City of Cape Town v Helderberg Park Development (Pty) Ltd (291/07) [2008] ZASCA 79; 2008 (6) SA 12 (SCA) ; [2008] 4 All SA 297 (SCA) (2 June 2008)

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City of Cape Town v Helderberg Park Development (Pty) Ltd (291/07) [2008] ZASCA 79; 2008 (6) SA 12 (SCA) ; [2008] 4 All SA 297 (SCA) (2 June 2008)

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REPUBLIC OF SOUTH AFRICA
THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Case
number:
291/07
Reportable
In the matter between:
CITY
OF CAPE TOWN
...
APPELLANT
and
HELDERBERG
PARK DEVELOPMENT (PTY) LTD
...
RESPONDENT
CORAM
:
MPATI AP, FARLAM, HEHER JJA, SNYDERS et KGOMO AJJA
HEARD
:
14 MAY 2008
DELIVERED
:
2 JUNE 2008
SUMMARY:
Administrative law
– section 28 of Land Use Planning Ordinance 15 of 1985 (Cape) –
whether gives rise to independent cause of
action for compensation –
whether compensation claimable flowing from
ultra
vires
decision
not set aside – order in para 13.
Neutral
citation: This judgment may be referred to as
City
of Cape Town v Helderberg Park Development (Pty) Ltd
(291/07)
[2008]
ZASCA 79
(2 June 2008).
__________________________________________________
JUDGMENT
__________________________________________________
FARLAM JA
[1] I have had the
advantage of reading the judgment of my colleague Heher JA, giving
his reasons for holding that the appeal should
be dismissed. In view
of the fact that I think that the appeal should be allowed it is
necessary for me to state my reasons for being
of that opinion.
[2] I do not think that
my colleague is correct in saying (in para 41 of his judgment) that
on a proper construction of s 28 of the
Land Use Planning Ordinance
15 of 1985 (commonly referred to by its acronym ‘LUPO’) the 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. It is instructive to have
regard to the wording of the section which reads as follows:
‘
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.’
[3] In my view it is not
only the logical inference to be drawn, to use my colleague’s
language, ‘as 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.
Consider these facts: A developer applies for approval
of a
subdivision. In his subdivisional plan, which is approved, he makes
provision for over-broad streets and over-generous public
places the
provision of which is not ‘based on the normal need therefor
arising 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] I also disagree with
the final sentence of para 38 of my colleague’s judgment. In this
respect I agree with the submission of
counsel for the appellant that
the imposition of condition ‘u’ in the purported exercise of the
powers vested in the local authority
by s 42 of LUPO did not
constitute expropriation because the owner was not obliged to submit
to the vesting of his land subject to
the condition. This is because
the owner could have avoided the vesting of these portions of its
land by not proceeding with the
proposed subdivision: cf
Administrator
Cape Province v Ruyteplaats Estates (Pty) Ltd
1952
(1) SA 541
(A) at 550H-551F (on which the appellant’s counsel
relied), where Greenberg JA said:
‘
Before examining the Ordinance [the
Townships Ordinance 33 of 1934 – the statutory predecessor to LUPO]
in order to ascertain whether,
under the powers conferred by it on
the Administrator, he is entitled to expropriate without the payment
of compensation, the contention
of Mr
Diemont,
on appellant’s behalf, that the
condition does not amount to such expropriation, must be considered.
His first point was that the
condition does not compulsorily
expropriate the respondent’s property inasmuch as he is not
compelled to establish a township.
Mr
Duncan’s
reply to this was that expropriation
without compensation, which I shall describe as confiscation, remains
confiscation even if it
is applied only when the owner chooses to
deal with his property in a certain manner. I am not satisfied that
this wholly meets the
point. In the absence of any authority that the
principle of interpretation applies to cases where it is within the
owner’s choice
whether his property is confiscated or not, and we
were not referred to any, it may be open to question whether the
principle applies
to such cases. But without deciding whether it does
or not, it appears to me that it can safely be said that part at any
rate, of
the reasons why the Court will not construe legislation as
empowering confiscation is its injustice and harshness and these are
undoubtedly
greater when the confiscation is inevitable than when it
only takes place where the owner chooses to deal with his property in
a
particular way. Consequently, assuming that the principle applies
to such cases, I think that the Court will be less reluctant to
construe legislation as empowering confiscation in this limited way
than when the confiscation takes place whether the owner deals
with
his property or not. Another circumstance which adds to the point
raised on behalf of the appellant is that, even when such
a condition
has already been imposed by the Administrator the appellant can avoid
the confiscation by abstaining from availing himself
of the
permission to establish the township. There is nothing in the
Ordinance which prevents him, notwithstanding the permission,
from
dealing with the ground in the same manner as he was entitled to do
before the permission was granted. Indeed the grant of the
permission
can be treated by him as an offer by the Administrator to grant
permission, on the condition stipulated, of which he,
the owner, can
avail himself or not, according to his own choice.’
[5] This passage was
referred to in
Belinco
(Pty) Ltd v Bellville Municipality
1970
(4) SA 589
(A) at 597C-G and the point left open was answered as
follows:
‘
The answer seems to me to depend in
the main on the degree of freedom of choice. The rule is based on
democratic dudgeon towards confiscation
of private property, and the
assumption that the elected Legislature shares that distaste. In the
present case the appellant company
owns land on which business
premises already exist. It wishes to add to such premises, and the
plans comply with the municipal building
regulations. In these
circumstances to withhold approval of the plans, unless the company
surrenders nearly a quarter of its land
without compensation, seems
to me to be in effect holding it to ransom in its lawful ordering of
its affairs; yet that is the sort
of situation which clause 8 (A) (i)
covers and would sanction. In principle the distinction between
ransom and uncompensated expropriation
seems to me so delicate as to
lack any discernible robustness.’
[6] I do not think that
it would be correct to say that the appellant’s predecessor can be
said to have been ‘holding [the respondent]
to ransom in its lawful
ordering of its affairs’.
[7] Furthermore the owner
could have appealed to the Premier under s 44 of LUPO against the
imposition of the condition and on the
basis of the concession made
by the appellant for the purposes of the adjudication of this part of
the case its appeal should have
succeeded. If it had not it could
have successfully taken the decision to impose the condition on
review. But it did not do any of
these things. It actually applied
for the extension of the allegedly invalid approval of the
subdivision (invalid because it was
based upon an invalidly imposed
condition) when it was due to expire. It thereafter proceeded with
the subdivision for which it obtained
approval and now seeks to be
compensated for doing so. Although it calls its claim a claim for
‘compensation’, it is in truth,
as counsel for the appellant
contended, a claim for constitutional damages.
[8] This court has held
on at least four occasions, (to all of which counsel for the
appellant referred), in closely analogous situations,
that a party
who has at his or her disposal the remedy of review and does not make
use of it will not be allowed to claim damages
because, as it was put
in the first of the cases to which we were referred,
Knop
v Johannesburg City Council
1995
(2) SA 1(A)
at 33B, such a party ‘does not need action for damages
to protect his [or her] interests; he [or she] has readily at hand
the appeal
procedure provided within the legislative framework’ to
which may be added, in cases such as this, a review. See also
Olitzki
Property Holdings v State Tender Board
2001
(3) SA 1247
(SCA),
Premier,
Western Cape v Faircape Property Developers (Pty) Ltd
2003
(6) SA 13
(SCA) and
Steenkamp
NO v Provincial Tender Board, Eastern Cape
2006
(3) SA 151
(SCA) (confirmed on appeal by the Constitutional Court:
see
Steenkamp
NO v Provincial Tender Board, Eastern Cape
2007
(3) SA 121
(CC)).
[9] Counsel for the
appellant also referred us to what Van den Heever JA said in the
Ruyteplaats
case,
supra,
at
560H-561A, in particular his
dictum
(at
561A):
‘
that if the conditions are struck
out the consent itself is completely vitiated; for one consents to
some definite thing, not in the
abstract.’
[10] In my view, based on
what Van der Heever JA said in the passage to which I have referred,
what the respondent in this case wants
to do is to take the benefits
of the unlawful decision whilst being freed from the obligations
flowing from it. This is something
that public or legal policy
considerations cannot contemplate. 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.
[11] In the circumstances
I am satisfied that the appellant’s contention that the
respondent’s remedies in this case were limited
to internal appeal
in terms of s 44 of LUPO and judicial review and that it is not
entitled, where it failed to exercise those remedies,
to claim a
compensatory award must be upheld.
[12] This conclusion
renders it unnecessary to consider the appellant’s further
argument, based on the decision of this Court in
Oudekraal
Estates (Pty) Ltd v City of Cape Town
2004
(6) SA 222
(SCA), that condition ‘u’, even if
ultra
vires
the
local authority, is effective and binding until and unless set aside
and that what the respondent is seeking to do is to mount
an
impermissible collateral challenge upon it. Furthermore the amendment
sought by the respondent to which Heher JA refers in para
54 of his
judgment takes the matter no further and is refused.
[13] In my opinion the
appeal should be allowed. Had the court
a
quo
upheld
the first special plea, as it ought to have done, it would have been
unnecessary for it to deal with the second special plea
of
prescription. (The second special plea is referred to at footnote 2
of the judgment of Heher JA.)
[14] In the result, I
make the following order:
1. The appeal is upheld
with costs.
2. The order of the court
a quo
is
set aside and replaced with the following:
‘
The first special plea
is upheld and the action is dismissed with costs.’
……………
..
IG
FARLAM
JUDGE
OF APPEAL
CONCURRING
MPATI
AP
SNYDERS
AJA
KGOMO
AJA
HEHER JA:
[15] The respondent sued
the appellant in the High Court, Cape Town for payment of
compensation in the amount of R3 170 635,20 arising
out of the
vesting in the appellant of 0,9414 hectares of land pursuant to the
provisions of s 28 of the Land Use Planning Ordinance
15 of 1985
(Cape).
1
[16] Section 28 provides:
‘
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.’
(The existence of such a
policy as is mentioned at the end of the section does not arise in
this case.)
It was the appellant’s
case that the provision of the land in question was not based on the
normal need for it arising from the
granting of a subdivision
application.
[17] The appellant raised
a special plea to the particulars of claim
2
in which it alleged that
the respondent enjoyed no claim in law to payment of financial
compensation as claimed or at all, on grounds
set out at length in
that plea (to which I shall return). By agreement the parties
disposed of the special plea as a separated issue
under rule 33(4).
The respondent called as a witness Mr Hilton Campbell, a professional
engineer and a representative of the company,
who had been intimately
involved in drafting and submitting an application to rezone the
respondent’s property. That application
led eventually to the
subdivision and vesting of the land which gave rise to the claim. Mr
Campbell also testified about negotiations
which he conducted with
the appellant’s officials from time to time. The appellant called
no witnesses.
[18] The learned judge
dismissed the special plea with costs. He refused an application for
leave to appeal. This appeal is brought
in consequence of leave
granted by this Court.
[19] A proper
understanding of the dispute requires extensive reference to the
pleadings. Its determination will, in my view, also
turn on the place
of s 28 in the scheme of the Ordinance.
[20] The particulars of
claim in the action contained the following allegations which have
relevance to this appeal:
(In these pleadings the
‘plaintiff’ is the present respondent and the ‘defendant’ is
the appellant.)
1. Prior to 1996 the
plaintiff’s predecessor owned the remainder of erf 18835, Strand,
approximately 32 hectares in extent.
2. The land was zoned
‘undetermined’ as contemplated in Chapter 2 of the Ordinance.
3. During 1996 the owner
applied to the local authority then possessing jurisdiction to rezone
the land so that it could be subdivided
for the purposes of
development.
4. On 3 April 1997 the
plaintiff became the owner of the land.
5. On or about 24 April
1997 the local authority approved the rezoning in terms of s 16(1) of
the Ordinance.
6. In granting the
application the local authority imposed certain conditions
purportedly in terms of s 42(1) and (2) of the Ordinance
including
the following:
‘
(u) that a 32 m wide
road reserve of Broadway extension located on the whole of the
[western] boundary of the remainder of erf 18835,
must be given off
free of charge before any sub-divisional plan will be approved’.
7. At the time of the
granting of the rezoning application and the imposition of the
condition,
(a) a 16 metre wide
street along the western boundary would have been adequate, according
to accepted town-planning and sound traffic
engineering criteria, to
give access to any development that might occur pursuant to the
subdivision of the land itself; and
(b) the purpose of the
condition was not only to give road access to any development that
might occur pursuant to the subdivision
itself, but also to ensure
that Broadway would be extended as an arterial and/or metropolitan
road which would in the fulness of
time take over and complement the
regional function of such other roads in the area, catering for
regional traffic, serving as a
major collector road and providing
access to neighbouring developments.
8. About March 2001 the
plaintiff applied to the defendant in terms of s 24(1) of the
Ordinance for the subdivision of the land. The
application was
accompanied by and particularised in a plan which depicted the
proposed subdivision.
9. The application and
the plan provided for –
(a) in compliance with
condition (u), the creation of a 32 metre wide public street of about
2,1986 hectares in extent; and
(b) the creation of one
land unit of about 0,4150 hectares in extent.
10. The defendant granted
the subdivision application and advised the plaintiff thereof on 11
July 2001.
11. At the time that the
defendant granted the application:
(a) a 16 metre wide
street along the western boundary of the land would have been
adequate, according to accepted town planning and
sound traffic
engineering criteria, to give road access solely to any development
that might occur pursuant to the subdivision of
the land itself; and
(b) the contemplated 32
metre wide street along the western boundary of the land, being twice
as wide as that which would have been
adequate, was necessary to
serve the additional purpose of ensuring that Broadway would be
extended as an arterial and/or metropolitan
road.
12. The plaintiff
thereafter─
(a) submitted a general
plan or diagram of the subdivision to the Surveyor-General in terms
of the Ordinance, which was subsequently
approved;
(b) complied with the
requirements of s 27(1) of the Ordinance; and
(c) sold portion A and on
11 January 2002 obtained registration into the name of the purchaser.
13. In the premises:
(a) the subdivision was
deemed to be confirmed on 11 January 2002, in terms of s 27(3); and
(b) ownership of Broadway
extension
ipso
jure
vested
in the defendant as from 11 January 2002, in terms of s 28.
14. Section 28 of the
Ordinance provides, by necessary implication, that if the provision
of public streets over land, indicated as
such at the granting of an
application for subdivision of land, is not based on the normal need
therefor arising from the subdivision,
the owner shall, to the extent
that it is not so based, become entitled to just and equitable
compensation from the local authority
in whose area of jurisdiction
the land is situated, when, upon the confirmation of the subdivision,
ownership of those streets vest
in that local authority.
[21] The particulars of
claim relies upon various alternative causes of action including an
actual or constructive expropriation of
the excess portion of the
road reserve and the payment of just and equitable compensation based
on s 25 of the Constitution. The
special plea is adapted accordingly.
Because of the conclusion I have reached, it becomes unnecessary to
examine all save two of
the alternatives or the responses to them.
[22] The plaintiff
pleaded, in paragraph 27 of its particulars of claim that ‘only in
the event that it shall be necessary for this
Honourable Court to
determine the validity of [condition (u)]’, that condition was
ultra
vires
the
provisions of sections 42(1) and 42(2) of the Ordinance and therefore
void for the same reasons as are referred to in paragraph
[6] at
point 7.
[23] As a final
alternative the plaintiff introduced by amendment a cause of action
which had earlier been pleaded in its replication
in the following
terms:
‘
On or about 4 December 2000, and at
Somerset West, alternatively at Strand, the Plaintiff and the
Municipality concluded a written
agreement (“the agreement”), a
copy whereof is annexed hereto marked “B”.
7.2 Clause 7.1 of the agreement
provides as follows:
“
7.1 The Parties record that in
terms of letter 16/1/5/2/1/197 dated 24 April 1997 the rezoning of
Erf 18835 was approved on certain
conditions which include the
following:
“
(u) that a 32 m wide road
reserve of Broadway extension located on the whole of the eastern
boundary of the remainder of erf 18835,
must [be] given free of
charge before any sub-divisional plan will be approved.”
On signing of this agreement HPD
agrees to allow the transfer process to take effect without prejudice
to their rights (if any) to
compensation for the above road reserve.”
7.3 The following were express terms
of the agreement:
7.3.1 The plaintiff would allow the
transfer process of the land constituting the road reserve referred
to in condition (u) to take
effect;
7.3.2 Such agreement, and the
consequent transfer of such land, were without prejudice to the
Plaintiff’s rights (if any)to compensation
for such land.’
On this factual basis the
plaintiff relied upon a proper construction of the agreement or a
tacit term flowing from it that, if it
had any rights to compensation
for the land, it would not be precluded from enforcing those rights
by the words ‘free of charge’
in condition (u). The plaintiff
also averred that clause 7.1 of the agreement constituted an
amendment of condition (u) as contemplated
in s 42(3) of the
Ordinance.
[24] The defendant’s
special plea was lengthy. Several of the plaintiff’s factual
averments were repeated and some were added.
Various legal
conclusions were drawn. The additional factual averments were these:
1. The plaintiff did not
appeal in terms of s 44 of the Ordinance against the imposition of
the condition or apply in terms of s 42
for its amendment.
2. In April 1999 the
plaintiff applied in terms of s 16 of the Ordinance for the extension
of the validity of the rezoning of the
land and on 21 April 1999 the
local authority granted approval for the extension of the rezoning
approval for a period of two years,
subject to conditions which
incorporated, inter alia, condition (u).
3. On 12 November 2002
the plaintiff instituted an application to review and set aside or
amend the rezoning decision by which condition
(u) had been imposed.
After the defendant had opposed the application and delivered its
answering affidavits the plaintiff withdrew
the application and
tendered payment of the defendant’s costs.
4. The plaintiff complied
with the requirements of condition (u) by framing and submitting for
approval a plan of subdivision in respect
of the land which gave
effect to the said condition, and after obtaining the defendant’s
approval of the subdivision in accordance
with the plan, securing the
confirmation of the subdivisional approval by transferring a unit of
land in the subdivision as contemplated
by s 27 of the Ordinance.
[25] In the special plea
the defendant raised and relied on the following legal conclusions
drawn from all or certain of the facts
asserted by the plaintiff and
added to by it in the special plea:
1. The obligation imposed
on the plaintiff in terms of condition (u) fell to be complied with
according to its tenor as a matter of
law unless and until it was set
aside or amended, either in terms of the Ordinance or on judicial
review (neither of which had occurred).
2. By (a) failing to
appeal or apply for an amendment, and/or (b) agreeing to allow the
transfer process to take effect, the plaintiff
waived any right it
may have had to apply for a review and setting aside or amendment of
the decision imposing condition (u) and
limited itself to a claim for
compensation for the land.
3. Section 28 finds no
application on the facts of the claim in the context of the incidence
of [condition (u)] imposed in terms of
s 42 of the Ordinance.
4. The plaintiff’s
litigious remedy in the context of its allegation that condition (u)
was outside the local authority’s powers
under the Ordinance, in so
far as the extent of the land to be ceded was concerned, was limited
to obtaining the judicial review
and setting aside or amendment of
the decision in terms of which the rezoning condition was imposed.
[26] Prior to the
commencement of the hearing the parties recorded a ‘Note of
Agreement in respect of consideration of the First
Special Plea’
which became Exhibit A in the trial. It reads:
‘
For the purposes of the
determination of the Defendant’s first special plea (which is
limited to the question of whether a claim
for compensation in the
circumstances is competent in law), it may be assumed by the Court
(without derogation from the content of
paragraphs 9, 12-14, 18-26 of
Defendant’s general plea, as amended, dated 22 August 2006 in the
event of the matter subsequently
proceeding to trial on the issues
stood over for later determination, if neither of the special pleas
is upheld) that a width of
less than 32m road reserve for the
extension of Broadway Extension was needed for the provision of road
access to the subdivision
proposed on the remainder of erf 18835,
Strand. In clarification of the aforegoing, for the purpose of
determining the first special
plea, which is in the nature of an
exception, it may be assumed that the imposition of the condition,
referred to in the special
plea as “condition (u)” was
ultra
vires
the powers of the
local authority in terms of the Land Use Planning Ordinance 15 of
1985 (LUPO). Accordingly, it will not be necessary
for the trial of
the special pleas for the parties to establish the actual road width
needed directly related to requirements resulting
from the rezoning
and subdivision of erf 18835, Strand, (within the meaning of s 42 of
LUPO) or to provide the ‘normal need’
for road space (within the
meaning of s 28 of LUPO), but their right to do so later in respect
of the issues not falling for determination
at this stage pursuant to
the separation of issues is reserved.’
In short, the appellant
accepted, for the purposes of the special plea, (i) that the
imposition of the whole or a part of condition
(u) was
ultra
vires
the
powers of the appellant, and (ii) that the whole or a part of the
road reserve which vested in it under s 28 was not ‘based
on the
normal need’ for such road arising from the subdivision of the
respondent’s land.
[27] When the matter was
argued before us counsel for the respondent contended that s 28 stood
independent of s 42 and fell to be
interpreted in such a manner as
conferred or recognised a right of compensation as a necessary
implication. Counsel for the appellant
by contrast (and in the face
of a concession in his heads of argument) submitted that the case
based on s 28 could not be divorced
from the conditions imposed under
s 42 and the nullity of part or the whole of a decision to impose
rezoning conditions could not
effectually be raised as a collateral
challenge to the validity of a subdivisional approval (which resulted
in the vesting of the
whole of the road reserve shown on the
subdivisional plan). It is obvious that the scheme of the legislation
is essential to the
adjudication of the respective arguments.
[28] The Ordinance
provides the legislative framework for town and regional planning in
the province. A principal land use control
is ‘zoning’ which, in
terms of s 2 (xxxiii), ‘when used as a noun, means a category of
directions setting out the purpose for
which land may be used and the
land use restrictions applicable in respect of the said category of
directions, as determined by relevant
scheme regulations’. Land set
apart by a zoning scheme for a particular zoning, irrespective of
whether it comprises one or more
land units or part of a land unit,
is referred to as a ‘zone’ (s 2 xxxi). All land in a municipality
is zoned according to a
zoning map framed in terms of s 10 of the
Ordinance.
[29] An owner may apply
to alter the zoning of his property (s 17) and the Administrator or
the council (as the case may be) may grant
or refuse the application
(s 16 (1)).
[30] Section 22 provides
that no application for subdivision which involves a change of zoning
may be considered unless and until
the land concerned has been zoned
in terms of Chapter II (secs 7 to 21). Applications for rezoning and
subdivision can be considered
simultaneously. When a subdivision is
confirmed (in terms of s 27) in whole or in part, it is to that
extent deemed to be a substitution
scheme, ie a scheme which takes
the place of an existing zoning scheme (s 14(4)(a)).
[31] In terms of s 23
lawful subdivision of land can, except in the case of the specific
exceptions there mentioned, only take place
in accordance with an
application granted under s 25 of the Ordinance.
[32] Section 25(1)
provides that either the Administrator or, if authorised thereto by
scheme regulations, a council, may grant or
refuse an application for
the subdivision of land. Once an application has been granted, the
owner shall submit a general plan or
diagram to the Surveyor-General
(s 26).
[33] Section 27 provides:
‘
(1) If a Surveyor-General has
approved a general plan or diagram as contemplated by section 26, the
owner concerned shall, within
a period of five years after the
application has been granted under section 25 or within such longer
period as the Administrator
or the council concerned, as the case may
be, may determine, furnish the registrar of deeds concerned with such
documents and information
as he may require, comply with the
requirements of the said registrar in connection with the
cancellation of existing conditions
of title, provide services in
accordance with a condition imposed under section 42(1) in respect of
the subdivision and obtain the
registration of at least one land
unit.
(2) Where an owner has failed to
comply with the provisions of subsection (1) in relation to a
subdivision or a part thereof, the
granting of the application under
section 25 shall be deemed to have lapsed in relation to the said
subdivision or part thereof at
the expiry of the period contemplated
by subsection (1), and the diagram or general plan concerned shall be
amended in accordance
with the requirements of the Surveyor-General.
(3) As soon as the provisions of
subsection (1) have in relation to a subdivision or part thereof been
complied with in such manner
that the granting of the application
concerned under section 25 cannot lapse in terms of subsection (2) of
this section, such subdivision
or part thereof shall be deemed to be
confirmed.’
[34] As appears from s
28, quoted above, after confirmation of subdivision ownership of all
public streets and places indicated as
such when an application for
subdivision is granted automatically vests in the local authority
concerned. If the provision of such
streets and places is based on
‘the normal need therefor arising from the subdivision’ such
vesting takes place without
compensation by the local
authority.
3
[35] Section 39(1) binds
every local authority to observe, comply and enforce compliance with
the provisions of the Ordinance, the
provisions incorporated in a
zoning scheme and conditions imposed in terms of the Ordinance.
[36] A contravention or
failure to comply with the provisions of a zoning scheme or
conditions imposed in terms of the Ordinance is
a criminal offence
which carries substantial penalties (s 39(2) read with s 46(1) and
(2)).
[37] Section 42 deals
with the imposition of conditions. It provides:
‘
42.
(1)
When the Administrator or a council grants authorisation, exemption
or an application or adjudicates upon an appeal under this
Ordinance,
he may do so subject to such conditions as he may think fit.
(2) Such conditions may, having regard
to─
(a)
the
community needs and public expenditure which in his or its opinion
may arise from the authorisation, exemption, application or
appeal
concerned and the public expenditure incurred in the past which in
his or its opinion facilitates the said authorisation,
exemption,
application or appeal, and
(b)
the
various rates and levies paid in the past or to be paid in the future
by the owner of the land concerned,
include conditions in relation to the
cession of land or the payment of money which is directly related to
requirements resulting
from the said authorisation, exemption,
application or appeal in respect of the provision of necessary
services or amenities to the
land concerned.’
[38] Finally, s 44
confers a right of appeal against the refusal or granting or
conditional granting of an application in terms of
the Ordinance.
[39] Counsel for the
appellant submitted that s 28 is a vesting clause and does not
contain a power of expropriation. That vesting
is its primary object
there can be no doubt. However the implications of the phrase
‘without compensation’ cannot be ignored.
In theory the automatic
vesting of land occurs in terms of s 28 at the voluntary instance of
the landowner who elects to rezone his
land, provides for roads and
public places in his application for subdivision and causes the
subdivision to be confirmed. But that
is to ignore the substance. It
is not the owner’s choice whether or not to give such land to the
local authority but the unavoidable
result of a statutory provision
which applies to all cases. It is sophistry to submit, as the
appellant’s counsel has done, that
the fact that the owner can
refrain from rezoning or subdividing his land confers freedom of
choice. That is to place stagnation
above development while the
Ordinance is intended to regulate development in an orderly fashion
not to stultify it. In addition,
if the owner has knowledge of the
statute, he will be aware that only land that falls within the
defined terms of s 28 must be yielded
without compensation. Such an
owner can hardly be said to part willingly with land which is not
vested as a result of normal need
for it arising from the
subdivision, unless compensation is to be paid, albeit that he has
caused it to be shown as a public place
or street in his
subdivisional diagram. Thus, the provisions of s 28, although
primarily concerned with the vesting of land, are
founded in a
compulsory taking and when, abused in the manner set up by the
respondent’s case, give rise to a situation so close
to
confiscation that application of the statutory principle of
interpretation is both appropriate and necessary.
[40] There is of course a
settled rule of interpretation that a legislative intention to
authorise expropriation without compensation
will not be imputed in
the absence of express words or plain implication:
Belinco
(Pty) Ltd v Bellville Municipality
1970
(4) SA 589
(A) at 597C. Expropriation is the compulsory deprivation
of ownership or rights usually by a public authority for a public
purpose.
See eg
Beckenstrater
v Sand River Irrigation Board
1964
(4) SA 510
(T) at 515A-C. But the rule extends beyond expropriation
in the strict sense to the interference with or injuring of persons’
rights.
See Steyn,
Die
Uitleg van Wette
5ed
105
et
seq
.
[41] Consistent with the
rule of interpretation, and even without need to resort to the
Constitution, s 28 is capable of meaning that
the vesting of public
places and streets beyond the normal need arising from a particular
subdivision will give rise to a claim for
compensation at the
instance of the former owner of the land.
4
Indeed that is the only
logical inference to be drawn as the correlative of the negative
postulation as to compensation in s 28: if
it were not so the
conditional clause linking the absence of compensation with normal
need would be superfluous. But of course s
28 must, in so far as it
compulsorily requires the giving up of land to a local authority, be
interpreted in the spirit of s 25(2)
of the Constitution ie subject
to the payment of just and equitable compensation.
[42] Counsel for the
appellant submitted that the respondent’s claim is properly
categorised as one for constitutional damages.
I respectfully
disagree. Section 28 describes the
quid
pro quo
for
land which automatically vests under its provisions as
‘compensation’. No wrongful act gives rise to the claim, which is
the
consequence of a lawful vesting. In addition, to equate
‘compensation’ with damages is not reconcilable with authority:
Apex
Mines Ltd v Administrator, Transvaal
1986
(4) SA 581
(T) at 601B-H and the cases there cited.
[43] In considering an
application for subdivision under s 25 of the Ordinance a local
authority will no doubt take into account the
extent of public roads
and places shown on the subdivisional map and the need for such. It
will also weigh the financial implications
to it flowing from the
vesting of such roads and places, knowing that it is only where what
is provided is based on normal need arising
from the subdivision that
such land comes to it free of compensation. In the circumstances I
find nothing anomalous in requiring
a local authority to pay for the
excess beyond normal need irrespective of whether the developer has
deliberately or accidentally
provided for more public space than he
was obliged to.
[44] Counsel for the
appellant also referred to
Knop
v Johannesburg City Council
1995
(2) SA 1
(A) in which this Court declined to recognise negligence in
the exercise of a statutory power as wrongful conduct and, therefore,
refused a claim for damages, on the ground that the appellant had not
used an available legislative remedy (appeal) to set matters
right.
In
Olitzki
Property Holdings v State Tender Board
2001
(3) SA 1247
(SCA) the same approach was taken where an interdict
would have anticipated and eliminated the appellant’s source of
loss. The
availability of review proceedings may also be a
consideration in appropriate circumstances where the existence of a
legal duty is
in question:
Steenkamp
NO v Provincial Tender Board, Eastern Cape
2006
(3) SA 151
(SCA) at 167H-168E.
[45] It seems to me,
however, that these cases stand on an entirely different footing from
the present appeal. Wrongfulness is not
relevant here. Our decision
is not policy-based. Indeed as will be seen the court is, in the
circumstances of this case, not vested
with any discretion. The
question at issue is the effect of the absence of a lawful power in a
public body to take a decision in
one statutory context and on which
that body subsequently seeks to rely in order to justify its actions
in a second (and different)
statutory context. That situation was
resolved in
Oudekraal
Estates (Pty) Ltd v City of Cape Town
2004
(6) SA 222
(SCA) without reference to the
Knop
line of
cases. I shall shortly return to a consideration of what this Court
decided in
Oudekraal
and
explain why I see it as relevant to the respondent’s cause of
action.
[46] Section 28 caters
for the passing of ownership to a local authority without the need
for formal transfer of ownership and the
possible delays and disputes
to which that process may give rise. It enables the local to control
and manage such places and streets
as soon as the applicant for
subdivision is legally entitled to exercise his approved rights. The
section lays down its own criteria
for compensation which apply to
all cases of subdivision including those consequent upon rezoning. It
serves a purpose independent
of a condition laid down under s 42
providing that land be ceded free of charge, and operates
irrespective of whether such a condition
has been imposed. It is
plain from s 22 that a change of land use involving subdivision only
acquires the legal force of rezoning
(as a substitution scheme) in
consequence of the confirmation of the subdivision, and, therefore,
not
ipso
facto
in
consequence of the imposition or acceptance of conditions imposed
under s 42. The importance of the legality of the confirmation
in the
process, irrespective of preceding defects, is therefore obvious. I
think the concession by counsel for the appellant in his
heads of
argument that s 28 has ‘a role and function quite discrete from
conditions imposed in terms of s 42’ was correctly made.
[47] Given the
differences in purpose and language between s 28 and s 42 it is
unnecessary for a claimant for compensation under the
first-mentioned
section to rely on the zoning provisions which attach to the land or
the conditions imposed on such zoning. That
the respondent referred
to them in its, perhaps unnecessarily lengthy, historical
introduction to its particulars of claim cannot
change the source of
its right of action and the averments necessary to sustain it or
result in the assumption of a greater onus.
All that the respondent
was required to do was to bring itself within the terms of s 28. That
it did by the allegations, other than
its averments relating to
condition (u), which it included in its particulars of claim.
[48] The respondent did
not, as the appellant’s counsel argued, challenge the validity of
the subdivisional confirmation. On the
contrary, its case was that
that confirmation took place in accordance with the prescriptions of
s 28. That being so, only that portion
of the road reserve shown on
the plan which was provided on the basis of normal need arising from
the subdivision conferred the benefit
(on the appellant) of vesting
free from compensation.
[49] The appellant’s
special plea (read with the pre-trial admissions) met the claim with
a confession and avoidance. Having pleaded
reliance on condition (u)
to stymie the compensation claim the appellant admitted (for the
purposes of the special plea) that that
conditions had been
ultra
vires
the
authority which imposed it but rejoined that the respondent was
prevented from raising the nullity because it had neither appealed
under s 44 or set aside condition (u) aside on review. The applicable
principle, appellant’s counsel submitted, was that an unlawful
administrative act is capable of producing legally valid consequences
for so long as it is not set aside:
Oudekraal
Estates (Pty) Ltd v City of Cape Town
,
supra
,
at 242B. But that
principle is not absolute.
[50] The success of the
special plea depended on the appellant’s ability to rely on
condition (u). Inherent in the condition was
a compulsion to make
over to the local authority free of charge land which was not
directly related to requirements resulting from
the application for
rezoning and was therefore unlawful. The settled law is that the
target of such compulsion is entitled to await
events and resist only
when the unlawful condition is invoked to coerce it into compliance:
Oudekraal
Estates (Pty) Ltd v City of Cape Town
,
supra,
at 245F-G; See also
Boddington
v British Transport Police
[1998] UKHL 13
;
[1999]
2 AC 143
(HL) at 157H-158D.
5
Neither failure to
challenge the unlawfulness by appeal or review is a bar to the
exercise of the right to defend oneself in such
a case. As was said
in
Oudekraal
at 246B:
‘
It is important to bear in mind
(and in this regard we respectfully differ from the Court
a
quo
) that in those cases in
which the validity of an administrative act may be challenged
collaterally a court has no discretion to allow
or disallow the
raising of that defence: The right to challenge the validity of an
administrative act collaterally arises because
the validity of the
administrative act constitutes the essential prerequisite for the
legal force of the action that follows and
ex
hypothesi
the subject may
not then be precluded from challenging its validity. On the other
hand, a court that is asked to set aside an invalid
administrative
act in proceedings for judicial review has a discretion whether to
grant or to withhold the remedy.’
[51] Because condition
(u) was not an element in the respondent’s cause of action, its
reliance on the nullity of the condition
was, properly analysed, a
defensive challenge to the appellant’s attempt to enforce the
condition and thereby to deny the respondent
its s 28 remedy. The
fairness of recognising such a challenge in the circumstances of this
case is manifest: no third party derives
any interest from condition
(u) and the local authority, the very author of the unlawful
condition, seeks to benefit itself by enforcing
the illegality. As
appears from the passage last quoted considerations such as delay
cannot operate as a bar to the raising of the
defence.
[52] The trial court
found that the agreement of 4 December 2000
6
embodied an amendment to
condition (u). I respectfully disagree. Although it may be, when no
other person’s interests are affected
by a proposed amendment, that
the local authority and the owner of the land can reach an agreement
to amend zoning conditions without
formality, and thereby comply with
s 42(3), the terms of the agreement in this case and the evidence of
Mr Campbell indicates otherwise.
The respondent had taken the view
that condition (u) was, at least in so far as it stipulated for a
transfer of the full road reserve
free of charge, beyond the
council’s powers. But the respondent also wished to press on with
the development of its land urgently.
It took a pragmatic decision to
transfer the whole of the road reserve to the local authority but to
record that its willingness
to do so was without prejudice to its
right to be compensated accordingly. The council, on the other hand,
did not wish the agreement
to be interpreted as a concession on its
part of the existence of any such right. Hence it insisted on the
parenthetical ‘if any’.
Thus, the respondent acquired no
acknowledgment of a right, but at the same time succeeded in making
clear in relation to its subsequent
conduct, that it acted on the
basis of its assertion that it possessed a right to compensation.
This latter aspect is of importance,
since it negates the submission
of the appellant’s counsel that, in pursuing and confirming the
subdivision on the foundation of
a plan which showed the full 42m
width as road reserve, the respondent tacitly consented to vesting
the entire area in the local
authority free of charge.
[53] A further
consideration which flows from the interpretation of the undertaking
in the letter is this. When the respondent applied
to review and set
aside the decision which resulted in the imposition of condition (u),
its application was met by the appellant,
on the ground, inter alia,
that the respondent had, by agreeing to proceed to transfer, waived
its right to apply to set aside the
decision which gave rise to the
obligation to transfer. This was manifestly a deadly riposte and the
respondent promptly abandoned
the application. Knowing, as it has at
all material times, that transfer was undertaken with the reservation
of the respondent’s
claim to compensation, it appears to me to be
cynical in the extreme for the appellant to raise the failure to set
aside the decision
on review as an answer to the claim for
compensation. In the circumstances, for this reason also, the
conclusion I have reached satisfies
the dictates of fairness between
the parties.
[54] For the aforegoing
reasons the special plea provided no sustainable answer to the
respondent’s claim. The court
a
quo
was
correct in refusing to uphold it.
[55] During the course of
his argument Mr
Newdigate
applied to amend prayer
A2 of the particulars of claim (Prayer A1 related to the claim for
compensation). It presently reads as follows:
‘
To the extent that it is
necessary to make an order to this effect in order to entitle the
Plaintiff to the relief sought in prayer
A1 above
,
an order declaring that condition “u” imposed by the Helderberg
Municipality on or about 24 April 1997 in terms of annexure
“A”
hereto, was
ultra vires
the
provisions of section 42(1) and 42(2) of the Land Use Planning
Ordinance, No 15 of 1985 (Cape), and therefore void, alternatively,
to the extent that the condition required a cession of the land “free
of charge”, it was
ultra
vires
the provisions of
section 43(1) and 42(2) of the Ordinance, and to that extent void.’
Counsel sought to add the
words ‘and to that extent is set aside’ before the full stop. Mr
Binns-Ward
opposed the amendment.
There is in principle no reason why the court’s power to amend
should not be exercised at the stage of appeal,
Bellairs
v Hodnett
1978(1)
SA 1109 (A) at 1150F, but if that is to be done the result must at
least bear some relevance to the appeal. As I have found
that the
special plea cannot succeed albeit that the assumed
ultra
vires
act
has not been set aside, the amendment serves no purpose at this
stage. It may however, have a bearing on the issues in the trial.
But
that is a matter that can properly receive the attention of the trial
court should the application be renewed. Accordingly I
think it is
advisable to make no order on the application.
[56] I would dismiss the
appeal with costs including the costs of two counsel.
__________________
J A HEHER
JUDGE OF APPEAL
1
The
matter has a long history. Neither party has been involved from the
beginning. Both are successors-in-title to original parties.
The
distinctions are however immaterial to the present dispute and when
I refer in this judgment to either party I intend also
to embrace
the appropriate predecessor if so required.
2
There
were in fact two special pleas. The second, which raised
prescription, was dismissed by the trial court and the defendant
did
not seek leave to appeal against that order. For convenience sake I
will refer to the first special plea as if it were the
only such
plea.
3
A
submission by appellant’s counsel, briefly maintained, that the
vesting itself depends on the existence of a normal need, is
in
conflict with the syntax and punctuation of the section.
4
In
so far as the section may be capable of any other meaning, the least
onerous interpretation should be preferred:
Fundstrust
(Pty) Ltd (in liquidation) v Van Deventer
1997
(1) SA 710
(A) at 735G.
5
The
court
a quo
held
that the imposition of condition (u) of itself amounted to coercion.
I do not agree. It merely provided the grounds on which
the local
authority sought to justify withholding what was the respondent’s
due in the form of compensation.
6
See
p
aragraph
[10] above.