By Michael Mbikiwa on 10 February 2014

This case concerns the meaning of “feasibility” in section 33(cA) of the Restitution of Land Rights Act 22 of 1994 (the “RLRA”) and, in particular, the circumstances in which restoration is a feasible method of restitution. Restitution of land rights under the RLRA can occur either by actual restoration of land, or by equitable redress. Equitable redress comprises the granting of a right in alternative state-owned land, the payment of compensation, or a combination of both.

Land claims were lodged by various communities – who, for the purposes of the land restitution process, were grouped together as “the Mhlanganisweni community” – in respect of the approximately 65 000 hectare Sabi Sand Wildtuin, which includes the land upon which the Mala Mala game lodge is built (the “Mala Mala land”).

In May 2008, the Regional Land Claims Commissioner made a written restoration offer, subject to ministerial approval, to purchase the Mala Mala land for R741 056 992. The Minister of Rural Development and Land Reform (the Minister”) refused this offer, on the basis that it was exorbitant and unaffordable for the State. After settlement negotiations failed, the matter was referred to the Land Claims Court (the “LCC”).

In the LCC, it was common cause that the Mhlanganisweni community had a valid land claim; therefore, the crisp issue requiring determination was whether restoration was “feasible” within the meaning of section 33(cA) of the RLRA.

Writing for a unanimous LCC, Gildenhuys J placed particular emphasis on the likely amount of compensation that would be payable to the land owners, in terms of section 25(3) of the Constitution, if the land was to be acquired or expropriated. In this regard, the LCC held that there was no reason to suggest that compensation should be anything less than market value, being at least R791 289 492 (that
is, R55 000 per hectare, plus R66 169 492 for the contributory
value of improvements). The land owners wanted R989 million as compensation for the land, whereas the State was prepared to pay in the region of R460 million, arguing that anything in excess of that figure would be unfeasible.

Whilst in principle acknowledging restoration as the primary method of restitution of land rights, the LCC held that ordering the state to pay an amount in the region of R791 289 492 would not serve the public interest and would render restoration of the land unfeasible. Furthermore, it held that because the Mhlanganisweni community was dispossessed of living space, grazing and cropping land, and would now be restored one of the country’s foremost eco-tourism destinations, restoration would, in this case, over-compensate the claimants.

The LCC also expressed concern that the Mhlanganisweni community did not have the capacity to manage the land, if it were to be restored. Whilst the community had secured a commercial partnership with Londolozi Game Reserve, which would assist it to operate the lodge, the LCC held that the “vague” and “open-ended” agreements could not guarantee that the venture would yield profitable returns for the members of the Mhlanganisweni community, which added further support to its finding that restoration would be unfeasible.

The Mhlanganisweni community sought leave to appeal to the Constitutional Court against the judgment and order of the LCC.

The matter was initially set down for hearing on 16 May 2013. However, after an application by the parties for an extension to file written submissions, the hearing was postponed to 13 August 2013. Then, following a request from the Minister that the matter be removed from the roll to allow the parties to explore settlement opportunities, the matter was again postponed and set down for hearing on 11 February 2014.

In its papers filed in the Constitutional Court, the Mhlanganisweni community argued that, given the primacy of restoration in the constitutional scheme, the LCC’s approach – which unduly elevated market value to a central or starting point, and which unquestioningly accepted the State’s stance in respect of affordability and limited resources – should be rejected. Instead, claimed the community, the Court should adopt an “historical cost of acquisition” model for determining just and equitable compensation, and make justice and equity paramount in the test for the calculation of compensation. On this approach, the Minister’s offer of R460 million was just and equitable.

The Minister contended that the equitable balance required by the Constitution for the determination of just and equitable compensation is, in most cases, best achieved by determining the market value of the property as a starting point, and adding or subtracting therefrom as other considerations may require. The Minister argued further that the Court a quo was correct to reject the historical cost of acquisition model, as this would “violate the principle of equality enshrined in the Constitution” and “would discriminate landowners because the Land Reform of the country is not aimed at taxing rich landowners.”

The Minister supported the LCC’s findings that the community would be significantly overcompensated if the land was restored to them, and that the community lacks the capacity to take over the massive eco-tourism business and run it effectively.

The second to fifth respondents – the owners of the land – also supported the judgment of the LCC, and argued that the applicants’ historical cost of acquisition model is speculative, irrational and arbitrary. No constitutional factors were identified, claimed the owners, which provided any reason to diminish the market value in order to arrive at just and equitable compensation. Furthermore, the land owners supported the LCC’s findings in respect of the Londolozi agreement, and argued that it would provide miniscule benefits to the community relative to the expense that the State would incur.

The Nkuzi Development Association and the Association for Rural Advancement, who were admitted as amici curiae, supported the Mhlanganisweni community’s claim, and argued that the question of feasibility under the RLRA is limited to physical and legal practicality, and does not include inquiries into the cost of restoration or the need to maintain productive use of the land. In the alternative, even on the approach adopted by the LCC, the amici claimed that the court had insufficient evidence to determine whether it was too expensive for the state to purchase the land.

These issues, which arose eight years ago, have significant implications for the trajectory of South Africa’s land reform policy. However, it appears that we may have to wait even longer to have the crucial questions to which these issues give rise answered by the Constitutional Court. President Jacob Zuma announced on 9 January 2014 that the Mala Mala land claim had been settled for R939 360 000 – South Africa’s largest ever land claim – and that an agreement was reached in terms of which the Mala Mala Game Reserve owners will be allowed a transitional period that will expire on the 31 January 2015, and which provides for a monthly occupational rental amount of R700 000.

Prior to the hearing scheduled for 11 February 2014, the Mhlanganisweni community applied to postpone the hearing pending further negotiations between the parties in respect of the only live issue between them, that is, the continued operation of the eco-tourism business on the Mala Mala land. The Court will hear submissions regarding the application for postponement at the hearing on 11 February 2014.