Case Law[2022] ZALCC 4South Africa
Moloto Community v Minister of Rural Development and Land Reform and Others (LCC 204/2010) [2022] ZALCC 4 (11 February 2022)
Land Claims Court of South Africa
11 February 2022
Headnotes
AT RANDBURG
Judgment
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## Moloto Community v Minister of Rural Development and Land Reform and Others (LCC 204/2010) [2022] ZALCC 4 (11 February 2022)
Moloto Community v Minister of Rural Development and Land Reform and Others (LCC 204/2010) [2022] ZALCC 4 (11 February 2022)
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sino date 11 February 2022
IN
THE LAND CLAIMS COURT OF SOUTH AFRICA
HELD
AT RANDBURG
CASE
NO:
LCC 204/2010
DELETE
WHICHEVER IS APPLICABLE
(1)
REPORTABLE:
YES
(2)
OF
INTEREST TO OTHER JUDGES: YES
(3)
REVISED:
YES
DATE:
11/2/2022
Before:
Cowen AJ and
Assessor T Maodi
In
the matter between:
MOLOTO
COMMUNITY
Plaintiff
and
MINISTER OF
RURAL DEVELOPMENT
AND
LAND
REFORM
First Defendant
LUMO
BELEGGINGS TRUST
Second
Defendant
JOHANNES
STEPHANUS GERHARDUS
VENTER
Fifth Defendant
COLLIN
LAI
Sixth
Defendant
PIETER
JACOBUS STEPHANUS ROBERTS
Ninth
Defendant
JAMES
ANDRE ROBERTS
Tenth
Defendant
RENTIA
KEMP
Twelfth Defendant
PIETER
MATHYS
BEUKES
Fifteenth Defendant
JAKKALSDANS
BOERDERY
CC
Sixteenth Defendant
PIETER
JOHANNES STRYDOM
Seventeenth
Defendant
JUDGMENT
COWEN
J (assessor T Maodi in agreement)
Introduction
[1]
This
Court is called upon to determine the amount of just and equitable
compensation the First Defendant, the Minister of Rural
Development
and Land Reform (the Minister) must pay various landowners to acquire
their properties in terms of the Restitution
of Land Rights Act 22 of
1994 (the Restitution Act) for purposes of land reform.
[2]
The
Moloto Community lodged a land restitution claim in terms of section
2 of the Restitution Act prior to 31 December 1998.
Amongst the
claimed property is land referred to as Jakkalsdans 243 in
Mpumalanga, located approximately 120km from Witbank in
the Greater
Nkangala District Municipality. Over time, Jakkalsdans 243 has
been subdivided into multiple parts. In
the result, the
affected portions are owned by multiple landowners under separate
title deeds.
[3]
From
an early stage in the land restitution process, multiple affected
landowners indicated their willingness to sell their properties
to
the Minister for purposes of land reform. Some affected
landowners reached agreement with the Minister regarding compensation
payable; some at an early stage and others more recently. Other
affected landowners did not, including those landowners participating
in the current proceedings, being the Second, Fifth, Sixth, Ninth,
Tenth, Twelfth, Fifteenth, Sixteenth and Seventeenth Defendants.
For
convenience, I refer in this judgment to these defendants as the
Landowner Defendants. I refer to their properties
collectively as the “subject properties”.
[4]
The
Minister is pursuing a process of acquisition of the subject
properties in terms of the Restitution Act pursuant to a consent
order granted by this Court on 5 June 2017. In terms of section
22(1)(b) of the Restitution Act, this Court has the power
to
determine compensation payable in respect of land owned by a private
person upon acquisition of such land under the Act.
[1]
Pursuant
to the 5 June 2017 order and a subsequent order of this Court of 24
May 2018, also granted by consent, any dispute in respect
of the
compensation payable to the Landowner Defendants is to be determined
by this Court. There is no dispute that on the
facts of this
case, this Court must, for this purpose, determine what is just and
equitable compensation as contemplated by section
25(3) of the
Constitution of the Republic of South Africa, 1996 (the
Constitution).
[2]
[5]
Section
25(3) of the Constitution provides as follows:
“
(3)
The amount of the compensation and the time and manner of payment
must be just and equitable, reflecting an equitable balance
between
the public interest and the interests of those affected, having
regard to all relevant circumstances, including—
(a)
the current use of the property;
(b)
the history of the acquisition and use of the property;
- the
market value of the property;
the
market value of the property;
- the
extent of direct state investment and subsidy in the acquisition
and beneficial capital improvement of the property; and
the
extent of direct state investment and subsidy in the acquisition
and beneficial capital improvement of the property; and
(e)
the purpose of the expropriation.”
[6]
The
Landowner Defendants seek compensation determined as the market value
of the subject properties. Save in respect of the
Sixteenth
Defendant’s property, the parties have reached agreement about
market value. The Minister disputes that market
value should be paid
for the subject properties and contends, on the advice of the
Valuer-General, that, on the facts of this case,
just and equitable
compensation should be determined by considering both the market
value of the properties and what is referred
to as ‘the current
use value’ of the properties. The ‘current use
value’ is described as the value
which the owner derives from
the property by virtue of its beneficial use. The Minister
contends that these two values (market
value and current use value)
should be added together and divided by two to arrive at a just and
equitable capital amount. This
‘formula’ gives
these two capital values equal weight. Where applicable,
adjustments can then be made in light
of other relevant
considerations, such as direct state investment and subsidy as
contemplated by section 25(3)(d) of the Constitution.
As it is
common cause that no such considerations arise in this case, the
Minister contends that just and equitable compensation
should be
arrived at simply by adopting the formula.
[7]
The
following main issues arise for decision in this case:
(a)
Whether,
properly interpreted, section 25(3)(a) of the Constitution, permits a
numerical value to be attached to the “current
use” of
property, in this case representing the value an owner derives from
the beneficial use of the property, referred
to as a “current
use value”.
(b)
If
the Constitution permits a quantitative assessment of “current
use”, what role should “current use value”
play in
determining just and equitable compensation? This requires
consideration whether the Court should accept that the
formula the
Minister adopted on the advice of the Valuer-General, which gives
market value and current use value equal weight,
would yield a just
and equitable amount of compensation on the facts and in the
circumstances of this case. It also requires
consideration of
what has become known as the two step approach in determining
just and equitable compensation which uses
the market value of
property as a starting point from which adjustments can be made with
reference to other relevant considerations.
(c)
If
the Court concludes that there is a role for “current use
value” in determining just and equitable compensation in
this
case, is the Court able to determine the “current use value”
of the relevant Landowner Defendants’ properties
on the
evidence before it and if so, what is it?
(d)
If
the Court is unable to determine the “current use value”,
how should just and equitable compensation be determined
on the facts
of this case?
(e)
Costs
including various reserved costs.
[8]
It
is important to note upfront that the Property Valuation Regulations
2018
[3]
made under the Property
Valuation Act 17 of 2014 (the PVA) require the application of the
formula as an initial step in the process
of valuing a subject
property for purposes of land reform. These Regulations
are not applicable to these proceedings
as these proceedings were
referred to this Court before the Regulations came into force.
[4]
This judgment thus does not concern their validity or interpretation,
which was not before me and was not addressed by the parties
at any
stage.
[9]
Before
turning to the above questions, I deal with the following issues:
the history of the matter, the broad approach to
be followed in
interpreting section 25 of the Constitution, the onus or duties of
proof, the agreed facts and the salient features
of the trial
proceedings and expert evidence.
The
history of the matter
[10]
The
Moloto land claim has a long and complex history. This Court
has not been fully apprised of the historical detail.
Nevertheless, a brief overview identifying certain features is
warranted.
[5]
[11]
The
Moloto land claim was published in the Government Gazette on 27
August 2004 in terms of section 11 of the Restitution Act.
[6]
After investigating the claim, the Regional Land Claims
Commissioner: Mpumalanga (the Regional Commissioner) embarked on
a
process of negotiation with the affected landowners with a view to
purchasing the affected properties on behalf of the Minister.
It
appears that written offers were made to some affected landowners
whose properties were valued in 2007. Some of these
offers were
accepted and the relevant properties were then transferred to the
State but the Regional Commissioner was not able
to reach consensus
with all affected landowners. At a point in October 2009, it
appears that the Regional Commissioner informed
the affected
landowners that the State no longer intended to restore the
properties to the land claimants. This stance apparently
led
various affected landowners to institute an application to compel a
referral of the land claim to this Court for adjudication,
which
succeeded before Andrews AJ.
[12]
On
2 September 2010, Andrews AJ granted an order compelling the Regional
Commissioner to issue a certificate in terms of section
14 of the
Restitution Act that the Moloto land claim cannot be resolved and to
refer it to this Court for adjudication.
[7]
The Regional Commissioner did so on 8 November 2010. The Moloto
Community thereafter pleaded to the referral as did various
landowners. Following the referral, a process of case management
ensued, the details of which need not be traversed save to note
that
the matter has faced many hurdles, taken many turns and come before
multiple judicial officers over the course of a decade.
The
need for finality in these proceedings is clear.
[13]
As
indicated above, the Minister is acquiring the subject properties in
terms of the Restitution Act pursuant to a court order of
5 June 2017
granted by consent. Following the grant of that order, the Minister
tendered to purchase the properties at amounts
based on valuation
reports issued by the Valuer General in terms of section 12 of
the PVA. The Landowner Defendants
rejected the offers and a
dispute has emerged regarding the compensation payable. It thus
falls on the Court to determine
the just and equitable amount
payable.
[14]
After
various delays, the matter was due to proceed in November 2018.
However, it was postponed in circumstances explained in a
reported
judgment of Canca AJ.
[8]
The
matter was thereafter set down for hearing in October 2019 but was
again delayed until April 2020, when it could
still not proceed.
[15]
On 6
July 2020, Canca AJ issued directives that a meeting of expert
witnesses must take place and joint minutes prepared.
At
that stage three expert witnesses were to be called. The State
Attorney had appointed Professor M Mooya and the Landowner
Defendants
had appointed Dr JM Laubscher and Mr JF du Toit. A minute dated
6 July 2020 of these expert witnesses held on
13 March 2020 is before
the court. It records that “a consolidated view is not
possible” despite a lengthy discussion,
“consensus could
not be reached on any substantive points”. In short,
Professor Mooya disagrees fundamentally
with Dr Laubscher and Mr du
Toit on the interpretation and, in turn, the application of section
25(3) of the Constitution to the
case.
[16]
On 18
October 2019, the parties filed a statement of agreed facts, which I
deal with below. The parties have not filed any
pleadings in
respect of the dispute about what constitutes just and equitable
compensation, rather, the scope of the dispute emerges
from the
divergent opinions of the expert witnesses and the agreed statement
of facts. Materially, there are disputes about
the nature of a
valuation for “current use value” and how it relates to a
determination of market value and about the
valuations themselves.
[17]
The
matter was allocated to me, and assessor Mr Maodi, for hearing on 9
November 2020. By that stage, the Minister was
represented by Mr Mtsweni (with him Ms Maleka) and the Landowner
Defendants were represented by Mr Roberts SC (with him Ms Roberts).
[18]
I
convened a pre-trial conference on 29 October 2020 at which various
matters were canvassed. I highlight two. First,
the
parties alerted the Court to the existence of a dispute about the
duty to begin and the onus of proof. As matters transpired
it
was unnecessary for the Court to determine those issues upfront as
the Minister (without concession) thereafter agreed to begin.
I
deal with the issue of onus or duties of proof in this judgment.
Secondly, I requested the parties to confirm whether
the three
expert witnesses whose summaries had been supplied were the only
anticipated witnesses. In response to a resultant
query from Mr
Roberts about whether a valuer responsible for preparing the
valuations on behalf of the Minister would be testifying,
Mr Mtsweni
advised that he would confirm the position by 3 November 2020.
No confirmation was forthcoming on that date.
[19]
The
trial proceeded on 9 November 2020. In the final result, four
experts testified – two for each party –
Professor
Mooya, Mr Ntjie, Mr du Toit and Dr Laubscher. The evidence was
ultimately completed on 17 December 2020. To the
extent
necessary, I set out salient features of the trial proceedings when
setting out the expert evidence.
Interpreting
section 25(3) of the Constitution
[20]
The
Constitution must be interpreted purposively.
[9]
The Constitutional Court has, on various occasions, been called upon
to interpret section 25 of the Constitution.
[10]
It is trite that any interpretation of section 25 must promote the
values that underlie an open and democratic society based
on human
dignity, equality and freedom.
[11]
And “[p]re-constitutional expropriation law must be approached
circumspectly.”
[12]
The
Constitutional Court has held that the purpose of section 25 is to
protect existing property rights and to serve the public
interest,
mainly in but not limited to the sphere of land reform: courts
must strike a proportionate balance between these
two functions.
[13]
The Constitutional Court has also held that whenever a court
interprets section 25 of the Constitution, the broader
context of
section 25, and specifically the redressive imperatives that underlie
subsections (4) to (9), must be borne in mind,
being “redressing
one of the most enduring legacies of racial discrimination in the
past, namely the grossly unequal distribution
of land in South
Africa.”
[14]
Importantly, under section 25, the protection of property as an
individual right “is not absolute but subject
to societal
considerations”.
[15]
[21]
In
Du
Toit
,
the Constitutional Court interpreted and applied section 25(3) of the
Constitution holding that it is the Constitution, and not
legislation
(in that case the Expropriation Act 63 of 1975) which “provides
the principles and values and sets the standards
to be applied
whenever property … is expropriated.”
[16]
It held:
“…
the
amount of compensation … must adhere to the standards of
justice and equity. It must also reflect an equitable
balance
between the interests of the public and of those affected by the
expropriation. These standards, provided for in
section 25(3)
of the Constitution, are peremptory and every amount of compensation
agreed to or decided upon by a court of law
must comply with them.
… [S]ection 25(3) provides an open-ended list of relevant
circumstances to be taken into account,
including the market value of
the property.”
[17]
The
Court held further:
“
Section
25(3) does not make it peremptory that all factors listed be
applied. The list is open-ended. Factors listed
there
will apply only insofar as they are relevant or applicable.
Factors other than those listed may also be taken into
account if
they are relevant or applicable. The outcome reached must,
however, be just and equitable, and it must reflect
an equitable
balance between the interests of the public and of those affected by
the expropriation.
”
[18]
Moreover,
the Constitution does not give any of the listed factors any
particular prominence or significance greater than the others.
[19]
This applies to market value too. Thus, the Constitutional
Court held:
“
Section
25(3) indeed does not give market value a central role. Viewed
in the context of our social and political history,
questions of
expropriation and compensation are matters of acute socio-economic
concern and could not have been left to be determined
solely by
market forces.
”
[20]
[22]
Courts
have however generally adopted what has become known as a two-step or
two staged approach to determine just and equitable
compensation
in terms of which market value is first ascertained, whereafter
deductions or additions are made to market value as
other relevant
circumstances may require.
[21]
At first blush, the formula adopted by the Minister in this case, and
which underlies Professor Mooya’s opinion, may
appear difficult
to reconcile with this approach. On reflection, I have
concluded that the formula is not irreconcilable
with the approach
nor precluded by the applicable authorities, and I explain this
conclusion below.
The
onus and duties of proof
[23]
Both
parties made submissions about the onus of proof in proceedings of
this sort. In view of the shortcomings in the evidence
before
me, it is necessary for me to consider this.
[24]
In
short, Mr Mtsweni submitted that in compensation proceedings the
issue of onus does not arise as there is no
lis
between
the State and the landowner, rather, the duty to determine
compensation simply resides with the Court itself, which acts
as the
ultimate valuer. Mr Mtsweni relied centrally on the authority
of
Pentree
Limited.
[22]
Mr Roberts submitted that the Minister bears the onus to prove what
is just and equitable compensation and that while there
is no
lis
between
a claimant and a landowner in a restitution case, a
lis
arises
once the issue of the quantum of compensation the State must pay a
landowner arises for determination. He relied centrally
on the
authority of
Kusile.
[23]
To
the extent that the issue is
res
nova
,
Mr Roberts relied on the general principle articulated in
The
South African Law of Evidence
[24]
that “[a]ny rule of law which annexes legal consequences
to a fact must as a necessary corollary provide which party
is
supposed to prove that fact.” I accept that this general
principle as articulated is of assistance and it has informed
my
consideration of the correct approach below. However, beyond
this, after considering the authorities, neither argument
captures
the correct approach.
[25]
In
Kusile,
this
Court had to consider whether costs should be awarded against the
Commission in favour of a landowner (the Ingonyama Trust)
which had
successfully opposed a claim insofar as its interests were affected.
This Court held that a claim for restoration
of land under the
Restitution Act is a claim by a claimant against the State and that
there is no
lis
between
the claimant and the landowner. It held that “where a
landowner opposes a land-restoration claim on its property,
it
opposes a demand by the claimant that the State acquire or
expropriate the property in order to transfer it to the
claimant.”
[25]
The
Court did not go on to consider the nature of a legal dispute between
the State and the landowner in which the State
has a legal duty to
pay the landowner just and equitable compensation which is to be
determined by this Court through legal proceedings.
In short,
Kusile
does
not hold that there is a
lis
between
the parties in a case of the present sort nor does it explain how any
such
lis
may
or may not determine the nature or incidence of any onus or duties of
proof.
[26]
The
contention Mr Mtsweni advances, on the other hand, is partly
supported by authority decided in context of compensation disputes
in
which the Expropriation Act 63 of 1975 (Expropriation Act) is
applicable about the
quantum
of property’s market value. In this specific context,
there are a number of dicta to the effect that there is no real
lis
between the parties and no onus in the ordinary sense on the party
claiming compensation.
[26]
Rather, the Court is said to assume the role of ‘valuer’
and “has to do the best it can with the
evidence before
it”.
[27]
[27]
In
Khumalo
,
[28]
this Court was called upon to determine compensation for an owner
whose land had been acquired under the Land Reform (Labour Tenants)
Act 3 of 1996. Meer J (as she then was, Dodson J concurring)
noted that the function of a Court determining market value
has often
been described as similar to that of a valuer:
[29]
“
Although
the determination of value is to a large extent a matter of estimate,
the court must, on the evidence placed before it,
make a finding in
much the same manner as a valuator would. The finding is one of
fact, a logical deduction from factual
data. In making its
determination of value, the Court is not tied either to the claim or
the offer, and it may award more
than the amount claimed, or less
than the amount offered.”
[28]
At
times the term ‘super-valuer’ is used when describing the
Judge’s function but the courts have cautioned against
that
notion as what courts are in fact doing is applying the applicable
rules of procedure and evidence (often in the nature of
expert
opinion evidence) to determine market value quantum.
[30]
[29]
The
dicta which hold that there is no onus of proof in compensation
proceedings are moreover neither uncontroversial
[31]
nor unqualified. The dicta are qualified firstly in that they
are asserted specifically when a court is dealing with a
determination
of market value. Secondly, they are qualified in
that they only apply to a determination of its
quantum.
Thus,
addressing the onus of proof when dealing with the potentiality of
property, the then Appellate Division held in
Port
Edward Town Board v Kay
[32]
that:
“
A
party who asserts that a property has a particular potential must
prove it. By potential is meant a use, additional to its
current use, for which the property is suited and reasonably capable
of being put in the future. Such proof has three components:
(a) that the potential exists; (b) that a willing buyer and seller
would have taken it into account in fixing the price …
and (c)
the quantum. Component (a) must be shown as a reasonable
possibility … Component (b) must be proved on a balance
of
probabilities … Once (a) and (b) have been conceded or
established there is no onus in the narrow sense in respect of
component (c).” (citations omitted).
[30]
Both
parties’ submissions assume that a
lis
between the parties must exist for any onus or duties of proof to
arise. Most simply, a ‘
lis
’
is a piece of litigation or a controversy;
[33]
“a dispute, controversy; action at law, suit.”
[34]
Viewed in this way, I find it difficult to understand how there
cannot be a
lis
between
the State and a landowner in legal proceedings where a Court must
determine compensation payable by the State to the landowner
under
the Restitution Act because a dispute has arisen in that regard.
But I cannot overlook the authorities which hold that
there is no
such
lis
in
comparable circumstances. Fortunately, it is not necessary for
me to decide whether or not there is a
lis
between
the parties in order to address the onus and duties of proof in this
case as I am of the view that these must arise irrespective.
The question rather is what approach this Court should follow with
regard to the onus and duties of proof in proceedings of this
sort
and mindful of the general principle articulated in
The
South African Law of Evidence
.
[31]
In
my view, this Court is vested with the duty to determine what is just
and equitable compensation based on admissible evidence
duly placed
before it and information the Court may obtain via the exercise of
its inquisitorial powers. In doing so, the
Court will have to
arrive at its own assessment of disputed values such as market value
(in this case agreed). Proceedings
in this Court differ
in some measure from proceedings in the High Court as this Court is
vested with inquisitorial powers.
This Court can call for
information and evidence, not least where the interests of justice
demands that such information is obtained
in order for the Court
objectively to determine just and equitable compensation.
[35]
In some, possibly many instances, this will obviate any possible need
to decide a case with reference to the “useful
instrument of
onus”. But ultimately, the Court must arrive at a value
by doing the best that it can with the information
to hand.
[32]
This
does not mean, however, that where a party asserts that compensation
should be paid on a certain basis and in a certain amount,
that that
party does not carry any risk of non-persuasion if it fails to prove,
via admissible evidence, either the suitability
of the basis or the
value contended for. The assertion may (and preferably should)
be made in pleadings,
[36]
or
as in this case, by the parties’ experts, or both. In
this case, the Landowner Defendants assert that compensation
should
be paid on the basis of market value. In this case, the
Minister has tendered expert evidence and her experts assert
that the
capital amount to be attached to property in arriving at just and
equitable compensation should be quantified by giving
equal weight to
market value and what is termed its ‘current use value’.
The Minister has also supplied evidence
of valuations done on this
basis in circumstances where there is agreement that no other
adjustments should be made in light of
section 25(3)(b) and (d) of
the Constitution.
[37]
In
my view, the risk of non-persuasion rests on the respective parties
in respect of the contentions so advanced. Material
for present
purposes is the risk the Minister carries if the Court rejects the
evidence advanced on her behalf, which is that just
and equitable
compensation will have to be arrived at without the Court having
regard thereto or having regard only to such facts
as are in fact
established, or features of the expert opinion which the Court
accepts. This is not a case where the Court
would then be left
with nothing to base its decision on in a manner consistent with the
Constitution. In these circumstances,
it is not necessary for
me in this judgment to go further and deal with some of the more
difficult questions that may arise when
a Court may have to resort to
the useful instrument of onus to determine the matter.
The
agreed facts
[33]
The
parties filed a statement of agreed facts on 18 October 2019.
The Court has also been supplied with details of the purchase
prices
and dates of acquisition and/or registration of the subject
properties. Save for the Sixteenth Defendant’s property,
the market value of the subject properties has been agreed and is not
in dispute. The remaining Landowner Defendants, the
description
of their properties, the purchase price and date of acquisition or
registration of the property, the agreed market
value of the
property
[38]
and the amount of
the state offer (also recorded in the statement of agreed facts)
[39]
are set out in Table A.
TABLE
A
DEFENDANT
&
OWNER
PROPERTY
DESCRIPTION
PURCHASE
PRICE AND DATE
AGREED
MARKET VALUE
STATE
OFFER
2
nd
Def
Lumo
Beleggings Trust IT12644/1996
Portion
5, Jakkalsdans
21
4133 ha
Title
deed no T11866/2005
R91 000.00
1
Feb 2005
R2 450 504.00
R1 675 000.00
5
th
Def
Johannes
Venter
Portion
12, Jakkalsdans
21
4139 ha
Title
Deed no T37383/1988
&
Portion
49, Jakkalsdans,
21
4190 ha
Title
Deed no: T62531/1998
R0.00
17
June 1988
9
June 1988
R140
000
R5 487
000.00
R3 644 000.00
6
th
Def
Collin
Lai
Portion
13, Jakkalsdans
21
4143 ha
Title
Deed no T85535/1994
R80000.00
27
Oct 1994
R3
355 000.00
R2 200 000.00
9
th
Def
Pieter
Roberts substituted by Executor of deceased estate
Portion
18 Jakkalsdans 21 4136 ha
Title
Deed no T05033278/2005
R57 000
18
March 2005
R1 818
046.00
R1 170 000.00
10
th
Def
James
Roberts
Portion
19 Jakkalsdans 21, 4139 ha
Title
Deed no T102987/2002
R130 000
27
Aug 2002
R2 474 548.00
R1 690 000.00
12
th
Def
Rentia
Kemp
Portion
36, Jakkalsdans
21,4133
ha
Title
Deed no T131501/1998
R237 000
10
Nov 1998
R4 054 000.00
R
2552 000.00
15
th
Def
Pieter
Beukes
Portion
63, Jakkalsdans
21
4138 ha
Title
Deed no T32001/2004
R130
000
15
March 2004
R1 381 121.00
R880 000.00
17
th
Def
Pieter
Strydom
Portion
75 of Jakkalsdans measuring 21.5 ha and held by virtue of Title
Deed no T29675/1993
21
April 1993
R39
000
R3 227 000.00
R2 064 000.00
[34]
The
parties’ statement of agreed facts expressly records that for
purposes of section 25(3)(e) of the Constitution, the purpose
of the
acquisition of the properties is land reform.
[40]
Notably, it also records the following: “The factors
referred to section 25(3)(b) and (d) of the Constitution
are not
relevant for purposes of determining the just and equitable
compensation to which the [Landowner Defendants’] are
entitled.”
[41]
At
the commencement of the proceedings, I requested the parties to
address the Court on the relevance of section 25(3)(b)
and (d) of the
Constitution and whether an agreement by the parties that these
provisions were not relevant to a case – as
reflected in the
statement of agreed facts – binds the Court or whether the
Court was required to satisfy itself in this
regard. It
is not necessary for me to decide this as the parties thereafter
tendered and provided information the Court
sought which satisfied me
that, on the information to hand and the facts of this case as
agreed, these factors are neutral as regards
the determination of
just and equitable compensation.
[35]
The
Court raised certain further queries on 21 July 2021, including three
matters arising from Table A. First, it appears
from
Table A that the date of purchase or registration of some of the
subject properties postdates the lodgment of the land claim
and/or
its gazetting in August 2004. The question that would then
arise is whether any of the parties knew or ought to have
known that
there was a land claim on the property which they purchased and
whether that may impact on what is just and equitable
compensation in
their case. The affected parties clarified their position on
affidavit and on the information to hand, including
the Minister’s
response, I have satisfied myself that none of the Landowner
Defendants were aware or ought to have been aware
of the land claim
at the time of purchase of the subject properties.
Second, it is apparent that Portion 12 and Portion
49 are valued
together and owned jointly and the question is whether this is
appropriate in the circumstances. The responses
provided,
considered with the evidence, clarify that these are contiguous
properties owned by the same party and operated as one
agricultural
unit, and there is no dispute amongst the parties or experts that on
the facts of this case the valuation of the property
yielding a
single value is in accordance with valuation practice. Third,
the Court requested clarification why the purchase
price for Portion
12 is reflected as R0.00, which, absent an explanation, may
materially affect what is just and equitable compensation
in light of
the history of its acquisition. The responses provided,
considered with the evidence, clarify that the property
was
transferred in June 1998 to the Fifth Defendant in terms of an
endorsement made under section 45bis(1)(a) of the Deeds Registry
Act
47 of 1937 in circumstances of a divorce. Until then the
property had been owned jointly by the Fifth Defendant and his
ex-wife, purchased by them on 17 June 1988 for R39 000 in an
open market transaction. This is, in my view, a neutral
factor
in this case.
[36]
In
the result, this case centrally concerns, narrowly, whether the
Landowner Defendants’ or the Minister’s contentions
can
and should be accepted on a proper interpretation of section 25(3) of
the Constitution and on the evidence. The manner in which
I address
these contentions is by considering the issues for decision
identified in paragraph [7] above. While a narrow dispute,
the
issues are complex. It is against this background that the
trial proceedings and expert evidence must be understood.
Salient
features of the trial proceedings and the expert witnesses’
evidence
[37]
On 9
November 2020, Mr Mtsweni indicated he would first lead the evidence
of Professor Mooya. Professor Mooya is an academic
in the
higher education sector, currently an Associate Professor at the
University of Cape Town and the Programme Convenor for
its BSc
(Honours) in property studies. Since 2015, Professor Mooya has
served as an
ad
hoc
consultant for the Office of the Valuer-General. He testified
that he has been extensively involved with assisting the Office
of
the Valuer-General to devise its mechanism for arriving at a just and
equitable compensation for the purpose of land redistribution
and
land reform. That mechanism informed both the Minister’s
assessment of just and equitable compensation for
purposes of this
case and, while not applicable to these proceedings, the Property
Valuation Regulations 2018. In essence,
Professor Mooya
expresses the opinion that, for purposes of determining just and
equitable compensation and when assessing the
capital value of a
property, a value should be placed both on what the property would
command in the market-place (its market value
or value in exchange)
and on its current use (its current use value or value in use). As
mentioned above, the current use
value represents the value attached
to the beneficial use the owner derives from the property and
Professor Mooya contends that
this is a well-known and accepted
concept in valuation theory. Professor Mooya opines that it
would be just and equitable
to give these values equal weight:
this entails the adoption of a simple formula whereby market value
and current use value
are added together and divided by two.
Thereafter, adjustments can be made in respect of any acquisition
benefit or other
relevant consideration. In this regard, he is
of the view that the items listed in sections 25(3)(b) and (d) of the
Constitution
are all capable of quantification, but – he is
advised – do not arise on the facts of this case.
[38]
Mr
Roberts objected to Professor Mooya’s evidence relying on the
principle that interpretation of legal instruments is a matter
for
the Court and contending that his evidence amounts to inadmissible
opinion evidence on the proper interpretation of the Constitution.
After hearing argument on the matter, I made a ruling allowing
the evidence on a provisional basis and indicating that its
admissibility would be finally determined after hearing all the
evidence. Professor Mooya testified that day. Having
considered the totality of the evidence given in light of the expert
summary, which was confirmed, I have concluded that Professor
Mooya’s
evidence is relevant and admissible only in part. This is for
purposes of providing the Court with an explanation
that a property
valuer can, as a matter of fact and opinion, quantify or give
monetary value to the current use of property, what
this means and
how such a valuation relates to market value.
[42]
As Mr Mtsweni submitted, viewed in this way, the evidence is
relevant and has probative force primarily in assisting the
Court to
apply, rather than to interpret, section 25(3). To the
extent that the expert summary and the explanatory
evidence went
further than this and sought to proffer an opinion on the proper
interpretation of section 25(3) of the Constitution
– which it
did – I agree with Mr Roberts that it is inadmissible.
[39]
Mr
Roberts also ultimately objected to Professor Mooya’s testimony
on the grounds that Professor Mooya did not satisfy the
requirement
of being an independent or objective witness. In my view, this
complaint was not sufficiently substantiated and
I am unable to
accept that Professor Mooya does not satisfy the requirement of
independence. Professor Mooya, like his counterparts,
is
addressing an issue which is divisive and emotive: compensation for
land acquired for land reform. That experts
may hold
strong and divergent views is inevitable. Professor Mooya was
wholly candid with this Court about the fact that
he has been
instrumental in the drafting of policies and laws governing
valuations and he sought to assist the Court to understand
the basis
for the approach adopted. In doing so, he expressly sought to
balance considerations he regarded as germane to
the application of
section 25(3) of the Constitution: giving equal weight to market
value and what he describes as current use
value.
[40]
Mr
Roberts objected further to Professor Mooya’s evidence on the
basis that his summary, and in turn his evidence, did not
comply with
the requirements for expert testimony. In
Coopers,
[43]
and having regard to the purpose of Rule 36(9) of the Uniform Rules
of Court, which is to remove the element of surprise, the then
Appellate Division emphasized that a bald statement of opinion is not
of any real assistance and a summary should at least state
the sum
and substance of the facts and data which lead to the reasoned
conclusion (i.e. the opinion), and where scientific principles
are
applied rather than ordinary logic, the reasoning process should be
summarised.
[44]
In
Massmart
,
[45]
the SCA restated the principle that: “An expert’s opinion
must be underpinned by proper reasoning in order for a court
to
assess the cogency of that opinion. Absent any reasoning the
opinion is inadmissible since it cannot be said to be an
expert
opinion.”
[46]
Rule 36(9) is similarly worded to Rule 49(1)(a) of the Rules of
this Court which requires the advance provision of
a summary of an
expert’s opinions and the reasons therefore. In light of
the purpose of Rule 36(9), and Rule 49(1)
being to remove the element
of surprise, I indicated upfront that Professor Mooya should not
testify materially beyond what his
summary, in substance,
foreshadowed. Because the summary, and resultant evidence, was
limited in its content (both as regards
the facts and data which
underpin it and the reasoning for the opinions expressed), the
evidence given was not ultimately of great
assistance.
Nevertheless, it did shed some useful light on important issues of
principle. More specifically,
it shed light on the broad
basis upon which the valuations were conducted and it provided an
explanation of the broad principles
upon which the approach was based
and its purpose, as set out above in paragraph [38].
[41]
That
it did not go much further than it did is unfortunate, and ultimately
a lost opportunity, as the issues raised are matters
of
constitutional importance. Specifically, and by way of example,
there was insufficient information to allow a sensible
comparison
between what he describes as a current use value and an assessment of
market value or indeed to understand the detailed
methodology that
must be applied in order to arrive at a current use value, what it
represents and its place in accepted valuation
theory.
[42]
At
the end of the proceedings on the first day – 9 November 2020 –
Mr Mtsweni informed the Court that he intended then
to lead the
evidence of Mr Ntjie, the valuer, as an expert witness. Mr
Roberts objected in circumstances where there had
been no notice to
call Mr Ntjie in terms of Rule 49.
[43]
The
issue was dealt with the following morning, on 10 November 2020.
The result was a further brief postponement of the matter
until 12
November 2020 to permit the Minister to file an expert summary in
respect of Mr Ntjie’s proposed expert evidence.
An expert
summary was filed on 11 November 2020. However, the matter was
again postponed until 7 December 2020 to run until
16 December 2020
(save for 8 December 2020). This postponement was to enable the
Landowner Defendants to request discovery
and trial particulars in
respect of the proposed evidence. I also made an order
regulating the postponement by setting time-frames
for discovery,
responding to the request for trial particulars and providing for a
further joint meeting of experts, specifically
Mr Ntjie and Mr du
Toit. To the extent necessary, I deal with the costs occasioned
by these postponements below.
[44]
On
7 December 2020, the matter could still not proceed as the Minister
did not comply with the time-frames regulating the adjournment.
The matter was then postponed until 9 December 2020, primarily to
enable Mr Ntjie and Mr du Toit to finalise their discussions
and to
ensure a response to the request for discovery and trial
particulars. A minute of the discussions between Mr
Ntjie
and Mr du Toit identifying their points of agreement and disagreement
was then supplied to the Court.
[47]
I refer to these engagements as the December 2020 joint expert
meetings. It warrants emphasis that in engaging with the
process of dialogue, neither the Landowners nor Mr du Toit conceded
that the methodology Mr Ntjie applied is an appropriate one:
they consistently maintained that market value amounts to just and
equitable compensation on the facts of this case.
[45]
Mr
Ntjie’s testimony finally commenced on 9 December 2020.
Mr Ntjie is currently a Managing Director of A & Sons
Property
Valuers, whom the Minister appointed to compile the valuation reports
that formed the basis of the Minister’s offers.
He
is a qualified and registered valuer, since 2002. The relevant
valuations were done using the formula referred
to above. Where
the Landowners’ expert Mr du Toit had initially taken issue
with multiple features of the valuation
of current use value of the
subject properties, the issues in dispute regarding the assessment of
these values narrowed substantially
pursuant to the joint minute.
There was and is no dispute that a current use value is arrived
at by multiplying the net income
derived from the properties by a
suitable capitalization rate. Ultimately, the pivotal material
issue that remained in dispute
is: What is the suitable
capitalization rate for the subject properties?
[46]
Mr
Roberts contends that Mr Ntjie’s evidence should be wholly
rejected as unreliable and lacking in credibility. While
there
are features of Mr Ntjie’s valuations and evidence that were
unsatisfactory, I do not reject his evidence as lacking
in
credibility or wholly unreliable. Mr Ntjie readily accepted and
corrected any errors that he made and conceded that features
of his
valuations should, in future, be more carefully attended to, notably
correctly dating drafts. And he was willing
to adapt his
approach during the December 2020 expert meetings where new
information came to hand. I deal with other objections
to his
evidence below when dealing with its details. After Mr Ntjie’s
evidence, the Minister closed his case.
[47]
Mr
Roberts commenced the Landowner Defendants’ case on 10 December
2020 with Mr du Toit’s evidence. Mr Du
Toit is a
valuer with some 39 years of experience and the past President of the
South Africa Council of Property Valuers.
Mr du Toit opines
that, if properly applied, the market value and the current use value
of a property will be the same. Moreover,
he expresses the
opinion that the current use valuation methodology finds no
application in context of residential small holdings,
which are in
issue in this case. Rather, the methodology finds application
in context of industrial or commercial properties.
Much of Mr
du Toit’s evidence, however, constituted a critique of Mr
Ntjie’s valuations. The substance of the critique
is that the
current use values are artificially low. This was based on two
initial central contentions, but the first ultimately
fell away after
his meeting with Mr Ntjie.
[48]
The remaining contention, as indicated above, is that the
capitalization rate used is incorrect. Initially it was
contended that the capitalization rate used (12%) was artificially
high, which reduces the assessed current use value. Mr
du
Toit expresses the opinion that a capitalization rate of 3.5 to 5.5%
is usual for residential properties/small holdings of this
nature and
that a range of 3.76% to 5.12% is suitable in this case.
Ultimately, the difference between Mr Ntjie and
Mr du Toit narrowed.
Mr Ntjie accepted a reduced capitalization rate of 7.5% and Mr du
Toit increased his range between 0.5%
and 1% resulting in a new range
of 4.2% and 6.12%. During his testimony, Mr du Toit
critiqued Mr Ntjie’s new
rate of 7.5%, in my view persuasively,
as I explain below.
[48]
Dr
Laubscher testified on 16 and 17 December 2020. He is an
agricultural economist. Dr Laubscher’s evidence focused
on the
economic impact of equity erosion for landowners. He also
offered a critique of the formula used by the Valuer-General
and
applied in this case, and similarly to Mr du Toit, critiqued any
artificial inflation of deductible costs and capitalization
rates.
Dr Laubscher agrees with Mr du Toit that when properly
applied, a current use value should equate to a market
value.
[49]
I
point out upfront that to the extent that Mr du Toit and Dr Laubscher
(like Professor Mooya) opined on the proper interpretation
of section
25(3) of the Constitution – which they both did – I am of
the view that such evidence is inadmissible. Moreover,
Mr
Mtsweni contended that their evidence should be rejected as lacking
in independence and objectivity, centrally because their
approaches,
he says, are aimed at advocating for market value compensation for
land acquired for land reform. I do
not agree.
Similarly to Professor Mooya, both witnesses were candid about what
underpinned their views and approaches
in what is a divisive an
emotive debate. In the case of Dr Laubscher, this did translate
into a very strongly held view that
material deviations from market
value compensation should be avoided. Mr du Toit adopted a more
balanced and nuanced approach.
Neither witness, however, failed
to give cognizance to the Constitution’s requirement that
market value is only one factor
relevant to just and equitable
compensation. Thus, while their opinions can indeed be
regarded as ultimately favouring
market value compensation, they were
not proffered in a biased fashion. Mr du Toit’s evidence was,
however, more detailed
on relevant matters and thus of greater
assistance to me. Moreover, to the extent that Mr du Toit erred
in a way that may,
if unexplained, suggest a leaning in favour of the
Landowner Defendants’ cause, like Mr Ntjie, he readily accepted
correction
and adjusted his approach where necessary.
[50]
Mr
Mtsweni also contended that Dr Laubscher is not qualified to testify,
inter
alia
because his qualifications are not directly related to valuing
properties and he has only been involved in one restitution case.
I do not agree that his limited involvement in restitution cases to
date renders him unqualified. Furthermore, Mr Mtsweni complained
that
Dr Laubscher’s testimony ventured into matters of economic
policy which are beyond the purview of the Court. While
I agree
that it is not for this Court to determine economic policy –
and the evidence as tendered might be understood as
such a call –
it must be appreciated that matters concerning just and equitable
compensation are steeped in social and economic
issues that may
ultimately implicate policy. Ultimately, I do not think that in
this case, this Court is called upon to navigate
this issue because
of a related but different difficulty with much of the testimony of
Dr Laubscher, which is that the primary
economic issue raised does
not appear to me to be relevant to the facts and circumstances of the
case. Most notably, concerns were
raised about the systemic economic
impact of deviating from market value compensation in circumstances
where banks secure their
loans on the strength of such valuations and
play a critical role in South Africa’s economic stability. But
there is no evidence
that any of subject properties is subject to a
mortgage or that compensation below a certain amount will result in
any prejudice
to any bank in this case. In these
circumstances, the views expressed on this topic and the related
broader economic
issues, are abstracted from the facts of the case
and appear rather to be an abstract economic debate. I
accordingly do not
consider the evidence on this issue nor Professor
Mooya’s responses thereto to be relevant. Different
considerations
may apply in a case where a bank has secured a loan
with a mortgage over a subject property.
[51]
The
evidence was completed on 17 December 2020.
The
parties then requested that the matter be postponed
sine
die
until the transcript of the proceedings was available, whereafter,
they would approach the Court for a date for the hearing of
argument. After receipt of the transcript, the parties then
filed heads of argument and the matter was argued on the arranged
date being 12 May 2021. I provisionally reserved judgment, on
the basis that the Court may request further information from
the
parties and their experts, whose further assistance was tendered.
As matters transpired, on 21 July 2021, the Court requested
further
information and submissions, which the parties supplied on 27 August
2021. This assisted me both with queries
arising from
Table A and other matters affecting the expert testimony.
[52]
I now
turn to deal with the five main issues that arise for decision in
this case as set out in paragraph [7] above.
The
first issue: can a numerical value be attached to ‘current
use’ of property as contemplated in section 25(3)(a)
of the
Constitution?
[53]
The
first issue for decision is whether, on a proper interpretation of
section 25(3)(a) of the Constitution, a numerical value can
be
attached to ‘current use’ of property as contemplated by
that sub-section (a quantitative approach) – as the
Minister
contends – or whether the sub-section requires or requires only
a contextual consideration of the current use of
property (a
contextual approach). If the latter, then the Minister’s
contentions must be rejected as inconsistent with the
Constitution.
If the former the second issue arises.
[54]
Mr
Roberts submitted that the plain language of section 25(3) precludes
a quantitative approach in that it is only subparagraph
25(3)(c)
which refers to a ‘value’, that being market value:
section 25(3)(a) refers to current use of property not
a current use
value
.
Mr Roberts submitted further that a proper consideration of the
case law in which courts have applied section 25(3)
and specifically
considered section 25(3)(a), shows that a contextual approach is
required when determining just and equitable
compensation. No
authority was cited to me that states such a principle in those
precise or similar terms, but it is
correct that courts, including
the Constitutional Court, the Supreme Court of Appeal and this Court,
have – as a matter of
fact – frequently applied section
25(3)(a) contextually.
[55]
That
much is apparent from an analysis of
Du
Toit.
In
that case, the Constitutional Court determined just and equitable
compensation in terms of the Expropriation Act. The portion
of
land in question was located on a farm on which a borrow pit was
created to excavate gravel. When considering the current
use of
the property, the Constitutional Court considered contextual factors,
such as evidence that the land and gravel in the expropriated
portion
had lain dormant and that extensive gravel deposits remained
notwithstanding the expropriation.
[49]
In
Haakdoornbult
,
[50]
the SCA also adopted a contextual approach. At issue was
whether a land claimant under the Restitution Act had received just
and equitable compensation for dispossessed land. The SCA had
regard to the use the affected family had put to the land
(irrigation, dry land cultivation, homes, livestock and traditional
family purposes) to conclude that the family lost more than
the
market value of the farm. Similarly, this Court adopted a
contextual approach in
Khumalo
,
[51]
in which a contextual consideration of the current use of the
property, where the farmer could not in fact use the grazing farms
due to others’ use of them, resulted in an upward adjustment in
the amount of compensation payable. And there are other
cases
where a contextual approach was followed.
[52]
[56]
In
my view, a contextual approach serves the purposes of section 25(3).
Context always matters and a consideration of the circumstances
in
which expropriated land is used can facilitate an understanding of
the balance of public and private interests. Moreover,
the
current use of a particular property may be integrally linked with
constitutionally supported values, such as environmental,
social or
cultural values, that may bear little or no relation to financial
value, as appears from
Haakdoornbult
.
[53]
And as Mr Roberts submitted, the plain language of the section
supports a contextual approach.
[57]
However,
it does not follow that it is impermissible, in an appropriate case,
to quantify, or attach a financial value to the current
use of
property which represents, for example, its beneficial use, and also
have regard thereto, when seeking to determine just
and equitable
compensation in terms of section 25(3). Indeed, to do so may
well be of assistance in an appropriate case.
Most
obviously, it may be of assistance if seeking to quantify the
difference between the potential of a property –
for which the
market may be willing to pay – and its actual use (or lack
thereof). Provided one does not forego a contextual
consideration of current use, this approach can also further the
purposes of section 25 by balancing public and private interests,
recognizing that property ownership entails social responsibility and
furthering its redressive imperatives. And I
can see
nothing in the wording of section 25(3)(a) which precludes this in an
appropriate case.
[58]
In
arriving at this conclusion, I have considered case authorities and
satisfied myself that there is no authority that binds me
that
precludes it and rather, I understand the conclusion to be consistent
with existing authority. There are however two
views in case
law on the issue of quantification in terms of section 25(3) which
are apparently in tension with each other and
that warrant
consideration in this context and I briefly turn to these now. One
view is that valuers and in turn Courts have regard
to current use
when quantifying the market value of property, which shows that the
current use of property is often instrumentally
and integrally
connected to how market value is quantified.
For
example, the current use of property may inform which recent sale
transactions in the open market will be identified as comparable
sales. Also, where appropriate, market value may be arrived at
by capitalising net income, a valuation methodology that uses
the
current use of property as its framing premise.
Two
examples are the decisions of this Court in
Mhlanganisweni
Community
[54]
and
Msiza.
[55]
In
light thereof, it thus cannot be suggested that current use (and thus
section 25(3)(a) has no bearing on quantification of just
and
equitable compensation. I accept that it is a step further to
say that current use can and should be independently quantified,
as
the Minister and her witnesses contend.
[59]
The
other view is that market value (section 25(3)(c)) and the extent of
direct state investment and subsidy in the acquisition
and beneficial
capital improvement of the property (section 25(3)(d)) are the only
factors in section 25(3) which are readily quantifiable.
The
origin of the statement is
Ex
Parte Former Highlands Residents
[56]
:
“
except
for factor (d) (which is about the extent of State investment and
subsidy), it [market value] is the only factor listed in
section
25(3)
of
the Constitution which is readily quantifiable. That makes it pivotal
to the determination of compensation.”
[57]
In
Du
Toit,
Mokgoro
J paraphrased this comment as suggesting that market value is “one
of the few factors in the section which is readily
quantifiable.”
[58]
In
Haakdoornbult,
Harms
ADP concluded that “market value was,
in
the context of that case
the
only factor listed in section 25(3) capable of quantification”.
[59]
None of these statements are, however, unqualified, and it would seem
deliberately so.
[60]
Nor
do they appear to be based on evidence placed before the respective
Courts as to what is and what is not capable of quantification
by
suitably qualified valuers. Accordingly, in my view, while it may
well be that the factors listed in section 25(3)(c) and (d)
are most
readily capable of quantification, there is nothing in the
Constitution, nor have I located any precedent, which precludes
a
party from seeking to persuade a Court that a numerical value should
be attached to another relevant factor, specified or not.
[61]
[60]
I
have concluded that a proper interpretation of section 25(3)(a)
requires a contextual analysis of the current use of the property,
but does not preclude a Court also from attaching a numerical value
thereto either as an instrument in determining market value
or
independently. Whether a value can sensibly be so attached will
depend on the evidence before the Court. Such a
value and what
it represents can then be considered as relevant in arriving at just
and equitable compensation.
The
second issue: what role should a “current use value”,
representing the beneficial use of property, play in
arriving at a
determining of just and equitable compensation
[61]
Having
determined that the Constitution permits a quantitative assessment of
“current use”, the second issue arises,
namely: what role
should a “current use value”, representing beneficial use
of property, play in the determination
of just and equitable
compensation? And does the formula adopted by the Minister on
the advice of the Valuer-General yield
a just and equitable
determination of a capital value to be attached to the subject
properties?
[62]
If
Professor Mooya is correct that valuers can sensibly arrive at two
capital values of property, one reflecting value in exchange
(or
market value) and the other value in use (current use value or value
of beneficial use) then there would seem to be inherent
balance in an
approach which seeks to place equal weight on these two capital
values. This is how Professor Mooya explained the
logic and purpose
of the formula. My difficulty with accepting a formulaic
approach, however, is that it precludes contextual
factors from
determining how these values should be balanced justly and equitably
in a given case: some cases may warrant greater
(or full) emphasis be
given to market value and others may warrant greater (or full)
emphasis be given to current use value or
to some other amount.
Ultimately the weight to be given to each factor, and whether they
should be given equal or different
weight, or no weight at all, would
thus need to be considered in each case having regard to its facts,
context and circumstances.
[63]
I now
turn to whether the formula (or an adjusted weighting as contemplated
in paragraph [62] above) can be reconciled with the
two-stage
approach whereby courts first ascertain market value and then make an
upward or downwards adjustments with reference
to other relevant
factors to determine a just and equitable amount. In this
regard, some conceptual clarity is warranted
and in achieving this, a
distinction should be drawn between two uses or contexts in which the
terminology of a “two-stage
approach” is used.
63.1
The one use finds its source in
Du
Toit
and
is mandatory: This is when section 12 of the Expropriation Act is
applicable. In such a case, a court must first consider
the
compensation payable under the Expropriation Act and then consider if
that amount is just and equitable under section 25(3)
of the
Constitution.
[62]
Absent any
legislative amendment to the Expropriation Act, the two-stage
approach in this sense is obviously mandated for the determination
of
just and equitable compensation when the Expropriation Act
applies.
[63]
This is not
such a case.
63.2
The second context in which a two-stage approach is adopted is where
no statutory parameters
are set for determining compensation and
here, the two-stage approach is not mandatory. It finds its
origin in in
Ex Parte Highlands Residents
:
“…
.
the equitable balance required by the Constitution for the
determination of just and equitable compensation will in most cases
best be achieved by first determining the market value of the
property and thereafter by subtracting from or adding to the amount
of the market value, as other relevant circumstances may
require.”
[64]
This
approach has been endorsed and used regularly by this court as a
salutary and practical approach in context of the Restitution
Act
beyond the purview of the Expropriation Act and to date has received
the endorsement of the SCA, at least in the circumstances
of the
cases which have come before it.
[65]
Importantly, however, the approach is always subject to section 25(3)
of the Constitution. When applying section 25(3)
to the facts
of a case, must always promote the spirit, purport and objectives of
the section and the Bill of Rights as a whole.
And in doing so,
this Court must not unduly privilege market value in that
process.
[66]
[64]
It
is the second way the term “two-stage approach” is used
that is relevant to this case. While at first blush it may
seem that
the formula (or an adjusted weighting as contemplated in paragraph
[62] above is precluded by it, on reflection, I have
concluded that
it is not for the following three reasons. First,
conceptually, the formula (or adjusted weighting)
can be regarded as
consistent with the two-stage approach as what it effectively posits
is that where a current use value is less
(or in the rarer case more)
than market value, an upwards or downwards adjustment can then be
made to arrive at a capital value.
Second, and in any event, the
two-stage approach is not a hard and fast rule, rather it is a
practical approach to determine just
and equitable compensation in
most cases. Third, the authorities do not preclude the
production of evidence with a
view to persuading a Court to attach a
numerical value to or to quantify factors other than market value or
section 25(3)(d), including
current use.
[67]
[65]
The
question that then arises is what the evidence demonstrates about the
nature and meaning of a current use value and how it relates,
conceptually and methodologically, to market value. I
accordingly turn to the evidence of Professor Mooya, on the one hand,
and Dr Laubscher and Mr du Toit on the other and related historical
precedent and authority. I have set out the broad
import
of these witness’ testimony above. The real points of
contention is the true relationship between market value
and current
use value and what methodology underpins a determination of the
latter.
[66]
Professor
Mooya explains that the market value of a property will be different
to its current use value only in circumstances where
the property is
not currently being put to its highest and best use. Where
property is being put to its highest and
best use, the difference
between the two should be marginal, if anything. It is this, he
says, that justifies placing equal
weight on the two values because
on the one hand, the public benefits from not compensating the full
potentiality of property in
circumstances where it is not used
optimally and on the other, owners are still fully compensated for
their actual loss.
[67]
Dr
Laubscher critiques this approach. He has analysed the State
offers in light of the agreed market value and ascertained
that on
average the reduction from market value was some 33.7%.
[68]
He views this reduction as generating a loss to the affected
landowners to benefit the State without justification.
[68]
Mr
du Toit opines that determining the value of property by capitalizing
net income is merely one of four primary well known methods
for
determining the market value of a property
[69]
and if properly applied should yield the same value as market value.
According to his testimony these four primary methods
can be
described as a) the market data approach of direct comparison, known
as the comparable transaction approach; b) the market
data approach
of indirect comparison, known as the income approach or
capitalisation of income approach; c) the land residual approach
and
d) the cost approach.
[70]
We are concerned with the second approach: I refer
to it as the income approach.
[69]
The
income approach, Mr du Toit testified, can be a useful method to
arrive at market value when valuing investment properties in
cities
and towns.
[71]
When valuing smallholdings and agricultural property, he explains,
one needs to understand what the residential and
agricultural
properties mean to the users of the components. Mr du Toit
explains that valuers, when valuing agricultural
and smallholding
properties, give preference to the comparative sales method. In
this regard, he drew my attention to
Wollach
,
in which Canca AJ observed that the “other three methods are,
generally speaking, not applicable to agricultural land”.
[72]
In
Mostert,
[73]
cited in
Wollach
,
Wessels JA held as follows as regards the
comparative
transaction approach and the income approach in a case concerning
compensating agricultural property:
“
Comparable
transactions, particularly where the sales are concluded after
objective and impersonal bargaining, afford the most satisfactory
evidence of a fair market value because it demonstrates how
circumstances have affected the minds of purchasers and sellers. ….
Where such evidence is not available or, not satisfactory, the valuer
would normally have regard to evidence which indicates what
the fair
market value probably would be in the light of the income which may
be derived from the land.”
Canca
AJ also relied on
White
v Union Government
,
[74]
in which Van Zyl JP dismissed an appeal against a decision of the
Water Court which had to value agricultural land. In doing
so,
the Water Court had rejected an income based approach. Van Zyl
JP held that while evidence as to profit made by a farmer
made out of
farming certain land “might often be an element of great
importance in determining the value of such land, I
do not think
there can be any doubt that such evidence might sometimes be very
misleading for the purpose of arriving at the value
of land if the
share which the particular farmer, through his skill and ability as a
farmer, had in producing the profit is not
taken into account.”
In that case there was uncontradicted evidence that the appellant was
an outstanding farmer ably
assisted by his wife and that he was able
to produce more from his farm than an average farmer would be able to
do. There
was no evidence of sales of land from which the Water
Court could obtain an idea of the market value of the land and in
those circumstances,
had arrived at a reasonable estimate of market
value by considering the evidence of witnesses who from practice and
experience
as farmers or land valuers or agricultural experts could
testify as to the value of the land viewed from various points of
view.
The appeal court upheld the decision of the Water Court.
[70]
In
Union
Government v Jackson and others
[75]
the Appellate Division considered an appeal against a determination
of the Water Court which valued two farms expropriated for
an
irrigation scheme. The Court agreed with the Water Court that
the properties’ market value was not ascertainable
“by a
mere capitalization of the annual profits”
[76]
and increased the compensation award having concluded that it had
erred in disregarding the fact that the farm had yielded a handsome
profit over two successive seasons. This conclusion was
considered to inform what would influence a willing buyer and
seller.
The good use to which the property had recently been
put thus served to increase a determination of market value.
[71]
In
Onteieningsreg
,
[77]
Gildenhuys deals with the income approach, explaining that the
valuation method proceeds from the premise that a purchaser will
not
pay more for a property with a certain income level than an amount
the investor can obtain a similar income level elsewhere
for the same
risk.
[78]
This method of
valuation is suitable for investment properties including housing,
office blocks, petrol stations and some
industrial buildings but is
ordinarily not suitable for a home, a business or a farm, although
the author notes that it had been
used in some Australian courts to
value grazing land. Gildenhuys emphasizes that a distinction
must be drawn between income
resulting from the specific attributes
of a property which is relevant to its value and income that derives
from the owners’
personal business on the property which may
not be.
[79]
[72]
When
regard is had to the historical authorities to which I have referred,
the income method of determining market value which has
historically
been relied upon may, as Mr du Toit testified, appear to be much the
same as what Professor Mooya describes as the
manner of determining
current use value. Moreover, the authorities do appear to hold
that at least generally, the income
method will not be used when
valuing residential or agricultural property.
[73]
Professor
Mooya in this regard explained, however, that the current use value
he is referring to and which assists in applying section
25(3) of the
Constitution, is focused on the actual position of the landowner
whereas the income method of determining market value
is focused on
the hypothetical. It must thus be regarded, he explained, as a
distinct concept of value which attaches value
in respect of a
specific landowner, not hypothetical market players. The method
thus requires that a valuer considers actual
income received when
arriving at current use value. The purpose of determining
market value and current use value, he explains,
is different: the
former establishes the hypothetical selling price of a property where
the latter quantifies the ongoing actual
benefits of using or owning
a property. Professor Mooya further maintained that the
concept is well established in
international valuation standards and
systems, but did not cite these.
[74]
Mr du Toit,
in turn, critiqued this approach indicating that it effectively
rewards or punishes the particular owner rather than
focusing on the
value of the land itself. In my view and at face value, there
may be some traction in this critique because
the reasons why some
owners are likely to be able to use land optimally or well and others
less so will be contextual, and importantly,
at times they will be
steeped in our colonial and apartheid history.
[75]
Yet
this still does not mean that there is no room for consideration of a
current use value of a sort which Professor Mooya contends
for, in
other words, which reflects value in use as opposed to value in
exchange provided it is considered contextually, rather
than
formulaically.
[76]
On an
evaluation of the evidence, however, a consideration of current use
value cannot assist the Minister in the circumstances
of this case
for three reasons.
76.1
First, on the evidence before the Court, there is insufficient
information to explain,
and in turn understand the implications of
any methodology which might be applied to arrive at a determination
of a current use
value which represents value in use. Indeed,
on the limited information to hand, it is not possible sensibly to
differentiate
how any such methodology would be rationally
distinguished from the income approach to determining market value
compensation. Moreover,
there is insufficient information
to permit a rational or just and equitable consideration of whether
the principles can sensibly
be applied in context of residential and
agricultural or smallholding properties. As a result, where
Professor Mooya has
usefully advanced a valuation principle which may
well have value, it cannot be given practical effect in this case to
arrive at
a just and equitable determination.
76.2
The second difficulty is that there is no evidence before me dealing
with how, contextually,
the affected owners’ current use of the
subject properties should be weighted. Indeed, there is no real
dispute between the
parties that the subject properties, which are
all smallholdings, are being put to their highest and best use: being
residential
and agricultural, which suggests that any current use
value should be the same or similar to market value.
76.3
Third, I have concluded, that the current use values which the
Minister has placed before
the Court cannot be accepted, as I now
explain.
Third
issue: The current use value of the properties
[77]
To
arrive at current use values, the Minister relies squarely on the
valuations conducted by Mr Ntjie and his evidence. The
valuations and the underlying evidence were the subject of criticism
from Mr du Toit including pertinent criticism about the absence
of
detail in the valuation reports. However, after the
process of requesting further particulars and discovery and
following
the December 2020 joint expert meetings, the differences between the
two experts had, in substance, narrowed to two main
issues: the
amounts of comparable gross rentals and the appropriate
capitalization rate. In turn, Mr Ntjie increased
his
assessment of current use value.
[78]
The
current use values of the properties determined by Mr Ntjie after the
December 2020 joint expert meetings are depicted in Table
B, which
depicts the original calculations of current use value and the
adjusted calculations. It also depicts the subject
properties’
market value, and in turn the Minister’s assessment of what is
just and equitable compensation.
[80]
This is notably significant less than the agreed market value.
TABLE
B
DEFENDANT
&
PORTION
AGREED
MARKET
VALUE
CURRENT
USE VALUE
PER
VALUATION
CAP
RATE: 12%
STATE
OFFER
AJUSTED
CURRENT USE VALUE
CAP
RATE:
7.5%
ADJUSTED
JUST
& EQUITABLE AMOUNT
EXH
G
2
nd
Def
Portion
5
R2 450 504
R
900 000
R1 670 000.00
R1
258 560
R1
855 000
5
th
Def,
Portions
12 and 49
R5 487
000
R1 800
000
R3 644 000.00
R3 076 480
R4 281
740
6
th
Def
Portion
13
R3
355 000
R1
050 000
R2 200 000.00
R1 678
080
R2 516
540
9
th
Def
Portion
18
R1 818
046
R
600 000
R1 170 000.00
R
978 880
R1 398
463
10
th
Def
Portion
19
R2 474 548
R
900 000
R1 690 000.00
R1
538 240
R2 006
394
12
th
Def
Portion
36
R4 054 000.00
R1
050 000
R
2552 000.00
R1 678
080
R2 866
040
15
th
Def
Portion
63
R1 381 121.00
R375 000
R880 000.00
R
879 880
R1 180
000
17
th
Def
Portion
75
R3 227 000.00
R900
000
R2 064 000.00
R
1538 240
R2 380
000
[79]
Mr
Ntjie commenced his analysis of the current use values by determining
the nature of the benefit derived by the owners of the
property,
which was mainly residential and limited agricultural purposes.
The value of the use was then determined
with reference to a net
rental income arrived at by determining a notional market rental for
the property and deducting monthly
expenses.
[80]
A
market rental was determined by interviewing property owners of
similar properties and managing agents as well as other agents
dealing with similar properties, and by analyzing the rentals of
various properties as set out in his reports.
[81]
Mr Ntjie was unable to identify properties in the immediately
proximity to the subject properties which were being rented
out.
Accordingly, he used similar properties situated outside of but
within a radius of 54km to the Pretoria city centre.
The
analysis yielded that the rentals ranged from R5000 and R20 000
per month. Mr Ntjie then adjusted the rental
for each
subject property after comparing property size, condition and
location. Mr du Toit opined that these rates were
overstated by
R1000 to R2000 per month.
[81]
After
the December 2020 joint expert meetings, there was no dispute that
the properties were suitable for purposes of comparison.
[82]
The experts also narrowed their differences in rental rates to
between R500 and R1000. The potential rentals would
then range
between R5000 and R13 000 per month.
[82]
To
determine monthly expenses, Mr Ntjie took into account rates and
taxes, maintenance costs, insurance costs for each property
and
management and audit fees. After analyzing the expenses, he
initially obtained an average of 25% of the gross income
in respect
of the subject properties. He testified that the best way to
determine expenses was to obtain access to an owners’
actual
expenditure. In this case, he took into account actual rates
and taxes based on municipal valuations. Thereafter,
his
analysis entailed assessing maintenance at 0.6% of the insurance
value, insurance at 0.3% of the insurance value, a management
fee at
5% of gross income and audit fees at R2160 per annum based on what he
described as industry norms. This approach is
patently not
based on actual expenditure, as Mr du Toit remarked. However,
after the November 2020 joint meeting, at which
information regarding
actual expenditure was shared by Mr du Toit, Mr Ntjie and Mr du Toit
agreed that the average rate of expenditure
should be reduced from
25% to 12.6% as a percentage of gross income.
[83]
Mr
Ntjie initially calculated a capitalisation rate of 12% which he
applied to all of the subject properties. He arrived at
this
amount by dividing the notional net income with a purchase price he
identified from analyzing comparable sales in the vicinity
of the
subject properties. Current use value was then determined by taking
the net rental income and multiplying it by the capitalization
rate
of 12%.
[84]
In
Mr Toit’s experience, residential property generally trades at
between 3% and 5%, this being the norm in the market place.
And he
opines that based on his experience that is the range within which
the subject properties should trade. Mr du Toit
did a high
level estimate on the capitalisation rates of the properties that Mr
Ntjie used as the rental proxies, relying on market
values in the
area. He arrived at a capitalisation rate in the range he
expected. Mr du Toit opined that the correct
way to arrive at a
capitalization rate for the subject properties would be to analyse
the purchase price of the properties identified
as comparable sales
in section 2.8 of his reports (being those used to determine market
value). Mr du Toit regarded only
4 of these 8 properties as
relevant
[83]
and arrived at a
capitalization rate between 3.10% and 6%, in other words, an average
of 5.08%. He ultimately opined
that a reasonable rate
would be within the parameters of 3.5 to 5.5%.
[85]
After
the December 2020 joint expert meetings both witnesses adjusted their
capitalization rates. In Mr du Toit’s case,
he adjusted
the rates in part as a result of the agreed drop in expenses from 25%
to 12.6% of gross income. He also included
in his consideration
one of the properties which he had omitted to include but which
yielded a 7.5% capitalisation rate.
Mr du Toit considered his
capitalization rate range (3.76 to 5.12) should increase between 0.5%
and 1% resulting in a new range
of between 4.2% and 6.12%.
[86]
Mr
Ntjie on the other hand considered that the capitalization rate
should be reduced from 12% to 7.5%. The property that he ultimately
used as a proxy for a purchase price and from which this figure is
derived is known as Portion 35. In my view, his reliance
on
this properly is misplaced, as Mr Roberts contends relying on Mr du
Toit’s critique. According to the evidence,
the property
was purchased in November 1999 from a bank. The owner on-sold
the property on 12 January 2017 in urgent circumstances
after her
husband’s death. Mr Ntijie testified that he
understood that the property had at that stage been purchased
by
someone cheaply and that the purchaser wanted to sell it to the
government at market value. He considered the purchaser
to be well informed. Mr du Toit on the other hand regards the sale as
precluded from consideration by the Pointe Gourde principle.
This principle, as accepted in our law, holds that when determining
compensation for compulsorily acquired land, no regard should
be had
to any increase or decrease in value of the land which is
attributable to the scheme underlying the acquisition.
[84]
While somewhat sparse, the information supplied to the Court does
suggest that the purchase price paid was lower than
it might have
been as a result of a land acquisition scheme and I am not satisfied
in these circumstances that the price for this
property can be used
as a proxy for purchase price. In any event, in my view,
this sale cannot be used as a proxy for
purchase price because the
factors which influenced price were distinct and unusual.
[87]
I
pause to deal with an objection which Mr Mtsweni raised in respect of
the Mr du Toit’s evidence about the circumstances
of the sale
of Portion 35, which I provisionally allowed. The objection was
levelled on the basis that the issues ought to
have been foreshadowed
in Mr du Toit’s expert summaries. In this regard, Mr
Mtsweni submitted that the same rules apply
to both the Minister and
the Landowner Defendants’ summaries and must be applied equally
to both parties. I agree with
Mr Mtsweni’s latter
submission. But in my view it is misplaced in this context.
It was Mr Ntjie not Mr
du Toit who relied so materially and centrally
upon Portion 35 for this purpose, and the information about the
property came to
light during the exchange between the experts in the
December 2020 joint expert meetings. Moreover, Mr Ntjie himself
testified
about it in material ways.
[88]
As
appears from the above, the only two real points of contention that
remained between Mr Ntjie and Mr du Toit after the December
2020
joint expert meetings were the capitalization rate and the rental
income amounts. On the latter, while the witnesses
were unable
to reach agreement, the difference between them was reduced to
between R500 and R1000 per month, a difference that
may be capable of
resolution. But the former disagreement on the capitalization
rate is material and in my view cannot be
resolved in the Minister’s
favour.
[89]
There
are further difficulties with the valuations. First, save
insofar as expenses were ultimately agreed based on actual
expenses,
the valuations are prepared with reference centrally to comparable
property yields and prices rather than information
germane to the
specific owner. That forefronts the evidential issues
that I have raised above, namely the sparse evidence
supplied about
the correct methodology to arrive at a current use value reflecting
value in use or beneficial use or that enables
me to reconcile
differences between a current use value representing value in use or
beneficial use or market value determined
via an income approach.
In turn this means that the valuations do not provide an adequate
basis upon which I can sensibly
conclude that they reflect the actual
beneficial use to the current owners. Secondly, and as already
noted, although there
are some differences in detail between the
expert witnesses, there is no dispute that the properties are being
put to their highest
and best use. There was no dispute that in
such circumstances a current use value should equate to market
value.
In this regard, Mr Ntjie contended that while that
is so, the owners in this case are not in fact using their properties
optimally
even within their current and best use (for example for
farming activities). But I am unable to accept this contention
on
the evidence before me. For the most part there is no
such evidence and such evidence as there is suggests either that
the
properties are being so used or the uses beyond residential uses were
not factored into the valuations. Thirdly, I have
considered
whether any benefit may be gained from using Mr du Toit’s
calculations to arrive at a current use value.
But this
exercise would be fruitless as Mr du Toit’s valuations default
to market value because the purchase price he uses
to arrive at a
capitalization rate is reflective of the market value of the subject
properties. While not expressly stated, this
appears to be the basis
upon which his view rests that if correctly applied, the income
approach (which this is in substance) should
yield the same value as
a current use value. Moreover, save for the divergent
approaches, there is insufficient information
before me about the
principles and procedures underpinning the valuation methodology for
me to arrive at a sensible value.
[90]
In
the result I have concluded that the Court is unable to rely on the
valuations supplied to determine any current use values in
the sense
mooted by Professor Mooya. In the result, the fourth question
arises: how just and equitable compensation
can be determined
on the information supplied and whether the Landowner Defendants’
contention that market value is just
and equitable compensation on
the facts of this case should be accepted.
[91]
Before
turning to that issue I must deal briefly with a series of
credibility attacks levelled by Mr Roberts against Mr Ntjie which,
it
was submitted, render his evidence wholly unreliable. The
attacks were varied. One critique, already mentioned,
is an
alleged failure to provide detailed substantiated valuation reports
which are necessary both for the court to perform its
own function
and to enable expert witnesses to engage as required under the rules
of court. Importantly, it was only through the
provision of further
particulars and discovery (which ensued during the above mentioned
adjournments) which enabled sensible engagement
between the parties.
Without these processes, it is indeed difficult to see how the Court
could have sensibly engaged with
the reports. Another concerned the
state of the valuation documentation and Mr Ntjie’s failure to
produce documents under
subpoena or requested in discovery or reports
referred to in e-mail correspondence that had not been produced and
which suggested
the Court had not been apprised of the full
information and that other, different valuations, were in
circulation.
In view of the conclusions which I have
reached above, and while the issues raised were concerning, it is not
necessary for me
to consider each of these attacks in any detail.
On the information to hand, and in light of his demeanour in what
were tense
and emotive proceedings, I have no reason to believe that
Mr Ntjie was acting other than in good faith and any errors he may
have
made can probably be put down to his current and relative
inexperience as a witness in High Court proceedings. That said,
litigants must be mindful that their cases may stand or fall on
whether the valuations proffered comply with the requirements for
expert evidence or valuation standards. Moreover the
documentation supplied to the Court must be correctly compiled so as
not to waste judicial resources and time. Requests for
discovery duly made and subpoenas must be complied with. These
are matters which require the attention not only of expert witnesses
but of legal representatives for the parties who engage them
and
indeed the parties themselves.
Fourth
issue: how should just and equitable compensation be determined
on the facts of this case?
[92]
In
light of the above conclusions, the only substantive issue that
remains is how just and equitable compensation should be determined
on the facts of this case and whether the court, in doing so, should
accept the landowners’ assertion that market value is
just and
equitable compensation. In this regard, the primary
information upon which this Court can rely is the agreed
market
values. Moreover, the parties have agreed that in view of
the delays from the date of valuation to the date
of hearing, the
amounts as valued should be increased by CPI to the date of judgment.
[93]
As
regards the listed factors in section 25(3), only (a), (c) and (e)
are relevant as explained above. As regards section
25(b), I have satisfied myself (as I explain above in paragraphs [34]
and [35]) that this is a neutral factor in this case and
(d) does not
apply. As regards section 25(3)(a) It is common
cause that the properties are currently being put
to their highest
and best use: smallholdings for residential and agricultural
use. No affected landowner is claiming
any additional value for
their potential use. As regards section 25(3)(c), the
market values are known and agreed and
this Court must consider
them. As regards section 25(3)(e), the acquisition is for the
important purpose of land reform and
the redressive purposes of the
Constitution generally and section 25 specifically.
[94]
The
factors in section 25(3) are not exhaustive. During the course
of the hearing, Mr Roberts sought to develop a case based
on an
additional consideration, being that the right to equality protected
in section 9 of the Constitution demanded that the affected
landowners are paid market value compensation for the subject
properties (adjusted by CPI as agreed). In this
regard, the evidence established that prior offers to some landowners
affected by the Moloto land claim were made based on valuations
which
used market value as a benchmark. In short, the State had
valued these properties at market value and made offers at
prices
lower than market value and which were ultimately accepted at least
in the range offered. In my view, it is
neither necessary
or appropriate to consider whether the right to equality demands that
the affected landowners in this case be
treated similarly.
It is not necessary because I have concluded that the basis the
Minister contends for cannot be
accepted in this case. It is
not appropriate because the issue was not pleaded upfront and in the
result, the issues ordinarily
germane to an analysis about unfair
discrimination were not adequately canvassed.
[95]
Mr
Mtsweni contended, on the other hand, that the evidence that has come
to the fore as a result shows that if regard is to be had
to thereto,
it should serve to adjust compensation downwards from market value.
As Mr Mtsweni contended, the evidence shows
that where offers have
been made and agreement reached in context of this land claim using
market value as the benchmark for a
reduced offer, offers were made
and parties have reached consensus at an amount below market value.
The question is
whether some settlement factor should be
applied in this case. In principle it may well be just and
equitable to do so, but
there is a similar difficulty to the
difficulty that Mr Roberts faces: there is insufficient
information upon which this
Court can arrive at a rational settlement
factor. While there is information to hand about the extent to
which the prior
settlements reflected in the documents supplied
departed from the determined market value, there is insufficient
information upon
which it can be safely concluded that the prior
settlements before the Court should be used as a sample. The
fact that they
all concern the Moloto land claim on its own is not
enough given the protracted history of this matter and one is left to
speculate
about what the negotiation climate may have been had offers
been made on the basis of market value at the relevant times.
[96]
In
the absence of any other information and satisfactory evidence upon
which just and equitable compensation can be assessed, this
Court is
constrained to conclude that market value is, in the circumstances of
this case, just and equitable compensation as the
landowners’
contend. That this is so is in some measure the result of the
parties’ joint approach to this matter
being that the material
issue for adjudication is whether the formula adopted by the Minister
should be accepted or not:
little attention was, in the result,
given by the parties to other potentially relevant considerations.
I highlight this
because in
Du
Toit,
the
Constitutional Court emphasized that section 25(3) does
not
give
market value a central role. But
if
courts are helpfully to engage the vexed questions relating to the
place of market value in an assessment of just and equitable
compensation, they need to be supplied with information and evidence
upon which they can do so rationally. Parties should
co-operate
to ensure that courts are given adequate information in this regard
on all relevant factors – whether in their
favour or against
them – and if need be, parties should not hesitate to resort to
the applicable rules of discovery or subpoena
to do so.
[97]
In
the result, I have concluded in this case that just and equitable
compensation is the agreed market value. Given the limited
information to hand, there is no other consideration applicable in
this case which yields any upward or downward adjustment thereto
and
given the contextual information to hand about current use, I can
accept that this market value is just and equitable compensation
on
the facts of this case. As agreed between the parties, the value
should be adjusted by CPI to the date of judgment. The adjusted
values as at February 2022 have been supplied by Mr du Toit and I
make provision in my order for the parties to approach the Court
should any dispute arise as regards this calculation.
[98]
As
the market value of the subject property of the Sixteenth Defendant
is not yet agreed and it is not known whether any dispute
will arise
in connection therewith, the determination of compensation in its
case is postponed
sine
die.
Fifth
issue: costs and reserved costs
[99]
There
was no dispute between the parties that if the landowners are
successful they should be awarded their costs. I agree.
The
question is whether costs should be awarded on a party and party or
punitive scale. I can see no reason why
costs should be
awarded on a punitive scale.
[100]
The
remaining question is reserved costs. There are three points of
contention. The first is the scale at which I awarded
costs
against the Minister in favour of the landowners when the matter was
initially postponed on 10 November 2020 until 12 November
2020 to
enable Mr du Toit to provide an expert summary. The
second is the costs occasioned by the postponement from
12 November
2020 until 7 December 2020 to enable further discovery, the provision
of trial particulars and a further expert meeting
between Mr Ntjie
and Mr du Toit. The third is the postponement from 7 December
2020 until 9 December 2020 to enable that
expert meeting to be
finalized and a joint minute filed.
Costs
occasioned by the postponement on 10 November 2020
[101]
The
first issue can be disposed of briefly. When I made my order
awarding costs against the Minister that day, I considered
the
correct scale of costs. That I did so was apparent from my
exchanges with the parties, as Mr Mtsweni pointed out.
On the
information available to me then, I was of the view that the correct
scale was the party and party scale but omitted to
say so expressly:
I was aware of no reason to award costs on a punitive scale. While
I have subsequently become
apprised of further relevant information,
I do not consider myself entitled to disturb that order nor is it of
such a nature that
persuades me that my order would have been
different.
[102]
However,
three other issues were raised regarding the first costs order.
The first two can be dealt with together and are
whether it covers
the costs of two counsel and the wasted costs occasioned by the
attendance of expert witnesses. These
matters stand on a
different footing as it was my intention when I made the order that
these be included. To the extent that
it is necessary to
specify these, it is appropriate that I clarify or correct my order
to reflect its intended ambit and I accordingly
do so. Mr
Roberts further requested the Court to reflect in its decision that
the Court adjourned at about noon on
10 November 2020. This is
indeed correct and at least half a day of court time on 10 November
2020 was lost as a result of
the postponement. It should be
noted too that a significant portion of court time in the morning was
spent dealing with the
belated notice given by the Minister to call
Mr Ntjie. Some time was, however, also spent dealing with other
issues raised
by the court relating to the merits of the matter,
specifically the parties’ recorded agreement that the history
of use and
acquisition of the property were of no relevance to the
matter. The apportionment of time spent on matters germane to
the
adjournment will appear from the transcript and these are matters
than can appropriately be drawn to the attention of the taxing
master.
Costs
occasioned by the postponement from 12 November to 7 December 2020
[103]
Secondly,
I must deal with the scale at which the Minister should pay the costs
occasioned by the postponement from 12 November
until 7 December
2020. Without conceding any liability to do so, the Minister
tendered the costs occasioned by the postponement.
However, the
parties remained in dispute about the scale of costs and that issue
was argued on 13 November 2020. The Landowner
Defendants sought
an order that costs be paid on an attorney and client scale and the
Minister submitted that the tender to pay
on a party and party scale
was not only unnecessary but adequate in the circumstances. It
thus becomes necessary for
me to determine both whether the State’s
tender was appropriate made and if so, as I conclude, the scale of
costs.
[104]
This
Court, which deals with social legislation, does not award costs save
in special circumstances, and subject to the principles
articulated
in
Affordable
Medicines Trust
[85]
and
Biowatch.
[86]
When dealing with postponements, this Court will in an appropriate
case award costs when the conduct of one party results
in a
postponement to the wastage of others. The cause of the
postponements, both on 10 and 12 November 2020, was the Minister’s
decision to call Mr Ntjie as an expert witness and the State’s
failure timeously to provide a summary of his evidence as
required by
Rule 49 of the Rules of this Court. In my view, it was
incumbent on the Minister, timeously, to comply
with Rule 49.
It did not suffice, as Mr Mtsweni contended, that the Landowner
Defendants were in possession of the valuation
reports. In
support of this contention, Mr Mtsweni submitted that it is material
that Rule 49 does not expressly require
a separate notice of
intention to call any expert witness; only a summary is required.
But it would make a mockery of Rule
49 if parties were not obliged,
at least when providing a summary, to identify the person to be
called and their expertise as is
customary in the High Court.
And the Minister at no stage submitted a summary even indicating that
the expert testimony would
be in accordance with the valuation
reports. At the very least this would have been required.
Moreover, as matters transpired,
the summary that was produced
extended well beyond the valuation reports themselves, and both
discovery and particularity was then
sought. This is
unsurprising as the valuation reports on their own did not comply
with the requirements for expert
summary, either generally as laid
down in
Coopers
[87]
case, or specifically as required in respect of property valuations.
While the valuation reports may have sufficed to enable
the Landowner
Defendants to assess whether to accept the offers the Minister made
relying on them, they were insufficiently explained,
by either fact
or reason, fairly to enable trial preparation or for purposes of
trial.
[105]
Furthermore,
quite apart from Rule 49, the pre-trial process in this matter
specifically contemplated that notice of expert testimony
be
specifically given. As indicated above, during the pre-trial
conference of 30 October 2020, I specifically requested the
parties
to indicate whether the anticipated witnesses were limited to the
three experts whose summaries had been supplied to the
Court.
At that time, Mr Roberts queried whether the State intended to call a
witness from the Office of the Valuer-General.
Mr Mtsweni
advised that he had no instructions at that time and that he would
inform the parties and the Court by Tuesday 3 November
2020 if he
would be. He regrettably omitted to do so. Indeed, Mr
Mtsweni confirmed that the Minister’s representatives
had only
taken a decision to call Mr Ntjie on 10 November 2020.
And on 12 November 2020, Mr Roberts informed me that
there had in
fact been a prior directive given by Canca AJ (to whom this matter
was previously allocated) requiring parties to
file any expert
summaries. The directive is dated 19 October 2019 and paragraph
7 records that the Minister is ordered to
file all expert notices and
summaries of the evidence of those witnesses on or before 15 November
2019. Mr Mtsweni submitted
that this directive did not apply to
Mr Ntjie as the valuation reports had already been supplied to the
Defendants. I disagree
for the reasons set out above.
[106]
Mr
Mtsweni submitted that any cause for postponement occasioned by the
failure to comply with Rule 49 had been cured by 12 November
2020 as
the summary had been filed on 11 November 2020. But that is not
so. Not only was the summary filed late on
11 November 2020
without explanation, but the Landowner Defendants expressly reserved
their rights as regards the limited time
available to deal with it.
As matters unfolded, the time was inadequate and the Landowner
Defendants reasonably required
further time to deal with what was
provided. This included the last minute supply of a technical
guidance manual and the
supply of materially different valuations to
what had previously been supplied (albeit ultimately explained as an
error).
Even though the Landowner Defendants may have
previously been in possession of the valuations and notionally could
have sought
further discovery and trial particulars in light thereof,
they cannot in my view be faulted for preparing for trial on the
assumption
that no valuer was going to be called. This is all
the more so in circumstances where the leave of this Court to obtain
discovery
is required. In my view it should have been no
surprise to the Minister that the last minute decision to call Mr
Ntjie
as an expert witness would likely result in a postponement of
more than two days, with an attendant wastage of costs.
[107]
Mr
Mtsweni submitted further that the Landowner Defendants in fact
anticipated that Mr Ntjie would be called as a witness as their
own
experts dealt with his valuations in their reports. It is
correct that the Landowner Defendants’ experts, in some
measure, address the reports. However, they do so primarily to
point out what is not motivated in the reports. A very
different response can be expected once the reports are motivated.
Accordingly, this submission does not assist the Minister.
[108]
In
these circumstances, I conclude that the Minister caused the
postponement through non-compliance with the Rules and case
management
requirements, and I would have held the Minister liable
for the occasioned costs even in the absence of the tender. Mr
Mtsweni
submitted that even if the Court were to reach this
conclusion, there was no basis upon which to order costs on an
attorney and
client scale. He submitted that the authorities on
attorney and client costs orders are clear that they should only be
awarded
in exceptional circumstances. Mr Roberts contended that an
award on an attorney and client scale was justified for two reasons:
first, the Minister’s conduct at this stage, which warrants
censure, and second, the history of the matter. I am
disinclined
to take into account the history of the matter, albeit
admittedly troubling. This is because prior conduct has already
been
addressed in previous proceedings by Judges steeped in those
proceedings who have made costs orders appropriate to the
circumstances.
In my view the conduct does, on the other hand,
invoke concern not least given this court is established to
facilitate access to
land justice. However, I do not think that
the conduct reaches the level set for the imposition of a punitive
order.
In this regard, I have considered the standard set for
the imposition of such an order referred to in the
Public
Protector v SARB
[88]
and I do not think that the conduct, while regrettable, manifests
such disregard for the court process that warrants a costs award
on
the punitive scale: the award of costs, which were tendered,
suffices.
[109]
The
postponement from 7 to 9 December 2020 was occasioned by a failure on
the part of the Minister to comply with the order regulating
the
further conduct of the proceedings made on 12 November 2020,
specifically the provision of trial particulars and compliance
with
the discovery order. Moreover, and as a result, Mr Ntjie and Mr du
Toit still needed to finalise their exchanges and compile
a joint
minute. While I am satisfied that costs occasioned by
this postponement should be borne by the Minister,
have no
information to hand upon which a punitive order is justified, as
sought by Mr Roberts.
Order
[110]
The
following order is made:
1.
The
First Defendant is hereby ordered to acquire the following properties
in terms of Section 35(1)(a), read with
Section 42A
of the
Restitution of Land Rights Act No 22 of 1994
for the benefit of the
Moloto Community and to pay just and equitable compensation to the
following Defendants, as follows:
1.1
Remaining
Portion of Portion 5 (a portion of Portion 3) of the farm Jakkalsdans
243, Registration Division J R, Province Gauteng
(in extent,
21,4133
(Twenty-One Comma Four One Three Three) hectares held by Deed of
Transfer No T11866/2005 in favour of the Second Defendant,
in the
amount
of
R2,989 244.00;
1.2
Portion
12 (a portion of Portion 1(ELIM) of the farm Jakkalsdans 243,
Registration Division J R, Province Gauteng in extent
21,4139
(Twenty-One Comma Four One Three Nine) Hectares held by Deed of
Transfer No T37383/1988 in favour of the Fifth Defendant,
and Portion
49 (a portion of Portion 1 (ELIM) of the farm Jakkalsdans 243,
Registration Division J R, Province Gauteng in extent
21,4190
(Twenty-One Comma Four One Nine Zero) hectares held by Deed of
Transfer No T62531/1998 in favour of the Fifth Defendant,
in the
amount of
R6,693,308.00
for both
the
aforesaid properties;
1.3
Portion
13 (a portion of Portion 1(ELIM) of the farm Jakkalsdans 243,
Registration Division J R, Province Gauteng in extent 21,4143
(Twenty-One Comma Four One Four Three) Hectares held by Deed of
Transfer No T85535/1994 in favour of the Sixth Defendant, in the
amount of
R4,092,592.00;
1.4
Portion
18 (a portion of Portion 1(ELIM) of the farm Jakkalsdans 243,
Registration Division J R, Province Gauteng in extent 21,4136
(Twenty-One Comma Four One Three Six) hectares held by Deed of
Transfer No T33278/2005 in favour of the estate of the late P.J.
S
Roberts, Estate No 6599/2021 registered with the Master of the High
Court Gauteng (the Ninth Defendant), in the amount of R2,217,741.00
which amount will be paid to the executor of the estate of the late
P.J. S. Roberts (to be appointed by the Master of the High
Court)
upon date of registration of the said property.
1.4.1.
The
First Defendant c/o the State Attorney Pretoria is hereby ordered and
directed to pay 90% (ninety percent) of the aforesaid
amount into the
trust account of Messrs Cox & Partners Attorneys, Vryheid, within
30 (thirty) calendar days of the granting
of the order. The
said attorneys, who will be attending to the conveyancing and
registration of transfer will deposit the
said amount into a special
interest earning investment account to be held by them in trust until
date of registration of transfer.
All interest earned on the
said investment account will accrue for the benefit of the State.
1.4.2.
Once
the appointment of an executor in the estate of the late P.J. S.
Roberts have been made by the Master of the High Court Gauteng
and
once Letters of Executorship have been issued, the said conveyancers
will forthwith proceed with the conveyancing process to
ensure that
registration of transfer of the property will be effected in the
Deeds Office Gauteng as soon as reasonably possible
thereafter.
1.4.3.
The
First Defendant, c/o the State Attorney, Pretoria, is hereby ordered
and directed to pay the balance of the 10% (ten percent)
of the
compensation payable to the Estate Late P.J. S. Roberts into the
trust account of the conveyancers Cox & Partners
Vryheid
within 5 (five) calendar days from date of registration of transfer
of the said property into the name of the State.
1.5
Portion
19 (a portion of Portion 1(ELIM) of the farm Jakkalsdans 243,
Registration Division J R, Province Gauteng in extent 21,4139
(Twenty-One Comma Four One Three Nine) hectares held by Deed of
Transfer No T102987/2002 in favour of James André Roberts
and
Elizabeth Christina Roberts, married In Community of Property, in the
amount of
R3,018,574.00;
1.6
Portion
36 (a portion of Portion 1(ELIM) of the farm Jakkalsdans 243,
Registration Division J R, Province Gauteng, in extent 21,4133
(Twenty-One Comma Four One Three Three) hectares held by Deed of
Transfer No T131501/1998 in favour of the Twelfth Defendant, in
the
amount of
R4,945,266.00;
1.7
Portion
63 (a portion of Portion 1(ELIM) of the farm Jakkalsdans 243,
Registration Division J R, Province Gauteng in extent 21,4138
(Twenty-One Comma Four One Three Eight) hectares held by Deed of
Transfer No T32001/2004 in favour of the Fifteenth Defendant in
the
amount of
R1,684,759.00;
1.8
Portion
75 (a portion of Portion 5) of the farm Jakkalsdans 243, Registration
Division J R, Province Gauteng in extent 21,4133 (Twenty-One
Comma
Four One Three Three) hectares held by Deed of Transfer No
T29675/1993 in favour of the Seventeenth Defendant in the amount
of
R3,936,451.00.
1.9
Should
any dispute arise between the parties regarding the correctness of
the calculations whereby the agreed market value of the
properties
have been adjusted with reference to the CPI to date of judgment
either party may approach this Court for a variation
of this order.
2.
The
First Defendant c/o the State Attorney, Pretoria, is hereby ordered
and directed to pay 90% (ninety percent) of the amounts
of just and
equitable compensation payable in respect of all the properties
referred to in paragraphs 1.1, 1.2, 1.3, 1.5, 1.6,
1.7 and 1.8 into
the trust account of Messrs Cox & Partners Attorneys, Vryheid,
within 30 (thirty) calendar days of the granting
of the order.
Messrs. Cox & Partners’ Conveyancers will attend to the
registration of transfer of each of the respective
properties into
the name of the State.
3.
The
First Defendant, c/o the State Attorney, Pretoria, is hereby ordered
and directed to pay the balance of the 10% (ten percent)
of the
compensation amounts payable in respect of the properties referred to
in paragraph 2 above into the trust account of Messrs
Cox &
Partners Attorneys, Vryheid, within 5 (five) calendar days from the
date of registration of transfer of each of the respective
properties
into the name of the State.
4.
Cox
& Partners, who will be attending to the conveyancing and
registration of transfer will deposit all the said amounts into
special interest earning investment accounts to be held by them in
trust until the respective dates of registration of transfer
of the
respective properties. All interest earned on the said
investment accounts will accrue for the benefit of the State.
5.
The
registration costs payable to Cox & Partners conveyancers in
respect of the registration of transfer of all the above-mentioned
properties will be paid for by the respective Landowner Defendants.
6.
The
determination of just and equitable compensation in respect of the
Sixteenth Defendant’s property is postponed
sine
die.
7.
The
First Defendant is directed to pay the wasted legal costs of the
Second, Fifth, Sixth, Ninth, Tenth, Twelfth, Fifteenth, Sixteenth
and
Seventeenth Defendants (Landowner Defendants), occasioned by the
three postponements of the trial set down from 9 – 13
November
2020 (10
th
to 12
th
November 2020, 12
th
November 2020 to 7
th
December 2020
and 7 -9 December 2020) on the scale as between party and party such
costs to include, but not limited to:
7.1
The
wasted trial fees and expenses of the Landowner Defendants
pursuant
to the employment of their attorney and two counsel (hereinafter
jointly referred to as “counsel”
)
including time wasted
when the matter stood down at several occasions during the week of 9
to 13 November 2020, and including all
wasted travelling time,
traveling costs, accommodation costs and all other expenses. [
It
is recorded that the appointment by the Landowner Defendants of their
attorneys from Vryheid and of counsel from Pietermaritzburg,
is in
the circumstances fully justified and appropriate with due regard to
the specialised nature of the litigation in question,
the country
wide jurisdiction of the Land Claims Court - which is a court with
special jurisdiction - and the fact that the
court operates
from its seat in Randburg and as a circuit court across all
Provincial and Local boundaries throughout the Republic
of South
Africa];
7.2
The
wasted costs occasioned by the said postponements to the attorney and
two counsel attending to preparation for the said trial
dates, and
consultations with the Landowner Defendants such to include the
wasted reasonable travelling time and expenses as well
as
accommodation costs (where applicable);
7.3
The
wasted travelling and accommodation costs of the Landowner Defendants
who attended the trial from 10 to 13 November 2020, where
applicable;
7.4
The
wasted costs occasioned by the postponement of the trial from 10 to
13 November 2020 relating to the employment of the experts
Prof
Kobus Laubscher - Agricultural Economist and Mr. Saul du Toit -
professional valuer,
which
costs include but shall not be limited to the costs relating to:
7.4.1
Their
wasted preparation for the trial set down for 9 – 13 November
2020;
7.4.2
Their
attending wasted consultations with the attorney and counsel in
preparation for the trial set down from 9 – 13 November
2020,
including travelling time and expenses, and accommodation costs to
attend such consultations;
7.4.3
The
wasted attendance fees in respect of the said experts including the
reasonable travelling costs and time and traveling expenses
as well
as wasted accommodation costs to attend the trial in Randburg from 9
to 13 November 2020.
7.5
The
wasted costs occasioned by the postponement of the trial from 10 to
13 November 2020 relating to the Landowners’ counsel
and
attorney consulting with the experts and the costs of such experts
attending such consultations, such to include (where applicable)
the
wasted reasonable travelling time and expenses as well as wasted
accommodation costs of counsel, the attorney and the experts;
7.6
The
wasted costs occasioned by the postponement of the trial from 9
to 13 November 2020 incurred by the Landowner Defendants’
attorney and two counsel pertaining to time spent sorting,
arranging, indexing, paginating and compiling bundles in
preparation for the said trial dates, including attending meetings on
virtual platforms and telephonically, and attending to the
copying
of bundles for the State Attorney and transmitting it by drop
box and by courier - which costs the State Attorney
has tendered to
pay;
7.7
The
wasted costs of arranging, preparing for and attending pre-trial
conferences (including such conferences conducted on virtual
platforms and/or telephonically) relating to the trial set down from
9 to 13 November 2020.
7.8
Any
further wasted costs, including where applicable of the sort referred
to in paragraphs 7.1 to 7.7, occasioned by the postponement
from 7 to
9 December 2020.
8.
In
addition to the abovementioned costs and to the extent that it would
not constitute any duplication of the costs awarded above,
t
he
First Defendant is directed to pay the other costs of the Landowner
Defendants pertaining to the matter including but not limited
to the
costs of the trial during the period of 7 to 17 December 2020:
8.1
The
costs pursuant to the employment of an attorney and counsel including
the costs of two counsel (hereinafter jointly referred
to as
“counsel”
)
- junior counsel
as
from date of appointment;
8.2
The
costs pursuant to the attorney and counsel preparing for and
attending all consultations with the Landowner Defendants and also
other necessary persons/witnesses consulted for purposes of
conducting the case of the Landowner Defendants and to prepare for
trial, such costs to include the reasonable travelling time and
expenses as well as accommodation costs of the attorney and counsel;
8.3
The
costs of the Landowner Defendants’ counsel and attorney
preparing for and consulting with experts including travelling
time
and expenses as well as accommodation costs to enable them to attend
such consultations;
8.4
The
costs incurred by the Landowner Defendants’ legal
representatives (attorney and counsel) pertaining to time spent
sorting,
arranging, drawing indexing, paginating and compiling of
trial bundles and in preparation for trial, including attending
meetings
on virtual platforms in this regard and attending to make
copies of bundles for the other parties and the court;
8.5
The
costs of arranging, preparing for and attending pre-trial conferences
including, telephone conferences and conferences on virtual
platforms, relating to the case and the trial;
8.6
Preparing
for trial and trial fees of the Landowner Defendants’ attorney
and counsel including reasonable travelling time
and accommodation
costs and expenses incurred by them to attend trial;
8.7
The
costs relating to the employment of the experts Prof Kobus Laubscher
- Agricultural Economist, and Mr. Saul du Toit - professional
valuer,
which costs will include but shall not be limited to the costs
relating to:
8.7.1
The
fees and reasonable expenses including travelling time and traveling
costs as well as accommodation costs (where applicable)
in respect of
all consultations, including consultations by telephone or virtual
platforms and other such deliberations with the
Landowner Defendants,
with or without their attorney and counsel, as well as consultations
and deliberations with other persons
as sources of information and
also with one another, as well as deliberations with opposing
experts, to enable them to acquaint
themselves with the case and to
prepare their reports and summaries of their evidence;
8.7.2
The
costs of preparing for and attending consultations with the Landowner
Defendants and their attorney and counsel in the process
of preparing
their reports and summaries of their evidence as well as in
preparation for trial including travelling time and expenses
and
accommodation to enable them to attend such consultations;
8.7.3
The
attendance fees and expenses of the said experts to attend the trial
in Randburg, including their reasonable travelling costs
and expenses
as well as accommodation costs;
8.7.4
The
costs of preparing for and attending consultations and meetings
between the experts as well as the cost of preparing minutes
of
meetings between the experts, including all relevant costs such as
attending to arrange such meetings, travelling costs and
expenses and
accommodation costs.
___________________
COWEN
J
Judge
Land
Claims Court
APPEARANCES
For
the Minister of Rural Development and Land Reform:
D
Mtsweni and E Maleka instructed by the State Attorney
For
the Second, Fifth, Sixth, Ninth, Tenth, Twelfth, Fifteenth and
Seventeenth Defendants:
MG
Roberts SC and K Roberts instructed by ABT Van der Merwe
[1]
More
fully, section 22(1)(b) of the Restitution Act confers on the Land
Claims Court the power “to determine or approve
compensation
payable in respect of land owned by or in the possession of a
private person upon expropriation or acquisition of
such land in
terms of this Act.”
[2]
Du
Toit v Minister of Transport
2006
(1) SA 297
(CC) (
Du
Toit
)
at para 26.
[3]
Regulation
1321 published in GG 42064 of 30 November 2018.
[4]
Emakhasaneni
Community and others v Minister of Rural Development
and
Land Reform and others
2019 (4) SA 286
(LCC) at paras 31 and 32.
[5]
For
purposes of this background, the primary sources of information to
which I have had regard are the various pleadings in the
referral.
The parties agreed that reference should be made thereto for
background purposes. I have also had regard
to the litigation
history as appears from the court papers and prior judgments where
parties have drawn attention thereto and
the factual matter is
uncontroversial.
[6]
Notice
1795 in
GG
26693 of 27 August 2004.
[7]
Jakkalsdans
Boerdery CC and others v Regional Land Claims Commissioner:
Mpumalanga and others
[2010] JOL 26093
(LCC).
[8]
Moloto
Community v Minister of Rural development and Land Reform and others
2019
(3) SA 523
(LCC), see specifically paras 1 to 17.
[9]
Department
of Land Affairs v
Goedgelegen
Tropical Fruits (Pty) Ltd
[2007] ZACC 12
;
2007
(6) SA 199
(CC) at para 51 with reference to fn 46 and 48.
[10]
Ex
Parte Chairperson of the Constitutional Assembly: In re
Certification of the Constitution of the Republic of South Africa
,
[1996] ZACC 26
;
1996
1996 (4) SA 744 (CC) (
Certification
1
);
First
National Bank of SA Ltd t/a Wesbank v Commissioner, South African
Revenue Service and another; First National Bank of SA
Ltd t/a
Wesbank v Minister of Finance
[2002] ZACC 5
;
2002 (4) SA 768
(CC) (
FNB
)
;
Du Toit
above
n2 and
Haffejee
NO and others v Ethekwini Municipality and others
2011 (6) SA 134
(CC) (
Haffejee
).
[11]
Section
39(1)(a) of the Constitution and
Haffejee
above n10 at para 29.
[12]
Haffejee
above
n10 at para 29, relying on
FNB
above n10 at para 59.
[13]
Haffejee
above
n10 at para 31, relying on
FNB
above
n10
at
para 50
.
[14]
FNB
above
n10 at para 49. See also
Certification
1
above
n10
at
para 72.
[15]
FNB
above
n10 at para 49
;
Haffejee
above
n10 at para 30.
[16]
Du
Toit
above
n2 at para 26.
[17]
Id
at
para 28.
[18]
Id
at para 33.
[19]
Id
at p
ara
34.
[20]
Id
at
para 37.
[21]
The
approach is usually attributed to the Constitutional Court’s
decision in
Du
Toit
and this Court’s decision in
Ex
Parte Former Highlands Residents; In re: Ash and others v Department
of Land Affairs
[2000]
2 All SA 26
(LCC) (
Ex
Parte Former Highlands Residents
).
[22]
Pentree
Limited v Nelson Mandela Bay Municipality
2017
(4) SA 32 (ECP).
[23]
In
re
Kusile
Land Claims Committee: Land Restitution Claim, Midlands North
Research Group and others
2010
(5) SA 57
(LCC) (
Kusile
)
at para 23.
[24]
DT
Zeffertt and AP Paizes
The
South African Law of Evidence
3
ed (2017) at 495.
[25]
Kusile
above n23 at para 23.
[26]
Lornadawn
Investments (Pty) Ltd v Minister van Landbou
1977 (3) SA 618
(T) at 626A-G;
Southern
Transvaal Buildings (Pty) Ltd v Johannesburg City Council
1979 (1) SA 949
(WLD) (
Southern
Transvaal Buildings
)
at 952D-E. That the concept of onus in a ‘narrow sense’
finds no application when determining quantum is supported
by the
decision of the then Appellate Division in
Port
Edward Town Board v Kay
1996
(3) SA 664
(A) at 674J-675D.
[27]
Southern
Transvaal Buildings
n26 above at 952D-E.
[28]
Khumalo
and others v Potgieter
and
others
2000 [2] All SA 456 (LCC).
[29]
Id
at para 24
.
[30]
In
Davey
v Minister of Agriculture
1979 (1) SA 466
(NPD) Kumleben J held the following at 475C-F in
response to a submission that in an expropriation case a judge acts
as a “super
valuator” and as such is not bound by any of
the rules of evidence:
“
This
term ‘super valuator’, which I find more flattering than
definitive, has been used to describe the function of
the Court when
in certain circumstances it has to make its own assessment of the
value of property in issue on the facts before
it. This
term cannot serve as a basis for this far-reaching submission.
I have no authority to preside over
any tribunal other than that of
a Supreme Court constituted in terms of the Supreme Court Act …
and in so presiding I
am quite obviously bound to apply the law of
evidence …” (footnotes omitted).
[31]
Thus
in
Jacobs
v Minister of Agriculture
1972
(4) SA 608
(W)
,
Colman
J remarked
obiter
at
628C-E:
“
I
have always had difficulty with the concept that there is no burden
of proof on either of the parties to a suit in which compensation
for expropriation is claimed …. Even if the claim
relates to the value of the land alone, I do not see how a Court
can
discharge its duty in all cases if the useful instrument of onus is
unavailable to it: What it there is conflicting
evidence and
it is equally balanced? What if both parties attend the trial,
but neither elects to present any evidence?
A valuer can go in
search of information, and apply his expert knowledge to it; but a
Court is not expected to the former; and
is not qualified to do the
latter.”
[32]
Above
n26 at 674J-675D.
[33]
B
Garner
A
Dictionary of Modern Legal Usage
2 ed (1995) at 530.
[34]
VG
Hiemstra & HL Gonin
Trilingual
Legal Dictionary
1ed (1981) at 215. In
Maske
v The Aberdeen Licensing Court, Gilbert v The Aberdeen Licensing
Court
1930
AD 30
at 36-37 and
Dreyer
& Macduff v New Marsfield Collieries Ltd
1935 AD 318
at 319, Curlewis JA regards a
lis
as
akin to civil proceedings or a suit – at issue was whether
certain decisions were appealable. The rules applicable
to
pending proceedings similarly use the term in this way:
lis
alibi pendens.
[35]
See
Mlifi
v Klingenberg
1999 (2) SA 674
(LCC) at para 112.
[36]
Intramed
(Pty) Ltd v Standard Bank of South Africa Ltd
2004 (6) SA 252
(W) at 259G-J.
[37]
I
deal with this agreement in the next section.
[38]
Paragraph
4 of the statement of agreed facts.
[39]
Paragraph
7 of the statement of agreed facts.
[40]
Paragraph
6 of the agreed statement of facts.
[41]
Paragraph
5 of the agreed statement of facts.
[42]
In
Helen
Suzman Foundation v President of the Republic of South Africa and
others
2015 (2) SA 1
(CC) at fn 30, the Constitutional Court held:
“
Any
opinion, whether from a lay person or expert, which is expressed on
an issue the court can decide without receiving such opinion
is in
principle inadmissible because of its irrelevance. Only when
an opinion has probative force can it be considered
admissible.”
[43]
Coopers
(South Africa) (Pty) Ltd v Deutsche Gesellschaft Fûr
Schädlingsbekämfung MBH
1976 (3) SA 352
(A) at 371F-372A (
Coopers
).
[44]
See
too
Bee
v Road Accident Fund
[2018] ZASCA 52:
“
Expert
witnesses are required to lay a factual basis for their conclusions
and explain their reasoning to the Court. The
Court must
satisfy itself as to the correctness of the expert’s
reasoning. …. An expert’s opinion must
be
underpinned by proper reasoning in order for a Court to assess the
cogency of that opinion.”
[45]
Massmart
(Pty) Ltd v Pick n Pay Retailers (Pty) Ltd
2016
(2) SA 586
(SCA).
[46]
Id
at para 15.
[47]
It
is entered as Exhibit D in the proceedings.
[48]
This
was that in the course of calculating the present value of an income
stream, deductible costs have been assessed as artificially
high,
which reduced the present value of an income stream and in turn
reduces value. During discussion with Mr Ntjie, the
witness
reached agreement on deductible costs.
[49]
Du
Toit
above
n2 at para 48.
[50]
Haakdoornbult
Boerdery CC and others v Mphela and others
(
Haakdoornbult
)
2007 (5) SA 596
(SCA).
[51]
Khumalo
above n28
at
para 14.
[52]
For
example,
Iqbal
Kazi Allie NO & Another v The Department of Land Affairs & 3
Others
[2000] ZALCC 1.
[53]
Above
n51.
[54]
Mhlanganisweni
Community v Minister of Rural Development and Land Reform and Others
[2012] ZALCC 7
(
Mhlanganisweni
Community
)
in which Gildenhuys J considered the fact that the current use of
the property was eco-tourism noting that the valuers took
that into
account (at paragraph 60). An appeal before the Constitutional
Court in
Mhlanganisweni
Community
did not proceed as the matter became settled.
[55]
Msiza
v Director-General for the Department of Rural Development and Land
Reform and Others
[2016] ZALCC 12
(
Msiza
)
at paras 39 to 52 where the Court accepted that the market value be
determined based on the current use of the property, being
agricultural, and not its potential use (township development),
which the Court regarded as far-fetched and speculative (para
45).
The Supreme Court of Appeal overturned
Msiza
in part on appeal but not on this issue: See
Uys
N.O and Another v Msiza and Others
[2017] ZASCA 130.
[56]
Ex
Parte Former Highlands Residents
above n21.
[57]
Id
at paragraph 34.
[58]
Du
Toit
above
n2 at para 37.
[59]
Haakdoornbult
above n51 at para 36: “Market value is in the context of this
case the only factor listed in section 25(3) capable of
quantification. Once the market value has been determined an
upward or downward adjustment, having regard to the other relevant
factors, can be made.”
[60]
The
only unqualified statement I have come across is a statement of
Harms JA in
City
of Cape Town v Helderberg Park Development (Pty) Ltd
2007 (1) SA 1
(SCA) at para 19 where the following is stated: “The
problem is, however, that apart from State investment, the market
value of the property is the only factor listed in s25(3) that is
capable of qualification.” Harms AJ refers in turn
to
Ex
Parte Former Highlands Residents
above n21 to support this, in which the statement made is “readily
quantifiable”. He also refers to I Currie
and J de
Waal’s
The
Bill of Rights Handbook
5
ed (2005) at 556, where the authors reflect
Ex
Parte Former Highlands Residents
to say that section 25(3)(c) and (d) are the only factors which are
‘objectively quantifiable’. But this is
not what
the judgment observes. Moreover, it is significant that
shortly after
City
of Cape Town v Helderberg Park Development,
Harms
JA limited his statement of the position to the facts of the case to
hand and there is no suggestion in the prior case that
the statement
was made with reference to any evidence, legislative or adjudicative
in nature.
[61]
Notably
in
Msiza
above
n56, this Court commented
obiter
at paragraph 38 that:
“
I
believe that other factors in section 25 of the Constitution can
also be easy to quantify. For instance, it is easy to work
out the
history of acquisition, and reference may also be had to historical
records to determine the value of the land over time.”
[62]
Du
Toit
above n2.
Notably,
the Expropriation Act has still not been amended despite the
majority clearly remarking that the approach is not ideal
and urging
Parliament to do so. Thus, at
paragraph
36, the majority (per Mokgoro J) held:
“
This
two stage approach to determine a constitutionally compliant amount
of compensation is not ideal. It would have been
more
expedient if the Legislature had made provision in the Act itself
for complying the constitutional standards of just and
equitable
compensation and ensuring that an equitable balance between the
interests of the State and those of the individual
is reflected.
Whatever the case may be, it is important that the provisions of
this Act be brought in line with the Constitution.
While that
is not the case, the approach that I take in this matter permits us
not to ignore the applicable legislation and more
importantly to
give cognizance to the imperative nature of s25(3) as required by
section 39(2) of the Constitution.”
The
minority was heavily critical of this approach, finding at para 84
that it would “continue to privilege market value
at the
expense of other considerations relevant to justice and equity which
are expressly advocated by the Constitution.”
[63]
The
approach was followed in
City
of Cape Town
above
n61 at paras 19 to 21.
[64]
Ex
Parte Highlands Residents
above n21 at para 35. In
Du
Toit
above
n2
,
Mokgoro
J referred to the decision to remark that the approach the
Constitutional Court whereby market value is first determined
and
then giving broader consideration to whether that is just and
equitable compensation was not novel. See paragraph 37.
## [65]InEx
Parte Highlands Residentsabove
n21, section 2(2) of the Restitution Act was in issue, which
provides that a person shall not be entitled to restitution
of a
right in land under that Act if just and equitable compensation as
contemplated by section 25(3) of the Constitution calculated
at the
time of any dispossession of such right was received in respect of
such dispossession. The same section was considered
inHaakdoornbultabove
n51at para 36. In following the two-stage approach, Harms ADP
was astute to note that market value wasin
context of that casethe
only listed factor capable of quantification. See tooAbrams
v Allie NOand
others2004 (4) SA 534 (SCA) at para 15, in which, after citingEx
Parte Former Highland Residentsabove
n21, Scott JA held: “It was not contended in this Court that
the approach was incorrect and on the facts of the present
case
there would appear to be no reason for holding otherwise.”
The approach has also been applied when seeking to
arrive at an
amount for equitable redress where restoration of property is not
claimed or ordered under the Restitution Act.
See tooIqbal
Kazi Allien53
above at paras 45 to 47.SeeWollach
N.O. and Another v Government of the Republic of South Africa and
Others[2018]
ZALCC 1 at para 22 for an application of the principle to a
determination of equitable redress. InKhumaloabove
n28 at para 24 and following, this Court applied a similar approach
in determining compensation payable to a landowner for
land awarded
to labour tenants under the Land Reform (Labour Tenants) Act 3 of
1996.
[65]
In
Ex
Parte Highlands Residents
above
n21, section 2(2) of the Restitution Act was in issue, which
provides that a person shall not be entitled to restitution
of a
right in land under that Act if just and equitable compensation as
contemplated by section 25(3) of the Constitution calculated
at the
time of any dispossession of such right was received in respect of
such dispossession. The same section was considered
in
Haakdoornbult
above
n51at para 36. In following the two-stage approach, Harms ADP
was astute to note that market value was
in
context of that case
the
only listed factor capable of quantification. See too
Abrams
v Allie NO
and
others
2004 (4) SA 534 (SCA) at para 15, in which, after citing
Ex
Parte Former Highland Residents
above
n21, Scott JA held: “It was not contended in this Court that
the approach was incorrect and on the facts of the present
case
there would appear to be no reason for holding otherwise.”
The approach has also been applied when seeking to
arrive at an
amount for equitable redress where restoration of property is not
claimed or ordered under the Restitution Act.
See too
Iqbal
Kazi Allie
n53
above at paras 45 to 47.
See
Wollach
N.O. and Another v Government of the Republic of South Africa and
Others
[2018]
ZALCC 1 at para 22 for an application of the principle to a
determination of equitable redress. In
Khumalo
above
n28 at para 24 and following, this Court applied a similar approach
in determining compensation payable to a landowner for
land awarded
to labour tenants under the Land Reform (Labour Tenants) Act 3 of
1996.
[66]
Du
Toit
above
n2 at para 37.
[67]
I
have dealt with this above.
[68]
After
the December 2020 joint meetings, this variance was les
s.
[69]
As
set out in
Wollach
above n66 at para 25 with reference to
Sher
and others NNO v Administrator, Transvaal
[1990] ZASCA 77
;
1990
(4) SA 545
(A) at 547J-548B.
[70]
Referred
to respectively in
Sher
id as the comparative or market data approach, income investment or
economic approach, the land residual technique and the cost
method
respectively.
[71]
I
have noted that in
Jacobs
v Minister of Agriculture
1972 (4) SA 608
(W), a comparative sales method was used to value
investment properties which were undeveloped and one had a
dilapidated building
on it.
[72]
Wollach
above n66 at paragraph 26.
[73]
Minister
of Water Affairs v Mostert and others
1966 (4) SA 690
(A) at 723E-G cited in
Wollach
above n66.
[74]
1937
CPD 225
at 228.
[75]
1956
(2) SA 398
(A).
[76]
Id
at 428.
[77]
A
Gildenhuys
Onteieningsreg
2 ed (2001).
[78]
Id
at 134: “Die metode van waardebepaling deur indirekte
vergelyking gaan van die veronderstelling uit dat n koper nie meer
vier n eiendom met n bepaalde inkomstevloei sal betaal as die bedrag
waarvoor hy n soortgelyke inkomstevloei met dieselfde risiko
elders
kan verkry nie.”
[79]
Id
at 135.
[80]
The
latter is arrived at by adding the current use value to the market
value and dividing the amount by two.
[81]
Specifically,
paragraph 3.1.7.3 of the reports.
These
were Guinea Fowl Crescent in Riverside View Country Estate, renting
at R20 000; Mooiplaats AH, Pretoria, renting at
R18 000; a
cottage in Bonkhorstspruit renting at R3500; a plot in Donkerhoek,
in Pretoria East renting at R9500; a plot
in Montana, Pretoria
North, renting at R4000, a plot in Bashewa renting at R9000; a
cottage in Woodlands AJ renting at R5 500;
a property in Mnand
AH, Centurion renting at R12 000; a plot in Donkerhoek,
Pretoria East renting at R9500; a property in
Donkerhoekd, Pretoria
East renting at R15 000, and two properties in the Moloto area
renting at R10 000 and R6500.
His confirmed summary
confirmed further that he considered the following properties:
Portion 46, Rietfontein, 375JR in
Rietvlei; Portion 412 in
Mooiplaats 367JR and Portion 26, Mooiplaats 367JR in Donkerhoek,
which he regarded, on information supplied
to him, as similar
properties to the subject properties.
[82]
Mr
du Toit initially criticised the reports for failing to specify the
properties adequately – which is indeed a requirement
–
but this criticism is no longer material.
[83]
Mr
du Toit inspected these properties from which important information
was derived. He disregarded as irrelevant properties
subject to forced sale (insolvent estate), a family to family member
sale and an estate transfer.
[84]
See
for example
Khumalo
above n28 at para 25 and 26.
## [85]Affordable
Medicines Trust and Others v Minister of Health and Others2006
(3) SA 247 (CC) at paras 138 and 139.
[85]
Affordable
Medicines Trust and Others v Minister of Health and Others
2006
(3) SA 247 (CC) at paras 138 and 139.
## [86]Biowatch
Trust v Registrar, Genetic Resources and Others2009
(6) SA 232 (CC).
[86]
Biowatch
Trust v Registrar, Genetic Resources and Others
2009
(6) SA 232 (CC).
[87]
Coopers
above n43.
[88]
With
reference to
Public
Protector v South African Reserve Bank
2019 (6) SA 253
(CC) at para 8.
sino noindex
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