Conforth Investments (Pty) Ltd v Ethekwini Municipality

• Jurisdiction: South Africa
• Judge: Lopes J
• Judgment Date: 28 November 2013
• Docket Number: 21593/2004
• Court: KwaZulu-Natal High Court, Durban
• Hearing Date: 22 November 2013
• Citation: 2013 JDR 2682 (KZD)

Lopes J:

[1]

I am required to decide whether the defendant is obliged to compensate the plaintiff for the loss of its beneficial use, occupation and control of the immovable property forming the right of way servitude registered over Erf 669 Brickfield pursuant to Notarial Deed of Servitude of Right of Way No K00410/11S (hereinafter referred to as 'the property')

2013 JDR 2682 p2

Lopes J

History

[2]

Since 1892 Jan Smuts Highway (hereinafter referred to as 'the Highway') has abutted onto the northern boundary of Erf 669. For many years the Highway constituted the main road between Durban and Pietermaritzburg. The roadway has been widened and changed slightly from time to time and undergone a name change and is now called King Cetshwayo Highway. It is common cause that the Highway is under the ownership and control of Ethekwini Municipality (hereinafter referred to as 'the Municipality').

[3]

On the 21st October 1986 the plaintiff, Conforth Investments (Pty) Ltd (hereinafter referred to as 'Conforth'), became the registered owner of Erf 669, which was then described as Erf 669 Brickfield 95/1 situated at 5 Jan Smuts Highway, Durban. Conforth wished to develop an oncology centre and a college of learning on the property and to that end in 1986 sought town planning approval for its rezoning.

[4]

The town planning consent which was granted contained the following condition:

''The ownership of the portion of the site forming part of the existing road reservation to Jan Smuts Highway shall be donated and transferred to the South Central Local Council or a right of way servitude shall be donated and transferred to the South Central Local Council for the benefit of the public, the conveyancing costs, including the costs of survey, shall be borne by the Council.'

(The South Central Local Council was the predecessor of the Municipality).

2013 JDR 2682 p3

Lopes J

[5]

For some years nothing was done by Conforth to comply with this requirement, although it went ahead with the development of the oncology centre and the college. In this regard:

(a)

in 1997 Conforth signed an offer 'to donate and register a right-of-way servitude over the property in favour of the Municipality for the benefit of the public'. That was never accepted by the Municipality;

(b)

in 2001 the Surveyor-General approved a diagram setting out the parameters of the right-of-way servitude, but it was still not registered.

[6]

During or about 2000 a dispute arose between Conforth and the Municipality when Conforth alleged that it had been paying rates over the property. That matter was settled between the parties, and, as I understand it Conforth was compensated for the incorrect payments, and Conforth has, since then, not paid rates over the property.

[7]

In 2004 Conforth instituted the present action against the Municipality claiming rental from the Municipality for its use of the property. The relief now sought has changed from that which was originally sought, and Conforth now seeks an order for compensation. (I am only required to determine the right to compensation, and not the nature or extent thereof.)

[8]

In 2011, and pursuant apparently to Conforth's desire further to develop its land and build a hospital facility thereon, Erf 669 was consolidated with the adjoining

2013 JDR 2682 p4

Lopes J

Remainder of Portion 2 of Erf 667. A Certificate of Consolidated Title was registered on the 17th February 2011, simultaneously with the registration of a Notarial Deed of Servitude of Right of Way over the property in favour of the Municipality.

Conforth's claim:

[9]

Mr Gordon SC who appeared for Conforth submitted that it was entitled to be compensated by the Municipality for the loss of the property or its use on the following grounds:

(a)

the registration of the servitude of right-of-way was not a gift or donation made by Conforth to the Municipality – that was done pursuant to the condition imposed upon Conforth (initially) by the 1996 town planning decision;

(b)

the imposition of that condition was unlawful because it constituted an arbitrary deprivation of property contrary to the provisions of s 25(1) of the Constitution;

(c)

if the condition imposed by the town planning decision constituted an act of expropriation, then Conforth is entitled to be compensated;

(d)

this court should recognise that the doctrine of constructive expropriation is now part of South African law and would entitle Conforth to be compensated.

Analysis:

[10]

With regard to the registration of the servitude, I do not have any facts which reveal the reason why it was registered in 2011. Both parties appear to have...