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1986
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[1986] ZASCA 95
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Community Development Board v Mahomed and Others (318/1985) [1986] ZASCA 95; [1987] 1 All SA 228 (A) (18 September 1986)
LL
Case No 381/1985
IN THE SUPREME COURT OF SOUTH AFRICA
APPELLATE DIVISION
In the matter between:
THE COMMUNITY DEVELOPMENT BOARD
Appellant
and
RABIA ESSA VALLI MAHOMED N O
MAHOMED SAYED MAHOMED N O
SHABIR AHMED MAHOMED N O
SHIRAZ ESSA VALLI MAHOMED N O
Respondents
CORAM:
TRENGOVE, HOEXTER, BOTHA, GROSSKOPF et SMALBERGER JJA
HEARD:
15 AUGUST 1986
DELIVERED: 18 SEPTEMBER 1986
JUDGMENT
/BOTHA JA......
2.
BOTHA JA
:-
The issues in this appeal require the interpretation
of certain provisions of the Expropriation Act 63 of 1975, relating to the
liability
of an expropriating authority to pay interest to the owner of
expropriated property on the capital amount of compensation payable
for such
property. Regrettably, the provisions in question constitute yet another example
of the Legislature's frequently encountered
inability to express its intention
with clarity and precision.
The appellant Board is endowed with powers of
expropriation by sections 38 (1) (a) and 38 (IB) of the Community Development
Act 3
of 1966, in terms of which the exercise of its powers is governed by
sections 6 to 2 3 of the Expropriation Act, in such a way that
references in the
latter sections to "the Minister" are to be construed as references to the
Board.. To facilitate the discussion
of the sections of the Expropriation Act
relevant to this appeal, when
/I ...
3.
I come to deal with them later in this judgment, I shall
myself refer to "the Minister" as connoting the appellant in the present
case.
In 1979 the appellant expropriated a piece of immovable property in the town
of Vereeniging, of which the owner was Essa Valli Mahomed.
He was the plaintiff
in an action which was subsequently instituted in the Transvaal Provincial
Division against the appellant as
the defendant. To some of the details of this
action further reference will be made presently. Mr. Mahomed was originally the
respondent
in this appeal. He passed away during January of this year. At the
outset of the hearing of the appeal an application was made to
this Court for
the substitution of the four executors appointed by the Master in the estate of
the late Mahomed as the respondents
in the appeal, in their capacities as such.
The application, which was not opposed by the appellant, was granted, and in
accordance
with a tender
/made ...
4.
made on behalf of the substituted respondents, they were
ordered to pay the costs occasioned by the application. I shall refer to
the
late Mahomed as "the deceased".
The facts giving rise to the issues in this case are common cause. The
appellant expropriated the deceased's property by virtue of
a notice of
expropriation issued on 28 November 1979 in accordance with the provisions of
the Expropriation Act, to which I shall
henceforth refer as "the Act". The date
of expropriation, applying the definition in section 1 read with section 7 (2)
(b) of the
Act, was 28 November 1979. In the notice of expropriation the
appellant did not offer the deceased an amount of compensation for
the property,
but requested the deceased to submit a claim for compensation in accordance with
the provisions of section 7 (2) (c)
of the Act. The period within which the
deceased was required to submit his claim was thereafter extended by the
appellant to 26
March 1980 in terms of
/the ...
5.
the proviso to section 7 (2) (c) (see also the proviso to
section 9 (1) of the Act). On 20 March 1980 the deceased submitted a written
statement to the appellant, containing the information and particulars
prescribed by section 9 (1) of the Act. In that statement
the deceased claimed
compensation of R320 000. The appellant did not accede to the claim.
On 1 December 1980 the appellant took possession of the property, pursuant to
the provisions of section 8 (3) of the Act.
On 18 December 1980 the appellant, in terms of section 10 (4) of the Act,
offered to pay the deceased compensation in an amount of
R82 775, which was
calculated as follows:
in terms of section 12 (1) (a) (i)
of the Act R75
250
in terms of section 12 (2) of the
Act (being 10% of
R75 250) 7 525
R82 775 The deceased did not accept the appellant's offer.
/At ...
6.
At the date of expropriation (28 November 1979, as stated
above) the deceased's property was encumbered with a mortgage bond in favour
of
the S A Permanent Building Society. On 6 March 1981 the appellant wrote a letter
to the deceased in connection' with the bond.
In it, the deceased's attention
was invited to the provisions of section 19 (1) of the Act; he was required to
agree to the payment
by the appellant to the bondholder of the amount
outstanding under the bond "as at the date the compensation money is paid out";
and he was advised that, unless this requirement were complied with, the
appellant would be "prohibited" under section 19 (1) from
paying out "any
portion of the money" and that "in such circumstances the amount will in terms
of section 21 of the Act, have to
be paid to the Master of the Supreme Court for
depositing in the Guardian's Fund after the provisions of section 10 (5) (a) and
10
(5) (b) of the Act have been complied with". The deceased
/did ...
7. did not reply to the letter.
The provisions of section 10 (5) of the Act did not come into operation,
because the deceased instituted an action against the appellant
within the
period of 8 months mentioned in paragraph (a) of section 10 (5), and in fact the
appellant did not pay any amount to the
Master in respect of the deceased's
property.
On 12 August 1981 the deceased issued a summons against the appellant in the
Transvaal Provincial Division, in which he claimed payment
of an amount of R330
992. From the particulars of claim it appears that the amount was made up as
follows:
(a) Compensation for the property
in terms of section 12 (1) (a)
(i) R320 000
(b)
Financial loss in terms of
section 12 (1) (a) (ii) 992
(c)
Amount to be
added in terms of
section 12 (2) 10 000
R330 992 /In ...
8.
In its plea, the appellant maintained that the amount payable
in respect of the expropriation of the property was R82 775, in accordance
with
its offer of 18 December 1980, as set out above. It did not, however, make
payment of that amount or any part of it to the deceased,
The action was set down for hearing on 8 March 1985. At a pre-trial
conference held on 21 February 1985 the possibility of settling
the action was
raised. This resulted in a settlement being reached on 1 March 1985 as to the
capital sum to be paid by the appellant
to the deceased and the costs of the
action up to that stage, but not as to the appellant's liability (if any) to pay
interest to
the deceased up to that date, on which the parties were unable to
reach agreement. In terms of the settlement it was agreed -(a)
that the
appellant would pay the deceased an amount of R100 000 as compensation for the
expropriated property in terms of section
/12 (1) (a) (i)....
9.
12 (1) (a) (i) of the Act;
(b) that the appellant would pay the deceased a further amount of R1O 000 in
terms of section 12 (2) of the Act;
(c) that each party would pay his or its own costs of the
action.
Pursuant to this agreement the appellant on
1 March 1985 paid to the deceased a total amount of R110 000.
On 4 March 1985 the deceased and the S A Permanent Building Society (the
bondholder) notified the appellant in writing, in terms of
section 19 (1) of the
Act, that they had agreed that no portion of the agreed compensation was payable
to the Building Society. (For
the sake of clarity it may be mentioned that the
appellant had, upon enquiry, already ascertained that nothing was due to the
mortgagee,
before it made its payment of R110 000 to the deceased on 1 March
1985.)
The question of the appellant's liability
for
/interest ...
10.
interest still being in issue when the case came to trial,
the trial Judge was requested to resolve the dispute between the parties
on the
basis of an agreed statement of facts, the relevant portions of which have been
summarised above. The two issues the trial
Judge was called upon to determine
were: (a) whether the appellant was liable to pay interest to the deceased on
the sum of R100
000 from 1 December 1980 to 1 March 1985; and (b), if the
appellant was so liable, at what rate the interest was to be calculated.
In
broad terms, as to (a), the deceased contended for a positive answer and the
appellant to the contrary (apart from the brief period
from 1 to 18 December
1980 and 30 days thereafter up to 17 January 1981) , both parties basing their
contentions primarily on the
provisions of section 12 (3) of the Act; and as to
(b), the appellant contended for a fixed rate of interest applicable in respect
of State loans and advances by virtue of the relevant notice under section 1 of
Act
/42 ...
11.
42 of 1917, to which reference was made in section 12 (3) of
the Act prior to its amendment in 1982, while the deceased contended
for a
variable rate of interest determined from time to time in terms of section 26
(1) of Act 66 of 1975 in accordance with section
12 (3) of the Act after its
amendment in 1982. The trial Judge found in favour of the deceased on both
issues, and consequently made
an order in the following terms:
"1. Die verweerder word gelas om aan die
eiser rente
op die bedrag van R100 000 te betaal vanaf 1 Desember 1980 tot 1 Maart 1985
ooreenkomstig die koers van tyd tot tyd bepaal
kragtens artikel 26 (1) van Wet
52 van 1966."
(The reference to "Wet 52 van 1966" was obviously a slip: what was intended
was "Wet 66 van 1975". )
"2. Die verweerder word gelas om eiser se koste sedert 1 Maart 1985 te
betaal."
It is against that order that the appellant now appeals to this Court, leave
to do so having been granted to it
/by ...
12. by the trial Judge.
With regard to the first issue, viz whether interest is payable at all over
the relevant period, the amendment of section 12 (3) of
the Act in 1982, to
which I have referred, is of no consequence. In dealing with this issue I shall
accordingly confine myself to
a consideration of the subsection in its present
form, and for ease of reference I quote it together with the preceding two
subsections
of section 12:
"12. (1) The amount of compensation to be paid in terms of this Act to an owner
in respect of property expropriated in terms of this
Act, or in respect of the
taking, in terms of this Act, of a right to use property, shall not, subject to
the provisions of subsection
(2), exceed -
(a) in
the case of any property other than a right, the aggregate of -
(i) the amount which the property would have realized if sold on the date of
notice in the open market by a willing seller to a willing
buyer; and
(ii) an amount to make good any
/actual ...
13.
actual financial loss caused by the expropriation; and
(b) in the case of a right, an amount to make good any actual financial loss
or inconvenience caused by the expropriation or the taking
of the right.
(2) Notwithstanding anything to the contrary contained in this Act there
shall be added to the total amount payable in accordance
with subsection 1 (a)
(i) in respect of all land, including any portion of a piece of land,
expropriated in terms of the notice of
expropriation in question, an amount
equal to ten per cent of such total amount, but not exceeding ten thousand
rand.
( 3 ) Interest at the standard interest rate determined in terms of section
26 (1) of the Exchequer and Audit Act, 1975 (Act No. 66
of 1975), shall, subject
to the provisions of subsection (4), be payable from the date on which the State
takes possession of the
property in question in terms of section 8 (3) or (5) on
any outstanding portion of the amount of compensation payable in accordance
with
subsection 1 (a) (i): Provided that -
(a) in a case contemplated in section 21 (4), in respect of the period
calculated from the termination of thirty days from the date
on which -
(i) the property was so taken
/possession ...
14.
possession of, if prior to that date compensation for the
property was offered or agreed upon; or
(ii) such compensation was offered or
agreed upon, if after that date it was offered or agreed upon,
to the date on which the dispute was settled or the doubt was resolved or the
owner and the buyer or the mortgagee notified the Minister
in terms of the said
section 21 (4) as to the payment of the compensation money; and
(b) from the date on which the Minister in terms of section 11 (1) pays or
makes available an amount to the owner or any person referred
to in section 21
(4),
the amount which is so payable shall for
the purposes of the payment of interest not
be deemed to be an outstanding amount."
(Subsection (4), referred to in the opening part of subsection (3), has no
bearing on the issue and can be left out of consideration.)
It is to be observed that para (a) of section 12 (3) refers pertinently to
section 21 (4), while para (b) refers pertinently to section
11 (1) of the Act.
It
/will ...
15.
will be convenient to quote sections 11 and 21 in full:
"11. (1) If the Minister deems it expedient, he may, prior to the
determination of the amount of compensation payable in terms of
this Act for
property or for use of property and on or at any time after the date of
expropriation, but subject to the provisions
of subsection (3) , pay the amount
offered the owner concerned as such compensation, or a portion of such amount,
to the owner concerned
or the person contemplated in section 19, or deposit it
with the Master or utilize it in settlement of the tax or other moneys
contemplated
in section 20 under the same circumstances under which he should or
could have so paid, deposited or utilized such compensation had
it been
determined on that date.
(2) Any moneys received by the Master
in terms of subsection (1) shall be
paid into
the Guardian' s Fund mentioned in section 21 (2)
(b) , and bear interest at the rate referred to in the said section 21 (2)
(b) until the compensation payable, in terms of this Act
for the property in
question or the use thereof has been determined, whereupon such moneys shall for
the purposes of section 21,
but subject to the provisions of subsection (3) of
this section, be deemed to have been received by the Master in terms of
subsection
(1) of that section.
(3) The payment, deposit or utilization
of any amount under subsection (1)
shall not
preclude the determination by agreement or by
a court contemplated in section 14 (1), of a different amount as
compensation, but if the
/amount ...
16.
amount so determined as compensation is less than the amount paid, deposited
or utilized, the owner to whom or on whose behalf the
last-mentioned amount was
paid, or the Master with whom it was deposited, or the local
authority-concerned, as the case may be, shall
refund the difference to the
State together with, in the case of such owner or local authority, interest at
the rate contemplated
in section 12 (3) from the date on which the amount was so
paid or utilized, and, in the case of the Master, the interest accrued
thereon
in terms of subsection (2)."
"21. (1) If property expropriated under this Act was burdened with a
fideicommissum
or if compensation is payable in terms of this Act to a
person whose place of residence is not known, or if compensation is so payable
and there is no person to whom it can be paid, the Minister . may deposit the
amount of the compensation payable in terms of this
Act with the Master or if,
in the opinion of the Minister, the property concerned is not so burdened and
the compensation is so payable
to a Black, with the South African Development
Trust mentioned in section 4 of the Development Trust and Land Act, 1936 (Act
No.
18 of 1936), and after such deposit the Minister shall cease to be liable in
respect of that amount,
(2) Any moneys received by the Master in terms of subsection (1) shall -
(a) if the property in question was burdened
/with ..,
17.
with a
fideicommissum
,
mutatis mutandis
be subject to all the terms and conditions
contained in the will or other instrument
by which such
fideicommissum
was constituted;
and
(b) subject to the provisions of paragraph
(a), be paid into the Guardian's Fund referred to in section 86 of the
Administration of Estates Act, 1965 (Act No. 66 of 1965), for
the benefit of the
persons who are or may become entitled thereto, and bear interest at a rate
determined from time to time by the
Minister of Finance.
(3)
The . provisions of
subsections (1) and (2) shall not affect the jurisdiction of any court to make
an order in respect of any moneys
in question.
(4)
In the event of a dispute or doubt as to the person who is to
receive any compensation payable in terms of this Act, or in the event
of the
issue of an interdict in respect
of the payment of
any such compensation, or if the owner and any mortgagee or any buyer have not
notified the Minister in terms of
section 19 in regard to the payment of such
compensation, the Minister shall pay the amount of such compensation to the
Master"
In sections 11 (1) and 21 (4) there are references to section 19, of which
subsection (1) is relevant in this
/case .. .
18. case.' It reads as follows:
"19. (1) If any immovable property expropriated under this Act was
immediately prior to the date of expropriation encumbered by a
registered
mortgage bond, or to the knowledge of the Minister the subject of an agreement
contemplated in section 9 (1) (d) (ii),
the Minister shall, subject to the
provisions of sections 20 and 21, not pay out any portion of the compensation
money in question,
except to such person and on such terms as may have been
agreed upon between the owner of such property and the mortgagee or buyer
concerned, as the case may be, and as the Minister may have been notified of in
writing by them."
On the facts of the present case, I have come to the conclusion that it is
possible (and expedient) to resolve the issue under consideration
on relatively
narrow grounds, which relate to the interpretation of the words "compensation
was offered" occurring in para (a) (ii)
of section 12 (3) . Before I proceed to
state my views on that score, however, it is necessary, in order to avoid
possible misunderstanding
of the effect of this judgment, to deal briefly with
some other aspects of the provisions quoted above, which were debated or
/touched ...
19.
touched upon in the course of the arguments presented to this
Court.
The main provision of section 12 (3), i e that which precedes the proviso, is
the only part of it which appears to be free from difficulty.
In many, if not
most, cases the expropriating authority will have taken possession of the
property expropriated before the amount
of compensation payable in respect of it
has been determined, in one of the three ways in which that can be done in terms
of the
Act (namely: 1. where an amount of compensation has been offered and the
owner is deemed to have accepted it in accordance with the
provisions of section
10 (5); or 2. where the. amount of compensation is agreed upon between the
parties; or 3. where the amount
of compensation is determined by a court or by
arbitration under section 14). To cater for cases in which the amount of
compensation
has not yet been determined, the expression " . . . . the amount of
compensation
/payable ...
20.
payable ...." must have been intended by the Legislature
to refer to the amount as ultimately determined in one
of the ways mentioned. Of that amount, "any outstanding
portion" must mean any part of it not yet paid as at
the date of taking possession of the property and for
as long as it remains unpaid thereafter- If the whole
of the amount in question is paid only after it has been
determined, interest will be payable on it from the date
of taking possession until the date of payment. All
this is, however, subject to the qualification contained
in the words ".... in accordance with subsection 1 (a)
(i)". It is clear (although the reason for it is
not) that the Legislature's intention was to exclude
liability for interest in all cases of the taking of
a right to use property, and also, in cases of the ex-
propriation of property other than a right, interest
on compensation for actual financial loss caused by it
and on the added amount referred to in subsection (2) .
/On....
21 .
On the facts of the present case, therefore, the amount of
R10 000 paid by the appellant to the deceased in respect of section 12
(2) could
not have attracted interest. That is why the first issue, in accordance with
what was said earlier, relates only to the
sum of R100 000 which was agreed upon
as being payable in terms of subsection (1) (a) (i) .
It follows that in terms of the main provision of section 12 (3), considered
apart from the proviso to it, the appellant was liable
to pay interest to the
deceased on R100 000 from 1 December 1980 to 1 March 1985.
So much, then, is clear. But when one moves on from the main provision to the
proviso, all clarity ceases, and obscurity reigns supreme.
Para (a) of the proviso commences by expressing itself to be applicable "in a
case contemplated in section 21 (4)" . The latter subsection
mentions a series
of
/"cases" ...
22.
"cases", or factual situations, which may be referred to
compendiously as cases of a dispute or doubt, or an interdict, or a failure
to
notify the Minister in terms of section 19. The last-mentioned case fits the
facts of the present matter, as summarised earlier.
In the cases mentioned, the
Minister is directed to pay to the Master "the amount of such compensation",
which refers back to the
earlier expression in the subsection, "any compensation
payable in terms of this Act". This expression is of wider ambit than that
used
in the main provision of section 12 (3) , viz "the amount of compensation
payable in accordance with subsection (1) (a) (i)",
but as far as I can see
nothing turns on the difference in this case. It was common cause between
counsel, as I understood their
arguments, that the injunction to the Minister to
pay the amount in question to the Master was directory and not peremptory, and
that after such payment to the Master the amount would not
/attract ...
23.
attract any interest. I shall simply assume (without
deciding) that counsel were correct in both respects.
Counsel differed, however, in their arguments concerning the area of
operation of section 21 (4). For the appellant it was argued
that section 21 (4)
was operative irrespective of whether the amount of compensation payable had
been determined or not, while for
the respondents it was contended that section
21 (4) was limited in its operation to the situation where the amount of
compensation
had already been determined. The wording of section 21 (4) itself
favours the latter view, and so does the context in which subsection
(4) appears
as part of section 21 as a whole, for it seems to be clear from a consideration
of the subject-matter dealt with in subsections
(1) , (2) and (3) that the
Legislature was there concerned with the situation where the amount of
compensation had already been determined.
The view that section 21 (4) was
intended to operate only in respect of an already determined amount of
compensation is further
/fortified ...
24.
fortified by contrasting it with section 11 (1), which deals in explicit
terms with payments,
inter alia
to the Master, "prior to the
determination of the amount of compensation payable in terms of this Act." .
Counsel for the appellant argued, however, that section 11 (1) did not
authorise a payment to the Master in the event of a failure
by the owner and the
mortgagee to notify the Minister in terms of section 19 (1), as in the present
case. In my view it does, despite
the presence in it of some curious features.
It uses the expression "deposit it with the Master", without reference to a
specific
section of the Act. The expression "deposit .... with the Master"
occurs in section 21 (1), but not in section 21 (4), which uses
the expression
"pay .... to the Master". Moreover, an amount deposited with the Master in terms
of section 11 (1) will bear interest
according to the provisions of section 11
(2), whereas an amount paid to the Master in terms
/of...
25.
of section 21 (4) will not attract interest, on the basis of
the assumption made earlier. These features of section 11 seem to me
to be
effectively neutralised, however, by section 12 (3) (b), which speaks of "the
date on which the Minister in terms of section
11 (1) pays or makes available an
amount to the owner or any person referred to in section 21 (4)". The
last-mentioned words must
necessarily include the mortgagee in a case such as
the present, while the words "makes available" can, I consider, bear no other
connotation, in the context of section 11 (1), than a deposit with the Master.
Section 11 (1) must be taken, therefore,
to equate "deposit .... with the Master" with "pay...to the Master",
for
it empowers the Minister, prior to the determination of the amount of
compensation, to make such a deposit "under the same circumstances
under which
he should or
could have so deposited such compensation
had it been determined on that date", and these words,
/having ...
26.
having regard to the wording of section 12 (3) (b) that
I have quoted, must necessarily embrace a payment to
the Master in terms of section 21 (4).
In passing, I should make it clear that, although
I have used the wording of section 12 (3) (b) in aid
of the interpretation of section 11 (1), with a view
to counsel's argument concerning the latter, I express
no view on the interpretation and manner of operation
of para (b) as such in the context of the proviso to
section 12 (3). It is fraught with profound problems.
arising from the use of the indeterminate expression
"an amount" in para (b) , when that is read with the con-
cluding words of section 12 (3), and in particular, the
words "the amount which is so payable", which presumably
refer back to the words "the amount of compensation pay-
able in accordance with subsection (1) (a) (i)"- What-
ever solution may be found for those problems, it would
not, as far as I can see, affect the decision of the
/issue ...
27. issue in the present case.
Counsel for the appellant argued further that, in the present case, the
Minister was precluded from exercising his discretion to make
a payment in terms
of section 11 (1), by virtue of the provisions of section 19 (1), which had the
effect of making it impossible
for him to prevent the running of interest by
making any payment. I do not agree. The prohibition of section 19 (1) against a
payment
except to a person designated by agreement between the owner and the
mortgagee, of which the Minister is notified, is expressly stated
to be subject
to the provisions of,
inter alia
, section 21. The whole of the latter
section is concerned with a payment to the Master. In my opinion it cannot be
doubted that a
payment to the Master, including a payment in terms of section 21
(4) specifically, falls outside the scope of the prohibition contained
in
section 19 (1). It follows, in the light of what
/has ...
28.
has been said above, that the Minister was entitled at any
time prior to 1 March 1985 to make a payment to the Master in terms of
section
11 (1) of any amount that he wished to make available to the deceased and his
mortgagee-Reverting to the area of operation
of section 21 (4), if it is
accepted that it applies only when the amount of compensation payable has
already been determined, it
does not necessarily follow that para (a) of the
proviso to section 12 (3) can have no application on the facts of the present
case-
It seems to me that the expression "in a case contemplated in section 21
(4)", viewed by itself, is ambiguous. It may connote no
more than the existence
of one or other of the series of factual situations mentioned in the section,
viz a dispute or doubt, or
an interdict, or a failure to notify the Minister; or
it may have the additional connotation of the existence of one of those factual
situations
/provided . . .
29.
provided the amount of compensation has already been
determined. The latter interpretation is suggested, rather strongly I consider,
by the manner in which the proviso has been divided into two paragraphs, (a) and
(b), and the subject-matter dealt with in each.
Since para (b), by virtue of its
reference to section 11 (1), deals exclusively with the situation where the
amount of compensation
has not yet been determined, one would expect para (a) to
deal with the converse situation. Such a construction would fit in also
with the
apparent rationale of para (a), which seems to be that the Minister should not
be held liable for interest where he is prevented
from discharging his liability
to pay compensation only by reason of circumstances beyond his control. On the
other hand, if an amount
paid to the Master in terms of section 21 (4) does not
attract interest, as I have assumed, it is within the power of the Minister
himself to avoid liability for interest in the circumstances dealt with in para
(a) simply by making such a payment.
/On ...
30.
On that basis, indeed, I have difficulty in understanding why
the elaborate and tortuous provisions of para (a) were considered to
be
necessary at all, instead of a mere explicit statement that interest would not
be payable from the date on which the Minister
made a payment to the Master in
terms of section 21 (4), as was done in the case of para (b), with reference to
section 11 (1).
The wording of subparas (i) and (ii) of para (a) serves only to obfuscate the
intention of the Legislature. The reference to "compensation
.... agreed upon"
supports the notion that the Legislature contemplated the situation where the
amount of compensation was determined,
because the agreement itself fixes the
amount. But the reference to "compensation .... offered" is utterly perplexing.
If it is assumed,
in the present case, that the amount of R100 000 in respect of
section 12 (1) (a) (i), which was agreed upon
/on ...
31 .
on 1 March 1985, had already been offered by the appellant
to the deceased on 18 December 1980 (instead of the lesser amount of R75
250),
would the Minister not have been liable for interest thereon from the
termination of a period of 30 days after the date of
the offer? On the face of
it, that seems to be the effect of the wording, but I must say that it appears
to me to be improbable that
the Legislature could have intended the mere making
of an offer to have such a result. After all, the deceased's failure to notify
the Minister in terms of section 19 (1) did not prevent the latter from
discharging his obligation and thus avoiding liability for
interest; he could
have followed the simple expedient of paying the amount to the Master in terms
of section 11 (1). The juxtaposition
of the words "offered" and "agreed upon" as
alternatives in such close proximity to each other suggests that the Legislature
may
have had in mind two concepts of equal operative force. But an offer does
not ordinarily have the effect of determining the
/amount ...
32.
amount of compensation payable, like an agreement has. In the
scheme of the Act an offer has such effect only in the context of the
provisions
of section 10 (5), where an owner fails to institute action within 8 months
after the date of the offer and the Minister
has given him the requisite notice
in terms of the subsection. During the argument the question was raised whether
the Legislature
did not in fact intend the word "offered" to be understood in
the limited sense of an offer having the effect of determining the
amount of
compensation in accordance with the provisions of section 10 (5). To give the
word "offered" such a restricted meaning
would certainly furnish the provisions
of para (a) with a rational pattern which otherwise they appear to lack. Where
an amount was
offered which was less than the amount payable as ultimately
determined by agreement or under section 14, para (a) of the proviso
does not
aim at preventing the running of interest on the lesser amount of the offer
only, as opposed to the larger amount as
/determined . . .
33.
determined, because of the use of the words "the amount which
is so payable" in the concluding portion of the proviso, which are incapable
of
being construed as referring to any "amount" contemplated in para (a) and must
accordingly be taken to refer to "the amount of
compensation payable" mentioned
in the main provision of the subsection. This supports the notion that the
amount offered may have
been intended (as in the case of the amount agreed upon)
to coincide automatically with the amount determined to be payable, which
can
only be the case in the event of section 10 (5) being applicable. Another
pointer in the same direction is that no provision
is made for the case where
the amount offered exceeds the amount payable as ultimately determined. But
there are obstacles in the
way of adopting such an interpretation. Why did the
Legislature not in terms restrict the word "offered" to a case contemplated in
section 10 (5)? It may have thought that the intention
/was ...
34.
was made clear enough by the use of the phrase "in a case contemplated in
section 21 (4) ", but it seems unlikely that it would have
chosen to reveal its
intention in so oblique a manner- Furthermore, if "offered" and "agreed upon"
are equated as ways of determining
the amount of compensation, the third way in
which that can be done, viz by the procedure provided for in section 14, is left
in
the air. Possibly the Legislature considered that the practical implications
of court or arbitration proceedings made it unnecessary
to deal with that kind
of situation, but that appears to be highly speculative.
For the purposes of the present case it is not necessary to resolve the
problems adverted to above, and accordingly I shall refrain
from attempting to
do so. I shall simply assume (without deciding), in the appellant's favour, that
the words "in a case contemplated
in section 21 (4)" do not limit the operation
of
/para ...
35.
para (a) of the proviso to a situation in which the amount of
compensation payable has already been determined, and that the word
"offered"
does not bear the restricted meaning referred to above. I am fully (and
painfully) aware that I have indulged in a long
discussion which poses questions
instead of resolving them. I have done so lest incorrect inferences be drawn
from the narrow basis
upon which I shall decide the first issue in this case. In
particular, I have sought to make it clear that the question whether the
words
"compensation .... was offered" in para (a) should be given a restricted
meaning, in the sense indicated above, is left wide
open for further
consideration and decision if it becomes necessary in a future case. In my
discussion I have also had a second object
in mind. I have pointed to the major
difficulties in discerning a rational and sensible pattern of regulating the
non-payability
of interest in the contents of the proviso (both paras (a) and
(b)), in the fervent hope that the Legislature may be prompted
/to ...
36.
to redraft the proviso in its entirety in order to remove the
present obscurities and illogicalities in it.
I turn now to the grounds upon which the first issue can be decided. Counsel
for the respondents argued that para (a) of the proviso
did not come into
operation on the facts of this case. The amount of R100 000 was agreed upon on 1
March 1985 and the Minister was
notified in terms of section 19 (1) on 4 March
1985, within the period of 30 days contemplated in para (a) , counsel said. The
offer
of R75 250 in respect of section 12 (1) (a) (i) which was made on 18
December 1980, counsel submitted, was irrelevant, since the
amount offered was
less than the amount which was ultimately determined to be payable. For this
submission counsel relied on the
words "such compensation was offered" in
subpara (ii); he emphasized the word "such" and contended that by using that
word the Legislature
intended
/to ...
37.
to refer to the expression "the amount of compensation
payable ...." in the main provision, which in this case was ultimately fixed
at
R100 000. From a purely syntactical point of view counsel's contention is
unacceptable. The words "such compensation" in subpara
(ii) are immediately
preceded by the indeterminate expression "compensation for the property" in
subpara (i). As a matter of syntax
the word "such" before "compensation" in
subpara (ii) must be taken to refer to the immediately preceding expression
"compensation
for the property" in subpara (i) , rather than to the much farther
removed expression "the amount of compensation payable ...." in
the main
provision. The indeterminate sense of "compensation for the property" in subpara
(i) must accordingly be regarded as having
been carried over into the expression
"such compensation" in subpara (ii)-Whether, apart from the syntax, and as a
matter purely
of the Legislature's intention, the expression "compen-
/sation . . .
38.
sation for the property" must be taken to refer to "the amount of
compensation payable ...." in the main provision, is a different
matter.
Counsel for the appellant argued that para (a) of the proviso came into
operation by virtue of the appellant's offer of 18 December
1980 to pay to the.
deceased R75 250 in terms of section 12 (1) (a) (i) . It is not the appellant's
case that interest did not accrue
on the sum of R75 250
,
being portion of
the amount of R100 000 ultimately agreed upon. (That an argument on this basis
was not put forward is understandable
in view of the wording of the proviso, as
discussed above-) Counsel's argument was that para (a) operated in such a way
that no interest
was payable on the sum of R100 000 (or any part of it) as from
17 January 1981 (being 30 days after the date of the offer) . To couch
it in
general terms, the argument for the appellant comes to this, then: whenever the
Minister has made an offer
/of ...
39.
of compensation, and one of the factual situations postulated
in section 21 (4) exists (such as a failure to notify the Minister in
terms of
section 19 (1), as in the present case), the effect of para (a) of the proviso
is to suspend the accrual of interest on
the amount of compensation as
ultimately determined to be payable, even, where the amount offered was less, by
whatever margin, than
the amount so determined.
In my opinion it is wholly inconceivable that the Legislature could have
intended such a result. Counsel, with reference to the words
"compensation was
offered" , invoked the rule of construction that the words of a statute must be
given their ordinary and literal
meaning. But that rule is subject to an
important rider, which is always its concomitant: as was said in
Bhyat v
Commissioner for Immigration
1932 A D 125
at 129:
".... in construing a provision of an Act of Parliament the plain meaning of its
language must be adopted unless it leads to some
absurdity,
/inconsistency ...
40.
inconsistency, hardship or anomaly which from a consideration
of the enactment as a whole a court of law is satisfied the Legislature
could
not have intended."
(See also
Ebrahim v Minister of the Interior
1977 (1) S A 665
(A) at
677 D - 678 G and the cases cited there.) In my view it would be repugnant to
obvious considerations of logic and equity to
hold that the deceased forfeited
all interest on the sum of R100 000 by reason of his failure to notify the
Minister in terms of
section 19 (1), merely because the Minister offered to pay
him an amount of R75 250. I am accordingly satisfied that the interpretation
contended for on behalf of the appellant would lead to an anomalous and, indeed,
absurd result, which the Legislature could not have
intended. The words
"compensation was offered" are not to be read, therefore, as meaning "
any
compensation was offered", but should be given a restricted meaning so as to
limit their scope to the case where the compensation
offered was an amount not
less than the amount of compensation
/as ...
41. as ultimately determined to be payable.
Counsel for the appellant pointed to the fact that under the common law no
interest accrued on an as yet unliquidated amount of compensation
(
Union
Government v Jackson and Others
1956 (2) S A 398
(A) at 410-6 and 437) and
from that base argued that the liability to pay interest which is imposed on the
Minister by section 12
(3) should not be extended beyond what was strictly
necessary according to the language used. In my view there is no room for such
an argument in the context of the issue to be decided in this case. By enacting
the main provision of section 12 (3) the Legislature
clearly intended to bring
about a radical departure from the common law position, and it is clear that it
did so because of considerations
of equity (
Die Suid-Afrikaanse
Naturelletrust v Kitchener en Andere
1964 (3) S A 417
(A) at 423 E-F, and
Klipriviersoog Properties (Edms) Bpk v Gemeenskapsontwikkelingsraad
1984
(3) S A 768
(T)
/at ...
42.
at 772 F-G). That being so, there is no warrant for
interpreting the proviso to the main provision in a manner that would produce
what is in effect an arbitrary and inequitable limitation on the Minister's
liability for interest.
In my judgment, therefore, the Court
a quo
was correct in deciding the
first issue against the appellant, and the appeal on that score must fail.
I turn, then, to the second issue, which relates to the rate at which
interest is to be calculated over the period from 1 December
1980 to 1 March
1985. As indicated earlier, this issue involves a consideration of the amendment
of section 12 (3) in 1982. The amendment
was brought about by section 4 (1) (a)
of Act 21 of 1982, which came into operation on 12 March 1982. Before the
amendment, the opening
words of section 12 (3), preceding the word "shall", read
as follows:
/"Interest.....
43
"Interest at the rate applicable on the date of expropriation
in respect of State loans and advances by virtue of a notice under section
1 of
the Financial Adjustments Act, 1917 (Act No 42 of 1917) "
For ease of reference, I quote again the opening words of the section after
the amendment:
"Interest at the standard interest rate determined in terms of section 2 6
(1) of the Exchequer and Audit Act, 1975 (Act No 66 of
1975)
Section 1 of Act 42 of 1917, in its main part (the proviso's to it are not
relevant here) , provided as follows:
"Notwithstanding that the rate of interest payable in respect of any loan or
advance made out of moneys appropriated by Parliament
is specified by law or by
notice under such law or by resolution of Parliament, the Minister of Finance
may, by notice in the Gazette,
fix the rate of interest at which any such loan
or advance made after the first day of July, 1917, shall be issued..."
This section was repealed by section 52 (1), read with the Schedule, of Act
66 of 1975. (It is of passing interest - but of no legal
significance, I
consider -
/that ...
44.
that Act 66 of 1975 was assented to on 20 June 1975, and that
it, and hence the repeal of section 1 of Act 42 of 1917, came into operation
on
1 April 1976, while the Expropriation Act, which was also assented to on 20 June
1975, came into operation only on 1 January 1977.)
Section 26 (1) of Act 66 of
1975 provides as follows:
"The Minister of Finance shall from time to time determine a standard
interest rate which shall be applicable to loans granted by
the State out of the
State Revenue Fund, and, subject to any provision to the contrary in any law
contained, interest shall be paid
at that rate on loans so granted."
The argument for the appellant was that the rate of interest which was to be
applied over the entire period from 1 December 1980 to
1 March 1985 was that
rate which was applicable on the date of expropriation, * i e 28 November 1979,
as fixed in the last notice
issued under section 1 of Act 42 of 1917, prior to
its repeal. It was contended that that was the clear effect of section
/12 (3) ...
45.
12 (3) prior to its amendment, and that the amendment in 1982
could not have changed the position, because of the presumption against
retrospectivety. For the respondents, on the other hand, it was argued that, by
virtue of the provisions of section 12 (1) of the
Interpretation Act 37 of 1957,
the reference to section 1 of Act 42 of 1917 in section 12 (3) before its
amendment was required to
be read as a reference to section 26 (1) of Act 66 of
1975. It was contended that in terms of the latter section the varying standard
rate of interest as determined from time to time was to be applied over the
entire period from 1 December 1980 to 1 March 1985, and
that the amendment of
section 12 (3) in 1982 did not bring about any change in the pre-existing
position.
Section 12 (1) of the Interpretation Act provides as follows:
"Where a law repeals and re-enacts with or
/without ...
46.
without modifications, any provision of a former law,
references in any other law to the provision so repealed shall, unless the
contrary
intention appears, be construed as references to the provision so
re-enacted."
There can be no doubt that the Legislature intended, by enacting sections 52
(1) (read with the Schedule) and 26 (1) of Act 66 of
1975, to replace section 1
of the 1917 Act by section 26 (1) of the 1975 Act. The subject-matter dealt with
in each section is the
same, viz the fixing or determination of the rate of
interest payable on State loans. The changes which were brought about, as
revealed
by a comparison of the provisions of sections 1 of the 1917 Act and 26
(1) of the 1975 Act, are not, in my view, of any great substance.
Applying the
test adopted in
Berman Brothers (Pty) Ltd v Sodastream Ltd and Another
1986 (3) S A 209
(A) at 239 J - 240 D, the repeal of section 1 of the 1917 Act
and the re-enactment with alterations of the earlier provisions in
section 26
(1) of the 1975
/Act ...
47.
Act did not change "the essential nature or character" of the
repealed provisions- Accordingly the 1975 Act must be regarded as having
repealed and re-enacted "with modifications" the provisions of section 1 of the
1917 Act, within the ambit of section 12 (1) of the
Interpretation Act. In terms
of the latter section, the reference to section 1 of the 1917 Act in section 12
(3) of the Expropriation
Act, before its amendment in 1982, must be construed as
a reference to section 26 (1 ) of the 1975 Act, "unless the contrary intention
appears". I can find no such contrary intention, either in the provisions of the
1975 Act or in section 12 (3) of the Expropriation
Act (cf the
Berman
Brothers
case,
supra
, at 240 F-G) . In particular, I do not consider
that the use of the word "notice" in section 12 (3) precludes the reference to
section
1 of the 1917 Act from being construed as a reference to section 26 (1)
of the 1975 Act, and, consequently, as bearing on
/a ...
48.
a determination under the latter section.
It follows that I reject the contention for the appellant that the rate of
interest to be applied in the present case is to be found
in the relevant notice
issued under section 1 of the 1917 Act, and that I accept the submission for the
respondents that the rate
of interest applicable here must be ascertained with
reference to the provisions of section 26 (1) of Act 66 of 1975. It does not
follow, however, that it is necessarily the varying standard rate of interest as
determined from time to time under section 26 (1)
of the 1975 Act which is
applicable over the entire period from 1 December 1980 to 1 March 1985. Whether
or not that is so, depends
upon matters still to be discussed. In this regard it
will be convenient to divide the relevant period into two parts: the period
prior to the amendment of section 12 (3) of the Act, that is, from 1 December
1980 to 12 March 1982, to which I shall refer as the
/first ...
49.
first period, and the period thereafter, that is from 13
March 1982 to 1 March 1985, to which I shall refer as the second period.
To have an idea of what is involved, reference must be made to a schedule of
the interest rates as determined under section 26 (1)
of the 1975 Act from time
to time, relevant to the period 28 November 197 9 to 1 March 1985, which formed
part of the stated case
in the Court
a quo
. A brief synopsis of what is
reflected in the schedule is as follows. On 28 November 1979, the date of
expropriation, the rate was
9,5%. After two intervening increases, it was
further increased to 11,25% on 1 December 1980, the date of the taking
possession of
the property. Thereafter a number of gradual increases followed,
resulting in a rate of 13,5% being applicable on 12 March 1982,
the date of the
amendment of section 12 (3). In September 1982 the rate rose to 15%. Thereafter
a number of gradual
/decreases ...
50.
decreases followed, reaching a low of 10,75% in February
1983. The rate rose again over a period, reaching 15% in May 1984 and a high
of
17,25% in October 1984. After two slight decreases, it stood again at 17,25% on
1 March 1975.
As to the first period, counsel for the appellant argued that, by virtue of
the provisions of section 12 (3) of the Act prior to the
amendment, it was only
the rate of interest which was in force on the date of expropriation, i e 28
November 1979, that was relevant,
that that rate applied throughout the first
period, and that no account should be taken of any of the increases in the
period. In
my view, this argument is sound. The wording of the section is
explicit and clear: what is expressed to be payable, is interest "at
the rate
applicable on the date of expropriation" . These words leave no room for giving
effect to increases in the prescribed rate
of interest after the date
mentioned.
/So ...
51.
So, the increased rate which was applicable at the later date
(1 December 1980) when the State took possession of the property - and
from
which interest commenced to run - is irrelevant. The application of section 12
(1) of the Interpretation Act to section 12 (3)
in its original form, as
discussed above, results in "the rate applicable" on 28 November being
ascertained with reference to the
determination under section 26 (1) of Act 66
of 1975 which was in force on that date, but it cannot have any effect on the
impact
of the words "on the date of expropriation", nor can it justify the
taking into account of subsequent increases as determined pursuant
to section 26
(1) of the 1975 Act. The idea of a variation of the rate from time to time,
which is implicit in section 26 (1), was
no less a feature of the repealed
section 1 of the 1917 Act, but section 12 (3) of the Expropriation Act as
originally framed did
not allow subsequent variations to be taken into
account.
/In ...
52.
In my view, therefore, the rate of interest which was payable
during the first period remained constant at the rate which was applicable
on 2
8 November 1979 by virtue of a determination under section 26 (1) of Act 66 of
1975. The amendment of section 12 (3) of the
Act which came into force on 12
March 1982 could not affect the rate at which interest had accrued prior to that
date without giving
retrospective operation to the amendment. I agree with the
submission of counsel for the appellant that there is nothing in the terms
of
the amendment to suggest that the Legislature intended it to be retroactive. The
presumption against retroactivity accordingly
leaves undisturbed the rate of
interest which applied during the first period.
As to the second period, counsel for the appellant again relied on the
presumption against retrospec-tivity, arguing that its application
precluded the
replacement of the then operative rate of interest by
/a ...
53.
a different rate. With this argument I do not agree. The
accrual of interest is a continuing process, and by allowing the new prescribed
rate to supplant the previously existing one as from the date of the amendment,
no more is being done than to give prospective effect
to the amendment (cf
Katzenellenbogen Ltd v Mullin
19
77 (4) S A 855
(A) at 884 D-E). The mere
fact that the accrual of interest in the future has its roots in the events of
the past does not mean that
retrospective operation is given to the amendment by
substituting one rate of interest for another as from the date of its coming
into force (cf Steyn,
Uitleg van Wette
, 5th ed, at 85, and Maxwell on
Interpretation of Statutes
, 12th ed, at 217). The principle at stake can,
I think, be demonstrated as follows. The key words in the
section remain the
same: "Interest shall
be payable " Let us suppose that in its
ori
ginal form the section had simply provided as follows:
"Interest at
the rate of 9% per annum shall be
/payable ...
54.
payable ....", and that the amendment had merely substituted the figure of
"13%" for "9%". In this example it is clear, I consider,
that interest would
have commenced to run at the rate of 13% instead of 9% as from the date when the
amendment came into force, notwithstanding
that the interest was payable in
respect of an expropriation and a taking possession of the property that had
occurred prior to that
date. That being so, it becomes apparent at once, in my
opinion, that the legal position cannot be affected, either by the fact that
the
section lays down the rate of interest payable with reference to a determination
made under another Act, or by the fact that
the words "at the date of
expropriation" have been omitted in the amendment, with the result of allowing a
fluctuating rate of interest
to apply for the future.
In my view, therefore, the rate of interest payable during the second period
was the rate in force as
/determined ...
55.
determined from time to time pursuant to section 26 (1 ) of Act 66 of
1975.
It follows that in my judgment the order made by the Court
a quo
in
respect of the second issue was wrong in part (as to the first period) and
correct in part (as to the second period).
It should be mentioned that counsel made available to this Court copies of
two unreported judgments given in the Transvaal Provincial
Division, in which
apparently divergent conclusions were reached, on matters similar to some of
those discussed above, and in which
views were expressed that in some respects
apparently differ from those set out above. The judgments were given by LEVESON
J in the
case of
Golfers Paradise (Pty) Ltd v Community Development
Board
, on 1 August 1985 , and by O'DONOVAN AJ in the case of
Davehill
(Pty) Ltd and Others v Community Development Board
, on 23 May 1986. In
regard to the latter case we were informed
/by ...
56.
by counsel that an appeal was pending, and it is possible that the same
applies to the first-mentioned case. In the circumstances
I have thought it
better in my judgment in this case not to refer pertinently to the reasoning
contained in those judgments. Suffice
it to say that the views I have expressed
in this judgment were arrived at after careful consideration of the judgments to
which
we were referred.
Finally, the costs of this appeal must be dealt with. The first issue, i e
whether interest was payable at all by the appellant (save
for the brief period
from 1 December 1980 to 17 January 1981), was obviously the main issue in the
case. On that issue' the appellant
has failed. In regard to the second,
subsidiary, issue, relating to the rate of interest to be appied, the appellant
has failed in
respect of the second period, but has succeeded in respect of the
first period, and to that limited extent has achieved
/success . ..
57. success.
Counsel have not had an opportunity of addressing this Court on what order of
costs would be appropriate in the circumstances I have
mentioned. I propose to
make a provisional order of costs, and to afford the parties an opportunity of
submitting written argument
on the matter, should they wish to do so. Since the
order to be made is provisional only, I shall do no more than to state broadly
the considerations that I have taken into account in deciding upon such order.
The appellant, as I have said, has failed on the major
issue and has achieved
but limited success on the subsidiary issue. As to the latter, the period in
respect of which an alteration
is required to be made to the order of the Court
a quo
, is a relatively short one of slightly more than a year. The period
in respect of which the order
a quo
will remain undisturbed extends for
just short of 3 years. The financial implications
/of ...
58.
of the appellant's limited success, when seen in the context of the whole
dispute between the parties, and having regard to the relevant
interest rates at
various times, as referred to earlier, appear to me,
prima facie
, to be
rather insignificant. The appellant's success seems to be too insubstantial to
carry the costs of the appeal, but on the other
hand some recognition ought to
be given to it by not awarding the respondents all their costs, so that this
appears to be a case
(for present purposes I put it no higher) in which it would
be proper to order the appellant to pay a portion of the respondents'
costs (cf
Protea Assurance Co Ltd v Matinise
1978 (1) S A 963
(A) at 978).
Provisionally, I assess that portion at one-half of the respondents' costs of
the appeal.
The order of the Court is as follows:
1 . The appeal succeeds to the limited extent reflected in para (a) of the
amended order set
/out...
59.
out in para 2 below, and fails in all other respects.
2. Para 1 of the order of the Court
a quo
is amended to read as
follows:
"The defendant is ordered to pay interest to the plaintiff on the amount of R100
000 for the period from 1 December 1980 to 1 March
1985, such interest to be
calculated as
follows:
(a) from 1 December 1980 to 12 March
1982, at a constant rate, being
the
rate which was in force on
28 November 1979 by virtue of
a determination made pursuant to section 26 (1) of Act 66 of
1975;
(b) from 13 March 1982 to 1 March
/1985
...
60.
1985 at varying rates, being the rates which were in force from time to time
by virtue of determinations made pursuant to the said
section 26 (1) of Act 66
of 1975."
3.
The appellant is ordered to
pay one-half of the respondents' costs of the appeal.
4.
The order in para 3 is provisional and subject to the following
provisions:
(a)
The appellant and the
respondents may, within 3 weeks from the date of this judgment, serve and file
with the Registrar written argument
with a view to obtaining a variation of the
order in para 3.
(b)
In the event of either
the appellant or the respondents serving and filing
written
/argument.....
61.
argument in terms of para (a), the opposing party or parties
may, within a further period of 2 weeks, serve and file with the Registrar
written argument in reply.
(c)
If written argument is
served and filed in terms of the foregoing provisions, the Court will reconsider
the order in para 3 and de-liver
judgment thereon.
(d)
If no written argument is served and filed in terms of para (a), the
order in para 3 will become final.
A.S. BOTHA JA
TRENGOVE JA
HOEXTER JA
GROSSKOPF JA
CONCUR
SMALBERGER JA