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[2014] ZASCA 56
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City of Cape Town v Arun Property Developments (Pty) Ltd (943/12) [2014] ZASCA 56 (16 April 2014)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not reportable
Case No: 943/12
In
the matter between:
THE
CITY OF CAPE
TOWN
...........................................................................
APPELLANT
and
ARUN
PROPERTY DEVELOPMENTS (PTY)
LTD
.....................................
RESPONDENT
Neutral
citation
:
City
of Cape Town v Arun Property Developments
(943/12)
[2014] ZASCA 56
(16 April 2014)
Coram:
Navsa, Ponnan, Theron, Willis JJA and
Mathopo AJA
Heard:
18 March 2014
Delivered:
16 April 2014
Summary:
Interpretation – interpretation of section 28 of Land Use
Planning Ordinance (LUPO) – section not amounting
to
expropriation – no compensation due.
ORDER
On
appeal from:
Western
Cape High Court, Cape Town (Dlodlo J sitting as court of first
instance):
1 The appeal is
upheld with costs including the costs of two counsel.
2
The order of the court below is set aside and replaced with the
following:
‘
(a)
It is declared that the plaintiff is not entitled to compensation in
terms of s 28 of LUPO.
(b)
The plaintiff is ordered to pay the defendant’s costs,
including the costs of two counsel.’
JUDGMENT
Mathopo
AJA
(Navsa, Ponnan, Theron and
Willis JJA concurring):
[1]
The question for determination in this appeal is whether the
respondent, Arun Property Development (Pty) Ltd (Arun), is entitled
to claim compensation from the appellant, the City of Cape Town (the
City) in terms of section 28 of the Land Use Planning Ordinance
(LUPO), for portions of certain public streets (the excess
land) pursuant to a subdivision granted by the City, for
which
Arun applied and which, purely for the purposes of this case
are accepted to be in excess of the normal
needs therefor
arising from that subdivision. The answer to that question follows on
an interpretation of s 28 of LUPO the provisions
of which allow for a
vesting in the City, without compensation of public spaces and
streets relative to the needs of the development.
[2]
The Western Cape High Court (Dlodlo J), wherein
Arun instituted an action against the City for compensation for the
excess land,
held, that in terms of s 28 of LUPO the excess land
automatically vested in the City and that since no review remedy was
available
to Arun, the City was obliged to compensate it and that
such compensation was to be calculated in terms of the provisions of
the
Expropriation Act 63 of 1975 (the EA). The High Court accordingly
issued orders to that effect and ordered the City to pay Arun’s
costs. It is against those findings and orders that the present
appeal is directed. The appeal serves before us with the leave
of the
high court. I pause to state that the high court in arriving at
the conclusions referred to above was aware of the
majority decision
of this court in
City of Cape Town v
Helderberg Park Development (Pty) Ltd
2008
(6) SA 12
(SCA) which dealt with the interpretation of s 28 of LUPO
in a manner that the high court appreciated called for a decision
contrary
to that reached by it. This will be addressed later.
[3]
At this stage it is necessary to set out in brief, in the paragraphs
that follow, the relevant factual background. In doing
so, I borrow
largely from the high court’s judgment.
[4]
The respondent, Arun Property Development (Pty) Ltd, is the
registered owner of portions 57 and 61 of the farm Langeberg 311,
Durbanville (the property). Arun purchased the property from the
University of Stellenbosch (the University) during 1997 and it
was
thereafter consolidated to form Erf 10357. Prior to Arun’s
purchase of the property, the University had, in or about
1987/1988
instructed City planners, architects and consulting engineers to
advise it regarding the future use and development of
the property.
They had advised the University that the property fell within the
logical expansion area of the Durbanville district
and that the value
of the property would be optimised if it was used for township
development purposes.
[5]
During the course of those investigations the advisers, considering
the relevant planning documents that regulated municipal
planning in
the area, established that various planning instruments, such as
structure plans adopted in terms of s 4 of the LUPO
and transport
plans for the Cape Metropolitan Area, which had been established in
terms of the Urban Transport Act 78 of 1977,
made provision for a
hierarchy of roads. Thus, for example, the Provincial Executive
Committee had approved a structure plan for
the area north of the N1
in terms of s 4(6) of LUPO on 13 June 1988 (the 1988 structure plan),
which provided for five categories
of roads.
[6]
This planning structure burdened the property with a planned primary
road system consisting of:
(a)
an order 1 (trunk roads and main roads) road: North/South Kuilsriver
highway (previously known as Main Road 81 and currently
known as Main
Road 81 and the R300 extension);
(b)
an order 2 (primary distributors) road: East/West De Villiers
extension (also known as Golf Course Road); and
(c)
an order 2 (primary distributors) road: North/South Brackenfell
Boulevard in the East.
[7]
No application for rezoning and subdivision of the property with the
view to a township development would have been approved
by either the
local or provincial authorities unless such a development plan was
reconcilable with existing planning, and in particular,
unless it
made provision for and indicated the required public road reserves
therein. The University’s consultants met with
the relevant
municipal officials to, inter alia, determine what the City’s
requirements in respect of the provision of civil
services for
development on the property were. The officials confirmed that the
approval of any development proposal was going
to be dependent on
compliance with existing planning for road infrastructure as referred
to above.
[8]
The University subsequently lodged certain applications in the early
1990’s with the City to obtain the necessary approvals
for
township development, including one for the rezoning of the property.
On 3 September 1992 the University was informed in writing
that the
Ministerial representative had approved the application to rezone the
property from agricultural to township development.
The approval was
informed, inter alia, by a Traffic Impact Assessment prepared by
consulting engineers. This report pointed out
that the development of
the property was not going to have a significant impact on the
existing road infrastructure. It was
reported that such impact
could be addressed by relatively minor improvements to the existing
road system.
[9]
After Arun acquired the property it employed its own team of
consultants, whose investigations confirmed the background summarised
above. Arun’s town planning consultant was informed that the
requirements with regard to the road infrastructure as set out
in the
1988 structure plan and related documents, such as transport plans
for the Cape Metropolitan Transport Area, had to be complied
with.
This included the obligation to provide for the planned higher order
roads over the property as referred to above. Arun’s
consultants prepared and submitted to the City a subdivision
application (the application was prepared taking into account the
requirements of the road infrastructure). The City approved the three
phases of the development on three different occasions. Each
one of
the approvals included confirmation of the rezoning of specified
portions of the property to ‘Public Streets’
as well as
conditions relating to the design of the road infrastructure.
[10]
On 10 September 2001 Arun instituted the action referred to in para 2
above. An exception was taken by the City to the
particulars of
claim, with the result that Arun amended its particulars of claim on
23 April 2003. These amended particulars of
claim were met with four
additional exceptions from the City. Erasmus J dealt with the
exceptions and upheld two of them.
[11]
The case advanced for Arun is that only a part of the property
designated for public streets could be said to be based on the
‘normal need’ for public streets arising from the
subdivision. Arun’s claim for compensation was for the
loss of its ownership of the excess land, which, it contended was
surplus to the normal need.
[12]
In support of its case, Arun relied on the minority judgment of Heher
JA in Helderberg and contended that the remarks of Farlam
JA, writing
for the majority, when dealing with section 28 of LUPO were obiter
and not binding. The court below agreed with Arun.
I will in due
course turn my attention to that case.
[13] In the court
below the parties agreed to a separation of issues in terms of Rule
33(4). The separated issues were:
‘
(a)
Does the excess land remain vested in the Plaintiff, or has it vested
in the Defendant in terms of s 28 of the Land Use Planning
Ordinance
15 of 1985 (C) (‘LUPO’)?
(b) If the excess
land has vested in the Defendant in terms of s 28 of LUPO, is the
Plaintiff entitled to compensation in respect
of the excess land in
terms of s 28 of LUPO?
(c)
If the Plaintiff is entitled to compensation in terms of s 28 of
LUPO, is such compensation to be reckoned as contended for
in terms
of paragraphs 19 or 20 of the particulars of claim?’
[14]
Arun called four witnesses in support of its case who were ultimately
unhelpful in resolving the issue. The parties were agreed
that in
resolving the dispute an assumption could be made that a part of the
public roads in the approved subdivision were in excess
of the normal
needs of the development.
[15]
Before us counsel for the City conceded that the City was wrong to
agree to a separation on that assumption. He accepted that
in the
event of a ruling in favour of the City, the assumption and the
agreed separation, far from having the effect of being dispositive
of
the matter would, probably result in protracted litigation. Put
simply, the assumption would have to be revisited to determine
whether the excess land was indeed surplus to normal needs. Counsel
for Arun, on the other hand, was undeterred, unsurprisingly,
as the
suggestion for a separation on the agreed basis was initiated by
him. This court has warned on numerous occasions
that courts
should not be led by counsel but should be vigilant to ensure that a
separation of issues does indeed lead to expedition.
See in this
regard
Absa Bank Ltd v Bernert
2011 (3) SA 74
(SCA) para 21.
[16]
It is now necessary to focus on s 28 of LUPO, which provides:
‘
Ownership,
on subdivision, of public streets and public places.
─The
ownership of all public streets and public places over or on land
indicated as such at the granting of an application
for subdivision
under section 25 shall, after the confirmation of such subdivision or
part thereof, vest in the local authority
in whose area of
jurisdiction that land is situated, without compensation by the local
authority concerned if the provision of
the said public streets and
public places is based on the normal need therefor arising from the
said subdivision or is in accordance
with a policy determined by the
Administrator from time to time, regard being had to such need.’
[17]
Both the majority and minority decisions in Helderberg now call for
attention. In that case Farlam JA (with whom Mpati AP,
Snyders AJA
and Kgomo AJA concurred) focused, right at the commencement of his
judgment, on the provisions of s 28 of LUPO.
[1]
He
disagreed with the interpretation placed on the section in the
minority judgment by Heher JA, namely that on a proper construction
of that section an owner of land subject to an approved subdivision
application has a claim for compensation from the local authority
concerned in respect of those portions of the public streets vesting
in the authority upon the confirmation of the subdivision
which
exceed the normal need therefor arising from the subdivision.
[2]
Farlam
JA took issue with Heher JA that his conclusion was logically
compelling as the language of s 28 was such that it was ‘the
correlative of the negative postulation as to compensation in the
section that an owner is entitled to be compensated for
over-generously
provided streets and public places which vest in the
local authority on confirmation of a subdivision.’
[3]
[18]
In support of his contrary conclusion Farlam JA provided the
following example:
‘
consider
these facts: A developer applies for approval of a subdivision. In
his subdivisional plan, which is approved, he makes
provision for
overbroad streets and overgenerous public places the provision of
which is not “based on the normal need therefor
arisisng from
the subdivision” If my colleague is correct the developer will
be able to claim compensation for the “unneeded”
portions
of the streets and public places, for which the local authority will
have to pay. One would not lightly conclude that
the lawgiver could
have intended such a result.’
[4]
[19]
Farlam JA might rightly have added to his remarks, noted in the
preceding paragraph, that a further perverse effect would be
that the
property development might because of the generous provisions be
particularly attractive to affluent buyers and the owner
would
benefit twice if compensation could be claimed from the local
authority.
[20]
The judgment of Farlam JA went further and disagreed with Heher JA
that section 28 constituted the power of expropriation.
The learned
judge of appeal reasoned that the owner could have resisted it by not
proceeding with the development or it could have
appealed to the
Premier of the Province under section 44 of LUPO against such
vesting.
[5]
Farlam
JA might even have said further that if the facts called for it, an
owner could bring it to the attention of the local authority
that
both it and the owner’s consultants erred or even one of them
and could have called on the local authority to consider
the error
and revisit such condition or approval. Or an owner could have lodged
an appeal on that basis, in the event of the local
authority
contending that it was not legally competent to revisit its prior
approval.
[21]
Farlam JA went further and called to mind that this court has on
several occasions, in analogous situations, held that a party
who has
the remedy of judicial review and does not make use of it will not be
allowed to claim damages.
[6]
At
para 10 of his judgment the following appears:
‘
I
agree with counsel for the appellant that the administrative act at
issue cannot be disentangled: the decision or administrative
act as a
whole should either have been appealed or reviewed and set aside.’
[22]
In his minority judgment Heher JA was, as already alluded to, adamant
that s 28 had vesting as its primary purpose and reasoned
that its
provisions were founded in a compulsory taking. He went on to say
that a legislative power authorising expropriation without
compensation will not lightly be countenanced. He concluded that an
owner had a right to compensation based on the provisions of
s 28 of
LUPO.
[7]
[23]
The primary purpose of s 28 is to vest roads and public places based
on the normal need therefor upon confirmation of a subdivision
in a
local authority, so as to enable it to fulfil its obligations as a
local authority in relation thereto. The wording is clear.
It
certainly is not to enable an expropriation of land not based on the
normal need therefor. Such a power, without a prescribed
procedure,
as contended for by Arun, would, in any event, be constitutionally
questionable. It will offend against s 25 of the
Constitution which
prevents the arbitrary deprivation of property. Importing the
provisions of the EA, ex post facto, as Arun seeks
to do, is an
exercise in desperation.
[24]
I find the reasoning of Farlam JA, referred to above, compelling and
do not agree, for the reasons already stated, that the
reasoning of
Heher JA is persuasive.
[25]
I fail to see how the imposition of a condition by the local
authority in
Helderberg
distinguishes
that case from this one, particularly since that case like the
present involved the interpretation of s 28 and both
concern the
remedy at the disposal of an aggrieved owner. By the same token I
fail to understand how Farlam JA’s remarks
could have been
construed as obiter, as the high court purported.
[26]
It is in my view necessary to deal with the submission on behalf of
Arun in respect of the structure plans adopted in terms
of the
provisions of LUPO, referred in paragraph 5 above. Such a plan, as
rightly contended by Arun, cannot be construed as authorising
expropriation in excess of the needs of the development. That takes
the matter no further. The question whether the roads and public
spaces are in excess of the needs of the development is a
factual one and the right to contest its vesting, must as pointed
out
above depend on the circumstances.
[27]
The submission on behalf of Arun that it was entitled to its
alternative prayer; that it be declared that the excess land remains
vested in it, is fallacious, for the reasons that follow. First,
there is no factual foundation to conclude that there is indeed
excess land. Second and importantly, there is an administrative
decision that remains extant, namely the approval of the subdivision,
that has not been undone, either by way of appeal, review or
otherwise.
[28]
Furthermore, it was submitted on behalf of Arun that the time it
takes to resolve appeals in terms of LUPO is that it would
be
uneconomical to resort to that avenue for relief is no answer
to the interpretation question. Those practical problems
have to be
resolved with the local authority. In the event of a condition being
imposed unilaterally, that is punitive and will
have the effect that
land in excess of the needs of the development is demanded by the
local authority an early challenge by way
of an application to review
the decision can be undertaken by an owner. Owners and the local
authority should each take greater
care in this regard when
submitting an application for and approving a subdivision.
[29]
It is necessary to say something about the manner in which Dlodlo J
dealt with the adjudication of this case. He was bound
by the
decision of this court in
Helderberg
.
He recognised that he was ‘treading on dangerous ground by even
considering to differ from the judgment of the Supreme Court
of
Appeal.’ Nonetheless, he went on to say: ‘But the facts
in the instant compel me to administer justice in the manner
set out
in the order I make…’
[30] In
True
Motives 84 (Pty) Ltd v Mahidi & another
2009 (4) SA 153
(SCA)
this court said the following:
‘
[100]
The doctrine of precedent, which requires courts to follow the
decisions of coordinate and higher courts in the judicial hierarchy,
is an intrinsic feature of the rule of law, which is in turn
foundational to our Constitution.
[8]
Without precedent there would be no certainty, no predictability and
no coherence. The courts would operate in a tangle of unknowable
considerations, which all too soon would become vulnerable to whim
and fancy. Law would not rule. The operation of precedent, and
its
proper implementation, are therefore vital constitutional questions.’
[31]
The court below erred in the first place in holding that there was
merit to the submission by counsel for Arun, that
Helderberg
was distinguishable. Second, in
holding, contradictorily, that the majority judgment was obiter but
that it was in any event differing
from this court. Third, by stating
that it was necessary for this court to revisit its interpretation of
s 28 of LUPO.
[32]
Following these conclusions, Arun’s claim ought to have been
dismissed in the court below. Counsel for Arun suggested
that further
litigation options might remain for Arun. Whilst I fail to see how
that is so, in the substituted order hereafter
I shall answer what
appears to be the substantive issue in the matter.
[33]
For the reasons stated, I make the following order:
1
The appeal is upheld with costs including the costs of two counsel.
2
The order of the court below is set aside and replaced with the
following:
‘
(a)
It is declared that the plaintiff is not entitled to compensation in
terms of s 28 of LUPO.
(b)
The plaintiff is ordered to pay the defendant’s costs,
including the costs of two counsel.’
R
S Mathopo
Acting
Judge of Appeal
Appearances
For
the Appellant: J H Roux SC (with him C Carolissen)
Instructed
by:
Cliffe
Dekker Hofmeyr Inc, Cape Town
Phatshoane
Henney Inc, Bloemfontein
For the Respondent:
S P Rosenberg SC
Instructed
by:
Du
Plessis Hofmeyr Malan Inc, Somerset West
Webbers,
Bloemfontein
[1]
Para 2.
[2]
Paras
1 and 2.
[3]
Para
3.
[4]
Para 3.
[5]
Paras
4 and 11.
[6]
Para
8.
[7]
Paras
39, 40 and 41.
[8]
Constitution Chapter 1, Founding Provisions, s 1─the Republic
of South Africa is founded on values that include ‘
(c)
Supremacy
of the Constitution and the rule of law’.