Uys NO and Another v Msiza and Others

• Jurisdiction: South Africa
• Citation: 2018 (3) SA 440 (SCA)

Uys NO and Another v Msiza and Others
2018 (3) SA 440 (SCA)

2018 (3) SA p440

Citation	2018 (3) SA 440 (SCA)
Case No	1222/2016; [2017] ZASCA 130
Court	Supreme Court of Appeal
Judge	Navsa ADP, Cachalia JA, Seriti JA, Tsoka AJA and Lamont AJA
Heard	September 29, 2017
Judgment	September 29, 2017
Counsel	GJ Scheepers for the appellants.; AA Gabriel SC (with M Bishop) for the first respondent.; NH Maenetje SC (with P Nonyane) for the second and third respondents.; GM Goedhart for the amicus curiae.

Flynote : Sleutelwoorde

Land — Land reform — Award of land to labour tenant — Compensation of owner — Calculation — Land subject to labour tenant claim negatively impacting developmental potential — Whether Pointe Gourde principle requiring one to ignore such impediment in calculating compensation — C In circumstances where owner aware of impediment at time of purchasing, Pointe Gourde principle not of application in calculating compensation.

Land — Land reform — Proceedings in Land Claims Court — Costs — Exceptional circumstances justifying costs order — Extreme dilatory conduct on part of state in negotiating compensation due to owner pursuant to successful labour tenant claim — Despite having arrived at appropriate amount for D compensation, state failing to tender such amount — Conduct of state necessitating parties to approach court.

Headnote : Kopnota

Mr Msiza was awarded a portion of land owned by the Dee Cee Trust (the Trust) pursuant to his successful claim as a labour tenant under s 23(1) of E the Land Reform (Labour Tenants) Act 3 of 1996 (the Act). Subsequent negotiations on the amount of compensation to be paid to the Trust failed. Mr Msiza approached the Land Claims Court (the LCC) for a determination in terms of s 23(2) of the Act. The LCC's decision as to the amount payable by the Director-General for the Department of Rural Development and Land Reform, and the Minister for the Department, formed the subject of F this appeal brought by the Trust (represented by its trustees).

In terms of s 23 of the Act, read with s 25(3) of the Constitution, owners of land are entitled to 'just and equitable [compensation], reflecting an equitable balance between the public interest and the interests of those affected', having regard to relevant circumstances, which include the market value of the property, the current use of the property, the history of the property, G and the purpose of the expropriation. In arriving at an appropriate amount as compensation, the approach the LCC adopted (in line with the two-stage procedure advocated in case law) was to use market value as a starting point, and to then adjust it upwards or downwards to strike an equitable balance between public and private interests. The parties disagreed how the market value was to be calculated. The state argued that it should be H determined on the basis of the property's present use — agricultural — giving a value of R1,8 million. The appellants argued that market value had rather to be determined based on the property's future residential developmental potential, giving a value of R4,36 million. The state, in support of its stance, relied on its expert, who found agricultural use to be the 'highest and best use' for the subject property, given, inter alia, the property's historical and I current use, its characteristics and its lawful use, as well as the fact that the property was subject to a successful labour tenant land claim by Mr Msiza. The LCC decided in favour of the state, placing the market value at 1,8 million based on present agricultural usage. The LCC then adjusted this value downwards to R1,5 million for the following reasons: there was a 'disproportionate chasm' between the amount paid by the Trust and the market J value it sought to claim; the Trust had made no significant investment in the

2018 (3) SA p441

land; the use of the land had not changed since it was acquired; when the A land was acquired there was a land claim and the Msiza family were residing on the land; the land had been subsequently awarded to the Msiza family in 2004; the fiscus should not be saddled with extravagant claims for financial compensation when the object of expropriation was land reform; and the Msiza family had lived and worked on the farm since 1936 as labour tenants and had to receive compensation. B

The appellants on appeal submitted that the LCC had misdirected itself, firstly in calculating market value based on the present agricultural use of the property instead of its developmental potential, and secondly in then adjusting downwards the figure it arrived at. They argued that application of the Pointe Gourde principle [*] required the impediment to the residential development constituted by the Msiza claim to be ignored in determining C value. The true market value of the land would then be R4,36 million.

Held, that one could not fault the conclusion of the state's expert in relation to the compensation to be paid (see [16]).

Held, that, in the present matter, the Pointe Gourde principle did not require that the existence of the Msiza claim be ignored in determining market value. D At the time the Trust purchased the subject property, it was aware that Mr Msiza had already lodged a claim under the Act, and of the presence of him and his family on the land. In other words, there was a known impediment to the property's development potential when it was purchased which had a direct bearing on the price that the Trust as buyer would have been willing to pay. In such circumstances the Pointe Gourde principle had E no application in determining the compensation due to the Trust for the subsequent acquisition of its property. (See [19] – [21].) On this basis the market value of the land was therefore R1,8 million and not R4,36 million, which would have been the market value with its developmental potential. (See [21].)

Held, however, there were no facts justifying the deduction of the amount of F R300 000; the LCC had arbitrarily decided on this figure with no rational basis. (See [27].) There was no 'disproportionate chasm' between the price paid by the Trust when it bought the land and the market value at the time of the determination. The difference simply reflected the increase in value over the period of Trust ownership. (See [24].) Further, there was no G justification for labelling the Trust's claim as extravagant, and there existed no evidence that the fiscus was unable to pay R1,8 million for the land. (See [26].) As to the other reasons provided by the LCC for making a further deduction, they had all in fact already been taken into account in determining market value. (See [25].) Accordingly, a just and equitable determination for the land was R1,8 million. (See [28].) H

Held, that exceptional circumstances existed justifying a departure from the general approach of the LCC to decline to make an order as to costs. In negotiating suitable compensation, the Minister had exhibited extreme dilatory conduct, such that Mr Msiza had been obliged to bring the present proceedings to move the matter forward. Further, despite having accepted I

2018 (3) SA p442

during A negotiations that R1,8 million was an appropriate determination, it had not tendered such amount, thereby compelling the Trust to go to trial. An appropriate order would be for the Minister to pay 70% of the Trust's costs, and all of Mr Msiza's costs. (See [29].)

Cases cited

Southern B Africa

Abrams v Allie NO and Others 2004 (4) SA 534 (SCA) (2004 (9) BCLR 914; [2004] 2 All SA 99): dictum in para [29] applied

City of Cape Town v Helderberg Park Development (Pty) Ltd 2007 (1) SA 1 (SCA) ([2007] 1 All SA 517; [2006] ZASCA 91): referred to

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

Kerksay Investments (Pty) Ltd v Randburg Town Council 1997 (1) SA 511 (T): compared

Msiza v Director-General, Department of Rural Development and Land Reform and Others 2016 (5) SA 513 (LCC): reversed in part on appeal

Port Edward Town Board v Kay 1996 (3) SA 664 (A): dictum at 681G – H D applied.

Australia

Queensland v Murphy (1990) 95 ALR 493 (HC): referred to.

England

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

Case Information

GJ Scheepers for the appellants.

AA Gabriel SC (with M Bishop) for the first respondent.

NH F Maenetje SC (with P Nonyane) for the second and third respondents.

GM Goedhart for the amicus curiae.

An appeal from the Land Claims Court of South Africa, Johannesburg (Ngcukaitobi AJ and Canca AJ sitting as court of first instance), judgment G reported sub nom as Msiza v Director-General, Department of Rural Development and Land Reform and Others 2016 (5) SA 513 (LCC) (5 July 2016).

Order

1.

H The appeal is upheld with costs.

2.

The third respondent is to pay the first respondent's costs and 70% of the appellants' costs, such costs are to include the costs of two counsel.

3.

The order of the Land Claims Court is amended as follows:

The I figure 'R1 500 000 (one million, five hundred thousand rand)' is deleted and substituted with the figure 'R1 800 000 (one million, eight hundred thousand rand)' where it appears in paras 1 and 2.

Paragraph 5 is deleted and substituted with '5. The second respondent is to pay the costs of the applicant and the Dee Cee Trust, J including the costs of two counsel'.

2018 (3) SA p443

Judgment

Lamont AJA (Navsa ADP, Cachalia JA, Seriti JA and Tsoka AJA A concurri...