Johannesburg - The Constitutional Court will rule on Thursday on whether an arbitral award should be enforced on a client who refuses to pay after committing to a contractual agreement.

Property developer Cool Ideas brought an application for leave to appeal against an order of the Supreme Court of Appeal (SCA).

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 which was registered as a home builder in terms of section 10 of the Housing Consumers Protection Measures Act (Housing Act).

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.

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.

Cool Ideas approached the 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 Hubbard'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 SCA, 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 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 argued 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 further argued 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.

Sapa