During 2013, an NHBRC inspector discovered that the trustees of Mike's Trust were constructing a sectional title housing development at Portion 3 of Erf 799, Pietersburg, Polokwane, for the benefit of the Trust. The Trust initially registered as a 'home builder' in terms of section 10 of the Housing Consumers Protection Measures Act 95 of 1998 for one year (24 July 2013 to 24 July 2014), but failed to renew its registration. The Trust continued constructing new homes without registration. Despite being served with notices of non-compliance by the NHBRC, the Trust refused to comply. The NHBRC launched an application against the trustees (first to fourth respondents) in the Limpopo Division of the High Court, Polokwane, seeking declaratory and interdictory relief. The High Court (Muller J) dismissed the application, finding 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. The NHBRC appealed with leave of the court below.
The appeal was upheld with no order as to costs. The order of the High Court was set aside and replaced with: (a) A declaration that trusts are home builders as envisaged in sections 1 and 10(1) of the Housing Consumers Protection Measures Act 95 of 1998; (b) A declaration that at all material times the first to fourth respondents in their capacities as trustees of Mike's Trust carried on the business of a home builder in terms of the Act; (c) No order as to costs. The interdictory relief originally sought was not pursued as construction had been completed.
A trust is included as a 'person' for purposes of section 10(1) of the Housing Consumers Protection Measures Act 95 of 1998, and must therefore register as a home builder when carrying on the business of constructing homes. This conclusion flows from: (1) purposive interpretation of the Act, which is consumer-protection legislation intended to protect housing consumers and regulate the home building industry; (2) the express references to 'trustees' and 'trusts' in sections 9 and 21 of the Act, which demonstrate clear legislative intention that trusts fall within the ambit of the Act; (3) the principle that statutory provisions should not be interpreted to produce arbitrary or unjust consequences; and (4) the fact that the Act is intended to apply to any person, entity or institution in the business of building homes for residential purposes, and there is no cogent reason to exclude trusts from this requirement.
The court noted that 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 court also observed that two previous unreported Gauteng Division judgments (National Home Builders Registration Council v Botes NO & others [2008] ZAGPHC 301 and National Home Builders Registration Council v Van Rooyen & others [2006] ZAGPHC 170) which held that trusts are not covered by the Act were incorrectly decided. The court commented that excluding trusts would allow construction to be conducted through a trust as an alter ego rather than other entities like companies, creating an arbitrary loophole inconsistent with the Act's purposes. The court noted that since the construction had been completed by the time of the appeal, the appellant did not persist in seeking interdictory relief.
This judgment definitively establishes that trusts engaged in home building activities fall within the scope of the Housing Consumers Protection Measures Act 95 of 1998 and must register as home builders. The decision reinforces the consumer protection objectives of the Act by preventing entities from circumventing registration requirements by operating through trust structures. It affirms the principle of purposive statutory interpretation in consumer protection legislation, ensuring that the legislative purpose is not defeated by technical arguments about legal personality. The judgment clarifies that the express references to 'trustees' and 'trusts' in sections 9 and 21 of the Act demonstrate legislative intention to include trusts in the definition of 'person' for purposes of section 10(1). It overrules two previous Gauteng High Court decisions that had reached the opposite conclusion. The case is significant for housing law, consumer protection, and administrative regulation of the home building industry in South Africa.
Explore 2 related cases • Click to navigate