Davis and Another v Pietermaritzburg City Council

• Jurisdiction: South Africa
• Judge: Corbett CJ, Hefer JA, Vivier JA, M T Steyn JA, Grosskopf AJA
• Judgment Date: 09 May 1989
• Citation: 1989 (3) SA 765 (A)
• Hearing Date: 23 February 1989
• Court: Appellate Division

Corbett CJ:

In October 1984 the two appellants purchased a fixed property in Terry Street, Pietermaritzburg, and on 2 February 1985 they took transfer thereof. Upon the erf stood a block of 10 flats known as 'Fortuna Court'. (I shall refer to the land, as improved, as 'the property'.) By a registered letter dated 6 December 1985 appellants I were given notice by the City Council of Pietermaritzburg (the respondent) of the expropriation of the property in terms of the Expropriation Act 63 of 1975 ('the Act'). The parties were unable to agree as to the amount of compensation payable in respect of the property expropriated and in due course the appellants instituted action J against the respondent in the Natal

Corbett CJ

A Provincial Division claiming an order determining the amount of compensation to which they were entitled in the sum of R283 705, together with ancillary relief. After pleadings had been closed the parties filed a 'Statement of agreed facts' (I shall call this 'the stated case') for decision by the Court. The matter came before Howard J (as he then was), who found generally in favour of the respondent B and made the following order:

'(a)

The amount of compensation payable to the plaintiffs is determined at R218 828;

(b)

The defendant is ordered to pay interest on the said amount in terms of s 12(3) of Act 63 of 1975;

(c)

C Costs are awarded in accordance with the provisions of s 15(1) and (2) of the said Act.'

In coming to this decision the learned Judge rejected a claim by the appellants to be paid, in addition to the amount of R218 828, a further D sum of R64 877 said to be compensation for 'actual financial loss' caused to appellants by the expropriation, in terms of s 12(1)(a) (ii) of the Act. (The judgment of Howard J has been reported, see Davis and Another v Pietermaritzburg City Council 1988 (3) SA 537 (N). I shall refer to this as 'the reported judgment'.) With the leave of the Court a quo appellants appeal against that part of the judgment which E rejected the aforesaid claim of R64 877.

According to the stated case, the appellants, acting through a firm of land surveyors, made a 'preliminary' application to the respondent (the 'local authority') on 7 November 1985, in terms of the Sectional Titles Act 66 of 1971, for a development scheme whereby the property was to be divided into a number of sections, each flat representing a F separate section. On 21 November 1985 a meeting of the tenants of the flats was held for the purpose of providing them with particulars concerning the sectional title development scheme. And on 5 December 1985 final sectional title plans were submitted by the land surveyors to the respondent.

The stated case further records that the parties were agreed that G the correct valuation of the property for the purposes of s 12(1)(a) (i) of the Act was the sum of R208 828. The detailed calculations made in order to arrive at this figure are set forth in an annexure ('I') to the stated case, and it is further stated that the 'facts assumed and contingencies applied in annexure "I" are agreed by the parties as being correct'. The final three paragraphs of the stated case read as H follows (appellants being referred to as 'plaintiffs'):

'33.

The parties agree that plaintiffs would probably have obtained permission to sectionalise Fortuna Court and in that event the sectional title register and plan would have been opened, registered and that plaintiff would have been in a position to commence selling units in February 1986.

34.

I The parties agree that first and second plaintiffs as developers would probably have sold all the sectionalised units by October 1986.

35.

The parties agree that the sale of the sectionalised units would have resulted in a developers' profit for first and second J plaintiffs in the

Corbett CJ

A sum of R64 877 which sum has been deducted in terms of the valuation formula adopted in annexure I.'

In explanation of the latter portion of para 35, I would point out that annexure 'I', which is headed - 'Feasibility calculations for sectional title conversion as at 6 December 1985' - consists of certain calculations in terms of which the following figures are arrived B at on the basis that the sectional units comprising the development scheme would have been sold at certain prices and at a certain rate over the agreed period of disposal, viz February 1986 to October 1986 (see paras 33 and 34 above):

Present value (as at 6 December 1985) of total sales income	R320 093
C Present value of cost of sales	49 773
Net present value	R270 320
Deduct-developer's profit for risk return @ 24 %	64 877
NOTE: Sectional Title Act/Rent Act problems	R205 443
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