
Council, after having obtained judgment against the defaulting
home
builder, or after insolvency proceedings having been instituted
against the default home builder by any person, has been
unable to
obtain settlement of the Council’s claim against such
defaulting home builder.
[Sub-s.(8)
amended by s.4(b)(i) and (ii) of Act No.27 of 1999.]
(9)
If the Council has incurred costs or expenditure where a home
builder has failed to meet his or her obligations in terms of
section 13(2)(b)(i), the Council shall be entitled to institute any
action which the housing consumer or home builder may have
or would
have had in contract or in delict against any person for having
caused or contributed to the failure of the home builder
in respect
of his or her obligations in terms of section 13(2)(b)(i).
(10)
The provisions of this section shall apply, with the necessary
changes to any other fund established in terms of section
15(5).
[13]
See
section 1A of the Act which provides that the Act does not apply to
a person who uses his or her own labour to build a home
for his or
her occupation if the home is part of an approved PHP Project.
[14]
See
Geyser
v Msunduzi Municipality
2003 (3) BCLR 235
AT 249I – 250B
[15]
2014
(4) SA 474
(CC) paragraphs 29 – 37
.
[16]
See
Hubbard v Cool Ideas 1186 CC
2013 (5) SA 112
(SCA) para [2] at 114I
[17]
Paragraph
[33]
[18]
See
s.10(3)(a)