In the last five decades, South Africa has been legally expropriating land for public use under the Expropriation Act 63 of 1975, which has recently been repealed and replaced by the highly contentious Expropriation Act 13 of 2024 (“the Expropriation Act”). Expropriation of land as a legal construct is a vehicle for reassigning identified private land for public use or public benefit, for example, to lay power lines, aqueducts, cemeteries, to name a few.

Often, private land earmarked for public interest is used by the owner as a private dwelling or for commercial income-earning purposes, and the expropriation thereof may mean an interruption of certain life activities. A legal expropriation must be in line with Section 25 of the Constitution of South Africa, which directs that no person may be deprived of property except in terms of the law of general application, and no law may permit arbitrary deprivation of property. The act of expropriating land is one that cannot be taken lightly, as it may have dire consequences for those deprived of the use of their land.  It begs the question as to what happens in the event that the state expropriates land for public use, but the said land is found to be unsuitable for the purpose for which it was expropriated?

Our Courts recently had the opportunity to grapple with this question, in the case of Smith V Buffalo City Municipality & Others (1323/2008) [2025] ZAECMKHC 43 (8 May 2025). Here, the High Court (“the Court”) considered whether ownership of land that had been transferred to a public body under expropriation for a legitimate public purpose can be restored to the previous owner after the land has been found to be unsuitable for the purpose for which it was acquired.

Background of the case

The Applicant, Roger Smith, sought a declarator from the Court to restore ownership of his property (Wembley Farm situated in East London) that had been transferred to the First Respondent, Buffalo City Municipality, in terms of a purchase settlement agreement pursuant to an intention to expropriate in 1999. The land remained unused from the date of acquisition.

In 2008, the Applicant instituted legal proceedings against the Municipality, seeking restitution of the property. In his application, the Applicant averred that he had been an unwilling seller under the threat of expropriation, and he was made to believe that his land was suitable for a legitimate public purpose of the establishment of a municipal cemetery, when in fact it was not. The Court dismissed the application on a special plea of prescription, finding that the Applicant did not act reasonably in ascertaining before June 2005 whether the land would be developed for the intended legitimate public purpose.

Thereafter, the parties entered settlement negotiations, wherein it was agreed that the land would be restored to the Applicant, subject to the Applicant's repayment of the primary consideration received for the land, with interest, plus the Applicant's contribution towards the municipality's litigation costs. It was further agreed that the Municipality would retain a one-hectare portion for the establishment of a fire station. There was a delay in negotiations over technical details of implementation, and a final revised settlement agreement was sent to the municipality for signature. Despite Council approval of the settlement terms, the Second Respondent did not sign the settlement agreement without communicating any reasons for failing to do so. The Applicant approached the Court to have the said settlement agreement made an order of Court.  When the proceedings were instituted, the Second Respondent, the City Manager for the Buffalo City Metropolitan Municipality, in an answering affidavit, raised the issue of non-compliance with Section 14 of the Municipal Finance Management Act 56 of 2003 (“MFMA”).

Discussion

The Second Respondent contended that the settlement agreement was invalidated, as the council resolution from which the settlement agreement derived its validity, was itself invalid. The Second Respondent further argued that section 14 of the MFMA had not been correctly applied. The Court found that the Municipality's reliance on Section 14 of the MFMA was flawed, and went on to distinguish between a transfer of property and the restitution or restoration of property rights after an expropriation is found to have failed its intended purpose. It stressed that the expropriation was justified by a legitimate public purpose (i.e., the establishment of a cemetery). However, the Court stated that when “that purpose became unattainable, the consequent unlawfulness of the Applicant's deprivation of his property rights and the unconstitutionality of that entire process became fatally indefensible.”

The Court also noted with disapproval the Second Respondent's acting in bad faith by not communicating concerns about section 14 compliance, with attorneys of other parties. The Second Respondent failed to act in an open and transparent manner, attempting to renege from the settlement agreement only after proceedings were instituted, despite the Municipality's legal department having no difficulties with the lawfulness of the agreement. Consequently, the Court found in favor of the Applicant and ordered that the initial proceedings in case no 1323/2008 had been settled and the deed of settlement was made an order of Court, with costs.

Conclusion

The Court’s stance in this case is commendable. The balancing approach adopted between the owner’s right in terms of Section 25(1) of the Constitution and the expropriating authority’s need to expropriate for a legitimate purpose is notable. The decision has an indirect effect on the application of Section 21 of the Expropriation Act, which permits the withdrawal of an expropriation if the land is deemed unsuitable for the purpose for which it was acquired. This decision will have a positive impact and provide comfort to private landowners who may be subjected to a similar process, knowing that land can and will only be expropriated for legitimate public use in a manner that is just and equitable. Landowners can hold the expropriating authority accountable for the failure to have regard to the arbitrary limitation of the landowner’s rights, and they can have appropriate recourse to have the land restored for the furtherance of their personal needs. Expropriating authorities have a duty to conduct their due diligence and ensure that the land is suitable to avoid the unjustifiable deprivation of land rights. The decision has the effect of curbing the expropriating authority’s power to expropriate without just cause. The decision is unfortunately not binding on other jurisdictions, and one can only look forward to when a similar matter is brought before the Supreme Court of Appeal and/or the Constitutional Court.