CT developer wins compensation battle

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Cape Town - The Constitutional Court has found that a residential property development company is entitled to compensation for "excess" land claimed by the City of Cape Town.

Its finding reverses an order of the Supreme Court of Appeal and reinstates an order of the Western Cape High Court, that Arun Property Development is entitled to compensation.

The matter arose after Arun completed a residential property development near Cape Town.

Public roads

For this purpose, the developer obtained various planning approvals from the city in accordance with the Land Use and Planning Ordinance 15 of 1985 (LUPO).

However, before Arun purchased the property or began its development, a provincial structure plan was approved.

The plan envisioned roads to serve the area, some of which traversed Arun's property. As part of the planning approvals for Arun's development, land was reserved for public roads.

Arun then sought compensation for the portion of the land used for the roads, which exceeded the normal needs for public streets and public places in the area where the development took place.

In September 2001, it instituted action against the city in the Western Cape High Court in terms of section 28 of the LUPO, claiming compensation for the so-called excess land. The court ruled in Arun's favour.

It held that the excess land was vested in the city and that Arun was entitled to compensation in respect thereof.

Public roads

The city took the matter to the Supreme Court of Appeal (SCA), and submitted that the excess was vested in the city and that Arun was not entitled to compensation for it. The appeal was upheld and the decision of the high court overturned.

Arun then raised the matter to the Constitutional Court, asking that the appeal be upheld and the order of the high court reinstated.

The city contended that Arun was not entitled to compensation because the reservation of land for public roads amounted to a mere deprivation, and not expropriation, as envisaged in section 25 of the Constitution.

The Constitutional Court on Monday ordered that the order of the Western Cape High Court be re-instated in amended form and the order of the SCA be set aside.

City to pay

The amended form included that excess land vested in the City of Cape Town in terms of section 28 of LUPO and that Arun "is entitled to compensation in respect of the excess land".

Further, that the compensation "must be calculated under the relevant provisions of the Expropriation Act 63 of 1975".

It ordered the city to pay the appellant's costs, including costs of two counsel in the high court, SCA and Constitutional Court.

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