Offit Enterprises (Pty) Ltd and Another v Coega Development Corp (Pty) Ltd and Others

• Jurisdiction: South Africa
• Judge: Jansen J
• Judgment Date: 19 November 2008
• Citation: 2009 (5) SA 661 (SE)
• Docket Number: 1764/07
• Court: South Eastern Cape Local Division
• Counsel: RG Buchanan SC (with S Rorke) for the applicants. MR Madlanga SC (with N Mayosi) for the first respondent. SJ Grobler SC (with BJ Pienaar) for the second and third respondents. AE Bhan SC (with T Motau) for the fourth respondent.

Jansen J: E

The applicants bring an application by way of notice of motion for an order declaring that any expropriation of the applicants' properties as described in the notice of motion in terms of the legislation in effect as at the date of granting of such order at the instance of any F respondents for the benefit of the first respondent is neither permissible nor lawful. The principal relief sought is limited in that it does not apply in respect of any lawful process for the expropriation of the applicants' land for provincial road purposes. In the alternative, an order is sought compelling any one of the respondents desirous of expropriating the properties referred to for the benefit of the first respondent to initiate a G lawful expropriation process within a period of one month from the date of the granting of such an order. In their notice of motion the applicants further sought an order that the first respondent pay the costs of the application and that the remaining respondents be ordered to do so jointly and severally with the first respondent only in the event that they oppose the application. All four the respondents H oppose the application.

On 7 December 2001 the fourth respondent designated the Coega area in the Eastern Cape Province for development as an Industrial Development Zone (an IDZ). The first respondent was incorporated on 20 April 1982 in terms of the Companies Act 61 of 1973 as a private I company under the name Plot 84 Klerksoord (Edms) Bpk. On 17 August 1998 the name of the company was changed to Coega Development Corporation (Pty) Ltd. The fourth respondent holds one 'A'-class share in the first respondent. The first respondent is presently operating the Coega IDZ. It does so by virtue of provisional IDZ operator permits issued to it from time to time and, thereafter, in terms J of an IDZ permit issued to it on 7 August 2007. All these permits were

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issued in terms of the provisions of the Manufacturing Development Act A 187 of 1993 and regulations promulgated in terms of the Act. It is common cause that it is a pre-emptory requirement that an IDZ operator be in possession of a valid IDZ operator permit. It is the applicants' case that the first respondent is not in possession of a valid IDZ operator permit and therefore that its activities in operating the Coega IDZ are accordingly unlawful. B

It is common cause that the immovable properties described in the notice of motion are owned by the applicants. It is further common cause that the said properties fall within the geographical boundaries of the Coega IDZ. It is common cause that the applicants' ownership of the C properties is constitutionally protected. Section 25(1) of the Constitution provides that no one may be deprived of property except in terms of a law of general application and no law may permit arbitrary deprivation of property. It is further common cause that the Expropriation Act 63 of 1975 confers on the third and fourth respondents certain powers of expropriation. It is also common cause that the first respondent has no D power to expropriate the applicants' properties. It is further common cause that anything other than a lawful expropriation would infringe the applicants' constitutionally protected right to property.

The second respondent has previously, on 2 February 2005, attempted to expropriate the applicants' properties, but was unsuccessful therein. E The second respondent at the time attempted to expropriate the properties for the purpose of transferring them to the first respondent. The matter came before Ebrahim J. He held that, in the absence of an effective definition of 'Executive Committee' in s 1 of the Expropriation Act, s 2(1) thereof does not confer authority on the second respondent F to expropriate property. He found that the expropriation for the purpose of transferring the properties to the first respondent was not legitimate, as it offended against the provisions of s 2(1) of the Act. He further concluded that, as s 3(1) of the Expropriation Act specifically provides for the expropriation of property on behalf of certain juristic persons or bodies as defined in s 3(2), the provisions of s 2(1) may not be utilised G for such a purpose. It was further held that the Eastern Cape Land Disposal Act 7 of 2000 does not authorise the acquisition of immovable property for the purpose of transferring it to another entity or person, nor does it authorise the acquisition of property on behalf of such entity or person. It was held, in conclusion, by Ebrahim J that the Expropriation H Act and the Land Disposal Act do not vest the second respondent with the authority to expropriate the applicants' properties for the purpose of transferring them to the first respondent. In terms of the Expropriation Act, so it was held, only the Minister of Public Works, the third respondent in the instant case, may expropriate the property for a public purpose. Although the first and second respondents were granted leave I by Ebrahim J to appeal to the Supreme Court of Appeal against the whole of his judgment, the respondents, at the eleventh hour, decided not to prosecute the appeal and withdrew it.

Another attempt to expropriate was made by the second respondent. On 17 March 2007 the second respondent attempted to expropriate a road J

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A running through the properties of the applicants. The road expropriation was attacked by the applicants, who brought an application to set aside the road expropriation. The respondents sought advice of counsel and eventually decided not to contest the application. The purported road expropriation was therefore set aside by Plasket J on 19 April 2007. The applicants are now content with the relevant provincial road being B upgraded and expropriated for such purpose.

It is the respondents' case in opposition that none of them have the intention to expropriate the applicants' properties and that, insofar as the third and fourth respondents are concerned, they have not been C requested by the first respondent to set in motion proceedings to expropriate the applicants' properties. Despite these statements of no intention to expropriate by the respondents, it is the applicants' case that they have established a continuing intention to expropriate the properties for the benefit of the first respondent. This continuing intention to expropriate emerges, according to the applicants, from two important D considerations. The first is that, in terms of the regulations, the first respondent is required to control all the land within the Coega IDZ, which includes the applicants' properties. The second consideration, according to the applicants, is that the history as evidenced in the applicants' founding affidavits discloses such a continuing intention.

E I will deal with the second contention first. The evidence placed before me overwhelmingly supports the contention by the applicants that the first respondent is indeed desirous to lay its hands on the properties of the applicants. I have already referred to the two abortive attempts at expropriation at the instance and for the benefit of the first respondent. F In addition to that, in November 2006, when the applicants applied to the local authority to have the properties rezoned so as to enable them to sell the properties out of hand, the first respondent objected thereto and, in so doing, informed the local authority that the properties had been 'expropriated by the State'. In its application for an IDZ operator permit G in terms of the amended regulations in February 2007, the first respondent deals pertinently with the applicants' properties and indicates that these are properties over which it is still to gain and exercise control. This application also expressly stated that the Coega Hotel, which is to be found on the applicants' properties, 'will be expropriated'. On 4 June 2007 the applicants' attorney directed a letter to the first H respondent's attorney and to the State Attorney, who is the attorney of record for the second, third and fourth respondents, advising them that the applicants were proceeding on the basis that the first and second respondents had no further interest in pursuing the acquisition of the applicants' properties and that they would commence marketing the I property on the open market. No response was received to that letter. The applicants then instructed their agents to market the property both nationally and internationally, as a result of which advertisements were placed prominently in the media advising the public that the applicants' properties were for sale. In a direct response the first respondent placed several advertisements in the Business Day newspaper stating its intention J to expropriate the applicants' properties if it were unable to

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purchase it at a reasonable market price. The first respondent's A explanation, in its answering affidavit, as to why it placed the advertisement in the Business Day is significant. It explains that an advertisement was placed in the media because the applicants' own advertisement had misled potential buyers because the latter failed to disclose to potential buyers that the first respondent was intending, as a remedy of last resort, B to request the relevant authorities to expropriate the applicants' land. It was properly conceded by counsel on behalf of the first respondent that there had been attempts at expropriation and repeated mention by the first respondent of possible future expropriation. I will accept for the purposes of this judgment that the continuous threats and interference by the first respondent amounts to an unlawful deprivation of the C applicants' properties. See Mkontwana v Nelson Mandela Metropolitan Municipality and Another; Bissett and Others v Buffalo City Municipality and...