Florence v Government of the Republic of South Africa

In 1952, the Florence family moved into a house called Sunny Croft in Rondebosch, Cape Town. In 1957, Mr Florence and his two brothers entered into an agreement to purchase the property from the owner, Dr Yeller, to be paid off in instalments over approximately 14 years. The area was classified as a "White Group Area" under the Group Areas Act 77 of 1957, preventing transfer of the property to Mr Florence as he was not classified as white. In October 1970, the sale agreement was cancelled, the Florence family was refunded R1,350, and they were forced to leave in November 1970 due to the area's classification and harassment by authorities. In 1995, Mr Florence lodged a restitution claim under the Restitution of Land Rights Act 22 of 1994. The claim initially sought restoration of the property but was amended to seek equitable redress in the form of financial compensation and erection of a memorial plaque. After Mr Florence's death, his wife Ms Florence was substituted as applicant. She reached a private agreement with the current owner who consented to the memorial plaque and withdrew opposition to the claim.

• What constitutes 'equitable redress' in the form of financial compensation under the Restitution of Land Rights Act?
• Is the Consumer Price Index (CPI) an appropriate measure for converting past loss into present-day value under section 33(eC) of the Restitution Act?
• At what point in time should compensation be calculated - at the time of dispossession or at the time of actual compensation?
• Does the Land Claims Court have jurisdiction to order the state to pay for the costs of erecting a memorial plaque as part of equitable redress?
• Whether an award of costs for a memorial plaque falls within the scope of 'alternative relief' under section 35(1)(e) of the Restitution Act?

The majority dismissed the appeal and upheld the cross-appeal. The final order was: (1) Leave to file the supplementary record is granted; (2) Condonation is granted; (3) Leave to appeal is granted; (4) Leave to cross-appeal is granted; (5) The appeal is dismissed; (6) The cross-appeal is upheld; (7) There is no order as to costs. This meant that the Land Claims Court's use of the CPI to calculate compensation stood, but the order requiring the Government to pay R50,000 for the memorial plaque was set aside.

The binding legal principles established by the majority are: (1) Under the Restitution of Land Rights Act, financial compensation as equitable redress must be calculated based on the value at the time of dispossession, adjusted for changes over time in the value of money. (2) The phrase 'changes over time in the value of money' in section 33(eC) of the Restitution Act refers to inflation, and the Consumer Price Index (CPI) is an appropriate measure for this purpose in determining equitable redress. (3) The purpose of financial compensation under the Restitution Act is to restore claimants to the position they would have been in immediately after dispossession if they had been adequately compensated then, not to place them in the position they would have been in had the dispossession never occurred. (4) Compensation under the Restitution Act is sui generis - it is reparative and restitutionary in character, neither punitive in the criminal justice sense nor compensatory in the civil sense. (5) Land Claims Courts have a wide discretion in determining appropriate remedies under sections 33 and 35 of the Restitution Act, and appellate courts will only interfere where the discretion was not exercised judicially. (6) A claimant who receives equitable redress under the Restitution Act is not entitled to additional relief in the form of payment for costs of erecting a memorial plaque. (7) The term 'alternative relief' in section 35(1)(e) of the Restitution Act means relief that is mutually exclusive of the other forms of relief in section 35(1)(a)-(d), not relief that is additional to those forms. (8) Once a person dispossessed of a right in land has been granted restitution (whether restoration or equitable redress), they have received full redress under the Restitution Act and are not entitled to further relief.

Van der Westhuizen J's minority judgment (on the main appeal) made several notable observations: (1) That where restoration of land is not feasible, equitable redress should generally aim to put claimants in as good a position as restoration, to avoid creating an irrational disparity between those who receive restoration and those who receive compensation. (2) That the CPI may under-compensate poor households because it is biased toward spending patterns of wealthier households and fails to account for the greater impact of inflation on poorer families who spend a larger percentage of income on food which is subject to greater price fluctuations. (3) That money used as investment in property works differently from money used for consumption, and the CPI, which measures consumption, inadequately reflects the investment nature of property ownership. (4) That current market value of the property may in appropriate cases be an appropriate starting point for calculating equitable redress, as it better achieves parity between restoration and financial compensation, though this should not be determinative and must be considered alongside other section 33 factors. (5) That where reliable evidence of current market value is not available or where the value has changed so dramatically as to create a windfall or excessive shortfall, current market value may not be appropriate. (6) That various investment metrics (32-day notice deposit rate, government bond rate, prime overdraft rate, mortgage rate, ABSA house price index) each have advantages and disadvantages, but the 32-day notice deposit rate best balances fair redress with avoiding undue burden on the public purse. (7) That the lack of a national housing index in South Africa makes it difficult to identify an optimal metric for conversion. Moseneke ACJ observed that: (1) The principle from international law in the Chorzow case is distinguishable and inapplicable to South African land restitution because it applies in a different context (expropriation of property of foreign nationals) and is inconsistent with the statutory scheme of the Restitution Act. (2) In cases where evidence shows claimants are poor and the CPI would result in compensation that is not just and equitable, courts have power under sections 33 and 35 to adjust the quantum to eliminate prejudice. Zondo J observed that: (1) The Restitution Act creates a specific cause of action (dispossession of a right in land) and prescribes a specific remedy (restitution of a right in land), and when legislation creates a new cause of action and prescribes a specific remedy, that is the only remedy available. (2) A construction of the Restitution Act that allows additional relief beyond restitution/equitable redress would create arbitrariness, treating two persons dispossessed on the same day unequally depending on whether they received just compensation at the time of dispossession. (3) The agreement between the applicant and current landowner regarding the memorial plaque was a private matter; the applicant should have extracted costs from the landowner in that settlement or can use part of the compensation awarded to pay for it.

This case is significant in South African land restitution jurisprudence as it: (1) addresses the fundamental question of how to calculate equitable redress under the Restitution of Land Rights Act; (2) confirms that the CPI is an appropriate (though not necessarily the only) measure for converting past financial loss into present-day value under section 33(eC); (3) clarifies that compensation under the Restitution Act is calculated at the time of dispossession and adjusted to present value, not calculated as if the dispossession never occurred; (4) emphasizes that restitution is reparative rather than punitive in character; (5) sets boundaries on the remedial powers of the Land Claims Court under section 35 of the Restitution Act; (6) clarifies that 'alternative relief' under section 35(1)(e) means relief that is mutually exclusive of other forms listed in section 35(1)(a)-(d), not relief that is additional to those forms; and (7) demonstrates the limits of judicial discretion in land restitution matters and the circumstances under which appellate courts may interfere with the exercise of such discretion. The split decision reflects ongoing debates about the proper approach to calculating equitable redress in land restitution cases.