Mohammed Yusuf Haffejee N.O. and Others v eThekwini Municipality and Others

The applicants were trustees of the YGM Haffejee Family Trust, which purchased property on the banks of the Umgeni River in Durban in 1992. The property was part of a larger tract earmarked for expropriation by the eThekwini Municipality for a canalisation programme to minimise flooding. The Municipality resolved to expropriate the properties in 2004. On 23 May 2005, the Municipality sent a notice indicating the property would be expropriated. A notice of expropriation was sent on 30 June 2005 fixing expropriation for 31 July 2005, containing no offer of compensation. On 31 July 2006, the Municipality offered 80% of assessed market value, which was rejected by the Trust. The Municipality instituted eviction proceedings on 11 September 2006 and in 2008 tendered full payment, which was again rejected. The Trust challenged the validity of the expropriation on the basis that compensation had not been determined before expropriation occurred. The High Court dismissed the constitutional application and granted the eviction application. Leave to appeal was refused by the High Court and Supreme Court of Appeal.

• Whether section 25(2)(b) of the Constitution requires that compensation for expropriation must be determined (either by agreement or court decision) before expropriation takes effect
• Whether the provisions of the Expropriation Act 63 of 1975 that permit expropriation before determination of compensation are unconstitutional
• Whether section 12 of the Expropriation Act, dealing with determination of compensation, conflicts with section 25(3) of the Constitution
• Whether eviction following expropriation requires court supervision

Leave to appeal was granted. The appeal was dismissed. Each party was ordered to pay its own costs, recognizing that an important constitutional issue had been raised by a private litigant.

Section 25(2)(b) of the Constitution does not require that compensation for expropriation must always be determined by agreement or by court before expropriation under section 25(2) takes effect. While determination of compensation before expropriation will generally be just and equitable in accordance with section 25(3), in cases where compensation must be determined after expropriation, this must be done as soon as reasonably possible in accordance with section 25(3). Eviction following expropriation may not take place unless agreed upon between the parties or, in the absence of agreement, under court supervision. In disputed cases of eviction, courts must grant orders that ensure just and equitable outcomes in accordance with sections 25(3) and 26(3) of the Constitution. The provisions of the Expropriation Act 63 of 1975 that permit expropriation before determination of compensation are not unconstitutional.

The Court made several non-binding observations: (1) It is not clear why the general purpose of socio-economic development would necessarily be frustrated by determination of compensation before expropriation. (2) There is merit in the contention that the Constitution's transformational purposes include better protection than under apartheid for those now able to gain access to property resources. (3) Comparative law is inconclusive on whether compensation must precede expropriation, with different countries adopting different approaches. (4) Self-help eviction is inimical to the rule of law. (5) The Court noted that the constitutional validity of section 12 of the Expropriation Act (dealing with determination of compensation) had not been decided in Du Toit v Minister of Transport, which proceeded on an acceptance that the compensation determination nevertheless amounted to just and equitable compensation on those facts. The Court did not determine whether the failure to pursue the constitutional challenge in the petition to the Supreme Court of Appeal would have been fatal, as the challenge failed on the merits in any event.

This case authoritatively determines that section 25(2)(b) of the Constitution does not require compensation for expropriation to be determined before expropriation takes effect. It clarifies the constitutional framework for expropriation, establishing that: (1) determination of compensation before expropriation will generally be just and equitable; (2) where compensation must be determined after expropriation, this must be done as soon as reasonably possible in accordance with section 25(3); (3) eviction following expropriation may not occur without agreement or court supervision; and (4) in disputed eviction cases, courts must grant orders ensuring just and equitable outcomes. The judgment upholds the constitutional validity of the Expropriation Act's provisions allowing expropriation before compensation determination, while emphasizing procedural safeguards including the anti-eviction protections in section 26(3) and access to courts under section 34. This decision balances individual property rights against the State's need to pursue socio-economic development and public interest objectives, including land reform. It is an important precedent on the temporal requirements of constitutional property protection and the interaction between sections 25, 26, and 34 of the Constitution.