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