NAD Property Income Fund (Pty) Ltd v South African National Roads Agency and Another (2137/2020) [2024] ZALMPPHC 25 (19 January 2024)

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[2024] ZALMPPHC 25
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NAD Property Income Fund (Pty) Ltd v South African National Roads Agency and Another (2137/2020) [2024] ZALMPPHC 25 (19 January 2024)

IN THE HIGH COURT OF
SOUTH AFRICA
LIMPOPO DIVISION,
POLOKWANE
CASE
NO:
2137/2020
In the matter between:
NAD PROPERTY INCOME
FUND (PTY) LTD

PLAINTIFF
and
THE SOUTH AFRICAN
NATIONAL ROADS
AGENCY AND ANOTHER

FIRST DEFENDANT
THE MINISTER OF THE
NATIONAL
DEPARTMENT OF
TRANSPORT

SECOND DEFENDANT
JUDGMENT
DIAMOND AJ:
INTRODUCTION
[1]
Hoedspruit is a town
situated in the Limpopo Province. It is situated adjacent to the
National Kruger Park which is on the town’s
eastern side. The
town falls within the area of jurisdiction of the Maruleng local
municipality (the “Municipality”).
[2]
There is a main road,
the R40, running along, in a general direction, from north to south,
and roughly parallel to the border of
the Kruger National Park.
[3]
Another road, the
R527 intersects the R40, in Hoedspruit, and the R527 runs in a
general east/west direction.
[4]
The Plaintiff (“NAD”)
was the registered owner of an erf, viz Erf 215, Extension 6,
Hoedspruit (the “Property”),
which it held by Deed of
Transfer number T 16933/2015.
[5]
The Property is
situated virtually on the intersection between the R40 and the R 527
and the following diagram illustrates the position
of the Property
relative to the intersection:
Figure
1
[6]
The
Second Defendant, the Minister of Transport expropriated a certain
portion of the Property by way of a notice dated 8 June 2016,
with an
acquisition diagram DP/R40/393/52/1, and with an effective
expropriation date of 25 July 2016.  The South African
National
Roads Agency Limited (“SANRAL”) requested her to do so,
in terms of legislation.
[7]
The
area of the expropriated portion is depicted on the acquisition
diagram as Figure a,b,c,d,e,f,g,h (the “Expropriated Portion”)

and if this figure is superimposed on Figure 1, the expropriated
portion can roughly
[1]
be depicted as follows:
Figure
2
[8]
The
expropriation took place in terms of the stipulations of section 41
of The South African National Roads Agency Limited and National
Roads
Act, 1998.
[2]
(the
Sanral Act”), and section 41 stipulates as follows:-
“
41.
Expropriation of land for purposes of national road.—(1)
Subject to subsection (2) and to the obligation to pay compensation,

for which the Agency will be responsible, the Minister, if satisfied
on reasonable grounds that the Agency reasonably requires—
(a)
any land for a national road or for
works or other purposes connected with a national road, including any
access road, the acquisition,
excavation, mining or treatment of
gravel, stone, sand, clay, water or any other material or substance,
the accommodation of road
building staff and the storage or
maintenance of any plant, vehicles, machines, equipment, tools,
stores or material, may expropriate
that land for the Agency;
(b)
gravel, stone, sand, clay, water or
any other material or substance on or in land for the construction of
a road or for works or
any of the purposes mentioned in paragraph
(a), may take it for the Agency or authorise the Agency to take it;
(c)
the right to use land temporarily
for any of the purposes for which the Minister is competent to
expropriate land under paragraph
(a), may take that right for the
Agency or authorise the Agency to take that right.
(2) The Minister may
not exercise a power in terms of subsection (1) unless satisfied on
reasonable grounds that the Agency is unable
to acquire the land or
anything mentioned in paragraph (b) of that subsection, or the right
to use the land temporarily, by agreement
with the owner of the land
or the holder of any relevant right in respect of the land, as the
case may be.
(3) Subject to the
obligation to pay compensation, and if satisfied on reasonable
grounds that any land is or will be divided by
a road contemplated in
paragraph (a) of subsection (1) in such a manner that the land or any
part of it is or will be useless to
its owner, the Minister may
expropriate that land or the relevant part thereof.
(4) Where the Minister
expropriates any land for the Agency in terms of subsection (1) or
(3), the Agency becomes the owner thereof
on the date of
expropriation of the land concerned.
(5) Subject to this
section, the provisions of sections 7 to 24 of the Expropriation Act,
1975, will apply with regard to any expropriation
in accordance with
subsection (1) or (3), reading in the changes necessary in the
context. However, any reference in those sections
of the
Expropriation Act, 1975, to “section 2”, must be
understood as a reference to this section.
[9]
Section
12 of the Expropriation Act, 1975
[3]
(the “Act”), which applies to this expropriation under
section 41(7) of the Sanral Act, determines the basis on which

compensation for expropriation is to be determined and paid.
[10]
The entire cause of
action as contained in the Particulars of Claim of NAD, is based on
the application of section 12 of the Act.
[11]
Section 12 of the Act
reads as follows:
“
12
Basis on which compensation is to be determined
(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, excepting a registered right to
minerals, 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 financial loss caused by the expropriation; and
(b) in the case of a
right, excepting a registered right to minerals, an amount to make
good any actual financial loss caused by
the expropriation or the
taking of the right:
Provided that where
the property expropriated is of such nature that there is no open
market therefor, compensation therefor may
be determined­
(aa) on the basis of
the amount it would cost to replace the improvements on the property
expropriated, having regard to the depreciation
thereof for any
reason, as determined on the date of notice; or
(bb) in any other
suitable manner.
(2) Notwithstanding
anything to the contrary contained in this Act there shall be added
to the total amount payable in accordance
with subsection (1), an
amount equal to­
(a) ten per cent of
such total amount, if it does not exceed R100 000; plus
(b) five per cent of
the amount by which it exceeds R100 000, if it does not exceed R500
000; plus
(c) three per cent of
the amount by which it exceeds R500 000, if it does not exceed R1 000
000; plus
(d) one per cent (but
not amounting to more than R10 000) of the amount by which it exceeds
R1 000 000.
(3)(a) Interest at the
standard interest rate determined in terms of section 26 (1) of the
Exchequer Act, 1975 (Act 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): Provided
that­
(i) 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
(aa) the property was
so taken possession of, if prior to that date compensation for the
property was offered or agreed upon;
or
(bb) 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 or the builder
notified the Minister in
terms of the said section 21 (4) as to the payment of the
compensation money, the outstanding portion
of the amount so payable
shall, for the purposes of the payment of interest, be deemed not to
be an outstanding amount; and
(ii) if the owner
fails to comply with the provisions of section 9 (1) within the
appropriate period referred to in the said section,
the amount so
payable shall during the period of such failure and for the purpose
of the payment of interest be deemed not to be
an outstanding amount.
(b) Interest payable
in terms of paragraph (a) shall be deemed to have been paid on the
date on which the amount has been made available
or posted to the
owner concerned.
(c) Any deposit,
payment or utilization of any amount in terms of section 11 (1), 20
(2) or 21 (1) or (4) shall be deemed to be
a payment to the owner,
and no interest shall in terms of paragraph (a) be payable on any
such amount as from the date on which
it has been so deposited, paid
or utilized.
(4) If the owner of
property which has been expropriated occupies or utilizes that
property or any portion thereof, no interest
shall, in respect of the
period during which he so occupies or utilizes it, be paid in terms
of subsection (3) on so much of the
outstanding amount as, in the
opinion of the Minister, relates to the property so occupied or
utilized.
(5) In determining the
amount of compensation to be paid in terms of this Act, the following
rules shall apply, namely­
(a) no allowance shall
be made for the fact that the property or the right to use property
has been taken without the consent of
the owner in question;
(b) the special
suitability or usefulness of the property in question for the purpose
for which it is required by the State, shall
not be taken into
account if it is unlikely that the property would have been purchased
for that purpose on the open market or
that the right to use the
property for that purpose would have been so purchased;
(c) if the value of
the property has been enhanced in consequence of the use thereof in a
manner which is unlawful, such enhancement
shall not be taken into
account;
(d) improvements made
after the date of notice on or to the property in question (except
where they were necessary for the proper
maintenance of existing
improvements or where they were undertaken in pursuance of
obligations entered into before that date) shall
not be taken into
account;
(e) no allowance shall
be made for any unregistered right in respect of any other property
or for any indirect damage or anything
done with the object of
obtaining compensation therefor;
(f) any enhancement or
depreciation, before or after the date of notice, in the value of the
property in question, which may be
due to the purpose for which or in
connection with which the property is being expropriated or is to be
used, or which is a consequence
of any work or act which the State
may carry out or perform or already has carried out or performed or
intends to carry out or
perform in connection with such purpose,
shall not be taken into account;
(g) .......
(h) account shall also
be taken of­
(i) any benefit which
will enure to the person to be compensated from any works which the
State has built or constructed or has
undertaken to build or
construct on behalf of such person to compensate him in whole or in
part for any financial loss which he
will suffer in consequence of
the expropriation or, as the case may be, the taking of the right in
question;
(ii) any benefit which
will enure to such person in consequence of the expropriation of the
property or the use thereof for the
purpose for which it was
expropriated or, as the case may be, the right in question was taken;
(iii) ......
(iv) any relevant
quantity of water to which the person to be compensated is entitled,
or which is likely to be granted to him,
in terms of the provisions
of the Water Act, 1956 (Act 54 of 1956), or any other law.
(i) ......
(6) ......
[12]
SANRAL offered the
amount R 190 777-40 as compensation for the Expropriated
Portion.
[13]
In
terms of the initial
[4]
Particulars of Claim, NAD claimed an amount of R 15 484 382.00
(Fifteen Million Four Hundred and Eighty-Four and Three
Hundred and
Eighty-Two Rand) being the alleged market value of the Expropriated
Portion (R 15 400 000,00) in terms of
section 12(1)(a) of
the Act, which amount also includes an amount for actual financial
loss allegedly directly caused by the expropriation
in terms of
Section 12 (1)(a)(ii) (R 29 382,00) as well as a further amount in
terms of Section 12(2) (R 55 000 – 00).
[14]
In terms of the
initial plea, SANRAL denies the amount of compensation payable as
alleged by NAD and pleads further that NAD obtained
the business
zoning of the property unlawfully, and that this factor should be
taken into account in terms of section 25(3)(b)
of the Constitution.
[15]
The parties tried to
negotiate and agree on a compensation amount, but they were not able
to agree on an amount.
[16]
It
is therefore clear that the parties cannot be further apart
[5]
.
[17]
This court is
therefore called upon to determine compensation to be paid by SANRAL
to NAD for the expropriated portion, under Section
14 of the Act.
APPROACH
OF THE COURT
[18]
A
few remarks are apposite, at this stage, regarding the proper
approach that a court should take when applying Section 12 of the

Act.
[19]
The Act was assented
to on 20 June 1975, and the date of commencement was 1 January 1977.
[20]
The
Act was amended on several occasions, and the last time that several
amendments were effected, was by way of the Expropriation
Amendment
Act, 1992 (Act no 45 of 1992)
[6]
.
[21]
In terms of section
12 of the Act:
[22]
the amount of
compensation to be paid to an owner in respect of expropriated
property shall not exceed;
[23]
the amount which the
property would have realised if sold on the date of the notice in the
open market by a willing seller to a
willing buyer;
[24]
and an amount to make
good any actual financial loss caused by the expropriation;
[25]
provided that where
the property expropriated is of such a nature that there is no open
market therefore, compensation may be determined
based on the amount
it would cost to replace the improvements on the property
expropriated having regard to the depreciation thereof,
or in any
other suitable manner.
[26]
Since the
commencement of the Act, and its subsequent amendments, section 25
(3) of the Constitution came into being. Section 25(3)
stipulates as
follows:
“
(
3)
The amount of the compensation and the
time and manner of payment must be just and equitable, reflecting an
equitable balance between
the public interest and the interests of
those affected, having regard to all relevant circumstances,
including—
(a) the current use of
the property;
(b) the history of the
acquisition and use of the property;
(c) the market value
of the property;
(d) the extent of
direct state investment and subsidy in the acquisition and beneficial
capital improvement of the property;
and
(e) the purpose of the
expropriation.
[27]
The
Constitutional Court cautions in
First
National Bank of SA Ltd T/A Wesbank v Commissioner, South African
Revenue Service and Another; First National Bank of SA Ltd
T/A
Wesbank V Minister of Finance
[7]
(“
First
National Bank
”
)
that judgments on expropriation must be read circumspectly because
such judgements are not necessarily reliable when it comes
to
interpreting the property clause is on the interim and 1996
Constitutions.
[28]
The
Supreme Court of Appeal established the following approach in
Haakdoornbult
Boerdery CC and Others v Mphela and Others
[8]
(“Haakdoornbult”)
:
“
In
this regard, I wish to paraphrase and adopt the approach of
Gildenhuys AJ in Baphiring Community v I Uys. Compensation, to be

fair (he said), must recompense. The purpose of giving fair
compensation is to put the dispossessed, insofar as money can do it,

in the same .position as if the land had not been taken. Fair
compensation is not always the same as the market value of the
property
taken; it is but one of the items which must be taken
into account when determining what would be fair compensation”
[29]
Gildenhuys
and Grobler
[9]
elaborate
on this approach and they cite the following remark by Duard
Kleyn
[10]
,
which they say is important to bear in mind:
“
The
purpose of damages in private law is to undo the consequences of an
unlawful act. In determining the amount to be awarded, the
affected
party must be placed in the hypothetical economic position he/she
might have been in had the act not taken place. The
object is to
award full damages, including loss of future income and profits.
Expropriation, on the other hand, is a lawful taking
of property in
the public interest. The purpose of awarded compensation is not that
it should make up for all losses suffered;
it is rather to
replace the object with its value. The property guarantee is
transformed into a value guarantee. The value of the
property is
determined in the light of factors that are relevant to the law of
expropriation. The aim is to put the affected party
in the position
to obtain an equivalent object."
[30]
It
is therefore clear that the market value of the expropriated property
is but one factor, to be considered, with, at least
[11]
the other factors mentioned in Section 25(3), and every court which
is tasked with the obligation to determine compensation, is

duty-bound, in terms of the Constitution, to do so.
[31]
In the end, the
purpose is to award an amount of compensation to the expropriatee, an
amount which is just and equitable, given
all the circumstances of
the expropriation.
[32]
The
Appellate Division ruled,
in
Estate
Marks v Pretoria City Council
[12]
“
(“
Marks
”
)
concerning the nature of an order for compensation in terms of the
repealed Expropriation Act, 1965 (Act no 55 of 1965), that
such an
order for compensation is not a discretionary decision, but it is a
valuation, based on fact.  The court remarked
that although the
making of the valuation relates to matters that may be so uncertain
that no one can be dogmatic about them, nonetheless,
a finding of
factors to be made, is a logical deduction
[13]
from
the factual data.
[33]
In my view, this is
an example of a remark that needs to be read, in light of the
judgement in
First
National Bank
,
with circumspection. That remark was made against the backdrop of an
expropriation compensation regime which necessitated, as
a core
component, the determination of the market value of the expropriated
property.
[34]
Post-1994 and 1996,
the market value of the expropriated property is no longer a core
consideration.  It is but one consideration
and the weight that
should be attached to it is to be determined in the light of the
circumstances of each case and finally in
the light of what is “just
and equitable”, as is prescribed in section 25(3) of the
Constitution.
[35]
Hence, the power to
determine a final consideration for expropriation, is, in the end,
bounded by considerations of justice and
equity. This means, in my
view, that the final determination of a compensation amount takes
place by way of a discretionary power
of the court.
[36]
The Constitutional
Court stated the following,
in
State Information Technology Agency SOC Ltd v Gijima Holdings (Pty)
Ltd (“Gijima”)
about the exercise of a discretion:
“
A
discretion in the true sense is found where the lower court has a
wide range of equally permissible options available to it. This
type
of discretion has been found by this court in many instances,
including matters of costs, damages and in the award of a remedy
in
terms of s 35 of the Restitution of Land Rights Act. It is 'true' in
that the lower court has an election of which option it
will apply
and any option can never be said to be wrong as each is entirely
permissible.  In contrast, where a court has a
discretion in the
loose sense, it does not necessarily have a choice between equally
permissible options. Instead, as described
in Knox, a discretion in
the loose sense­
'means
no more than that the court is entitled to have regard to a number of
disparate and incommensurable features in coming to
a decision'."
[37]
A court exercises a
judicial discretion, that is a discretion in the true sense of the
word if it
“
exercises
its power on correct principles, and based on  a correct
assessment of the facts; and
where
the discretion results in an outcome which can be justified by a
court which properly directs itself to all the facts and
all the
principles in the case
.
[14]
[38]
In
my view, what all of this means in a case where a court has to
determine compensation for expropriation in terms of the Constitution

read with the Act, is the following:
[39]
Since
the court is duty-bound to consider, amongst others, the market value
of the property
[15]
,
the determination of such a market value is a valuation and not the
exercise of a discretion, but it is a valuation based on the

facts.
[16]
[40]
beyond
this, however, the court exercises a judicial discretion that is true
discretion, when it determines a compensation which
is just and
equitable given all the circumstances. While considering what is just
and equitable, a court may determine that the
market value should be
paid as compensation, since it is just and equitable given all the
circumstances. A court may however also
determine that less (or for
that matter perhaps more
[17]
)
than market value is just and equitable within the circumstances. A
court may conceivably conclude it is just and equitable for
the state
not to pay any compensation, because the expropriatee, for instance
initially obtained the land by way of a government
subsidy and has in
the meantime not effected any capital improvements
[18]
.
[41]
One aspect remains
concerning the general approach that this court is bound to follow.
[42]
Both parties relied
heavily on expert opinion, but the opinions of the expert witnesses
were diametrically opposed to each other,
in some respects.
[43]
Apart from this, NAD
even argues that the First Respondent failed to prove that one of the
persons he called as a witness, was indeed
an expert in the field of
property valuation.
[44]
Against
the backdrop of the above, this court must decide whether the
particular witness has sufficient qualifications to assist
the court
in the determination of the market value of the property. This is
done by measuring his qualifications and experience
to determine that
they are sufficient to enable him to give the relevant evidence.
[19]
[45]
Concerning
the conflicting evidence, it is important to note that the expert
witnesses are not the judges of fact about which they
express an
opinion, and a court should be careful not to allow the opinion of
expert witnesses to take the place of their own finding
of fact.
[20]
[46]
The
following general approach that a court should follow when assessing
expert testimony was stated
in
Mv Pasquale Della Gatta; Mv Filippo Lembo; Imperial Marine Co v
Deiulemar Compagnia Di Navigazione Spa
[21]
(“
Imperial
Marine
”
):-
“
In
my view the court must first consider whether the underlying facts
relied on by the witness have been established on a prima
facie
basis. If not then the expert's opinion is worthless because it is
purely hypothetical, based on facts that cannot be demonstrated
even
on a prima facie basis. It can be disregarded. If the relevant facts
are established on a prima facie basis then the court
must consider
whether the expert's view is one that can reasonably be held on the
basis of those facts. In other words, it examines
the reasoning of
the expert and determines whether it is logical in the light of those
facts and any others that are undisputed
or cannot be disputed. If it
concludes that the opinion is one that can reasonably be held on the
basis of the facts and the chain
of reasoning of the expert the
threshold will be satisfied. This is so even though that is not the
only opinion that can reasonably
be expressed on the basis of those
facts. However, if the opinion is far­fetched and based on
unproven hypotheses then the
onus is not  discharged”.
[47]
What follows from the
Imperial
Marine
judgement
is that a court should establish whether the opinion of an expert is
based on prima
facie-proven
facts. If so, the
court must examine the reasoning of the expert and determine whether
it is logical in light of those facts. If
the opinion of the expert
fails the scrutiny on either one of the above steps, the opinion has
no evidential value and can even
be said to be irrelevant.
[48]
I will now proceed,
against the backdrop of the above-mentioned general approach, to
consider an award for compensation, of the
Applicant, in the
circumstances of this case.
FACTUAL
MATRIX, AND SEQUENCE OF EVENTS.
[49]
A property developer,
Boschpoort Ondernemings (Pty)Ltd, applied to establish a town under
the provisions of the Transvaal Town Planning
and Townships
Ordinance, 1986, on the property known as the remainder of the farm
Amsterdam 208 T. The application was approved
in January 2005, and a
town called Hoedspruit Extension 6 was eventually proclaimed on the
farm.
[50]
The town became known
as the HOEDSPRUIT WILDLIFE ESTATE, a non-profit company known as the
Hoedspruit Wildlife Estate NPC No 2004/010767/08,
was established and
is active from the inception as the Home Owners Association of the
estate.
[51]
The developer of the
township donated the Property, in terms of Clause 2.4 of the
Conditions of Establishment of the Town, to the
Municipality.
It was a condition of the township that the Municipality had to
develop a secondary school within five years
of the date of
proclamation of the township and if not, the property would have
reverted to the developer.
[52]
The Municipality did
not establish a secondary school on the Property, and the Property
reverted to the Developer. The exact date
on which the Property was
transferred back into the name of the developer, or its successor in
title, is not known.
[53]
At the beginning of
2013, an engineer in the employment by SANRAL, a Mr Klaus Gerhard
Schmidt (“Schmidt”), received
a visit from Ms. Christine
du Preez, and she indicated to Schmidt that there were serious
traffic congestions on the existing access
road from the R40 into
Hoedspruit Extension 6.
[54]
After this visit,
Schmidt went to the site, where he met with Christine du Preez and
municipal officials to assess the situation.
[55]
SANRAL had a traffic
impact study done, of the traffic situation at the R40 R297
interchange, and certain recommendations were made,
in a report dated
simply May 2013.
[56]
The net effect of
this visit and traffic impact study was captured in a letter dated 13
August 2013, sent by SANRAL to the Municipality.
This letter
indicated that a certain Mr Charl Auret (“Auret”),
deliberated with SANRAL on the traffic issues
and that Auret
represented the owners/developers of Erf 215.
[57]
A Close Corporation,
Overine 145 CC (“Overine”), took transfer of the property
in 2014 by way of Deed of Transfer T
5987/2014.
[58]
NAD and Overine
signed a Deed of Sale on 22 January 2015, in terms of which NAD
purchased the property from Overine for R 7 750 000-00.
[59]
A practising Town and
Regional planning firm, a certain Jacques du Toit and Associates,
applied for the rezoning of the Property,
on 20 February 2015. He
filed a single application regarding the Property, on behalf of
Overine CC, and at the same time the rezoning
of Portions 1 and 2 of
Erf 712, Hoedspruit Extension 6, on behalf of a Close Corporation
called Silver Moon Investments 160 CC.
[60]
Registration of the
transfer of the Property in the name of NAD took place on 13 March
2015.
[61]
Proclamation of the
amendment scheme that amended the zoning of the Property from
Educational to Business 1 took place on 12 June
2015.
[62]
SANRAL wrote a letter
to the Municipality, on 17 July 2015. In this letter, SANRAL referred
to their letter dated 13 August 2015
and stated that SANRAL was
became of the change of ownership of the Property and that it was
aware that NAD intended land use for
the Property that would imply a
rezoning of the Property, and SANRAL requested that before the
rezoning or the approval of site
development plans took place,
consultation with SANRAL should take place.
[63]
NAD filed a site
development plan, concerning its intended development of the
Property, on 1
st
September 2015.
[64]
On 5 November 2015,
the Municipality wrote a letter to NAD, requesting SANRAL’s
comments on the site development plan as well
as a traffic impact
assessment report by an engineer.
[65]
NAD wrote a letter to
the Wildlife Estate, on 10 December 2015, indicating that they were
in consultation with NAD, regarding the
finalisation of the access
road over the Property.
[66]
The attorneys of NAD,
Messieurs Ivan Pauw and Partners (“Ivan Pauw”), wrote a
letter on 9 March 2016, to the Municipality,
indicating that NAD
regarded the request of the Municipality to provide the Municipality
with the comments of SANRAL, as unlawful.
The firm also indicated
that the Municipality’s request for Traffic Impact Assessment,
was to be considered before the rezoning
application and that the
client was under no legal obligation to procure such a study. They
requested the municipality to approve
the site development plan
within fourteen days of the date of the letter failing which the firm
stated that they held instructions
to proceed with further action
against the Municipality.
[67]
The Second Defendant
signed an expropriation notice in terms of the Act, on 8 June 2016,
and indicated that the effective date of
the expropriation would be
25 July 2016. It is consequently from 25 July 2016, that SANRAL
became the owner of the Expropriated
Portion.
[68]
The director and
chief executive officer of NAD, Johannes Petrus Jacobus van Niekerk
signed a founding affidavit on 23 August 2016,
an affidavit that
would be used in support of an application compelling the
Municipality to approve the site development plan.
[69]
NAD issued its
application to compel the Municipality to approve the site
development plan, on 31 August 2016.
[70]
Ivan Pauw wrote a
letter to SANRAL on 12 November 2019, in which they reiterated NAD’s
position that the Municipality had
to approve the site development
plan and not SANRAL. Despite that, they indicated that they would be
willing to circulate the site
development plan to SANRAL for comment
by SANRAL, before final approval by the Municipality. They confirmed
that the site development
plan will provide for access to the
respective erven before the construction of the interchange and
access road and consequential
closure of Rotsvy Street (the street
that intersects with the R40), which gives access to the Property and
other erven of the Wildlife
Estate.
[71]
NAD issued the
current summons on 11 March 2020.
[72]
NAD sold that part of
the Property which had remained after the expropriation of the
Expropriated Portion, on 25 January 2022, to
Hebrides Investments
Proprietary Limited (“Hebrides”), for a total purchase
price of R 14 500 000,00 plus
VAT of R R 2 175 000,00
totalling a consideration of R 16 675 000,00.
[73]
Hebrides took the
transfer of the Property on 23 March 2022, by Deed of Transfer
2537/2022.
[74]
The trial commenced
on 25 July 2022.
THE TRIAL
[75]
The trial commenced
on 25 July 2022 and became partly heard on that day. The trial
unfolded over a further eleven days and concluded
on 28 July 2023.
[76]
During the trial, the
court was called upon to adjudicate on interlocutory applications,
and the court also had to make certain
rulings regarding the
proceedings. The court indicated that it would provide its reasons,
and orders for costs, if any, in such
interlocutory proceedings in
the rulings, in this judgment.
[77]
NAD presented the
evidence of two expert witnesses, firstly Mr Stafanus Gabriel Makkink
(“Makkink”), a professional
Town and Regional Planner,
and Mr Peter Parfitt (“Parfitt”), a professional property
valuer. NAD did not call any lay
witnesses to testify on its behalf.
[78]
SANRAL called three
lay witnesses, an erstwhile employee of SANRAL, Schmidt, and two
municipal officials, Ms Khesani Veronica Sithole
and Mr Moshele Given
Mailula. SANRAL also called two expert witnesses, Mr André
Albertus Jansen van Nieuwenhuizen (“van
Nieuwenhuizen”),
a professional Town and Regional Planner, and Mr Christian Lourens
Winckler (“Winckler”), a
property valuer.
[79]
Both parties
concerned themselves for all practical purposes almost exclusively
with the question regarding the market value of
the Expropriated
Portion and only referred in passing to the other issues mentioned in
section 25 (3) of the Constitution if they
did so at all.
[80]
I will first deal
with the question of the determination of the market value of the
Property, after which I will consider all the
factors mentioned in
section 25 (3) of the Constitution. I will then conclude with my
reasons for interlocutory orders and rulings
followed by the order.
MARKET
VALUE OF THE PROPERTY
[1]
Parfitt started his
testimony by explaining the four different internationally accepted
methods of land valuation,
viz
:
firstly, the depreciated replacement cost method; secondly, the
residual value calculation method; thirdly, the income capitalisation

method and fourthly, the comparable sales method.
[2]
At the beginning of
the trial, Parfitt, on behalf of the Plaintiff, started off to value
the Expropriated portion based on the income
capitalisation method.
Winkler, on behalf of the First Defendant, started, with what Parfitt
opined, was the residual value method.
[3]
During the
litigation, the experts filed addendum reports and had further
meetings of experts during which they exchanged viewpoints.
[4]
In the end, the two
experts converged on the same method, viz, the comparative sales
method, and they duly filed addendum reports
in this regard.
[5]
It is important to
note that the comparative sales method, which both experts employed,
was employed in a specific manner,
viz
the so-called “before and after method”.
[6]
The
rationale of the so-called before and after the method was explained
in
Ingersoll­Rand
Co (SA) Ltd v Administrateur, Transvaal
[22]
(“Ingersoll
-Rand”), as follows:
“
Why
it is important to do a 'before and after' valuation is because it
often happens that there can be a concentration of value
on a
property.  The street frontage portion of a business lot may be
worth much more than a pro rata portion further away
from the street,
just as irrigated lands may be worth much more per hectare than
pasture on the same farm.  By declaring a
road over a property
that can be developed in a town area it is quite conceivable that the
remainder may be so adversely affected
that it can no longer be
developed in this way.  By now imagining two sales between
imaginary willing buyers and sellers,
the objective market value of
the part expropriated, taking into account the integration potential,
can be reliably determined.
A sale of the property before road
proclamation is contemplated.  The property has town development
potential and will be
purchased for that purpose. Then a sale of the
remainder in the open market is contemplated after road
proclamation.  The
remainder may now be without
town-establishment potential because of its size and shape or the
town-establishment potential has
been severely affected.  The
price achieved per hectare is significantly lower than it was before
the road proclamation.
The value of the expropriated portion
will be the difference between the price calculated at the first sale
without the road proclamation
and the price calculated after the road
proclamation.  The integration potential was taken into account
in it. There is not
necessarily always an integration potential
present.  A road can, for example, be declared over a portion of
land that cannot
be used as beneficially as the remainder with the
establishment of a town.  A 'before and after' valuation may now
indicate
a lower price per hectare for the expropriated portion than
for the entire property before the road declaration.  There was

no integration potential, and the valuation shows it.
[23]
[7]
Using a comparative
“before and after valuation”, Parfitt values the
expropriated portion to be R 17 064 382.00.
[8]
Using the same
method, Winkler values the expropriated portion to be R 1 723 507.90.
[9]
Scrutiny
of the mathematical calculations used by both valuers, reveals that
both applied their calculations in a plausible and
tenable
manner
[24]
.
If so, why then this big difference in valuation?
[10]
The answer as to why
the big difference in valuation exists can be found in the
following:  When valuing a property, one has
to take cognisance
of the value which a specific type of land use will realise from the
property. It is a question of basic logic
that a piece of land
utilised to develop a national shopping centre, will generate more
income, and consequently have a higher
market value, than a piece of
land utilised for extensive cattle grazing.
[11]
This is the point on
which the valuations differ. Parfitt opines that the highest and best
use of the Property, before the expropriation,
was to develop a
community shopping centre on. Winkler opines on the other hand, that
the highest and the best use for the Property
will be a retail small
business development.
[12]
In the instance of a
community shopping centre, so Parfitt argues, the market valuation of
the property will be driven by factors
specific to a community
shopping centre. The income potential of such a development is of
such a nature that it will attract province-wide
and perhaps
countrywide investors.
[13]
On the other hand, a
small business retail land use envisaged by Winkler, will attract
investors primarily from the Hoedspruit area,
and history has shown
that the demand in the area for this type of business development, is
subdued with the result that there
will be a much lower valuation for
such a property compared to the situation where the property could
have been utilised as a community
shopping centre.
[14]
A further factor
comes into play: Parfitt opines that due to the awkward nature of the
expropriation, the property of the expropriation
is rendered useless
for purposes of a community shopping centre.  He argues that if
one looks at Figure 1 above, it is clear
that the entire property can
be developed, and that the property is advantageously located, very
close to the intersection of two
prominent roads, giving prime
visibility, of the shopping centre, one of the minimum requirements
of such a shopping centre.
Furthermore, so the argument goes,
the “B” portion of the land after expropriation cannot be
integrated into a development
on the “A” portion of the
land, leaving the “A” portion too small to develop a
community shopping centre
on.
[15]
After the
expropriation, however, it is clear that the expropriation bisected
the property in a very awkward manner, and the development
potential
of the Property was substantially adversely affected.  Parfitt
opines further that had the Expropriated portion
be situated all
along any of the borders of the Property, the impact on the
development potential of the Property would have been
much less, to
the extent that it would still be possible to develop the centre as a
community shopping centre.
[16]
This being the case,
the explanation given in
Ingersol–Rand
,
quoted above comes into play. Parfitt states that the awkward manner
of the expropriation renders the development of a piece of
land
impossible for purposes of the community shopping centre and that for
that reason it would be inappropriate to focus on the
value of the
Expropriated portion, which has no market value in any event.
The only viable way to approach the valuation
is with a “before
and after valuation”.
[17]
What is pivotal then,
is to keep the principles in mind when it comes to the determination
of the “highest and best use”
of land for purposes of
property valuation.
[18]
It
was ruled in
Port
Edward Town Board v Kay
(“Kay”) that the following principles apply when
assessing the potential future use of a property:
[25]
A
party who asserts that a property has a particular potential must
prove it; by potential use is meant additional use over and
above its
current use, for which the property is suited and reasonably capable
of being put in the future. Such proof has three
components, viz 1)
that the potential exists,2) that a willing buyer and seller would
have taken it into account in fixing the
price, and 3) the quantum.
The first component must be shown to be a reasonable possibility and
component two must be proved
on a balance of probabilities. Once
components one and two have been established, then there is no onus
in the narrow sense of
the word concerning component 3.
[19]
Gildenhuys
and Grobler
[26]
state concerning “highest and best use”:
“
The
International Assets Valuation Standards Committee described "highest
and best use" as being "the most probable
use of an asset
which is
physically
possible
,
appropriately
justified
,
legally
permissible
,
financially
feasible
and
which results in the highest value of the asset being valued."
[27]
[20]
It is further stated
in Gildenhuys and Grobler that an owner relying on a potential use
different from the use to which the property
is being put is entitled
to select the use which is the most advantageous to him or her,
provided
that such
use would have occurred to both the notional seller and notional
buyer, and would have been accommodated by them in their
negotiations
about the price.
[21]
It is against the
above backdrop that the evidence has to be analysed as to whether the
Plaintiff, in this case, succeeded in placing
evidence before the
court that a
reasonable
possibility exists that the Property may be developed in future as a
community shopping centre, and whether the Plaintiff
has succeeded in
proving on a balance of possibility, that the notional seller and
buyer would have taken notice of such a possibility
and would have
been accommodated by them in the negotiation of their price.
[22]
To do this, one must
focus more closely on the attributes of a Community Shopping Centre.
[23]
Makkink, testified
that as far as the classification of shopping centres is concerned,
there exists a broad typology which is captured
by a publication of a
certain body, the South African Council of Shopping Centres
(“SACSC”). The publication is called
“Major
Retail Types, Classification and The Hierarchy of Retail Facilities
In South Africa. The 2016 document was handed
in as an exhibit.
[24]
In
terms of this classification, three main groups of retail types
exist, viz firstly, planned shopping centres, secondly unplanned

shopping centres and thirdly rural retail developments.
[28]
[25]
What is important, is
that the Plaintiff’s approach in’s case is based on one
of the above-mentioned three types of
retail development, viz the
planned retail facilities, and six core classifications exist:
firstly, small freestanding and convenience
centres; secondly
neighbourhood centres; thirdly community centres; fourthly small
regional/large community centres; fourthly,
regional centres and
sixthly, super-regional centres.
[26]
The following is
stated on page 5 of this publication:
“
The
market characteristics of each type of centre should be well
understood and taken into consideration in the planning process
for a
specific type centre. The most important to be included are the age
and lifecycle profile, socio-economic status, disposable
income and
expenditure levels, as well as different lifestyles of a particular
area.
The
local conditions of individual markets should be considered. For
example, the development of centres as part of coastal towns
has
different threshold values and the focus should be on the permanent
residents living in the town.  The peak tourist months
should be
regarded as additional support, and not part of the long-term
sustainability of a centre.
[27]
The report then
discusses the characteristics of each one of these six centres under
five subheadings, viz, Role and function, Description
and Centre
Characteristics, Location Criteria, Market Characteristics and
Threshold Values and, lastly Tenant Mix.
[28]
Under the heading,
“Role and function”, the report states that the role of a
community centre is to satisfy the need
for shopping facilities
between that of the neighbourhood and regional centre. Their role is
to offer a larger variety of convenience
products with more depth and
variety of merchandise.
[29]
Under the heading
Description and Centre Characteristics, it is stated that the centres
are between 12,000 and 25,000 square metres
in extent, houses between
50 to 100 stores and the size of the land is between 3.6 and 7.5
hectares.
[30]
Under the heading
Location Criteria, it is stated that these centres are located on
main arterial roads which are accessible from
several suburbs located
in the area. The site must offer high visibility to passing traffic
and accessibility to the residents
in this area. The report states
that the average radius of the primary pride area is 2.5 – 3km,
the median travelling time
to the centre is 6 – 14 minutes, and
the access requirement is that it must be situated at least on a
major arterial road.
[31]
Under the heading
Market Characteristic and Threshold Values, the report states that
for a successful community centre, the following
threshold values and
market support are required: LSM 1 – 5, 44 000 –
102 000; LSM 6 – 9, 15 000
– 45 000 and
LSM 10 – 10+, 5 000 – 12 000.
[32]
Under the heading
Tenant Mix, it is stated that the anchor tenant is required that is
one or two larger supermarkets bigger than
2 500 n square
metres, with typical tenants being Spar, Pick and Pay, Checkers or
Shoprite.  Further included in the
offering should be a
pharmacy, butchery, hairdresser, dry cleaner, liquor store and
hardware store.
[33]
The
reference to the LSM needs explanation: the acronym LSM stands for
Living Standards Measure, developed by the South African
Advertising
and Research Foundation
[29]
.
This measure classifies the standard of living and the disposable
income of individuals. It segments the population into ten deciles

(categories for this judgment), with category 1, being the category
of those people in the population with the lowest living standard
and
disposable income, and category 10 being that category of the
population with the highest living standards and disposable
income
[30]
.
[34]
Parfitt testified
during his evidence in chief, concerning the above-mentioned shopping
centre classification environment, that
those specifications and
requirements should be understood as broad overlapping guidelines and
not rigid categories.
[35]
Plaintiff’s
opinion is, that when assessing the potential use of the Property, it
will become clear that there is a reasonable
possibility that the
Property could, before the expropriation, have been developed as a
community shopping centre as is explained
in the publication of the
South African Council of Shopping Centres.
[36]
The
question therefore is, will a community shopping centre be physically
possible on this site? The current zoning of the property,
viz,
Business 1 with its developmental rights associated with it, will
allow the developer to erect a 35, 464-square-metre building.
Apart
from this aspect, it is common cause between the parties that the
property is situated on the intersection of the R 40 and
R 527, two
major arterial roads. Seen from this perspective, it will certainly
be physically possible
[31]
,
to develop a property, broadly speaking within the understanding of a
Community Shopping Centre.
[37]
The second question
is whether the development will be legally permissible. It is
concerning this requirement that the First Defendant
initially, at a
stage when Mr Shokoane
SC
appeared
on behalf of the First Defendant, constructed its misgivings about
the approach of NAD.
[38]
The defence of the
First Defendant at that stage, was that NAD obtained the zoning of
Business 1, unlawfully and should therefore
not be entitled to rely
on the zoning of Business 1. In fact, at some stage during the
proceedings, the First Defendant sought
to amend its pleadings with
the dramatic effect to include a prayer that the Business 1 zoning
should be reviewed and set aside,
as part of the relief sought by the
First Defendant. Apart from this, during the cross-examination of the
witnesses, a substantial
amount of energy was put into probing of the
question whether the Business1 zoning was lawful.
[39]
At some stage Mr
Shokoane’s instructions were terminated by the First Defendant
and Mr de Villiers from thereon appeared on
behalf of the First
Defendant.  Mr de Villiers abandoned SANRAL.
[40]
In
my view, the decision of SANRAL to abandon this approach was wise and
well-justified. I am not going to dwell on the reasons
why this is
so, other than to say that the existing zoning of a property,
concerning potential future use, is not determinative
of the
development potential of the property.
[32]
There are further reasons, but since this approach was abandoned by
the First Respondent, it is not necessary to consider this
aspect
further.
[41]
The second question
regarding the legal permissibility of the development of the shopping
centre proved to be much more substantial,
in further respects.
[42]
It is the case of
NAD, that before the expropriation, there was a reasonable
possibility that a community shopping centre could
be developed. Due
to the expropriation, and the awkward way in which the expropriation
was done explained above, the development
of a community shopping
centre is no longer possible.
[43]
It is common cause
between the parties that the First Defendant expropriated the
Expropriated portion, to enable it and the Municipality
to devise a
traffic flow solution for the area of Hoedspruit extension 6.
[44]
NAD took transfer of
the Property on 13 March 2015 and submitted a site development plan
for its proposed development on 1 September
2015.
[45]
It is common cause
that the Municipality refused to approve the site development plan,
for the reason that they opined that
NAD had to obtain the approval
of the First Defendant particularly concerning the impact that the
development would have on the
road and traffic implications in the
vicinity.
[46]
SANRAL and the
Municipality opined, that NAD was duty-bound to do so by Section 48
of the SANRAL Act, which reads as follows:
“
48.
Structures and other works on, over or below national roads or
certain other land.—
(1)
Except as provided in subsection
(2), no person may do any of the following things without the
Agency’s written permission
or contrary to that permission,
namely—
(a) on or over, or
below the surface of,
a national road
or land in a building
restriction area
, erect, construct or lay, or establish any
structure or other thing (including anything which is attached to the
land on which
it stands even though it does not form part of that
land);
(b) make any
structural alteration or addition to a structure or that other thing
situated on or over, or below the surface of,
a national road or land
in a building restriction area
(c)
give permission for erecting, constructing, laying or establishing
any structure or that other thing on or over, or below the
surface
of, a national road or land in a building restriction area, or for
any structural alteration or addition to any structure
or other thing
so situated”.
[33]
[47]
Subsection 2 of
section 48 is not applicable to this development.
[48]
Subsection 3 of
Section 48, reads as follows:
“
(3)
(a) The Agency, in its discretion, may give or refuse its permission
in terms of subsection (1).
(b) When giving
permission, the Agency may prescribe—
(i) the specifications
to which the structure, other thing, alteration or addition for which
permission is asked, must comply;
(ii) the manner and
circumstances in which, the place where and the conditions on which
the structure,other thing, alteration or
addition may be erected,
constructed, laid, established or made; and
(iii)
the obligations to be fulfilled by the owner of the land in question
if the structure, other thing, alteration or addition
is erected,
constructed, laid, established or made
.”
[49]
The argument of NAD
is that section 48 of the Sanral Act does not apply to this
development. To be applicable, as the argument goes,
the development
must envisage a structure on the road surface or a building
restriction area. For that reason, it is necessary
to establish what
the building is in terms of this Sanral Act.
[50]
A building
restriction area is defined in the Sanral Act as
“
building
restriction area” means the area consisting of land (but
excluding land in an urban area)—
(a) situated alongside
a national road within a distance of 60 metres from the boundary of
the national road or
(b)
situated within a distance of 500 metres from any point of
intersection
;”
[51]
It is clear from a
mere visual inspection of Figures 1 and 2 and Annexure “A”,
that the Property is within 500 m of
an intersection with the R40,
that is the Rotvy R 40 intersection.
[52]
The argument of NAD
is, however, that the definition of building restriction area
excludes land situated in an urban area.
[53]
To establish what is
meant by “urban area”, one has to consider all the word
definition of urban area, which is defined
as follows in the Sanral
Act:
“
urban
area” means any area consisting of—
(a)
a township mentioned in paragraph
(a) of the definition of “township”, but excluding land
in that area
(i)
which is commonage land; or
(ii)
which is used or destined to be used
mainly for farming or horticulture or the keeping of animals;
or
(iii)
which consists of any other open
space which has not been developed or reserved for public purposes;
or
(b)
a township mentioned in
paragraph (b) of that definition which the Agency by notice in the
Gazette has declared to be an urban area
for the purposes of this
Act.
[54]
It is therefore clear
that any township, within the meaning of township as defined in the
Sanral Act, is defined as an urban area
and is thus excluded from the
definition of building restriction area.
[55]
It is common cause
between the parties that Hoedspruit Extension 6, is a township as is
defined in the Sanral Act.
[56]
NAD argues therefore
that, since the property does not fall within a building restriction
area, that, for that reason, the consent
and the permission of SANRAL
are not necessary for its site development plan.
[57]
In
my view, NAD does not consider the definition of “urban area”
properly. An urban area is indeed defined as being
any declared
township, but, as is clear from the definition, certain areas are
excluded from the definition of “urban area”,
amongst
others “any other open space”
[34]
.
There can be no doubt that at the time of the submission of the site
development plan, the Property, was such an open space.
[58]
This means that the
Property is excluded from the definition of urban area, meaning that
it falls within the definition of a building
restriction area, which
in turn means that Section 48 applies to the development, meaning
that the permission of the First Defendant
is indeed necessary, and
apart from that SANRAL has the authority to impose conditions and
specifications in terms of subsection
3 of section 48.
[59]
Makkink, in his
evidence in chief, also confirmed that no access of vehicles via
Rotsvy Road would be permissible, concerning the
development,
although he reiterated in the re-examination that in terms of the
current zoning, there is access to the property
from the R 40 via
Rostvy road.
[60]
In my view, if it is
assumed for the argument for the moment, that the traffic
implications and the expropriation of the Expropriated
portion
destroy the possibility that the property can be developed as a
community shopping centre, then that fact was well known,
even at the
time that NAD bought the property from the previous owner.
[61]
The Deed of Sale
between NAD and the erstwhile owner stipulates clearly that at the
time of the purchase, negotiations had already
commenced between
SANRAL and the erstwhile owner, to the extent that diagrams for a
portion of land which SANRAL intended to acquire,
had already been
drawn. Copies of the diagrams and other documentation had been handed
over to NAD.
[62]
In my view, a
notional buyer would have taken notice of these traffic requirements,
as representing a possible constraint on the
possibility of
developing the property as a community shopping centre.
[63]
To
this, NAD offers an answer. NAD relies on the judgment
Mooikloof
Estate (Edms) Bpk v Premier
[35]
(“
Mooikoof
”),
in which the following is stated:
“
It
is not unreasonable for an owner who wants to develop his property to
take the position that he continues with his development
in a way
that suits him (obviously within the limitations that the law imposes
on him) regardless of the fact that a road may one
day be proclaimed
over his property or in its vicinity (because a plan was drawn up
officially proposing it a decade ago) taking
into account the fact
that it may take a number of decades before the road ' become a
reality, if ever. The authority is free to
curb the developer by
immediate proclamation of the road but it is unreasonable on the part
of the authority to paralyze all development
for the foreseeable
future because an engineer drew a few lines on a stretch paper."
[36]
[64]
Based on this ruling
NAD argues that it was entitled to proceed with the development of
the property, as it saw fit even though
it knew that an expropriation
might follow resulting from SANRAL devising a solution for the
traffic complications in the area.
[65]
I do not agree that
Mooikloof
supports NAD in this case.
Mooikloof
refers to a situation where planning documents foresee the
possibility of a road, clearly based on the assessment of an engineer

of the development scenarios that may unfold in future. It is of
course logical that the assumptions may prove not to materialise,
in
such an instance the roadway never comes into being.
[66]
In this case,
however, the opposite is true. Schmidt received a visit from a
councillor of the Municipality, complaining
of an existing and
concrete traffic problem. He visited the site, with the councillor,
and a staff member of the Municipality.
SANRAL had a traffic
study done after which they initiated the process that resulted in
the expropriation of the Expropriated portion.
[67]
Schmidt testified
that he and a representative of Overine had more than one discussion
and that they jointly demarcated the borders
of the Expropriated
area,  and they agreed that the area so marked by them
represents the most practical and the only practical
way for a road
area.
[68]
Apart from this,
Overine handed all diagrams, and other documentation over to NAD, and
alerted NAD in the Deed of Sale, of the possibility
of the
expropriation of the portion.
[69]
Schmidt also
testified that he had a meeting with a representative of NAD and with
an expert employed by NAD, a certain Dr Herman
Joubert.  Dr
Joubert apparently undertook to make an alternative proposal to
SANRAL. SANRAL waited to receive this alternative
proposal, but they
never received the proposal.  SANRAL eventually proceeded with
the expropriation.
[70]
Apart from the above,
the town and regional planner that applied for the rezoning of the
property from “Educational”
to “Business1”
indicated clearly, in the cover letter, that the owner of the
Property at that stage was aware of the
possible SANRAL intervention
and that they would consult directly with SANRAL.
[71]
The sequence of
events involving SANRAL, cannot be equated with an engineer drawing
“
a
few lines on a stretch of paper
”
“
a
decade earlier
”.
[72]
In my view, any
reasonable purchaser of land contemplating the purchase of the
Property, having all the information at the disposal
of NAD, would
have realised that some action from the side of SANRAL to acquire the
Expropriated portion, was probable and imminent.
[73]
The last factor to be
considered, when assessing the potential use of land,  is the
question of whether there is prima facie
evidence pointing to a
reasonable possibility that the community shopping centre could be
financially viable on the Property.
[74]
In this regard, the
guidelines laid down by the SACSC guideline document describe the
community shopping centre as a community shopping
centre which is
accessible from a number of suburbs located in the area. It specifies
also a LSM profile market support, viz LSM
1 – 5: 44 000 –
102 000 -00 households, LSM 6 – 9: 15 000 -  45 000
households and LSM10
– 10+ 5 000 – 12 000
households.
[75]
About Hoedspruit,
Parfitt testified as follows:
“
Hoedspruit
is probably one of the best gateways to the Kruger Park and has some
of the best game lodges in that area, but that is
what is driving
it.
”
[76]
It testified further
that there are plus minus 150 bush lodges in the area, representing
approximately 7 000 beds.
[77]
He also testified:
“
But
there is a lot of tourism, that is what is driving this locality
”.
[78]
Parfitt identified a
second change in the social economic dynamics operative within the
area and that is the social grant dispensation.
It testifies that
there was a massive increase in social grants, in the area. He
however stated that the retail facilities that
satisfy such needs are
“
like
little retail centres
”,
to a large degree “
glorified
distribution centres
”.
The designs of these centres are industrial designs.
[79]
In Parfitt’s
expert report the following remark appears:
“
This
(sic) nature of the locality is rural agricultural community. Its
location is south of Phalaborwa. The land sits in the central

business area of Hoedspruit. The land front entrance of the
Hoedspruit wildlife estate, and also adjoins other business
developments,
making it a very appealing location for retail
development. This property is, located alongside the main Pick and
Pay shopping
centre with growing retail potential. The area has an
increasing presenting local population as well as serving the alp
demographic
by being a commuter/taxi hub. This area has been growing
at the population rate of approximately 11
%
per annum over the last 8 years and additional retail development is
needed to supply the area with consumer goods at locality
close to
the consumers.”
[80]
Parfitt also
testified as follows with regard to future potential of land use
other than the current land use:
“
MR
VENTER: And if you have got a piece of land that is  zoned
agricultural, will there be potential, do you take into
account
the potential of that piece of land being something  different?
MR
PARFITT: You could take that into potential, when I  was
involved with developers for Mall of the North, Brits

Mall as well, Flanagan and Gerard who I used to work for  some
years ago, effectively where they make their money is
they look
at the major highway, they look at the frontage,  they look at
that field and they say there is potential. They
do an analysis
of the demographic of the existing retail  rights and demand and
spend, but remember they are plugged in to
all the retailers so they
have got information  as to what is being spent in the area, so
they know there is  better
potential than what most other people
know. But this  only comes with years of experience,
knowledgeability and
all the rest of it and they say
there is potential in that. “
[81]
Parfitt also
testified as follows:
“
MR
VENTER: Is there anything that you want to add to  what your
report says, as far as locality is concerned?
MR
PARFITT: M'Lord, can I just amplify a little but on my  locality
over here and that is that, you know what, in  assessing
a
retail centre, having been involved and very,  very fortunately
with intellect which has actually put together 1, 2, 3 billion
rand
shopping centres. And having  learned from that, one of the
things that you look at is what  drives, what drives
a
development to the point that it is  actually feasible, that it
works? That once you put R500  million to the ground,
it is
actually going to work and even  big companies get that wrong, I
am just busy dealing with the demise of a company that
is worth about
12 million, that  actually owes about 13 billion, because they
got this wrong  and I am busy with a business
rescue part on
exactly that.”
[82]
When coming to the
rezoning of land use rights, Makkink testified that there is an
application to be followed at the added such
a process, which he
described as “
an
intensive process
”,
a process which is “
intricate”
including
specialist studies public participation and the procurement of
comments.
[83]
Van Nieuwenhuizen
echoed these remarks by Makkink. He indicated that the rezoning
application is accompanied by detailed studies
to indicate that there
is a need for the type of land use proposed by the developer. He
added that in this rezoning application,
no expert reports pointing
to a need to develop this property, were submitted by the town
planner. This statement of van Nieuwenhuizen
was not disputed.
[84]
If one analyses the
cover letter that accompanied the rezoning application, one simply
finds that attached to the letter was a complete
application and
approval of bank transfer of the application monies.  There are
no references to any specialist reports.
[85]
The Memorandum that
accompanied the application deals with the subject of the Need and
the Desirability of the rezoning of specifically
the Property, under
paragraph 6:
“
The
establishment of a business component in Hoedspruit Ext 6 has proved
to be viable and popular with the development of a wide
range of
shops, restaurants offices and a national food chain. The Estate
could be considered a huge success and contributed directly
to the
economic growth of Hoedspruit and Maruleng.
”
and
“
The
proposal makes provision for a school on 6 ha, and enough space on
Erf 215 to develop a minimall which would enhance and strengthen
the
retail node at the entrance to the Hoedspruit Wildlife Estate
”.
[86]
Winkler also
testified and reiterated on the cross-examination that in his view,
no facts pointing to the conclusion that a community
shopping centre
will be successful on the site, exist.
[87]
The question
therefore is: against the backdrop of what is required, as set out
by, for all practical purposes the testimony of
all the expert
witnesses, to conclude that there is a reasonable possibility that
Erf 215 can successfully be developed as a community
shopping centre
- did NAD succeed in placing such facts before this court?
[88]
In line with all the
requirements set out above, one would at least have expected evidence
to the following effect: some tangible
evidence concerning the total
retail demand in the catchment area of the to-be-developed shopping
centre; how much of that demand
is currently satisfied by the current
retail facilities in the area and from that, what is the deficit in
terms of retail offering
that can be followed by a shopping
centre.    Apart from that one would have expected
clear evidence regarding the
retail profile of the consumers in the
catchment area of the to-be-developed shopping centre
[89]
NAD did not place any
such evidence before the court. It seems also no such evidence was
placed before the tribunal considering
the rezoning application.
[90]
NAD relies on the
bald statements of Parfitt, that the “demographics” of
the shopping centres, which are similar to
the shopping centre that
NAD wanted to develop, as comparative land values, are similar.
[91]
The only other
statements by Parfitt, are the very general statements that tourism
is the primary driver of economic demand in the
area and that there
are plus minus 150 lodges, that 7 000 beds in the area. How
these remarks translate into economic demand,
within the context
above, is not explained.
[92]
In
the past, the courts have signalled a cautionary note concerning the
value to be attached to the potential use of land.
It was
stated in
Davey
v Minister of Agriculture
[37]
(“
Davey
”)
that a buyer will be circumspect and conservative in attaching value
to potential use, for several reasons. Despite these
remarks, the
court said, some value should be attached to proven potential.
Important in this judgement is, that the
potential must be proven,
and lastly that “
some
value”
should
be attached to it.
[93]
The
conclusion of this court is therefore as far as the potential use of
the property is concerned: NAD had to tick the boxes in
the evidence
that it presented: Firstly, is a development physically possible? In
my view, NAD ticked this box in terms of the
evidence presented. The
locality of the Property certainly lends itself to a community
shopping centre. Over and above this, the
extent of the Property, and
the development rights afforded to the Property, before the
expropriation, make it possible to develop
a Community Shopping
Centre. The second box, is the question of whether the development is
legally permissible. Once again, in
terms of the land use scheme, the
development is legally permissible. It is much less clear whether any
purchaser would obtain
the permissions of SANRAL for its development
proposal, and the uncertainties in this regard were well known to NAD
before the
purchase.  If SANRAL’s expropriation and
requirements concerning traffic indeed make the development of a
community
shopping centre impossible
[38]
,
as is submitted by NAD, then in my view, NAD did not tick the second
box, that is place sufficient evidence before the court to
conclude
that the community shopping centre is a reasonable possibility. The
last box is whether the development of a community
shopping centre is
financially viable.  In my view, there is a paucity of evidence
on this aspect for the reasons set out
above, to such an extent that
it cannot be set that NAD placed enough evidence before the court to
conclude that the development
of the shopping centre is a reasonable
possibility.  I find therefore that, based on the evidence
presented, the development
of the shopping centre as a community
shopping centre, was not reasonably possible.
[94]
The second aspect is
the question of in what way and to what extent the future possible
land use as submitted by NAD would be taken
into account in the price
negotiations.
[95]
Parfitt testified
that he did not use the purchase price of the Property in 2015,
amongst others, as a property in his basket of
comparative sales,
because there was uncertainty as to the obligations between all
the different parties involved in this
transaction. He testified that
it was not clear who of the parties attracted what obligations. He
typified the situation as having
“
too
many moving parts of unknown quantum attached to the original
acquisition of this land
”.
[96]
This statement of
Parfitt was certainly odd. After all, NAD employed Parfitt to place
an expert opinion before the court.
All the factors leading
Parfitt to conclude that the transaction has “
too
many parts of unknown quantum
”,
are all within the knowledge of NAD. One would have expected NAD to
give Parfitt full instructions, and lead evidence,
on these
factors. These factors refer to the cost of rezoning, and the cost of
the relocation of the school and, so it seems,
also possibly, the
cost of upgraded services of the Property.
[97]
I have to agree with
Parfitt, the nature of this transaction is certainly opaque.
[98]
In light of these
factors, I conclude consequently that NAD failed to place evidence
before the court,  and to prove on a balance
of probabilities,
that a willing buyer and seller in the open market would have
concluded that a community shopping centre is viable
as a development
option for the Property, and that they would have taken that into
account, within the context of this transaction
in negotiating a
purchase price.
[99]
The entire report
testimony of Parfitt is premised on the assumption that the
development of a community shopping centre is viable
on the
Property.  Parfitt did not consider any comparative sales in the
Hoedspruit area, for the reasons given above.
In my view, the
opinion of Parfitt does not assist in determining the value of the
Expropriated area.
[100]
It is therefore not
necessary to analyse the logic of Parfitt’s comparative
analysis of properties in towns in Limpopo, which
he opined were
similar to the intended development on the Property.
[101]
There are indeed
strange aspects in his opinion. From this analysis presented to the
court, he selected properties that were serviced.
He adjusted
the property values of properties for properties that were not
serviced, to reflect the value of the serviced property.
However, in
his testimony, he responded to a question of the court that the
property should be regarded as an unserviced erf. It
is not clear
from the evidence if a serviced erf was sold to Hebrides. The
probabilities point in the direction that it was an
unserviced erf,
since NAD was never in a position to commence with the development of
the erf, because the site development plan
was never approved.
[102]
There
is a second curious aspect.  Parfitt selected a  list of
properties, extracted land values from the list, adjusted
the values
in the light of certain assumptions and then calculated an average
land value per square metre from these figures. He
arrived at his
valuation by simply signing this value to the Property. This
approach, in my view, is incorrect. When it comes to
future potential
use,
Davey
stated
that “some value” should be allowed for the future
potential of a property. In my view,  therefore any valuation

which takes cognizance of future potential use of the property,
cannot regard the local economic factors to be irrelevant.
The
fact that a developer, even a national developer, can obtain land in
an area, at a price which is a substantial discount compared
to other
developed shopping centres, may prove to be one of the factors that
contribute to the overall financial viability of the
future
development.  In other words in my view, even if NAD had made
out a case that a Community Shopping Centre was feasible,
that would
not mean that the notional buyer would have offered a price for the
land on par with land values of other developed
shopping centres in
the Province. It is of course possible that a purchaser would be
willing to do so, but then satisfactory evidence
to that effect
should be placed before the court. (See also the criticism of the
court in
Ingesol-Rand
of the approach of the valuer in that case that the approach the
valuation of the subject property, in a before and after valuation,

on the basis that the values of the adjacent properties were
irrelevant)
[39]
.
[103]
A further aspect of
the case of NAD remains unanswered. Although NAD denies, that it
never received the expropriation notice, it
is clear that even on
their version, they were aware of the expropriation before 31 August
2016, the date on which they filed their
application for an order to
compel the Municipality to approve its site development plan. For a
full three years after this date,
they still attempted to negotiate
with SANRAL to approve the site development plan, in fact on 12
November 2019  NAD wrote
a letter to SANRAL to indicate that
they would file the site development plan to SANRAL, albeit for
comments.   NAD  thereafter
sold the Property.
So the question is,  was it the awkward way in which the
Expropriated portion is situated on
the property that prevented
further development, or was it the conditions that SANRAL  required
in terms of road construction
and access to the property that
prevented development of the property into a Community shopping
centre? These factors were never
clarified satisfactorily in
evidence.
[104]
In establishing a
value for the Expropriated portion, the opinions of Winkler should
also be considered in detail.
[105]
It
is apposite at this stage to deal with the submission of Mr Venter,
that NAD does not agree that Winkler Jnr
[40]
was sufficiently qualified and has sufficient experience to be
regarded as an expert. It is therefore apposite to deal with this

aspect at this stage.
[106]
Winkler testified
that he had been a professional valuer since 2010, that is 13 years.
He testified that he was attached to the
firm of Winkler Snr. He
testified that he obtained an honours degree in Quantity Surveying at
the University of Pretoria. He practised
for two years as a quantity
surveyor.  He obtained a Master's degree in real estate at the
University of Pretoria and registered
as a professional valuer.
[107]
He testified that he
had experience in valuing shopping centres up to 40,000 square
metres, and he had experience in the valuation
of undeveloped land.
[108]
He also testified
that they have done valuations for Eskom for a long period, strip
valuations for powerlines as well as for SANRAL
for land
acquisitions mostly based on the Expropriation Act.
[109]
In cross-examination,
he concedes that he only had done valuations of approximately five
shopping centres, whereas Mr Parfitt had
been involved in the
valuation of hundreds of shopping centres
[110]
It seems that despite
13 years of practising as a professional valuer, his exposure to
shopping centre valuations paled into insignificance
compared to
Parfitt, who had been involved in a few hundred shopping centre
valuations.  For that reason, so the argument
went, Winkler can
not be regarded as an expert.
[111]
I do not agree. In my
view, it is wrong to devise some quantitative measure that aggregates
into a quantitative minimum beyond which
a person can be regarded as
an expert witness. In my view, it is also wrong to count the number
of instances in which a person
was involved in the valuation of a
property type and compare that with the number of instances in which
the expert for the opposite
party had been involved in similar
valuations, and from that conclude that the one is an expert and the
other is not, or that the
one is a greater expert than the other. To
take such an approach is to make a basic error of counting evidence
instead of weighing
evidence, which a court should do.
[112]
The
focus of evaluating expert evidence falls on the assessment of prima
facie proved facts on which the expert bases its conclusion
and the
rationality of the reasoning behind the conclusion.
[41]
[113]
I am satisfied that
Winkler Jnr is suitably qualified and has suitable experience to
express an opinion concerning the matters
which are the subject
matter of this opinion.
[114]
The basic methodology
Winkler employed was the following: the business economic potential
of the Property, should be assessed using
the economic demand factors
specifically operative within the Hoedspruit area since the general
market for these types of properties
in smaller towns is not very
attractive.
[115]
Apart from this,
according to him the Property, is suitable for small retail
development, both Portions “A” and “B”
in
Figure 2 can still be developed optimally and the specific area of
the Expropriated portion did not adversely affect the development

potential, and therefore values of the Property.
[116]
Winkler opines that
the 2015 purchase of the Property, is a very good indication of the
market value of the property at that stage
since he regarded that
purchase as a
bona
fide
transaction.
[117]
Relying on a
well-known author, Gildenhuys, he states that one is seldom in the
lucky position to have a transaction on your subject
property.
This is the case in this instance.
[118]
He echoed a sentiment
expressed by Parfitt, that the comparative sale evaluation becomes
less and less comparable the more adjustments
have to be made. If you
have transactions of the subject property (in this instance the
Property) the only adjustment that needs
to be made,  is an
adjustment for the time value of money. That is the only adjustment
would be an increase or decrease, depending
on the situation, in the
light of a certain rate, and in this instance, the experts agree that
the appropriate rate is 5% per annum.
[119]
What Winkler did,
was to take the price paid for the property in 2015, as the market
value of the property, to be an amount
of R 14 500 000-00,
even though the purchase price paid by NAD was only R 7 750 000
– 00. The market
value is thus an adjusted value of the
purchase price. I will return
[120]
Winkler Snr, in his
report, took the market value of the property after the expropriation
to be the purchase price of the Property,
in 2015, per square meter,
that is R 14 500 000-00 divided by the area,
viz
,
44 331 resulting in a purchase price per square meters of R 327 –
00. Winkler thereafter opined that after expropriation,
the value of
the property can be determined by multiplying the area of Portion A
in Figure 2,
viz
33373
square metres multiplied by R 327-00 that is R 10 912 971,00.
To this he adds a value for Portion B in Figure 2,
that is the area
of Portion B viz 5857 square metres multiplied by R 327-00, that is R
1 9115 239.00.  The value of the two
portions taken together is
thus R 12 828 210.00. If this amount is subtracted from the
value of the entire property before
expropriation, that is R
14 500 000-00, it leaves an amount of R 1 671 790
- 00.  According to Winkler
Snr in his report, this is the
market value of the Expropriated portion, that should be awarded to
NAD.  This, according to
him in his report, represents a result
of a before and after the valuation of the Property.
[121]
In my view remarks
are necessary concerning the testimony and reports of the Winklers.
In the Deed of Sale between Overine and NAD,
it is clear that NAD had
only one obligation and that is to pay a purchase price of R
7 750 000-00, and nothing more.
This figure is also
the figure reflected in the Deed of Transfer.  If this is so
then how did they arrive at a purchase price
of R 14 500 000-00?
[122]
The explanation is to
be found on P. 11 of the addendum report of Winkler Snr. In paragraph
9.1.1, he states the following:
“
The
subject property was purchased with a school on it. The purchaser
demolished the school. According to information obtained from
the
valuation report compiled by Mr Peter Parfitt(o.b.o NAD Prop Income
fund), the school was relocated at a cost of R 6 750,000,00.

Taking this relocation cost into consideration, the total purchase
price is as follows
:”
[123]
Parfitt testified
explicitly that the transaction had a
“
slightly
chequered history as who is meant to do what with it, not who it
belonged to, but who was meant to do in certain obligations
to
anybody that was going to invest into the property
.”
[124]
This statement is in
itself vague, and it was never clarified. It was argued before this
court on many occasions that NAD incurred
these relocation costs.
There is however no evidence to this effect.
[125]
Furthermore,
Winkler Snr’s report presented its calculations in a “before
and after” manner.  This calculation
is not a before and
after calculation within the context of
Ingersoll-Rand
,
that is, to keep proper account of the integration potential of land
that has been compromised by the expropriation. It is of
course not
wrong to use the before and after method in the instance of land with
no integration potential, as Hartzenberg J remarked
in
Ingersoll-Rand
”
[42]
.
All that will happen is that the calculation will show that there was
no integration potential to begin with. This is what
Winkler Jnr
testified. Winkler Snr's formulation of his valuation was an
unnecessarily convoluted way of doing a very simple calculation,
and
that is to divide the purchase price paid by the purchaser, by the
area of the land before expropriation, and to regard that
result as
the square metres value of the land expropriated.
[126]
In
my view, therefore, given the fact that this court found that NAD did
prove the reasonable possibility of the potential use of
the Property
as being that of a community shopping centre and that there is no
evidence to include the relocation costs of the
school as part of the
purchase price of the Property, the correct way to approach the value
of the Property before expropriation,
is to regard the 2015
transaction between Overine and NAD, as a
bona
fide
transaction,
and as representing the value of the Property. Such was also the
approach followed by a court in
Jacobs
v Minister of Agriculture
.
[43]
[127]
The
purchase price of R 7 750 000 – 00, should be
adjusted for a single year
[44]
to reflect the changes in the value of money over time. The experts
are
ad
idem
that
the rate applicable should be 5% per annum. To adjust the purchase
price is simple: R 7 750 000-00 multiplied by
1,05, leading
to a result of, that is R 8 137 500 – 00.  Thus
for purposes of this judgment show take a market
value of the
Property, on the date of expropriation to be R 8 137 500 –
00.
[128]
Parfitt testified
that the expropriated portion has no market value. This testimony was
never challenged and it is almost self-evident
that no purchaser will
be interested in buying the Expropriated portion on the open market.
[129]
That being the case,
the proviso in Section 12(1) of the Expropriation Act comes into
play, and that is where the property expropriated
has no market
value, then the expropriated property shall be valued based on either
the replacement cost of the improvements on
the property or “
in
any other suitable manner”.
In my view, this is
an instance where the value which is to be attached to the
expropriated portion should be evaluated “
in
any other suitable manner
”.
[130]
I will return to the
value of the Expropriated portion after having considered the factors
mentioned in section 25(a), (b),(d) and
(e) of the Constitution. In
the end, this court has to arrive at a value which is just and
equitable reflecting an equitable balance
between the public interest
and the interests of those affected.
SECTION
25(3)(a),(b),(d),(e) OF THE CONSTITUTION
[131]
Section 25(3)(a): The
current use of the property, is as was the case on the date of
Expropriation, an open space. The zoning is
Business 1, previously
having been educational. The rezoning application was done
simultaneously with the acquisition of the property
and the previous
owners applied for the rezoning of the property. The fact that the
previous owners were indicated to be the applicants
for the rezoning,
does of course not mean that NAD did not undertake the rezoning,
since NAD could have undertaken all rezoning
steps, and incurred all
the costs, with the assistance of Overine. The problem is just that
there is no evidence to this effect
and it is unclear which of the
parties did what in terms of rezoning.
[132]
Section 25(3)(b): The
Property initially had a small school built on it. The property was
initially donated to the local authority,
gearing township
establishment Hoedspruit x 6, to develop a school. Since the school
was not developed within five years, it was
transferred back to the
developer, and Overine eventually acquired the Property to develop a
school on the Property.  NAD
approached Overine (and perhaps
other parties) with a proposal that included the relocation of the
school to adjacent properties,
which would allow the Property to
obtain a Business 1 zoning. Once again, the exact nature of the
eventual agreement between all
the relevant parties was never
properly explored in the evidence.
[133]
Section 25(3)(d):
There was no direct state investment and subsidy in the acquisition
and beneficial capital improvement of the
Property.
[134]
Section
25(3)(e): The purpose of the acquisition of the Expropriated portion,
is to enable both SANRAL and the Municipality to devise
a solution to
alleviate the traffic problems in the area of Hoedspruit Extension 6.
That this was necessary and that the expropriation
was in the end
necessary, was not disputed by any of the parties.
[45]
The provision of road infrastructure, in my view, is an instance of
regulatory expropriation falling within what is called, the
“police
power” of the state which arises from the obligation of the
state to take measures about the environment, health,
morals, culture
or economy of the country.
[46]
[135]
When
it comes to assessing compensation, the public, from whom the money
comes, has an interest that the award would not put an
undue
financial strain on the public purse. The interest of the
expropriated property owner is to receive full compensation.
[47]
The question that should be asked is that the sacrifice made by the
expropriatee must be such that it can be expected from other
persons
as well, otherwise, it could offend the equality clause contained in
section 9 of the Constitution.
DETERMINATION
OF COMPENSATION WHICH IS JUST AND EQUITABLE
[136]
This
court must award compensation which is just and equitable reflecting
an equitable balance between the public interest and the
interests of
those affected.
[48]
[137]
The market value of
the property date of expropriation was R 8 137 500 –
00.
[138]
Parfitt calculated
the present value of the purchase price of the transaction between
NAD and Hebidres Investments, on the date
of expropriation, to be R
11 487 966.00.
[139]
If these two values
are kept in mind, then the strange result is that the Property is
worth more after expropriation than before
expropriation.
[140]
Some may argue that
in such a situation, no compensation should be payable. In fact,
Parfitt testified that he was involved in arbitration
proceedings in
which the arbitration tribunal determined that no compensation should
be paid to a certain landowner, for the expropriation
of a small
portion of its land, during the Gautrain development.
[141]
In my view,
expropriation without compensation can only be justified in specific
circumstances, for instance, where the situation
as described in
section 25(3)(d) or for instance where the portion of land
expropriated would be so insignificant that it would
be the case of
de minimis
.
Many other scenarios may also exist.
[142]
In
general, as was stated by the Supreme Court of Appeal in
Haakdoornbult
and
articulated by Kleyn
[49]
,
the purpose of compensation for expropriation is to recompense the
expropriatee, that is to provide a sum of money to the expropriated

to replace what he has lost. This should be done based on what is
just and equitable reflecting an equitable balance between the
public
interest in the interest of the property owner.
[143]
In my view, as was
stated above, NAD expended an amount of R 7 750 000 –
00, under circumstances that they knew,
or any reasonable person
would have known precisely what portion SANRAL intended to acquire,
and they knew or should have known,
since it was stated in the Deed
of Sale, that SANRAL’s acquisition of the Expropriated portion
was imminent, either by way
of agreement or expropriation if
necessary.
[144]
In my view, it is
just and equitable that under such circumstances NAD should be
compensated by awarding to them the pro rata amount
of the purchase
price paid by them for the Property to compensate them for the value
of the asset, at the date of the transaction,
taken from them.
[145]
In SANRAL’s
letter of 13 August 2023 already, SANRAL expressed an interest in
acquiring a portion of the Property and even
the whole property by
buying it, to solve the traffic problem of Hoedspruit Extension 6.
Schmidt testified that while SANRAL was
still negotiating with the
representatives of Overine, Overine sold the property to NAD,
unbeknown to SANRAL. While there is of
course no legal obligation on
either Overine or NAD to communicate the upcoming sale with SANRAL,
the transfer of the property
confronted SANRAL with a new owner,
which had a completely new attitude to the expropriation.
[146]
In
my view, it is just, fair and equitable to place SANRAL  in a
position that it had been in, should it have finalised the

acquisition from Overine. SANRAL could then lock its position in by
expropriating the Property, had they realised that a sale of
the
property was imminent, in the absence of an agreement with
Overine
[50]
.
Overine was willing to sell for R 7 750 000-00, that
is R 7 750 000-00 divided by 4 4331 square metres
resulting
in a value of R 174,82 per square meter.
[147]
The area of the
Expropriated Portion is 5101 square meters, resulting in a total
amount of R 891 756,82,  for the Expropriated
portion.
REASONS
FOR JUDGMENT IN SANRAL’S APPLICATION TO AMEND
[148]
This case was
adjourned on 2 December 2022 and at that stage, NAD indicated that
they contemplated closing their case but they would
have made a final
decision on that when the trial was received on 27 March 2023.
[149]
When the trial
resumed on 27 March 2023, Mr Shokoane SC on behalf of SANRAL,
proceeded with two interlocutory applications. The
first was an
application to amend SANRAL’s pleadings and the second was an
application in terms of rule 30 A.
[150]
NAD opposed the
application.
[151]
The
application
[51]
was argued the entire 27 March 2023. I indicated that that I would
give judgment on the 28th of March 2023. On that date, I dismissed

the application and indicated that my reasons would follow with the
final judgment together with an order for costs.
[152]
From the outset, part
of SANRAL’s version was that the rezoning of the Property from
Educational to Business1 was unlawful.
[153]
Now, to be clear,
there were indeed strange aspects surrounding the rezoning.
This rezoning was achieved in what van Nieuwenhuizen
called,
world-record time, the time between the lodging of the rezoning
application and the eventual approval thereof did not allow
for
meaningful public participation and comments from government agencies
that may have an interest in the rezoning. The rezoning
was finalised
without, with what would normally be expected, thorough expert
reports, to support the requirement of the need and
the desirability
for the rezoning.
[154]
At
the same time though, it is, in my view clear that irrespective of
the formal zoning of the Property, the only sensible land
use is some
or another kind of business land use, simply because of the locality
and adjacent property developments.  The
potential use of the
property is not constrained by the existing land zoning.
[52]
[155]
The amendment aimed
to achieve two results: Firstly to amplify the allegations in support
of the illegality of the zoning of the
Property, and secondly to
insert a prayer that the zoning of the Property be reviewed and set
aside.
[156]
It is just
inexplicable why SANRAL brought the application: it was not
necessary, and strictly spoken not even admissible, to try
to amplify
the allegations of unlawfulness in the plea with further allegations,
some of which were nothing more than evidence.
It was also
inconceivable that, at that stage of the trial, that a prayer could
be added for a type of counterclaim in which the
zoning of the
Property, would be set aside.  At that stage, the Property had a
new owner, a person who would certainly have
had a direct and
substantial interest in the outcome of any proceedings to set the
zoning of the property aside.  When confronted
with this fact,
Mr Shokoane simply responded by saying that the court could ignore
that portion of the intended amendment, and
grant the rest of the
amendment. That was a surprising response.
[157]
In summary, the
attempted amendment was unnecessary, would have impacted adversely on
the rights of persons not parties to the proceedings,
and would
certainly have necessitated a postponement, if granted, to enable NAD
to consider its position.
[158]
The application for
amendment was in my view frivolous and unjustified in its entirety.
[159]
In my view, the only
just cost order would be to order that SANRAL shall NAD’s costs
occasioned by the application to amend,
and that on a scale as
between attorney and client. The waste of court time for a full day
was without any justification.
GENERAL
REMARK
[160]
The court proceedings
were postponed on 31 March 2023 to 5 June 2023.
[161]
When proceedings
resumed on 5 June 2023, the court was told that Mr Shokoane’s
brief was terminated and that Mr de Villiers
would appear thenceforth
on behalf of SANRAL.
Mrde
Villiers thereafter proceeded with the case of the First Defendant.
At some stage, he tried to lead opinion evidence,
that was not
contained in the initial reports of the expert of the First
Defendant,  nor that the opinions put to the experts
of Nad.
The consequence of that would have been that the experts of SANRAL
would not have had the opportunity to respond
thereto.
[162]
Mr Venter objected.
He argued that the experts of Nad were bound by their initial
opinions, and if they were allowed to venture
outside the initial
opinions, then NAD would be prejudiced, and he would at least be
entitled to recall some of his expert witnesses.
I agreed with
Mr Venter and upheld his objection.  I indicated that I would
give my reasons for this in the final judgment.
[163]
Gildenhuys
and Grobler
[53]
states that the prolixity of expropriation cases has become
notorious. The authors state that evidence should be limited to what

is necessary and relevant.  By the time that Mr de Villiers
wished to introduce opinion evidence not previously canvassed,
a
trial that would, with proper planning and cooperation by the
parties, not have lasted beyond five days,  already lasted
nine
days, with no indication at that stage as to when the end would be in
sight.  If Mr Venter had recalled witnesses,  as
he would
no doubt be entitled to have done,  the trial would have become
even more protracted. At that stage,  evidence
and opinions had
already been presented to the court,  covering the question of
the valuation of the Property from all possible
angles.   I
was satisfied that it was not in the interest of justice,  nor
fair towards either NAD or the court
to allow Mr de Villiers to
present evidence on an opinion not canvassed in the expert opinions
at that stage, nor was it put to
the experts of Nad
[54]
.
SOLATIUM
AND INTEREST
[164]
NAD
is entitled to interest as stipulated in section 12(3) of the
Expropriation Act.
[165]
NAD is also entitled
to a solatium amount be added to the amount of compensation,
calculated as follows: 10% on  R 100 000
– 00, that
is R 10 000 – 00 plus 5% on R 400 000, that is R
20 000 – 00 plus 3% on R 391 756
– 82 totalling
a solatium amount of R 41 752-00.  Nad is accordingly
entitled to a total compensation of R 933 509-52.
COSTS
[166]
This brings me to the
issue of costs.
[167]
Section
15 (2) of the Expropriation Act states that if the compensation
awarded by the court is equal to or exceeds the amount last
claimed
by the owner one month prior to the date for which the proceedings
were for the first placed on the roll, costs shall be
awarded against
the Minister. If the amount is equal to or less than the amount last
offered by the Minister one month prior to
the date for which the
proceedings were for the first time placed on the roll, costs should
be awarded against the owner. If however
lastly
[55]
the amount awarded exceeds the amount last offered by the Minister
but is less than the amount claimed by the owner, so much of
the cost
of the owner shall be awarded against the Minister as bears to such
costs the same proportion as the difference between
the compensation
so awarded the amount so offered, bears to the difference between the
amount of compensation so awarded and the
amount so claimed.
[168]
Section 15 (3)(d)
stipulates however that a court shall in its discretion deviate from
the prescriptions of Section 15(2) if the
conduct of any party during
or before the proceedings justifies a deviation from subsection 2.
[169]
The effect of section
15(2) which is badly worded, is the following: The formula intends
the award of a fraction of costs following
the specific formula: the
difference between the award and the offer forms the numerator of the
fraction whereas the difference
between the award and the claim forms
the denominator of the fraction.
[170]
If this formula is
applied in this instance, Nad will receive less than 5% of its costs.
[171]
This
court is alive to the criticism against the formula prescribed by the
Act, as well as the possibility that the judgement in
Biowatch
Trust v Registrar, Genetic Resources
[56]
may necessitate a different approach to costs in expropriation
claims.
[172]
In my view, NAD will
be greatly prejudiced if the formula in section 15(2) is applied.
[173]
This trial became
protracted mainly as a result of the conduct of SANRAL’s first
counsel, Mr Shokoane,  during the trial.
Mr Shokoane
indulged in protracted cross-examination,  for the most part
aimless, irrelevant and frivolous.
[174]
Apart from this, when
Mr Venter tried to object, or the court tried to give direction to
the proceedings, such attempts would lead
to drawn-out arguments some
of which could at best be typified as low-level quarrelling.
[175]
At some stage, the
court requested Mr Venter to refrain from noting objections, even
though such objections may have had merit,
but to leave the issues to
be dealt with during argument, just to avoid unnecessary further
delays in the court.
[176]
Apart from this, Mr
Shokoane consumed valuable court time by reading slowly through
pleadings and expert reports, while contemplating
what next question
to put to witnesses. During this time the court had to wait patiently
for him to proceed.  All of this
led to an enormous waste of
time.
[177]
When Mr de Villiers
came on record after Mr Shokoane’s mandate was terminated, he
summarily abandoned the reliance on the
version that the rezoning of
the Property was unlawful. Two days later, after having presented the
case for SANRAL, Mr de Villiers
closed SANRAL’s case.
[178]
Mr Venter argued at
some stage that this case should not have lasted more than five days.
I agree. Instead, it lasted 11 days.
[179]
In my view, the
conduct of SANRAL justifies a deviation from the formula prescribed
in section 15 (2), and a just order would be
that SANRAL shall pay
the costs of NAD and that the costs for the following trial days
shall be paid on a scale as between attorney
and client: 28 – 2
December 2022. These days represent 50% of the total time used by NAD
to present its case.
I
make the following order:
1.
The First Defendant
shall pay NAD an amount compensation of R 933 509-52 ;
2.
The First Defendant
shall pay NAD interest calculated as from 25 July 2016 up until the
date of payment at the interest rate prescribed
in terms of Section
80 of the Public Finance Management Act, 1999 (Act 1 of 1999).
3.
The First Defendant
is to pay NAD’s costs in respect of the First Respondent’s
application for leave to amend its pleadings,
brought on 27 December
2023, on a scale as between attorney and client.
4.
The
First Respondent shall pay the costs of suit of the ‘ and the
costs of the trial dates 28 November 2022 – 2 December
2022
shall be paid on a scale as between attorney and client.
__________________
G. J.
DIAMOND
ACTING JUDGE OF THE HIGH
COURT
LIMPOPO PROVINCIAL
DIVISION
APPEARANCES:
HEARD
ON:

25 July 2023
JUDGMENT DELIVERED ON:
19 JANUARY 2024. This judgment was handed
down electronically by circulation to
the parties representatives by
email. The date and time for hand-down of the judgment is deemed to
be 19 JANUARY  2024 at
11:00
FOR THE APPLICANT:

Adv A Venter
Instructed
by

Ivan Pauw & Partners Attorneys c/o Mmakola Matsimela Inc
FOR THE
RESPONDENT:
Adv Shockwane [25 July 2022]
Adv De
Villiers [5-7 June 2023]
Instructed
by:

Mokgadi Attorneys c/o LL Senyatsi Inc
[1]
Figure
1 and 2 are very simplified sketch diagrams, specifically prepared
for this judgement, based on the diagrams presented
as evidence
during the trial,  and are not on scale.  Attached to this
judgement is Annexure “
A”
,
which is an aerial photograph on which the erf boundaries and the
extent of the Expropriated Portion is superimposed. Annexure
“
A”
represents
an accurate view of the Property and Exprpriated Portion. Annexure
“
A”
was obtained from the public Website of the Surveyor –
General, viz
https://csggis.drdlr.gov.za/psv/
,
on 19 December 2023.
[2]
Act
No. 7 of 1998.
[3]
Act
63 of 1975.
[4]
NAD
amended its Particulars of Claim and I will revert to the amendment
later in this judgment.
[5]
Despite
further amendments to the pleadings, the parties remained very far
apart.
[6]
The
last amendment was effected by way of Proclamation R41 of 25 March
1994, which proclamation amended the definition of the
word
“Minister”.
[7]
[2002] ZACC 5
;
2002
(4) SA 768
(CC), par 59.
[8]
2007
(5) SA 596
(SCA), par 48.
[9]
In
‘LAWSA Expropriation (Volume 10(3) - Second Edition)’
(LexisNexis Butterworths), Par
[10]
(1996) 11 SAPR/PL 402 442.
[11]
And
maybe more circumstances since the list in section 25(3), is not a
closed list.
[12]
1969
(3) SA 227 (A).
[13]
The
term used by the Appellate Division. It would in many instances be
more appropriate to refer to inferences from the data.
[14]
Gijima,
Par 11.
[15]
As
is mentioned in section 25(3)(c) of the Constitution.
[16]
As
was ruled in Gijima.
[17]
In
which event there may in certain circumstances be questions of the
constitutionality of the stipulations of Section 12 of the
Act.
[18]
Section
25(3(d) of the Constitution.
[19]
Zeffertt
DT and Paizes AP, The South African Law of Evidence (Third editon,
LexisNexis 2017), P.337.
[20]
Rv
Jacobs
1940 TPD 142
at 146 – 147.
[21]
2012
(1) SA 58
(SCA) Par 26.
[22]
1991
(1) SA 321 (T).
[23]
This
is my translation of the following Afrikaans text, on P. 329 of the
judgment as per Hartzenberg J: “Hoekom dit belangrik
is om 'n
'voor en na' waardasie te doen is omdat dit heel dikwels gebeur dat
daar 'n waarde­konsentrasie op 'n eiendom kan
wees. Die
straatfront gedeelte van 'n besigheidserf kan heelwat meer werd wees
as 'n pro rata gedeelte verder weg van die straat
af, net soos wat
besproeiingslande baie meer werd mag wees per hektaar as wat weiding
op dieselfde plaas is. Deur 'n pad te verklaar
oor 'n eiendom wat in
'n dorpsgebied ontwikkel kan word is dit goed denkbaar dat die
restant so nadelig geaffekteer kan wees
dat dit nie langer so
ontwikkel kan word nie. Deur nou twee verkopings tussen denkbeeldige
gewillige kopers en verkopers te veronderstel
kan die objektiewe
markwaarde van die geneemde  gedeelte met inagneming van die
integrasie­potensiaal betroubaar bepaal
word. 'n Verkoping van
die eiendom voor padverklaring word bedink. Die eiendom het
dorpstigingspotensiaal en sal vir daardie
doel gekoop word. Dan word
'n verkoping van die restant in die ope mark bedink na
padverklaring. Die restant is nou dalk sonder

dorpstigtingspotensiaal vanweë die grootte en vorm daarvan of
die dorpstigtingspotensiaal is erg aangetas. Die prys wat
behaal
word per hektaar is aansienlik laer as wat dit was voor die
padverklaring. Die waarde van die ontneemde gedeelte sal die
verskil
wees tussen die prys bedink met die eerste verkoping sonder die
padverklaring en die prys bedink na die padverklaring.
Die
integrasie­potensiaal is daarin in ag geneem. Daar is nie
noodwendig altyd 'n integrasie­potensiaal teenwoordig nie.
'n
Pad kan bv verklaar word oor 'n gedeelte grond wat met dorpstigting
nie so voordelig soos die restant benut kan word nie.
'n 'Voor en
na' waardasie mag nou 'n laer prys per hektaar aandui vir die
ontneemde gedeelte as vir die hele eiendom voor die
padverklaring.
Daar was nie 'n integrasie­potensiaal nie, en die waardasie toon
dit aan.
[24]
Despite
small questionmarks that may exist, to which I will revert later in
this judgment.
[25]
1996
(3) SA 664
(A), on P. 674 and 765, in which the court referred to
several judgements.
[26]
Op
cit
,
Par 58. See further an exploratory discussion of the topic in
Boshoff DGB, ‘
Principles
of Highest and Best Use Valuation - A South African Legal
Perspective with Practical Implications
’
(2016) <https://www.quaesti.com/archive/?vid=1&aid=2&kid=160401-283>
accessed 13 January 2024.
[27]
My
emphasis.
[28]
The
definition of the groups of retail type centgers in the document is
a bit confusing. Nothing turns on that for purposes of
this
judgement.
[29]
https://www.gcis.gov.za/content/newsroom/speeches/pcomm/transformation-advertising-marketing-industry-south-african-advertising-research-foundation.
[30]
For
a detailed discussion on this topic, see Kironji E, ‘
Measuring
Quality of Life in South Africa: A Household-Based Development Index
Approach
’
(PhD Thesis, University of Pretoria 2008)
<https://repository.up.ac.za/handle/2263/25060> accessed 14
January
2024.
[31]
although
other factors should also be considered.
[32]
See
for instance
Boshoff
supra.
[33]
Emphasis
added.
[34]
That
is other than an open space developed or reserved for public
purposes, which the Property clearly is not.
[35]
2000
(3) SA 463 (T).
[36]
This
is my translation of the Afrikaans text on P. which reads as
follows” Dit is nie onredelik van ‘n eienaar wat
sy
eiendom wil ontwikkel om die standpunt in te  neem dat hy met
sy ontwikkeling voortgaan op ‘n wyse wat hom pas
(uiteraard
binne  die beperkinge wat die reg hom oplê) ongeag all
die feit dat daar oor sy eiendom of in die
nabyheid daarvan
moontlik eendag ‘n pad gaan kom (omdat daar reeds ‘n
dekade  gelede ‘n plan opgestel
is wat dit amptelik
voorstel) met inagname van die feit dat dit  nog ‘n
aantal dekades kan duur voordat die pad ‘n
werklikheid word,
indien ooit.  Dit  staan die owerheid vry om die
ontwikkelaar aan bande te lê deur onmiddelikke

proklamering van die pad maar dit is onredelik aan die kant van die
owerheid om alle  ontwikkeling lam te lê vir die

onafsienbare toekoms omdat ‘n ingeneur ‘n paar strepe
op ‘n stuk papier aangebring het.”
[37]
1979
(1) SA 466
on P. 470.
[38]
And
this court is by no means convinced of that, but in the light of the
findings reached with regard to the financial viability
of a
community shopping centre, I do not elaborate on this aspect.
[39]
P.
330, D – E.
[40]
Mr
J W Winkler filed the expert report as well as addendum report
behalf of Sanral. On the day of testimony, however his son Mr

Christiaan Winkler took the stand and he explained that he is a
professional valuer, that Winkler Snr was unable to testify due
to
medical reasons, and that he would testify on the basis of reports
filed by Winkler Snr. NAD did not object to the fact that
Winkler
Jnr was taking the stand.
[41]
Imperial
Marine,
supra.
[42]
P.
329 F – G.
[43]
1972
(4) SA 608
W.
[44]
NAD
took transfer of the property, and consequently paid the purchase
price, on 13 March 2015 and expropriation took place on
25 July
2060, that his one-year and 4 months later.
[45]
NAD
never attempted to review and set aside the expropriation on the
basis that the requirements of section 41 of the Sanral Act,
were
not met.
[46]
Gildenhus
and Grobler,
op
cit
Par
153.
[47]
Gildenhuys
and Grobler,
Op
cit
Par 128.
[48]
Section
25 (3).
[49]
Supra.
[50]
See
Mooikloof
supra.
[51]
At
some stage Sanral withdrew the Rule 30A application.
[52]
See
Boshoff
supra
.
[53]
Op
cit
Par 139.
[54]
See,
for similar remarks the judgment in AM and Another v MEC For Health,
Western Cape
2021 (3) Sa 337
(SCA), Par. 22 – 26.
[55]
Section
15 (2)(c).
[56]
2009
(6) SA 232
CC and she also Gildenhuys and Grobler,
op
cit
Par
150.