In a recent ruling in NAD Property Income Fund v South African National Roads Agency Limited (Sanral), the Supreme Court of Appeal (SCA) upheld an appeal by NAD and set aside aspects of a Limpopo High Court decision, remitting the matter for further evidence and reconsideration.
The case relates to the expropriation of a portion of land in Hoedspruit in 2016 for road construction. NAD purchased the property in January 2015 for R7,75 million, at a time when negotiations between Sanral and the previous owner over a possible expropriation were already under way. A diagram of the land potentially required had also been made available to NAD.
On 25 July 2016, the minister of transport expropriated a 5 101m² portion of the property in terms of the Sanral and National Roads Act (No. 7 of 1998).
A wide gap existed between the parties’ valuations. NAD claimed nearly R17 million, based on the property’s potential for development into a community shopping centre, while Sanral offered just under R200 000 based on current market value.
The matter was taken to the Limpopo High Court which, in January 2024, awarded compensation of about R933 500, plus interest. However, the SCA found that the High Court had applied the wrong legal framework.
The SCA reaffirmed the two-stage approach established in the 2005 Constitutional Court judgment in Du Toit v Minister of Transport. This requires that compensation first be determined with reference to market value under the Expropriation Act (No. 63 of 1975) and then assessed against the constitutional requirement that it be ‘just and equitable’.
Importantly, the SCA stressed that market value is the ‘presumptive starting point’, not merely one factor among many.
It also rejected the High Court’s view that compensation involves broad judicial discretion, finding instead that courts must apply an objective standard based on the facts and the criteria set out in Section 25(3) of the Constitution.
The SCA found that the High Court had failed to properly interrogate conflicting expert evidence, including differing valuations and sale prices, and had asked the wrong questions regarding development potential. It also did not adequately explain discrepancies between previous sale transactions of the property.
As these issues were not fully examined, the SCA ruled that it could not make a final determination and ordered that the matter be reheard in the High Court with additional evidence.
Annelize Crosby, head of legal intelligence at Agbiz, said the judgment brings clarity by confirming a structured, evidence-based approach to compensation within the bounds of the Constitution.
“For the agriculture sector, the ruling offers reassurance that compensation will not hinge on broad judicial discretion, but on an objective assessment grounded in market value and relevant facts. Market value is the starting point, from where the price can be negotiated up or down,” she told Farmer’s Weekly.
