A grist for the mill: construction contracts – a consumer’s perspective

In our current economic and social climate nothing comes as a surprise anymore and most of us assume the worst when entering into a contract, especially a construction contract.

The aim of this article is to enlighten consumers as to their rights when a builder is not registered with The National Home Builders Registration Council (NHBRC).

An Act not known to all, the Housing Consumer Protection Measures Act 95 of 1998 (HCPMA), deals with exactly this issue. In terms section 10 of the act, a builder and its sub-contractor must be registered with the NHBRC as a builder in order to carry on business as such and also to be considered for any contract having the outcome of constructing a home.

The 2014 Constitutional Court decision in the case of Cool Ideas 11886 CC v Hubbard and Another ((CCT/99/13) [2014] ZACC 16 2014(4) SA) sets out the consumer’s remedy in respect hereof.

In this case, Mrs. Hubbard entered into a construction agreement with Cool Ideas to build a house. Cool Ideas appointed a sub-contractor and construction commenced. The contract provided for arbitration in the event of a dispute and accordingly Mrs. Hubbard referred her dispute, pertaining to a claim for damages, for arbitration. Cool Ideas met her claim with a counterclaim in respect of outstanding monies owed and a ruling was subsequently made in favor of Cool Ideas.

However, the saying “hell hath no fury like a woman scorned” was in fact just what followed. Mrs. Hubbard fought the matter all the way to the Constitutional Court, where the Court clarified the effect of section 10 of the HCPMA.
The Court held that the purpose of the act is to make provision for the protection of housing consumers, as also set out in the preamble of the act. Accordingly, the Court found that in the event that a builder or contractor is not registered with the NHBRC, as envisaged in section 10 of the HCPMA, the builder and/or contractor will not be entitled by law to proceed with any claim resulting from the contract with the consumer. The contract is in effect not void, however, it is only enforceable by the consumer and not by any contractor or sub-contractor thereto. The quality and quantity of the work completed by the contractor is thus irrelevant.

In conclusion, it is vital for consumers to thoroughly acquaint themselves with the compliance status of the appointed builder or contractor vis-à-vis the provisions of the HCPMA and the NHBRC. It may be that, if a consumer willingly and knowingly enters into a contract with a builder and/or contractor that he or she knows is not compliant when they ought to be, a court of law may apply the maxim in pari delicto potior est condition defendentis (also known as the principle of Unclean Hands) as against the consumer.

Prepared by:

Attorney Jónanke van Zyl
Associate at
Jurgens Bekker Attorneys
Pretoria Branch


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