Property Practitioners Bill: adoption

Human Settlements, Water and Sanitation

20 November 2018
Chairperson: Ms N Mafu (ANC)
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Meeting Summary

The Committee met to consider and finalise the Property Practitioners Bill and consider the Report of the Bill.

The Department of Human Settlements took the Committee through the bill clause by clause.

The Committee:

  • required the establishment of a transformation fund to be provided for.
  • noted that clause 7 read confusingly as it related to two distinct aspects namely; experience in rural land reform and secondly experience in promotion and protection of consumers’ rights and interests. It proposed that both aspects be captured separately and distinctly.
  • wanted to know whether there was a set period for disqualification from the board for someone who has at any time been found to be in contravention of this Act or the Estate Agency Affairs Act; or there was space for rehabilitation and whether the provision provided for all misconduct as magnitude of infringement differed from case-to-case.
  • wanted clarity on the number of board members as subclause 7 (a) (1) provide that not less than nine but not more than 12 non-executive members made up the board
  • struggled to reconcile clause 6 with clauses 9 & 10 specifically to establish why there was a need for three years of exemption; was the period a minimum or maximum period? Would it not be proactive to leave the change in the status of the exemption, as facts were amicable to change? 

The Committee approved the Bill subject to the amendments agreed to. It also approved the Committee Report on the Bill.

Meeting report

The Chairperson welcomed members and legal advisors and asked that the Department of Human Settlements (DHS) to take the Committee through the B-list of the Property Practitioners Bil).

Property Practitioners Bill- B version
Long title
Mr Khwezi Ngwenya, Legal advisor, DHS, read the long title with the Committee.
The bill was to provide for the regulation of property practitioners, for transformation of the property practitioners sector; establishment of a transformation fund and establishment of a research centre on transformation.

The Chairperson asked for input from the Committee regarding the long title

The Committee agreed with the title as had been outlined.

Preamble
Mr Ngwenya continued reading with the Committee.

The Committee accepted the preamble as had been read.

Chapter 3
Objects of Act

Mr Ngwenya continued reading with the Committee through the B-list.

Mr M Bara (DA) asked why the establishment of a transformation fund had not been provided for in the objects.

Mr Ngwenya referred to subclause 3 (j): transformation of the property market to address the distortions, especially in the secondary property market. The objects chapter spoke broadly to include the transformation fund but if the Committee so desired; a provision specifying establishment of a transformation fund would be added by DHS. 

Mr Bara said he wanted the provision included to avoid leaving the law to interpretation.

Mr M Wolmarans (ANC) said although he agreed with the sentiments of Mr Bara, chapter 4 of the b-list spoke to the establishment of the Property Sector Transformation Fund.

Mr S Malatsi (DA) said that subclause 3 (k) and (j) were repeating but the phrasing was slightly different; although redundant all the same. He supported alteration of one of the clauses to specifically provide for the establishment of a transformation fund since objects of a law did not in themselves become standalone clauses all the time.

Mr Bara reiterated his view noting that South Africans (SAs) were learned people and very well could manipulate ambiguities in law.

The Chairperson instructed the drafters to include that provision to the satisfaction of the Committee.

The Committee adopted the objects of the bill.

Exemption from Act
Mr Malatsi said he was struggling to reconcile clause 6 with clauses 9 & 10 specifically to establish why there was a need for three years of exemption; was the period a minimum or maximum period? Would it not be proactive to leave the change in the status of the exemption, as facts were amicable to change?   

Adv Jan Tladi, Technical Legal Analyst, Estate Agency Affairs Board (EAAB), replied that the EAAB believed that the three years was reasonable to cater for any changes that could occur during the operation of an exemption.

Mr Malatsi said that he would be comfortable with specificity within that provision as a different interpretation could be expedient since he - without legalese training - already saw a gap within those provisions.

The Chairperson said the drafters would redraft accordingly to cater for the concern and requested Mr Ngwenya to proceed reading the bill.

Board of Authority
Composition and appointment of Board

Mr Malatsi that clause 7 read confusingly as it related to two distinct aspects namely; experience in rural land reform and secondly experience in promotion and protection of consumers’ rights and interests. He proposed that the latter aspect be captured separately and distinctly.

Mr Bara asked whether it was by extension that the Chief Executive officer (CEO) would be appointed by someone the Committee knew seeing that the board Chairperson would be appointed by the Minister. 

The Chairperson said that chapter 3 would explain that appointment.

Mr D Kabini (ANC) needed clarity on the number of board members as subclause 7 (a) (1) provide that not less than nine but not more than 12 non-executive members made up the board when in fact what the Chairperson and presenter had just alluded to made it sound like the board had the potential to have less than nine members and that clause 7 specified only a single appointee by the Minister of DHS without saying who would be appointing the rest of the board members.

The Chairperson replied that as per subclause 7 (2) the board had to have the listed expertise there keeping within the limits as prescribed in subclause 7 (1) of no less than nine and not more than 12 members.

Mr Kabini reiterated that he wanted to know who appointed the rest of the board if the Minister was responsible for appointing the board Chairperson only.

The Chairperson replied that all board members would be appointed by the Minister but clause 7 was simply outlining the requirements of the 12 or 9 people who would have been shortlisted amongst those invited to apply for a board vacancy; that is, the Minister would appoint a board of authority from the shortlisted candidates so that the Chairperson of said board would be appointed by the Minister as well.

Mr M Shelembe (NFP) asked what ‘sufficient’ expertise would be including as provided for at subclause 7 (2); possibly he had missed the discussion on the wording of the provisions.

The Chairperson concurred that Mr Shelembe had missed the discussions on the wording indeed where the Committee had thrashed out that provision. She allowed Mr Ngwenya to continue reading.

Disqualification from membership of Board
Mr K Sithole (IFP) asked if an individual would be disqualified from sitting on the board as well, if said individual had been fined for misconduct instead of serving a sentence.

Mr Malatsi wanted to know whether there was a set period for disqualification from the board for someone who has at any time been found to be in contravention of this Act or the Estate Agency Affairs Act; or there was space for rehabilitation and whether the provision provided for all misconduct as magnitude of infringement differed from case-to-case.

Mr Ngwenya replied that subclause 8 (e) provided that ‘...for which such person has been sentenced to direct imprisonment without the option of a fine’. That meant that if a person had not served direct imprisonment and had been sentenced with the option to pay a fine then that person could not be disqualified from serving on the board of authority.

Adv Tladi replied that the declaration of insolvency was handled in terms of the Insolvency Act which prescribed about 5-10 years period which would be followed by a process of rehabilitation. Post-rehabilitation and when an individual had become a rehabilitated insolvent then said individual qualified to serve on the board.

Mr Wolmarans asked what provision there was regarding Government employees wanting to serve on the board.

Mr Ngwenya replied that the Public Service Act already provided for that. If a particular Department through its Minister nominated an official within said Department; that official would not be remunerated for serving on the board as he would already be employed in Government.

Good governance and code of ethics
Mr Malatsi asked whether the broader property industry had been considered in the development of the code of ethics in terms of the level of engagement seeing that, said code would regulate them.

Mr Ngwenya replied that the code of ethics development was an open process subject to engagement with the broader property sector.

Conflict of interest of members of Board
Mr Malatsi was concerned that conflict of interest was voluntary for board members. To leave the reporting of conflict of interest to board members seemed too optimistic and he preferred that there be a mechanism where upon a suspicion of conflict of interest that could be ventilated elsewhere to establish whether recusal would be required or not on a particular issue.

The Chairperson suggested that the clause 11 had to be read with clause 8 of the bill.

Mr Ngwenya said from a drafting view, subclause 11 (1) imposed a duty to each member to submit a declaration as per that provision. Subclause 11 (3) also covered the concern raised by Mr Malatsi through the use of the word ‘must’  which meant that was non-negotiable.

Mr Malatsi said his point related to issues arising in the daily running of the business of the board not what disqualified eligibility to serve on the board. His concern was conflict arising implicating the board Chairperson, and the drafting left that unattended when the Chairperson or board member failed to notify the board voluntarily of an arising conflict of interest. What other avenue would there be for that conflict to be ventilated?

Adv Tladi noted that as per clause 10 there was a code of ethics provided for in the bill, and that code would include dealing with conflict of interest and how such cases would be processed including consequence management therein.

Mr Malatsi remained dissatisfied in that the code of ethics was not before the Committee.

The Chairperson requested that the DHS had to clarify the concern raised by Mr Malatsi when the Committee would be processing regulations.

Meetings of Board
Mr Sithole said he did not understand subclause 12 (2).

The Chairperson replied that the Minister was directed to write to both the board and the board member who would be disqualified from the board because of the transgressions at subclause 12 (1).

Appointment of CEO and Staff of Authority
Appointment of CEO 

Mr Wolmarans asked whether subclause 16 (1) meant that if the Minister did not approve the board would be unable to appoint a CEO.

The Chairperson replied that the board would after selection brief the Minister before appointing a CEO.

Mr Malatsi said the concern lay in the instance where there would be lack of agreement between the board of authority recommended candidate and the Ministers’ preference. What would happen then?

Mr Ngwenya said the subclause 16 (1) was in line with standard governance procedures that an entity reporting to a particular Minister would take that particular Minister into confidence on their recommended candidate for the position of the CEO. In practise however; boards generally shortlisted and submitted three to four names including the report on the interview procedure to a sitting Minister for consideration of appointment.

The Chairperson reaffirmed that as Mr Ngwenya was saying there was that standard procedure and hopefully that covered the Committee’s concern.

Mr Wolmarans asked if that standard procedure correctly crafted relative to the term ‘approval’ instead of ‘in consultation’ because the use of ‘approval’ could lead to other connotations.

Ms Phumelele Ngema, Legal Advisor, Parliamentary Legal Unit, agreed with Mr Wolmarans’ understanding that indeed without the Minister’s approval that appointment of the CEO would not take place and in the instance of a stalemate in the appointment of the CEO, the Minister had to give the board the go ahead. Use of the clause ‘in consultation’ would return the Committee to; if the board never agreed with the Minister then no appointment would occur; whereas the current drafting of subclause 16 (1) the buck stopped with the Minister.

The Chairperson informed the Committee that although not captured in the bill generally; Minister’s had to present to the Cabinet on such appointments as well which would also have to approve that appointment.

Mr Bara was not certain whether he required further detail on subclause 16 (8) because his understanding told him that a timeframe was supposed to be set for someone to be appointed to act in the CEO position once it became vacant. He noted subclause 16 (9) and its timeframe for appointment of the fulltime CEO, his worry was what timeframe there would be allowed if a CEO resigned immediately without due notice to anyone.

Mr Ngwenya said ‘as soon as possible’ could be subjected to different interpretations but subclause 16 (8) spoke to reasonable time for appointment of an acting CEO but then subclause 16 (9) was quite clear that within six months the acting position had to be filled permanently. 

Mr Shelembe asked what then would happen at the end of the six months if the board had not appointed a permanent CEO. Would there be an extension?

The Chairperson referred Mr Shelembe to subclause 16 (8) regarding the appointment terms of an acting CEO.

Powers of inspectors to enter, inspect, search and seize
Mr Malatsi recalled a previous Committee discussion on search and seizure of documents without a search warrant where there had been legal concerns about extraction of documents without said warrant; what was the status of such searches and usefulness of whatever would have been removed?

The Chairperson replied that the purpose of the bill had to also deal with such instances; the auction alliance had challenged that matter of searches and seizures and the EAAB had not been empowered previously to conduct search and seizures.

Mr Ngwenya said that clause 25 had provided for searches in private residence as the Chairperson had alluded to the powerlessness of the EAAB officials to conduct such search and seizures before.

Fine as compensation
Mr Ngwenya - having noticed a typographical error - said that the drafters would substitute ‘ombud’ anywhere in the draft b-list with ‘authority’.

The Chairperson asked if the Committee was comfortable with the draft bill as had been read to completion by Mr Ngwenya.

Mr Wolmarans applauded the drafters for having amended the clauses the Committee had requested to the Committees specifications. He did however want clarity on the enforceability of the bill when it became law.

Mr Ngwenya replied that the explicitly of the provisions penalised non-compliance stringently with the penalties clauses emphasising the types of sanctions that would be incurred by those property practitioners not complying with the law.

The Chairperson rephrased Mr Wolmarans concern: was there any way practitioners could double dip the bill and not register and practise under the bill?

Mr Mbulelo Tshangana, Director-General (DG), DHS, said he had been following movements in the property sector recently since the introduction of the bill. He had noticed that FNB had started buying up all the private property portals, and ABSA had also acquired property24 and looking at the definition in the bill of a property practitioner; and nothing had been said about portal operators and he wanted to find out from the EAAB whether the definition in the bill was had been broad enough. Portals held 52% of the property market share in South Africa (SA) currently and his concern was whether using said portals would not be circumventing compliance to the current law which was being processed by the Committee. Would it harm anyone if the online property portals could be included in the definition of property practitioners?

Mr Bara said that good work had been done but the Committee had to be cognisant that as progress was being made a lot of new things were emerging. To lead with the DGs concerns he was not sure whether ‘developers’ had been included in the property practitioner’s definition. ‘Developers’ selling plots for housing in a housing development space became property practitioners in a way; therefore he agreed with the DG that the definitions had to be tightened by broadening it.

The Chairperson noted that it seemed the Committee agreed broadly on the bill; she wanted clarity whether the Committee would adopt the bill with the pending amendments just made at the end or would it wait for the amendments to be drafted into the bill to later adopt it?

Mr Bara said he was happy with the effort of the DHS and the bill did address the concerns of the Committee. He was moving for adoption of the bill with the amendments as had been made.

The Property Practitioners Bill [B 21B—2018] was adopted with amendments.

Committee Report on Bill
The Chairperson read out the report on the Bill, which was approved with no changes.

Consideration of draft Portfolio Committee on Human Settlements minutes
The Committee considered its minutes for the 13& 14 November 2018.

The Committee adopted its minutes without any amendments.

The Chairperson thanked the Committee for having finalised the bill and the meeting was adjourned.

 

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