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

• Jurisdiction: South Africa
• Court: Constitutional Court
• Judge: Ngcobo CJ, Moseneke DCJ, Cameron J, Froneman J, Jafta J, Khampepe J, Mogoeng J, Nkabinde J, Skweyiya J, Yacoob J and Brand AJ
• Judgment Date: 18 November 2010
• Citation: 2011 (1) SA 293 (CC)
• Hearing Date: 03 August 2010
• Docket Number: CCT 15/10
• Counsel: RG Buchanan SC (with SC Rorke) for the appellants. MR Madlanga SC (with N Bawa and N Mayosi) for the first respondent. SJ Grobler SC (with BJ Pienaar SC) for the second and third respondents. AE Bham SC (with T Motau) for the fourth respondent.

Skweyiya J: A

Introduction

[1] This matter comes before us by way of an application for leave to appeal following a judgment of the Supreme Court of Appeal [1] in which that court confirmed the decision of the South Eastern Cape Local B Division [2] (High Court) and dismissed the appeal with costs. In this court, the applicants seek an order compelling the respondents to decide whether or not they intend to expropriate the applicants' properties.

[2] The applicants collectively own approximately 505 hectares of land within the Coega Industrial Development Zone (Coega IDZ), a major C government initiative to develop a new deepwater port at Coega and a surrounding industrial area near the city of Port Elizabeth in the Eastern Cape Province. [3] The applicants complain that the respondents have, by continued threats of expropriation of their land and other forms of conduct over a period of approximately nine years, beginning in 2000, deprived them of their entitlement to the full use, enjoyment and D exploitation of their land. The applicants argue that they have thus been deprived of their property in terms of s 25(1) of the Constitution. [4]

[3] The other complaint by the applicants is that the long history of threats to expropriate their property is prejudicial in the light of the first E respondent's failure to give lawful effect to them, and it was argued that the failure to take a decision is administrative action subject to review as envisaged in the Promotion of Administrative Justice Act [5] (PAJA). Furthermore, they contend that if this long process were to culminate in an expropriation of their property, the expropriation would constitute procedurally unfair administrative action in terms of s 6(2)(c) of PAJA. [6] F

[4] The first applicant is Offit Enterprises (Pty) Ltd; and the second applicant is Offit Farming Enterprises (Pty) Ltd (applicants). The first

Skweyiya J

A respondent is the Coega Development Corporation (Pty) Ltd (to whom I refer interchangeably as the CDC and the first respondent); the second respondent is the Premier of the Eastern Cape Province (Premier); the third respondent is the Minister for Public Works; and the fourth respondent is the Minister for Trade and Industry (collectively referred B to as the respondents). It should be noted at the outset that the first respondent is currently operating in the Coega IDZ, and has been designated to do so by the Minister for Trade and Industry. [7] The Department of Trade and Industry holds an A class share in the CDC, and it appears that the only ordinary shareholder in the CDC is the C Eastern Cape Development Corporation (Pty) Ltd, which holds shares on behalf of the national and provincial governments. It should also be noted that it is common cause amongst the parties that only the Minister for Public Works has the power to authorise any expropriation in the Coega IDZ in terms of the Expropriation Act. [8]

D [5] In the directions that were issued in setting this matter down for hearing in this court, the parties were directed to address the following issues in written and oral argument:

(i)

Whether the applicants have been deprived of their property in contravention of s 25 of the Constitution.

(ii)

If so, by whom?

(iii)

E What relief are the applicants entitled to?

The main focus of this judgment will thus be on the issues set out in these directions.

Skweyiya J

[6] Before I proceed further, there is one preliminary issue with which I A must first deal - that is, what type of entity is the first respondent? This is important to determine because, although s 8(4) of the Constitution [9] and our jurisprudence [10] make it clear that the Bill of Rights applies to juristic entities, whether s 25 is applicable to private entities is less apparent. The CDC is a private company incorporated in terms of the B Companies Act. [11] However, the CDC is in reality a public entity acting in the public interest; government has ownership in the company; and it complies with the definition of 'organ of state' in s 239 of the Constitution. [12] The CDC is, in principle, no different from other entities in which the government has a measure of shareholding. [13] Accordingly, I am C satisfied that s 25 applies to the first respondent, and no further consideration need be given to the horizontal application of s 25.

Legislative framework

[7] Section 25(1) of the Constitution contemplates the deprivation of D property, and states that:

'No one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property.'

The Coega IDZ is governed by the Manufacturing Development Act and E the regulations [14] promulgated in terms of s 10 thereof. Whilst the 2000 regulations required an applicant for an IDZ operator permit to show control over the land by way of ownership, lease or option, the 2006 amended regulations are far less stringent and require only that

Skweyiya J

A control is shown in 'the detail and manner as indicated in the guidelines'. [15] It is in terms of the amended regulations that the CDC's final operator permit was issued. The guidelines provide as follows:

'The term control of the land refers to ownership of the land . . . by the party applying for the IDZ operator permit and includes . . . holding of B an option over the land that will allow for ownership . . . or servitude of the land at the instance that the IDZ operator permit is granted. A spes for control in the near future may also qualify, but the applicant must clearly set out what the nature of that control obtained will be, as well as the likelihood of that realising.' [16]

C [8] The operator permit does, however, provide that the CDC must submit bi-annual reports to the Board [17] on its progress made in respect of expropriation proceedings. Provision is made in the amended regulations, [18] the guidelines [19] and the operator permit for the possibility of certain portions of land that fall within the designated area of the Coega IDZ to be excised at the decision of the Board. In particular, clause 14 of D the operator permit issued to the CDC states:

'Should the Board be of the opinion that after some period of deliberations and/or a final court order/decision (i.e. where no further appeal is available, or where a further appeal is not advisable), the CDC will not be able to obtain control of the area currently indicated as subject to E expropriation proceedings, or any part thereof, the Board may recommend to the Minister to amend the Operator's permit so as to exclude that specific area or portion thereof.'

To date, no application for excision has been made by the CDC.

Background to the present matter F

[9] As I have already mentioned, the first respondent has been tasked with the development of the Coega IDZ. The first respondent received a provisional operator permit in February 2002, which was extended from G time to time as required. [20] A final operator permit was granted to the

Skweyiya J

CDC in August 2007 in terms of the amended regulations. The A applicants own property falling within the designated area of the Coega IDZ, comprising 8,1 percent of that area. This is the only land within the Coega IDZ over which the CDC has, as yet, been unable to obtain control.

Previous attempts at expropriation B

[10] The Premier has on two previous occasions attempted to expropriate the applicants' land for the purpose of transferring it to the CDC. According to the applicants, these attempts seemingly arose at the instigation of the first respondent. However, both these attempts have been set aside, and there has to date been no actual expropriation of any C of the applicants' land.

[11] The first attempt was made in February 2005, and was set aside by Ebrahim J on the basis that the Expropriation Act did not confer the authority on the Premier to expropriate property. [21] Although Ebrahim J D granted leave to appeal to the Supreme Court of Appeal, the appeal was withdrawn. The Premier made a further attempt at expropriation in March 2007, this time attempting to expropriate a road running through the applicants' property. When this was challenged by the applicants, the respondents opted not to contest the application and it was set aside by Plasket J by an order of court in April 2007. [22] E

[12] Whilst there is nothing wrong in law with seeking to expropriate only a portion of land, such as a road, the respondents appear to have gone about this improperly in the past. It seems to me that it was at all times open to the CDC to legitimately seek to have the applicants' land F expropriated, provided that it complied with the law in its attempts to do so. There have been no attempts to expropriate since April 2007, and no application has ever been made by the CDC to the Minister for Public Works for the expropriation of the applicants' property. [23] However, it is clear that all the parties are now aware and in agreement that it is only the Minister for Public Works who is authorised to approve an application G for expropriation. [24]

Skweyiya J

Conduct prior to August 2007 of which the applicants complain A

[13] The applicants and the first respondent have been engaged in negotiations for the sale of the land since 2000. There are a number of instances of conduct by the CDC of which the applicants complain, which culminated in the launch of the High Court proceedings in August B 2007. [25] In addition to the attempted expropriations to which I have referred above, the conduct complained of can be grouped into three categories: the spoliation of the applicants' land; the rezoning application; and the ongoing threats of expropriation.

C [14] There have been three instances of 'spoliation'. In 2004 the CDC's employees erected a vibracrete fence around...