Minister of Agriculture v Estate Randeree and Others

• Jurisdiction: South Africa
• Judge: Rumpff CJ, Wessels JA, Corbett JA, Hofmeyr JA and Hoexter AJA
• Judgment Date: 29 September 1978
• Citation: 1979 (1) SA 145 (A)
• Hearing Date: 11 September 1978
• Court: Appellate Division

Corbett JA:

By two notices of expropriation, each dated 4 September

Corbett JA

1974, the appellant (the Minister of Agriculture), acting in terms of s 2 (1) of the Expropriation Act 55 of 1965, as amended ("the Act"), expropriated two vacant erven situated in Brickfield Road, Umgeni South, A in the Municipality of Durban. Both erven fall within a group area established for the Indian group. The one erf (which I shall call "lot 131") is 1 321 square metres in extent and at the time of expropriation ownership thereof was vested in the estate of the late Mr M I Randeree. The other erf (which I shall call "lot 129") is 1 261 square metres in B extent and at the time of expropriation was owned in equal undivided shares by Mrs M S E Randeree, Mrs A S Randeree, Mr M S E Randeree and the estate of the late Mr H A Haffejee.

The present dispute relates to the amounts of compensation which the owners of the two properties are entitled to be paid by the State. In the case of lot 131 the owner last claimed R48000 and the appellant's total C offer amounted to R22000, while in the case of lot 129 the figures were R45000 and R22000 respectively. The two amounts of R22000, together with statutory interest, were paid to the owners in each case, who accepted payment subject to a reservation of rights. Thereafter the owner of lot 131 and the joint owners of lot 129 instituted separate actions in the D Durban and Coast Local Division for the determination, in terms of s 7 of the Act, of the compensation to be paid by the State for the expropriated properties. At the hearing (which took place before SHEARER J sitting without assessors) the two actions were consolidated and I shall accordingly refer to the owners of the two properties collectively as "the respondents".

E In the consolidated action the respondents asked that the compensation be fixed in the amounts last claimed by them, viz R48000 for lot 131 and R45000 for lot 129. The appellant consented to a determination by the Court, in the case of each property, in the sum of R22000 but otherwise prayed for judgment in his favour with costs. The trial Court, having heard evidence and argument, determined the compensation for each lot in F the sum of R30000, ordered the payment by appellant of interest to be determined in accordance with s 8 (2) of the Act, and ordered appellant to pay that portion of respondents' costs required to be paid in terms of s 10 (2) (c) of the Act. Despite the consolidation of actions separate orders in these terms were issued. The appeal is against the whole of the G judgment and the orders of the Court a quo. On appeal it was the general contention of appellant's counsel that the trial Court ought to have determined the compensation in the case of each property in the sum offered and paid by appellant, viz R22000, whereas respondents' counsel supported the trial Court's finding of R30000 for each property.

The two erven in question form part of a block of 18 erven, situated in a H locality known as "Essendene", which in turn forms part of the much larger area called Umgeni South. In terms of a new town planning scheme in the course of preparation for Umgeni South, published in October 1968 and adopted by the Durban City Council ("the Council") on 7 June 1971, these 18 erven were zoned for use for educational purposes (the use zone being actually termed "Educational l"). Under an earlier town planning scheme, which was adopted by the Council in 1953 and remained in operation until 7 June 1971, these erven had fallen into a use zone termed "Special Residential". It appears that this alteration in the zoning of the

Corbett JA

erven was effected in order to provide for a site (referred to in the evidence as "school site No 12") for the establishment of an Indian High A School. The 1971 town planning scheme made provision for a number of such school sites in the whole area of Umgeni South. This was the result of consultation and collaboration between the City Engineer's department of the Council and the responsible educational authority, before 1 April 1966 B the Natal Provincial Education Department and thereafter the Division of Indian Education of the Department of Indian Affairs. Briefly, the procedure was for the educational authority to state its general requirements as to the number of school sites required and how many of these should be for high schools and how many for primary schools; for the City Engineer's department to put forward a number of proposed sites; and C for the educational authority, having viewed the sites, to select those of which it approved. It is common cause that the purpose of expropriating respondents' properties was to acquire all the erven comprising school site No 12 in order to give effect to the plan to establish thereon an Indian High School.

Section 8 (1) (a) of the Act prescribes that the amount of compensation to be paid to an owner in respect of property expropriated in terms thereof shall not exceed the aggregate of:

"(i)

the amount which the property would have realized 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 or inconvenience caused by the expropriation".

E The relevant meaning of "date of notice", as defined in s 1 of the Act, is the date upon which the notice of expropriation was delivered or sent by registered post to the owner. In this case we are concerned only with the amount referred to in (i) above but one of the problems immediately encountered in the determination of this amount arises from the fact that because lots 129 and 131 were zoned for educational purposes on the date F of the notice of expropriation (which can be taken to be on or about 4 September 1971) there was on that date no open market for the expropriated properties. This was found to be the position by the trial Court, which held that on the evidence the prospects at that stage of a sale of the properties to any person or institution other than the expropriating authority were "negligible". This finding was not challenged on appeal.

G The manner in which the trial Judge overcame this problem appears from the following passage in his judgment:

"Of course, at the date of the notice, there was no open market, for the zoning restricted the use of the properties to educational. The only realistic possibility of a purchaser was, as I have found, the expropriating authority. The zoning of the properties and the consequent restrictions upon their use was the product of consultation and H negotiation between the relevant State Department and followed the publication in October 1968 of the plan showing the proposed zoning. This publication had the effect of destroying utterly any prospects of selling the properties for residential use. To award an amount on the basis of educational use alone would, in my judgment, be unconscionable. There are, for example, zonings for cemeteries, and for a new and substantial 'Outer Ring Road' (New Streets). The effect of the zonings is to sterilise properties affected from any other use and to award compensation upon the basis that their use was limited by the zoning would probably result in a nil award. This could not have been intended by the Legislature. In my view, the correct approach in the present matter is to regard the consultations, the publications of the plan and the subsequent adoption of the scheme as being part of the machinery of expropriation

Corbett JA

and to estimate the market value of the properties on the basis that their use was not restricted by their zonings as educational."

Having excluded the educational zoning as the basis for the assessment of A market value, SHEARER J then went on to consider what notional zoning should be put in its place. He held that in this context he was obliged to have regard to the existence and provisions of the 1971 town planning scheme and to consider what upon the view of the notional buyer and seller the probable zoning of the properties would have been under that scheme; and he decided that such persons would have concluded that the properties B would have at least an "Extended Residential" zoning with "some possibility (which adds marginally to their value)" of a zoning as "General Residential". Upon this basis, and on his view of the evidence relating to the market value of the property so zoned, the trial Judge assessed the compensation for each property in the sum of R30 000.

C At this point it is necessary to say something about the use zonings provided for in the 1971 town planning scheme and, in terms of the scheme, the purposes for which land in each use zone may be used or the purposes for which buildings may be erected thereon and used. (For sake of brevity I shall call these "use purposes".) In addition to the actual zoning of D respondents' properties, viz Educational 1 ("E 1"), the following zonings occur extensively in the vicinity of the properties and on the evidence are of immediate relevance: Special Residential ("SR"), Extended Residential ("ER") and General Residential 3 ("GR 3"). The use purposes permitted under the scheme for each of these use zones are the following:

SR:

Dwelling house, recreational building.

ER:

Dwelling house, maisonettes, residential building other than hotels, boarding houses, residential clubs, hostels, and buildings comprising rooms which are individually let, recreational building.

GR 3:

Dwelling house, maisonettes, residential building, institution, recreational building.

E 1:

Place of instruction, recreational building.

Many of these use purposes are separately defined in the scheme. Of these definitions it is necessary to refer to only one, viz "residential building", which reads:

"'residential building' means a building other than a dwelling house or maisonettes, used...