Concourt to hear building contract case

The Constitutional Court will hear the case after the firm applied for leave to appeal a ruling by the Supreme Court of Appeal. (Madelene Cronje, M&G)

The Constitutional Court will hear the case after the firm applied for leave to appeal a ruling by the Supreme Court of Appeal. (Madelene Cronje, M&G)

Argument about whether an arbitral award should be enforced on a client who refuses to pay after committing to a contractual agreement will be heard at the Constitutional Court on Wednesday.

Property developer Cool Ideas brought an application for leave to appeal against the majority judgment and order of the Supreme Court of Appeal (SCA), the Constitutional Court said on Tuesday.

In 2006, Cool Ideas entered into a building contract with Anne Hubbard. The property developer enlisted the services of Velvori Construction CC, a building construction company that was registered as a home builder in terms of section 10 of the Housing Consumers Protection Measures Act (Housing Act), the court said. Work on the buildings was practically completed in October 2008 when Hubbard took issue with the quality of the work and refused to make the final payment, the court said.

"She instituted arbitration proceedings in terms of the building contract, claiming the cost of remedial works."

Hubbard's claims were dismissed by the arbitrator following Cool Ideas' defence and counter-claim for the balance of the contract price. Hubbard then failed to comply with the arbitral award.

Registered company
Cool Ideas approached the South Gauteng High Court (high court in Johannesburg) for an order enforcing the arbitral award. Hubbard opposed the application, contending that Cool Ideas was not registered as a home builder in terms of the Housing Act.

Subsequent to Hubbarb's contention, Cool Ideas registered as a home builder and argued that in any event at the time of executing the building works, it had done so in co-operation with Velvori Construction, which was a registered home builder. The high court then granted the application and made the arbitral award an order of the court.

Hubbard then approached the Supreme Court of Appeal, which upheld her appeal, stating that the purpose of the Housing Act was to protect consumers. Both Cool Ideas and Velvori Construction were required to be registered before taking on the building project.

"The majority [at the SCA] also held that enforcing the arbitral award would disregard what is clearly prohibited in law ... The dissenting judgment argued that Cool Ideas did not intentionally fail to register as a home builder and that not enforcing the award would be unjust," the court said. This led to the application to the Constitutional Court.

Hubbard was expected to argue that leave to appeal should be refused because the constitutional issues were being argued for the first time in the Constitutional Court, which was prejudicial. She would further argue that a court's enforcement of this arbitral award would be problematic because, if Cool Ideas were to receive payment of the award, this would constitute a criminal offence in terms of the Housing Act, the court said. – Sapa

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