Jacobs v Minister of Agriculture

• Jurisdiction: South Africa
• Judge: Colman J
• Judgment Date: 29 May 1972
• Citation: 1972 (4) SA 608 (W)
• Court: Witwatersrand Local Division

B Colman, J.:

The plaintiff in this action claims compensation, under Act 55 of 1965, in respect of property which formerly belonged to him, but which was expropriated by the defendant for public purposes in August, 1970. A written notice of expropriation, in terms of the statute which I have mentioned, was addressed to the plaintiff. There was, apparently, some disagreement about the date on which the plaintiff received that C document, but it was common cause between counsel that I should, for the purposes of this action, assume that the notice was given to the plaintiff at the end of August, 1970, and that that, consesequently, was the time of expropriation. The notice stated that the expropriation would take effect on 26th October, 1970, and the property consequently D became vested in the State on that day. But the plaintiff, with the tacit consent of the Department of State for whose use the property had been taken, was allowed to remain in occupation, and did remain in occupation, until a much later date.

The parties failed to reach agreement as to the amount of compensation which should be paid. It was common cause that, for the purposes of sec. E 10 (2) of the Act (which deals with costs), I should take it that the amount last claimed by the plaintiff before the commencement of the proceedings was R85 000, and that the amount last offered by the defendant was R24 000. In his summons, however, the plaintiff claimed, not R85 000, but R68 150.

It is laid down in sec. 8 (1) (a) of the Act that the amount of F compensation to be paid to the owner in respect of property expropriated (when the property is something other than a right)

'shall not exceed the aggregate of -

(i)

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

(ii)

G an amount to make good any actual financial loss or inconvenience caused by the expropriation'.

When, in this judgment, I refer to the 'value' of the expropriated property, or of any part of it, I shall be using that expression as a convenient term for the price which the property referred to would have realised if it had been the subject of the hypothetical sale referred to H in (i) above.

Although the Legislature has used the words 'shall not exceed', and thus indicated that the compensation may be less than the sum of the two amounts referred to in (i) and (ii) above, it is my view that (unless there are special and cogent reasons for doing otherwise), it is the duty of the Court which fixes compensation to award a figure which comes as close as possible to its estimation of the sum of those two amounts. (Cf. Union Government v Gass, 1959 (4) SA 401 (AD) at p. 416, and

Colman J

Minister of Water Affairs v Mostert and Others, 1966 (4) SA 690 (AD) at p. 715D).

That is, however, subject to the provisions of sec. 8 (4) of the Act, A which expressly enjoins the exclusion from the award of certain amounts which might otherwise have been thought fit for inclusion therein. It is necessary to refer to one of the provisions in that sub-section, namely that in para. (e) thereof, which reads as follows:

'No allowance shall be made for any unregistered right in respect of any other property, or any indirect damage or loss of profit or anything done with the object of obtaining compensation therefor.'

B Compensation is claimed in this case under para. (ii), as well as para. (i) of sec. 8 (1) (a). I shall deal firstly with the head of compensation covered by para. (i), namely that relating to the value of the expropriated property at the end of August, 1970.

That property consisted of two contiguous freehold stands, each 5 000 C square feet in area, situated in the township of Turffontein. One of those, with a frontage of 100 feet on High Street and 50 feet on Church Street, was zoned under the relevant town planning scheme for business use, (which would include use for flats as well as for shops or offices), and it had on it, at the time of expropriation, a building D consisting of four shops, with appurtenant store rooms and outbuildings. That was stand 1492, and I shall refer to it, when that is convenient, as 'the business stand', or 'the corner stand'. It was on the northeastern corner of the intersection, so that its 100 foot frontage on High Street had a western aspect and its 50 foot frontage on Church E Street had a southern aspect. The buildings were about 59 years old, and they were in poor repair. But two of the shops were let. The one on the corner was let as a store room for R50 per month: the one adjoining it, in High Street, was let to an Indian doctor for R35 per month. The other two shops were occupied by the plaintiff for the purposes of his pharmacy business which he had conducted there for about 33 years; in F his books he charged the business with a monthly rental of R80 for the two shops.

The adjoining stand, number 1493, was, for all practical purposes, unimproved at the date of expropriation. It had no business rights, but it was zoned for general residential use, which meant that a dwelling G house or a block of flats could be built on it. There was also provision for the use of some or all of the plaintiff's ground for library purposes, but it was common cause that that potential use had no relevance to its value at the material date; in what follows I shall ignore that use right.

Turffontein is one of the oldest suburbs in Johannesburg, and an inspection of the part of the township in which the expropriated property was situated gave the impression that it is predominantly a H workingclass suburb, in which old houses and suburban shops are slowly and sporadically being replaced by more modern dwellings and business premises. In High Street, on which the plaintiff's shops had their main frontage, most of the buildings were (and still are) old ones, though some appear to have been renovated.

It is common cause that the use of the property at the time of expropriation was uneconomic. With one stand empty, and a dilapidated building on the other, the property did not yield, and could not have

Colman J

yielded, an income commercially appropriate to its value. To make the land yield an income consistent with its potentialities it would have been necessary to build on both stands. And the evidence persuades me that, to make the best of the land, what an owner would have had to do A was to erect a new building consisting of shops and flats, on the two stands together. The town planning scheme permitted a three-storey building, and the optimum exploitation would, in my view, have been achieved by erecting a building of that height consisting of flats on the inner stand, and ground-floor shops with flats above them on the corner stand. It was the potentiality for such development that gave the B plaintiff's property its full value at the date of expropriation.

There was no real dispute about that. A suggestion was made (somewhat faintly) that the inclusion of professional suites in the upper floors of the hypothetical building might have been commercially practicable. But on that there was a difference of opinion and, in so far as the C suggested use might have any bearing on the inquiry, I would (relying partly on my own impression of the area) be inclined to disregard it.

In my task of fixing the value at the date of expropriation, I had the assistance of two valuers of great experience, and of senior counsel who cross-examined those valuers, and later addressed me on the evidence. D Mr. Gottlieb, who testified on behalf of the plaintiff, opined that the expropriated property had a value of R37 500 at the time of expropriation, while Mr. Balme, who was called on behalf of the defendant, expressed the view that the value at that time was R25 000. But, as I shall later indicate, Mr. Balme, towards the end of his E evidence, made a concession which, logically, would justify a substantial addition to his figure.

Both valuers said that the soundest approach to valuation was through a consideration of the prices at which sales of comparable properties had taken place, and the making of such adjustments as might seem reasonable in consequence of material differences between the property to be valued F and the properties forming the subject-matter of the sales. That was the approach which commended itself to the Appellate Division in Estate Marks v Pretoria City Council, 1969 (3) SA 227, as appears from the judgment of the learned CHIEF JUSTICE at pp. 253 - 4.

G The two valuers agreed, also, that what was to be valued was the two stands, as a block, with the buildings on it. But, as part of the reasoning leading up to such a valuation, or providing a way of testing it, each of them gave evidence about the value which each of the two stands, considered individually, might be considered to have had at the H relevant time, and about the hypothetical value which the business stand would have had if it had been unimproved at that time.

As to the value, at the time of expropriation, of stand 1493 (considered in isolation) no difficulty arises. Mr. Gottlieb gave the figure of R4 000; and although Mr. Balme valued stand 1493 at R5 000, counsel were agreed that, in so far as it might be relevant, I should take the value of that inner stand, at the time of expropriation, to have been R4 000.

Colman J

There was agreement, also, about the value which the business stand, if it had been unimproved, and had been dealt with independently, would have had at the time of expropriation. Both Mr. Gottlieb and Mr. Balme A were of the view that, on that hypothetical basis, stand 1492 would have had a value of R20 000. But the two valuers arrived at that conclusion by entirely different routes, and in order to understand how they ultimately reached such differing conclusions about the value of the...