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[2024] ZAECMKHC 1
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Raymond Mhlaba Municipality v Coega Packing (Pty) Ltd (CA 241/2022) [2024] ZAECMKHC 1 (16 January 2024)
IN THE HIGH COURT OF
SOUTH AFRICA
EASTERN CAPE DIVISION,
MAKHANDA
Case No: CA 241/2022
REPORTABLE:
YES/NO
In
the matter between
RAYMOND
MHLABA MUNICIPALITY
APPELLANT
And
COEGA
PACKING (PTY) LTD
RESPONDENT
Coram: Pakati J et
Brooks J et Bands J
JUDGMENT ON APPEAL
PAKATI J
Introduction
[1]
This is an appeal against a judgment which dismissed the application
of the appellant to rescind
an order granted by Smith J, on 27 July
2021. The appellant had failed to oppose the said application (“the
main application”)
launched by the respondent and the order was
granted in its absence. The court
a quo
as per Rugunanan J
granted the order dismissing the application for rescission, on 19
July 2022. The appeal is with leave of the
court
a quo
against
the whole of the judgment and order he granted. The rescission
application was brought in terms of Rule 42 of the Uniform
Rules of
Court and common law. The respondent opposed the application.
[2]
In the main application, the appellant was the first respondent, and
the respondent, the applicant.
For convenience, I shall refer to the
parties as they appear in the appeal.
Background
facts
[3]
The respondent is the owner of Erf 3902, Fort Beaufort (“the
property”) situated within
the Raymond Mhlaba Municipal Area.
The property is 21.1099 hectares in extent and approximately 3
kilometres from the centre of
Fort Beaufort. It is zoned for
industrial use although it may, in addition, be used for agricultural
purposes. It falls within
the area of jurisdiction of the appellant
and Amathole District Municipality, the second respondent, in the
main application. The
issues between the parties fall within the
function of the appellant as the local government municipality in
that during 2011,
the appellant permitted and facilitated and
continues to permit and facilitate the encroachment of a municipal
graveyard from Erf
2232 owned by the appellant, onto the property in
extent of about 2935 square metres. During 2012, the appellant used a
portion
of the property as an illegal dumpsite and established
various sewerage works on the southern boundary by some 407 square
metres
without the respondent’s right or permission to do so
and the appellant continues to do so. The portion of the property on
which the encroachment rests was surveyed in extent of 4.7979
hectares as shown in the sub-division diagram referred to as Portion
“A”. During 2019, the sewerage works, in extent of 407
square metres, were constructed by Amathole District Municipality
to
provide services to the residential area which is the neighbour to
the south-eastern corner of the property.
[4]
Regarding the encroachments, various engagements, discussions, and
meetings were held between
the respondent and the appellant over an
extended period whereupon an understanding was reached that the
appellant would purchase
a two-hectare portion of the property that
had been encroached upon. Numerous correspondences were exchanged
between Mr Elfranco
Britz, for the appellant, and Mr Siegfried
Gericke, on behalf of the respondent, regarding this issue. On 29
January 2013, an understanding
was reached, and the terms were
recorded as per Annexure “EH11”
[1]
.
In an email dated 31 January 2013, Mr Gericke addressed an email to
Mr Britz which
inter
alia
,
stated: “
Please
be advised that Riverside and its Board of Directors hereby
officially inform you that we are requesting the amount of
R563 000-00
from the Nkonkobe Municipality for the purchasing of
the land in question. The illegal establishment of a graveyard on
Riverside
Property refers. Please note: The establishment of the
graveyard has effectively “blocked” our entrance to the
adjoining
piece of land, and further compensation might be sought.”
[5]
On 01 February 2013, Mr Britz forwarded another email to Mr Gericke
informing him that the matter
had been forwarded to the office of the
Municipal Manager and that a private valuator would assess the
property and submit the
valuation to the Municipal Manager’s
office, which was done. From March 2013, there was no progress due to
lack of response
by the appellant. Mr Gericke sent further emails to
Mr Britz dated 20 March 2013, and 27 March 2013, about lack of
response by
the appellant. Mr Britz obtained the valuation for a
portion of Erf 3902 amounting to R207 000-00 which was accepted by
the appellant.
[6]
A meeting between Mr Britz and Mr Gericke was held on 02 April 2013,
whereupon it was agreed that:
(i) the respondent would donate the
land to the appellant; or (ii) the appellant would purchase two
hectares of the property; or
(iii) two hectares of the respondent’s
property would be exchanged for property of equal size owned by the
appellant. On
04 April 2013, the parties proposed that they conclude
a lease agreement for a period of thirty years of land known as Njola
in
exchange for a donation by the respondent of land required by the
appellant. Negotiations between the parties continued but did
not
yield any results. In 2019, the appellant continued to establish
graves on the property, thereby ignoring the respondent. The
appellant disregarded efforts of the respondent to engage with it and
continued to unlawfully appropriate and use the property
as a
municipal graveyard.
[7]
During October 2020, the respondent instructed Mr Kyle Van Niekerk, a
Land Surveyor, to conduct
a survey and an on-site inspection and
prepare diagrams for the sub-division, which he did. On 04 November
2020, Mr Andre Crouse,
a professional Land Valuer and Appraiser,
determined the fair market value of the encroached portion to be a
sum of R4 580 000-00.
The respondent,
as
the owner of the property,
acknowledged
in its founding affidavit that in the ordinary course, it
has
the right and is entitled to compel the appellant to remove the
encroachments from its property.
[2]
However,
it could not compel the appellant to acquire, purchase or expropriate
the portion of the property encroached upon for its
use. It further
considered that the portion of the property upon which the
encroachment is situated, is no longer capable of any
beneficial use
to it. As a result, it has suffered and continues to suffer a loss to
the value of the property. However, it contended
that it was not in
the public interest that human remains buried on the property be
exhumed and buried elsewhere as that would
be impractical and a waste
of public funds. It also acknowledged that the material dumped on the
property could be removed but
did not know where it would be taken
to. It therefore tendered to sell that portion of its land described
as Portion A to the appellant
for it to acquire the property and in
return, compensate the respondent on condition that the appellant
paid the costs of the sub-division
and transfer. However, the
attempts to negotiate with the appellants to reach a constructive
resolution to the issue had been unsuccessful
due to lack of
co-operation by the appellant. This conduct left the respondent with
no option but to approach the court for relief.
[8]
During June 2021, the respondent launched the main application
seeking the removal of the appellant’s
encroachment upon its
property consisting of the municipal graveyard, dumping site and
sewerage works from the property namely,
Erf 3920, Fort Beaufort and
to make good the respondent’s property within 90 days of
service of the court order upon the
Municipal Manager. In the
alternative, it sought, in the discretion of the court, that the
appellant be ordered to compensate
it for its encroachment upon its
property by paying an amount of R4 850 000-00 together with
a
solatium
calculated in terms of s 12 of the Expropriation
Act within 30 days of service of the court order upon the Municipal
Manager. Upon
payment, the respondent would be ordered to sign all
necessary documentation to effect transfer of that portion of its
property
to the appellant.
[9]
On 18 June 2021 at 12h19, the Sheriff served the main application
comprised of the notice of motion,
founding affidavit and annexures
upon Mr Zolileyo Mjebeza at the appellant’s legal department at
8 Somerset Street, Fort
Beaufort. The respondent also served the
notice of set down upon Mr Mjebeza, on 21 July 2021 at 11h19, at the
same address, although
it was not required to do so. No notice of
opposition was received by the respondent. Mr Britz received the
papers a few days later.
He forwarded same to Mr Nini, the Director
of Corporate Services.
[10]
On 27 July 2021, Smith J granted the order in circumstances in which
the appellant failed to oppose the application.
The order directed
the appellant to compensate the respondent for the encroachment upon
its property by paying an amount of R4 850 000-00
together
with a
solatium
calculated in terms of s 12 of the
Expropriation Act. An ancillary order was also granted directing the
respondent to sign all
such documents deemed necessary to effect
transfer to the appellant of the portion of the property as described
in the sub-divisional
diagram.
[11]
As a consequence of the order by default, the appellant approached
the court
a quo
applying for rescission of the judgment
granted on 27 July 2021, relying on Rule 42 of the Uniform Rules of
Court and the common
law. Two issues had to be determined by the
trial court namely,
11.1
that service of the process and notice of set down were irregular;
and
11.2
that recourse to the application procedure in the main proceedings
rendered it incompetent and impermissible for the court
to have made
the order for payment of damages with reference being made to the
Expropriation Act when there was no expropriation
of land.
[12]
Regarding service of the process, the court
a
quo
referred
to
Vhembe
District Municipality v Stewarts and Lloyds Trading (Pty) Limited and
Another
[3]
where the requirements of
s 115(3)
of the
Local Government: Municipal
Systems Act 32 of 2000
,
[4]
were
examined by the SCA in respect of the rescission application in
circumstances where the summons was served on a person other
than the
Municipal Manager at the address of the municipality.
[13]
In casu
, the court
a quo
found that there was proper
service of the notice of motion and notice of set down on the person
in attendance at the office of
the Municipal Manager.
[14]
Regarding the second issue, the court
a quo
found that the
extent of the land owned by the respondent was determined by a land
surveyor and a fair market value of the encroached
portion of the
land was determined by a valuator, ‘
hence the amount of
compensation to be paid by reference to s 25(2) of the Constitution
was plainly determinable and liquid
’. He found further that
the order made ensued unaffected by any procedural error, which if it
was known to Smith J, it would
have precluded him from making the
order which he did. He concluded that there was no basis for
rescinding the order under Rule
42 or the common law. The application
was dismissed with costs on 19 July 2022, as alluded.
[15]
Aggrieved by the court order, the appellant filed a notice of appeal
dated 21 December 2022, and listed the
following grounds summarised
thus:
15.1
That the court
a quo
erred in finding that there was proper
service of the process upon the respondent. The court should have
found that service upon
Mr Mjebeza of the Legal Department was not
service upon the Municipal Manager or a person in attendance at her
office. As such
there was no proper service in terms of s 115(3) of
the Local Government Municipal Systems Act;
15.2
The court
a quo
failed to deal with the arguments advanced
concerning the competence of seeking a forced transfer of the land
encroached upon.
15.3
The trial court erred in holding that the claim was a liquid claim
because it relied on a valuation and that such could be
brought by
way of application proceedings.
15.4
He failed to deal with the element of the order which directed a
solatium
to be paid as calculated by the Expropriation Act.
Had it done so, it would have held that this was incompetent, and
that rescission
should have been granted.
Issues
on appeal
[16]
Initially, the appellant raised
inter alia,
prescription as a
defence. However, this defence was not pursued when the appeal was
argued. Instead, the appellant contended
that there existed a
misapprehension on the part of Smith J when he granted the default
judgment which was erroneously sought and
erroneously granted in that
the proceedings effectively sought an order for damages which
included a payment of a
solatium
in terms of s 12 of the
Expropriation Act. An issue further was whether it was competent to
order a forced transfer of the encroached
portion of the respondent’s
property to the appellant and order a
solatium
to be paid by
the appellant in terms of the Expropriation Act. That is because such
transfer amounted to deprivation of property
as contemplated in
section 25(1) of the Constitution and the appellant did not
expropriate any land. In addition, the appellant
alleged that service
of the process was irregular because of internal problems. The
Municipal Manager contended that she was not
informed of the court
process which resulted in lack of instructions to the attorneys to
defend the matter. The court had to also
determine whether there was
a plausible explanation for the delay and whether a
bona fide
defence had been established.
[17]
The respondent alleged that the appellant did not dispute that the
appellant is, in terms of sections 155
and 156 read with schedule 4
Part B and schedule 5 Part B of the Constitution, obliged to provide
for, manage and administer cemeteries,
sewerage works and refuse
dumps in its jurisdiction, which are the object of the encroachment
of the respondent’s property.
The
applicable authorities
[18]
Rule 42(1) (a) of the Uniform Rules of Court provides that the court
may, in addition to any other powers
it may have,
mero
motu
or
upon the application of any other party affected, rescind, or vary an
order or judgment erroneously sought or erroneously granted
in the
absence of any party affected thereby.
In
Freedom
Stationery (Pty) Ltd and Others v Hassam and Others
[5]
,
Van
der Merwe JA (Ponnan, Tshiqi and Schippers JJA and Carelse AJA
concurring) had this to say:
“
[25]
As
I have said, when an affected party invokes rule 42(1)
(a)
,
the question is whether the party that obtained the order was
procedurally entitled thereto. If so, the order could not be
said to
have been erroneously granted in the absence of the affected party.
An applicant or plaintiff would be procedurally entitled
to an order
when all affected parties were adequately notified of the relief that
may be granted in their absence. The relief
need not necessarily
be expressly stated. In my view it suffices that the relief granted
can be anticipated in the light of the
nature of the proceedings, the
relevant disputed issues, and the facts of the matter. In this regard
it would be useful to enquire
whether the relief could have been
granted without amendment of the process in question. If so, the
failure of an affected litigant
to take steps to protect his
interests by joining the fray ought to count against
him…In circumstances such as these,
a party who did not
oppose or participate in the proceedings would not be entitled to
relief under rule 42(1)
(a)
.
This is not only logical and fair but accords with the fundamental
principle of finality of litigation.”
[19]
In
Nyingwa
v Moolman NO
[6]
, White J held:
“
It
therefore seems that a judgment has been erroneously granted if there
existed at the time of its issue a fact of which the Judge
was
unaware, which would have precluded the granting of the judgment
and which would have induced the Judge, if he had been
aware of it,
not to grant the judgment.”
[20]
Alkema J in
National
Pride Trading 452 (Pty) Ltd v Media 24 Ltd
[7]
held:
“
[27]
It has often been held that, where the rules prescribe a particular
procedure, and that procedure is not followed, then such
procedural
error renders the judgment sought and granted ‘erroneous’
within the meaning of rule 42(1) (a). What
is effectively being
rescinded is the procedure in terms of which the judgment was
granted, and therefore, by necessary implication,
also the judgment.
[21]
The learned Judge referred to
Lodhi
2 Properties Investments CC & Another v Bondev Developments (Pty)
Ltd
[8]
where the court held that the phrase ‘
erroneously
granted
’
relates
to the procedure followed to obtain the judgment in the absence of
another party and not the existence of a defence to the
claim. Thus,
a judgment to which a party was procedurally entitled cannot be said
to have been erroneously granted in the absence
of another party.
[22]
My understanding of the above is that a rescission of judgment in
terms of Rule 42(1) (a) can only succeed
if the procedure followed
when the judgment was obtained was erroneous or there was a
procedural irregularity
.
It
has often been held that, where the rules prescribe a
particular procedure, and that procedure is not followed, then
such
procedural error renders the judgment sought and granted
'
erroneous
'
within the meaning of rule 42(1)
(a)
.
[23]
The strength of the applicant’s defence on the merits of the
rescission application also becomes crucial.
An application for
rescission of a judgment or order granted by default requires that an
applicant shows good cause/sufficient
cause for his default. In
Grant
v Plumbers (Pty) Ltd
[9]
the court remarked that the application must be
bona
fide
and
not made with the intention of delaying the plaintiff’s claim
and the applicant must show that he has a
bona
fide
defence
to the plaintiff’s claim. The court held further that it would
be sufficient if a
prima
facie
defence
is set out. If it is a weak defence the application has a little
chance of succeeding.
[10]
The
learned Judge added that if it appears that his default was wilful or
that it was due to gross negligence, the court should
not come to his
assistance.
[24]
In
Colyn
v Tiger Food Industries Ltd t/a Meadow Feed Mills (Cape) 2003 (6) SA
1 (SCA)
[11]
the
court as per Olivier JA, Cameron JA, and Jones AJA, had this to say:
“
11
…
With
that as the underlying approach the Courts generally expect
an applicant to show good cause
(a)
by
giving a reasonable explanation of his default;
(b)
by
showing that his application is made
bona
fide
;
and
(c)
by
showing that he has a
bona
fide
defence
to the plaintiff's claim which
prima
facie
has
some prospect of success (
Grant
v Plumbers (Pty) Ltd,
HDS
Construction (Pty) Ltd v Wait supra
,
Chetty
v Law Society, Transvaal
)”
[25]
In order to succeed at common law an applicant for rescission of a
judgment taken against him by default
must show sufficient cause.
[12]
This
generally entails that the applicant must:
(i)
give a reasonable (and obviously acceptable) explanation for his
default;
(ii)
show that his application is made
bona fide
; and
(iii)
show that on the merits he has a
bona
fide
defence
which
prima
facie
carries
some prospect of success.
[13]
The courts, however, retain
a
discretion which must be exercised after a proper consideration of
all the relevant circumstances.
[14]
Whether
there was irregular service of the application and notice of set down
[26]
The appellant contended that
there was irregular service of process as the papers were not served
at the correct address. It contended
further that because of the
internal problems the Municipal Manager was not informed of the court
process and because of that,
attorneys were not instructed to oppose
the application, as alluded. At paragraph 35 of the founding
affidavit, the Municipal Manager
stated that the notice of set down
‘
was
served at Fleet Management Workshop at Ordinance Street and not at
the municipal offices at 8 Somerset Street as is required
by rule
4(1) (a) viii) of the rules of the Honourable Court.
’
[27]
However, the Municipal Manager confirmed that the court process was
received by Mr Mjebeza, the Labour Relations,
and Legal Manager, on
18 June 2021. A few days later Mr Britz, a manager in the
administration, received same and forwarded it
to Mr Nini. The
Municipal Manager stated that Mr Njokweni, the Legal Manager, was ‘
an
employee who is often absent without permission from the department
and this is presently under investigation.’ S
he
asserted that his absence ‘
placed a tremendous burden on the
legal department and in particular Mr Mjebeza
’. She
asserted further that the court process was not brought to her
attention by the abovementioned officials and they ‘
simply
forgot to brief attorneys as they were distracted by the present
financial crisis that has befallen all municipalities including
the
Covid – 19 restrictions
.’ It is strange that the
Municipal Manager did not know whether to refer to Mr Mjebeza as the
Relations Manager or Legal
Manager, which makes it unclear as to
which office Mr Mjebeza held.
[28]
In response, the respondent submitted that Mr Mjebeza could not have
been so busy that he was unable to attend
to court process served
upon him. This conduct showed wilful disregard of the court papers
because the office of the appellant
is at 8 Somerset Street, the
argument went.
[29]
Mr Marais, for the appellant, raised an issue regarding a notice in
terms of
s 3
of the
Institution of Legal Proceedings Against Certain
Organs of State Act 40 of 2002
. This section provides:
“
3
(1) No legal proceedings for the recovery of a debt may be instituted
against an organ of state unless-
(a)
The creditor has
given the organ of state in question notice in writing of his or her
or its intention to institute the legal proceedings
in question; or
(b)
The organ of state in
question has consented in writing to the institution of that legal
proceedings-
(i)
Without notice; or
(ii)
Upon receipt of a
notice which does not comply with all the requirements set out in
subsection (2).”
(2)
A notice must-
(a)
within six months from the date on which the debt became due, be
served on the organ of state in accordance with
section 4
(1); and
(b)
briefly set out-
(i)
the facts giving rise to the debt; and
(ii)
such particulars of such debt as are within the knowledge of the
creditor.”
[30]
Ms Watt, on behalf of the respondent, correctly stated that this was
never raised in this case. In reply,
Mr Marais conceded that this
section was never raised but indicated that when it was referred to
in
Vhembe
supra
, he thought it might be relevant.
[31]
Section 3
was neither raised before the court
a quo
nor
mentioned as one of the grounds of appeal, I will therefore not deal
with it in this judgment. Regarding service of the court
process, Mr
Marais conceded that service of process was done properly and that
this court is bound by
Vhembe
. Nevertheless, I will deal with
the issue of service especially where it overlaps with the
explanation for the appellant’s
default under common law.
[32]
The Municipal Manager asserted that nothing was done with the notice
of set down because at the time it was
received, Messrs Nini and
Mjebeza ‘
were heavily involved in Union demands, policies,
and organograms and placements. So was I.
’ She asserted
further that negotiations with SAMWU and IMATU were time consuming
and demanding. Despite the appellant’s
knowledge of the
application from the date of service of the application to date of
hearing, on 27 July 2021 (40 days), nothing
was done to oppose the
application. This conduct shows total disregard of the court
application papers. This cannot be permitted.
The appellant’s
explanation for the default in this regard is unreasonable and
unacceptable. There is no satisfactory explanation
of the 40-day
period. The confirmatory affidavits by Messrs Nini, Mjebeza and Britz
lack detail of what happened during the period
of the delay. Instead,
they just confirmed the correctness of the Municipal Manager’s
affidavit insofar as it related to
them, which is unhelpful. To say
that Mr Mjebeza was too busy to attend to legal process that was
served upon him, clearly shows
a flagrant disregard of the court
process which amounts to wilful neglect of same. It is unclear what
Mr Nini did with the court
process after he received it from Mr
Mjebeza. For the appellant to say that ‘
the aforesaid
employees did not bring the papers to my attention and simply forgot
to brief attorneys as they were distracted by
the present financial
crisis that has befallen all municipalities
’, is
inconceivable especially coming from the Municipal Manager.
[33]
A judgment or order may be granted in the absence of another party if
that other party is aware that legal
process has been initiated
against them. Service of the said process to the other party becomes
important. A party who initiates
the proceedings would ensure that
the process has been properly served on the other party to
successfully obtain an order by default,
which the respondent did in
this case, as shown above.
[34]
The instant case, is in all fours with the circumstances in
Vhembe
.
The appellant has, in my view, failed to show that there was
irregular service of process. The appellant acknowledged receipt
of
the notice of motion and its annexures on 18 June 2020 and notice of
set down on 21 July 2021, served on Mr Mjebeza as shown
in the return
of service, which notice was in turn given to Mr Britz and then, Mr
Nini. In my view, the court
a quo
did not misdirect himself
when he found that there was proper service of both the notice of
motion and notice of set down.
The
nature of the relief granted by Smith J
[35]
Mr Marais, for the
appellant,
submitted that where an award of damages is the appropriate relief,
an order for the transfer of the portion of the property
encroached
upon is incidental to and consequent upon such an award but, the
award of damages is the true basis for the relief granted.
He
submitted further that a court exercising a discretion should not
conflate compensation with transfer as transfer need not necessarily
be made. He stated that the preferred position was an order that the
encroachment be removed rather than payment of compensation.
In para
54 of the founding affidavit, the appellant alleged that transfer of
the owner’s land to the encroacher amounted
to deprivation of
property as contemplated in s 25(1) of the Constitution. For this
assertion, it relied on
Fedgroup
Participation Bond Managers (Pty) Ltd v Trustee Capital Property
Trust
[15]
.
[36]
Ms Watt, on behalf of the respondent,
submitted
in reply that the appellant has neither put up a
bona
fide
defence
to the basis of the order granted on the merits nor has it put any
defence on the sum of the compensation determined by
the Court. She
further submitted that the case of
Fed
Group
relied
upon by the appellant is distinguishable from the instant case.
[37]
Griesel
J, i
n
Trustees,
Brian Lackey Trust v Annandale
[16]
remarked:
“
[32]
In exercising such discretion, the starting point, in my view, should
be that an owner is ordinarily entitled to claim a demolition
order
in respect of the encroaching structure. The primary remedy in
cases of encroachment is, therefore, an order for removal
of
the encroachment. However, as with claims for specific
performance, rigid enforcement of that primary remedy can sometimes
give rise to an unjust result and, as appears from
the
Benson
case
supra
,
that is precisely the
raison
d'être
for
the Court's discretion, namely, so as to enable the Court to avoid an
unjust result…
[34]
Weighing up, therefore, the option of
complete
demolition,
on the one hand, against payment of compensation
(including a
solatium
), on the other, I am satisfied
that the former option would indeed produce an unjust result. The
considerations leading me to this
conclusion fall broadly into two
categories, viz
(a)
disproportionality of prejudice;
and
(b)
principles of neighbour law.”
[38]
Turning to
Fed Group
, the issue to be determined was whether
the encroacher on another’s land was entitled, in the absence
of an action or application
being brought by the owner of the land
for a removal order, to approach a court for an order compelling the
owner to transfer,
not only that part of the land on which there is
an encroachment, but also seek transfer of additional vacant land
against a tender
of compensation. The court
a quo
was of the
view that the order sought was entirely within the court’s
discretion and granted the relief sought which the
court
a quo
categorised as a ‘
specific performance’
. She
declined the aggrieved landowner’s claim for a demolition
order.
[39]
The SCA as per Navsa ADP and Sadulker JA (Mhlantla JA, Pillay JA and
Willis JA concurring) held at para [35]:
“
[35]
…An encroacher might be able to defend an action or
application for removal on the basis that it is unjust and unfair
to
order demolition and removal. This is a defensive position that might
rightly be adopted. Courts, in exercising what has now
been accepted
as a ‘discretion’ to award compensation instead of
ordering removal, do so on the basis of policy considerations
such as
unreasonable delay on the part of the landowner, or on the basis of
what might be viewed as acquiescence. Prejudice and
principles of
neighbour law are taken into account. However, an encroacher does not
have an independent cause of action. He or
she cannot offensively
compel another to part with his rights of ownership.”
[40]
In my view, the facts in
Fed Group
are distinguishable from
those of this case because the owner of the property encroached upon
was unwilling to sell the property
encroached upon. The encroacher
sought an order that the owner of the land encroached upon be
directed to transfer ownership to
it. The owner did not seek removal
of the encroachment from the property, as in the instant case. There
were also significant disputes
of fact as well as the value of the
portion of the property encroached upon. Moreover, the appellant,
in
casu
, did not offer to remove the encroachments on the property
of the respondent. However, it appeared that it was willing to accept
that it should take ownership of the respondent’s property
encroached upon.
[41]
Reverting
to whether the judgment was erroneously sought or erroneously
granted, t
he
appellant contended that the order granted in the alternative was
erroneously granted in that it was ‘
legally
incompetent’
for
default judgment to have been made in this instance namely, seeking
removal of the encroachment but relying upon payment of
damages and
other ancillary relief, as shown above.
For
this assertion, it relied on
Marais
v Standard Credit Corporation
[17]
where Coetzee J held:
“
In
my view the word 'erroneously' covers a matter such as the
present one, where the allegation is that for want of an averment
there is no cause of action, ie nothing to sustain a judgment, and
that the order was without legal foundation and as such was
erroneously granted for the purposes of Rule 42(1)
(a)
.”
[42]
Mr Marais submitted that the appellant has a
bona
fide defence
arising
from the proceedings which sought an order for damages which was
granted on application papers and included an order for
payment of
solatium
in
terms of s 12 of the Expropriation Act, where there was no
expropriation of land. That is because a claim for compensation in
respect of an encroachment of the owner’s property was a claim
for damages and therefore illiquid. He argued that it was
inappropriate for the respondent to seek damages by way of
application papers. In paragraph [48] of the appellant’s heads
of argument it is alleged that in uncontentious matters where default
judgment is sought in respect of damages, a court in its
discretion,
may dispense with the hearing of evidence. However, the question of
compensation for encroachment is a complex issue
and should have been
dealt with by way of
viva
voce
evidence.
For this assertion, reliance was placed on
Economic
Freedom Fighters & Others v Manuel
[18]
where the Court as per Navsa JA, Wallis JA, Sadulker JA, Molemela JA
and Poyo-Dlwati AJA concurring, held:
“
[92]
An
unliquidated claim for damages must be pursued by institution of an
action. No less so, when an aggrieved victim of a defamatory
statement seeks compensation. That has always been the position and
it is reflected in the Uniform Rules of Court. Uniform
Rule
17(2) compels a person claiming unliquidated damages to use a
long-form summons and file particulars of claim, and Uniform
Rule
18(10) obliges 'a plaintiff suing for damages [to] set them out in
such manner as will enable the defendant reasonably to
assess the
quantum thereof' and plead thereto. In respect of damages claims
for personal injury the rule requires even greater
specificity.
Summary judgment proceedings, regulated by Uniform Rule 32, are
limited to claims based on a liquid document, a liquidated
amount in
money, the delivery of specified movable property, and ejectment. It
is not a remedy available in respect of claims for
unliquidated
damages.
[93]
This is not mere technicality. Claims for unliquidated damages by
their very nature involve a determination by the court of
an amount
that is just and reasonable in the light of a number of imponderable
and incommensurable factors. That exercise cannot
be undertaken in
proceedings by way of application. As Harms DP said in
Cadac
[19]
:
'(M)otion
proceedings are not geared to deal with factual disputes — they
are principally for the resolution of legal issues
— and
illiquid claims
by their very nature
involve the
resolution of factual issues.'
[43]
Economic
Freedom
Fighters
dealt
with a claim for damages for defamation in terms of the
actio
iniuriarum
which
is a delictual claim for compensation for wounded feelings and loss
of reputation. It was a claim for non-patrimonial damages,
commonly
known as general damages.
[20]
The claim was for unliquidated damages which involved a determination
by the court of what amount was just and fair considering
several
imponderable and incommensurable factors.
[21]
The SCA found that the ordinary procedure in claims for unliquidated
damages should be by way of action.
[22]
Therefore, an unliquidated claim for damages is one where the
quantum
is
undeterminable. In my view, the instant case is distinguishable from
this case.
[44]
Mr Marais submitted that the respondent attempted to deal with this
matter by putting up an evaluation by
an expert to indirectly show
the value of the land which has its own problems, more particularly
if one has regard to the use of
land but of more significance was
that the respondent in its application failed to make a proper case
to prove loss which required
compensation to be paid. In support of
this argument, the appellant relied on
Rand
Waterraad v Bothma en ‘n Andere
.
[23]
It further mentioned that some of the difficulties in computing
damages where there was an encroachment are detailed in
Fed
Group
[24]
,
where
the court remarked:
“
[36]
It is clear from what is set out above that adjudication in relation
to encroachment is fraught with
complexities. For example, is
compensation to be calculated in relation only to the value of use
and occupation of the land, or
should the negative impact of the
deprivation of the full use of the land be taken into account? If the
determination occurs in
relation only to use and occupation it might
obviate the need to consider transfer of ownership. Does the right to
use and occupy
endure only for the lifetime of the encroacher? In
determining whether an encroachment should remain in place, town
planning and
zoning considerations might come into play. Ought
compensation to be calculated in relation to the full market value of
the land?
If the answer is in the affirmative, does it mean that
registration and transfer has to follow? If it does, does it amount
to deprivation
of property within the meaning of s 25(1) of the
Constitution: Of course, these difficulties arise only in the event
of a landowner
being unwilling to part with his or her property.
Carefully crafted legislation, preferably upon the advice of the
South African
Law Reform Commission, may address at least some of
these complexities.”
[45]
Ms Watt, in response, submitted that the main application was not
advanced as an expropriation of property
in terms of the
Expropriation Act. The respondent utilised the provisions of the
Expropriation Act to calculate the
solatium
. She submitted
further that the remedy and relief granted by Smith J is not a
damages claim found in delict. Instead, he exercised
a judicial
discretion aimed at preventing injustice.
[46]
In casu
, it has not been disputed that the respondent was
willing and agreeable to giving up ownership of the portion of its
property and
transferring same to the appellant after having been
compensated. That was confirmed by the Municipal Manager who stated
that ‘
negotiations had been ongoing between the municipality
and Coega Packing since as far back as 2012
.’ Mr Britz,
acted on the instructions of the municipal council in obtaining
evaluations for Erf 2232 since May 2023. In paragraph
[20] of the
founding affidavit, the Municipal Manager said: “
Unfortunately,
and for reasons that have not been given to me, the transfer of the
erf did not follow nor was payment made to Coega
Packing
.”
She confirmed that further negotiations between Mr Britz and the
representatives of the respondent invoiced the appellant
for an
amount of R207 000-00 with Vat in the amount of R235 980-00
(“UT5”) regarding Erf 3902. On 31 October
2014, Mr
Gericke forwarded an email to Mr Zwelethemba Nkosinkulu of Nkonkobe
regarding the illegal graveyard on Riverside Land
and stated:
“
Our
meeting in the office of the Town Manager, Mr Maneli and my
subsequent email to your good office refers. Please provide me with
info re progress on the payment by the Nkonkobe Municipality for the
Riverside Land.”
[47]
In response, Mr Nkosinkulu requested Mr Gericke to provide him ‘
with
relevant documentation for the Finance Department to process your
payment as agreed
’ in an email dated 18 November 2014 at
11:44. The appellant lacked response and failed to co-operate with
the respondent
who expressed its disappointment and frustration.
[48]
The question that also requires determination is whether there
existed a
bona fide
defence arising from the form of
proceedings which sought an order for damages which was granted on
application papers and reference
made to s 12 of the Expropriation
Act, where there has been no expropriation?
[49]
In my view, there is no expropriation of land in this case. It can
also not be referred to as a forced sale
because the appellant did
not approach court in the absence of an application by the respondent
for the removal of the encroachment
seeking an order compelling the
respondent to transfer the encroached land against a tender of
compensation. In the absence of
expropriation of land, s 25 of the
Constitution did not arise. That is because in terms of s 25(1) of
the Constitution the deprivation
must be in terms of the law of
general application and the law may not allow an arbitrary
deprivation of property. The law of general
application regulating
encroachments is the common law.
[25]
The common law allows in certain instances that a court may deviate
from the default remedy of removing the encroachment and award
compensation instead. In terms of s 25(2) of the Constitution,
property may be expropriated only in terms of the law of general
application for (a) 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 either been agreed to by those
affected or decided or approved by court. If there is a further
order
of transfer of the property encroached upon in favour of the
encroacher, against the will of the property owner, that would
amount
to deprivation inconsistent with s 25 of the constitution. In
Meyer
v Keiser
[26]
Kumleben J held at page 507:
“
When
an award of damages is acknowledged as the permissible and
appropriate form of relief in the case of an encroachment, an order
for the transfer of that portion of the property encroached upon is
incidental to, and consequent upon, such an award. The virtue
of such
an ancillary order is obvious but it need not necessarily be made…,
and in certain circumstances to do so may be
impracticable or not
permissible in law.
The
important point is that whatever form the order takes in such a case,
it is the award of damages which is the true basis for
the relief
granted.”
Emphasis added.
[50]
In
Phillips
v South African National Parks Board
[27]
the
applicant sought an interdict to compel the respondent to remove the
fence and relocate it to the cadastral boundary or onto
the
respondent’s property. The respondent raised three defences,
and a counter application claiming a declaratory order in
terms of
which the applicant would be entitled to damages instead of removal
of the encroachment and that the respondent be entitled
to transfer
of ownership of the SANParks portion. The Court as per Eksteen J, had
to determine whether a fence that resulted in
the encroachment should
be removed or remain in place. The learned Judge set the law
regulating encroaching structures in SA, specifically
regarding the
discretion that courts must leave encroaching structures intact in
exchange for compensation. The Court held that
courts have the
discretion to award compensation instead of removal of the
encroachment. In paragraph [21] the learned Judge stated
that it has
consistently been accepted that where an applicant seeks a demolition
order in respect of an encroachment constructed
on its property, the
court does have a discretion. In this case it can be deduced that a
court will follow an essentially policy
driven approach when
exercising its discretion in encroachment disputes, balancing the
interests of both parties to determine whether
removal or
compensation would be the most appropriate remedy. In doing so, it
will take cognisance of the right of removal but
keep in mind that
this right is by no means conclusive anymore. Importantly, courts may
refuse to grant an order for removal if
policy reasons dictate that
the most appropriate remedy is compensation instead of removal of the
encroachment.
[51]
It is undisputed that it is not in the interests of the public for
human remains buried on the encroached
portion (the graveyard) of the
respondent’s property to be exhumed and buried elsewhere. I
agree with the respondent’s
submission that the cost would be
out of bounds and difficult to overcome. Mr Britz had also previously
indicated that there was
no municipal land in proximity of Fort
Beaufort suitable to be utilised as a graveyard. It was recognised
that the appellant needed
to acquire land from the respondent for a
cemetery in Newtown but in the application for rescission the
appellant acted as if it
had no obligation to provide land for the
cemetery in Fort Beaufort. Notably, this was uncontested by the
appellant. It is inescapable
that the applicant failed to address the
issue not only when the parties were engaged in negotiations but also
after the process
had been served on it.
[52]
It was further not seriously disputed that it would be impractical
and a waste of public funds to remove sewerage
works from the portion
of the property and establish same elsewhere as there is no suitable
site to do so. The respondent stated
that the dumped material could
be removed from the respondent’s property. However, it is not
known where it would be legally
dumped. This was also undisputed. The
amount and compensation granted by the Court
a
quo
was
equal to the market value of the portion of the property and a
solatium
calculated in terms of s 12 of the Expropriation Act after the land
surveyor had determined the fair market value of the portion
that had
been encroached on. This means that the amount was determinable.
[53]
According to the appellant, the disclaimer shows that the
evaluation amount of the property was not accurate for a conclusion
that
an amount of R4 850 000-00 of compensation for the
respondent’s encroached property was not guess work.
The
appellant referred to a valuation certificate dated 21 May 2013 for a
significantly smaller area of the cemetery encroachment
of Erf 2232.
A greater portion has now been appropriated by the appellant. This
was uncontroverted by the appellant. It claimed
that the valuation
amount granted by the court
a quo
‘
is also exorbitant and out of
context
.’ In paragraph 66 of
the appellant’s founding affidavit the following can be
gleaned:
“
66.
In due course, a further updated valuation will be obtained by the
municipality to support the lesser amount as previously discussed
in
correspondence.”
[54]
However, the appellant has not provided an updated valuation which
points to one direction that it has not
seriously disputed the
attached evaluation by the respondent especially that there was no
confirmatory affidavit attached to the
respondent’s founding
affidavit by the valuer in the motion proceedings. If the appellant
was seriously disputing the valuation,
it was incumbent upon it to
provide another valuation to dispute the one that was placed before
the court. Otherwise, the
quantum
of the amount for
compensation was determined by way of a valuation of the market value
of the portion of the property to be transferred
plus a
solatium
determined by use of a formula contained in the Expropriation Act.
The amount of compensation payable to the respondent was established
in the respondent’s founding affidavit and the Court, in its
discretion was satisfied with the evidence regarding compensation
and
granted the determinable amount which rendered the damages, liquid.
Therefore, the submission that a valuation of the immovable
property
is not an exact science and is an enquiry relating to a subject
abound in uncertainties where there is more than guesswork,
in the
circumstances of the instant case, the complexities in assessing
damages did not arise.
[55]
In my view, the nature of the relief sought by the respondent in the
motion proceedings was, in the main,
to exercise its right to compel
the appellant to remove the encroachments from its property. Smith J,
in his discretion, granted
the relief in the alternative which, in my
view, was policy driven after consideration of the interests of both
parties. It is
clear from the facts of this case that removal of the
encroachment from the portion of the respondent’s property
would have
proved to be an impossible exercise and a waste of public
funds, as alluded. I am satisfied that the respondent’s claim
was
not a claim for damages in delict but payment of compensation
which is a remedy to be granted in the discretion of the court in
circumstances where to order the removal of encroachment would result
in hardship and injustice and instead it brought about an
equitable,
just, and reasonable outcome.
[56]
Regarding the argument that the judgment was erroneously sought and
granted, that cannot be sustained. I
say so because this allegation
is not supported by the facts of this case. In exercising his
discretion in favour of leaving the
encroachment in place and that
the land encroached upon be transferred to the appellant, did not
sanction involuntary transfer
of the respondent’s property. The
circumstances in which the relief was sought, does not exhibit any
procedural irregularity
on the part of Smith J. It has not been shown
what fact was he unaware of which and if he was aware of, it would
have precluded
him from granting the order sought in his discretion,
as he did.
[57]
In the circumstances, the appellant’s explanation for its
default is unacceptable and there is no room
for rescission in terms
of Rule 42(1) (a). The appellant also failed to present good cause or
a reasonable and acceptable explanation
for his default under common
law. There are also no prospects of success on the merits. There
exists no
bona fide
defence arising from the form of
proceedings which sought an order granted by Smith J. The appellant’s
explanation for the
default is weak in that not the entire period is
explained. The appellant’s application for rescission of the
judgment of
Smith J was correctly dismissed by the court
a
quo
.
Costs
[58]
The only outstanding issue is costs. Mr Marais submitted that the
appeal should succeed with costs and requested
that the costs order
should include costs of two counsel. In response, Ms Watt, submitted
that the appeal should be dismissed with
costs. She referred to
Blue
Crane Route Municipality v South African National Parks Board
[28]
where
Bloem J held:
“
23.
Had it not been for the defendant’s failure to enter an
appearance to defend, this application would not have been necessary.
It cannot be said that the plaintiff’s opposition to the
application was unreasonable.”
[59]
Ms Watt submitted further that the respondent should not be mulched
with costs. Instead, each party should,
in the discretion of the
court, be ordered to pay its own costs.
[60]
It is a general rule and fundamental principle that a successful
party should be awarded costs. This rule
should not be departed from
except on good grounds.
[29]
The award of costs is wholly within the discretion of the court, but
this discretion is a judicial discretion which must be exercised
on
the grounds upon which a reasonable person would have concluded.
[30]
[61]
It is indeed so that if the appellant in the instant case had served
and filed a notice to oppose and opposed
the main application, the
rescission application would have been unnecessary. In this instance,
there is no reason why costs should
not follow the result.
[62]
Regarding employment of two counsel, I am of the view that this
matter was not complicated to justify employment
of two counsel. I
also consider that before the court
a quo
, no two counsel were
employed and the circumstances of the case remained the same.
In
the circumstances, I issue the following order:
The
appeal is dismissed with costs.
B
PAKATI
Judge
of the High Court
I
agree
R
BROOKS
Judge
of the High Court
and
I
BANDS
Judge
of the High Court
For
the appellant:
Mr
PT Marais, instructed by Wheeldon Rushmere & Cole Attorneys,
Makhanda.
For
the respondent:
Ms
KL Watt, instructed by Cloete & Company, Makhanda.
Date
of hearing:
18
July 2023
Date
of delivery of the judgment:
16
January 2024
[1]
The understanding was
recorded as follows: “…
We
will negotiate once we have received the valuation and formal offer
of purchase.”
[2]
See Smith v Basson
1979 (1) SA 559
(W) where the Court held that since the over-hanging
branches which intrude on the airspace above the affected
neighbour’s
land constitute an encroachment, he can insist on
having the encroachment removed.
[3]
Vhembe District
Municipality v Stewarts and Lloyds Trading (Pty) Limited and Another
[2014] 3 All SA 675
(SCA) para [9].
[4]
Section
115(3)
of the
Local
Government: Municipal Systems Act 32 of 2000
,
provides: “
115
Service of documents and process
(3)
Any legal process is effectively and sufficiently served on a
municipality when it is delivered to the municipal manager or
a
person in attendance at the municipal manager's office.
[5]
Freedom
Stationery (Pty) Ltd and Others v Hassam and Others
2019 (4) SA 459
(SCA) at para 25
.
[6]
Nyingwa v Moolman NO
1993 (2) SA 508
(Tk) at
510F-G.
[7]
National
Pride Trading 452 Pty Ltd v Media 24 Ltd
2010 (6) SA 587
(ECP) at
para 27.
[8]
Lodhi 2 Properties
Investments CC & another v Bondev Developments (Pty) Ltd
2007 (6) SA 87
(SCA)
at paras 25-27.
[9]
Grant v Plumbers
(Pty) Ltd
1949
(2) SA 470
(O) at 476-477.
[10]
Carolus and Another v
Saambou Bank Ltd and Smith v Saambou Bank Ltd
2002 (6) SA 346
(SE)
at 349B-E
[11]
In
Colyn
v Tiger Food Industries Ltd T/A Meadow Feed Mills (Cape)
2003 (6) SA
1
(SCA) para 11.
[12]
Colyn
v Tiger Food Industries Ltd T/A Meadow Feed Mills (Cape)
2003 (6) SA
1
(SCA) at 9C.
[13]
Colyn
at 9D-F.
[14]
Colyn
at 9B-D.
[15]
Fed
Group Participation Bond Managers (Pty) Ltd v Trustee Capital
Property Trust
2015
(5) SA 290
(
SCA)
at para 24.
[16]
Trustees,
Brian Lackey Trust v Annandale
2004 (3) SA 281
(C) paras 32 and 34.
[17]
Marais
v Standard Credit Corporation
2002
(4) SA 892
(WLD) at 897A-B.
[18]
Economic
Freedom Fighters & Others v Manuel
2021 (3) SA 425
(SCA) at
paras 92 and 93.
[19]
Cadac
[Pty)
Ltd V Weber-Stephen Products Co and Others
2011 (3) SA 570
(SCA)
([2011] 1 All SA 343; [2010] ZASCA 105..
[20]
Economic
Freedom Fighters supra at para 91.
[21]
Economic
Freedom Fighters supra at paras 92 and 93.
[22]
Economic
Freedom Fighters at para 127.
[23]
Rand
Waterraad v Bothma en ‘n Andere 1997 (3) SA 120 (O).
[24]
Fed
Group supra a
t
para 36.
[25]
Du
Plessis v De Klerk
[1996] ZACC 10
;
1996 (3) SA 850
(CC) at para 44; See also S v
Thebus
[2003] ZACC 12
;
2003 (6) SA 505
(CC) paras 64-65 which provide authority for
the fact that the common law is law of general application.
[26]
Meyer v Keiser
1980 (3)
SA 504
(D) at 507.
[27]
Phillips
v South African National Parks Board
[27]
(4035/07)
[2010] ZAECGHC 27 (22 April 2010).
[28]
Blue
Crane Route Municipality v South African National Parks Board
(953/2021)
[2022] ZAECMKHC 24 (31 May 2022) at para 23.
[29]
South
African Association of Personal Injury Lawyers v Heath
[2000] ZACC 22
;
2001 (1) SA
883
(CC) at 912.
[30]
Gelb
v Haskins 1960 (3) SA687 (a) AT 694A-B.