Press Release: SCA finds that existing land claim has impact on compensation to be paid for land

For Immediate Release: 02 October 2017

On Friday, 29 September 2017, in the Supreme Court of Appeal, judgment was handed down in a matter between a land owner who is seeking compensation for land claimed by Mr Msiza, a labour tenant represented by the Legal Resources Centre, and the Department of Rural Development and Land Reform.

The Court found that the residential development potential of the land is not a factor in this case and should not determine the value of compensation for the land; but rather that the land is more suited to agricultural purposes, and taking into consideration the circumstances of the land, including the existing land claim, and that the compensation to be paid is a lesser amount (R1,8 million versus R4,36 million).

While this judgment brings relief to our client, Mr Msiza, who has been waiting many years for the compensation value of the land to be adjudicated, the SCA overturned an earlier judgment in the Land Claims Court which found that market value of the land is not the most important consideration when determining the value of compensation for land.

In the LCC, the Court found that the value of the compensation to be paid to the land owners was less than the valuated amount (the market value) and ascribed compensation at R1,5 million. The SCA overturned this amount, stating that there were, “no facts justifying the deduction of the amount of R300,000. The LCC arbitrarily decided on this amount with no rational foundation.”

The figure of R1,8 million was provided by the State’s expert. The SCA found this valuation to be significant because it takes, “…cognisance of the historic and current use, the characteristics of the subject property, the lawful use, and the judgment of the subject property in terms of Chapter III of the Land Reform (Labour Tenants) Act…. Simply put, the valuation of R1.8 million took account of the Msiza claim in the valuation of the property.”

While this judgment accepts that an existing land claim can impact on the future use of the land, and could act as a warning to potential land buyers who choose to ignore existing land claims, the SCA only partially grappled with the issue of whether deductions to the market value, and the extent of these, may be justified in order to seek “just and equitable compensation” for land reform. The Court instead placed its faith in the valuation of the state expert and may lead to future cases where the implementation of constitutional principles are determined by valuators, and not by courts of law.
ENDS