THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable

Case No: 780/2018 and 784/2018

In the matter between:
NATIONAL HOME BUILDERS’
REGISTRATION COUNCIL                                        FIRST APPELLANT

MINISTER OF HUMAN SETTLEMENTS             SECOND APPELLANT
and
XANTHA PROPERTIES 18 (PTY) LTD                                RESPONDENT

Neutral citation:  National Home Builders’ Registration Council & another v
Xantha Properties 18 (Pty) Ltd (780/2018 and 784/2018) [2019] ZASCA 96
(21 June 2019)
Coram:
Leach, Saldulker and Van der Merwe JJA and Gorven and Weiner
AJJA
Heard:
27 May 2019

Delivered: 21 June 2019

Summary: Housing – Housing Consumers Protection Measures Act 95 of
1998 – whether s 14(1) of that Act applies to homes being built with the
intention that they be let and not sold.

________________________________________________________________
ORDER
________________________________________________________________

On appeal from: Western Cape Division of the High Court, Cape Town
(Nuku J sitting as court of first instance):

The appeal is upheld, with costs, including the costs of two counsel.
The order of the court a quo is set aside and substituted with the
following:
‘The application is dismissed with costs, including the costs of two counsel.’

________________________________________________________________
JUDGMENT
________________________________________________________________
Leach JA (Saldulker and Van der Merwe JJA and Gorven and Weiner
AJJA concurring)

[1] The issue in this case is whether the respondent, who is registered as a
‘home builder’ as defined in s 1 of the Housing Consumers Protection Measures
Act 95 of 1998 (the Act), is obliged to comply with the provisions of s 14(1) of
the Act in respect of homes being built solely for the purpose of being let. The
Western Cape Division of the High Court, Cape Town decided that the section
was of no application in those circumstances and issued an order declaring that
to be the case. The appeal against that order is with the leave of the court a quo.

[2] The first appellant (the Council) is the National Home Builders’
Registration Council established in terms of s 2 of the Act. It is composed of at

least seven members appointed by the second appellant, the Minister of Human
Settlements, who is obliged to ensure that it consists of persons who are
‘representative of the interests’ of various parties in the home building
industry.1 Section 3 of the Act provides the objectives of the Council. Those
include the regulation of the home building industry;2 the establishment and
promotion of ethical and technical standards;3 and the improvement of structural
quality in the interest of the industry.4

[3] The respondent, Xantha Properties 18 (Pty) Ltd, carries on business in the
building construction industry. It embarked upon the construction of a property
development in Wynberg, Cape Town consisting of shops and 223 residential
apartments. It averred that it had no intention of selling these apartments or
developing them in terms of a sectional title scheme but intended to rent them to
tenants. In these circumstances, the respondent disputed being obliged to enrol
the project with the first appellant or to pay the prescribed enrolment fee as
prescribed by s 14(1) of the Act, to which provisions I shall return in due
course.

[4] The respondent took the matter up with the Council, arguing that the Act
was intended to provide a form of housing insurance in favour of housing
consumers against errant home builders. It contended that where, as in the
present case, there was no third party but the home builder was, itself, the
effective end user of the apartments which it intended to rent out, it was absurd
to expect it to insure against itself. The Council did not agree and advised the
respondent to enrol the apartments. This it ultimately did, and paid the assessed
enrolment fee (a sum in excess of R1.5 million) but did so under protest. It then

1 Section 4 of the Housing Consumers Protection Measures Act 95 of 1998 (the Act).
2 Section 3(b) of the Act.
3 Section 3(d) of the Act.
4 Section 3(e) of the Act.

applied to the high court for an order declaring that s 14(1) did not require a
home builder to enrol houses being constructed solely for the purpose of being
let. As mentioned at the outset, that court decided in its favour.

[5] In considering the interpretation of the Act, it is necessary to remind
oneself, as this court recently pointed out in Adendorf,5 that the Act is
consumer-protection
legislation
designed
to
offer
protection
against
incompetent builders and the construction of homes having structural defects,
and that to achieve those aims it requires registration of home builders and the
enrolment of the homes they build. Bearing that in mind, I turn to the relevant
provisions of the Act.

[6] As a starting point, a ‘home’ is defined in s 1 of the Act as meaning
‘. . . any dwelling unit constructed or to be constructed by a home builder, after the
commencement of this Act, for residential purposes or partially for residential purposes,
including any structure prescribed by the Minister for the purposes of this definition or for the
purposes of any specific provision of this Act, but does not include any category of dwelling
unit prescribed by the Minister.’
(I must immediately mention that the respondent accepts that apartments being
constructed by the respondent fall within this definition as read with the
regulations as they currently stand, so that such issue need not be debated
further for purposes of this judgment.)

[7] Crucial to the decision in this case are the further definitions in s 1 of
‘home builder’ and ‘business of a home builder’. The two are inter-related. A
home builder is defined, inter alia, as meaning ‘a person who carries on the
business of a home builder’ whilst such business is defined as meaning:
‘(a)   to construct or to undertake to construct a home or to cause a home to be constructed for
any person;

5 National Home Builders Registration Council v Adendorf & others [2019] ZASCA 20 para 6.

(b)   to construct a home for the purposes of sale, leasing, renting out or otherwise disposing
of such a home;
(c)   to sell or to otherwise dispose of a home contemplated in paragraph (a) or (b) as a
principal; or
(d)   to conduct any other activity that may be prescribed by the Minister for the purposes of
this definition.’
The words ‘leasing, renting out’ contained in sub-para (b) of this definition
were not included in the Act as originally passed but were inserted with effect
from 9 April 2008 by way of the Housing Consumers Protection Measures
Amendment Act 17 of 2007 (the Amendment Act). I mention this as it forms
part of the respondent’s argument, as shall become apparent in due course.

[8] Section 10 of the Act goes on to require ‘home builders’ to be registered
as such, and prescribes that no person may carry on the business of a home
builder unless so registered. Section 10(3) further provides that the council may
only register a home builder if satisfied that the person seeking registration
meets various criteria, will comply with a home builder’s obligations in terms of
the Act, and has the appropriate financial, technical, construction and
management capacity to do so.6

[9] Importantly, s 14(1) of the Act, which lies at the heart of this appeal,
provides:
‘A home builder shall not commence the construction of a home falling within any category
of home that may be prescribed by the Minister for the purposes of this section unless-
(a)
the home builder has submitted the prescribed documents, information and fee to the
Council in the prescribed manner;
(b)
the Council has accepted the submission contemplated in paragraph (a) and has
entered it in the records of the Council; and
(c)
the Council has issued a certificate of proof of enrolment in the prescribed form and
manner to the home builder.’

6 Section 10(3).

[10] At first blush these provisions, as they currently stand, therefore provide
for a person who wishes to construct a home for the purposes of ‘leasing,
renting out’ and thereby carry on the ‘business of a home builder’ as defined, to
first register as a home builder under s 10 – after satisfying the council that it
meets the necessary requirements – and then, before commencing construction,
to enrol the home with the Council, pay the prescribed fee and otherwise fulfil
the requirements laid down in s 14(1) – which will entail showing that the
proposed building specification will not be sub-standard and will meet the
necessary specifications.

[11] The respondent, however, contends that this is not so, and that despite the
definition of ‘business of a home builder’ containing specific reference to
homes constructed for the purpose of being let, s 14(1) has no application in
such a case. Its argument as to why the Act should not be afforded what appears
to be its clear meaning, is somewhat convoluted. It commences with the
definition in s 1 of the Act of ‘housing consumer’ as meaning ‘a person who is
in the process of acquiring or has acquired a home and includes such person’s
successor in title’. In the light of this, it was argued that the word ‘acquire’ used
in this definition is generally understood as buying or obtaining ownership of
something which, in the context of the Act, would mean obtaining ownership of
a home. Therefore, a person who rents a property without becoming its owner
cannot be said to have ‘acquired’ the property and, by definition, can thus not be
a ‘housing consumer’. Accordingly, so the argument went, as s 14(1) is in
chapter 3 of the Act which is headed ‘PROTECTION OF HOUSING
CONSUMERS’, and as housing consumers are limited to persons who either
purchase homes or have homes built for them, the Act and its regulatory scheme
were not intended to apply to properties being constructed for the purpose of
rental; and s 14(1) thus did not apply in such a case.

[12] Although this reasoning appears to have been accepted by the court a
quo, it seems to me to stumble at the first hurdle. The Concise Oxford English
Dictionary7 does not restrict the word ‘acquire’ to the concept of becoming an
owner. Instead it provides its primary meaning to be to ‘come to possess
(something)’. The suggestion that persons who have rented their places of
permanent residence have not ‘acquired a home’ as that phrase is understood in
common parlance, is untenable. It is also significant that even prior to the
amendment brought about by the Amendment Act in April 2008, the business of
a home builder was by definition not restricted solely to the construction of a
home for the purposes of sale but also for ‘otherwise disposing of such a home’.

[13] Be that as it may, it is in my view unnecessary to decide whether the
definition of housing consumer embraces a tenant. For present purposes, but
without deciding the issue, I intend to accept in favour of the respondent that it
does not. But for the reasons that follow, and even if a tenant is not to be
regarded as a housing consumer, the respondent cannot succeed.

[14] Prior to the amendment, the construction of homes for the purposes of
leasing or renting out did not fall within the definition of ‘the business of a
home builder’. A person building such a home was accordingly neither a home
builder nor carrying on the business of a home builder, and was therefore not
obliged to be registered under s 10 and did not have to comply with s 14(1)
before commencing construction. However, as the definition of business of a
home builder was amended by the Amendment Act to specifically include
homes constructed for the purposes of leasing or renting out, thereafter a builder
constructing a house for those purposes also became obliged to register as a
home builder under s 10. This the respondent conceded, but argued that the
relevant definitions and regulations as they were at the time of their original

7 The Concise Oxford English Dictionary 12 ed (2011) at 11.

enactment continued to apply in respect of s 14(1). This would mean that a
home builder constructing a home for purposes of rental would be obliged to
register as a home builder but not to enrol the home under s 14(1), despite the
obvious intention of the legislature having been to broaden the scope of
operation of the Act to embrace homes built for the purposes of sale or rental.
As s 1 provides for the amended definition to apply throughout the Act ‘save
where the context indicates otherwise’, this would require a clear indication
from the legislature that such a deviation was necessary in respect of s 14(1). As
appears from what follows the contrary is the case.

[15] In attempting to support that this somewhat incongruous situation was
indeed what the lawgiver had intended, the respondent relied on the argument
which it had put forward to the council at the outset of their dispute; namely that
the Act was intended to provide a form of insurance in favour of housing
consumers and that it was absurd to expect it to insure against itself. It also
argued that, in cases of lease, tenants would have the normal rights of a tenant
faced with defective premises; that the protection to be afforded by s 14(1) was
consequently unnecessary in respect of property to be leased; that this
distinguishes such property from property to be sold; and that this was a clear
indication that the legislature would not have intended the Act to be applied to
properties being built for purposes of being let.

[16] This latter argument may be swiftly disposed of. A purchaser also has
contractual remedies in respect of latent defects or misrepresentations in respect
of property it purchases, and the fact that they may be different to those of a
lessee is neither here nor there. But the purpose of the Act is designed to attempt
to avoid contractual disputes, either in sale or lease, having to be resorted to by
ensuring that homes are built which comply with the Council’s standards and
specifications. The fact that a lessee may have contractual remedies is no reason

to think that the legislature must have intended not to afford the Act’s protection
to homes which were constructed for rental purposes.

[17] In any event, legislation falls to be interpreted by having regard to the
words used by the legislature, and not by taking account of what a party feels
the legislature should have said. It simply does not lie in the mouth of the
respondent to argue that the legislature did not intend the Act as amended to
apply to homes being built for ‘purposes . . . of leasing, renting out’ when that is
exactly what the definition provides shall be the business of a home builder.
Moreover the fact that s 14 is situated in a chapter which bears a heading
relating to ‘housing consumers’ acquired before the Act was amended, is no
reason for its provisions not to apply to the amended definition.

[18] In any event, the underlying purpose of the Act clearly trumps the
respondent’s argument. The Act was designed to afford adequate housing for
residents by ensuring that their homes were constructed by competent builders
to approved standards. These objectives were sought to be achieved, first, by s
10 (to ensure that homes are constructed by persons having the necessary
competence) and, secondly, by s 14 (to enrol such homes and ensure that they
are built to a prescribed level of structural and technical quality). These
provisions are supplemented by s 19 of the Act which, inter alia, provides:
‘Inspectors
(1)
The Council shall for the purposes of this Act-
(a)
appoint inspectors in terms of section 6; and
(b)
enter into agreements or liaise with local government bodies or other bodies or
persons for the inspection of homes.
(2)
An inspector may, for the purpose of inspecting a home during its construction, enter
and inspect the premises constituting the site of the construction at any reasonable time.
(3)
For the purposes of an investigation, an inspector may-

(a)
require the production of the drawings and specifications of a home or any part of a
home, including plans approved by the local authority and plans and specifications prescribed
in the Rules or the Home Building Manual, for inspection from the home builder and may
require information from any person concerning any matter related to a home or any part of a
home;
(b)   be accompanied by any person employed or appointed by the Council who has special or
expert knowledge of any matter in relation to a home or part of a home; and
(c)   alone or in conjunction with any other person possessing special or expert knowledge,
make any examination, test or enquiry that may be necessary to ensure compliance with the
Home Building Manual.’
Without homes being enrolled under s 14, inspectors would be unable to
identify them or to fulfil their duties or obligations under this section. In itself
this is a clear indication that it was intended that all homes were to be enrolled.

[19] In the light of this, and when one remembers that the fundamental
underlying premise of the Act is to guard against builders constructing sub-
standard homes and that the definition of a home builder’s business was
amended to specifically include building homes for purposes of being let or
rented out, I can think of no reason why the legislature would have intended to
treat homes built for leasing purposes any differently from those constructed for
sale. There is certainly nothing in the structure of the Act which indicates that to
be the case.

[20] On the contrary, there is every reason to think that the legislature would
have wished homes built for sale to be treated the same way as homes built for
lease. Circumstances often change, and it takes little imagination to envisage
how a home being constructed for rental purposes might end up being sold
rather than let. And requiring both categories of home to be enrolled would not
only avoid a sub-standard home being sold in those circumstances, but would
also serve to mitigate against the abuse of unscrupulous developers building

inferior homes allegedly for leasing purposes, then professing to change their
minds and selling them.

[21] Taking all of the above into account, it is clear to me that s 14(1) does
apply to homes being built for lease and rental purposes. In these circumstances
the court a quo incorrectly reached the contrary conclusion and ought not to
have issued the order it did.

[22] In the alternative to the declaratory order that was granted, the respondent
sought an order in the court a quo that should it be held that s 14 did require the
enrolment of a proposed construction of a home being built solely for the
purposes of leasing or renting out, various sections of the Act and the
regulations promulgated thereunder should be declared ‘unconstitutional,
unlawful and invalid to the extent that they compel such enrolment’. Counsel
for the respondent, in their heads of argument filed in this court, persisted in this
argument. They contended that those provisions were irrational, and in that
respect again relied on the contention that it is irrational to expect a home
builder in the respondent’s position to insure itself against itself.

[23] This argument was not advanced with any enthusiasm in this court,
understandably as in my view it is devoid of merit. Whilst it is so that enrolment
carries with it the necessity to pay amounts that are levied, those sums are used
to fund the activities of the Council and to ensure that all homes, whether
constructed for resale or for rental, are up to scratch. This will include the costs
which will be incurred by inspectors doing their duty to ensure this is the case. I
see nothing arbitrary, irrational or discriminatory in the legislation. The
respondent’s argument in that regard must also be rejected.

[24] For these reasons the respondent’s application ought to have been
dismissed in the court a quo and the appeal must succeed.

[25] In civil litigation, the general rule is that costs should follow the result.
Counsel for the respondent however invoked the so-called principle in
Biowatch8 in arguing that should the appeal be upheld, the respondent had
sought a declaratory order to interpret statutory provisions relevant to its
constitutional right to freely conduct its trade and occupation enshrined in s 22
of the Constitution, and should therefore not have to pay the appellants’ costs in
both courts.

[26] The general rule laid down in Biowatch applies in constitutional matters
involving organs of state, and operates to shield unsuccessful litigants from
paying costs to the State in order ‘to prevent the chilling effect that adverse
costs orders might have on litigants seeking to assert constitutional rights’.9 But
as has previously been stressed, the mere labelling of litigation as
‘constitutional’ is insufficient. For the rule to apply the issues should be genuine
and substantive and raise constitutional considerations relevant to their
adjudication. The rule thus does not mean ‘risk-free constitutional litigation’10
and a court in the exercise of its discretion must consider the scope and
character of the litigation.

[27] In the present case, the respondent sought a declaratory order freeing it
from the obligation to pay a substantial sum of money. The litigation has, in
truth, been nothing more than a commercial dispute in which the respondent
sought to evade the clear provisions of the Act. Constitutional considerations

8 Biowatch Trust v Registrar, Genetic Resources, & others [2009] ZACC 14; 2009 (6) SA 232 (CC); 2009 (10)
BCLR 1014 (CC).
9 Harrielall v University of KwaZulu-Natal [2017] ZACC 38; 2018 (1) BCLR 12 (CC) para 11.
10 Lawyers for Human Rights v Minister in the Presidency & others [2016] ZACC 45; 2017 (1) SA 645 (CC)
para 18.

played no part and I see no reason for the respondent not to bear the costs of the
proceedings.

[28] It is ordered as follows:
The appeal is upheld, with costs, including the costs of two counsel.
The order of the court a quo is set aside and substituted with the
following:
‘The application is dismissed with costs, including the costs of two counsel.’

_______________
L E Leach
Judge of Appeal

Appearances

For the First Appellant:
A G Sawma SC (with him N T Mayosi)
Instructed by:

Werksmans Attorneys, Cape Town

Phatshoane Henney Attorneys, Bloemfontein

For the Second Appellant:
T Madima SC (with him R Matsala)
Instructed by:

The State Attorney, Cape Town

The State Attorney, Bloemfontein

For the Respondent:

J G Dickerson SC (with him P S van Zyl)
Instructed by:

Smith Tabata Buchanan Boyes, Cape Town

E G Cooper Majiedt Inc, Bloemfontein