Pentree Ltd v Nelson Mandela Bay Municipality

• Jurisdiction: South Africa
• Citation: 2017 (4) SA 32 (ECP)

Pentree Ltd v Nelson Mandela Bay Municipality
2017 (4) SA 32 (ECP)

2017 (4) SA p32

Citation	2017 (4) SA 32 (ECP)
Case No	3199/2013
Court	Eastern Cape Local Division, Port Elizabeth
Judge	Eksteen J
Heard	October 26, 2016
Judgment	November 17, 2016
Counsel	A Breitenbach SC (with MR Townsend) for the plaintiff.; EAS Ford SC (with G Richards) for the defendant.

Flynote : Sleutelwoorde E

Expropriation — Compensation — Calculation — Expert valuation — Approach of court — Valuer may adduce evidence of information provided by third F parties — Not hearsay — Court to decide what weight to attach to evidence — Expropriation Act 63 of 1975, s 12(1); Constitution, s 23(5).

Expropriation — Compensation — Calculation — Market value still at heart of enquiry — Constitution providing additional factors that may justify adjustment to market-based compensation — Constitution, s 23(5).

Headnote : Kopnota

The G plaintiff claimed compensation under s 12(1) and (2) of the Expropriation Act 63 of 1975 (the Expropriation Act) for land expropriated by the defendant municipality. To prove market value the plaintiff called an expert valuer, one Falck, who relied on information given to her by one Edelson, another expert valuer. The municipality objected to this evidence on the H ground that it was hearsay. The plaintiff argued that it was not hearsay and that even if it were, it ought to be admitted under s 3 of the Law of Evidence Amendment Act 45 of 1988 (the Amendment Act).

Held

Market value was at the heart of an enquiry under s 12(1) of the Expropriation Act. Section 25(3) of the Constitution provided for additional factors that I could, where appropriate, justify an adjustment to the market-based compensation to reflect a just and equitable result (see [39]).

In considering the quantum of compensation in expropriation cases a line of decisions established that there was no lis between the parties and no onus on the plaintiff, and that the court functioned as a 'super valuer' that had to place itself in the shoes of the notional informed buyer and seller. The J Expropriation Act did not change this (see [19], [35], [41]).

2017 (4) SA p33

An expert valuer could, in the course of s 12 proceedings, adduce evidence of A information provided by other persons that influenced his or her valuation. Such information was part of the general body of information available to informed buyers and sellers in arriving at a purchase price, and was relevant and material irrespective of its truth. It was then up to the court to decide what weight to attach to it (see [31], [42], 51]).

The information provided by Edelson was freely available on the market, and the B notional informed buyer would have taken in into consideration (see [43]). It was relevant and material irrespective of its truth, not hearsay, and in any event admissible under s 3 of the Amendment Act. Any prejudice to the municipality would be cured by the opportunity to cross-examine Falck (see [51], [54], [57]). Objection overruled.

Cases cited C

City of Cape Town v Helderberg Park Development (Pty) Ltd 2007 (1) SA 1 (SCA): dicta in paras [20] and [33] applied

Coopers (South Africa) (Pty) Ltd v Deutsche Gesellschaft für Schädlingsbekämpfung mbH 1976 (3) SA 352 (A): dictum at 371B – E applied

Davey v Minister of Agriculture 1979 (1) SA 466 (N): dictum at 476H applied D

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

Estate De Wet v De Wet 1924 CPD 341: referred to

Ex parte Former Highland Residents: In re Ash and Others v Department of Land Affairs [2002] 2 All SA 26 (LCC) ([2000] ZALCC 54): applied E

Haakdoornbult Boerdery CC and Others v Mphela and Others 2007 (5) SA 596 (SCA) (2008 (7) BCLR 704; [2007] ZASCA 69): dictum in para [36] applied

Ingersoll-Rand Co (SA) Ltd v Administrateur, Transvaal 1991 (1) SA 321 (T): applied

Jacobs v Minister of Agriculture 1972 (4) SA 608 (W): dictum at 628D – E applied F

Khumalo and Others v Potgieter and Others [2000] 2 All SA 456 (LCC): applied

Lornadawn Investments (Pty) Ltd v Minister van Landbou 1977 (3) SA 618 (T): discussed and applied

Mdani v Allianz Insurance Ltd 1991 (1) SA 184 (A): dictum at 189J – 190A applied G

Msiza v Director-General, Department of Rural Development and Land Reform and Others 2016 (5) SA 513 (LCC): dictum in para [82] doubted

Pienaar v Minister van Landbou 1972 (1) SA 14 (A): referred to

Pietermaritzburg Corporation v South African Breweries Ltd 1911 AD 501: dictum at 516 applied

Port Edward Town Board v Kay 1996 (3) SA 664 (A): dictum at 674J – 675D H applied

PriceWaterhouseCoopers Incorporated and Others v National Potato Co-operative Ltd [2015] 2 All SA 403 (SCA): considered

R v Miller 1939 AD 106: dictum at 119 applied

S v Shaik and Others 2007 (1) SA 240 (SCA) (2007 (1) SACR 247; [2007] 2 All SA 9): dictum in para [170] applied I

Southern Transvaal Buildings (Pty) Ltd v Johannesburg City Council 1979 (1) SA 949 (W): dictum at 952D – E applied.

Legislation cited

The Constitution, 1996, s 25(3): see Juta's Statutes of South Africa 2015/16 vol 5 at 1-28 J

2017 (4) SA p34

The A Expropriation Act 63 of 1975, s 12(1) and 12(2): see Juta's Statutes of South Africa 2015/16 vol 6 at 4-295.

Case Information

A Breitenbach SC (with MR Townsend) for the plaintiff.

EAS Ford SC (with G Richards) for the defendant.

A B ruling on an objection to the admissibility of evidence. The objection was overruled (see [58]).

Judgment

Eksteen J:

[1] This is a ruling on an objection to evidence which comes in the course of protracted expropriation proceedings. The defendant has C objected to the plaintiff adducing evidence through Ms Jenny Falck, a valuer called as an expert witness, of information given to her by one Edelson, a valuer based in Port Elizabeth.

[2] It is necessary at the outset to place the objection in perspective. The plaintiff claims compensation in terms of s 12(1) and (2) of the D Expropriation Act 63 of 1975 (the Act) in respect of a property (the subject property) expropriated by the defendant on 2 October 2011. The subject property is undeveloped agricultural land situated within the urban edge of Uitenhage. The plaintiff contends that the subject property offers an above-average potential for short-term urban development E and it accordingly appointed a team of consultants who embarked upon a comprehensive process to acquire all administrative approvals necessary to undertake a large-scale mixed-use development centred around a residential core. An application under the Land Use Planning Ordinance 15 of 1985 was submitted to the municipality in March 2007 for approval of the proposed subdivision of the land. It had F not been approved at the time of the expropriation. Extensive evidence has been led relating to the proposed subdivision and numerous related issues which may have an impact upon the feasibility of such a development.

[3] Ms Falck, as alluded to earlier, has been called as an expert valuer to G testify in respect of the market value of the subject property at the time of the expropriation. She stated that in the course of her work on the valuation of the subject property she met with Edelson on 12 July 2012 and that she spoke with him on the telephone sometime thereafter but prior to 23 July 2012. During the meeting and the telephone H conversation Edelson informed her about a transaction regarding a property (the Motherwell property) which he did not identify specifically but which he said was situated in Motherwell, a township within the Nelson Mandela Metropole and in relative proximity to Uitenhage. He informed Ms Falck that the information relating to the Motherwell I property and the transaction in respect thereof had been supplied to a bank for purposes of attaining finance, and that he had been appointed by the bank to value the Motherwell property.

[4] Ms Falck made contemporaneous notes during the meeting and telephone conversation with Edelson and with reference to these contemporaneous notes she testified that Edelson passed the following J information to her:

2017 (4) SA p35

Eksteen J

(a)

The transaction had not yet been registered, but registration was A imminent;

(b)

the Motherwell property was about 489 hectares in extent;

(c)

approvals had been granted for the development on the Motherwell property of 4366 freestanding single-storey units on 112 hectares, 533 semi-detached single-storey units on 12,25 hectares, 24 two- to B three-storey apartments on 15,8 hectares, a retail site on 11 hectares, public open space of 103 hectares, including a nature reserve of 98 hectares, institutional units, roads and 13 mixed-use erven on 5,6 hectares;

(d)

an application had either already been made or would still be brought to the municipality to increase the number of residential C units to be developed to 10 000. The transaction was subject to the increase being granted by the municipality;

(e)

the Motherwell property was to be developed in a joint venture between the property owner and a developer (the applicant for the bank finance). The developer would have a 55% interest in the D venture, which excluded 250 residential erven and the commercial component. The land on which the residential portion was to be situate was 112 hectares in extent, excluding the 103 hectares of public open space, roads, etc;

(f)

the property owner would retain a 45% interest in the venture, as E well as 250 residential erven, and the commercial component;

(g)

the developer would pay the property owner R75,4 million for its 55% in the venture, which then comprised 6142 approved residential units, less the 250 units 'retained' by the property owner;

(h)

the R75,4 million purchase price for the...