Davis and Another v Pietermaritzburg City Council

• Jurisdiction: South Africa
• Citation: 1989 (3) SA 765 (A)

Davis and Another v Pietermaritzburg City Council
1989 (3) SA 765 (A)

1989 (3) SA p765

Citation	1989 (3) SA 765 (A)
Court	Appellate Division
Judge	Corbett CJ, Hefer JA, Vivier JA, M T Steyn JA, Grosskopf AJA
Heard	February 23, 1989
Judgment	May 9, 1989

Flynote : Sleutelwoorde D

Expropriation — Compensation — Calculation of — Section 12 of Expropriation Act 63 of 1975 — Expropriated property having potential for sectional title development — Parties in agreement E over compensation to be paid in terms of s 12(1)(a)(i), viz amount which property would have realised if sold to willing buyer in open market — Appellants, however, unsuccessfully claiming additional amount in terms of s 12(1)(a)(ii), viz compensation for actual financial loss caused by expropriation, due to loss of their developer's profit — On appeal F held that to award this additional amount would mean that an owner of expropriated property would be compensated not for market value of property on date of expropriation with its then-existing potentiality for development but for present value of what would have accrued to them had potential been realised and development carried out — Such result contrary to principle and likely to lead to anomalies not intended G by Legislature — Court further holding that in any event there was no direct causal connection between expropriation and alleged financial loss — Realisation of developer's profit would have required independent volition and considerable effort on part of appellants and others — Alleged loss of developer's profit could therefore not be H said to have been caused by expropriation itself — Claim for additional amount of compensation not succeeding — Appeal dismissed.

Headnote : Kopnota

During 1984 the appellants had purchased property comprising a block of 10 flats. During 1985 the respondent expropriated this property in I terms of the Expropriation Act 63 of 1975. The parties were unable to agree as to the amount of compensation payable in respect of the property expropriated and the appellants instituted action in a Provincial Division claiming an order determining the amount of compensation payable in the sum of R283 705. The Court a quo determined the amount of compensation at R218 828, and in doing so rejected a claim by the appellants to be paid, in addition to the amount of R218 828, the further sum of R64 877, said to be compensation in terms of J s 12(1)(a) (ii) of the Act for actual financial loss caused to

1989 (3) SA p766

A the appellants by the expropriation. On appeal, the appellants contended that in terms of the latter section they were entitled to be awarded this additional amount of R64 877 in that, had the expropriation not taken place, they would probably have obtained permission to turn the property into a sectional title scheme and would have sold all the sectional title units by October 1986, which would have resulted in the accrual to them of a developer's profit of R64 877, and that therefore they had suffered an actual financial loss in this sum caused by the expropriation.

B Held, that if this contention was correct it would mean in effect that in such a case the owner of the property expropriated would be compensated not for the market value of the property on the date of the notice of expropriation, with its then-existing potentiality for development, but for the present value of what would have accrued to him had the potential been realised and the development carried out, which was contrary to principle and likely to lead to anomalies which could not have been intended by the Legislature.

C Held, further, that in any event the element of causation was lacking: there was no direct causal connection between the expropriation and the alleged financial loss, in that the realisation of a developer's profit would have entailed independent volition and action on the part of appellants and others (eg in the application for and registration of a sectional title register, renovations to flats and marketing and selling of units, all of which would have required considerable time and effort on the part of the appellants and/or their estate agents).

D Held, therefore, that the alleged loss of developer's profit could not be said to have been caused by the expropriation itself. Appeal dismissed.

The decision in the Natal Provincial Division in Davis and Another v Pietermaritzburg City Council 1988 (3) SA 537 confirmed.

Case Information

Appeal from a decision in the Natal Provincial Division (Howard E J) reported at 1988 (3) SA 537. The facts appear from the judgment of Corbett CJ.

P Levinsohn SC for the appellants referred to the following authorities (the heads of argument having been drawn by K R McCall SC assisted by A J Dickson ): As regards, generally, the correct approach F to determining compensation for expropriation, see Southern Transvaal Buildings (Pty) Ltd v Johannesburg City Council 1979 (1) SA 949 (W); Lochner v Afdelingsraad, Stellenbosch 1976 (4) SA 737 (C); Sri Raja Vyricherla Narayana Gajapatiraju Bahadur Garu v Revenue Divisional Officer, Vizagapatam [1939] 2 All ER 317 (PC); Maori Trustee v Ministry of Works [1958] 3 All ER 336 (PC). As regards the question as to G whether a developer's profit is excluded from the calculation of the market value of the property, see Durban Corporation v Lewis 1942 NPD 24 at 47 - 8. As regards loss of developer's profit being 'actual financial loss caused by the expropriation', see Jacobs The Law of Expropriation in South Africa 1st ed (1982) at 86 and 130 - 2. As H regards the causal relationship that must exist between the expropriation and the financial loss, see Estate Marks v Pretoria City Council 1969 (3) SA 227 (A) at 245E - G; Pienaar v Minister van Landbou 1972 (1) SA 14 (A) at 25. As to the rules of delictual damages applying to the expropriation procedure, see Union Government v Jackson and Others 1956 (2) SA 398 (A) at 441A - D. As to the effect that I independent acts of independent volition may have on the claim of causation, see Estate Marks v Pretoria City Council (supra at 245E - G); Pienaar's case supra at 25E - G. As to recoverability of future losses, see Lochner's case supra at 746 - 7; Natal Estates Ltd v Community Development Board and Others 1985 (3) SA 378 (D); Illovo Sugar Estates Ltd v South African Railways and Harbours 1947 (1) SA 58 (D) at J 75 - 83; Sandton Town Council v Erf 89 Sandown Extension 2 (Pty) Ltd 1988 (3) SA 122 (A) at 129F - G. As to the

1989 (3) SA p767

A requirement that the loss must be 'actual' see Joubert (ed) Law of South Africa vol 10 sv 'Expropriation' para 114 n 7; Tongaat Group Ltd v Minister of Agriculture 1977 (2) SA 961 (A); Union Government v Gass 1959 (4) SA 401 (A) at 417A - E. As to the certainty of the loss, see Greyvenstein en 'n Ander v Minister van Landbou 1970 (4) SA 233 (T) at 237A - B; Lochner's case supra at 747B - C; Law of South Africa vol B 10 supra at para 114 n 22. As to the sufficiency of the causa sine qua non test for loss and the remoteness of the loss, see Da Silva and Another v Coutinho 1971 (3) SA 123 (A); Minister of Police v Skosana 1977 (1) SA 31 (A) at 34 - 5; Standard Bank of South Africa Ltd v Coetsee 1981 (1) SA 1131 (A) at 1140D.

D J Shaw QC (with him C J Hartzenberg ) for the respondent referred to the following authorities (the heads of argument having been drawn C by Shaw QC and R C Hiemstra ): As to the design and aim of the Expropriation Act 63 of 1975, see Bestuursraad van Sebokeng v M & K Trust & Finansiële Maatskappy (Edms) Bpk 1973 (3) SA 376 (A) at 384F - G; Estate Marks v Pretoria City Council 1969 (3) SA 227 (A) at 242H - 243A; Union Government v Jackson and Others 1956 (2) SA 398 (A); Pienaar D v Minister van Landbou 1972 (1) SA 14 (A) at 20D - E. As to the Legislature's intention in s 12(1) of the Act as regards recoupment of loss, see the Estate Marks case supra at 245C - E; Pienaar's case supra and Administrator, Transvaal v Kildrummy Holdings (Pty) Ltd and Another 1983 (4) SA 960 (T) at 967H - 968A. As to the concept of market value, see the...