Du Toit v Minister of Transport

• Jurisdiction: South Africa
• Judge: Langa ACJ, Madala J, Mokgoro J, Moseneke J, Ngcobo J, O'Regan J, Sachs J, Skweyiya J, Van Der Westhuizen J and Yacoob J
• Judgment Date: 08 September 2005
• Hearing Date: 09 November 2004
• Docket Number: CCT22/2004
• Citation: 2006 (1) SA 297 (CC)
• Court: Constitutional Court
• Counsel: R S van Riet SC (with him H J de Waal) for the applicant. R C Hiemstra SC (with him W de Haan) for the respondent.

Mokgoro J:

Introduction

[1] This is an application for leave to appeal against the judgment of the Supreme Court of Appeal (the SCA) [1] setting H aside the order of the Cape High Court. [2] The case concerns a dispute between Mr Du Toit (the applicant) and the South African Roads Board (the board) whose rights and obligations have since been taken over by the Minister of Transport (the respondent). The dispute relates to the correct approach to compensation, and the correct amount to be paid in terms of s 12 of the Expropriation Act 63 I of 1975 (the Act) for an expropriation under s 8 of the National Roads Act 54 of 1971 (the Roads Act).

Mokgoro J

[2] Since its inception the Act has been applied as the primary statutory instrument for expropriation of property in South Africa. The A law regarding expropriation is now also governed by the Constitution. The applicant has not challenged the constitutionality of the Act or any of its provisions directly, but rather submitted that the Act should be interpreted and applied in conformity with the Constitution as required by s 39(2) of the Constitution. [3]

Background B

[3] On 12 November 1997 a notice of expropriation was served on the applicant. It purported to be a notice issued in terms of s 8(1)(c) of the Roads Act, [4] which has since been repealed. [5] Following the notice, C the board entered the applicant's farm Hooi Kraal and on a portion approximately 3,03 hectares in size known as Moordenaarskop, used a borrow pit which it created to excavate gravel for a period of approximately 18 months. About 80 000 cubic metres of gravel was extracted from the pit and removed from the land for the purposes of the construction of a public road. These facts were not in dispute D between the parties. What was contentious was whether the notice of expropriation was properly issued under s 8(1)(c) as opposed to s 8(1)(b) of the Roads Act and whether as a result, s 12(1)(b) rather than s 12(1)(a) [6] of the Act was the correct statutory basis for the determination of compensation following the expropriation. E

[4] Section 8 of the Roads Act provides for the expropriation of land or building material as well as the right to use land temporarily. It states:

'8(1) The board may, subject to an obligation to pay compensation -

(a)

expropriate land for a national road or for works or purposes in connection with a national road, including any access road, F the acquisition, mining or treatment of gravel, stone, sand, clay, water or any other material or substance, the accommodation of road building staff and the storage or maintenance of vehicles, machines, equipment, tools, stores or material;

(b)

take gravel, stone, sand, clay, water or any other material or substance on or in land for the construction of a road or for works or for purposes referred to in para (a); G

(c)

take the right to use land temporarily for any purpose for which the board may expropriate such land;

(d)

if any land is or will be divided by a road referred to in para (a) in such a manner that in the opinion of the board, that land or any part of it is or will be useless to its owner, expropriate that land or the part of it in question.' H

Section 8(2) of the Roads Act makes the provisions of ss 7 - 24 of the Act apply, mutatis mutandis, in respect of the expropriation of property or the taking of property or a right in terms of s 8. Section 12 of the Act

Mokgoro J

provides for the measure of compensation, depending on whether property had been expropriated, or a A right in property. It states:

'12(1) The amount of compensation to be paid in terms of this 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 property, shall not, subject to the provisions of ss (2), exceed - B

(a)

in the case of any property other than a right, excepting a registered right to minerals, the aggregate of -

(i)

the amount which the property would have realised if sold on the date of notice in the open market by a willing seller to a willing buyer; and

(ii)

an amount to make good any actual financial loss caused by the expropriation; and C

(b)

in the case of a right, excepting a registered right to minerals, an amount to make good any actual financial loss caused by the expropriation or the taking of the right:

Provided that where the property expropriated is of such nature that there is no open market therefor, compensation therefor may be determined -

(aa)

on the basis of the amount it would cost to replace the improvements on the property expropriated, having regard to D the depreciation thereof for any reason, as determined on the date of notice; or

(bb)

in any other suitable manner.'

[5] The applicant contended that the correct section of the Roads Act for issuing the notice of expropriation was s 8(1)(b) and not s 8(1)(c). Consequently, the E compensation should be awarded under s 12(1)(a) of the Act, and be based on the market value of the property which was expropriated. The contention of the respondent, on the other hand, was that the s 8(1)(c) notice was proper in that a temporary right to use the applicant's land and not the property itself had been expropriated. It follows that s 12(1)(b) is F applicable in determining compensation which should be based on the actual loss of the applicant.

[6] When the parties failed to reach an agreement, the applicant, relying on s 12(1)(a) of the Act, claimed compensation in the amount of R801 980 based on what he submitted was the market value of the gravel removed. Rejecting this claim, the G respondent, relying on s 8(1)(c) of the Roads Act, read with s 12(1)(b) of the Act, offered R6 060, an amount representing what was said to be the actual financial loss incurred by Mr Du Toit as a result of the expropriation, together with a solatium. This dispute about the amount of compensation to be awarded prompted Mr Du Toit to approach the High Court. H

Proceedings in the High Court

[7] In the High Court, Jamie AJ held that the notice issued under s 8(1)(c) of the Roads Act was proper [7] in that what was expropriated was a right I to use land temporarily. The right, he held, had two elements: First, the temporary use of the land in question to create a borrow pit to excavate gravel for purposes of the construction of a public road and,

Mokgoro J

secondly, the permanent taking of a quantity of gravel from that land. [8] Having found that there was no open market A for what was expropriated in this case, being the temporary right to use land, together with a right to remove an unspecified amount of gravel, he then proceeded to find that the proviso contained in s 12(1)(aa) and (bb) of the Act were applicable. [9] These sections state that where there is no open market for the property expropriated, compensation can B be determined either on the basis of the replacement value of what was expropriated or in any other suitable manner.

[8] Electing to determine the compensation 'in any other suitable manner', [10] the Judge was of the view that because the Constitution enjoins a court to promote the spirit, C purport and objects of the Bill of Rights when interpreting legislation, the phrase 'any other suitable manner' in s 12(1)(bb) ought to be interpreted in the light of ss 25 [11] and 39(2) of the Constitution when determining compensation for expropriation. Section 25(3), he observed, requires additional considerations to those of the market value of the D property to be taken into account. [12] Moreover, it requires compensation to be just and equitable and to reflect an equitable balance between the public interest and the interests of those affected by the expropriation. [13]

[9] Having considered the taking of the gravel as a component of the expropriated right, and using the market value of the quantity of E the gravel taken as the basis for determining compensation, the Court held that on the available evidence, the market value of the applicant's gravel was fixable at R5 per cubic metre. [14] The Court further considered whether the compensation should be adjusted from the market value, after having F regard to the other factors set forth in s 25(3) [15] together with any other relevant circumstances. The factors that the Court considered were: (a) the extent of the remaining deposits of gravel at Hooi Kraal; (b) the use of the property at the time of expropriation, and in particular the rate of extraction of gravel therefrom; (c) the effort and cost of removing the material, G the cost of rehabilitation of the site thereafter; and (d) the purpose of the expropriation. [16] It was found that the compensation based on the price of R5 per cubic metre should be H

Mokgoro J

reduced by 40% and the Court awarded compensation in the amount of R257 623, which included a solatium in terms of A s 12(2) [17] of the Act. [18]

Proceedings in the SCA

[10] Following the decision of the High Court, the respondent brought an appeal to the SCA contending that the High Court had erred in its finding that compensation for the expropriation was to be B calculated in terms of the proviso contained in s 12(1)(bb) of the Act. [19] The respondent argued that compensation should have been assessed under s 12(1)(b) [20] of the Act and based on the actual financial loss of the applicant, resulting from the expropriation of the temporary right to use the land. C

[11] Upholding the appeal against the decision of the High Court, Heher JA held that the board, having taken the right to use the land, was authorised to expropriate under s 8(1)(c) of the Roads Act but held that compensation should properly have been measured in terms of s 12(1)(b) of the D Act. [21] He rejected the reliance...