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[2005] ZACC 9
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Du Toit v Minister of Transport (CCT22/04) [2005] ZACC 9; 2005 (11) BCLR 1053 (CC); 2006 (1) SA 297 (CC) (8 September 2005)

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CONSTITUTIONAL
COURT OF SOUTH AFRICA
Case CCT
22/04
PAUL JOHANNES DU
TOIT Applicant
versus
MINISTER OF
TRANSPORT Respondent
Heard on : 9 November
2004
Decided on : 8
September 2005
JUDGMENT
MOKGORO J:
Introduction
This is an application for leave to appeal against the judgment of
the Supreme Court of Appeal (the SCA)
1
setting aside the order of the Cape High Court.
2
The case concerns a dispute between Mr Du Toit (the applicant) and
the South African Roads Board (the Board) whose rights and
obligations have since been taken over by the Minister of Transport
(the respondent). The dispute relates to the correct approach
to
compensation, and the correct amount to be paid in terms of section
12 of the Expropriation Act 63 of 1975 (the Act) for an
expropriation under section 8 of the National Roads Act 54 of 1971
(the Roads Act).
Since its inception the Act has been applied as the primary
statutory instrument for expropriation of property in South Africa.
The law regarding expropriation is now also governed by the
Constitution. The applicant has not challenged the
constitutionality
of the Act or any of its provisions directly, but
rather submitted that the Act should be interpreted and applied in
conformity
with the Constitution as required by section 39(2) of
the Constitution.
3
Background
On 12 November
1997 a notice of expropriation was served on the applicant. It
purported to be a notice issued in terms of section
8(1)(c) of the
Roads Act,
4
which has since been repealed.
5
Following the notice, the Board entered the applicant’s farm
Hooi Kraal and on a portion approximately 3,03 hectares in size
known as Moordenaarskop, used a borrow pit which it created to
excavate gravel for a period of approximately eighteen months.

About 80 000 cubic metres of gravel was extracted from the pit and
removed from the land for the purposes of the construction
of a
public road. These facts were not in dispute between the parties.
What was contentious, was whether the notice of expropriation
was
properly issued under section 8(1)(c) as opposed to section 8(1)(b)
of the Roads Act and whether as a result, section 12(1)(b)
rather
than section 12(1)(a)
6
of the Act was the correct statutory basis for the determination of
compensation following the expropriation.
Section 8 of
the Roads Act provides for the expropriation of land or building
material as well as the right to use land temporarily.
It states:
“
8(1) The Board may, subject
to an obligation to pay compensation–
expropriate land for a
national road or for works or purposes in connection with a
national road, including any access road,
the acquisition,
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 vehicles, machines,
equipment, tools, stores or material;
take 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 for purposes referred
to in paragraph (a);
take the right to use land
temporarily for any purpose for which the Board may expropriate
such land;
if any land is or will be
divided by a road referred to in paragraph (a) in such a manner
that in the opinion of the Board,
that land or any part of it is
or will be useless to its owner, expropriate that land or the
part of it in question.”
Section 8(2) of
the Roads Act makes the provisions of sections 7 – 24 of the Act
apply, mutatis mutandis, in respect of the
expropriation of
property or the taking of property or a right in terms of section
8. Section 12 of the Act provides for the
measure of compensation,
depending on whether property had been expropriated, or a right in
property. It states:
“
12(1) The amount of
compensation to be paid in terms of this Act to an owner in respect
of property expropriated in terms of this
Act, or in respect of the
taking, in terms of this Act, of a right to use property, shall not,
subject to the provisions of subsection
(2), exceed—
(a) in the case of any property
other than a right, excepting a registered right
to minerals, the aggregate of—
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
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.”
The applicant
contended that the correct section of the Roads Act for issuing the
notice of expropriation was section 8(1)(b)
and not section
8(1)(c). Resultantly, the compensation should be awarded under
section 12(1)(a) of the Act, and be based on
the market value of
the property which was expropriated. The contention of the
respondent, on the other hand, was that the section
8(1)(c) notice
was proper in that a temporary right to use the applicant’s land
and not the property itself had been expropriated.
It follows that
section 12(1)(b) is applicable in determining compensation which
should be based on the actual loss of the applicant.
When the
parties failed to reach an agreement, the applicant, relying on
section 12(1)(a) of the Act, claimed compensation in
the amount of
R801 980.00 based on what he submitted was the market value of the
gravel removed. Rejecting this claim, the respondent,
relying on
section 8(1)(c) of the Roads Act, read with section 12(1)(b) of the
Act, offered R6 060.00, an amount representing
what was said to be
the actual financial loss incurred by Mr Du Toit as a result of the
expropriation, together with a solatium.
This dispute about the
amount of compensation to be awarded prompted Mr Du Toit to
approach the High Court.
Proceedings in
the High Court
In the High
Court, Jamie AJ held that the notice issued under section (8)(1)(c)
of the Roads Act was proper
7
in that what was expropriated was a right to use land temporarily.
The right, he held, had two elements: First, the temporary
use of
the land in question to create a borrow pit to excavate gravel for
purposes of the construction of a public road and second,
the
permanent taking of a quantity of gravel from that land.
8
Having found that there was no open market for what was
expropriated in this case, being the temporary right to use land,

together with a right to remove an unspecified amount of gravel, he
then proceeded to find that the proviso contained in section
12(1)(aa) and (bb) of the Act were applicable.
9
These sections state that where there is no open market for the
property expropriated, compensation can be determined either
on the
basis of the replacement value of what was expropriated or in any
other suitable manner.
Electing to determine the compensation “in any other suitable
manner”,
10
the judge was of the view that because the Constitution enjoins a
court to promote the spirit, purport and objects of the Bill
of
Rights when interpreting legislation, the phrase “any other
suitable manner” in section 12(1)(bb) ought to be interpreted
in
the light of sections 25
11
and 39(2) of the Constitution when determining compensation for
expropriation. Section 25(3), he observed, requires additional
considerations to those of the market value of the property to be
taken into account.
12
Moreover, it requires compensation to be just and equitable and to
reflect an equitable balance between the public interest
and the
interests of those affected by the expropriation.
13
Having considered the taking of the gravel as a component of the
expropriated right, and using the market value of the quantity
of
the gravel taken as the basis for determining compensation, the
Court held that on the available evidence, the market value
of the
applicant’s gravel was fixable at R5 per cubic metre.
14
The Court further considered whether the compensation should be
adjusted from the market value, after having regard to the other
factors set forth in section 25(3)
15
together with any other relevant circumstances. The factors that
the Court considered were: (a) the extent of the remaining
deposits
of gravel at Hooi Kraal; (b) the use of the property at the time of
expropriation, and in particular the rate of extraction
of gravel
therefrom; (c) the effort and cost of removing the material, the
cost of rehabilitation of the site thereafter; and
(d) the purpose
of the expropriation.
16
It was found that the compensation based on the price of R5 per
cubic metre should be reduced by 40% and the Court awarded

compensation in the amount of R257 623.00, which included a
solatium in terms of section 12(2)
17
of the Act.
18
Proceedings
in the SCA
Following the
decision of the High Court, the respondent brought an appeal to the
SCA contending that the High Court had erred
in its finding that
compensation for the expropriation was to be calculated in terms of
the proviso contained in section 12(1)(bb)
of the Act.
19
The respondent argued that compensation should have been assessed
under section 12(1)(b)
20
of the Act and based on the actual financial loss of the applicant,
resulting from the expropriation of the temporary right to
use the
land.
Upholding the
appeal against the decision of the High Court, Heher JA held that
the Board, having taken the right to use the land,
was authorised
to expropriate under section 8(1)(c) of the Roads Act but held that
compensation should properly have been measured
in terms of section
12(1)(b) of the Act.
21
He rejected the reliance placed by the High Court on the proviso
in section 12(1)(bb) as the basis to settle the amount of

compensation.
The SCA found
that the owner of land is not entitled to compensation merely
because a right to use his or her property is taken,
even where the
exercise of the right involved the permanent deprivation of some
elements of the land.
22
It was pointed out that where a determinable market value can be
attached to that right, compensation will only be payable if
the
taking has caused
actual
financial
loss
, flowing
directly, not hypothetically, from the expropriation.
23
The evidence indicated that there were huge reserves of gravel on
the farm, which could have been used to supply what was viewed
as a
limited market for at least the next 60 years. Since the applicant
was bound to mitigate his loss, he would have satisfied
the demand
for gravel from these other sources had the Board bought the
property on the open market.
Moreover, the
Court held, the applicant’s evidence of the market price of the
gravel was misleading because he did not take
account of the fact
that if he had sold gravel which was to be sourced from the
expropriated portion of his land, he would have
been obliged to
open a new quarry because the gravel was not easily accessible on
the portion of land expropriated by the Board.
He would have had
to pay for the cost of creating a quarry, extracting the gravel and
rehabilitating the site. Considering
that the market for gravel
from the site would thereafter amount to only approximately 1800
cubic metres per annum, being the
average amount of gravel he sells
annually, the evidence did not establish that he could have
justified the venture. Therefore,
the possibility of such a loss
occurring, the Court held, could not be regarded as actual
financial loss because it was too speculative.
24
Furthermore,
enhancement in the market value of the land or gravel could not be
taken into account because the increased demand
was due to the same
project for which the expropriation had occurred. Section
12(5)(f)
25
of the Act, which was not challenged, requires one to think away
any enhancement in the value of the property if that increase
resulted from the expropriation itself.
26
The Court rejected the applicant’s argument that the potential
for the market had been created by the original construction
of the
national road in 1948. This was because the market had remained a
mere 1800 cubic metres of gravel annually since then.
27
Consequently,
the SCA upheld the appeal with costs and set aside the order of the
High Court. The Board was ordered to pay compensation
amounting to
a total of R6 060.00, plus a solatium in terms of section 12(2) of
the Act. The SCA held that these amounts represented
just and
equitable compensation within the meaning of section 25(3) of the
Constitution. The Court also ordered the payment
of interest under
section 12(3)(a) of the Act in respect of the compensation and the
solatium. Mr Du Toit now appeals the decision
of the SCA.
Issues before
this Court
Before this
Court the applicant was persistent in his submission that what was
expropriated was not a right to use the 3,03 hectares
of land to
operate a quarry for purposes of upgrading a national road, but the
80 000 cubic metres of extracted gravel which
was removed from the
land. He argued that he was entitled to compensation under section
12(1)(a) of the Act, measured by the
market value of the gravel
taken. As in the High Court and the SCA, he relied in the
alternative on a claim for just and equitable
compensation in terms
of section 25(3) of the Constitution.
The applicant
did not challenge the constitutional validity of section 12(1)(b)
or any other provision of the Act. However, he
did contend that
the SCA’s finding that section 12(1)(b) of the Act was applicable
was incorrect and affected the constitutional
interpretation and
application of the Act. The applicant argued that the Act will not
have been interpreted in line with section
25(3) of the
Constitution if the expropriating authority purports to take away a
right to use land but in the process takes the
landowner’s
property, and the court considers the landowner’s right to
compensation to be limited to considerations referred
to under
section 12(1)(b). This is because section 12(1)(b) includes no
explicit reference to the market value of the property,
but section
25(3) of the Constitution mandates a consideration of market value
in the calculation of compensation for expropriated
property.
Today, the
applicant argued, the statutory protection of property, the
authority to expropriate it and the obligation to pay compensation
all require a constitutional dimension not reflected in
pre-constitutional legislation and case law. Relevant legislation

and case law now all have to be interpreted to promote the spirit,
purport and objects of the Bill of Rights as required by section
39(2) of the Constitution. If one interprets section 12(1)(b) as
not making room for the consideration of just and equitable
standards to be applied when assessing the amount of compensation,
but instead as confined to compensating for financial loss,
it is
contrary to the provisions of section 25(3) of the Constitution.
Counsel for
the respondent submitted that on the contrary, the applicant was
entitled to compensation measured on the basis of
actual financial
loss in terms of section 12(1)(b). The respondent contended that
when the SCA considered the amount of compensation
that the
applicant was entitled to under section 12(1)(b) of the Act, it
interpreted the section in a way that made clear that
the
calculation of actual financial loss does take into account the
loss of the market value of the gravel, making section 12(1)(b)
no
less disadvantageous than section 12(1)(a).
The respondent
further averred that what was expropriated by the Board was the
right to use 3,03 hectares of the applicant’s
farm as a quarry
pit to excavate gravel for a temporary period of 18 months only and
for purposes of upgrading a public road.
With regard to the
purposes for which the right was taken, there is no dispute that it
was to create a quarry to procure gravel,
which amounted to 80 000
cubic metres, for public road development purposes. The notice
under section 8(1)(c) of the Roads Act,
the respondent contended,
therefore was issued properly.
Arguing that
while the aim of the Act is to ensure there is just and equitable
compensation for property taken in the public interest
so as not to
prejudice the expropriatee, the respondent submitted that it is
also to ensure that he or she does not benefit unduly
by obtaining
a windfall at the expense of the public.
28
The respondent submits that the purpose of compensation is
therefore to place the expropriatee financially in the same
position
as he or she would have been but for the expropriation.
29
The respondent
acknowledges that whenever there is expropriation, which must be in
the public interest, compensation shall be
paid.
30
He contended that it was fallacious for the applicant to aver that
compensation based on financial loss cannot constitute just
and
equitable compensation, simply because it does not explicitly
include the market value of what has been expropriated. Market
value, he argued, is only one of the factors to be taken into
account when compensation for expropriation is assessed in terms
of
section 25(3) of the Constitution. When regard is had to all
relevant circumstances, just and equitable compensation in the
end,
may amount to more or less than market value. Therefore, market
value alone should not be equated with just and equitable
compensation, as appears to be argued by the applicant.
The respondent
further contended that section 12(1)(b) neither explicitly nor by
implication excludes a consideration of market
value in
establishing actual financial loss. If it did, the respondent
suggested, section 12(1)(b) would be in conflict with
section 25(3)
of the Constitution.
The SCA’s finding that the High Court should have assessed
compensation under section 12(1)(b) therefore did not exclude the
need to take into account the market value of what had been
expropriated. In the case of
Kangra Holdings (Pty) Ltd v
Minister of Water Affairs
31
and in the present case, the SCA made it clear that financial loss
includes the loss of the market value of what had been
expropriated.
The SCA therefore did factor in a consideration of
market value in its calculation of compensation. The SCA arrived
at its
decision not because it applied the legal principles
incorrectly, the respondent contended, but because there was a lack
of relevant
evidence.
Whether leave
to appeal should be granted
A preliminary
question to be determined is whether leave to appeal should be
granted in this matter. While the constitutional
protection of
private property is an important right, the ability to expropriate
property is a crucial constitutional power of
the state. Firstly,
it enables the state to perform several of its important functions
without private ownership becoming an
undue impediment. Secondly,
in view of the history of the unequal and unjust distribution of
property in our society, land in
particular, the Constitution
enjoins the state to effect redistribution equitably. Considering
that the Act is the law of general
application in this regard, it
is essential that there be certainty on its interpretation and its
application. The current differing
views of the High Court and the
SCA regarding the constitutional interpretation and application of
the relevant sections of the
Act has the potential to create
uncertainty. There can be no doubt that the need for certainty in
the interpretation and application
of such an important piece of
legislation is necessary. The application for leave to appeal is
therefore granted.
The application
of the Constitution
Although the
Act has for nearly two decades been applied in the expropriation of
property and has been regarded as the major source
of expropriation
law in South Africa, it is important to recognise and appreciate
that since the inception of the Constitution,
all applicable laws
must comply with the Constitution and be applied in conformity with
its fundamental values.
32
It is therefore now the Constitution, and not the Act, which
provides the principles and values and sets the standards to be
applied whenever property, which in turn is now also
constitutionally protected, is expropriated. Every act of
expropriation,
including the compensation payable following
expropriation, must comply with the Constitution, including its
spirit, purport
and objects generally and section 25 in particular.
The relevant
provisions of section 25 of the Constitution provide:
“
(1) No one may be deprived
of property except in terms of law of general application, and no
law may permit arbitrary deprivation
of property.
(2) Property may be
expropriated only in terms of law of general application—
(a) for a public purpose or in
the public interest; and
(b) subject to compensation,
the amount of which and the time and manner of payment of which have
either been agreed to by those
affected or decided or approved by a
court.
(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.”
Section 25(2) of the Constitution requires property to be
expropriated only in terms of a law of general application and
subject
to compensation. The amount of compensation must then be
agreed upon between the affected parties. Alternatively, it may be

decided or approved by a court of law. However, the amount of
compensation agreed or decided upon must adhere to the standards
of
justice and equity. It must also reflect an equitable balance
between the interests of the public and of those affected by
the
expropriation. These standards, provided for in section 25(3) of
the Constitution, are peremptory and every amount of compensation
agreed to or decided upon by a court of law must comply with them.
To determine that the amount is just and equitable, section
25(3)
provides an open-ended list of relevant circumstances to be taken
into account, including the market value of the property.
In
contrast, the Act does not specifically require that the amount of
compensation meet the peremptory standards of the Constitution.

Section 12(1) of the Act confines the compensation amount to either
actual financial loss, when what is expropriated is a right,
33
or to the aggregate of market value and financial loss when the
subject of the expropriation is tangible property.
34
Section 25 of the Constitution on the other hand does not draw
that distinction. There are clearly differences between the
Act
and the Constitution which may affect the fairness of the amount of
compensation.
The difficulty in this case, however, is that as already indicated,
the applicant did not impugn the constitutionality of section
12(1)
or any provision of the Act. He instead contended that the finding
of the SCA that section 12(1)(b) rather than section
12(1)(a) was
applicable, was flawed and impacted on the constitutional
interpretation and application of the Act. In these circumstances,
and in the circumstances of this case, the Act cannot be bypassed.
35
Section 39(2) of the Constitution requires that unless it is
unduly strained, section 12(1) of the Act must be applied in

conformity with the fundamental values of the Constitution wherever
possible. In the case of
In Re Hyundai Motor Distributors
36
this Court held that:
“
All law-making authority
must be exercised in accordance with the Constitution. The
Constitution is located in a history which
involves a transition
from a society based on division, injustice and exclusion from the
democratic process to one which respects
the dignity of all
citizens, and includes all in the process of governance. As such,
the process of interpreting the Constitution
must recognise the
context in which we find ourselves and the Constitution’s goal of
a society based on democratic values, social
justice and fundamental
human rights. This spirit of transition and transformation
characterises the constitutional enterprise
as a whole.
The purport and objects of the
Constitution find expression in s 1, which lays out the fundamental
values which the Constitution
is designed to achieve. The
Constitution requires that judicial officers read legislation, where
possible, in ways which give
effect to its fundamental values.
Consistently with this, when the constitutionality of legislation is
in issue, they are under
a duty to examine the objects and purport
of an Act and to read the provisions of the legislation, so far as
is possible, in conformity
with the Constitution.” [Footnotes
omitted.]
37
This Court
explained further,
“
Accordingly, judicial
officers must prefer interpretations of legislation that fall within
constitutional bounds over those that
do not, provided that such an
interpretation can be reasonably ascribed to the section.
Limits must, however, be placed
on the application of this principle. On the one hand, it is the
duty of a judicial officer to
interpret legislation in conformity
with the Constitution so far as this is reasonably possible. On the
other hand, the Legislature
is under a duty to pass legislation that
is reasonably clear and precise, enabling citizens and officials to
understand what is
expected of them. A balance will often have to
be struck as to how this tension is to be resolved when considering
the constitutionality
of legislation. There will be occasions when
a judicial officer will find that the legislation, though open to a
meaning which
would be unconstitutional, is reasonably capable of
being read ‘in conformity with the Constitution’. Such an
interpretation
should not, however, be unduly strained.”
[Footnotes omitted.]
38
Therefore, it
is necessary to consider whether section 12(1) enables the award of
an amount of compensation which is just and
equitable as required
by section 25 of the Constitution. Section 12(1) pre-dates the
Constitution. At this stage it provides
the mechanism by which
compensation (under the Act) may be calculated. That section 12(1)
of the Act and section 25(3) of the
Constitution are different to
each other is not surprising. Section 25(3) on the other hand
provides a broad standard against
which the amount of compensation
arrived at under section 12(1) of the Act must be measured to
ensure that it accords with the
Constitution.
As already
indicated, section 25(3) is in peremptory terms. It says that the
amount of the compensation “must be just and equitable”.

Section 2 of the Constitution, in addition to providing that the
Constitution is the supreme law of the Republic and that law
or
conduct inconsistent with it is invalid, also provides that the
obligations imposed by the Constitution must be fulfilled.
Section
8(1) of the Constitution makes it plain that the Bill of Rights is
also binding on the judiciary. Section 25(3) therefore
imposes a
positive duty on the executive, the legislature and the courts to
ensure that compensation paid pursuant to an expropriation
is just
and equitable regardless of what the legislation concerned with
compensation provides. Difficult questions of interpretation
might
arise where the amount considered by a court to be just and
equitable exceeds the amount representing the market value
of the
property or the right to the property where the right has a market
value, or the actual financial loss, and the amount
payable under
subsection 2.
39
It is nevertheless incumbent upon a court to determine whether
compensation calculated in terms of section 12(1)(a) and (b)
is
just and equitable.
Section 12 of
the Act does not preclude the award of just and equitable
compensation in circumstances where neither the market
value nor
actual financial loss has been proved. In the case before us, the
SCA held that neither actual financial loss nor
the market value of
the right or of the gravel was established. However, it concluded
that the amount offered by the state constituted
just and equitable
compensation. If the SCA’s findings were correct, it cannot be
said that section 12 of the Act was applied
in a manner that is
inconsistent with the Constitution.
Section 25(3)
does not make it peremptory that all factors listed be applied.
The list is open-ended. Factors listed there will
apply only in so
far as they are relevant or applicable. Factors other than those
listed may also be taken into account if they
are relevant or
applicable. The outcome reached must however be just and
equitable, and it must reflect an equitable balance
between the
interests of the public and of those affected by the expropriation.
Therefore, whether the amount of compensation
is reached in terms
of section 12(1)(a) or 12(1)(b), it must similarly be a just and
equitable amount which reflects an equitable
balance of the
relevant interests. Here too we must have regard to all relevant
circumstances listed in section 25(3), including
all other relevant
circumstances of the case.
Section
12(1)(a) bases the determination of the amount of compensation paid
for the expropriation of property on the aggregate
of the market
value and actual financial loss, and section 12(1)(b), where what
has been expropriated is a right, bases the compensation
only on
actual loss suffered. In section 25(3) of the Constitution,
however, provision is made for a range of relevant circumstances
to
be taken into account to ensure that the compensation agreed to
between the parties or approved by a court of law in terms
of
section 25(2) is just and equitable and reflects an equitable
balance between the public interests and the interests of those
affected by the expropriation. The Act does not explicitly insist
that the compensation meet these standards. While section
12(1) of
the Act bases compensation on market value or financial loss, none
of the relevant circumstances listed in section 25(3)
of the
Constitution, which include market value and possibly actual
financial loss,
40
are given any particular prominence. The Constitution therefore
does not foreshadow which of the circumstances provided in the
open-ended list will be relevant, will actually apply or will be
more significant. If, after having regard to all relevant factors,
the compensation awarded is just and equitable and it reflects an
equitable balance between the public and the private interests,
the
constitutional standards as envisaged in section 25(3) would have
been met. The construction of the relevant provisions
of the Act
and section 25(3) of the Constitution is different but does not
appear to give rise to inconsistency. If on closer
scrutiny it
does, we have not been called upon to make that determination. I
will therefore proceed on the assumption that there
is no
inconsistency.
Under these
circumstances, the more practical approach which will ensure that
the peremptory standards of compensation envisaged
in section 25(3)
of the Constitution are met, is therefore to consider what
compensation is payable under the Act, which is still
valid and
then to consider if that amount is just and equitable under section
25(3) of the Constitution.
This two-stage
approach to determine a constitutionally compliant amount of
compensation is not ideal. It would have been more
expedient if
the legislature had made provision in the Act itself for complying
with the constitutional standards of just and
equitable
compensation and ensuring that an equitable balance between the
interests of the state and those of the individual
is reflected.
Whatever the case may be, it is important that the provisions of
this Act be brought in line with the Constitution.
While that is
not the case, the approach that I take in this matter permits us
not to ignore the applicable legislation and
more importantly, to
give cognisance to the imperative nature of section 25(3) as
required by section 39(2) of the Constitution.
It must be ensured
that the compensation ultimately awarded to Mr Du Toit is just and
equitable, and reflects the necessary
balance between his interests
and the interests of the state.
Section 25(3)
indeed does not give market value a central role. Viewed in the
context of our social and political history, questions
of
expropriation and compensation are matters of acute socio-economic
concern and could not have been left to be determined solely
by
market forces. The approach of beginning with the consideration of
market value (or actual financial loss for that matter)
and
thereafter deciding whether the amounts are just and equitable is
not novel. It was adopted by Gildenhuys J in
Ex Parte Former
Highland Residents; In Re: Ash and others v Department of Land
Affairs.
41
The Court in that matter did not deal with the interpretation
and application of section 12(1) of the Act but rather with section
2 of the Restitution of Land Rights Act
42
in the context of monetary compensation for dispossession of land.
Nevertheless, the judge pointed out that the market value
of the
expropriated property could become the starting point in the
application of section 25(3) of the Constitution since it
is one of
the few factors in the section which is readily quantifiable.
Thereafter, an amount may be added or subtracted as
the relevant
circumstances in section 25(3) may require. Actual loss may play a
similar role depending on the circumstances
of the case. For this
reason, the approach adopted here which applies the Act as a
starting point and proceeds to apply section
25(3) of the
Constitution may not be suitable in all cases. It is, however, the
most practicable one in the circumstances of
this case where there
is no challenge to the constitutionality of the Act.
The
application of section 8 of the Roads Act and section 12 of the Act
Section 12
bases the determination of the compensation payable under the Act
on market value and/or financial loss. In the context
of the
reasons given in the preceding paragraphs, I will therefore use
these considerations to determine what compensation is
payable in
this matter, then proceed to determine whether, under section 25(3)
of the Constitution, the amount arrived at under
the Act is just
and equitable and reflects an equitable balance of the relevant
interests.
In my view,
both the SCA and the High Court were correct in finding that what
was expropriated was a right which included the
taking of property.
Section 8(1)(c) authorises the Board to take the right to use land
temporarily for a purpose foreshadowed
in section 8(1)(a). That
purpose includes:
“
works or purposes in
connection with a national road, including any access road, the
acquisition, mining or treatment of gravel,
stone, sand, clay, water
or any other material or substance”.
43
The SCA was
correct in its conclusion that the right to use land for excavation
and acquisition of the materials referred to in
that subsection
will inevitably result in a permanent deprivation of the ownership
of those materials. The Board, in my view,
correctly preferred to
issue its notice under section 8(1)(c) rather than section 8(1)(b)
because it includes the power to take
an unspecified amount of
gravel as section 8(1)(b) envisages, but also, unlike section
8(1)(b), precludes the owner or third
party from doing so whilst
the Board holds the right to use the land. This temporary security
of tenure must be vital if the
taking of the gravel requires
considerable effort and resources and the quantity required for the
purposes sought cannot be predetermined.
Indeed, on the date of
expropriation the gravel was in situ, and the quantity that was
required was unknown. What was expropriated
was not gravel but the
right to remove gravel. Thereafter, 80 000 cubic metres of gravel
was excavated from 3,03 hectares of
land and permanently removed
for the purposes of upgrading a public road. This in circumstances
where there was previously no
quarry on the land over which the
right taken was exercised and where the Board used its own
resources to establish the facility.
For these reasons, the notice
was properly issued under section 8(1)(c) of the Roads Act.
The applicant
argued that the compensation awarded to him is not just and
equitable because the amount was determined only according
to the
actual financial loss suffered, pursuant to the taking of the
right, as required by section 12(1)(b). He does not argue
that
since section 12(1)(b) does not explicitly make reference to
compensation on the basis of the market value of the right,
even
where the exercise of such a right involves the taking of physical
property, which itself has a market value, the amount
of
compensation arrived at does not meet the constitutional standard
of just and equitable compensation. Rather, he contends
that if
the section is interpreted so as not to take into account such
market value, as he claims the SCA interpreted the section,
the
interpretation of the Act will not be consistent with the
Constitution.
But the applicant misperceived the approach of the SCA. As already
indicated,
44
in trying to determine the actual loss suffered by the applicant,
being of the view that actual loss included the loss of the
market
value of the 80 000 cubic metres of gravel taken, the SCA did take
into account the market value of the applicant’s
property. It is
important to point out that considering market value where
financial loss is the basic measure of compensation,
as already
indicated, is not a novel interpretation.
45
It is legitimate to determine actual financial loss by making
reference to the market value of the property in question, which
could well constitute the actual amount of the loss suffered by the
expropriatee. The High Court made reference to the case
of
South
African Roads Board v Bodasing
46
where the Court found:
“
If what was taken had a nett
market value of X thousand rand then plaintiff’s loss is X
thousand rand because either the value
of the plaintiff’s property
on a willing seller/willing buyer basis would probably be diminished
by this amount or this is the
amount for which he could probably
have sold the material and that reflects his actual financial loss.”
This approach was
confirmed in the SCA case of
Kangra Holdings
,
47
“
It is nevertheless plain
that loss of an asset through expropriation constitutes actual loss
of its market value.”
In determining
the amount of compensation payable under section 12(1)(b), Heher JA
held,
“
Third, although the
immediate cause of the loss is the taking of the right vested in the
owner to use his own property and exploit
his own gravel during the
temporary period, a secondary but equally direct result of the
taking is the permanent deprivation of
the owner’s right to
exploit gravel in the quantities removed. The value of that
deprivation (if any) will also be part of the
loss caused by the
taking.”
48
He held further,
“
While it is correct, as
pointed out in
Kangra Holdings
. . . that the
measure
of such loss will include the equivalent of the market value of what
is taken by the expropriator, that does not mean that the
market
value can always be used to prove the
fact
that such a loss
was suffered.”
49
The applicant’s
claim that the SCA in this case did not interpret section 12(1)(b)
so as to take account of market value is
therefore incorrect.
The SCA
concluded that even though, theoretically market value can be
factored into a consideration of what loss was suffered,
that does
not mean that in every factual situation, a loss was actually, and
not merely hypothetically, suffered. The Court
found that there
was no market value proven for the hypothetical sale of 80 000
cubic metres of gravel. The Court was bound
in terms of section
12(5)(f) to think away the market for gravel created by the
project, since the increased demand and enhancement
in value owed
its existence to the purpose for which the expropriation took
place. The Court found that on the evidence, the
possibility of
the applicant ever suffering a financial loss became too
speculative.
50
Therefore,
where market value attaches to property, the measure of financial
loss will require a consideration of that market
value. In
instances where a right has been expropriated and the right does
have a market value, the distinction between section
12(1)(a) and
12(1)(b) will be blurred.
51
In the
Bodasing
case the Court found:
“
In my view on the facts of
this case it makes little difference whether compensation is
assessed under s 12(1)(a) or 12(1)(b) of
the Expropriation Act. I
say this because I find that what the defendant expropriated was in
fact a right as contemplated by section
12(1)(b). It was the right
to take gravel from the defined 4.83 hectares of plaintiff's land.
That right was abandoned before
the trial started. The amount of
gravel taken is known, that is to say it was agreed at 194945 cubic
metres. That is what ultimately
was taken so whether compensation
is to be based upon what a willing buyer would pay a willing seller
under 12(1)(a) for that material
or for the actual financial loss to
the plaintiff is really of no practical difference.”
52
The applicant
contended that section 12(1)(a) should govern the amount of
compensation he receives because what was actually taken
was
gravel. Having decided that what was taken was indeed a right to
use land, where the exercise of that right resulted in
the
permanent removal of gravel, it then becomes necessary to
compensate for both aspects of this expropriated right, being the
right of use of the land, and for the gravel that was taken as part
of that right of use. Because section 12(1)(b) enables

compensation of both the right of use and the property taken under
that right, it is the correct section under which compensation
is
to be determined in this case. That said, there would be no
difference in respect of compensation for the gravel alone, if
compensation were assessed under section 12(1)(b) or 12(1)(a) of
the Act. In a case such as this, both sections would require
a
consideration of the market value of the gravel because financial
loss includes the loss of the market value of what has been
expropriated. Besides, whether the calculation for compensation is
determined under section 12(1)(a) or 12(1)(b), it will have
to
comply with section 25(3) of the Constitution.
Measure of
compensation under the Act
The SCA held
that Mr Du Toit had established neither the market value of the
gravel nor his actual financial loss.
53
It further held that realistically the market value of
agricultural land would carry no premium above the value of land
without
the gravel. In the circumstances the SCA concluded that
compensation for the market value of the land that had been used
for
a period of eighteen months, was just and equitable
compensation pursuant to section 25(3) of the Constitution. I
cannot fault
this finding.
Mr Du Toit
received the market value of his property despite the fact that his
land was returned to him. It will be necessary
to determine if the
finding that this amount is just and equitable and reflects an
equitable balance between the public and his
interests is correct.
To make this determination, the circumstances set out in section
25(3) of the Constitution must be considered
so far as they are
relevant.
The
current use of the property
The evidence
indicates that the land and gravel in the expropriated portion of
property lay dormant and was therefore not being
used for the
purpose of excavating gravel. I agree with the SCA’s assessment
that it is also unlikely or at least highly speculative
that this
portion of property that was temporarily used by the Board was
going to be used to excavate gravel in the future.
Evidence was
moreover led to the effect that extensive deposits of gravel
remained available at Hooi Kraal, so that the applicant
could
continue for decades to uplift gravel from the farm without being
affected by the quantity of material taken in the course
of the
expropriation to satisfy the demand that he had been supplying.
The High Court concluded that there remains virtually
inexhaustible
and readily accessible deposits of gravel at Hooi Kraal.
54
The
history of the acquisition and use of the property
It is clear
that the property to which the expropriation notice applied was
bought and used for agricultural purposes and was
used for the
excavation of gravel only on an ad hoc basis. The portion of
property from which the gravel was taken was not used
for the
purpose of excavating gravel. At the rate of extraction in the
order of 1800 cubic metres of gravel per year, it would
have taken
about 45 years to remove approximately 80 000 cubic metres of
gravel. The history of its acquisition would also include
the
price paid for the property. It was agricultural property and one
can infer that the cost of its acquisition was no more
than the
agricultural value of the property at the time. Mr Du Toit did not
indicate that he had paid more for the property
because of its
gravel content.
The
extent of direct state investment and subsidy in the acquisition
and beneficial capital improvement of the property
This is not a
relevant factor since there was no state investment in the
property. In terms of section 25(3) of the Constitution,
it is not
relevant nor is it applicable.
The
purpose of the expropriation
The purpose of
the expropriation was to upgrade the N2 highway, a major national
road in the country. The High Court emphasised
that the importance
to the economy and the general wellbeing of the populace of the
improvement of the road system should not
be overlooked. The road
system is therefore a national asset and a matter of public
interest.
55
As a farming member of the public who needs the road both for
farming purposes and personal needs, including his gravel supply
business, the applicant himself benefits from the upgraded road.
Other
relevant factors
The High Court
pointed out that on the date of expropriation, the gravel was in
situ and the precise quantity required was not
known. Since it was
the right to remove gravel which was expropriated, in determining a
just and equitable amount as compensation,
the effort and cost
involved in extracting and removing a large quantity of gravel and
of rehabilitating the site must be taken
into account. The
evidence established that it was unlikely that in the ordinary
course excavations would have taken place to
the depth that they
did in the expropriated quarry. Therefore, in the absence of the
expropriation, the harder and deeper deposits
would have remained
undisturbed in favour of the extraction of more easily accessible
deposits elsewhere on Hooi Kraal. The
limited demand for gravel
from Hooi Kraal, absent the expropriation, would have made it
unlikely that excavation would have taken
place with the same
intensity in a single location.
56
Although it does not appear that there were any improvements done
on the property, the Board did incur the cost of excavating
and
rehabilitating the site. It is important to note that because the
right was temporarily expropriated, the land was returned
to Mr Du
Toit after this rehabilitation, so that he could continue to use
it.
The
consideration of the factors in section 25(3) of the Constitution
and other relevant circumstances clearly confirm that there
is no
other basis on which Mr Du Toit can be justifiably compensated.
Conclusion
I have
concluded that what has been expropriated in this matter is a right
to use land temporarily to create a quarry pit to excavate
gravel
for the purposes of the construction of a public road, where the
right includes the permanent removal of gravel for the
purposes of
that road construction. Having applied the provisions of section
25(3) of the Constitution, I conclude that the
compensation paid to
Mr Du Toit is just and equitable and reflects an equitable balance
between the private and public interests.
Although the
respondent had asked for a costs order, the applicant has brought
an important issue to this Court regarding the
application and
interpretation of the relevant provisions of the Act. I therefore
make no order as to costs.
Order
In the result
the following order is made:
The
application for leave to appeal is granted.
The
appeal is dismissed.
The
costs order of the SCA is set aside.
Madala J, Moseneke
J, Sachs J, Skweyiya J and Yacoob J concur in the judgment of
Mokgoro J.
LANGA ACJ:
I have had the
benefit of reading the judgment of Mokgoro J which sets out
admirably the facts that give rise to the dispute and
the issues
that have to be decided. I would dismiss the application for leave
to appeal on the grounds that it bears no prospects
of material
success for the applicant and there are no other interests of
justice that require it to be considered as will appear
from this
judgment. Moreover, I have two differences of opinion to record on
the legal issues traversed in Mokgoro J’s judgment.
First, I am
unable to agree with her analysis of section 8(1) of the National
Roads Act 54 of 1971 (the Roads Act); and secondly,
and more
fundamentally, I cannot agree with her analysis of the relationship
between section 12(1) of the Expropriation Act 63
of 1975 and
section 25(3) of the Constitution.
The Roads Act
The notice to
applicant purported to be in terms of section 8(1)(c) of the Roads
Act. Pursuant to it, about 80 000 cubic metres
of gravel was
extracted over a period of eighteen months from a new borrow pit,
about 3,03 hectares in size located on a hill
on the applicant’s
farm. Section 8(1) of the Roads Act identifies categories of
property that may be expropriated. Applicant’s
contention is
that the subject matter of the expropriation was the gravel on his
property which the National Roads Board (the
Board) required for
the purpose of upgrading a national road, the N2 highway. Although
the process of taking the gravel would
necessitate conceding to the
Board the temporary right to use the portion of land concerned to
set up an excavation site for
the extraction of the gravel, the
expropriation was, according to the applicant, primarily concerned
with the taking of the gravel
under the provisions of section
8(1)(b) of the Roads Act.
The
respondent, on the other hand contends that the expropriation was
that of a right to use 3,03 hectares of applicant’s property
as a
temporary gravel quarry, which included the right to extract and
remove gravel for the use of the Board. This, according
to the
respondent, is an activity that falls under the provisions of
section 8(1)(c) of the Roads Act.
In terms of
section 8(2) of the Roads Act, the provisions of sections 7 to 24
of the Expropriation Act 63 of 1975 apply mutatis
mutandis to the
expropriation of property or the taking of property or a right in
terms of section 8(1) of the Roads Act. Only
section 12 of the
Expropriation Act is relevant for present purposes. It contains
the basis for the determination of compensation
and provides for
different measures of compensation with respect to the taking of
property, on the one hand and the taking of
a right to use, on the
other. In the case of the expropriation of property as provided
for in section 8(1)(a) or (b) of the
Roads Act, section 12(1)(a) of
the Expropriation Act provides for compensation on the basis of
market value together with actual
financial loss. In the case of
the taking of a right as envisaged in section 8(1)(c) of the Roads
Act, section 12(1)(b) of the
Expropriation Act provides that only
actual financial loss should be taken into account in the
computation of compensation.
Section 8(1)
of the Roads Act provides that:
“
The Board may, subject to an
obligation to pay compensation─
(a) expropriate land for a
national road or for works or purposes in connection with a national
road, including any access road,
the acquisition, 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 vehicles, machines, equipment, tools,
stores or material;
(b) take 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 for purposes referred to in
paragraph (a);
(c) take the right to use land
temporarily for any purpose for which the Board may expropriate such
land; . . .”
Section 12(1) of
the Expropriation Act states:
“
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 realised 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─
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
in any other suitable manner.”
Although the
expropriation notice to applicant reflects that it was issued in
terms of section 8(1)(c) of the Roads Act read with
section
12(1)(b) of the Expropriation Act, the enquiry as to which
provisions are applicable remains a factual one, regard being
had
to all the circumstances of the case. What really matters, in my
view, is the essence of what was expropriated. To be “just
and
equitable”, as required by section 25 of the Constitution,
compensation cannot be determined solely on the terms of a notice,
which may misrepresent the reality of the expropriation, but on
what the subject matter of the expropriation is.
The contention
by the applicant that the notice should have been in terms of
section 8(1)(b) of the Roads Act means that it is
the gravel that
was taken which should be the basis for the computation of
compensation. This, it was argued, implicates section
12(1)(a) of
the Expropriation Act which requires that compensation for the
expropriation of property should be based on the market
value of
such property. Relying on that basis, the applicant claimed R801
980.00 which was, according to him, the market value
of the gravel
taken.
Both the High
Court and the Supreme Court of Appeal held that the invocation of a
section 8(1)(c) notice by the Board, rather
than a notice in terms
of section 8(1)(b), was correct as the former provision authorised
the Board to take the right to use
land temporarily “for any
purpose for which the Board may expropriate such land.”
According to section 8(1)(a), such purposes
include “works or
purposes in connection with a national road, including any access
road, the acquisition, mining or treatment
of gravel, stone, sand,
clay, water or any other material or substance”. The two Courts
reasoned that the mining and acquisition
of the materials referred
to in that section will inevitably result in a permanent
deprivation of the ownership in those materials.
This is to be
contrasted with section 8(1)(b) which empowers the Board to “take
gravel . . . or any other material or substance
on or in land for
the construction of a road or for works or for purposes referred to
in paragraph (a).”
In the Cape
High Court, Jamie AJ held that the section 8(1)(c) notice was
correct because what was expropriated was a right which
had two
elements to it, namely, the right to use the applicant’s land
temporarily to create a borrow pit to excavate the gravel
as well
as to take the gravel from the land permanently. The Supreme Court
of Appeal, as well as Mokgoro J, agree. As already
indicated, I
take a different view.
One of the
issues in this case is the correct identification of the applicable
provisions of the Roads Act.
Section 8(1)
contemplates three circumstances under which the Board may exercise
the powers contemplated in the section. In the
first place, the
Board may wish to expropriate the land for the purposes mentioned
in section 8(1)(a). These include the construction
of a national
road, repairs to the national road, acquisition of gravel or any
material or substance. In this instance, the
Board acquires
ownership of the land as well as the material in the land such as
gravel.
In the second
place, the Board may wish to remove only the material such as
gravel from the land, for the construction or repair
works to the
national road. The Board may do this under section 8(1)(b).
Unlike the powers conferred by section 8(1)(a) the
landowner
remains the owner of the land and retains the right to excavate
gravel from the same area that is being used by the
Board. In
other words the landowner is not precluded from the use of the land
that is being used by the Board. This section
may be used where
there is already in existence a quarry or a borrow pit from which
gravel is excavated. All that the Board
does is to take gravel
from an already existing quarry. The landowner is not prevented
from using the same portion of the land
from which the Board is
taking the gravel. The landowner may also remove gravel from the
same quarry.
The third
situation contemplated by the section is where the Board takes away
temporarily the right of the landowner to use the
land. As long as
the Board uses the particular piece of land, the owner may not use
the land in question because his or her
right to use that piece of
land has been taken away, albeit temporarily. The Board may
exercise this power for any purpose for
which the Board may
expropriate such land. This will include any of the purposes
mentioned in section 8(1)(a) such as the construction
of or repair
to the national road or obtaining gravel from the land. The Board
may exercise this power under section 8(1)(c).
Unlike section
8(1)(a) which envisages a permanent expropriation of the land and
any material in the land, section 8(1)(b) gives
the Board the right
to take and remove any of the material referred to in the
subsection for the purposes of section 8(1)(a).
By contrast
section 8(1)(c) confers on the Board the right to use the land
temporarily for any of the purposes for which the
Board may
expropriate land such as the acquisition of gravel, the
construction of or repair to the national road. The Board
cannot
therefore expropriate the right to use the land under section
8(1)(b). That can only be done under section 8(1)(c).
Nor can the
Board under section 8(1)(b) expropriate the right to take gravel as
opposed to taking gravel.
In
Bodasing
v South African Roads Board
,
57
the Durban High Court had occasion to consider a case where the
facts were not dissimilar to the present. In that case the Board
had issued a notice of expropriation under section 8(1)(b). The
High Court had the following to say of and concerning the powers
conferred by section 8:
“
It is quite clear from the
history of the matter that the defendant intended to use the land
temporarily for the purpose of taking
material from the land, in
other words, act in terms of s 8(1)(c), and also intended to take
material from the land in terms of
s 8(1)(b). Instead of saying so,
it issued the notice under s 8(1)(b), which of course relates to the
taking of material but stated
that it was expropriating the right to
take material temporarily for seven years. It seems to me that the
board could not in terms
of ss (b) expropriate a right to use the
land in a certain fashion; that had to be done in terms of ss (c).
On the other hand
it could not under ss (b) expropriate a right to
take gravel as opposed to taking gravel and other substances.”
58
The Court then
concluded:
“
In my view the notice of
expropriation, despite its defects, constituted a notice in terms of
which the defendant expropriated the
material which it required in
terms of s 8(1)(b) and the temporary right to use the land for this
purpose in terms of s 8(1)(c).
In my opinion, furthermore, that
which was expropriated in terms of s 8(1)(b) constituted property
for which the measure of compensation
was that provided for in s
12(1)(a) of the Expropriation Act. Section 12(1)(b) provides the
basis of the compensation for the
right to use the property for the
purpose of taking the material.”
59
On appeal to the Full Bench
60
the Court was called upon to decide whether the Board had
expropriated a right rather than a property so as to determine the
amount of compensation to which the landowner was entitled. In
determining the subsection under which the notice had been issued,
the Full Bench appears to have relied upon the terms of the notice,
in particular the fact that it refers to section 8(1)(b).
It
disagreed with the holding of the court below to the effect that
the notice of expropriation constituted a notice under which
the
defendant expropriated the material which it required. It
expressed doubt, whether the notice of expropriation under which
the defendant expropriated “the material which it required”
would constitute a valid notice. Consequently it held that what
was expropriated was the right to take gravel from the 4,83
hectares in question for the period of seven years which was
reduced
thereafter. In the result it held that the expropriation
was in terms of section 8(1)(b).
In reaching
its conclusion the Full Bench relied upon an unreported decision of
the Durban High Court in
Greyling v The Administrator of Natal,
61
which according to the Full Bench had facts that “were not
dissimilar because the legislation there was the Roads Ordinance
as
opposed to the National Roads Act.” In the
Greyling
case
the court was concerned with the Natal Ordinance 10 of 1968. It
acknowledged that there were differences between the Ordinance
and
the National Roads Act but took the view that the differences were
not significant. The section under which the expropriation
had
taken place in the
Greyling
case was section 10(1)(b) which
authorised the Board to “enter upon any property and take and
remove there from any . . . gravel
. . . required for the
construction, reconstruction, repair or maintenance of any main
road”. The Court in
Greyling
held that “ordinarily the
right to use property does not include the right to consume the
property.” It held that section
10(1)(b) gave the Administrator
the right to take and remove any of the material referred to in the
paragraph from any property.
The approach
adopted by the Durban High Court in
Bodasing
v South
African Roads Board
is preferable. The proper approach is not
to look at the subsection under which a notice purports to have
been issued but at
what actually happened. Here there can be no
question that the Board intended to use the land temporarily for
the purposes of
taking gravel from the land, in other words, act in
terms of section 8(1)(c), and also intended to take gravel from the
land
in terms of section 8(1)(b). However, instead of saying so it
issued a notice in terms of section 8(1)(c). The Board should have
issued a notice in terms of sections 8(1)(c) and 8(1)(b).
While I accept
that the Board necessarily had to take temporary possession of the
portion of the land concerned in order to set
up the machinery
necessary to extract the gravel, the fact that the undertaking was
directed at the extraction of gravel and
its permanent removal
cannot be ignored. The occupation of the land was incidental to
acquiring the gravel. Accordingly, the
situations envisaged in
sections 8(1)(b) and 8(1)(c) are, in my view, both implicated.
It has been
argued that section 8(1)(c) encompasses everything that is
contained in section 8(1)(b) and that the former should
accordingly
be the applicable provision. This does not explain why section
8(1)(b) was enacted at all and under what circumstances
it could be
applicable. If a meaning can be ascribed to a legislative
provision, it should not easily be assumed that such provision
is
mere surplusage. Besides, it is not clear to me that a right of
use, as envisaged in section 8(1)(c), includes the right
to remove
large quantities of gravel permanently. It is however not
necessary to make a positive finding in this respect. As
already
stated, both sections 8(1)(b) and 8(1)(c) are implicated for the
reasons stated above.
As already
indicated, both the High Court and the Supreme Court of Appeal
erred, in my view, in their sole reliance on section
8(1)(c) of the
Roads Act. As it happens, however, this error does not affect the
outcome of the case. This now brings me to
the next issue upon
which I differ from Mokgoro J.
The
relationship between section 12 of the Expropriation Act and
section 25(3) of the Constitution
There was no
challenge to the constitutional validity of any of the provisions
of either the Roads Act or the Expropriation Act.
Pursuant to his
finding that what was expropriated was a right, Jamie AJ went on to
embark on an enquiry to determine the correct
measure of
compensation. He held that as there was no market value for what
had been expropriated, compensation should be determined
on the
basis of the proviso to section 12(1). The Supreme Court of
Appeal, on the other hand, having found that there was no
actual
financial loss (the measure under section 12 of the Expropriation
Act it considered relevant) determined the compensation
on the
basis of what it considered just and equitable.
In this Court,
in essence, the applicant objects to the amount of compensation
awarded by the Supreme Court of Appeal. As stated
above, the
applicant does not challenge the provisions of the Expropriation
Act which regulate the payment of compensation.
62
Instead, he argues that the expropriation notice was issued in
terms of the wrong provision of the Roads Act and that that

resulted in the incorrect calculation of the amount of
compensation. I have agreed with him that the expropriation notice
was
issued under the wrong provision of the Roads Act. In my view,
however, nothing turns on that for the outcome of this case as
I
shall explain.
There can be
no doubt that the calculation of compensation for expropriation
raises a constitutional issue. Indeed, the precise
formulation of
the property clause in our Constitution
63
was a matter of great sensitivity at the constitutional
negotiations and for good reason. Three and a half centuries of
colonial
deprivation and apartheid together resulted in a deeply
racist pattern of land ownership in our country, which our
Constitution
seeks to alter. The provisions of the property clause
were carefully formulated to ensure that while protecting property
on
the one hand, the constitutional protection of property,
important as it is, should not impede the important social and
political
purpose of land reform.
It is not
surprising, therefore, that the Constitution provides not only for
the purposes for which expropriation may be effected,
but also for
the calculation of compensation payable. It is true that it
expressly contemplates legislation to give further
detail to its
provisions. It is clear, however, that its provisions are
peremptory and that legislation to give effect to them
must be
consistent with them.
The mandatory
approach for the calculation of compensation set in section 25(3)
of the Constitution requires that compensation
paid for property
expropriated be “just and equitable” and reflect “an
equitable balance between the public interest and
the interests of
those affected”. It identifies a range of factors that should be
taken into account, including the current
use of the property; the
history of the acquisition and use of the property; the market
value of the property; the extent of
direct state investment and
subsidy in the property; and the purpose of the expropriation.
This test (and these factors) differs
markedly from the factors set
out in section 12 of the Expropriation Act which refers to two
factors, market value and actual
financial loss.
Mokgoro J
suggests that section 12 can be reconciled with section 25(3) by
first undertaking the section 12 calculation and then
considering
whether that calculation is consistent with the test set by the
Constitution. I cannot accept that such an approach
is permitted
by our Constitution. It seems to me that our Constitution
expressly avoided the approach to the calculation of
compensation
set out in the Expropriation Act, which has been the approach in
South Africa for many years. In my view, the Constitution
expressly insists upon a different approach – one which makes
justice and equity paramount, not as a second level “review”
test but as
the
test for the calculation of compensation.
In my view, the approach advocated by Mokgoro J would continue to
privilege market
value at the expense of other considerations
relevant to justice and equity which are expressly advocated by the
Constitution.
Moreover, it would be unwieldy to apply.
It seems to
me, however, that this case can be decided without following the
approach suggested by Mokgoro J. If the compensation
awarded by
the Supreme Court of Appeal is just and equitable as contemplated
by section 25(3) of the Constitution, then the applicant
has no
cause for constitutional complaint, no matter how the compensation
was calculated in other courts. The applicant would
accordingly
have no prospects of obtaining relief in this Court.
The reasoning
of the Supreme Court of Appeal that led to its finding that the
compensation it awarded was just and equitable is
set out in
paragraph 16
of its judgment. It reasoned that the
landowner would not have been able to negotiate a price for gravel
alone. In the circumstances,
the Supreme Court of Appeal held that
“[o]ne cannot realistically be satisfied that the market value of
agricultural land with
an underlying gravel content carried any
premium above the price of land without gravel.”
In my view,
the amount of compensation arrived at is just and equitable as
contemplated by the Constitution for the reasons given
both by the
Supreme Court of Appeal and Mokgoro J.
The clear
purpose of this application for leave to appeal was to obtain an
increase in the compensation awarded by the Supreme
Court of
Appeal. Given that it is our conclusion that the compensation
awarded was not inconsistent with the Constitution, the
applicant
had no prospects of success. The applicant did not point to any
other considerations relevant to the interests of
justice which
would suggest the application should have been granted. In my
view, therefore, the application for leave to appeal
should have
been dismissed on this basis.
The question of the relationship between section 12 of the
Expropriation Act and section 25(3) of the Constitution should, in
my view, stand over for another day. I accordingly disagree with
Mokgoro J that the application for leave to appeal should be
granted. The effect of this is however the same for the applicant
in that Mokgoro J dismisses the appeal.
The appeal
must accordingly fail.
Ngcobo J, O’Regan
J and Van der Westhuizen J concur in the judgment of Langa ACJ.
For the applicant: RS van Riet SC and HJ de Waal instructed by Van
der
Spuy & Partners Inc.
For the
respondent: RC Hiemstra SC and W de Haan instructed by State
Attorney (Cape Town)
1
Minister of Transport v Du Toit
2005 (1) SA 16
(SCA).
2
Du Toit v Minister of Transport
2003 (1) SA 586
(C).
3
Section 39(2) provides:
“
When interpreting any legislation, and when
developing the common law or customary law, every court, tribunal or
forum must promote
the spirit, purport and objects of the Bill of
Rights.”
4
S
ection 8(1) is reproduced in para 4 below.
5
The Roads Act, except for section 2(1A), was repealed by section
60(2) of the South African National Roads Agency Limited and

National Roads Act 7 of 1998.
6
The provisions of section 12(1) are reproduced in
para 4 below.
7
Above n 2 at para 12.
8
Id.
9
Id at para 12.
10
Id at para 13.
11
The relevant provisions of section 25 are reproduced in para 27
below.
12
Above n 2 at para
25.
13
Id at para 27.
14
Id at para 43. This value was based on the fact that the
hypothetical sale would be of a quantity of 80 000 cubic metres of
gravel
– a far greater quantity than the applicant was accustomed
to selling. It was accepted that the sale of larger quantities of
gravel would entail a discounted price.
15
The relevant provisions of section 25 are reproduced in para 27
below.
16
Above n 2 at paras
45-50.
17
Section 12(2) provides:
“
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–
ten per cent of such total amount, if it does not
exceed R100 000; plus
five per cent of the amount by which it exceeds R100
000, if it does not exceed R500 000; plus
three per cent of the amount by which it exceeds R500
000, if it does not exceed R1 000 000; plus
one per cent (but not amounting to more than R10 000)
of the amount by which it exceeds R1 000 000.”
18
Above n 2 at paras 52 and 67.
19
See section 12(1) in para 4 above.
20
Id.
21
Above n 1 at para 7.
22
Id at para 8.
23
Id.
24
Id at para 15.
25
Section 12(5)(f) states,
“
In determining the amount of
compensation to be paid in terms of this Act, the following rules
shall apply, namely─
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”.
26
This rule is derived from the so-called Pointe Gourde principle
developed from the case of
Pointe Gourde Quarrying and Transport
Company Limited v Sub-Intendent of Crown Lands
[1947] AC 565
(PC).
27
Above n 1 at para 13.
28
See Budlender, Latsky and Roux
Juta’s New Land Law
(Juta
and Co. Ltd Cape Town 1998) at 1-60.
29
See
Illovo Sugar Estates Ltd v South African Railways and
Harbours
1947 (1) SA 58
(D) at 64;
Kangra Holdings (Pty) Ltd
v Minister of Water Affairs
[1998] ZASCA 36
;
1998 (4) SA 330
(SCA) at 342I;
Minister van Waterwese v Mostert en Andere
1964 (2) SA 656
(A) at 667A-B and
Mooikloof Estates (Edms) Bpk v Premier, Gauteng
2000 (3) SA 463
(T) at 471F.
30
See section 25(2) of the Constitution at para 27 below.
31
Above n 29.
32
See para 29 below.
33
Section 12(1)(b) of the Act.
34
Where the right expropriated has a market value, however, there is
no real difference between the two bases of compensation payable
because, in that event, the compensation payable will be the market
value of the right as well as actual financial loss. Similarly
in
Kangra Holdings
, above n 29 at 336I-337B, the SCA concluded:
“
In other words, where that which is expropriated is
a right having a market value, there is no difference between the
measure of
compensation respectively afforded by paras (a) and (b).
Consequently, (b) entitles the owner of an expropriated right with
market
value to compensation not only in respect of such value but
to additional actual loss provided, of course, that the latter is
‘caused
by the expropriation’ and, provided further that, apart
from causation, it is a loss for which the Act permits
compensation.”
35
In
Ingledew v Financial Services Board: In Re Financial
Services Board v Van Der Merwe and Another
[2003] ZACC 8
;
2003 (4) SA 584
(CC);
2003 (8) BCLR 825
(CC) Ngcobo J pointed out that relevant
legislation should not be ignored in favour of direct resort to the
Constitution. He stated
at paras 20 and 22:
“
This Court has adopted the doctrine of objective
constitutional invalidity. The effect of this doctrine is that any
law in existence
prior to the Constitution coming into effect, and
inconsistent with the Constitution, becomes invalid the moment the
Constitution
comes into operation, and that any constitutionally
inconsistent law, passed after the Constitution, becomes invalid
from the moment
it is passed. It is important to appreciate,
however, that the doctrine only determines the moment of invalidity
– in the absence
of any constitutional provision to the contrary –
once the law in question has been declared invalid
. As
pointed out earlier, at no stage has the applicant challenged the
constitutionality of Rule 35(14). That being so the Rule
must be
taken to be valid.
. . . .
In
Member of the Executive Council for Development
Planning and Local Government, Gauteng v Democratic Party and Others
this Court pointed out that ‘considerable difficulties stand in
the way of the adoption of a procedure which allows a party to
obtain relief which is in effect consequent upon the invalidity (of
a statutory provision) without any formal declaration of invalidity
of that provision’. Grave doubts were expressed whether such a
procedure was compatible with s 172(1) of the Constitution, which
obliges a Court to declare a statutory provision which is
inconsistent with the Constitution invalid to the extent of the
inconsistency.”
[Footnotes omitted.]
36
Investigating Directorate: Serious Economic Offences and Others v
Hyundai Motor Distributors (Pty) Ltd and Others: In Re Hyundai
Motor
Distributors (Pty) Ltd and Others v Smit NO and Others
[2000] ZACC 12
;
2001 (1)
SA 545
(CC);
2000 (10) BCLR 1079
(CC).
37
Id at paras 21-22.
38
Id at paras 23-24. See also
Ingledew
above n 35.
39
Above n 17.
40
Section 25(3) requires that relevant circumstances be considered,
and the list provided in that section is open-ended. Therefore,
should actual financial loss be a relevant consideration, it must be
taken into account to reach compensation which is just and
equitable
and also reflects an equitable balance between state and individual
interests.
41
Ex Parte Former Highland Residents; In Re: Ash and others v
Department of Land Affairs
[2000] 2 All SA 26
(LCC).
42
Act
22
of 1994.
43
Section 8(1)(a) in para 4 of this judgment.
44
See para 24 of this judgment.
45
Kangra
Holdings
above n 29 at 336I-J.
46
South African Roads Board v Bodasing
(NPD) Case no 948/94, 22
September 1995, unreported at 6–7, quoted in the High Court
judgment above n 2 at paras 8-9.
47
Above n 29 at 336I-J.
48
Above n 1 at para 8.
49
Id at para 15.
50
Id at paras 13-14.
51
Above n 34.
52
Above n 46 at 6.
53
See paras 13 and 43 of this judgment.
54
Above n 2 at para 46.
55
Id at para 50.
56
Id at p
aras 48-49.
57
1995 (4) SA 867.
58
Id at 871E-G.
59
Id at 875F-G.
60
South African Roads Board v Bodasing
(NPD) Case no 948/94, 22
September 1995, unreported.
61
Piet van Zyl Greyling v The Administrator of
Natal
, unreported case no 92/722, Supreme Court, Durban and
Coast Local Division, per Thirion J dated 22 May 1995.
62
The payment of compensation is regulated in
section
12 of the Expropriation Act.
63
Section 25 of the Constitution reads:
“
(1) No one may be deprived of property except in
terms of law of general application, and no law may permit arbitrary
deprivation
of property.
(2) Property may be expropriated only in terms of law
of general application─
(a) for a public purpose or in the public interest; and
(b) subject to compensation, the amount of which and
the time and manner of payment of which have either been agreed to
by those
affected or decided or approved by a court.
(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.
(4) For the purposes of this section─
(a) the public interest includes the nation’s
commitment to land reform, and to reforms to bring about equitable
access to all
South Africa’s natural resources; and
(b) property is not limited to land.
(5) The state must take reasonable
legislative and other measures, within its available resources, to
foster conditions which enable
citizens to gain access to land on an
equitable basis.
(6) A person or community whose tenure of land is
legally insecure as a result of past racially discriminatory laws or
practices
is entitled, to the extent provided by an Act of
Parliament, either to tenure which is legally secure or to
comparable redress.
(7) A person or community
dispossessed of property after 19 June 1913 as a result of past
racially discriminatory laws or practices
is entitled, to the extent
provided by an Act of Parliament, either to restitution of that
property or to equitable redress.
(8) No provision of this section may impede the state
from taking legislative and other measures to achieve land, water
and related
reform, in order to redress the results of past racial
discrimination, provided that any departure from the provisions of
this
section is in accordance with the provisions of section 36(1).
(9) Parliament must enact the legislation referred to
in subsection (6).”