Southern Transvaal Buildings (Pty) Ltd v Johannesburg City Council

• Jurisdiction: South Africa
• Judge: King AJ
• Judgment Date: 28 November 1978
• Court: Witwatersrand Local Division

King AJ:

On 4 September 1975 the defendant caused a notice of expropriation in terms of s 15 of the Expropriation Act 55 of 1965 to be served on the plaintiff in terms of which the defendant expropriated the H plaintiff's property being portion 1 of portion A of lot 2, Rosebank, Johannesburg. In terms of s 6 of the Act the plaintiff timeously gave written notice to the defendant claiming compensation in the sum of R225 000, which amount was subsequently reduced to R125 000. On 1 July 1977 the defendant offered to pay to the plaintiff compensation in the sum of R80 000 together with interest to date of the tender, which offer the plaintiff declined. The plaintiff has, however, retained payment of that sum in terms of s 6A (4) of the Act. The parties were unable to agree on the amount of compensation to be paid by the defendant to the plaintiff in respect of the expropriation and accordingly action was

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instituted for the determination of the compensation payable to the plaintiff.

In further particulars furnished by the plaintiff it was alleged that the A sum of R125 000 represented the market value of the property if sold by way of sectional title or to a purchaser who wished to resell the property on sectional title. The property consists of nine duplex flats on the corner of Oxford Road and Jellicoe Avenue, Rosebank. It was also alleged in the further particulars that the property's potential lay in the B possible sale of units by way of sectional title. On the plea as originally drawn these allegations were admitted, but at the commencement of the trial the plea was amended without objection by the plaintiff. In terms of the amended plea the defendant placed in issue the potential alleged and the market value of R125 000.

The block of nine duplex flats known as "Oxford Place" was built C approximately 40 years ago. In terms of the 1937 Johannesburg Town Planning Scheme the stand on which it was built had special residential rights. The local authority granted an existing use right to the plaintiff to build the flats on the special residential stand. This use may be continued until 1980. In terms of the Township and Town Planning Ordinance D 25 of 1965 (T) the plaintiff would have been entitled to apply for an extension of the existing use right for a further period of 15 years. During 1971 the local authority commenced a redevelopment scheme for Rosebank as a result of the so-called Firs development. This scheme involved the redevelopment of the boxed area bordered by Oxford Road in the east, Bolton Road in the south, Jan Smuts Avenue in the west and E Jellicoe Avenue in the north. During 1973 the right to open a sectional title register in respect of separate units on a single erf came into operation.

Although the flats were built in approximately 1937 they were built as duplex flats on the lines of the now well-known modern townhouse type of development. At the pre-trial conference it was agreed between the parties F that, in the event of the Court holding that the property had a potential for redevelopment for sectional title, the expenditure required to place the premises in a suitable condition for such development would be the sum of R12 000.

The redevelopment scheme, which by the date of the expropriation was G well-known, involved, inter alia, the widening of Jellicoe Avenue. In consequence, at first the defendant had communicated with the plaintiff on the basis that it wanted to expropriate portion of the plaintiff's property only in order to obtain a servitude area for the widening of Jellicoe Avenue. Eventually, however, the defendant decided that the whole of the property should be expropriated.

H The defendant made a bona fide and serious offer to the plaintiff to pay it compensation in the sum of R125 000. This offer was accepted by the plaintiff. The offer was subject to approval by the Administrator. The Administrator, however, refused to approve the agreement to pay compensation in that amount and only agreed to compensation being paid in the sum of R80 000.

Two difficult questions, therefore, arise. Firstly, in determining the compensation payable to the plaintiff, should the existence of the redevelopment scheme be taken into account in valuing the property as at the

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date of delivery of the notice of expropriation? Secondly, can the willing buyer in terms of s 8 (1) (a) (i) of the Act be individual purchasers of sectional title units of a block of flats which has not yet had a sectional title register opened?

A In terms of the Act the Court is in effect a supper valuator. Vide, Loubser en Ander v Suid-Afrikaanse Spoorweë en Hawens 1976 (4) SA 589 (T) at 608 - 615. The Court has to consider a fictitious well-informed seller B and purchaser. The Court must take into account everything which a seller and purchaser would have found in the open market and any information which was available to them. It must be accepted that the parties would have negotiated on a basis of equal footing. Vide, Bestuursraad van Sebokeng v M & K Trust & Finansiële Maatskappy (Edms) Bpk 1973 (3) SA 376 (A) at 384H. The question of the value of the property is a question of C fact. The purpose for which the property is being expropriated must not be taken into account and the implementation of the scheme must be ignored. The open market is a fictitious one as any enhancement or diminution in value as a result of the scheme causing the expropriation must be ignored. It must also be assumed that the bargaining is voluntary D and that there is no anxious or enforced disposal which "would cause ordinary business considerations to be overlooked". Vide, O'Keefe Legal Concept and Principles of Land Value. The plaintiff has the onus of establishing the potentiality of the property alleged by it while in regard to the quantum of compensation there is no real lis between the parties and, therefore, no onus in the legal sense; the Court has to do the best it can with the evidence before it. Vide, Loubser's case supra at E 626; Jacobs v Minister of Agriculture 1972 (4) SA 608 (W) at 627; Lornadawn Investments (Pty) Ltd v Minister van Landbou 1977 (3) SA 618 (T).

The onus was, therefore, on the plaintiff to prove that the property had the potential for redevelopment as a sectional title property. In this F regard the plaintiff called one of the legal officers employed by the defendant, one Hollgate. He has assisted the clerk of the Council in the acquisition and disposal of hundreds of properties. He is the chief estates officer employed by the defendant. He said that, although the plaintiff's existing use right would expire in 1980, the defendant would G in all probability have granted an extension of the use right for another 15 years. He said that, if there had been no scheme to widen Jellicoe Avenue, the plaintiff would in all probability have obtained a rezoning of its land to general residential. He pointed out that the Director of Local Government has granted rezonings in conformity with the defendant's H redevelopment plan, which, inter alia, provides for the plaintiff's property to be rezoned general residential. In regard to such rezoning he was of the view that, if there had been no road-widening scheme, the contravention of the existing building line would have been relaxed by the defendant. He pointed out that the building line was brought into operation in the town planning scheme of 1946 and that many buildings in the Johannesburg area which were built before 1946 encroach upon this building line. He has not...