Msiza v Director-General, Department of Rural Development and Land Reform and Others

• Jurisdiction: South Africa

Msiza v Director-General, Department of Rural Development and Land Reform and Others
2016 (5) SA 513 (LCC)

2016 (5) SA p513

Citation	2016 (5) SA 513 (LCC)
Case No	LCC 133/2012
Court	Land Claims Court
Judge	Ngcukaitobi AJ and Canca AJ
Heard	July 5, 2016
Judgment	July 5, 2016
Counsel	T Mbhense (on behalf of the Legal Resources Centre) for the applicant.; P Nonyane for the first and second respondents.; G Scheepers for the third and fourth respondents.

Flynote : Sleutelwoorde G

Expropriation — Compensation — Calculation — Market value of land not to be overemphasised at expense of other factors mentioned in s 25 of Constitution H — Established two-step procedure (assessment of market value followed by equitable adjustment) followed — Court awarding less than market value on ground that maket value did not strike equitable balance between public interest and interests of owner.

Land — Land reform — Award of land to labour tenant — Compensation of I owner — Calculation — Land Reform (Labour Tenants) Act 3 of 1996.

Headnote : Kopnota

Mr Msiza, a labour tenant on the third and fourth respondents' farm, was in 2004 awarded part of the farm under s 16 of the Land Reform (Labour Tenants) Act 3 of 1996. When the owners sought compensation from the state, a dispute arose about the correct valuation of the land. The state J

2016 (5) SA p514

A agreed to pay 'market value' but the owners wanted market value to be determined in the light of the 'development potential' of the land. It was common cause that if the land were valued for agricultural use, its market value was R1,8 million. According to the owners the possibility of a township development pushed the market value up to R4,36 million (see [44.5] – [44.7]).

B Section 23 of the Land Reform Act empowers the court to award owners 'just and equitable compensation as prescribed by [s 25 of] the Constitution'. Section 25(2) and (3) of the Constitution provide that '(p)roperty may be expropriated only . . . for a public purpose or in the public interest' and 'subject to [just and equitable] compensation, reflecting an equitable C balance between the public interest and the interest of those affected, having regard to . . . (a) the current use of the property; (b) the history of the acquisition and use of the property; (c) the market value of the property; (d) the extent of direct state investment and subsidy in the acquisition . . . of the property; and (e) the purpose of the expropriation'.

Held

D The pre-eminent determinant of compensation was justice and equity, not market value, which was merely the most quantifiable of the factors listed in s 25 of the Constitution (see [29] – [34]). Market value was, however, a useful starting point in a two-step procedure, to be adjusted upwards or downwards to strike an equitable balance between public and private interests (see [35] – [36]). In the present case the alleged developmental E potential of the land was too speculative to be considered as a factor in the calculation of market value, which had to be determined with reference to its current — agricultural — use (see [45] – [46]). In any event, the approach advanced by the owners might well distort the real value of the land and therefore run contrary to the public interest (see [47]).

F The inclusion in s 25 of item (e) — the purpose of the expropriation — served as a counterweight to market value, and allowed the court, acting in the public interest, to award compensation below market value in land reform cases (see [65] – [66]). It also meant that the application of the Pointe Gourde principle [*] would be limited to the determination of market value (see [68]). In the present case the market value had to yield to factors such as the G history and purpose of the acquisition and the objects of the land reform policy (see [76]). The market value would for the following reasons be adjusted downwards to R1,5 million (see [80]) —

•

the difference between the amount claimed and what the landowners paid for a much bigger area;

•

the landowners did not make any significant investments in the land since they H acquired it;

•

the use of the land did not change since it was acquired;

•

the claim succeed in 2004;

•

the state should be protected from extravagant claims for compensation;

•

Mr Msiza and his family had lived and worked on the land since 1936, I and the purpose of the Act was to compensate them.

2016 (5) SA p515

Cases Considered

Annotations A

Case law

Southern Africa

Abrams v Allie NO and Others 2004 (4) SA 534 (SCA) (2004 (9) BCLR 914; [2004] 2 All SA 99): applied

Agri SA v Minister for Minerals and Energy 2013 (4) SA 1 (CC) (2013 (7) BCLR 727; B [2013] ZACC 9): dictum in para [60] applied

Baphiring Community v Uys and Others 2007 (5) SA 585 (LCC): applied

City of Cape Town v Helderberg Park Development (Pty) Ltd 2007 (1) SA 1 (SCA): applied

City of Johannesburg Metropolitan Municipality v Chairman, Valuation Appeal Board 2014 (4) SA 10 (SCA) ([2014] ZASCA 5): dicta in paras C [24] – [25] applied

Du Toit v Minister of Transport 2006 (1) SA 297 (CC) (2005 (11) BCLR 1053; [2005] ZACC 9): applied

Ex parte Former Highlands Residents: In re Ash and Others v Department of Land Affairs [2000] 2 All SA 26 (LCC): applied

First National Bank of SA Ltd t/a Wesbank v Commissioner, D South African Revenue Service and Another; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC) (2002 (7) BCLR 702; [2002] ZACC 5): dictum in para [49] applied

Harksen v Lane NO and Others 1998 (1) SA 300 (CC) (1997 (11) BCLR 1489; [1997] ZACC 12): dictum in para [32] applied

In re Kookfontein Trading Co [2012] ZALCC 21: applied E

Khumalo and Others v Potgieter and Others [1999] ZALCC 59: discussed and applied

Khumalo and Others v Potgieter and Others [1999] ZALCC 68: discussed and applied

Msiza and Others v Uys and Others [2004] ZALCC 21: applied F

Phoebus Apollo Aviation CC v Minister of Safety and Security 2003 (2) SA 34 (CC) (2003 (1) BCLR 14; [2002] ZACC 26): dictum in para [4] applied.

England

Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565 (PC): discussed. G

Statutes Considered

Statutes

The Constitution, s 25(3): see Juta's Statutes of South Africa 2015/16 vol 5 at 1-28

The Land Reform (Labour Tenants) Act 3 of 1996, s 16: Juta's Statutes of South Africa 2015/16 vol 6 at 4-497. H

Case Information

T Mbhense (on behalf of the Legal Resources Centre) for the applicant.

P Nonyane for the first and second respondents.

G Scheepers for the third and fourth respondents. I

A determination on compensation in terms of s 23 of the Land Reform (Labour Tenants) Act 3 of 1996.

Order

1.

In terms of s 25(2)(b) of the Constitution it is decided that the just and equitable compensation to be paid by the first and second J

2016 (5) SA p516

A respondents (the one paying the other to be absolved) is R1,5 million for the acquisition of the property described by this court as 'the area of the homestead, demarcated by the fence on the perimeter of the homestead yard'; 'four parcels of cropping land, each 600 x 50 paces in extent'; and 'grazing land in extent equal to the rest of Rondebosch less the remainder of the ploughing fields' (the property). B

2.

The first and second respondents, the one paying the other to be absolved, are directed to make payment to the third and fourth respondents in the amount of R1,5 million for the acquisition of the property, within 60 days of this judgment.

3.

C The first and second respondents are directed to take appropriate steps to ensure that the property is registered in the name of the applicant.

4.

The steps referred to in para 3 of this order should be finalised within 90 days of this order.

5.

D There is no order as to costs.

Judgment

Ngcukaitobi AJ (Canca AJ concurring):

Introduction

[1] The question presented before this court concerns the determination E of compensation in accordance with s 23(1) of the Land Reform (Labour Tenants) Act 3 of 1996 (the Act) due to the applicant. The merits of the matter were decided by Moloto AJ in Msiza and Others v Uys and Others [2004] ZALCC 21 (LCC 39/01, 16 November 2004). Moloto AJ held that the applicant qualifies as a 'labour tenant' within the definition of the Act. Their application for an award of land pursuant to F s 16(1)(a) and (b) of the Act was approved by this court.

[2] The specific area of land awarded to the applicant was described as 'the area of the homestead, demarcated by the fence on the perimeter of the homestead yard'; 'four parcels of cropping land, each 600 x 50 paces G in extent'; and 'grazing land in extent equal to the rest of Rondebosch less the remainder of the ploughing fields'. During the current trial, it was established that the name 'Rondebosch' refers to part of the farm in which the land awarded to the applicant is located.

[3] Pursuant to the award mentioned above, the current proceedings H were instituted. There is a dispute between the landowner, the third and fourth respondents and the state respondents, being the first and second respondents, as to the correct value to be attached to the awarded land. This court has been requested to determine the amount to be awarded.

[4] The powers of this court to determine compensation are set out in s 23 of the Act. That section states that an owner of affected land 'shall I be entitled to just and equitable compensation as prescribed by the Constitution'. In s 23(2) it is stated that if there is no agreement as to the amount of compensation it must be determined by arbitration or by this court. The further powers of the court as provided for in s 23(3) pertain to the manner of the...