Community Development Board v Mahomed and Others NNO

• Jurisdiction: South Africa
• Judge: Trengove JA, Hoexter JA, Botha JA, Grosskopf JA and Smalberger JA
• Judgment Date: 18 September 1986
• Hearing Date: 15 August 1986
• Court: Appellate Division

Botha JA:

The issues in this appeal require the interpretation of certain provisions of the Expropriation Act 63 of 1975 relating to the liability of an expropriating authority to pay interest to the owner of expropriated property on the capital amount of compensation payable for such property. Regrettably, the provisions in question constitute yet another example of the Legislature's frequently encountered inability to express J its intention with clarity and precision.

Botha JA

A The appellant Board is endowed with powers of expropriation by ss 38(1)(a) and 38(1B) of the Community Development Act 3 of 1966, in terms of which the exercise of its powers is governed by ss 6 to 23 of the Expropriation Act in such a way that references in the latter sections to 'the Minister' are to be construed as references to the Board. To facilitate the discussion of the sections of the Expropriation Act relevant to B this appeal, when I come to deal with them later in this judgment, I shall myself refer to 'the Minister' as connoting the appellant in the present case.

In 1979 the appellant expropriated a piece of immovable property in the town of Vereeniging, of which the owner was C Essa Valli Mahomed. He was the plaintiff in an action which was subsequently instituted in the Transvaal Provincial Division against the appellant as the defendant. To some of the details of this action further reference will be made presently. Mr Mahomed was originally the respondent in this appeal. He passed away during January of this year. At the outset of the hearing of the appeal an application was made to D this Court for the substitution of the four executors appointed by the Master in the estate of the late Mahomed as the respondents in the appeal, in their capacities as such. The application, which was not opposed by the appellant, was granted, and in accordance with a tender made on behalf of the substituted respondents, they were ordered to pay the costs occasioned by the application. I shall refer to the late E Mahomed as 'the deceased'.

The facts giving rise to the issues in this case are common cause. The appellant expropriated the deceased's property by virtue of a notice of expropriation issued on 28 November 1979 in accordance with the provisions of the Expropriation Act, to F which I shall henceforth refer as 'the Act'. The date of expropriation, applying the definition in s 1 read with s 7(2)(b) of the Act, was 28 November 1979. In the notice of expropriation the appellant did not offer the deceased an amount of compensation for the property, but requested the deceased to submit a claim for compensation in accordance with the provisions of s 7(2)(c) of the Act. The period within which G the deceased was required to submit his claim was thereafter extended by the appellant to 26 March 1980 in terms of the proviso to s 7(2)(c) (see also the proviso to s (1) of the Act). On 20 March 1980 the deceased submitted a written statement to the appellant, containing the information and particulars prescribed by s 9(1) of the Act. In that statement H the deceased claimed compensation of R320 000. The appellant did not accede to the claim.

On 1 December 1980 the appellant took possession of the property, pursuant to the provisions of s 8(3) of the Act.

On 18 December 1980 the appellant, in terms of s 10(4) of the Act, offered to pay the deceased compensation in an amount of I R82 775, which was calculated as follows:

in terms of s 12(1)(a)(i) of the Act	R75 250
in terms of s 12(2) of the Act (being 10% of R75 250)	7 525
	R82 775

J The deceased did not accept the appellant's offer.

Botha JA

A At the date of expropriation (28 November 1979, as stated above) the deceased's property was encumbered with a mortgage bond in favour of the SA Permanent Building Society. On 6 March 1981 the appellant wrote a letter to the deceased in connection with the bond. In it, the deceased's attention was invited to B the provisions of s 19(1) of the Act; he was required to agree to the payment by the appellant to the bondholder of the amount outstanding under the bond 'as at the date the compensation money is paid out'; and he was advised that, unless this requirement were complied with, the appellant would be 'prohibited' under s 19(1) from paying out 'any portion of the money' and that 'in such circumstances the amount will in C terms of s 21 of the Act, have to be paid to the Master of the Supreme Court for depositing in the Guardian's Fund after the provisions of s 10(5)(a) and 10(5)(b) of the Act have been complied with'. The deceased did not reply to the letter.

The provisions of s 10(5) of the Act did not come into operation because the deceased instituted an action against the D appellant within the period of eight months mentioned in para (a) of s 10(5), and in fact the appellant did not pay any amount to the Master in respect of the deceased's property.

On 12 August 1981 the deceased issued a summons against the appellant in the Transvaal Provincial Division, in which he claimed payment of an amount of R330 992. From the particulars E of claim it appears that the amount was made up as follows:

(a) Compensation for the property in terms of s 12(1)(a)(i)	R320 000
(b) Financial loss in terms of s 12(1)(a)(ii)	992
(c) Amount to be added in terms of s 12(2)	10 000
	R330 992

F In its plea, the appellant maintained that the amount payable in respect of the expropriation of the property was R82 775 in accordance with its offer of 18 December 1980 as set out above. It did not, however, make payment of that amount or any part of it to the deceased.

The action was set down for hearing on 8 March 1985. At a G pre-trial conference held on 21 February 1985 the possibility of settling the action was raised. This resulted in a settlement being reached on 1 March 1985 as to the capital sum to be paid by the appellant to the deceased and the costs of the action up to that stage, but not as to the appellant's liability (if any) to pay interest to the deceased up to that date, on which the parties were unable to reach agreement. In terms of the settlement it was agreed -

(a)

that the appellant would pay the deceased H an amount of R100 000 as compensation for the expropriated property in terms of s 12(1)(a)(i) of the Act;

(b)

that the appellant would pay the deceased a further amount of R10 000 in terms of s 12(2) of the Act;

(c)

that each party would pay his or its I own costs of the action.

Pursuant to this agreement the appellant on 1 March 1985 paid to the deceased a total amount of R110 000.

On 4 March 1985 the deceased and the SA Permanent Building Society (the bondholder) notified the appellant in writing, in J terms of s 19(1) of the Act, that they had agreed that no portion of the agreed compensation

Botha JA

was payable to the building society. (For the sake of clarity A it may be mentioned that the appellant had, upon enquiry, already ascertained that nothing was due to the mortgagee before it made its payment of R110 000 to the deceased on 1 March 1985.)

The question of the appellant's liability for interest still being in issue when the case came to trial, the trial Judge was B requested to resolve the dispute between the parties on the basis of an agreed statement of facts, the relevant portions of which have been summarised above. The two issues the trial Judge was called upon to determine were: (a) whether the appellant was liable to pay interest to the deceased on the sum of R100 000 from 1 December 1980 to 1 March 1985; and (b), if the appellant was so liable, at what rate the interest was C to be calculated. In broad terms, as to (a), the deceased contended for a positive answer and the appellant to the contrary (apart from the brief period from 1 to 18 December 1980 and 30 days thereafter up to 17 January 1981), both parties basing their contentions primarily on the provisions of s 12(3) of the Act; and as to (b), the appellant contended for D a fixed rate of interest applicable in respect of State loans and advances by virtue of the relevant notice under s 1 of the Financial Adjustments Act 42 of 1917, to which reference was made in s 12(3) of the Act prior to its amendment in 1982, while the deceased contended for a variable rate of interest determined from time to time in terms of s 26(1) of the Exchequer and Audit Act 66 of 1975 in accordance with s 12(3) E of the Act after its amendment in 1982. The trial Judge found in favour of the deceased on both issues, and consequently made an order in the following terms:

'1.

Die verweerder word gelas om aan die eiser rente op die bedrag van R100 000 te betaal vanaf 1 Desember 1980 tot 1 Maart 1985 ooreenkomstig die koers van tyd tot tyd bepaal kragtens art 26(1) van Wet 52 van 1966.'

(The reference to 'Wet 52 van 1966' was obviously a F slip: what was intended was 'Wet 66 van 1975'.)

'2.

Die verweerder word gelas om eiser se koste sedert 1 Maart 1985 te betaal.'

It is against that order that the appellant now appeals to this Court, leave to do so having been granted to it by the trial Judge.

With regard to the first issue, viz whether interest is payable G at all over the relevant period, the amendment of s 12(3) of the Expropriation Act in 1982 to which I have referred is of no consequence. In dealing with this issue I shall accordingly confine myself to a consideration of the subsection in its present form, and for ease of reference I quote it together with the preceding two subsections of s 12:

'12(1) The amount of compensation to be paid in terms of this H Act to an owner in respect of property expropriated in terms of this Act, or in respect of the taking, in terms of this Act, of a right to use...