Rustenburg Local Municipality v Burrie Smit Ontwikkelaars (Pty) Ltd

The respondent, a property development company, owned land earmarked for township development. In July 2004 the appellant municipality, acting on behalf of Rand Water and under statutory expropriation powers, expropriated portions of the land for a water reservoir and pipeline servitude. The municipality paid compensation in August 2007 under s 11(1) of the Expropriation Act 63 of 1975, including interest and a solatium, but the respondent disputed the adequacy of the compensation and instituted action in 2008. Before trial, in November 2016, the municipality made a without‑prejudice tender of R1.5 million, which was rejected. After lengthy litigation, the High Court determined compensation in June 2023 at an amount lower than the combined payments and tender, but made unclear orders regarding interest and ordered each party to pay its own costs. Both parties appealed on interest and costs.

The appeal was upheld with costs and the cross‑appeal dismissed. The SCA set aside the High Court’s orders on interest and costs, substituted an order confirming that simple statutory interest was payable from the date of expropriation, ordered the respondent to pay the municipality’s costs incurred after 11 November 2016 (including two counsel and expert qualifying fees), and directed that each party bear its own costs incurred before that date.

The case clarifies the interpretation of s 12(3) of the Expropriation Act regarding the nature and rate of interest on unpaid compensation and reinforces that courts must strictly apply the statutory costs regime in expropriation matters. It confirms that rejected settlement offers, read with prior statutory payments, have mandatory cost consequences and limits judicial discretion in departing from the statutory formula.