De Facto Investments 255 (Pty) Ltd v Toye Nkala and Others

The plaintiff company purchased a farm in Bergville, KwaZulu-Natal from Mr van der Merwe. At the time of purchase, three families resided on the farm, including the Nkala family (headed by Toye Nkala, 68 years old, with approximately 16 family members) and the Mavundla family (headed by Skeshe Mavundla, 64 years old, with approximately 17 family members). The plaintiff alleged that in October 2002, Mr van der Merwe, acting on behalf of the plaintiff, entered into written agreements with the heads of the three families whereby they would vacate the farm in exchange for R1,000 and 400 concrete building blocks each. One family (the Hadebe family) complied and left. The Nkala and Mavundla families accepted the money and blocks but refused to vacate. Both defendants were born on the farm, as were their fathers before them. They and their families had lived and worked on the farm for generations, receiving minimal cash wages but being permitted to reside on the land, keep cattle, and cultivate crops. After purchasing the farm, the plaintiff installed a pivot irrigation system, and the defendants' homesteads fell within the pivot circle on its western edge, interrupting cultivation of approximately 13 hectares. The plaintiff brought eviction proceedings.

• Whether the eviction could be granted under the Extension of Security of Tenure Act 62 of 1997 (ESTA)
• Whether there was lawful and just and equitable termination of the occupiers' rights of residence under section 8 of ESTA
• Whether a ground for eviction under section 10 of ESTA had been established
• Whether the first and second defendants were labour tenants as defined in the Land Reform (Labour Tenants) Act 3 of 1996 (LTA)
• Whether the first and second defendants were farmworkers rather than labour tenants
• What valuation approach should be used to determine whether remuneration was predominantly in cash or in land use rights
• Whether the court could grant the alternative relief sought by the plaintiff for relocation of the defendants

1. The plaintiff's application for eviction and alternative relief was dismissed. 2. The first and second defendants were declared to be labour tenants as defined in the Land Reform (Labour Tenants) Act 3 of 1996. 3. The Registrar was directed to deliver a copy of the judgment to the Director-General of the Department of Rural Development and Land Reform, drawing attention to paragraphs [29] to [32] regarding the need to process the defendants' section 16 applications for an award of land. 4. No order as to costs was made.

The binding legal principles established are: (1) A landowner cannot evict occupiers under ESTA without a just and equitable termination of the right of residence under section 8, which requires considering all relevant factors including whether the occupiers had an effective opportunity to make representations. (2) Where occupiers satisfy the requirements in paragraphs (a), (b) and (c) of the definition of 'labour tenant' in section 1 of the LTA, the statutory presumption in section 2(5) applies and they are presumed to be labour tenants unless the landowner proves they are farmworkers. (3) To prove someone is a farmworker rather than a labour tenant, the landowner must establish on a balance of probabilities that the occupier was paid predominantly in cash or other forms of remuneration, and not predominantly in the right to occupy and use land. This requires a valuation exercise comparing the monetary value of all components of remuneration. (4) Labour tenants can only be evicted in accordance with the procedures set out in the LTA, not under ESTA. (5) The court will not grant eviction or relocation orders in labour tenant cases without following the proper statutory procedures set out in Chapter III of the LTA, including mediation and referral to the court where appropriate.

Loots AJ made several important observations: (1) The judge ventured to suggest that where it is established that an occupier's parents or grandparents were clearly labour tenants on the same farm, this historical fact might be taken into account in deciding whether the current occupier is a labour tenant, because labour tenancy is often a continuum across generations (paragraph [23]). (2) The judge noted that it was 'totally unacceptable' that officials of the Department of Rural Development and Land Reform could lose original applications for awards of land under section 16 of the LTA, given the exceptionally important function of implementing land reform legislation (paragraph [31]). (3) The judge observed that the plaintiff's decision to install a pivot irrigation system that would crash into occupied homesteads while relying on an unenforceable vacant possession clause was 'ill-advised' because occupiers can only be evicted by court order (paragraph [7]). (4) The court noted that it would be 'unwise to adopt a dogmatic approach' to valuation when determining whether remuneration was predominantly in cash or land use rights, and that each case must be considered on its own merits using a method that is just and equitable in the circumstances (paragraph [24]).

This judgment is significant in South African land reform law for several reasons: (1) It demonstrates the protective nature of both ESTA and the LTA and the strict requirements for eviction under these statutes. (2) It clarifies the application of the statutory presumption in section 2(5) of the LTA, which shifts the onus to landowners to prove that occupiers are farmworkers rather than labour tenants once the basic definitional requirements are met. (3) It addresses the difficult question of valuation when determining whether remuneration was predominantly in cash or in land use rights, following the guidance in Woerman and Landman. (4) It emphasizes that historical facts about previous generations' status as labour tenants can be relevant in assessing whether the current occupiers are labour tenants, particularly where there is a continuum of labour tenancy across generations. (5) It highlights the severe consequences of administrative failures by the Department of Rural Development and Land Reform, including the loss of original labour tenant applications. (6) It reinforces that landowners cannot rely on vacant possession clauses in sale agreements to evict occupiers without complying with the statutory requirements for eviction. The case illustrates the court's commitment to upholding the land reform objectives of the Constitution and protecting vulnerable occupiers from arbitrary eviction.