City of Johannesburg Metropolitan Municipality v Engen Petroleum Ltd and Another

The City of Johannesburg (successor to the Sandton City Council) constructed a flyover on Grayston Drive at its intersection with Katherine Street, elevating four traffic lanes above the intersection. A petrol filling station owned by Sandton Gate Service Station CC, supplied by Engen Petroleum Ltd, was situated adjacent to the intersection. Although one lane at ground level still provided access, the elevation materially reduced direct vehicular access from most lanes to the filling station, allegedly causing loss of business. Sandton Gate and Engen claimed compensation under s 67(3)–(4) of the Local Government Ordinance 17 of 1939 (T) for losses caused by what they alleged was a permanent diversion of the road. The City admitted it had not followed the statutory notice procedures, contending these were unnecessary because there had been no permanent closure or diversion. The High Court held that while there was no closure, the construction amounted to a permanent diversion. The City appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs, including the costs of two counsel.

The case authoritatively clarifies that a 'diversion' of a street under s 67 of the Local Government Ordinance 17 of 1939 (T) is not confined to horizontal relocations but can include vertical alterations such as flyovers or underpasses. It reinforces a purposive approach to statutory interpretation in South African law and affirms the protection of adjacent property owners’ rights to compensation where road works materially impair access and cause financial loss.