Home Talk Developments (Pty) Ltd and Others v Ekurhuleni Metropolitan Municipality

• Jurisdiction: South Africa

Home Talk Developments (Pty) Ltd and Others v Ekurhuleni Metropolitan Municipality
2018 (1) SA 391 (SCA)

2018 (1) SA p391

Citation	2018 (1) SA 391 (SCA)
Case No	225/2016; [2017] ZASCA 77
Court	Supreme Court of Appeal
Judge	Ponnan JA, Cachalia JA, Majiedt JA, Willis JA and Schippers AJA
Heard	June 2, 2017
Judgment	June 2, 2017
Counsel	MC Maritz SC (with LW de Koning SC) for the appellants.; J Peter SC (with C Georgiades and L Stroom) for the respondent.

Flynote : Sleutelwoorde

Delict — Elements — Unlawfulness or wrongfulness — City manager's non-issue of s 82 certificates to developers — Not wrongful (majority judgment) — Absence of 'something more' justifying liability — Wrongful (dissenting judgment) — Abuse of power justifying such liability — Town Planning and Townships Ordinance 15 of 1986. G

Headnote : Kopnota

In a delictual action, first and second appellant, who were property developers, claimed damages from respondent municipality. Their assertion was that the city manager had mala fide failed to issue them with s 82 certificates [*] and that the failure had caused them financial losses. (The municipality eventually issued the certificates, but the delay before issue was said to have H resulted in: lost interest on invested property-sales proceeds (first and second appellant); lesser proceeds (second appellant); and unnecessary payment of rates and taxes (first and second appellant). (See [46].)

Third appellant, which was also a property developer, claimed that the manager's behaviour dissuaded it rectifying the municipality's erroneous non-proclamation [*1] of land third appellant owned; and that the delay before I proclamation occasioned it financial loss. (That included, allegedly, reduced

2018 (1) SA p392

sales A proceeds (owing to a market decline); and lost interest on the invested proceeds.) (See [46].)

The High Court dismissed the action, and the appellants appealed to the Supreme Court of Appeal.

The issues were:

(1) Whether the failure to issue the certificates was wrongful. Held, per Ponnan JA, B that it was not (see [44]):

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The Ordinance provided for an internal appeal against the refusal of a s 82 certificate (s 139), which suggested its drafters did not intend there to be a damages action for such a refusal. (See [22] – [23].)

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'Something more' justifying liability, was not present. (Appellants asserted it to be mala fides on the city manager's part (an attempt to C extort a benefit for issue of the certificates); or an ulterior purpose. But they failed to prove either.) (See [24], [27], [30], [32], [35], [39] and [42].)

(2) Whether the failure to issue the certificates and consequent delay was the factual cause of first and second appellant's loss? Held, that it was not:

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After non-issue of the certificates, first appellant was aware there would D be delay (and loss) were it to proceed with its development, yet it did so. (See [45] and [47].)

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First and second appellant's sales agreements, which non-issue of the certificates had allegedly delayed in implementation, so causing loss, could not ground any claims, in that they were unlawful and void. (See [48] – [50].)

(3) E Whether the failure to issue the certificates was the factual or legal cause of third appellant's alleged loss. Held, that it was not the factual cause: third appellant's (self-interested) non-insistence on proclamation of the township was. Nor was it the legal cause: the market-decline-related loss was unforeseeable. (See [51] – [52].)

Appeal dismissed (see [53]).

In F a concurring judgment, Schippers JA held that:

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The non-issue of the s 82 certificates was not the factual cause of first or second appellant's loss. The sales agreements, giving rise to the proceeds, which would have been invested earlier, and which would have generated more interest, were contrary to the Ordinance, and to be regarded as not having been concluded. (See [68] and [85].)

Regarding G the allegedly loss-causing delay before third appellant's properties were proclaimed: it was not factually caused by non-issue of the s 82 certificates, but by third appellant's non-insistence on proclamation. (See [88].)

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Nor was non-issue the legal cause of appellants' loss. This as the loss H arose from an illegality (first and second appellants); was too distant from the non-issue (first – third appellants); and in its forms (lost interest (first and second appellants); and reduced property value owing to a market decline (second and third appellants)), was unforeseeable to the municipality. The relationship of municipality and appellants was also insufficiently proximate. (See [75], [83], [86] and [91].)

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Moreover, I the claims for unnecessary rates and taxes were incompetent — they were settled. (See [80] and [85].)

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Appellants had also failed to prove their damages (see [93], [105]): there was no evidence first or second appellant would have invested the sales proceeds, or that third appellant suffered a loss (see [92], [101] – [102]); and first and second appellant's allegedly lost interest, derived from J unlawful agreements, was uncognisable as damage (see [104]).

2018 (1) SA p393

Cachalia JA, dissenting, would have upheld the appeal (see [223]). He held as A follows:

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A state employee need not have acted fraudulently or for illicit gain, in order to find the state's conduct wrongful. (See [199].)

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Public and legal policy would generally require the imposing of delictual liability for loss resulting from an abuse of power. (Abuse of power embraced dishonesty, bad faith and improper or ulterior purpose.) (See B [205].)

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The city manager's dishonesty and mala fides in, and in connection with, the withholding of the certificates was an abuse of power, and wrongful. So too, his attempts to extort a stand in one of the developments; transfer of a shareholding to a third party; and his extortion of a sales list, were mala fide exercises of public power, and wrongful. (See [206] – [209].) C

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Non-issue of the certificates was the factual cause of first and second appellant's loss. (This was not negated by the sales agreements concerned being invalid. It was also the factual cause of the delay in proclaiming third appellant's properties and the resultant loss.) (See [218] – [220].)

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And it was the legal cause of their loss. (See [221] – [222].) D

Cases cited

Southern Africa

Aussenkehr Farms (Pty) Ltd v Trio Transport CC 2002 (4) SA 483 (SCA) ([2002] 3 All SA 309): referred to

Cool Ideas 1186 CC v Hubbard and Another 2014 (4) SA 474 (CC) (2014 (8) BCLR 869; [2014] ZACC 16): referred to E

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2018 (1) SA p394

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Panamo Properties 103 (Pty) Ltd v Land and Agricultural Development Bank of South Africa 2016 (1) SA 202 (SCA): referred to

Perlman v Zoutendyk 1934 CPD 151: referred to

Pottie C v Kotze 1954 (3) SA 719 (A): referred to

President of the Republic of South Africa and Others v South African Rugby Football Union and Others 2000 (1) SA 1 (CC) (1999 (10) BCLR 1059; [1999] ZACC 11): referred to

R v Mahomed 1929 AD 58: referred to

R D v Notaris 1903 TS 484: referred to

Robinson v Randfontein Estates GM Co Ltd 1925 AD 173: referred to

Robinson v Randfontein Estates Gold Mining Co Ltd 1921 AD 168: referred to

S v Essack and Another 1974 (1) SA 1 (A): referred to

Santam Bpk v Biddulph 2004 (5) SA 586 (SCA) ([2004] 2 All SA 23): referred to

Sasfin E (Pty) Ltd v Beukes 1989 (1) SA 1 (A) ([1988] ZASCA 94): referred to

Schierhout v Minister of Justice 1926 AD 99: applied

Shill v Milner 1937 AD 101: referred to

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