IN THE LAND CLAIMS COURT OF SOUTH AFRICA
Heard at CAPE TOWN on 23-24 April, 26-27 July 2001 CASE NUMBER: LCC 13/00 2-3 August, 6-7 August, 17 September, 10-11 October 2001, 30 November, 3 December, 7 December 2001, 23-25 April and 19 July 2002. before Meer AJ and Murphy (assessor)
Decided on: 01 October 2002
In the case of:
IQBAL KAZI ALLIE NO First claimant
ABDUL RAZAK MAHATEY NO Second claimant and
THE DEPARTMENT OF LAND AFFAIRS First respondent
PROVINCIAL ADMINISTRATION WESTERN CAPE: Second respondent DEPARTMENT OF PLANNING, LOCAL GOVERNMENT AND HOUSING
ZUBEIDA ABRAMS Third respondent
REGIONAL LAND CLAIMS COMMISSIONER, WESTERN CAPE Fourth respondent
JUDGMENT
MEER AJ:
[1] A claim for restitution of a right in land in terms of the Restitution of Land Rights Act,1 (“the Restitution Act”) was lodged by Mr B A M Mahatey, an Indian gentleman and a pensioner of about seventy-eight years. The claim is in respect of Erf 12377, Cape Town, at Woodstock,
1 Act 22 of 1994, as amended. 2 also known as 3 Lever Street, Woodstock (“the subject property”).2 Mr Mahatey claimed that he was dispossessed of a right in land when the area of Woodstock was declared “Coloured” in terms of the Group Areas Act,3 and he was forced to sell the property to the Community Development Board (“the Board”) in December 1979 for a sum which did not constitute just and equitable compensation as contemplated in the Restitution Act.4
[2] Section 2 of the Restitution Act deals with entitlement to restitution and sets out the prerequisites for restitution as follows:
“(1) A person shall be entitled to restitution of a right in land if -
(a) he or she is a person dispossessed of a right in land after 19 June 1913 as a result of past racially discriminatory laws or practices; or
(b) it is a deceased estate dispossessed of a right in land after 19 June 1913 as a result of past racially discriminatory laws or practices; or
(c) he or she is the direct descendant of a person referred to in paragraph (a) who has died without lodging a claim and has no ascendant who —
(i) is a direct descendant of a person referred to in paragraph (a); and (ii) has lodged a claim for the restitution of a right in land; or
(d) it is a community or part of a community dispossessed of a right in land after 19 June 1913 as a result of past racially discriminatory laws or practices; and
(e) the claim for such restitution was lodged not later than 31 December 1998.
(2) No person shall be entitled to restitution of a right in land if —
(a) just and equitable compensation as contemplated in section 25(3) of the Constitution; or
(b) any other consideration which is just and equitable,
calculated at the time of any dispossession of such right, was received in respect of such dispossession.”
2 Previously known as the remainder of Lot no. 72, Walmer Estate.
3 Act 36 of 1966.
4 At section 2(2)(a) quoted in paragraph [2]. 3
[3] The claim was brought under section 2(1)(a) of the Restitution Act and it sought physical restoration5 of the subject property. The subject property is currently owned by the Western Cape Housing Development Board, which was represented in these proceedings by its administrative arm, the second respondent, the Provincial Administration of the Western Cape: Department of Planning, Local Government and Housing.
[4] The first and fourth respondents, the Department of Land Affairs and the Regional Land Claims Commissioner for the Western Cape, supported the claim. The second respondent did not object to the validity of the claim and abides the decision of the Court.
[5] The third respondent, Ms Z Abrams, a tenant who has continuously rented the subject property for the past thirty years, opposed the claim. She disputed the contention that the sale of the property to the Board constituted a dispossession and submitted that just and equitable compensation had been paid to Mr Mahatey by the Board when it purchased the subject property. Ms Abrams rented the property initially from Mr Mahatey and thereafter from the second respondent when the property was acquired by the Board. In 1997 the property was sold to her by the second respondent. Transfer to her was however prevented when the sale was discovered to be in contravention of the Restitution Act in that written notice in respect thereof was not given to the fourth respondent.6
5 As opposed to equitable redress. Section 1 of the Restitution Act defines the term “restitution of a right in land” and specifies the available forms of restitution as follows:
“‘restitution of a right in land’ means - (a) the restoration of a right in land; or (b) equitable redress;
‘restoration of a right in land’ means the return of a right in land or portion of land dispossessed after 19 June 1913 as a result of past racially discriminatory laws or practices;
‘equitable redress’ means any equitable redress, other than the restoration of a right in land, arising from the dispossession of a right in land after 19 June 1913 as a result of past racially discriminatory laws or practices, including- (a) the granting of an appropriate right in alternative state-owned land; (b) the payment of compensation;”
6 Section 11(7)(aA) of the Restitution Act restricts the sale of land subject to claims. It provides that no person may sell land in respect of which notice of a claim has been published in the Gazette, without having given the Regional Land Claims Commissioner one month’s written notice of his or her intention to do so. 4
[6] It was agreed by the parties that the Court would determine at a preliminary hearing the first threshold requirement for a restitution claim, namely whether there had been a dispossession of a right in land in respect of the subject property. Thereafter, if it was established that the subject property had been dispossessed, the Court would go on to consider the second threshold requirement, namely whether just and equitable compensation was received at the time of such dispossession. In addition it was agreed that the Court would consider whether it may set aside the sale of the subject property by the second respondent to the third respondent in terms of section 11(7)(aA)(i)7 of the Restitution Act on the grounds that it was not done in good faith.
Preliminary hearing on the issue of dispossession
[7] During the course of the hearing on the issue of dispossession, and after he had testified, Mr Mahatey passed away. Mr Iqbal Kazi Allie and Mr Abdul Razak Mahatey, executors of his estate, were thereafter substituted as claimants in his stead.8 At the close of the preliminary hearing on the threshold requirement of dispossession I found that there had been a dispossession of a right in land in respect of the subject property. My reasons for so finding appear from the following consideration of the facts and circumstances surrounding the acquisition of the subject property, in conjunction with the evidence presented.
7 Section 11(7)(aA) read as follows:
“(7) Once a notice has been published in respect of any land- (a) . . . (aA) no person may sell, exchange, donate, lease, subdivide, rezone or develop the land in question without having given the regional land claims commissioner one month's written notice of his or her intention to do so, and, where such notice was not given in respect of- (i) any sale, exchange, donation, lease, subdivision or rezoning of land and the Court is satisfied that such sale, exchange, donation, lease, subdivision or rezoning was not done in good faith, the Court may set aside such sale, exchange, donation, lease, subdivision or rezoning or grant any other order it deems fit;”
8 In terms of rule 15(1)(a) of the Land Claims Court Rules published in Government Gazette 17084, 21 February 1997, as amended. 5
Factual background in conjunction with the testimony of Mahatey, Allie and Abrams
[8] From the uncontested evidence of the late Mr Mahatey the following factual background, (much of which was common cause) pertaining to the acquisition by the Board of the subject property emerged:
[9] Mr Mahatey inherited the subject property from his late father and took transfer thereof on 26 May 1965.9 On the same date and by the same Deed of Transfer, three other properties were transferred to him, also bequeathed by his father. The current physical addresses of these properties are: 7 and 7A Princess Street (Erven 12443 and 15145 respectively), 49 Duke Street (Erf 12376) and 48 Coventry Road (Erf 12336). At the time, the subject property and the Princess Street properties were rented out to tenants. Mr Mahatey operated a general dealership store from the property at 48 Coventry Road from 1947 until 1984 and also lived there for a while. Between 1963 and 1964 he and his family moved into the property at 49 Duke Street, which became the family home. 49 Duke Street is situated next door to and borders onto the subject property at 3 Lever Street.
[10] About eight years later, in May 1971, the third respondent, Ms Abrams moved into the subject property as a tenant in terms of an oral lease agreement. Ms Abrams was classified as “coloured” at the time. Her rental was initially R25 per month but later was increased to R50 per month. By agreement, one of the rooms in the subject property came to be occupied by Mr Mahatey’s two sons shortly after she moved in. An interleading door between the two properties provided access to the subject property.
[11] The area of Woodstock, in which the subject property is situated, was designated for occupation and ownership by members of the Coloured Group in terms of Proclamation 135 of 1975,10 issued under section 23 of the Group Areas Act. The effect thereof was that the subject
9 Deed of transfer 13473/1965.
10 Government Gazette 4740, 13 June 1975. 6 property came to be an “affected property” in terms of section 1 of the Community Development Act11 and was included in a list of affected properties compiled in terms of that Act.12
[12] In 1976 Mr Mahatey received a letter from the Department of Community Development dated 21 May 197613 in respect of the subject property, the relevant portion of which stated as follows:
“INCLUSION OF PROPERTY IN LIST OF AFFECTED PROPERTIES Property Remainder of 12377 Cape Town at Woodstock Walmer Estate Coloured Group Area
The abovementioned property, of which you are the registered owner has been included in the list of affected properties compiled in terms of section 29(1) of the Community Development Act, 1966 (Act No. 3 of 1966) in respect of the area described in Proclamation No. 136 dated 13/6/1975.
Should you wish to object to the inclusion of the property in the list on the grounds that it is not affected property, your objection together with an exposition of the facts on which it is based, must be lodged with this office by no later than the 11-6-1976.”
The letter is signed by the regional representative.
[13] After the initial letter Mr Mahatey heard nothing from the authorities for just over two years. In 1978 he received the following letter, dated 21 September 1978,14 concerning both the subject property and the Duke Street property.
“Sir
WALMER ESTATE: OFFER IN TERMS OF SECTION 15(5)(a) OF ACT 3 OF 1966, TO THE COMMUNITY DEVELOPMENT BOARD OF ERF 12376 AND REM. ERF 12377 CAPE TOWN AT WOODSTOCK.
As you may already be aware of this Department is assisting the Municipality of Cape Town with a renewal scheme of Walmer Estate.
In terms of the redevelopment plan drawn up for this specific area the abovementioned properties, owned by you, is affected by future redevelopment and will accordingly have to be acquired by the Department.
11 Act 3 of 1966. Section 1 defines “affected property” as property declared by proclamation to be for the ownership and use of a specific group in terms of the Group Areas Act
12 In terms of section 29 of the Community Development Act
13 The discovery bundle at 1.
14 The discovery bundle at 2. 7
In the circumstances I wish to enquire whether you will be prepared to offer Erf 12376 and Rem. Erf 12377 Woodstock to the Community Development Board for sale stating a definite selling price.
Should you require any further information you are welcome to call on Mr. J.B. Ferreira at Room 1132, Customs House, Cape Town or contact him telephonically at 21-1110 extension 117.
Your kind attention to this matter will be appreciated and I await to hear from you as soon as possible.”
[14] Mr Mahatey could not remember the specific letter dated 21 September 1978. He testified however that he had received a letter from “the Group Areas” to the effect that “they” wanted 3 Lever Street and 49 Duke Street. Thereafter “they” sent him a letter saying “they” no longer wanted 49 Duke Street, only 3 Lever Street (the subject property), and that he should get a permit each year to enable him to stay at 49 Duke Street. He did not know why “they” did not want Duke Street any more.15 He had continued to reside at Duke Street on a year to year permit until he received a letter informing him that he did not need a permit anymore. Mr Mahatey could not remember in which year he had last had a permit.16 Mr Mahatey’s son-in-law, Mr Iqbal Allie also testified that his father-in-law had continued to reside at Duke Street by virtue of an annual permit.17 No trace of the permit could be found either from the Mahatey file retrieved from the archives or from the second respondent’s file pertaining to the subject property. Mr Allie said that there were missing documents from the archival file, amongst which the permit could be. That the archival file is not complete was evident from the fact that it did not contain some documents that were in the second respondent’s file.
[15] In response to the letter of 21 September 1978, Mr Mahatey went to the office “of the Group Areas”. His evidence was “when I said I don’t want to sell, the Group Areas said I have to sell or they will take me to court”.18 He said he believed that if he did not sell the subject property to the Board, it would be taken away from him by force. He also believed that he had to sell the subject property to the Board and no other purchaser.19 As a result, he said, he decided
15 The court record at 61 and 68.
16 The record at 148.
17 The record at 317.
18 The record at 64.
19 The record at 75 and 170-172. 8
to negotiate a good selling price for the property with the Board. His starting offer was to sell for R18 000,00. This was rejected by the Board, as were his subsequent offers of R15 000,00 and R13 000,00. The Board’s maximum counter offer was R11 599,50. He finally and reluctantly agreed to this offer.20
[16] Mr Mahatey said the fact that he had attempted to negotiate a better price for himself should not be construed as a willingness to sell. He was adamant that he was forced to sell because of the Group Areas Act. He explained that the subject property was of enormous sentimental value to him, and that it was his intention that it remain within his family. Iqbal Allie also referred to this in his evidence, saying his father-in-law had told him that the property was not for sale, it had been taken away from him and the sale had accordingly been forced.21 Mr Allie stated that because of its sentimental value there was no price tag on the subject property.22
[17] The subject property was sold to the Board on 11 December 1979 for R11 599,50 and transfer thereof was effected by deed of transfer T3667/80 on 19 February 1980. The third respondent remained in the property as a tenant. The only difference immediately after the sale of the subject property was that Mr Mahatey’s sons vacated the room they had occupied therein prior to the sale. In time the Board increased Ms Abrams' monthly rental from R50 to R95, a sum she continued to pay until 1997, when the subject property was sold to her. Although she continues to occupy the property, she has not been paying rent for the past five years since 1997, pending the determination of this claim.
[18] Since then the subject property has been transferred over time to successive government departments. Initially it was transferred from the Community Development Board to the National Housing Board.23 In 1997 the assets in the Western Cape of the National Housing Board were
20 In a letter to the Board dated 27 September 1979.
21 The record at 326.
22 The record at 207, 250 and 318.
23 In terms of the Housing Arrangements Act 155 of 1993. 9 transferred to the Provincial Housing Development Board of the Western Cape24 when the assets and liabilities of the former National Housing Board became vested in that body.25 The subject property was then transferred from the National Housing Board to the Provincial Housing Development Board of the Western Cape. The property was thereafter transferred to the second respondent, the Western Cape Housing Development Board,26 its current owner.
[19] In January 1980, just over a month after he had sold the subject property to the Board, Mr Mahatey sold two of his other properties in Walmer Estate, those situated at 7A and 7 Princess Street, for R13 500 each. These properties were sold to the tenants in occupation. Mr Mahatey stated that he did not get a letter from the Board in respect of these properties, but he was prompted to sell them because of the letter from the Board in respect of the subject property and the Duke Street property. He thought that since the Board had asked for those properties it would also ask for the Princess Street properties. He said he formed the view that he would also have to sell these properties and his preferred choice was to sell to the Coloured tenants residing there because if he did not sell to them he would have to sell at a lower price to the Board.27 This was also the testimony of Mr Allie in relating what his father-in-law had said in respect of the Princess Street properties.28 Mr Mahatey also stated that he was not aware that he could get a permit to continue to own these properties.
[20] Mr Mahatey did not however sell the other two properties he inherited from his father, namely those in Coventry Road and Duke Street, both of which continued to be registered in his
24 In terms of section 14 of the Housing Act 107 of 1997.
25 The National Housing Board was disestablished by section 13 of the Housing Act 107 of 1997.
26 The Western Cape Housing Development Board was established by section 5 of the Western Cape Housing Development Act 6 of 1999. In terms of section 6(2) of this Act, the Western Cape Housing Development Board took over all rights, liabilities and obligations in respect of all immovable property which previously vested in the former Provincial Housing Development Board of the Western Cape. The title deed of the property however still reflects the Community Development Board as the owner of the property. A supplementary affidavit by George McGregor, a conveyancer employed by the Department of Justice, explains that this is so because the title deed has not been “physically dealt with by the deeds office” since the sale to the Board (The pleadings bundle, para 19, at p 272).
27 The record at 36-37, 41 and 47.
28 The record at 298. 10 name at the time he testified. He continued his general dealer’s business from the Coventry Road property until 1984 when he retired. The property is currently rented out to another general dealer. Mr Mahatey’s testimony in relation to the Coventry Road property was that the Board was not interested in acquiring that property and he therefore did not have to obtain a permit to continue owning it.29 A notice in respect of the Coventry Road property from the Department of Community Development to Mr Mahatey was retrieved from the archives and handed into Court after Mr Mahatey had passed away. The notice, dated 26 September 1978, informed Mr Mahatey that 48 Coventry Road was situated in an area declared by proclamation for occupation of members of the Coloured group,30 and that he was a disqualified person, not being of that Group. The notice went on to quote Section 26 of the 1966 Group Areas Act which provides that no disqualified person shall occupy land in an area to which the proclamation relates, except under the authority of a permit. It explained that this section would apply in respect of the premises as of 1 October 1979, and that his occupation would be illegal as of that date.
[21] Mr Mahatey continued to reside in the Duke Street property immediately adjacent to the subject property until his death. Likewise, the third respondent continued to occupy the subject property and has been a tenant there since May 1971.
[22] The third respondent refuted Mr Mahatey’s claim of dispossession. Her testimony was that Indians were not forced to leave Walmer Estate as a result of the Group Areas Act. She was adamant about this in her evidence in chief, asserting also that as far as she was aware no one was forcibly removed from Walmer Estate, like in District Six, although it was thought this was going to happen. She explained that after hearing Mr Mahatey’s testimony, she had spoken to some Indians in the area and had come to the conclusion that they had continued to own properties. She named several Indian shopkeepers, amongst whom, she said, Messrs Mohammed and Bawa had continued to own their properties. Under cross-examination her stance changed. She conceded that she had not set about to conduct an elaborate investigation of properties owned by Indians in Walmer Estate. She had made no enquiries at the deeds office, nor had she verified that the shopkeepers referred to by her were classified Indian. She had also not investigated whether
29 The record at 67-68.
30 Proclamation 136, Government Gazette 4740, 13 June 1975. 11
Messrs Mohammed and Bawa had permits to reside in Walmer Estate. She conceded that Indians could live and conduct business in Walmer Estate by way of a permit.
[23] With the passage of time and the change in legislation it became possible for Mr Mahatey as an Indian person to claim restitution of the subject property. In 1993, Mr Mahatey, by then in his late sixties, embarked with the help of his son-in-law on what has proven to be a difficult and frustrating quest to reclaim the subject property.
[24] Their quest commenced with a letter by Mr Mahatey, dated 17 December 1993 to the Department of Housing31 stating that he wished to reclaim the subject property. When he received no response to this letter, his son-in-law hand delivered a copy to the Department of Housing in February 1994.32 Receipt of the letter of 17 December 1993 was eventually acknowledged, but nothing further ensued from that Department.
[25] On 26 June 1995, some eighteen months later (during which time he had heard no further from the Department of Housing), and with the introduction of the Restitution Act, Mr Mahatey lodged a claim for restitution of rights in land in respect of the subject property with the fourth respondent, the Regional Land Claims Commissioner for the Western Cape. He was assisted in the filing of the claim by his son-in-law, Mr Allie who thenceforth actively pursued the claim on his behalf.
[26] On 8 September 1995 the fourth respondent published notice of the claim in the Government Gazette.33 Thereafter on 1 August 1996 (14 months after the claim form had been filled in and 11 months after it was gazetted) the fourth respondent informed the National Housing Board (the then owner of the subject property), in writing, that a claim for the restitution of land rights had been lodged in respect of the subject property.34
31 At its address in Parliament Towers, 105 Plain Street.
32 Letter dated 17 December 1993, the discovery bundle at 83.
33 Government Gazette 16647, Notice 903 of 1995, in terms of section 11(1) of the Restitution Act.
34 In accordance with section 11(6) of the Restitution Act. 12
[27] Over the three years that followed Iqbal Allie, as the person pursuing the claim, endured considerable frustration, struggling to establish how the claim was progressing. His repeated enquiries with both the fourth and the second respondents came to naught. He telephoned the second respondent on numerous occasions, left messages and visited its offices, but to no avail. He even contemplated writing to the press in complaint.
[28] Early in 1999, just over five years after Mr Mahatey sent his first letter to the Department of Housing stating his intention to reclaim the subject property, Mr Allie telephoned the Housing Board once again to enquire about the subject property. To his dismay he was informed by a Mr Botha that the subject property had been sold to the third respondent in November 1997 for R5 197,21. The sale had occurred in accordance with the second respondent's policy of selling low cost housing in Walmer Estate to encourage home ownership.
[29] Mr Mahatey and Mr Allie both testified about their anger and disappointment at receiving news of the sale to the third respondent, given their concerted efforts over five years to claim the subject property. On 29 June 1999 they met with representatives of second respondent in an attempt to resolve the situation. At that meeting Mr Mahatey offered to purchase the property himself from the second respondent for a sum of R12 697 and undertook to accommodate the third respondent as a tenant for a period of one year after the transfer of the property to him. Mr Allie understood that this offer was in fact agreed to at the meeting, and recorded as such in a subsequent letter by Mr Mahatey.35 This, however, was not to be. The property was not transferred to Mr Mahatey, nor did the third respondent accept the offer of accommodation for a year. Instead she insisted that she was entitled to transfer of the property to her by the second respondent.
[30] The third respondent’s anger at being prevented from taking transfer of the subject property because of the land claim registered against it was apparent in her testimony, as was her indignation at the prospect of having to move out of the subject property. She said she was not prepared to vacate her home of 30 years, in which her children and grandchildren had been born.
35 From Mr Mahatey to Mr Boshoff, a representative of second respondent, dated 19 July 1999,the discovery bundle at 113. 13
She said she had worked since the age of 16, and had bought the house for her children with the package paid to her when her employment ended.
[31] The third respondent testified also that she had undertaken extensive and costly renovations and improvements to the subject property. These were to the toilet, the floorboards, tiling of the kitchen and bathroom, and renovation of windows. She introduced into evidence quotations and invoices in respect thereof totalling all of R140 000 and then embarked upon the task of proving the cost of these renovations. However, when after two days of testifying, the challenge of proving the costs became too difficult, she conceded under the strain of cross- examination to lying that she had spent R140 000 on renovations. She admitted that she had arranged for a builder to fabricate quotations and invoices to assist with her litigation. She apologised and tendered wasted costs incurred for the duration of such evidence.
[32] The third respondent was clearly neither a credible nor reliable witness and I can place little store by her testimony. I gained the impression that she would be prepared to testify to anything if she thought it would help her case. I do however accept her attachment to the home she has lived in for 30 years and empathise with her plight. From an inspection in loco it was apparent that the subject property was renovated.
[33] In contrast to Ms Abrams, Messrs Mahatey and Allie struck me as honest and credible witnesses. They corroborated each other on important aspects as to whether there had been a dispossession. Whilst Mr Mahatey’s memory for detail was vague on occasion and his testimony sometimes ponderously slow in the telling, overall his evidence was nonetheless satisfactory. Mr Allie by contrast was articulate and forthright.
Was there a dispossession of a right in land in respect of the subject property?
[34] I now turn to consider in the light of the above evidence and within the context of the applicable legislation whether there was a dispossession of a right in land as contemplated in section 2 of the Restitution Act. 14
[35] Entitlement to restitution under section 2(1)(a) of the Restitution Act requires there to have been a dispossession as a result of past racially discriminatory laws or practices. In the present case this requires a direct causal link to be established between the sale of the subject property and the two racial laws in point,the Group Areas Act36 and the Community Development Act.37 It is trite that these laws were designed to foster the spatial apartheid policy of the previous regime.38 I am satisfied that a causal link has successfully been established between the sale of the subject property in 1979 and the racial legislation in question on account of the following: but for proclamation 135 of 1975 issued under section 23 of the 1966 Group Areas Act which declared the subject property to be in a Coloured group area,
a) the property would not have been declared affected in terms of the Community Development Act, b) the invitation would not have been made to Mr Mahatey to sell the property to the Board in terms of section 15(5)(a) of the Community Development Act (which subsection specifically provided that the owner of such property shall offer it to the board for sale,and the board shall thereupon have a preferent right to purchase),39 c) the sale to the Board would not have occurred.
[36] Mr van der Merwe, for the third respondent, argued otherwise. Focusing on section 15(5)(a) of the Community Development Act (in terms of which the invitation was made to Mr
36 Act 36 of 1966.
37 Act 3 of 1966.
38 Causation in this respect has been dealt with in Minister of Land Affairs and Another v Slamdien and Others [1999] 1 All SA 608 (LCC) at para [31], Former Highlands Residents: Naidoo v Department of Land Affairs 2000 (2) SA 365 (LCC) at para [4].
39 Section 15(5)(a) of the Community Development Act reads:
“(5) (a) Any owner of immovable property in an area in respect of which any notice under subsection (2) (e) is in operation, who desires to dispose of such property, shall offer such property for sale to the board, and the board shall thereupon have a preferent right to purchase such property at a price agreed upon between it and the owner concerned, or (if within sixty days after the date on which the offer was made the board and such owner fail to agree as to the price to be paid) at a price fixed as if the provisions of section 14 of the Expropriation Act, 1975, were applicable in respect thereof.” 15
Mahatey to sell the subject property to the Board) only, he argued as follows: section 15(5)(a) gave to the Board the statutory right of pre-emption to purchase an affected property only when there was an unqualified desire on the part of the purchaser to sell to the Board. Mr Mahatey did not have an unqualified desire to sell to the Board. The statutory right of pre-emption did not consequently arise, and therefore the Board did not exercise its pre-emptive right to force a sale. A price was not agreed upon between the Board and Mr Mahatey as a result of the latter’s unqualified desire to sell, nor did the sale occur at a price fixed in accordance with section 14 of the Expropriation Act. In the circumstances there was no dispossession.
[37] I disagree with Mr van der Merwe. It is strained reasoning to suggest that a dispossession could only have been as a result of a forced sale caused by the exercise of a statutory right of preemption and the invoking of the Expropriation Act. What gave rise to the sale was not the exercise or non-exercise of a statutory right of pre-emption, but the declaration of the property to be in a Coloured area by the Group Areas Act, the subsequent letter to Mr Mahatey in terms of Section 15(5)(a) of the Community Development Act, (the operation of which subsection gave Mr Mahatey no option but to sell to the Board), and finally his reluctant acquiescence to the Board acquiring it. Hence the sale was clearly precipitated by the Group Areas Act and the Community Development Act. But for the operation of these Acts Mr Mahatey would not have agreed to sell the subject property.
[38] The next question for determination is whether there was a dispossession of the subject property given that the late Mr Mahatey continued to hold title to the properties at Duke Street and Coventry Road in the area, and the fact that he chose to sell the properties at Princess Street. This is a legitimate enquiry, in that the third respondent argued that on the probabilities it was unlikely that Mr Mahatey would have been dispossessed of only one of his properties in Walmer Estate and not the others. In developing this argument third respondent drew attention to the following: At the time of the alleged dispossession the claimant owned a number of properties within the area referred to by proclamation 135 dated 13 June 1975. If the legislation and practices relied upon were a cause for the dispossession of the subject property, why did a similar fate not befall the other properties? How was it possible for the Group Areas Act to have dispossessed the claimant only of the subject property and not the Duke Street and Coventry Road 16 properties, both of which he continues to own? Mr Van der Merwe contended that the only answer to this is that there is no causal link between the racially discriminatory legislation and practices relied upon and the sale of the subject property. By choosing to sell the subject property and by choosing not to sell his home, so goes the argument, the claimant lost his right to claim dispossession.
[39] Mr Mahatey’s explanation for continuing to remain in his Duke Street home was that he had done so by virtue of an annual permit. Whilst Mr Mahatey could not remember with great clarity details pertaining to permits, he was adamant that he had obtained a permit for the Duke Street property. His evidence in this regard was corroborated by Mr Allie and, in the absence of any evidence in rebuttal, must stand. His explanation pertaining to the Coventry Road property is not as simply dealt with. For, whilst he said he did not have to get a permit for that property (as the Board was not interested in acquiring it), the notice sent to Mr Mahatey in respect of the Coventry Road property (retrieved from the archives) drew attention to section 26 of the Group Areas Act which permitted a disqualified person to occupy land in the area under the authority of a permit. Evidence of permits in respect of these properties was sought from both the archival file in respect of the subject property40 and a file in the name of Mahatey in second respondent’s possession, but none could be found. Mr Allie, who retrieved the archival file, testified that there were portions missing from it and it was drawn to the Court's attention that documents which were in the second respondent’s Mahatey file were missing from the archival file. It is probable that amongst the missing documents are permits held by Mr Mahatey, now gone astray and in the absence of evidence to the contrary I accept such to be the case.
[40] All that one can say with certainty is that Mr Mahatey was dispossessed of the subject property but managed to hold title to the Coventry Road and Duke Street properties. Either he did so by means of a permit, documentary proof of which cannot be found, or he did so in defiance of the law. The probabilities are that he did so by way of permits for the alternative would most probably have resulted in the property being expropriated from him.41 In any event the lack of
40 The file stored in the Archives at Roeland Street, Cape Town.
41 Section 35 of the Community Development Act provides for the expropriation of affected property by the State. 17 certainty as to how he managed to hold title to the Coventry Road and Duke Street properties does not, in the final analysis, detract from the finding that there was a dispossession of the subject property as a result of a racial law.
[41] Similarly, the fact that Mr Mahatey sold the Princess Street properties is not inconsistent with a finding of dispossession in respect of the subject property. There is no reason not to accept Mr Mahatey’s explanation (corroborated by Mr Allie) that he sold those properties under fear of the Board also asking for them, no evidence in rebuttal was led and, in the circumstances, these sales too can be regarded as having been forced.
[42] On the basis of the above I found that there was a dispossession of a right in land in respect of the subject property. Due to the untimely death of Mr Mahatey and the substitution of the aforementioned executors of his estate as claimants the entitlement to restitution arises not as contemplated at section 2(1)(a) of the Restitution Act, in terms of which these proceedings commenced, but as contemplated in section 2(1)(b). Had Mr Mahatey not passed away, I would have been able to find that there was a dispossession as contemplated in section 2(1)(a) of the Restitution Act, as he would have remained the claimant. Upon his death his restitution claim became an asset in his estate to be administered by his executors, the claimants in his stead, and so too it is the estate which may be entitled to restitution as provided by section 2(1)(b) of the Restitution Act.42
[43] Having successfully established the first threshold requirement, of dispossession, for a restitution claim, the claimants proceeded to prove the existence of the second threshold requirement , namely that Mr Mahatey did not receive just and equitable compensation or consideration calculated at the time of the dispossession as contemplated at section 25(3) of the Constitution and set out at Section 2(2)(a) of the Restitution Act43. I now turn to that leg of the enquiry.
42 See In re Kara: Properties formerly known as the farm Cato Manor No 812, LCC 44/98, 7 November 2001, available from www.law.wits.ac.za at para [14].
43 Section 2 (2) of the Restitution Act is quoted in paragraph 2 above 18
Just and equitable compensation
[44] The relevant parts of section 25 of the Constitution state:
“25 (1) No one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property.
(2) Property may be expropriated only in terms of law of general application - (a) for a public purpose or in the public interest; and (b) subject to compensation, the amount of which and the time and manner of payment of which have been agreed to by those affected or decided or approved by a court.
(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; (c) the market value of the property; (d) 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.”
[45] Of all the factors that section 25(3) of the Constitution enjoins one to consider in determining just and equitable compensation, that of market value, being the most tangible, has understandably come to be employed by this Court as the starting point of such an enquiry as has been expressed in various decisions.44 In Ex parte Former Highlands Residents; In Re Ash and Others v Department of Land Affairs Gildenhuys J held that as market value45 is the only factor of those listed in section 25(3) of the Constitution which is readily quantifiable, a determination of what constitutes just and equitable compensation would-
“ . . . 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.”46
[46] In accordance with this formulation, once market value has been arrived at, the other less tangible factors mentioned at 25(3) are considered and applied thereto. The Court’s approach is
44 See Former Highlands Residents concerning area formerly known as the Highlands, Pretoria In re Ash and Others v Department of Land Affairs [2000] 2 All SA 26 (LCC); Khumalo and Others v Potgieter and Others [2000] 2 All SA 456 (LCC); Hermanus v Department of Land Affairs 2001 (1) SA 1030 (LCC), [2000] 4 All SA 499 (LCC).
45 Contemplated in section 25(3)(c) of the Constitution.
46 Above n 44, at para [35]. 19 therefore to consider the factors set out at 25(3)(a), (b), (d), and (e) of the Constitution as well as all relevant factors in the light of market value determined, and flowing therefrom add or subtract to market value. Thereafter in making a decision on what is just and equitable compensation the Court pays heed to section 33 of the Restitution Act,which sets out further factors it must have regard to in considering its decision in any particular matter.47
[47] Mr van der Merwe, for the third respondent, sought to persuade the Court that its approach to the determination of just and equitable compensation as expressed in its cases was wrong. Mr van der Merwe submitted that the Court should abandon this approach in favour of what he called “the Restitution approach”. This approach, he said, would require the Court to calculate compensation actually received at the time of dispossession and thereafter conduct a particular judicial assessment to establish if such compensation or consideration was just and equitable, considering the balance between the public interest and the interests of those affected. This balance, he said, is influenced by all relevant circumstances which include the factors at section 25(3)(a) to (e) of the Constitution. The approach of this Court, in his view, does not provide for an equitable balance between the public interest and the interests of those affected. I do not agree.
47 Section 33 states: “In considering its decision in any particular matter the Court shall have regard to the following factors: (a) The desirability of providing for restitution of rights in land to any person or community dispossessed as a result of past racially discriminatory laws or practices; (b) the desirability of remedying past violations of human rights; (c) the requirements of equity and justice; (cA) if restoration of a right in land is claimed, the feasibility of such restoration; (d) the desirability of avoiding major social disruption; (e) any provision which already exists, in respect of the land in question in any matter, for that land to be dealt with in a manner which is designed to protect and advance persons, or categories of persons, disadvantaged by unfair discrimination in order to promote the achievement of equality and redress the results of past racial discrimination (eA) the amount of compensation or any other consideration received in respect of the dispossession, and the circumstances prevailing at the time of dispossession; (eB) the history of the dispossession, the hardship caused, the current use of the land and the history of the acquisition and use of the land; (eC) in the case of an order for equitable redress in the form of financial compensation, changes over time in the value of money; (f) any other factor which the Court man consider relevant and consistent with the spirit and objects of the Constitution and in particular the provisions of section 9 of the Constitution.” 20
Section 25(3) of the Constitution together with section 33 of the Restitution Act ensures precisely that the approach adopted by this Court will balance judicially the public interest with that of those affected. I am therefore not persuaded to abandon the approach of this Court, which is a salutary method of arriving at just and equitable compensation that I endorse.48 I accordingly set out firstly to determine what the market value of the subject property ought to have been in 1979 when the property was sold and thereafter assess such amount in the light of the less tangible factors set out in section 25(3) of the Constitution as well as section 33 of the Restitution Act in order to determine if just and equitable compensation was received when the property was sold to the Community Development Board. In determining market value and in keeping with established wisdom, no regard shall be paid to any impact of the Group Areas Act might have had on property prices in the area.49
Determination of market value paid at the time of the sale of the subject property
[48] Two valuers testified on the issue of just and equitable compensation. They were Mr Willem van Ryswyk for the claimants and Mr Casper Gerber for the third respondent. The first respondent submitted a valuation report, but chose not to lead oral evidence in respect thereof. The second respondent chose to abide the decision of the Court on the question of just and equitable compensation.
[49] It was common cause that before purchasing the subject property in 1979 the Department of Community Development [“the Department”] had engaged both a valuer in its employ and an independent valuer to determine market value. The former, Mr Elrick,50 arrived at a market value of R12 09051 (valuation dated 25 May 1978), whilst the latter, Mr Jacobs, fixed the market value
48 See Khumalo, above n 44, at para [23] onwards.
49 Highlands, above n 44, at para [38] and Khumalo, above n 44, at para [26]. This is also known as the “pointe guarde” principle, which derives its name from the Privy Council case, Pointe Gourde Quarrying and Transport Co Ltd v Sub-intendent of Crown Lands [1947] AC 565.
50 A valuer in training and a senior Inspector for Works in the Department of Community Development, according to the evidence of Mr Casper Gerber.
51 Annexure HB5, the pleadings bundle at page 106. Mr Elrick’s valuation values the ground at R2 490 and the buildings at R9 600, arriving at a total market value of R12 090. 21 at R9 00052 (valuation dated 14 November 1978). The average of the two valuations was accepted as the market value. To this a solatium of 10% was added resulting in the sum of R11 599,50 being paid as purchase price for the subject property. The actual market value determined by the Community Development Board and accordingly the purchase price, was thus R10 545,00 and the solatium was the sum of R1 054,50.
The evidence of Willem van Ryswyk
[50] Willem van Ryswyk, a registered valuer and sworn appraiser who operates a consultancy business as an independent valuer and commercial property broker, testified for the claimants. He said that he had considerable experience in the valuation of residential properties in the Western Cape, including District Six on which the subject property borders.
[51] It was difficult to keep abreast with Mr van Ryswyk’s testimony and explanations concerning the market value of the subject property, as appears from the following account thereof. Prior to the hearing in a summary of his evidence filed,53 he had concluded in commenting on a valuation by the first respondent’s valuer54 as follows:
“ . . . the valuer should have at least valued the subject property at R18 000 and with research a value in excess of R20 000 can be justified.”
At the hearing, in contrast to this, Mr van Ryswyk handed in a valuation report in which he adjusted market value to R15 000, to which he added a premium of R3 000 to bring the subject property in line with the conditions of the eight comparable sales he relied on. His report then concluded:
“ . . . the premium of R3 000 is debatable and ignoring the state of repair of the subject property may not be equitable and a value of R11 500 plus R2 000 and R2 000 or R15 500 should be a minimum value.”
52 Annexure HB4, the pleadings bundle at page 104. Mr Jacob’s valuation values the ground at R2 100 and the buildings at R6 900, arriving at a total market value of R9 000.
53 In terms of Rule 49(2).
54 A valuation report by Mr Mokweni from Associated Valuer SA. He valued the subject property at R12 500. As stated in para [48] above no evidence was led in respect of this report. 22
In evidence he was not able to explain with clarity how he had arrived at the conclusions in his report and finally conceded at the end of a day’s testimony thereon, that the report should be rejected in its entirety as he had not had adequate time for research when he prepared it.
[52] He then revisited some of the comparable properties mentioned in his report, and finally settled on a just and equitable valuation of the subject property at between R15 500 and R18 000 on the basis of only five of the comparable sales previously relied upon (having rejected the three other sales as being non- comparable). He explained this conclusion as follows: in his view the market value of the property on the basis of the five comparable sales selected, was between R13 500 and R15 000. To this, he said, he had added a sum of R2 000 to R3 000 because of the depressive effect the Group Areas Act had on properties in the area. However when questioned further, he said that the Group Areas Act could have resulted in an increase in property prices in the area, and finally conceded he had done no research into the effect of the Group Areas Act on properties and could therefore not say whether that Act had an appreciative or depreciative effect on property values in the area. All of this rendered his evidence unsatisfactory and unreliable.
[53] It was also clear that neither his inspection of the comparable sales he relied on nor his assessment of the subject property in relation to those comparables, had been sufficiently thorough. There is consequently no need to dwell upon those comparables. Another disconcerting aspect was the statement by him that there had been an increase in the property market in the area between 1978 (when the property was valued by the Community Development Board) and 1979 (when it was sold), followed by the contradictory statement that he was unable to comment about what had happened to the property market between 1978 and 1979.
[54] Given the contradictory, inconsistent, unsubstantiated, and indeed confusing nature of Mr van Ryswyk’s testimony I am unable to place any store by it, and I am compelled to reject his valuation in its entirety.
The evidence of Casper Louis Gerber
23
[55] Mr Casper Louis Gerber, a registered professional valuer who was the chief valuer and chief inspector of works for the Department of Community Development at the time the subject property was valued and purchased, was called to testify for the third respondent. Mr Gerber had been chief valuer from 1965 until 1983, whereafter he had worked as a deputy director in the Department of Community Development. He has had considerable experience valuing properties in District Six, Walmer Estate, Elsie's River and elsewhere in the country. From his vantage position in the Department of Community Development, he was able to provide useful insight into the manner in which the Department valued and acquired properties at the time of the sale. He was also able to comment knowledgeably on movements in property values, during the time in question and in the light of the Group Areas Act. Mr Gerber’s comments on the two 1978 valuations of the subject property preceding the sales as well as his own 1979 historic valuation of the subject property, was useful as appears from the following account of his evidence.
[56] Mr Gerber testified that property transactions and the fixing of purchase prices by the State were based on market value. The policy the Community Development Board used to determine market value in 1978, when the subject property was valued, was to obtain an internal departmental market valuation as well as an external independent market valuation. Thereafter, the lower valuation would be offered as purchase price to a seller. If this was not accepted an offer would be made based on the average sum of the two valuations. Mr Gerber expressed reservations about a purchase price being fixed at the average, in this manner, saying the better method was a choice of one valuation. He pointed to the difficulty of valuators having to testify on a market value which was not theirs, but an average market value. This unorthodox approach was later changed. However in the case of the subject property, when an initial offer of the lesser external valuation of R9 000 was rejected, an offer was made on the average of the two valuations. The market value of R10 545 factored into the purchase price in December 1979 therefore reflected the average of the two valuations conducted in May and November 1978.55
[57] In the course of his work for the Department of Community Development as chief valuer, Mr Gerber had created a formula for use in mass valuations in about 1967/1968 during the
55 The internal office valuation (by Mr Elrich, who determined market value at R12 090), and the external independent valuation (by Mr Jacobs, who arrived at a market value of R9 000). 24
District Six removals, for the valuation of land and buildings. The formula was applied also in Walmer Estate, in accordance with which the value of land there during 1978 and 1979 was set at R12,50 per square metre. He had arrived at this figure on the basis of the average square metre value of vacant land in the surrounding White areas of Vredehoek (R15,00 per square metre) and University Estate (R12,50) in open market sales. He was familiar with these values from Departmental sales and a survey conducted by him whilst working on a schedule of prices for valuators in training.
[58] He explained that an arbitration involving the Community Development Board had settled the price of land in Walmer Estate at R10 per square metre in 1976. This figure, he said, would have escalated to R12,50 per square metre in 1978/1979. In-house valuations by the Department of Community Development were done in accordance with his formula. Unfortunately he was no longer in possession of the relevant records of some twenty seven years ago pertaining to the formula.
[59] In accordance with his formula he said the value per square metre of a building was derived by deducting the land value from the purchase price of a property, and thereafter dividing that amount by the metre size of the building. Mr Gerber had been taken to the subject property in 1979 by the departmental valuer, Mr Elrick, and has since been there three times over the years. Based on his knowledge of the subject property, the value of land at R12,50 per square metre applied by the Department, and the value of the buildings on those comparable sales he had deemed most similar to the house on the subject property, he had determined R70 per square metre to be a fair market value for the building on the subject property as of 1979.
[60] Mr Gerber indicated, with reference to Mr Elrick’s valuation of R12 090,56 that Mr Elrick, being a valuer under him, had also used the formula land value of R12,50 per square metre and a building value of R70 per square metre in his valuation of May 1978. He explained that the formula of R12,50 and R70 per square metre was adjusted upwards to keep abreast with inflation about every 19 months.57 However no upward adjustment had been made to these variables during
56 Annexure HB5, the pleadings bundle at 106.
57 The record at 58. 25 the 20 months between the valuation in accordance with the formula by Mr Elrick in May 1978 and the sale of the subject property in December 1979. At that latter date the market value of the subject property was still based on the formula square meterage market value used by Mr Elrick in May 1978. Mr Gerber made the observation that from his knowledge there had been an increase of 8% in property prices in Walmer Estate between 1978 when the valuations were conducted and 1979 when the property was sold. He also testified that the Group Areas Act had not caused a decrease in property prices in Walmer Estate as the area continued to be popular and properties were in demand.
[61] Mr Gerber was familiar with the two valuations of the subject property obtained by the Department of Community Development in 1978 prior to the sale in December 1979. The valuers were also known to him and he said they both knew the area well. Mr Jacobs, the independent valuer, also an estate agent and auctioneer in the area, was on a panel of valuers used on an ad hoc basis by the Department. Mr Elrick, the Departmental valuer, had been trained by Mr Gerber and worked under him as a senior inspector of works and valuer in training. Mr Gerber testified that the Court should not accept the valuation by Mr Jacobs, which indicated market value at R9 000 based on “prices obtained at recent public auctions of similar properties in the near vicinity, being for Coloured Occupation”. He did not place much reliance on Mr Jacob’s report as comparable sales were not added thereto. In contrast, he testified that Mr Elrick’s valuation, in accordance with the valuation formula and based also on comparable sales, could be relied upon, subject to an amendment pertaining to the size of the building, as is explained below.
[62] Mr Gerber testified that Mr Elrick’s valuation incorrectly recorded the size of the building on the subject property as 138 square metres, that is 11 metres more than the correct size of 127 square metres recorded in the official municipality printout.58 An amount of R770 (11 x R70 being the square metre value of the building), therefore fell to be deducted from Mr Elrick’s valuation for the size of the building. In addition Mr Elrick’s valuation had not accounted for the stoep, which measured 14 metres. Mr Gerber ascribed a minimal value of R30 per square metre to the stoep, arriving at a total stoep value of R420. This sum, he said fell to be added on to Mr
58 The Interim Building Description Enquiry, the valuation bundle at 58 (the claimant's notice in terms of rule 49(2)). 26
Elrick’s valuation. In total therefore, he said that the sum of R350 had to be deducted from Mr Elrick’s valuation, arriving at an adjusted market value of R11 740 as per Mr Elrick’s valuation. Mr Gerber testified further that the 8% 1978-1979 annual escalation in property prices59 would have to be factored into this adjusted market value for the period from 25 May 1978 (being the date of Mr Elrick’s valuation) to December 1979 (being the date of the sale of the subject property).
Mr Gerber’s valuation report
[63] Mr Gerber constructed a historic market valuation of the subject property as of 1979 based on his knowledge of the property, the value of land at R12,50 per square metre as per his formula applied by the Department, and the four comparable sales60 he deemed most similar to the subject property.
[64] The comparable sales relied on by Mr Gerber were those indicated as comparables 2, 3, 4 and 5 in a schedule to his valuation report:61
No. Property Sold in Price Land size Building size 2 7 Princess Street January 1979 R13 500,00 202m² 150m² 3 7A Princess Street January 1979 R13 500,00 199m² 66m² 4 35 Lever Street November 1979 R13 000,00 401m² 125m² 5 71 Ravenscraig Road July 1979 R12 500,00 169m² 119m²
By deducting the value of the land from the purchase price in each comparable sale and thereafter dividing that sum by the metre size of the building, Mr Gerber had worked out the market value
59 As testified to by him, see para [60] above.
60 Valuation Report Gerber, the valuation bundle at 47. These comparable sales are extracted from page 6 of a historical valuation, conducted by valuer Mr R M Welkom for the fourth respondent, the Regional Land Claims Commission.
61 Ibid. 27 building price per square metre of the comparable sales to be as follows:62 Comparable 2: R73; Comparable 3: R63; Comparable 4: R64; Comparable 5: R87. From these figures he had arrived at a market value of R70 per square metre in respect of the building on the subject property.
[65] With reference to the official municipal records,63 he established that the size of the building on the subject property was 127 square metres, that of the open stoep 14 square metres (with a minimal value of R30 per square metre) and the land 199 square metres. Based on the square metre value of land as per the aforementioned formula and the value of the building and stoep fixed by him, he had arrived at a market value in respect of the subject property as follows:
Land 199 m² x R12,50 = R2 500 Building 127 m² x R70,00 = R8 890 Stoep 14 m² x R30,00 = R420 Total R11 810
He testified that in his view actual market value should be estimated to be in a range of 10% above or below this figure. He fixed a market value of between R9 700 and R12 500 as of the date of the sale of the subject property in Decemberr 1979 from this range, stating that his preference would be to elect market value in the region of 10% above the figure determined.64 He opted for a maximum market value of R12 500.
[66] On the basis of all of the above, Mr Gerber suggested the Court should determine market value to be somewhere between his value of R12 500,00 and Mr Elrick’s adjusted market value of R11 740,00 (being Mr Elrick’s market value of R12 090,00 less R350 as specified above) to which should be added an 8% increase in value factored in for the period between May 1978 and December 1979. This, at 8% from 25 May 1978 to 25 May 1979 amounts to R12 679,20, plus
62 The method used at arriving at the building value per square meter as explained at para [59] above, was to subtract the land value from the purchase price and then divide that figure by the size of the building.
63 Annexure C, the valuation bundle at 58.
64 Note that an exact calculation of 10% above or below the figure R 11 810 is between R10 629 and R12 991. 28 another 4% for half a year’s escalation to the date of sale on 11 December 1979, amounts to a market value of R13 186,37. According to him, market value would therefore be between R12 500,00 and R13 186,37.65
[67] It is clear that on Mr Gerber’s evidence even his basic unadjusted market value of R11 810,00 which I accept as per his calculation at paragraph 65, is greater than compensation paid at the time of dispossession. Were one to factor in the adjustments suggested by him, market value would of course be even higher. I have however chosen to disregard the adjustments on account of the following. The ten percent general escalation was neither sufficiently nor satisfactorily motivated for, and the comparable sales relied upon at paragraph 64 indicate that an escalation to the square metre land and building values was not warranted as the square metre price of R12,50 for land and R70 for buildings as per the Department’s formula, still held good in 1979.
[68] As Mr Gerber himself testified and Mr Elrick did not, Mr Gerber’s evidence is the best available evidence on market value, having been subject to cross examination66 I accordingly fix market value at Mr Gerber’s basic figure of R11 810 as opposed to Mr Elrick’s reconstructed market value as testified to by Mr Gerber.
Determination of just and equitable compensation
[69] I now turn to consider whether market value as determined must be added to or subtracted from in the light of all relevant circumstances, including those set out at section 25(3)(a), (b), (d) and (e) of the Constitution. Section 25(3)(a) refers to the current use of the property. The fact that the property is currently used for residential purposes by a tenant, does not warrant an amendment to market value, nor was any suggested for this reason. Nor does the history of the acquisition and use of the property, (referred to at section 25(3)(b) of the Constitution), by the Community Development Board and thereafter by second respondent and its continuous rental to the third
65 Mr Elrick’s adjusted market value of R11 740 plus 8% thereof from May 1978 to May 1979 (R12 679,20) plus 4% thereof for the half year from May 1979 to December 1979 gives a figure of R13 186,37.
66 Gildenhuys Onteieningsreg 2nd ed (Butterworths, Durban 2001) at 228. 29 respondent, justify an amendment to market value. Mr Visser for the claimants argued for an upward adjustment to market value because of the impact of the Group Areas Act on property values. He referred to this as a “pointe gourde” addition based on the widely accepted “pointe gourde principle”67 in the sphere of valuation. In terms of this principle, when one determines market value, one pays no regard to the impact of the scheme (which has caused the sale of the property) on the increase or decrease of the value of the property. It is only after one has determined market value that one adjusts upwards or downwards depending on the effect of the scheme. The scheme in this case was the Group Areas Act which caused the sale of the property. The evidence of Mr Gerber made clear that the Group Areas Act did not decrease the value of property in Walmer Estate. There can accordingly be no justification for increasing the market value in the light of the Group Areas Act.
[70] The extent of direct State investment and subsidy in the property, (a consideration at Section 25(3)(d) of the Constitution) in the form of improvements to the roof, also does not warrant an amendment to market value and none was sought on this ground. The purpose of the expropriation (a consideration under section 25(3)(e) of the Constitution), would also not result in an amendment to market value. It is in fact debatable whether the term “expropriation” is applicable to the dispossession of the subject property. Nor are there other relevant circumstances which would warrant an adjustment to market value under section 25 of the Constitution in determining whether just and equitable compensation was paid in 1979.
[71] A consideration of the factors set out at section 33 of the Restitution Act does not have a bearing on amendment to market value for the purpose of determining just and equitable compensation. The section 33 factors especially those of justice and equity at section 33(c) are however pertinent to the question of feasability of restoration and repayment and are considered below in that context.
[72] On the basis of all of the above just and equitable compensation ought to have been at least R11 810,00 as determined by Mr Gerber. I accordingly find that the amount of R 11 599,50
67 Which derives its name from the Privy Council case, Pointe Gourde Quarrying and Transport Co Ltd v Subintendent of Crown Lands [1947] AC 565. 30 received at the time of the sale of the subject property did not constitute just and equitable compensation.
Sale of the subject property by the second respondent to the third respondent
[73] The issue that I am required to determine with regard to the sale of the subject property by the second to the third respondent is whether the Court may set aside the sale68 in terms of section 11(7)(aA)(i)69 on the grounds that it was not done in good faith.
[74] It was common cause that the subject property was sold to the third respondent contrary to second respondent’s stated policy not to sell properties subject to land claims. It was also common cause that as far back as 1993 the Department of Housing received a letter dated 17 December 199370 from Mr Mahatey stating that he wished to reclaim the subject property and that after the claim was lodged, the National Housing Board, the then owner of the property, received a letter from the Regional Land Claims Commissioner to the effect that a claim for restitution of land rights had been registered by the claimant against the subject property in terms of Section 10 of the Restitution Act and that steps had been taken to have the claim published in the
68 The question was also posed whether there was a valid sale, given that an agreement was entered into, the purchase price paid, but no transfer of the property into the name of the third respondent occurred. It is trite law that offer and acceptance constitute a valid contract, giving rise to personal obligations to perform. See Christie The Law of Contract in South Africa 2nd ed (Butterworths, Durban 1991) at 29: “As a general proposition, the contract will be made at the time and place where agreement is reached. Again as a general proposition, agreement is reached when each party is aware that the other is in agreement with him, which will be when and where the offeror receives communication of the offeree’s acceptance from him.” There is no exception to this general rule for sales of real property, see Kleyn and Boraine Silberberg and Schoeman's The Law of Property 3rd ed (Butterworths, Durban 1992) at 75: “As a contract creates only personal rights and obligations, an additional transaction is required for the transfer of a real right from the one party to the other. Transfer does not complete the contract, but gives effect to it. . . [L]egally it is always possible to distinguish between the contract, giving rise to the personal obligation to perform, and the actual performance when the real right is transferred."
69 At n7 above.
70 The documents bundle at 85. Receipt of this letter was acknowledged by the Deputy Director- General, Community Services Branch in an undated letter, (which refers enquiries to an L. Rautenbach) as well as in a letter dated 2 February 1994, from the Director-General Administration, House of Representatives, at Parliament Towers, 103 Plain Street. 31
Government Gazette as required by the Act.71 Thereafter the claim was referred to the Housing Board task team72
[75] The above notwithstanding, the subject property was sold to the third respondent in November 1997 as part of a low cost housing sale policy at the price of R95,28 per square metre. The subject property fell into what was called Phase 2 of Walmer Estate.73 Those persons like the third respondent who had been tenants before 1994 and were first time buyers were entitled to a considerable discount as a result of which the selling price of the subject property was fixed at R5197,21.74 The sale to the third respondent was approved on 22 October 1997.75 The sale was concluded on 18 November 1997.76 However, as explained earlier, the transfer of the property was postponed until the resolution of this claim.
[76] Mr Botha, the Assistant Director of Assets in the Housing Settlement Directorate, Department of Planning, Local Government and Housing, and the official responsible for
71 The pleadings bundle at 62. The letter was sent on 1 August 1996 to the Housing Board at PO Box 2330, Cape Town, 8000. It is noted that the letter was sent all of 14 months after the claim form had been filled in and 11 months after it was gazetted in accordance with Section 11(6) of the Restitution Act. There is no explanation by the Commission as to why there was such a long delay before the second respondent was notified. Section 11(6) of the Restitution Act states: “Immediately after publishing the notice referred to in subsection (1), the regional land claims commissioner shall by notice in writing - (a) advise the owner of the land in question and any other party which, in his or her opinion, might have an interest in the claim of the publication of the notice; and (b) refer the owner and such other party to the provisions of subsection (7).”
72 Consisting of members of the Commission, Department of Land Affairs, Housing Board and an independent facilitator for discussion. A reference to the claim appears in the minutes of a December 1998 meeting of the task team, where no objections were raised as to the validity of the claim. The discovery bundle, para 9.3 at 48.
73 Documentation of the second respondent’s assets committee pertaining to the sale of houses in phase 2 of Walmer Estate specifically excludes the sale of properties subject to land claims. The discovery bundle at 37.
74 As per the certificate of calculation of price in the pleadings bundle at 125. The selling price was R11 433,60 plus arrear rental of R1263,61 making the total selling price R12 697,21. From this amount the sum of R7500 was deducted as a discount given to first time buyers and buyers who had been tenants prior to March 1994 as per the Board’s circular. The discovery bundle at 34.
75 The discovery bundle at 38.
76 Deed of sale, the pleadings bundle at 120. 32 approving sales of departmental property, who had approved the sale of the subject property, gave evidence to explain how the sale had come about. He was at pains to testify that the sale had occurred as a result of an administrative error and was devoid of bad faith on the part of second respondent. His explanation of the error was as follows. The notice of 1 August 1996 from the Commission to second respondent informing about the land claim on the subject property had been received at the offices of second respondent at its address on the foreshore in Cape Town. Thence, it had been been wrongly sent to a Mr Hugo, the Deputy Director, Housing Management, (in the Department of Planning, Local Government and Housing) instead of to the Assets Management section, which is the section that deals with sales of departmental properties and restitution claims. The notice therefore was not filed in the correct file containing the documentation for the sale of the subject property to the third respondent, in the relevant section dealing with property sales. Mr Botha said that when he was handed the the file pertaining to the subject property for perusal prior to his approving the sale, he was informed that there was no land claim against the subject property. Thereafter he had paged through the file, himself to check if there was a notice on the Regional Land Claims Commission’s letterhead to the effect that there was a land claim on the property. He had found none and consequently approved the sale.
[77] Under cross examination Mr Botha stated that he was aware that the issue of land claims was of crucial importance in the sale of Walmer Estate properties. He said he had “got the picture” from the file that the property had been transferred from Mr Mahatey to the Community Development Board, and had seen correspondence in this regard. He explained he was aware that the Group Areas Act together with the Community Development Act had been used to acquire affected properties and he may also have seen the notices from the Community Development Board77 to Mr Mahatey. All of this he said did not however alert him to the fact that there might be a land claim in respect of the subject property as he was looking specifically for a notice on the Commission’s letterhead as proof that a claim had been lodged. He conceded that he had not read the entire contents of the file and conceded that had he done so, he would have been alerted to the possibility of a land claim against the subject property.78 He had only become aware in preparing for the trial, that a notice dated 1 August 1996 from the Commission (in respect of the
77 The discovery bundle at 1-2.
78 The record at 495-502. 33 land claim against the subject property), had in fact been received by second respondent. He did not explain why he had received no communication from the Housing task team about the claim, given that their minutes of December 1998 mentioned the claim.
[78] It was only in February 1999 after a list of houses that had been sold was furnished by second respondent’s representatives to members of the Regional Land Claims Commission at a task team meeting, that the second respondent was alerted to the fact that the subject property was subject to a land claim, and had been sold contrary to policy. The second respondent blamed the sales on a lack of communication between itself and the Commission79 and recorded its annoyance at the unsatisfactory situation in a letter to the Commission from which it emerges that the subject property was one of three such properties sold in error, the transfer of which had to be stopped. The second respondent also explained that the Commission’s notices in respect of those properties were either never received or received long after they were dispatched, as they were sent to the wrong address.
[79] The second respondent thereafter directed the state attorney not to effect transfer of the subject property to the third respondent, and informed the latter that the Department was prohibited from proceeding with the transfer of the property, pending a ruling on the claim by the Land Commissioner.80 The fourth respondent, the Commission, itself sent a letter to the third respondent, dated 22 July 1999,81 about the land claim and drawing attention to Section 11(7) of the Restitution Act permitting the setting aside of sales in respect of properties subject to land claims. No explanation was furnished as to why the Commission only notified the third respondent about the claim in 1999, given that the claim had been lodged four years earlier, as far back as 1995.
Was the sale done “not in good faith” in terms of section 11(7)(aA)(i)?
79 Exhibit D, undated letter from C B Herandien, Minister of Housing
80 In a letter dated 23 July 1999, the discovery bundle at 118.
81 The discovery bundle at 117. 34
[80] Mr Visser submitted that there had been mala fides in the sale of the subject property. He argued that the sale constituted a serious dereliction of duty and was for this reason a mala fide action. He based this argument on the following statement specific to the case Leach v Secretary of Justice Transkeian Government82 by Professor Yvonne Burns:83
“ in some cases the courts have found that the official has acted mala fide, even in instances where no blameworthiness was encountered. This kind of mala fide action (where no blameworthiness is present), would then relate to a serious dereliction of duty committed in good faith. In other words, the mala fides amounts to a sort of indirect awareness of wrongfulness - the failure to comply with the legal requirement was so blatant that the official must or should have known that the action was invalid”
Mr Visser referred us also to excerpts from Baxter84 and Wiechers85 in support of this argument.
[81] The quote from Burns relied on above does not describe a settled principle of law. It simply states what the Courts have found in some cases, but is in fact specific and pertinent to the circumstances in the Leach case.86 It is also preceded by a general statement based on Wiechers' arguments that “mala fides presumes consciousness of wrongfulness”.87 The general rule is qualified in the quote and the Leach case referred to in that context.
[82] The Leach case is distinguishable from the present one because it involves the dereliction of a requirement to exercise a discretion as prescribed in the statute. In the present case the exercise of an analogous discretion was not prescribed by statute, hence there was no failure to
82 1965 (3) SA 1 (E)
83 Burns Administrative Law under the 1996 Constitution (Butterworths, Durban 1999) at 164.
84 Baxter Administrative Law (Juta, Cape Town 1989) at 478.
85 Wiechers Administratiefreg 2nd ed (Butterworths, Durban 1994) n50 at 357.
86 The Leach case pertains to the review of a decision by the Secretary of Justice for the Transkeian Government not to grant an application for the renewal of a liquor license. The Court found that the Secretary had acted mala fides in that he had not used the “full powers and discretion” granted to him by the authorising statute in considering the application. Instead he had substituted a decision taken by the Cabinet regarding the granting of liquor licences. In so doing he had fettered his discretion and exercised his power mala fides in that he had used the power for a purpose different from that for which it was given to him” I note also that it is questionable whether Professor Burns has correctly interpreted the formulation given that she has expanded the formulation of mala fides in Leach, namely “the use of power for a purpose other than that for which it was conferred.” as mala fides where there is no blameworthiness.
87 Burns, n 83 above at 164. 35 comply with a prescribed legal requirement.There was a decision (void of any statutorily prescribed discretion) not to sell properties subject to land claims. The property was mistakenly sold contrary to the decision, in the absence of the kind of mala fides referred to in Leach. The commentary on mala fides by Burns accordingly has no application to the different circumstances of the present case.
[83] Nor, in my view, do those sections of Baxter and Wiechers as referred to support an argument construing second respondent’s negligence in selling the property as mala fides. As is aptly argued by Wiechers, mala fides presumes consciousness of wrongfulness,88 a consciousness which was clearly absent in the sale of the subject property. Therefore the negligence on the part of the second respondent notwithstanding, I am unable to find that the sale was not in good faith and stands to be set aside for that reason.
[84] Section 38E(a)(i)(aa) of the Restitution Act permits this Court to set aside a sale “if it is satisfied that such sale . . . defeats or will defeat the achievement of the objects of this Act.” This in effect provides that a sale in good faith as I have found this one to be , can be set aside if it defeats the objects of the Restitution Act. Unfortunately no argument was presented on this matter by the parties. However even a sale which does not defeat the objects of the Act, does not of itself restrict the power of this Court to order restoration in terms of section 35 of the Restitution Act, given its extensive powers of expropriation and restoration in terms of section 35(1)(a).
[85] Mr Visser further argued that the sale of the subject property was ultra vires because it had occurred without the requisite approval of the National Minister of Housing as prescribed at section 32 of the applicable statute, the Housing Act 4 of 1966. It does not appear to me that the sale was ultra vires.89 However, I need not decide the issue, given that the status of the sale does
88 Wiechers, n 85 above at 255.
89 It would appear that properties under the control of the Community Development Board are sold not in terms of section 32 of the Housing Act 4 of 1966 but in terms of section 42(5) thereof which states in the relevant part: “The maintenance, sale or letting of dwellings registered in the name of the Commission (board) shall be by the Secretary on such terms and conditions as the Commission may from time to time determine.” Section 32 appears to be concerned primarily with the purchasing or acquiring of affected property for the purpose of developing or disposing thereof. The approval of the Minister would this appear to be irrelevant 36 not bar entitlement to restitution in terms of section 2 of the Restitution Act, nor restrict an order for restoration. I accordingly make no finding in this regard.
[86] The claimants have met the threshold requirements for entitlement to restitution. They have established both that there was a dispossession of a right in land in respect of the subject property and that just and equitable compensation as envisaged in the Restitution Act was not paid at the time of the dispossession. In deciding whether to award them the relief they claim, namely restoration of the subject property, I am required to have regard to the factors set out at section 33 of the Restitution Act.90
[87] After carefully considering these factors in the light of all relevant submissions and in relation to the facts and circumstances in this particular matter, I have arrived at the decision that the subject property should be restored to the claimants. In coming to this viewpoint I have not been oblivious to or lacking in empathy for the position of the third respondent who may well stand to lose what she has come to regard as her home of thirty years. I have reflected carefully upon her situation and concluded that claimants’ right to restitution by way of restoration within the context and purpose of the Restitution Act91 takes precedence over her tenancy rights. Were it not for the dispossession of the subject property, the late Mr Mahatey would in all likelihood have accommodated his family members in the subject property and the third respondent would not have enjoyed the long term occupancy at favourable rental. Nor would she have enjoyed rent free occupancy since 1997 which even taken at the 1997 rental of R95 per month and making no allowances for inflation related increases, comprises a saving of R5320,00 to her, an amount in excess even of the purchase price of R5197,28 she paid the second repondent for the subject property. The claimants’ right to ownership of the property by way of restoration outweighs the
to the sale.
90 See n 47 above.
91 The preamble states - “Whereas the Constitution of the Republic of South Africa, 1996 (Act 108 of 1996), provides for restitution of property or equitable redress to a person or community dispossessed of property after 19 June 1913 as a result of past racially discriminatory laws or practices; And whereas legislative measures designed to protect or advance persons, or categories of persons, disadvantaged by unfair discrimination may be taken to promote the achievement of equality”. 37 third respondent’s rights to occupancy. Ultimately, the desirability of remedying past violations of human rights together with considerations of justice and equity favours restoration.
[88] In consideration of the plight of the third respondent, I urge the second respondent to take all necessary steps as a matter of priority, to assist the third respondent in acquiring accommodation of a similar nature in one of the housing schemes it administers. Similarly the second respondent is urged to engage with the third respondent on the question of improvements to the property effected by her.
[89] Section 33(eA)92 of the Restitution Act read with section 35(2)(a) and (b)93 thereof permits me to consider the amount of compensation received at the time of dispossession and order the claimants to make payment in respect thereof as a condition prior to restoration. At the time of the dispossession Mr Mahatey received compensation in the sum of R11 599,50 from the Community Development Board. The first respondent did not seek any repayment in respect of this amount and no evidence was placed before me as to the escalated current value of R11 599,50. In considering the question of payment for compensation received at the time of dispossession, I am guided once again by the factors set out at section 33 of the Restitution Act, in particular the requirements of equity and justice set out at section 33(c). This leads me to the view that it would be inequitable in this instance, if claimants made no repayment upon restoration, for this would in effect result in their being doubly enriched by the state, once at the stage of dispossession when compensation of R11 599,50 was paid to them for the subject property and again at the stage of restitution, upon restoration of the subject property to them. In determining the amount that must be repaid in the circumstances of this case, a number of factors must be borne in mind, namely,
92 “33 In considering its decision in any particular matter the Court shall have regard to the following factors: (eA) the amount of compensation or any other consideration received in respect of the dispossession, and the circumstances prevailing at the time of the dispossession.”
93 “35 (2) the Court may in addition to the orders contemplated in in subsection (1)- (a) determine conditions which must be fulfilled before a right in land can be restored or granted to a claimant; (b) if a claimant is required to make any payment before the right in question is restored or granted, determine the amount to be paid and the manner of payment, including the time of payment.” 38 the considerable and unrecoverable94 legal costs expended by the claimants in claiming restitution of the subject property, the fact that the current owner of the property was prepared to sell it to the third respondent for R5 197,28, and also that first respondent is not even asking for any repayment. All of this leads me to conclude that justice and equity require that the claimants pay back no more than actual compensation received at the time of dispossession, namely R11 599,50. I accordingly order in terms of section 35(2)(b) that such amount be repaid by claimants to the first respondent.
[90] The following order is made: (a) The restoration to the claimants of Erf 12377 Cape Town situate at 3 Lever Street Woodstock, Cape, is ordered in terms of section 2(1)(b) read with section 35 (1)(a) of the Restitution Act. The first respondent is ordered to acquire or expropriate the said property from the second respondent in order to restore it to the claimants. (b) The claimants are ordered in terms of section 35(2)(b) of the Restitution Act to pay the sum of R11 599,50 to the second respondent prior to or simultaneous with transfer of the subject property. (c) The third respondent is ordered to pay wasted costs for the duration of the proceedings taken up by the testimony on expenses incurred by her in renovating the subject property.
______ACTING JUDGE Y S MEER
I agree
94 The general policy of the Land Claims Court is not to award costs since litigation in this Court belongs to the genre of social litigation. See for example Hlatshwayo and Others v Hein 1999 (2) SA 834 (LCC) at para [23]-[26]; Skhosana and Others v Roos t/a Roos se Oord and Others 2000 (5) SA 561 (LCC) at para [30]; In re: Kranspoort Community 2000 (2) SA 124 (LCC) at para [121]. There is nothing in this case which warrants a deviation from this general policy. 39
______PROF J MURPHY *ASSESSOR
* (Assessor appointed in terms of section 28(5) of the Restitution of Land Rights Act, Act 22 of 1994).
For the claimant: Adv N Visser instructed by N Hassan & Associates, Cape Town.
For the first and fourth respondents: Adv D Jacobs instructed by Rehana Khan Parker & Accosiates, Cape Town.
For the second respondent: Adv W Coughlan instructed by State Attorney, Cape Town.
For the third respondent: Mr J D van der Merwe instructed by Chennells Albertyn Attorneys, Stellenbosch.