IN THE LAND CLAIMS COURT OF SOUTH AFRICA CASE NO.

: LCC 148/08

In the case of:

ISABEL JOYCE FLORENCE (NEE DODGEN)

Plaintiff

and

BROADCOUNT INVESTMENTS (PTY) LTD THE GOVERNMENT OF THE REPUBLIC OF SOUTH AFRICA THE CITY OF CAPE TOWN

First Defendant

Second Defendant Third Defendant

HEADS OF ARGUMENT

INTRODUCTION

1.

The Florence family lived at Sunny Croftin Kromboom Road, Fraserdale Estate (the property or the subject land) from December 1952 until November 1970 when they were forced to leave their home following threats from Group Areas inspectors.

2.

Mr Lionel Frederick Florence (Mr Florence) launched this claim for restitution of the property. He, however, died prior to the finalisation of the claim. Mr

Florence was substituted as Plaintiff in the action by his wife, Mrs Isobel Joyce Florence, in terms of a Notice of Substitution dated 24 June 2009. 1

3.

The claim was launched by Mr Florence acting in his own right and in a representative capacity on behalf of his brothers, Normal Samuel Florence and Ronald Philip Florence. 2

4.

Although the Florence family lived at Sunny Croft from December 1952, their claim to ownership of the property is based on a written agreement of sale entered into on 9 January 1957 between the three Florence brothers and a Dr Yeller, the owner of the land at the time. The parties have been unable to find a copy of the agreement of sale, and many of its terms are uncertain, but it is common cause that it provided for the purchase price to be paid off in R90,00 instalments and that the members of the Florence family paid these instalments regularly, every month, until September 1970.

5.

The claim for restitution is opposed by the Second Defendant (the State). Initially, the Plaintiff sought restoration of ownership of the subject land.3The First Defendant, the current owner of the property, opposed the granting of this relief. The Third Defendant did not oppose the claim.

When we use the terms the Plaintiff or the claimant below, we refer to Mr Florence, unless the context indicates otherwise. 2 Amended Statement of Claim: A1: 88: 2. 3 See: The Statement of Claim of 10 October 2008: A1: 8 9.

6.

The Plaintiff has abandoned her claim to restoration of ownership of the subject land, save to the extent that she seeks to have a memorial plaque erected on the property. 4The reason for the abandonment of the restoration claim is because it is no longer feasible - part of the property had been excised for purposes of widening the Black River Parkway and the remainder of the property has been substantially developed (notably by the building of a parking garage on it).

7.

Following the abandonment of the restoration claim, the First Defendant entered into a settlement agreement with the Plaintiff in terms of which a memorial plaque recording the dispossession will be erected on the subject land and it withdrew its opposition to the claim. 5

8.

The Plaintiff and the representatives of the State on 11 February 2010 signed a Statement of Agreed Facts6 which eliminated many of the disputes of fact which had previously existed on the pleadings which recorded that the sole issues which remain to be determined by this Court are:

6.1

The amount of compensation to be awarded to the Plaintiff as a result of the dispossession of the rights in the subject land; and

Statement of Agreed Facts: A1: 83. Statement of Agreed Facts: A1: 83. 6 A1: 83 86.
5

6.2

Whether the Second Defendant is liable for the cost of the erection of a memorial plaque on the subject land. 7

9.

In order to determine the above issues, this Court will be required to resolve a number of legal and factual disputes relating to restitution in the form of financial compensation.

10. The requirements which have to be satisfied by a person seeking restitution of a right in land in terms of the Restitution of Land Rights Act 22 of 1994 (the Restitution Act or the Act) are listed in sections 2(1) and 2(2) of the Act. Section 1 defines restitution of a right in land as:

(a)

the restoration of a right in land; or

(b)

equitable redress.

11. The former concept is defined to mean in effect the return of the dispossessed right, while the latter concept means:

any equitable redress, other than the restoration of a right in land, arising from the dispossession of a right in land after 19 June 1913 as a result of past racially discriminatory laws or practices, including

A1: 85.

(a)

the granting of an appropriate right in alternative state owned land;

(b)

the payment of compensation;

12. The four primary issues to be determined by this Court (each of which will be considered in turn below) are the following:

12.1

The extent of the financial loss suffered by the Florence family on their dispossession in 1970;

12.2

The method that should be used to translate that loss into current monetary terms;

12.3

The amount of financial compensation the Florence family should receive as a solatium in respect of the hardship and suffering they experienced as a result of the dispossession; and

12.4

Whether the State should be liable for the costs of erecting the memorial plaque on the subject land.

THE EXTENT OF THE 1970 LOSS

13. Many of the facts relating to the extent of the loss suffered by the Florence family in 1970 are not in dispute. We shall accordingly set out the facts which are common cause before considering the Plaintiffs and the Defendants evidence relating to the outstanding factual disputes.

FACTS NOT IN DISPUTE

14. As a result of the signing of a Statement of Agreed Facts on 11 February 2010,8the following facts, amongst others, are not in dispute:

14.1

The Florence family occupied the subject land in December 1952 in terms of a lease agreement;9

14.2

The Florence brothers:

14.2.1 purchased the subject land from Dr Yeller on 9 January 1957 in terms of a written sale agreement of sale;10

14.2.2 paid instalments of R90,00 per month for a period of 13 years and 10 months from 1957 in terms of this agreement;11

A1: 83 86. Plaintiffs Amended Statement of Claim: para 11, A1: 89. 10 Plaintiffs Amended Statement of Claim: para 12, A1: 90.
9

14.3

The subject land was never transferred into the name of the Florence brothers as a result of racially discriminatory legislation which prohibited transfer of land to disqualified persons; 12

14.4

On 16 October 1970 the Florence brothers entered into a memorandum of agreement of cancellation of sale with Dr Yeller in terms of which they cancelled the 9 January 1957 sale. The cancellation agreement is annexure LF8 to the Statement of Claim. Its terms included a refund from the seller to the purchasers of an amount of R1 350,00; 13

14.5

A total of R14 896,00 was paid towards the purchase price of the subject land, including R46,00 paid in terms of the deed of cancellation; 14

14.6

The Florence brothers had no alternative but to enter into the cancellation of agreement because the Groups Areas Act 77 of 1957 (the Group Areas Act) prevented them from acquiring ownership of the subject land;15

14.7

The Florence family moved from the subject land in or about November 1970 as a result of threats from Group Areas inspectors;16

11 12

Plaintiffs Amended Statement of Claim: Plaintiffs Amended Statement of Claim: 13 Plaintiffs Amended Statement of Claim: 14 Plaintiffs Amended Statement of Claim: 15 Plaintiffs Amended Statement of Claim: 16 Plaintiffs Amended Statement of Claim:

para 13, A1: para 14, A1: para 19, A1: para 20, A1: para 21, A1: para 22, A1:

90. 90. 91. 91. 91. 91.

14.8

The Florence family incurred removal costs estimated at R85,00 as a result of the dispossession.17

15. The parties also agreed that the value of the subject land in 1970 was R31 778,00. 18

16. In addition, Mr du Toits estimate of the 1957 market value of the subject land of R8 131,00 19 has been accepted by the Claimant.

17. No copy has been found of the 1957sale agreement and there is uncertainty concerning many of its terms. In letters, which will be discussed below, Mr Florence has referred to amounts of R 9000 and R 15 000 in relation to the purchase price of the property. Much of much the evidence concerning the extent of the loss suffered by the Claimant in 1970 arose as a result of the lack of clarity concerning the terms of the sale agreement.

THE CLAIMANTS CASE

18. The Plaintiffs case is that the amount of R9000 referred to by Mr Florence in his undated letter to the Land Claims Commission20was the amount that would have been paid if the purchase price sale had been paid in full in 1957. This is consistent with the 1957 market value of the property of R8131.00. The amount
Plaintiffs Amended Statement of Claim: para 33.1, A1: 95. Statement of Agreed Facts: para 4, A1: 85. This was the valuation given to the property by the States expert valuer, Mr du Toit. 19 A2: 102. 20 The letter is attached as annexure JJ to Mr du Toits report of 19 February 2010. The reference to a selling price of R 9000 is at page 2 of the letter (A2: 203).
18 17

of R 15 000 referred to by Mr Florence in three letters (discussed below in dealing with the evidence of Mr Margolius) was the total amount of the instalments to be paid-off over a number of years.As it is common cause that the Florence brothers had paid instalments totalling R14 896.00 by the time the sale was cancelled, we contend that they had effectively paid-off the purchase price by October 1970.

19. In any event, given: (i) the market value of the property in 1957; and (ii) the instalments paid by the Florences both of which are common cause - the Florence brothers would have paid-off the value of the property plus any reasonable interest charges by 1970. It is only by assuming that the parties agreed on an unreasonable and highly punitive interest rate in 1957 that one can avoid the conclusion that the property was paid-off by 1970.

20. Accordingly, we submit that the Florence family should be regarded as the de facto owners of the property in 1970 and their claim should be treated as one for compensation for loss of ownership rights (subject to an adjustment for the compensation received of R1 350,00).

21. The Plaintiffs case with regard to the extent of the loss suffered by the Florence family in 1970 rests on the evidence ofMr Margolius and Professors Mesthrie and Wittenberg.

10

Professor Mesthrie

22. Professor Mesthrie is a Professor of History at the University of the Western Cape. She has written extensively on the Group Areas Act and its consequences, including several articles on the forced removal of the Black River community (of which the Florence family formed part). She conducted 36 interviews with former residents of Black River, including two with Mr Florence before his death.

23.

Professor Mesthrie made an excellent impression in the witness box. The thrust of her evidence was not contested by the State and at the conclusion of her evidence she was complimented by the Court on having produced an excellent report.21

24. Professor Mesthrie testified that:

24.1

The entire transaction between the Florence brothers and Dr Yeller should be viewed against the context of the Group Areas Act and how it forced people to enter into all kinds of arrangements to secure their homes;22

24.2

There can be no doubt that the Florences considered themselves to be the owners of the property and that the actions of Mr Florences mother

21 22

Record: 125: 20. Record: 112: 2 5.

11

throughout the 1950s and 1960s, including her response to the proclamation of the area under the Group Areas Act and the representations she made in 1964, demonstrated that she conducted herself as an owner;23 and

24.3

Mr Florence had always believed that his family had owned their home, and only found out in or about 1998 that no deed of transfer had been registered in their name. 24

Professor Wittenberg

25. Professor Wittenberg is an Associate Professor of Economics at the University of Cape Town. He was a most impressive witness. Although he was subject to lengthy cross-examination, no criticism of any substance can be levelled against his testimony. Professor Nattrass described him as the most well renowned mathematician/econometrician in South Africa 25 and remarked that he had demonstrated his formidable expertise in the witness box. 26

26. Much of Professor Wittenbergs evidence dealt with the translation of a 1970 loss into current terms. However, he also commented on Mr du Toits

compensation calculations. In Exhibit E, he made the assumption that the Florences had been loaned a sum of R8 131,00 (the agreed value of the house at
23

Record: 111 112.The States expert witness, Mr Du Toit, accepted that the Florences would have regarded themselves as the owners, or the unregistered owners, of the property (Record: Vol 2: 231: 16 19). 24 Record: 104 105. 25 Record: 370: 12 16. 26 Record: 368 370.

12

the time) and that it had been paid off in monthly instalments of R90,00 by September 1970. He then calculated what interest rate would have been applied to the loan to achieve this and established that it was 9.9%. 27

27. If the amount of the initial loan is changed to R9 000,00, then the implicit interest rate which would have resultedin the loan being paid off by September 1970 is 8%. 28

28. Professor Wittenberg concluded that:

With any reasonable interest rate, the property would have been paid off according to that set of repayments 29

Mr Margolius

29. Mr Jerry Margolius is an experienced professional valuer and a fellow (and past national president) of the South African Institute of Valuers.30 Most of his evidence dealt with what the current market value of the property would be if it remained in the condition in which it was at the time of dispossession. He was also referred to three of Mr Florences letters which dealt with the purchase price of the property. The first of these, Exhibit O, stated:

27 28

Record: 179: 4 9 read together with Exhibit E. Record: 182: 9 13. 29 Record: 180: 21 23. 30 His Curriculum Vitae is to be found at A2: 37 42.

13

He paid 13 years 10 months of R90,00 per month totalling to R14 950,00 including R46,00 which we had to pay by the 31 st October 1970 which is on page 2 of the cancellation of sale. I am assuming that these two amounts amalgamated totals to R15 000,00 for the price of the property.

30. Mr Margolius stated that in light of a purchase price of R9 000,00, the difference between that sum and R 15000,00, would be the interest paid, accumulating to the total amount of about R15 000,00, referred to in the letter. 31

31. In Exhibit P, the second letter, Mr Florence stated that:

We had almost completed paying the R15 000,00 he agreed to with a payment which he demanded of R46,00 which we paid on 31 October 1979 . . .

32. Mr Margolius stated that what Mr Florence was saying was that they would have paid a total R15 000,00 in instalments of R90,00 per month over the estimated 14 year period. The sum of R15 000,00 would have been the capital plus interest.32

33. In Exhibit Q Mr Florence wrote as follows:

31 32

Record: Vol. 2: 51: 19 22. Record: Vol. 2: 52 53.

14

By the 16/10/1970 when the cancellation of sale was signed we had paid R90,00 per month for a period of 13 years 10 months, totalling R14 950,00 plus we had to pay a further R46,00 before the 31/10/1970 as full and final settlement. Meaning that a price of R15 000,00 was the agreed for Sunny Croft.33

34. Mr Margolius reiterated, having considered Exhibit Q,that the letters reflect that R9 000,090 was the capital amount and R6 000,00 was the interest paid.34 The total sum of the payments received by Dr Yeller was R 15 000.35

THE STATES CASE

35. The State disputes that the Florence family should be regarded as owners of the property. Its case in this regard rests on the evidence of Mr Saul du Toit, an expert valuer.He presented four reports which set out three different methods for calculating the loss suffered by the Claimant. These reports will be considered in turn.

THE FIRST REPORT

36. Mr du Toits first two reports were, apart from the CPI conversion calculation,substantially the same. The compensation proposal made in the first two reports will be discussed below when dealing with his second report. The
Sunny Croft was the name given to the family home. Record: Vol. 2: 55. 35 Record: Vol. 2: 65: 6 9.
34 33

15

CPI conversion calculation in the first report is incompetent. The report is relevant insofar as it reflects adversely on Mr du Toits standing as an expert.

37. The first reported is dated 29 July 2009. 36It uses a CPI conversion factor of 25.7692 to translate the 1970 loss into current terms.37Professor Wittenberg had used a CPI conversion factor of over 40. When asked to comment on the discrepancy between his and Mr du Toits CPI calculations, Professor Wittenberg stated that Mr du Toits was an incompetent CPI calculation, which spliced together two CPI series, one which was based on 2000 values and one which was based on 2008 values. The effect of the error was to wipe out all the inflation between 2000 and 2008 , which is the sort of mistake which I wouldnt accept from my undergraduate students.38

38. Mr du Toit claimed that the July 2009 report was a draft which should not be in the Court bundles. He did not rely on it 39 and admitted that he could not defend the CPI calculation.40

39. Under cross-examination Mr du Toit accepted that he signed the July 2009 report, that he had confirmed it with an appraisers certificate, that it had been made available by the State Attorney to the Claimants attorney for purposes of

36 37

It is to be found at A2: 71. A2: 104. 38 Record: 199 201. 39 Record: Vol. 2: 95: 5 15. 40 Record: Vol. 2: 192: 1.

16

the litigation between the parties and that there is nothing in the report itself to indicate that it is a draft.41

40. Mr du Toit also did not dispute that he had corrected the error only after Professor Wittenbergs calculations, in which he had used a CPI factor of over 40, had been furnished to him and he had realised that there was a problem. 42

41. Although Mr du Toit claimed that the CPI calculation was performed by a colleague, he conceded that he should have checked it and that, as he had signed the report, he had been negligent.

THE SECOND REPORT

42. Mr du Toits second report is dated 29 September 2009. 43The compensation proposal in this report was based on the assumption that the R90,00 instalments would have included a rental portion as the Plaintiff was occupying the property whilst paying off the purchase price. Assuming a monthly marketrelated rental, he attempted to establish the capital amounts outstanding in 1970 on the 1957 loan made to the Florence family by Dr Yeller and calculated the Claimants loss as the difference between the 1970 market value of the property and this outstanding loan amount. The calculations were performed assuming

41 42

Record: Vol. 2: 186 190. Record: Vol. 2: 194 195. 43 A2: 259.

17

initial purchase prices of both R9 000,00 and R15 000,00 (for present purposes the latter calculations is not relevant).44

43. Assuming an initial purchase price of R9 000,00, Mr Du Toit calculated that the outstanding loan amount at the time of cancellation was R22 357,00. Based on a market value for the property in 1970 of R31 778,00 and the compensation received of R1 350,00, Mr Du Toit calculated the claimants net loss in 1970 as R8 071,00. 45

44. Professor Wittenberg commented that it is ridiculous to assume that the Florence family paid both interest and rent. He pointed out that if the purchase price had been borrowed, then the Florencebrothers would have been the owners of the property and they would have paid the loan back with interest and not paid rent.46 This is because for them to be paying interest on an amount of

R9 000,00, the full R9 000,00 must have been borrowed. It follows that the money must have been handed over to them, in which case the property would have been paid for in full. If the original owner lent the Florence family

R9 000,00 to buy his property, he would not be entitled to charge them rent because he would no longer be the owner. It would be a fraudulent transaction. 47

45. Professor Wittenbergs evidence in this regard was not disputed.

To the

contrary, in cross-examination, counsel for the State even went so far as to

44

See A2: 287 289 and 338 340. The calculation based on a purchase price of R 15 000 suggested that the Florence family did not suffer any loss. 45 A2: 288. 46 Record: 193: 2 18. 47 Record: 347 348.

18

identify with the statements that conceptually the assumptions made by Mr du Toit didnt make sense and that they were ridiculous. 48

46. Professor Wittenberg also noted that the scenario in terms of which the loanwas greater in 1970, after almost 14 years of regular payments, than at the outset and had ballooned to R22 357,00 and would never be paid-off was fanciful and failed to make any economic sense whatsoever. 49This evidence was also not disputed by the State.

47. Under cross-examination Mr du Toit did not concede that the assumptions underpinning his calculation were ridiculous, but accepted that the State was no longer relying on the compensation calculation in his second report.50

48. Mr du Toit stated that apart from the assumption that both interest and rental were charged, there were no other flaws in the calculation.51He did not dispute that in Exhibit F, when Dr Wittenberg corrected the error and redid the calculation, the initial purchase price of R9 000,00 was paid off by September 1968. 52

49. Mr du Toit also gave contradictory evidence concerning the manner in which he had conceptualised the agreement. Initially he disagreed with the proposition that the calculation envisaged two different transactions, a sale and a loan
48 49

Record: Record: 50 Record: 51 Record: 52 Record:

344 345. 195 196. Vol. 2: 203 204. Vol. 2: 293: 3 10. Vol. 2: 293: 11 22.

19

agreement, and characterised it as an instalment sale agreement.

He also

disputed the proposition that the calculation assumed that the Florences had borrowed the money and that there was a loan and that the loan balance increased year by year.53

50. However, he later accepted that he had conceptualised the agreement in terms of a loan amount54 and that the arrangement was a purchase agreement combined with a loan.55

THE THIRD REPORT

Introduction

51. Mr du Toits third report is dated 19 February 2010.56In it he states that since the submission of his September 2009, he ha d had the benefit of investigating market behaviour in relation to instalment sales of properties and accordingly had prepared a supplementary report.57Its starting point is that the Florences loss can at best be the amount by which Yeller under-compensated them for the cancellation of the instalment sale, and cannot be for the loss of the property. 58 Notwithstanding that he submitted a fourth report containing a different compensation calculation, Mr du Toit remained of the view that compensation

53 54

Record: Vol. 2: 209: 2 12 and 209: 22 24. Record: Vol. 2: 212: 2 3. 55 Record: Vol. 2: 214 215. 56 The Report is to be found at A2: 118. 57 A2: 120: 1.2. 58 A2: 126: para 2.7.

20

should be awarded to the Florence family on the basis set out in his third report.59

52. The report contained two compensation calculations: the first attempted to reflect how the market would have dealt with the cancellation transaction and the second was based on how Mr Florences opinion concerning the amount of compensation to which he was entitled.60In evidence Mr Du Toit conceded that one should not rely on the assessment of a non-expert such as Mr Florence for purposes of calculating compensation.61 We accordingly need not dwell on the latter calculation.

Market practice

53. In the calculation based on market practice Mr du Toit took the sum total of the payments made by the Florence family between 1957 and 1970, deducted from this amount (R14 896,00) what he understood to be a reasonable rental amount over the period (R6 241,95), and took the difference (R8 654,05) to be the extent of the under-compensation. After making adjustments for the compensation received (R 1350) and removal costs (R85), he came to a loss in 1970 of R7 389,05. When adjusted to December 2009 in terms of the CPI, he estimated the present loss to be R330 238,00. 62

59 60

Record: Vol. 2: 133 134. Record: Vol. 2: 122: 6 18. 61 Record: Vol. 2: 240. 62 A2: 131 132. See also: Record: Vol. 2: 237 238.

21

Shortcomings in research

54. In the course of Mr du Toits evidence it became apparent that there were serious short-comings in the research upon which he had based his third report:

54.1

He had been unaware that the subject land was located in a controlled area in terms of the Group Areas Act and he had not had regard to the Group Areas Act context against which the 1957 agreement was concluded. He conceded in his evidence that the Group Areas Act constituted one of the defining features of the sale and that he had failed to see it as such.63

54.2

He conceded that the Parliamentary debates, upon which he placed great reliance in his report, took place over a decade after the conclusion of the sale in 1957. 64 He stated that these debates were the best evidence that he could find concerning sales ofland on instalments.65

54.3

He was unable to identify a single specific transaction (for the purchase of land in instalments) that he could find to support the conclusions in his report.66

63 64

Record: Record: 65 Record: 66 Record:

Vol. 2: Vol. 2: Vol. 2: Vol. 2:

216 220. 218: 1 8. 220: 4 8. 221: 11 12.

22

54.4

He placed considerable reliance on an unsigned draft deed of sale, which was drawn up at least 14 years after 1957, as evidence of market practice.67

54.5

He failed to have regard to the disempowering effect of the Group Areas Act on people facing removal under it:

54.5.1 In the reporthe noted that it must be kept in mind that L.F. Florence was a literate adult of 31 years of age at the time of the signing of the cancellation agreement.68

54.5.2 In response to a question from the Court, he agreed that he was suggesting that Mr Florence would have known what his legal rights were.69

54.5.3 After reading, in cross-examination, Mr Florences account of how he signed the cancellation agreement without having read it or having it explained to him,70 Mr du Toit stated that he didnt have the benefit of the transcript (at the time that he drafted his report) but that he would normally assume that a 31 year old adult

67 68

Record: Vol. 2: 221: 4 7. A2: 122: 1.4.3. 69 Record: Vol. 2: 108: 4 7. He also noted that the Parliamentary debates found that purchasers who could read and write were not necessarily legally literate. 70 Mr Florences letter is at p. 7: 184. It was dealt with in evidence a t Record: Vol. 2: 223 226.

23

would take caution to make sure that what sign is proper , especially as his mother was illiterate.71

54.5.4 After having read Mr Florences account of the sale, Mr du Toit accepted that it did not reflect much asserting of rights on the part of Mr Florence.72

54.5.5 When it was put to Mr Du Toit that when he conducted his investigations he was insufficiently familiar with the impact of the Groups Areas Act and the manner in which it impacted upon people who were subject to removal, he answered that he would accept that to be the case that parties were under duress, they werent negotiating on level fields, most certainly not. 73

Misconceived purpose of the Act

55. Mr du Toit stated that the purpose of his calculation was to determine how the market would have dealt with the cancellation of the sale agreement.74The calculation was based on market conditions at the height of apartheid in the 1970s. 75He assumed that the Group Areas Act was in place andthat the

71 72

Record: Record: 73 Record: 74 Record: 75 Record:

Vol. 2: Vol. 2: Vol. 2: Vol. 2: Vol. 2:

226: 14 20. 226: 11 13. 226 227. 122: 6 18. 245: 23 24.

24

cancellation agreement had been concluded. He then estimated what would be fair compensation for the dispossession. 76

56. Mr Du Toit accepted that:

56.1

it was common cause on the pleadings that the Florences would have become the registered owners of the property, had it not been for the Group Areas Act;77

56.2

the purpose of financial compensation is to place the claimant, insofar as money can do it, in the same position as if the land had not been taken ; 78 and

56.3

his calculation did not give effect to the above principle. 79

57. We submit that Mr du Toits report misconceived the purpose of compensation he did not seek to place the Florences in the position in which they would have been if the land had not been taken, but attempted to compensate them on the basis of a fair dispossession instead.

76 77

Record: Record: 78 Record: 79 Record:

Vol. 2: Vol. 2: Vol. 2: Vol. 2:

244: 6 11. 241 242. 185: 14 19 and 246: 8 12. 246: 13 17.

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THE FOURTH REPORT

58. Mr du Toits fourth report, dated 17 March 2010,80disregards the cancellation agreement and market practice at the time of the dispossession.81 It contains two calculations. The first (in annexure NN) takes a privately funded mortgage sale of a property valued at R9 000,00 in 1957 with fixed monthly repayments of R90,00. It then makes the critical assumption that the repayment period for the loan was fixed for 20 years and calculates the interest rate implied by this transaction,82which is 10.5241%. This interest rate is then used to calculate the outstanding debt on the R9 000,00 loan in September 1970, which amounts to R4 930,97. On this basis Mr du Toit estimates that the Florence family had repaid R4 069,03 of the initial capital amount of R9 000,00, giving them an interest of 45.21% in the value of the property in 1970. After adjusting for the compensation received and removal costs, and using the CPI to translate the loss into any 2010 terms, Mr du Toit recommends compensation in the amount of R571 017,00.

59. In the second calculation (annexure OO) Mr du Toit assumes a fixed repayment period of 20 years, a fixed interest rate and fixed monthly payments of R90,00, in order to calculate a punitive interest margin of 4.5241%. Then, using a variable interest rate and a variable repayment period, he calculates the

80 81

It is Exhibit K. Record: Vol. 2: 137. 82 See Professor Wittenbergs comments in Exhibit M and at Record: Vol. 2: 5: 1 24.

26

Florence familys loss in 1970 to be R8 901,09. After making the various adjustments,he estimatesa loss of R387 922,00 in January 2010 terms. 83

Annexure OO

60. Professor Wittenberg commented that the method used of taking apunitive interest margin of about 4.5% and adding that onto the prime rate between 1957 and 1970, is:

Completely incoherent, you cant take two very different assumptions and graft them together, the one assumption is that youve got a fixed repayment period of 20 years, youve got a fixed interest, fixed monthly repayments, from that you get a penalty rate and then you now apply the penalty rate to variable interest, variable repayment period, because it would not have been paid off after 20 years. So basically you are combining not just apples with oranges, you are combining two completely different types of calculations, . . . . I think there is no

intellectual merit in that calculation at all and I think it is simply not defensible. . .84

83 84

Exhibit K, annexure OO read together para 6 of Exhibit M. Record: Vol. 2: 9.

27

61. Mr du Toit conceded in evidence that the above scenario is unlikely and accordingly he recommended compensation in terms of his alternative calculation (annexure NN).85

Annexure NN

62. Professor Wittenberg criticised the annexure NN calculation on the following grounds:

62.1

The interest rate used to calculate the outstanding debt in 1970 of 4.524% is highly punitive, being 75% higher than the prime rate prevailing in 1957; 86

62.2

The assumption of a bond arrangement implies that the Florence family would have been the owners of the property (although there might have been some debt remaining in September 1970);87

62.3

The assumptions made in the calculation are highly questionable. The only argument in support of the 20 year repayment period is that current bond repayment practices are mainly over a term of 20 years. However, current bond practices do not include a fixed interest rate and fixed

85 86

Record: Vol. 2: 146: 12 16. Record: Vol. 2: 5: 19 23. 87 Record: Vol. 2: 6: 5 10.

28

monthly repayments.

Furthermore, interest rates on bonds are not

almost double the prime rate;88

62.4

If the assumptions are varied, one gets very different outcomes. In Exhibit M he illustrated this by replacing the interest rate used, firstly, with the prime rate and, secondly, with a rate of prime plus 2%. In the first instance the R9 000,00 initial debt would have been fully paid-off by September 1968 and, in the second calculation, by September 1970 there would have been an outstanding balance on the loan of approximately R600,00; 89

62.5

On any reasonable assumptions, including a hefty penalty interest rate of prime plus 2%, the debt would effectively have been paid off by September 1970; 90 and

62.6

Mr du Toit didnt himself believe in the fixed 20 year repayment term, because in his second calculation (annexure OO), which employs a very different logic, he has jettisoned the assumption.91

88 89

Record: Record: 90 Record: 91 Record:

Vol. 2: Vol. 2: Vol. 2: Vol. 2:

6 7. 7 8. 9 10. 30 31.

29

The 20 year term

63. Mr du Toit accepted that the assumption of a 20 year repayment term for the loan was critical and had a huge bearing on his calculation.92

64. Mr du Toit was strongly influenced by current market practices in assuming a 20 year repayment term for the transaction. However, he conceded that when dealing with a transaction which took place in 1957, almost 55 years ago, if one is relies on current market practices to understand the transaction, there is enormous potential for getting it completely wrong.93

65. When questioned about Exhibits O, P and Q, the letters written by Mr Florence, he conceded that:

65.1

Exhibit O was consistent with a 1957 price for the property of R9 000,00 and R15 000,00 being the total amount of the instalments;94

65.2

the phrase in Exhibit O we had almost completed the R15 000,00 he agreed to is a very strong indication that the 1957 agreement envisaged a total of R15 000,00 would be paid in instalments over a period of time;95

92 93

Record: Record: 94 Record: 95 Record:

Vol. 2: Vol. 2: Vol. 2: Vol. 2:

248: 18 20. 257 258. 250 251. 251 252.

30

65.3

the paragraph in Exhibit Q ending with the sentence meaning that a price of R15 000,00 was the agreed price for Sunny Croft leads to the conclusion that Mr Florence regarded the R15 000,00 to be the total of all the required instalments;96

65.4

it appears from the letters that Mr Florence understood that the total amount to be paid in R90,00 instalments would be R15 000,00, to be paid over a term of approximately 14 years;97

65.5

in drafting his report he failed to take into account these letters, the only direct evidence available concerning the term of the transaction.98

Punitive interest rate

66. In his evidence Mr du Toit accepted that the punitive interest rate which he used of 10.5241% was an unfair amount but argued thatit was not only the Florence family who were probably subject to such rates.99 He conceded that if a reasonable interest rate is used, then the Florence family would be the owners of the property.100

96 97

Record: Vol. 2: 253 254. Record: Vol. 2: 264: 6 14. 98 Record: Vol. 2: 264: 15 21. 99 Record: Vol. 2: 141 142. 100 Record: Vol. 2: 270 271.

31

SUMMARY OF THE STATES CASE

67. We submit that Mr du Toit was an unimpressive witness. He was the author of four different reports:

67.1

The first report contained an incompetent CPI calculation. He conceded that he was negligent in signing it;

67.2

The compensation calculation in the second report is based on the assumption that the Florence family would pay both rent and interest. This was described by Professor Wittenberg as ridiculous. The State no longer relies on this calculation;

67.3

The compensation calculation contained in the third report assumes that the Florence family was dispossessed of the property by the Group Areas Act and attempts to determine fair compensation for the dispossession. Mr du Toit conceded in evidence that the purpose of compensation in terms of the Act is to put claimants in the position that they would have been if their land had not been taken and that his calculation does not do this;

67.4

The crucial assumption in the fourth report is that the purchase price for the property would be repaid over a 20 year term. This assumption was formulated without regard to the only direct evidence concerning the

32

term of the transaction, namely Mr Florences three letters. Mr du Toit also conceded that the punitive interest rate of 10.5% used in this calculation was unfair and that on any reasonable interest rate the Florences would effectively have paid off the property by 1970.

68. The differences between the four reports also demonstrate the absence of any coherent or principled approach to the determination of compensation. The first two reports are drafted on the basis that the Florence family will receive 100% of the benefit of the capital appreciation in the property between 1957 and 1970. The third report changes tack completely and does not allocate the family any share in the capital appreciation. In the fourth calculation the family receives 45% of the capital appreciation.

69. The contradictory methods used suggest an absence of any clear understanding of the basis upon which compensation should be determined.

70. Mr du Toits evidence also disclosed a lack of understanding of the Group Areas Act, its importance as forming the context against which the sale and dispossession took place, and its impact on the Florence family.

71. There a clear basis for Professor Wittenberg comments concerning Mr du Toits calculations:

33

basically its designed with one purpose only to erode the value of the contributions that the Florence family did actually make as far as possible. 101

my conclusion reading this document, and in particular annexure OO is that you are determined to find the most negative combination of factors to make the situation look as untenable as possible for the family, if you [are] wanting to make assumptions that basically deprive them of their home thats easy, but if those assumptions are not backed by any facts that they are assumptions and assumptions only . . .102

LEGAL PRINCIPLES: 1970 LOSS

72. The Restitution Act contains no explicit directives concerning the determination of compensation for purposes of equitable redress.103It is accordingly appropriate to begin by considering the purpose of restitution and the manner in which the Act should be interpreted.

73. A purposive approach should be applied to the interpretation of the Constitution and the Act (which gives effect to the right to restitution entrenched in section

Record: Vol. 2: 9: 14 20. This is with regard to the calculations in the fourth report. Record: Vol. 2: 17: 16 24. 103 Hermanus v Department of Land Affairs: Erven 3535 and 3526, Goodwood 2001(1) SA 1030 LCC [9].
102

101

34

25(7) of the Constitution), in preference to the blinkered peering at an isolated provision in a statute.104

74. When interpreting the Act, our Courts are obliged to scrutinise its purpose and promote the spirit, purport and objects of the Bill of Rights .105The Constitutional Court has stated the following concerning the purpose of the Act:

. . .(A)lthough it is clear that a primary purpose of the Act was to undo some of the damage wreaked by decades of spatial apartheid, and that this constitutes an important purpose relevant to the interpretation of the Act, the Act has a broader scope. In particular, its purpose is to provide redress to those individuals and communities who were dispossessed of their land rights by the Government because of the Governments racially discriminatory policies in respect of those very land rights.

75. It is trite that in interpreting a constitutional right, such as the right to restitution, Courts should adopt an interpretation which is generous rather than legalistic, aim to fulfil the purpose of the constitutional right and to secure for individuals the full benefit of their rights.106

104

105

Department of Land Affairs v Goedgelegen Tropical Fruits 2007(6) SA 199 (CC) [51] [52]. Goedgelegen, supra, [53]. 106 R v Big M Drug Mart Ltd (1985) 18 DLR (4th) 321, cited in Goedgelegen, supra, [51] at note 48.

35

76. A generous interpretation is particularly appropriate with regard to the Act, given that it is remedial legislation umbilically linked to the Constitution.107

77. Both this Court and the SCA have accepted that the purpose of compensation is to put the dispossessed, in so far as money can do it, in the same position as if the land had not been taken. 108

78. Furthermore, in interpreting the phrase the payment of compensation in the definition of equitable redress in section 1 of the Act, this Court has accepted that the general principle is that the displaced owner should be placed, as nearly as possible, in the same position financially as prior to the taking. 109

79.

The Act recognises and accepts the subtlety, complexity and inescapable contradictions of the situations in which claimants found themselves and
attempts to create practical solutions for them in its pursuit of equitable redress. While it recognises the importance of registered title, it does not afford it unblemished primacy.110This Court accordingly has awarded restoration of full ownership rights in cases where claimants only established lesser rights:

79.1

In the matter of the Makuleke Community: In re Pafuri area of the Kruger National Park111restitution of the right of ownership was awarded, in terms of

Goedgelegen, supra, [53]. Haakdoorinbult Boerdery CC & Others v Mphela & Others 2007(5) SA 596 (CC) [48]. See also Baphiring Community v Uys & Others 2007(5) SA 585 (LCC) [12], citing Birmingham City Corporation v West Midland Baptist (Trust) Association (Incorporated) [1970] AC 874. 109 Hermanus v Department of Land Affairs: In re Erven 3535 and 3536, Goodwood2001 (1) SA 1030 (LCC) [15]. 110 Prinsloo and Another v Ndebele-Ndzundza Community and Others 2005 (6) SA 114 (SCA) [33] [34]. 111 Case number LCC 90/98, 15 December 1998, per Dodson J.
108

107

36

this Courts power to adjust rights under section 35(4) of the Act, where this was not the right which the community held prior to the dispossession;112and

79.2

In the Kranspoort case,113this Court awarded restoration of full ownership under section 35(4) in circumstances where the community held beneficial occupation rights prior to dispossession, on the grounds that this would be equitable to both the current registered owner (a church which would be compensated in full on expropriation, rather than holding formal ownership burdened by the communitys rights to use its land) and the claimants.114

80.

In a similar vein, Professor Mesthrie testified115 to the need to view the transactions between the Florence family and Dr Yeller against the broader context of the Group Areas Act and the arrangements it forced people to make in order to secure their homes.

81.

We submit that a proper analysis of the evidence establishes that the Florence brothers had effectively paid off the property by the time that they were dispossessed and that they should be regarded, for purposes of determining compensation, as de facto owners.Mr du Toit is only able to avoid this conclusion by making what he admits are unreasonable and unfair assumptions concerning interest rates, based on highly speculative and generalised evidence concerning market practices.

See paras [4] and [12] of Dodson Js judgment. In re Kranspoort Community 2002 (1) SA 124 (LCC). 114 Kranspoort, supra, [103] [104]. 115 Referred to above in the section dealing with her evidence.
113

112

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82. The above conclusion is supported by section 33 of the Act, which requires this Court to have regard to a number of factors in considering its decision in any particular matter.116 The following are relevant for present purposes:

(a)

The desirability of providing for restitution of rights in land to any person . . . dispossessed as a result of past racially discriminatory laws or practises;

(b)

the desirability of remedying past violations of human rights;

(c)

the requirements of equity and justice;

...

(eA)

the amount of compensation or other consideration received in respect of the dispossession, and the circumstances prevailing at the time of the dispossession;

(eB)

the history of the dispossessions, the hardship caused, the current use of the land and the history of the acquisition and use of the land;

(eC)

in the case of an order for equitable redress in the form of financial compensation, changes over time in the value of money;

116

See Hermanussupra [9].

38

(f)

any other factor which the Court may consider relevant and consistent with the spirit and objects of the Constitution and in particular the provisions of section 9 of the Constitution.

83.

The evidence relating to the above factors (particularly the need to remedy past violations of human rights, the requirements of justice and equity, the history of the dispossession and the hardship caused) is analysed below in the section dealing with the award of a solatium.These factors strongly support the Florences claim to be treated as the owners of the property.

84.

All of the principles discussed above (the purpose of the Act, the need for a generous interpretation of Constitutional rights, the purpose of compensation, the recognition in the Act and by this Court of the complex positions in which claimants found themselves, the Group Areas Act context against which the sale and dispossession took place, the irredeemable hardship experienced by the Florence family, particularly Mr Florence and his mother, and the other section 33 factors) strongly support the Florences claim to be treated as the owners of the property.

85.

In any event, this Court has held that where there is doubt about the amount of compensation payable, it should not be close-fisted and should tend to resolve the doubt in favour of a liberal (or generous) estimate. 117

117

Hermanus, supra, [26].

39

86.

We accordingly submit that the Claimants loss in 1970 should be determined on the basis of the market value of the subject land (R 31 778), plus the removal costs (R85), less the compensation received (R 1350). This is an amount of R30513.

40

CONVERSION OF PAST LOSS

87. This Court has given no judgment dealing with the question as to what is the appropriate method for translating a past loss into present day monetary terms for purposes of an award of financial compensation.

88. In two cases, Ex Parte Former Highlands Residents; In re Ash & Others v Department of Land Affairs118 and Hermanus v Department of Land Affairs: In re Erven 3535 and 3536, Goodwood,119 the parties agreed that the Consumer Price Index (CPI) should be used to translate the amount of the loss from the date of dispossession to its value at the time of the award. This Court was accordingly not required to consider the question of the appropriate method for converting the past loss.

89. In Gcaba v Minister for Safety & Security & Others120 the Constitutional Court endorsed the dictum of Moseneke J in his minority judgment in Van der Walt v Metcash Trading Ltd121 that the stare decisisprinciple is not applicable where the Court is satisfied that its previous decision was wrong or where the point was not argued or where the issue is in some legitimate manner distinguishable. Accordingly, the fact that the CPI was used to calculate compensation in the Ash and Hermanuscases in no way binds this Court in the present matter.

118 119

[2000] 2 All SA 456 LCC 2006(1) SA 1030 LCC. 120 [2009] ZACC 26 [61] 121 2002(4) SA 317 (CC) [95].

41

90. As indicated above, the Act contains no explicit directives concerning the determination of compensation for purposes of equitable redress.122 However, section 33 of the Act requires the Court to have regard to a number of factors in considering its decision in any particular matter.123 The relevant factors have been set out above in our section dealing with the extent of the loss in 1970.

91. The State supports the use of CPI for the conversion of past loss, essentially on the pragmatic grounds that it is widely used and accepted, and argues that this position is supported by section 33(eC) of the Act.

92. The Plaintiffs case is that the purpose of financial compensation is to place claimants in the position in which they would have been had they not been dispossessed. This is not achieved by the CPI which compensates for loss of purchasing power and does not take into account any capital appreciation in the land in the time since the dispossession. Where the dispossessed right is an investment good (such as an immovable property) it is inappropriate to determine compensation by means of the CPI, which measures consumption. It follows that compensation in terms of the CPI will not enable a claimant to buy an equivalent property to the one lost and will result in an arbitrary and unjustifiable disparity between the value of a restitution award in the form of restoration and restitution in the form of financial compensation. Financial compensation should rather be determined according to the value of an award of restoration of the lost rights (or the best available proxy for this value).
122 123

Hermanus v Department of Land Affairs: Erven 3535 and 3526, Goodwood 2001(1) SA 1030 LCC [9]. Hermanus ibid.

42

93. We shall consider the evidence led with regard to these issues by the Claimant and the Defendant and then discuss the relevant legal principles.

CLAIMANTS EVIDENCE

94. The Claimants case concerning the appropriate method of translating a past loss into present monetary terms rested on the evidence of three witnesses:Professor Wittenberg, Professor Nicoli Nattrass, and Mr Jerry Margolius.

95. Professor Wittenberg considered five different approaches to the calculation of a loss in October 1970 as at December 2008 in his summary, namely:

95.1

The CPI;

95.2

The 32 day notice deposit rate;

95.3

The yield on Government bonds;

95.4

The prime overdraft rate; and

95.5

The mortgage rate.

96. The report demonstrated that R30 000,00 in October 1970 was worth the following (as at December 2008):

43

96.1

Using the CPI

R1 226 250,00

96.2

32 day notice deposit rate

R1 787 280,19

96.3

The yield on Government bonds

R3 341 708,86

96.4

Prime overdraft rate

R8 692 522,65

96.5

Mortgage rate

R8 095 370,39124

97. In Exhibit L Professor Wittenberg prepared updated calculations in which an initial amount of R30 513,00 was converted from October 1970 to December 2010 terms. The updated amounts were as follows:

97.1

32 day notice deposits

R2 072 678,66

97.2

Yield on Government Bonds

R4 036 797,00

97.3

Prime overdraft rate

R10 964 727,55

97.4

Mortgage rate

R10 219 913,38 125

98. In his expert report Professor Wittenberg summarised his reasoning in the following terms:
124 125

See: A2: 14. The updated calculations are dealt with by Professor Wittenberg in his evidence at Vol. 2, 2 4.

44

Given the nature of the loss (a property) it seems that the risk-free return available to an individual should be a lower bound on the value placed on the loss. It is difficult, however, to attach a higher value to the loss, since the individual would have had to bear some risk in order to achieve those returns. In my opinion the 32 day notice deposit rate is probably the most realistic way of valuing the loss.

99. In his evidence Professor Wittenberg stated that the 32 day notice deposit rate (which is essentially the short-term interest rate)126 is effectively a risk-free investment and that it is the lower bound of the band of returns that would be derived from an investment. Although the other instruments he considered in his report would give higher returns, they would be riskier.

100. Professor Wittenberg stated that while the 32 day rate constituted the lower bound of what is reasonable, the bond rate (which was preferred by Professor Nattrass) would be on the upper bound of reasonable rates.127 While the bond rate was not unreasonable, he opted to be more conservative and preferred an investment open to private individuals. However, he conceded that there was merit and logic in the use of the bond rate, which was the rate at which government would have borrowed. 128

126 127

Record: 146 - 147 Record: 184. 128 Record: 186 187.

45

101. Professor Wittenberg stated that if there was an official Reserve Bank housing index, it would be entirely appropriate for this Court to use it to translate past losses into current terms. However, there is no such official index. The most commonly used housing index is the ABSA house price index, which reflects the transactions made by clients of ABSA bank. However, he was uncertain as to how the index is constructed and he would not be in a position to defend it.129

102. Professor Nattrass is Professor of Economics at the University of Cape Town. She is a former Rhodes scholar and in 1991 was awarded a D. Phil. (Economics) by Oxford University. Her curriculum vitae is impressive,130 as was her

testimony in the witness box.

103. In her expert summary, Professor Nattrass motivated her choice of the yield on government bonds as the appropriate mechanism for converting a past loss into present terms on the following grounds:

Dr Wittenberg argues that the 32-day notice deposit rate is the lower bound of the value of that lost investment. I agree that this is the lower bound but would argue that the lower bound is not the most appropriate bound to use. In my opinion, the yield on Government bonds would be a more appropriate rate of interest with which to compensate the Florence family for their lost investment. Not only are Government bonds the most risk-free form of investment available, but given that it was
129 130

Record: 150 151. A2: 246 258.

46

Government policy which facilitated the forced redistribution of wealth from the Florence family to Dr Yeller, it seems appropriate for the Government to be held accountable for having effectively borrowed the money from the Florence family. The interest rate on that borrowing (i.e. the yield on the Government bond) [is] thus appropriate . . ..131

104. Professor Nattrass stated that if there was an official house price index she would certainly consider using it, since it would be getting close to trying to value the asset that was lost. The problem with the existing house price index is that it is done by a bank and she was uncertain as to how it is constructed.She stated that while she would consider an official index as an indicator of value (if one was available), she would still prefer to use the bond rate in order to calculate compensation.132

105. The Claimants final witness on the question of translating a past loss into current terms was Mr Jerry Margolius. The brief given to Mr Margolius was to assume that the subject land remained in the condition that it was as at the date of dispossession and to estimate its current market value. In his expert summary he concluded that the market value of the subject property in March 2010 would have been R2 800 000,00. 133

A2: 244 245. This was considered in her evidence at Record: 395 399. Record: 374 375. 133 A2: 45.19.
132

131

47

106. Mr Margoliusfreely acknowledged that his investigations were conducted under substantial time and financial constraints and he was compelled to piggy-back on Mr du Toits research.134 Although these constraints resulted in some errors in the report, these did not relate to the substance of his conclusions and would not have led to him changing his valuation. 135

107. It is to be noted that the State did not put forward any alternative opinion as to the present market value of the dispossessed property.

108. We submit that Mr Margolius valuation is of considerable assistance to this Court in determining its compensation award.

THE STATES EVIDENCE

109. The State case in respect of the appropriate method for translating past losses into present terms was based on the evidence of Professor Francois Viruly, an Associate Professor of Construction Economics and Management at the University of Cape Town. Professor Virulys evidence: A number of criticisms can be levelled against

109.1

In his summary he stated that South African Courts have tended to turn to the CPI to overcome the subjectivity associated with the choice of an

134 135

Record: Vol 2: 37 38. Record: Vol 2: 78 80.

48

appropriate compensation benchmark.136 Under cross-examination he conceded that:

109.1.1

in the two cases which he relied upon for this statement, the CPI had been used by agreement between the parties;

109.1.2

the two cases did not reflect any tendency, or decisions, of our Courts;

109.1.3

the question of the subjectivity associated with the choice of appropriate compensation benchmarks simply did not arise in either case;137 and

109.1.4

a line could be drawn through the relevant paragraph of his summary.138

109.2

He contradicted himself in his evidence concerning the use of the CPI as a measure for the risk-free rate of return on investment. After stating that it had often been used, when asked to refer to any book or reputable article in his support of his answer, he attempted to change the question

136 137

A2: 221. Record: Vol. 2: 558 564. 138 Record: Vol. 2: 564 565.

49

before reversing his answer and conceding that the CPI has not been used as a measure of the risk-free rate;139 and

109.3

He failed to answer questions directly and showed considerable reluctance to make concessions.140

110. The thrust of Professor Virulys evidence is summarised in the conclusion to his expert report:

The purpose of determining the compensation for a lost opportunity that occurred in the past must ultimately be focused on a benchmark that is just and equitable. Such a benchmark should attempt to reflect a calculable opportunity costs [sic] in an objective manner that reflects available information.

The use of a financial benchmarks [sic] that attempt to second-guess the possible investment that a household may have undertaken is difficult to ascertain and often based on premises that are highly subjective. Household investment decision-making is a function of disposal income, savings requirements, financial literacy, the expected risk profile that the household is comfortable with as well as numerous other characteristics. When a cash flow extends over a long period,

consideration must be given to ever changing investment opportunities

139 140

Record: Vol. 2: 607 608. See Record Vol. 2: 621 626, cf. 682 683; see also 567 585, 650 655 and 690 719.

50

and the fact that financial conditions, the performance of investments change with time. Finally, problems arise in attempting to match

investment vehicles and interest rates with the envisaged investment horizon.

Such problems are largely overcome by using the Consumer Price Index (CPI) as a benchmark. The benchmark has proven itself globally as a preferred index used in business, in the public sector, and in courts in order to compensate for their opportunity cost associated with time and rise in prices. Further, it avoids issues regarding the subjective

extrapolation of household investment decisions and potentially unrealised investment outcomes.141

Section 33(eC)

111. Professor Viruly also placed considerable reliance on section 33 (eC) of the Act which provides that regard should be had to changes over time in the value of money when making an order for equitable redress in the form of financial compensation. In his report he stated that it would be difficult to interpret changes over time in the value of money as this phrase is used in the Act as anything other than the CPI. 142 He repeated this in his oral evidence. 143

A2: 223. This was dealt with in evidence at Record: Vol. 2: 534 538. A2: 222. 143 See: Record: Vol. 2: 503 3 12; Vol. 2: 533: 15 25.
142

141

51

112. We submit that Professor Virulys understanding of section 33(3C) was flawed in several respects:

112.1

He was unfamiliar with the principle of the nominalism of currency which, in the words of Grosskopf JA:

underlies all aspects of South African law, including the law of obligations. Its essence, in the field of obligations, is that a debt sounding in money has to be paid in terms of its nominal value irrespective of any fluctuations in the purchasing power of currency. This places the risk of a depreciation of the currency on the creditor and saddles the debtor with the risk of an appreciation. 144

112.2

He refrained from commenting on the proposition that the purpose of section 33(eC) was to ensure that the principle of nominalism of currency was not to be applied with regard to awards of financial compensation. He said that it was a legal rather than an economic concept.145 This consideration had not deterred him from giving hi s interpretation of the provision earlier in his evidence; 146

112.3

Professor Nattrass wrote a note, Exhibit J in which she stated that there is no single value of money because money can be used for two

144 145

SA Eagle Insurance Company (Ltd) v Hartley 1990 (4) SA 833 (A) 839F - H. Record: Vol. 2: 745 748. 146 Record: Vol.2: 503 and 533.

52

purposes: either for consumption or for saving. If money is used for saving, then the value of money changes over time as interest is earned and added to the amount saved. Value for saving purposes is typically adjusted over time using a risk free interest rate.147

112.4

It follows, Professor Nattrass testified, that the value of money is determined in two distinct ways and there is no reason why the phrase changes over time in the value of moneyshould be read as excluding changes in the value of money for investment over time. 148

112.5

Professor Viruly considered Exhibit J on two different occasions in the course of his evidence.149In his evidence in chief he accepted that economic theory suggests that we use money for both transaction and investment purposes.150 However, he asserted that Professor Nattrass was referring to the uses of money rather than its value and he proceeded to make an unrelated point that ultimately people invest in order to obtain money for consumption purposes. 151

Exhibit J and Record: 384 386. Record: Vol. 2: 440 441. 149 Record: Vol. 2: 529 533 and Vol. 2: 661: 5 24. 150 Record: Vol. 2: 529 530. 151 Record: Vol. 2: 530 533.
148

147

53

112.6

Under cross-examination he accepted that if money is used for saving, then its value changes over time as interest is earned and its value is typically adjusted over time using a risk-free interest rate.152

112.7

In summary, he accepted that money can be used for two purposes, for consumption and for saving, and that when it is used for saving its value is typically adjusted over time using a risk free interest rate. These

concessions are destructive of his repeated assertion that the phrase value of money in section 33 (eC) refers to inflation as measured by the CPI.153

FAILINGS OF THE CPI

113. The CPI is unsuitable for translating past loss into present terms for three reasons:

113.1

It does not place claimants in the position that they would have been if they had not been dispossessed;

113.2

Its use gives rise to a discrepancy between the value of financial compensation and restoration; and

Record: Vol. 2: 661: 5 24. Professor Nattrass evidence was that the phrase value of money can be read either as the CPI or the riskfree interest rate, see Record: 424 425 and 426 427.
153

152

54

113.3

It under-compensates people who are not in the wealthiest quintile (i.e. the top 20% of income earners).

Purpose of compensation

114. The purpose of compensation should be to place the dispossessed, to the extent that money can do it, in the same position that they would have been if the y had not been dispossessed of their rights. 154

115. The above principle was fundamental to the approach adopted by the Plaintiffs witnesses. Professor Wittenberg, in his expert summary, stated that, given the nature of the loss, a property, the lower bound on the value placed on that loss should be the risk-free investment return available to an individual.155

116. In his evidence Professor Wittenberg stated that the CPI is an inadequate remedy for purposes of placing individuals in the same situation (as they would have been if they had not been dispossessed), as it effectively forces them to cash out of their investments which would appreciate in value over time. While the CPI will compensate for inflation, it will not compensate for any capital gains in the lost property. Ultimately, compensation by means of the CPI would not enable

154 155

The basis for this submission is set out in our section dealing with the relevant legal principles. A2: 7.

55

the Florences and other dispossessed individuals to buy back equivalent properties, which would have appreciated in line with investment returns. 156

117. Similarly, Professor Nattrass stated in her expert summary that:

To put the Florence family back in the position that they were as of 1970, they should be compensated for their lost investment not the lost purchasing power of the value of the property. 157

118. Professor Viruly was concerned with a fundamentally different exercise. In his words, the Florences had a house, in 1970 the house disappeared, the family suffered a loss as a result of the dispossession and he was requested to furnish an opinion as to the value, in todays terms, of the loss suffered by the Florences in 1970. 158He conceded that his brief was to look at the value of money over time, not the value of a house and that if he had known that it was a house, then I would have had to find an index for houses or something of that sort.159

119. The above passage illustrates vividly the conceptual flaw at the heart of the States case. Compensation calculated on the basis suggested by Professor

Viruly does not aim to place claimants in the position that they would have been had they not been dispossessed, but rather aims to restore them to their position

156 157

Record: 172 173. See also: 222 223. A2: 243. See also: Record: 392 393. 158 Record: Vol. 2: 527 528 and 622 624. 159 Record: Vol. 2: 624 625. See also: Vol. 2: 681 682 and 686.

56

after the dispossession, once they had been compensated.160 This is contrary to well established legal principles, which will be discussed below, and results in an illogical discrepancy between the value of restitution in the form of restoration and financial compensation.

Discrepancy between restoration and compensation

120. Professor Wittenberg pointed out in his evidence that by using the CPI to translate past loss into current terms, one compensates claimants for inflation but not for any capital gains on their properties.161This results in a disparity between the value of a restitution package in the form of restoration and the value of restitution in the form of financial compensation. The extent of the disparity is the difference between the CPI and investment returns. This is illustrated, in the case of the Florences,by the fact that the CPI would deliver a return to them of roughly R1.3 million, while the 32 day notice deposit rate would lead to an amount of R1.9 million and the ABSA house price index R2 million.162 It

follows that the award of R1.3 million suggested by the CPI would not enable the Florences re-purchase their property at the cost of R2.6 million,163 as suggested by Mr Margolius valuation. The use of the CPI would result in

Record: Vol. 2: 626: 2 8. Record: 172 173; 222 223. 162 This was on the basis of his calculations prior to them being updated to December 2010. 163 Taking the valuation of R 2.8 million and making an adjustment for the compensation received in 1970 of R1350.
161

160

57

substantial under-compensation, of the order of 50%, in the value of the award.164

121. Professor Viruly in his evidence accepted that:

121.1

The CPI would not compensate the Florence family for the capital gains in the house in the period since the dispossession; 165

121.2

The likelihood is that a risk averse investment would have outperformed the CPI in the period since 1970; 166 and

121.3

The calculations done by Professor Wittenberg show that the CPI would not have allowed the Florences to acquire an equivalent property to the one of which they were dispossessed.167

122. There can be no justification for an award of financial compensation in an amount substantially less than the value of an award of restoration, particularly in circumstances where restoration has been rendered impossible as a result of circumstances beyond the control of the claimants.

164 165

Record: Record: 166 Record: 167 Record:

223 224. Vol. 2: 690: 5 14. Vol. 2: 710: 5 12. Vol. 2: 719: 1 19.

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BIASED AGAINST LOWER INCOME EARNERS

123. Professor Nattrass in her expert summary stated that the CPI measures changes in the general level of prices of consumer goods and services and is made up of a representative basket of goods. Overall (or headline) CPI accordingly reflects average spending patterns rather than the spending of any representative household. It follows from its primary purpose, which is to measure the overall inflation rate rather than the change in living standards experienced by the average person or household, that:168

4.4

This means that the headline CPI is biased significantly towards the spending patterns of richer households and hence is only an appropriate measure for measuring changes in living standards of the top quintile. Thi s [is] why Statistics South Africa also provides CPIs for different quintiles and these can be sharply different from the headline CPI. For example in 2008, headline inflation between January and December was 7.7%, but for the poorest quintiles it was 11.3% and for the richest quintile 6.8%. . . . the spending patterns of the poorest quintile account for only 3.2% of the headline CPI, whereas that of the top quintile contributes 64.1%. 169

168 169

A2: 238 239. A2: 239.

59

124. Professor Wittenberg endorsed Professor Nattrass comments concerning the bias of the CPI towards the spending patterns of the top quintile and referred to criticism, in the economic literature, of the CPI as being plutocratic.170

125. The lack of objectivity of the CPI was dealt with at length in the evidence of the expert witnesses.171 Professor Viruly accepted the evidence of the

Claimants experts that if the Florence family had not been in quintile 5 (i.e. the top 20% of income earners) the use of the CPI would result in them being undercompensated.172

126. There was much debate in evidence as to which quintile the Florence family would have fallen into. 173 However, whether or not the Florence family fell within any particular quintile is beside the point for purposes of this Courts decision on the appropriate method for translating past loss into present terms. It is not in dispute that the CPI will under-compensate poorer families who fall outside the fifth quintile. We submit that this renders it unfit for use by this Court as a general method for calculating compensation.

Exhibit H, para 4. Professor Wittenberg dealt with the issue at Record: 212 216 and 280 282. Professor Nattrass discussed the question at Record: 379, 380 383, 434 435 and 437 439. Professor Viruly dealt with it at Record: Vol. 2: 524 526, 569 582, 585 586 and 594 595. 172 Record: Vol. 2: 594 595. 173 See: Record: Vol. 2: 753 759 and 770 785.
171

170

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LEGAL PRINCIPLES

127. Our Courts have accepted the general principle that the purpose of compensation is to place claimants in the position in which they would have been if their land had not been taken. 174This principle is accepted in international law, which Courts are required by section 39(1)(b) of the Constitution to consider when interpreting the Bill of Rights (and by implication the Act).

128. In the Factory at Chorzowcase,175 the Permanent Court of International Justice stated the following:

The essential principle contained in the actual notion of an illegal act a principle which seems to be established by international practice and in particular by the decisions of arbitral tribunals is that reparation must, as far as possible, wipe-out all the consequences of the illegal act and re-establish the situation which would, in all probability, have existed if that act had not been committed. Restitution in kind, or, if this is not possible, payment of a sum corresponding to the value which a restitution in kind would bear; the award, if need be, of damages for loss sustained which would not be covered by restitution in kind or payment in place of it such are the principles which should serve to

174

This principle is established in the judgment of Harms ADP in Mphela , supra, [48] and in the judgments of Gildenhuys AJ in Baphiring,supra, [12] and Hermanus , supra, [15]. 175 (Germ. v Pol.), 1928 PCIJ, (ser. A) No. 17 (Sept. 13) [125].

61

determine the amount of compensation due for an act contrary to international law.

129. The court went on to state that the offending party had an obligation to restore the factory which had been dispossessed, and if that was not possible, to pay its value at the time of the indemnification, which value is designed to take the place of restitution which has become impossible.176

130. The Court articulated its task in determining compensation as being to place the dispossessed as far as possible in the economic situation in which they would probably have been if the seizure had not taken place. 177

131. The Chorzow principle is widely accepted in international law and has been adopted in:

131.1

Article 35 of the Draft Articles on State Responsibility for Internationally Wrongful Acts with Commentary;178

131.2

The United NationsPinheiro Principles,Handbook on Housing and Property Restitution for Refugees and Displaced Persons;179 and

Factory at Chorzow, supra, [126]. Factory at Chorzow, supra, [132]. 178 These were adopted by the International Law Commission in 2001.In terms of Article 65:A State responsible for an internationally wrongful act is under an obligation to make restitution, that is, to re -establish the situation which existed before the wrongful act was committed, provided and to the extent that restitution: (a) is not materially impossible; ( b) does not involve a burden out of all proportion to the benefit deriving from restitution instead of compensation.
177

176

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131.3 Numerous decisions of international courts and tribunals. 180

132. This Court endorsed the Chorzow Factorycase in Mphela v Engelbrecht.181The Constitutional Court and the SCA have also recognised the primacy of restoration of land as a remedy in terms of the Act which supports the approach adopted in Chorzow that the amount of financial compensation should be designed to take the place of the restoration of the rights (which has become impossible).182

133. The Claimants evidence was consistent with the Chorzow principles. Professors Wittenberg and Nattrass in their evidence sought to determine compensation which would place the Florence family in the position in which

In the Handbook on Housing and Property Restitution for Refugees and Displaced Persons, Principle 21 states: 1. All refugees and displaced persons havethe right to full and effective compensation as an integral component of the restitution process. Compensation may be monetary or in kind. States shall, in order to comply with the principle of restorative justice, ensure that the remedy of compensation is only used when the remedy of restitution is not factually possible, or when the injured party knowingly and voluntarily accepts compensation in lieu of restitution, or when the terms of a ne gotiated peace settlement provide for a combination of restitution and compensation. 2) States should ensure, as a rule, that restitution is only deemed factually impossible in exceptional circumstances, namely when housing, land and/or property is destroyed or when it no longer exists, as determined by an independent, impartial tribunal. Even under such circumstances the holder of the housing, land and/or property right should have the option to repair or rebuild whenever possible. In some situations, a combination of compensation and restitution may be the most appropriate remedy and form of restorative justice. In applying principle 21, the Handbook notes: alternative is compensation in order to restore the value of the loss of the destroyed property. Compensation must be granted with the same intention as restitution, however, so that victims are returned as far as possible to their original pre-loss or pre-injury position (i.e. status quo ante). [Emphasis added] 180 Notably: Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory, (Advisory Opinion), ICJ Reports 2004, pp.181 -194, Paras.114- 137; Case Concerning Armed Activities Case in the Territory of the Congo (Democratic Republic of Congo v. Uganda), (Judgment), ICJ Reports 2005, p. 82, Para. 259; and Guiso-Gallisay v ItalyEuropean Court of Human Rights (Grand Chamber) 2009.
181 182

179

Case No. LCC 66/01, 9 March 2005, per Moloto J. Mphela & Others Haakdoorinbult Boerdery CC & Others 2008(4) SA 488 (CC) [32]. See also Khosis Community, Lohatla & Others v Minister of Defence & Others 2004(5) SA 494 (SCA) [30] [31].

63

they would have been if the land had not been taken. The thrust of their criticism of the CPI was that given that the family had lost an investment good (a house) rather than cash for consumption, it was inappropriate to compensate themfor the loss of purchasing power.

134. Finally, the use of the CPI leads to irrational consequences:

134.1

It will not enable a claimant to buy a property equivalent to the one lost, as it does not take into account the capital gains which would have accrued since the dispossession; and

134.2

It will result in a disparity in the value of restitution in the form of restoration (which will include the capital gains in the period since the dispossession) and restitution in the form of financial compensation.

135. It is a requirement of the rule of law that every exercise of public power must be rational. 183 The arbitrary disparity between restoration and financial

compensation that follows from the use of the CPI is inconsistent with the rule of law.

136. The use of the CPI is also inconsistent with the requirement that constitutional rights be interpreted generously so as to afford individuals the full benefit of those rights and the purpose sought to be achieved by the Restitution Act.

183

Pharmaceutical Manufacturers of SA: In re ex parte President of the RSA 2000 (2) SA 674 (CC) [85].

64

137. We submit that Professors Wittenberg and Nattrass are correct when they state that in converting the past loss suffered by the Florence family into current terms, the fixed deposit rate should be used to determine the lower bound,and the bond rate the upper bound, of the loss.

138. Using Professor Wittenbergs calculations updated to December 2010, set out in Exhibit L, the above conclusion implies that the Florence familys 1970 loss of R 30 513amounts to between R2 072 678,66 and R4 036 797,00 in current terms. We submit that in the circumstances an award of R3 million, towards the middle of the acceptable range, would be appropriate.

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SOLATIUM

139. Professor Uma Mesthriepresented evidence concerning the hardship experienced by the Florence family as a result of the dispossession. She is an expert on the Group Areas Act and had done extensive research on the Black River removals, including 36 interviews with former residents (including Mr Florence).She stated that she had come across the Florence family and Sunny Croft in several instances in the archival material she had studied.

140. Professor Mesthrie described the removal process from 1955 when the Group Area Board Advertisement for Fraserdale commenced. It was a lengthy process with the authorities initially considering declaring the area as a Chinese area.Ultimately, in 1961 Black River was advertised as a white area. There were many protests against this and the Plaintiffs family was amongst those who registered their objections to the proclamation.In July 1966 Black River was finally proclaimed a white area.

Group Areas hostility and how it affected the plaintiff family

141. From around 1967 onwards people started moving out of Black River and by 1970 the Group Areas Inspectors came to Black River on a regular basis. Initially they were friendly but later on they harassed residents in order to get them to move out.

66

142. Professor Mesthrie testified as to how in late 1970 Mr Florence came home to find that his mother and most of his family had moved out of Sunny Croft. His mother and sister did not tell him they were moving out but they had come under severe pressure and the embarrassment of having to be removed by the government was too much for them to bear. He was left alone in the home with his wife and children for about two weeks. The atmosphere in the area at the time was chaotic and hostile.

143. After two weeks he received a telephone call from somebody who worked at the City Council advising him that there was a house which he could purchase. He was too afraid to tell his wife that he had bought a house but she overheard him when he spoke to a friend. He then moved with his family to Primrose Park but never really adapted to the new living conditions.

Effect of removals

144. Professor Mesthrie gave evidence that the effect and impact the removals had on people were emotional, psychological and financial. The financial implications arose particularly where people were moved away from centrally located areas and they faced increased transport costs. This was a significant factor in Black River, which had an excellent bus service. The loss of communal support was likened to the idea of a web, where extended families lived together and pooled resources.

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Determining compensation in terms of the Restitution Act

145. Section 33 of the Act sets out the factors this Court must have regard to when making its order. These factors have been referred to above.

146. To determine an appropriate solatium for the hardship suffered as a result of the dispossession, this Court must consider the history of the dispossession and the suffering experienced by the Florence family as a result of it.

147. In Hermanus v The Department of Land Affairs Gildenhuys AJ commented that hardship is not a word a commonly used in connection with the determination of compensation for the compulsory acquisition of land. Its dictionary meaning is privation ; suffering or adversity.He held that this could imply both financial loss and privation or emotional stress.

Compensation for solatium

148. InHermanus, this Court stated that even though some of the hardship suffered by the claimant in that case was not a direct result of the dispossession, it may very well have been the case that had the dispossession not occurred, the claimant would not have suffered the afflictions.

149. In discussing the effect that the Group Ares Act had on the communities, Gildenhuys AJ noted that removals could cause much psychological harm by

68

disrupting family life and education and also place severe financial burdens on families.

150. In light of the considerable suffering experienced by the Florence family as a result of the forced removal, we submit that an award of R 15000.00 is appropriate as a solatium.

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MEMORIAL PLAQUE

151. In this case the Court has been asked to grant an order directing the State to pay the reasonable costs associated with the erection of a memorial plaque on the subject land.

152. We submit that such an order will constitute both symbolic reparation,184 and appropriate alternative relief.185 It will also give effect to the settlement

agreement 186 between the Plaintiff and the First Defendant,187 which agreement itself affords to the Plaintiff both partial or symbolic restitution, and appropriate alternative relief.

The Courts Vast Remedial Powers

153. Section 35 of the Restitution Act confers on this Court what were described in Department of Land Affairs and Others v Goedgelegen Tropical Fruits (Pty) Ltd188 as vast remedial powers. Amongst other remedies, the Court may order:

153.1

the restoration of land ... or any right in land ... to the claimant in full or partial settlement of the claim in terms of section 35(1)(a), and

In terms of section 35(1)(a) of the Restitution of Land Rights Act 22 of 1994 (The Restitution Act). In terms of section 35(1)(e) of the Restitution Act. 186 In terms of section 35(2)(fA) of the Restitution Act. 187 First Defendant has agreed to the erection of such a plaque, the precise wording and location of which are yet to be agreed. 188 2007 (6) SA 199 (CC) at [84].
185

184

70

153.2

the grant to the claimant of any alternative relief in terms of section 35(1)(e).

154. The Courts powers include the power to adjust the nature of the right previously held by the claimant, and to determine the form of title under which the right may be held in future in terms of section 35(4).

155. Furthermore, the Court is empowered to make appropriate orders to give effect to any agreement between the parties regarding the finalisation of the claim in terms of section 35(2)(fA).

Discretion encompassing power to fashion a new remedy

156. The court is vested with the discretion to determine the form of restitution in a given case, and has broad powers to fashion an appropriate remedy. In the Highlands 189 case the Court held that:

where it is evident that the legislature did not intend to prescribe for a particular factual situation, but to leave it to the court to work out a solution ... justice and equity will guide the court in making an appropriate order.190

Former Highlands Residents concerning the area formerly known as The Highlands (now Newlands Extension 2) district of Pretoria: in re Sonny & Others v Department of Land Affairs[2000] 1 All SA 157 (LCC). 190 Highlands (ibid) at [22].

189

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157. What is appropriate will depend on the facts of the particular case. In Pretoria City Council v Walker, 191 Langa DP (as he then was) was of the view that appropriate relief should be relief which is tailored to the needs of the particular case. In Fose v Minister of Safety and Security,192 Ackermann J characterised appropriate relief as relief that is required to protect and enforce the Constitution and stated that, in order to do so, courts may have to fashion new remedies.193

Remedies are cumulative

158. In Richtersveld Community v Alexkor Ltd and Another,194 this Court held that no remedy in the broad range of potential remedies is exclusive of any other, and that the Court may combine them in order to arrive at a just remedy. 195

How the Court will exercise its discretion

159. In the exercise of its discretion to determine the appropriate form of relief, the Court will have regard to the purpose of the Restitution Act as well as to the factors listed in section 33 of the Act.

191 192

1998 (2) SA 363 (CC) at [95]. 1997 (3) SA 786 (CC). 193 At [19]. 194 2004 (8) BCLR 871 (LCC). 195 Ibid at [31].

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Purpose of the Restitution Act

160. The Constitutional Court has, as noted above, held that the purpose of the Restitution Act is to:

... make good the ample hurt, indignity and injustice of racial dispossession of rights or interests in land that continued to take place after 19 June 1913. 196

161. This court held in the Highlands case197 that the injustice which the Constitution and the Restitution Act set out to remedy was the original dispossession of the relevant right in land. 198

Section 33 Factors

162. In considering its decision the Court must also have regard to the factors listed in s 33 of the Act, which include:

162.1

the desirability of providing for restitution of rights in land to any person or community dispossessed as a result of past racially discriminatory laws or practices;199

162.2
196 197

the desirability of remedying past violations of human rights; 200

Goedgelegen (supra n8) at [41]. Supra n9. 198 Highlands at [19]. 199 Restitution Act Section 33(a).

73

162.3

the requirements of equity and justice; 201

162.4

the history of the dispossession, the hardship caused, the current use of the land and the history of the acquisition and use of the land; 202

162.5

any other factor which the court may consider relevant and consistent with the spirit and objects of the Constitution and in particular the provisions of section 9 of the Constitution. 203

Why the Court should exercise its discretion in favour of the Plaintiff

163. An order directing the Government to pay for the erection of a memorial plaque on the subject land is an appropriate remedy, tailored to the facts and circumstances of this case, which constitutes both partial or symbolic restoration of a right in land, and alternative relief which is appropriate in light of the purpose of the legislation and the section 33 factors. It is arguably an adjustment of the right previously held, and it gives effect to the settlement agreement reached between the parties.

164. The erection of a memorial plaque on the subject land will symbolically restore one of the Plaintiffs lost rights in the land, being the right to erect a memorial. 204

Ibid section 33(b). Ibid section 33(c). 202 Ibid section 33(eB). 203 Ibid section 33(f). 204 Ownership rights comprise a bundle of rights including the rights to possess, use, manage and consume, see Prinsloo & Another v Ndebele Ndzundza Community and Others 2005 (6) SA 144 (SCA) at [33]; Silberman and Schoemans The Law of Property 4ed at 94.
201

200

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Alternatively, it constitutes an adjustment of the Plaintiffs original right in the land. 205

165. The erection of a memorial plaque on the subject land also constitutes relief which is both alternative and appropriate in light of the broad purpose of the legislation to make good the ample hurt, indignity and injustice of the racial dispossession of land.206

166. This court has heard the expert evidence of Uma Mesthrie, who concludes that not enough has been done by the current residents of Rondebosch to acknowledge the apartheid era removals of black families from the area. 207

167. A memorial plaque will constitute a public, official acknowledgement of the injustice of the past, restoring dignity both to the dispossessed and to the modern community which uses and occupies the area. This is in keeping with the broad approach to reconciliation and rebuilding in post-apartheid South Africa. Reconciliation can only take place after full disclosure;208 the plaque represents that disclosure and, by publicly acknowledging the past it facilitates reconciliation between those who were removed and the current occupiers.

168. The erection of a memorial plaque is also appropriate in light of the s33 factors:

As contemplated by s 35(4) of the Restitution Act. Supra n16. 207 Record at page 91 (line 18) and page 92 (lines 1-8). 208 This was the principle of the Truth and Reconciliation Commission.
206

205

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168.1

In light of the hurt and indignity caused by the removal of the Black River community, it is desirable to provide restitution to the Plaintiff; due to subsequent development of the land it is not possible to restore physical ownership to Plaintiff, and therefore it is appropriate to support a gesture which acknowledges and memorialises the community;

168.2

It is a particularly appropriate form of relief in light of the location and current use of the land. 209 The envisaged plaque will be located on busy Klipfontein road which is the main route between Mowbray/Rondebosch and Athlone/Gugulethu/Crossroads. It will be located opposite the Red Cross Childrens Hospital, on a major bus and taxi route, and attached to a building housing a public medical facility which is frequented by members of the general public. It will therefore effectively speak both to the dispossessed and to the modern general public, informing them about the historic removals.

169. There is nothing in the Mowbray/Rondebosch area to commemorate the racially motivated disappearance of an entire community from Black River. It was the expert evidence of Uma Mesthrie that the Black River community had been erased: in the memory of Cape Town, Black River simply doesnt exist.210

209 210

Section 33(d) of the Restitution Act. Record 86 line 16.

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She suggested that memorialisation of the fact of the apartheid -era removals may bring reconciliation and healing. 211

170. Memorialisation is an important aspect of reconciliation and the rebuilding of a viable society in the post-apartheid era. It is submitted that, just as the Truth and Reconciliation Commission offered the possibility of reconciliation through full disclosure and public acknowledgment of the brutality to which South Africans were subject under apartheid,212 so the Black River community and the current residents of Rondebosch may only be reconciled once the history of dispossession in the area is acknowledged, memorialised and appropriately honoured.

171. The proposed memorial plaque makes proper use of the location and nature of the subject property to publicly acknowledge the disappearance of the community. Such memorialisation is , and constitutes what in Hermanus v Department of land Affairs: in re erven 2535 and 253 Goodwood 213 was referred to as symbolic reparation.

172. The plaque will also serve to preserve our living heritage, defined in the National Heritage Resources Restitution Act214 as the intangible aspects of inherited culture, which include popular memory. Professor Mesthrie described

Record page 92 lines 12-13. See Azanian Peoples Organisation (AZAPO) and others v President of the RSA & Others 1996 (4) SA 671 (CC) at [17]. 213 2001 (1) SA 1030 (LC) at [33]. 214 Act 25 of 1999, section 2.
212

211

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the erasure215 of the Black River community and testified that in the memory of Cape Town, Black River simply doesnt exist. 216

173. In making the order requested, the Court will be fulfilling its duty to fashion a new remedy in order best to give substantive effect to the Plaintiffs right to restitution.

Why it is First Defendant who should pay for the memorial plaque

174. Having established that the erection of the plaque constitutes restoration of a right in land, symbolic reparation and appropriate alternative relief, Plaintiff submits that it is proper to order that the Government pay for it because:

174.1

the Government bears the constitutional duty to fulfil the right to restitution;

174.2

restitution under the Restitution Act is a public act and uses public resources; as Moseneke J held in Goedgelegen:

The claim is against the State. It has a reparative and restitutionary character. It is neither punitive in the criminal law sense nor

compensatory in the civil law sense. Rather, it advances a major public

215 216

Record 86 line 13. Record 86 line 16.

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purpose and uses public resources in a manifestly equitable way to deal with egregious and identifiable forms of historic hurt. 217; and

174.3

in this particular case, the proposed memorial plaque is the only memorial in the area, and is truly public in that it commemorates not only the removal of Plaintiffs family, but the erasure218 of the entire Black River community.

175. It would not be appropriate to require Plaintiff to pay for the erection of the proposed memorial plaque because:

175.1

this would diminish the value of the proper amount of compensation to which the Court deems that the Plaintiff is entitled to compensate for the lost rights in the land, and

175.2

the proposed memorial is a public memorial; it is in respect not only of Plaintiffs familys eviction from Sunnycroft, but of the eviction of the entire Black River community from the area.

176. It would furthermore not be appropriate to assume that the South African Heritage Resources Agency, SAHRA,219 or a provincial heritage resources

Goedgelegen supra n8, at [68], emphasis added. Uma Mesthries expert evidence, Record, page 86 line 12, page 92 line 13. 219 SAHRA is the national administrative body responsible for the protection of South Africas cultural heritage, established under the National Heritage Resources Act 25 of 1999.
218

217

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authority established under the National Heritage Resources Act,220 should pay for the erection of the memorial plaque because:

176.1

In terms of section 44(3) of the National Heritage Resources Act, memorials will only be erected in places already identified for protection by the relevant authority;

176.2

Steps have not yet been taken to persuade the relevant authorities that the land on which Sunnycroft stood, on Klipfontein Road, is of such significance as to constitute a national protection; heritage site worthy of

176.3

Such an application process would take up time and resources, and is not the best or most rational way to facilitate the settlement agreement between the Plaintiff and the First Defendant;

176.4

Expert witness Laura Robinson testified that, given constraints, 221 heritage resource authorities would not get around to the Florences for many years;222 and

176.5

In any event, SAHRA does not have the power to order an owner of private land to construct a memorial plaque. 223

220 221

Act 25 of 1999. Record 159 line 16 222 Record 160 line 15

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177. Lastly, by ordering the State to pay the reasonable costs associated with the erection of the proposed memorial plaque, the Court will give effect to a settlement agreement regarding the finalisation of the claim, in terms of s 35(2)(fA) of the Restitution Act.

178. The Court has heard the expert evidence of Laura Robinson to the effect that the cost of erecting such a plaque will not exceed R45 000.224 It is submitted that the order requested does not have significant budgetary implications.

Conclusion

179. It is accordingly submitted that the court may order a wide variety of potential forms of relief, that it has both the discretion and a duty to fashion an appropriate remedy, and that, having regard to the purpose of the legislation and to the factors listed in s 33 of the Restitution Act, it is appropriate that the Government pay the reasonable costs of erecting the memorial plaque, which costs are not very great.

180. Since Richtersveld established the power of the court to combine restoration and other equitable redress, it is in the courts power to make this order, in addition to ordering Second Defendant to pay compensation to the Plaintiff.

223 224

Record 161 lines 15-20. Record 154 line 7 and Exhibit T.

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181. Accordingly, the court is asked to order that Second Defendant pay the reasonable costs of the erection of the memorial plaque.

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CONCLUSION

182. We request an order in the following terms:

182.1

Determining the loss suffered by the Plaintiff in 1970 in the amount of R30 513,00;

182.2

Directing the Second Defendant to pay the Plaintiff the current value of the 1970 loss in the amount of R3 million;

182.3

Directing the Second Defendant to pay the Plaintiff a solatium of R15 000,00;

182.4

Directing the Second Defendant to pay for the reasonable costs of erecting a memorial plaque on the subject land; and

182.5

Directing the Second Defendant to pay the Plaintiffs costs (insofar as those costs have not been met already by the Land Claims Commission).

________________________________ P HATHORN ________________________________ F JAKOET ________________________________ S HARVEY