Cool Ideas 1186 CC v Hubbard and Another

• Jurisdiction: South Africa
• Citation: 2014 (4) SA 474 (CC)

Cool Ideas 1186 CC v Hubbard and Another
2014 (4) SA 474 (CC)

2014 (4) SA p474

Citation	2014 (4) SA 474 (CC)
Case No	CCT 99/13; [2014] ZACC 16
Court	Constitutional Court
Judge	Moseneke ACJ, Skweyiya ADCJ, Cameron J, Dambuza AJ, Froneman J, Jafta J, Khampepe J, Madlanga J, Majiedt AJ, Van Der Westhuizen J and Zondo J
Heard	February 5, 2014
Judgment	June 5, 2014
Counsel	PF Louw SC (with HH Cowley) for the applicant.; W van der Linde SC (with X Stylianou) for the first respondent.; No appearance for the second respondent (the Minister of Justice and Constitutional Development).

Flynote : Sleutelwoorde D

E Housing — Consumer protection — Unregistered builder — Contract between consumer (home buyer) and unregistered builder — Court refusing to enforce arbitral award directing consumer to pay balance of contract price — Housing Consumers Protection Measures Act 95 of 1998, s 10.

Arbitration — Award — Enforcement — Award directed at performance of act prohibited by statute unenforceable — Principle of party autonomy will yield to principle of legality where enforcement of award would constitute F criminal offence.

Constitutional law — Constitution — Foundational values — Principle of legality — Fairness may not be invoked to circumvent plain meaning of statute which is rationally connected to legitimate purpose.

Headnote : Kopnota

G This case illustrates the following principles:

•

Fairness may not be invoked to circumvent the plain meaning of a statute which is rationally connected to a legitimate purpose.

•

Courts would rarely enforce a private arbitration contrary to a plain statutory provision, and never where enforcement would constitute a criminal offence.

•

H An unregistered home builder may be deprived of any claim for payment.

Ms Hubbard appointed Cool Ideas to build her a house for R2 695 600. Cool Ideas was not, however, registered as a home builder under the Housing Consumers Protection Measures Act 95 of 1998, s 10(1)(b) of which provided that only registered builders were entitled to payment. Hubbard I discovered structural defects, refused to make final payment, and instituted arbitration proceedings for the costs of remedial work. Cool Ideas counterclaimed for the balance of the contract price, approximately R550 000. The arbitrator found in favour of Cool Ideas but Hubbard refused to comply with his award. Cool Ideas asked the high court for an order enforcing the award. Hubbard opposed the application on the ground that Cool Ideas was unregistered and therefore barred from receiving payment. J Cool Ideas argued that this would be unfair, that the actual construction

2014 (4) SA p475

was in any event done by a registered subcontractor, and that it had itself A since registered. The high court granted the application, but Hubbard's appeal to the SCA was upheld.

In an application for leave to appeal to the Constitutional Court the following issues were raised for determination: the proper interpretation of s 10(1)(b) of the Act; whether Cool Ideas would be arbitrarily deprived of its property if it were barred from enforcing a claim for unjustified enrichment; whether B the building contract remained valid; whether equity considerations applied; and whether a refusal to make the arbitral award an order of court would constitute a denial of the right of access to court.

Held (per Majiedt AJ, with Moseneke ACJ, Skweyiya ADCJ, Khampepe J and Madlanga J concurring): The appeal would be dismissed on the following grounds: C

•

Section 10(1)(b) did not allow registration to take place during or at the end of construction; it was required at the beginning. Nor was Cool Ideas' non-registration cured by the fact that a subcontractor did the actual work. (Paragraphs [33] – [37] at 486B – 487A.)

•

The deprivation in s 10(1)(b) was aimed at a legitimate statutory D purpose, namely the protection of home consumers against unscrupulous or unskilled builders. There was a rational, proportional connection between the penalty and the purpose, and hence no arbitrariness. (Paragraphs [38] – [44] at 487B – 488H.)

•

A distinction had to be drawn between the arbitration agreement and the underlying building contract. The latter remained valid in order to E protect the consumer in respect of what was already erected and the home builder for what it had already received. (Paragraphs [45] – [51] at 488H – 491H.)

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Fairness could not be invoked to circumvent the plain meaning of s 10(1)(b), regardless of how much work had been done. (Paragraph [52] at 491H – 492C.)

•

Arbitral awards that sanctioned illegalities or subverted the purpose of F statutes were unenforceable. But this did not mean that courts would never enforce awards that were at odds with statutory prohibitions: it depended on public policy. In the present case the award violated a statutory prohibition backed by a criminal sanction, and was therefore contrary to public policy and unenforceable. (Paragraphs [53] – [62] at 492D – 495C.) G

In a dissenting judgment Froneman J (Cameron J, Dambuza J and Van der Westhuizen J concurring) held that the Act had to be interpreted in a manner less damaging to the right to property.

Cases Considered

Annotations

Case law H

Southern Africa

Barclays National Bank Ltd v Thompson 1985 (3) SA 778 (A) ([1985] ZASCA 50): referred to

Barkhuizen v Napier 2007 (5) SA 323 (CC) (2007 (7) BCLR 691; [2007] ZACC 5): referred to I

City of Tshwane Metropolitan Municipality v RPM Bricks (Pty) Ltd 2008 (3) SA 1 (SCA) ([2007] ZASCA 28): referred to

CUSA v Tao Ying Metal Industries and Others 2009 (2) SA 204 (CC) (2009 (1) BCLR 1; [2009] 1 BLLR 1; (2008) 29 ILJ 2461; [2008] ZACC 15): referred to

Dadoo Ltd and Others v Krugersdorp Municipal Council 1920 AD 530: dictum at 543 applied I

2014 (4) SA p476

Dengetenge Holdings (Pty) Ltd v Southern Sphere Mining and Development Co Ltd and Others 2014 (3) BCLR 265 (CC) ([2013] ZACC 48) dictum in paras [84] – [86] applied A

Department of Land Affairs and Others v Goedgelegen Tropical Fruits (Pty) Ltd 2007 (6) SA 199 (CC) (2007 (10) BCLR 1027; [2007] ZACC 12): dictum in para [5] applied

Dhlamini en 'n Ander v Protea Assurance Co Ltd 1974 (4) SA 906 (A): referred to B

Ferris and Another v FirstRand Bank Ltd 2014 (3) SA 39 (CC) (2014 (3) BCLR 321; [2013] ZACC 46): referred to

First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service and Another; First National Bank of SA Ltd t/a Wesbank v Minister of Finance C 2002 (4) SA 768 (CC) (2002 (7) BCLR 702; [2002] ZACC 5): applied

First National Bank of Southern Africa Ltd v Perry NO and Others 2001 (3) SA 960 (SCA) ([2001] 3 All SA 331; 2001 CLR 196; [2001] ZASCA 37): referred to

Hoisain v Town Clerk, Wynberg 1916 AD 236: referred to

Hubbard v Cool Ideas 1186 CC 2013 (5) SA 112 (SCA) ([2013] ZASCA 71): confirmed on appeal D

Investigating Directorate: Serious Economic Offences and Others v Hyundai Motor Distributors (Pty) Ltd and Others: In re Hyundai Motor Distributors (Pty) Ltd and Others v Smit NO and Others 2001 (1) SA 545 (CC) (2000 (2) SACR 349; 2000 (10) BCLR 1079; [2000] ZACC 12): referred to

Jaga v Dönges NO and Another; Bhana v Dönges NO and Another 1950 (4) SA 653 (A): dictum at 664E – H applied E

Jajbhay v Cassim 1939 AD 537: referred to

KPMG Chartered Accountants (SA) v Securefin Ltd and Another 2009 (4) SA 399 (SCA) ([2009] 2 All SA 523; [2009] ZASCA 7): dictum in para [39] applied

Lufuno Mphaphuli & Associates (Pty) Ltd v Andrews and Another 2009 (4) SA 529 (CC) (2009 (6) BCLR 527; [2009] ZACC 6): discussed and distinguished F

Lupacchini NO and Another v Minister of Safety and Security 2010 (6) SA 457 (SCA) ([2010] ZASCA 108): referred to

Maharaj and Others v Rampersad 1964 (4) SA 638 (A): referred to

Matatiele Municipality and Others v President of the RSA and Others 2006 (5) SA 47 (CC) (2006 (5) BCLR 622; [2006] ZACC 2): referred to G

Messenger of the Magistrate's Court, Durban v Pillay 1952 (3) SA 678 (A): referred to

Metro Western Cape (Pty) Ltd v Ross 1986 (3) SA 181 (A): referred to

National and Overseas Distributors Corporation (Pty) Ltd v Potato Board 1958 (2) SA 473 (A): referred to

National Credit Regulator v Opperman and Others 2013 (2) SA 1 (CC) (2013 (2) BCLR 170; [2012] ZACC 29): compared H

Noragent (Edms) Bpk v De Wet 1985 (1) SA 267 (T): referred to

North East Finance (Pty) Ltd v Standard Bank of South Africa Ltd 2013 (5) SA 1 (SCA) ([2013] ZASCA 76): dictum in para [24] applied

Oilwell (Pty) Ltd v Protec International Ltd and Others 2011 (4) SA 394 (SCA) ([2011] ZASCA 29): referred to I

Potchefstroom se Stadsraad v Kotze 1960 (3) SA 616 (A): referred to

Pottie v Kotze 1954 (3) SA 719 (A): referred to

Reflect-All 1025 CC and Others v MEC for Public Transport, Roads and Works, Gauteng Provincial Government, and Another 2009 (6) SA 391 (CC) (2010 (1) BCLR 61; J [2009] ZACC 24): dictum in para [49] applied

2014 (4) SA p477

S v Zuma and Others 1995 (2) SA 642 (CC) (1995 (1) SACR 568; 1995 (4) BCLR 401; A [1995] ZACC 1): dictum in paras [13] – [14] applied

SATAWU and Another v Garvas and Others 2013 (1) SA 83 (CC) (2012 (8) BCLR 840; [2012] ZACC 13): dictum in para [37] applied

SATAWU and Others v Moloto and Another NNO 2012 (6) SA 249 (CC) (2012 (11) BCLR 1177; [2012] ZACC 19): referred to B

Schierhout v Minister of Justice 1926 AD 99: dictum at 109 applied

South African Forestry Co Ltd v York Timbers Ltd 2001 (4) SA 884 (T): referred to

Standard Bank v Estate Van Rhyn 1925 AD 266: referred to

Swart v Smuts 1971 (1) SA 819 (A): referred to

Taljaard v TL Botha Properties 2008 (6) SA 207 (SCA) ([2008] ZASCA 38): referred to C

The Master of the High Court (North Gauteng High Court, Pretoria) v Motala NO and Others 2012 (3)...