Smith v Buffalo City Municipality and Others

The applicant purchased and owned Wembley Farm. In 1999, Buffalo City Municipality acquired the property from him under threat of expropriation for a legitimate public purpose, namely establishing a municipal cemetery, paying compensation under the Expropriation Act. The property was never used and was later found unsuitable for that purpose. The applicant instituted action proceedings seeking restitution of the property, but the claim was dismissed on prescription; leave to appeal was granted. While the appeal was pending, the parties concluded a settlement agreement in 2018 providing for restoration of ownership to the applicant against repayment of compensation with interest and payment of litigation costs, subject to the municipality retaining a one-hectare portion. Although the municipal council resolved to approve the settlement, the City Manager refused to sign it, alleging non-compliance with section 14 of the Municipal Finance Management Act (MFMA). The applicant then sought an order declaring the matter settled and making the settlement agreement an order of court.

The court declared that the proceedings in case no. 1323/2008 had been settled, made paragraphs 2 to 5 of the settlement agreement an order of court, and ordered the first respondent to pay the costs of opposition on scale C.

The judgment clarifies that section 14 of the MFMA does not apply to the restitution or restoration of property to a former owner following an expropriation that fails to achieve its public purpose. It affirms constitutional protection of property rights and recognises restitution as distinct from ordinary disposal of municipal assets. The case also reinforces principles governing when settlement agreements may be made orders of court.