Is your home builder registered in terms of the Housing Consumers Protection Measures Act 95 of 1998?

The overall purpose of the Housing Consumers Protection Measures Act 95 of 1998 (“the Act“), and its core function, is to protect the public by requiring the registration of home builders.  This will ensure that consumers are not exposed to unscrupulous and incompetent home builders, building contractors and developers or to the potential risk of defective housing.  It is intended to cover all home builders.

The National Home Builders Registration Council (“the NHBRC“) is an organ of State established in terms of section 2 of the Act to regulate the home building industry.

During 2013 an NHBRC inspector, whilst conducting a routine inspection, discovered that the trustees of the Mike’s Trust (“the Trust“) were constructing a Sectional Title housing development on the property of the Trust, for the benefit of the Trust.

Initially the Trust was registered as a ‘home builder’ in terms of section 10 of the Act, for a period of one year,  but later failed  to renew its registration.  The Trust continued with the construction of new homes on the property, whilst not registered as a home builder.  The Trust was served with notices of non-compliance by the NHBRC, but refused to comply. Consequently the NHBRC launched an application against the trustees, claiming that the Trust is in breach of the Act.  The Trust’s primary contention was that a trust is not “a person” and therefore it is not required to register as a home builder in terms of the Act.

The High Court (Muller J) dismissed the application and found 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 as a home builder in terms of the Act.  The NHBRC took the decision on appeal.

The Supreme Court of Appeal in National Home Builders Registration Council v Michiel Wessel Adendorff & others (406/2018/) [2019] ZASCA 20 (26 March 2019), had to decide not whether the Trust should be afforded juristic personality (it is well established that it is not a person) but whether a trust is included in the ambit of the Act to which registration as a home builder applies.  Section 10(1) of the Act says that no ‘person’ shall carry on the business of a home builder unless that person is registered as a home builder.  Section 10(1) makes no reference to a trust.  Sections 9 and 21 of the Act, however refer to trusts and trustees.

The SCA came to the conclusion that a ‘trust’ is to be included as ‘a person’ in section 10(1) of the Act for purposes of registration and enrolment.

Even if a person is constructing a residential dwelling for his or her own occupation, the Act nevertheless applies unless and until such person is exempted.

The appeal succeeded, and as this appeal is in the public interest, the appellant sought no order as to costs.

By

Lizelle Marx

lizelle@dyason.co.za

Contingency Fee Agreement Explained

  • In terms of the Contingency Fees Act 66 of 1997 (“the Act”) a client can choose to enter into a Contingency Fee Agreement with his/her attorney and/or advocate.
  • Should the client not want to enter into a Contingency Fee Agreement, his/her attorney will have him/her sign a Fee Agreement in terms of which the client will be liable to pay the attorney’s attorney and own client fees (“normal fees”). Normal fees are those fees normally charged by an attorney/advocate to do legal work for a client.  The client may finance his/her litigation themselves or approach Legal Aid South Africa if he/she cannot afford litigation (only clients who qualify for legal aid may apply).
  • In the case of a Contingency Fee Agreement: if the client wins his case, the attorney will be entitled to a portion of the amount that the client has won.
  • In terms of the Act, a contingency fee will be 25% of the amount awarded to a client in a court case, if the client is successful in his/her case OR double the attorney’s normal fees, whichever is the LESSER.
  • For example: If the Court awards the client R100 000, and the client and attorney did NOT enter into a Contingency Fee Agreement, the attorney will deliver his/her normal bill for work done (attorney and own client bill). The attorney’s fee will depend on what work he/she has performed and the client will be charged accordingly.  However, if a Contingency Fee Agreement was entered into, the attorney’s fee will be R25 000 or double the attorney’s normal fee, whichever is the lesser.  The attorney’s fee may not be more than R25 000 (25% of the R100 000), but it may be less than R25 000 if double the attorney’s normal fee is less than R25 000.  The 25% is merely set as the maximum the attorney can charge in a Contingency Fee Agreement.
  • The basis of the Contingency Fee Agreement is a “no-win-no-fee” basis. The attorney will only be entitled to fees for services rendered if the matter is successful (or partially successful) upon conclusion.  Successful means if the responsible party pays any compensation to the client, even only a percentage (partially successful).  If the matter is not successful (no compensation paid to client), the attorney will not be paid and will then not be able to give the client a bill.
  • Should the client lose the case, he/she does not have to pay his/her own attorney any legal fees, however, the client may get a court order against him/her to pay the taxed legal costs on a party and party basis of the winning party.
  • The client may withdraw from the Contingency Fee Agreement within a period of 14 days, calculated from the date of signing the agreement, by giving notice to the attorney in writing. In this instance no fees will be payable to the attorney.
  • Should the client terminate the Contingency Fee Agreement for any reason before its conclusion (after the period of 14 days from signature of the Agreement), the client will be liable to pay the attorney’s costs and expenses to date of withdrawal. The bill of costs will be drafted and taxed in accordance with the attorney’s normal fees.
  • The Contingency Fee Agreement must be in writing and signed by both parties and has to be concluded when the attorney takes on the matter, not later.
  • No contingency fee agreement may be entered into in respect of professional services to be rendered in any criminal proceedings or any proceedings in respect of any family law matter.

By

Lizelle Marx

lizelle@dyason.co.za