Sambo v Mabanga (27/2015) [2017] SZSC 51 (30 November 2017);

 

 

 

IN THE SUPREME COURT OF SWAZILAND

JUDGMENT

 

 

HELD AT MBABANE                                                                  Appeal Case No. 27/2015

 

 

In the matter between:

 

 

JOSEPH SAMBO                                                                    Appellant

 

 

And

 

 

 

ALFRED MABANGA                                                              Respondent

 

Neutral Citation            :        Joseph Sambo v Alfred Mabanga (27/2015) [2017]

                                                SZSC 51 (30/11/ 2017)

 

Coram                           :        M.C.B. MAPHALALA CJ, M.J. DLAMINI JA

                                                AND R.J. CLOETE JA          

 

For the Appellant                   :        Mr S. Dlamini

For the Respondent      :        Mr S. Masuku

 

Heard                            :        25 October 2017

Delivered                       :        30/11/2017

SUMMARY                 :         Calculation of compensation in terms of a formula ordered by this Court – comparing the evidence and qualifications of experts – confirming findings by Court a quo – liability for costs of rectifying encroachment of building on adjoining property – liability for City Council Rates – compensation granted by Court a quo confirmed – deduction for encroachment – Respondent liable for City Council Rates.

 

                  

JUDGMENT

 

CLOETE - JA

 

BACKGROUND FACTS

 

[1]               This is yet another episode in a long suffering matter between two parties who have been at loggerheads for decades.  Only the facts which are relevant to this appeal are referred to below.

 

[2]               I need to state here that the Record of Appeal, which was partly agreed to between the legal representatives contains completely irrelevant material, even after having been reconstituted by the parties, and my displeasure with the completely irrelevant and superfluous material incorporated in such Record will be dealt with at the end of this Judgment.

 

[3]               The current dispute between the parties relates solely to certain immovable property being Lot 9, Mathendele Township, Nhlangano (“the Property”).

 

[4]               Suffice it to say that this and other Courts before it have found that it is undisputed that the Appellant is the lawful owner of the Property but that the Respondent is in lawful possession of the Property over which he has a lien pending payment to him of compensation equivalent to the calculated improvements brought about on the Property by him.

 

[5]               It appears to be uncontroverted that the Respondent has been in possession of the Property since the year 1983 and that in 1986 he erected a building on the Property and did so again during 1999.

 

[6]               There have been various Applications and Counter-Applications in the High Court and an appeal to this Court.  In a High Court Judgment dated 29 October 2010, the Respondent was awarded damages in the sum of E250,000.00 (Two Hundred and Fifty Thousand Emalangeni) being fair compensation for the improvements brought about on the Property, against which payment the Respondent would relinquish his lien.  That Judgment was appealed to this Court. The only issue in my view which is of real import in the Judgment of this Court is that which is contained in the Order made by this Court in which the parties were directed as follows:

 

“1.2            The Order made in the Court below, which is contained in Paragraph 8 of the Judgment dated the 29th of October 2010, is set aside and the matter is remitted to the High Court for the hearing of oral evidence on the following issue: what is the amount in respect of which the Respondent enjoys a lien over Lot No. 9, Mathendele Township by reason of the necessary and useful improvements effected by him on the said Property?

 

                   In determining the said amount the Court shall determine the amount by which the value of the said property has been enhanced by reason of the said improvements and the amount of the actual expenditure incurred in effecting such improvements, the amount in respect of which the lien is enjoyed being the lesser of the two amounts.”  

 

[7]               It is common cause that the matter was eventually heard in the Court a quo on 31 October 2012 during which evidence was heard from each of the experts presented by the Appellant and the Respondent.

 

[8]               In a written Judgment delivered on 20 February 2015 the Court a quo per Maphalala P. J., as he was then, stated at Paragraph 68 of his Judgment:

 

[68]             Having found that the expert witness called by the Respondent is more credible than the witness called for the Applicant I am duly bound to be persuaded by his evidence which I have adopted above and would in the final analysis order that the Respondent be compensated for the value of the Property as has been enhanced by reason of the improvement at E502,000.00 being less of the depreciating replacement costs of the building which is amount actually expenses (sic) being E54,000.00.” 

 

[9]               It is that Judgment that is now serving on appeal before this Court and the grounds of appeal of the Appellant are expressed in the following relevant terms:

 

“1.              The Court a quo erred in law and in fact in ordering the Appellant to compensate the Respondent in the sum of E502,000.00 or such amount as is determined after clarification of the ambiguous Order of the Court a quo.  The Learned Judge in the Court a quo   more particularly erred in accepting, and placing reliance on, the evidence of the Respondent’s expert witness which was flawed in that:

 

1.1                                    It was based on a report which did not speak to the pre-determined method of compensation prescribed by this Honourable Court under Civil Appeal Number 6/2011 when it remitted the matter to the Court a quo.

 

1.2                                    It grossly undermined the value of the undeveloped land which materially enhanced the value of the entire property by virtue of its location in a commercial area.

 

2                                           The Court a quo erred in law and in fact in finding that the Appellant’s expert’s witness was discredited and that his entire testimony had no credibility.  The Court a quo particularly erred in rejecting the Appellant’s expert reports which were more relevant for the pre-determined method of compensation prescribed by this Honourable Court.  The said relevance arose as follows:

 

2.1                                    The first report spoke to the actual expenditure incurred which could only have been incurred in 1986 when the first buildings in the Property were erected.

 

2.2                                    This first report aforesaid also distinguished, from the buildings erected in 1986, the erection and possession of the salon since 1999 as mala fide in which case no lien for useful expenses arose.

 

3                                          

 

4                                           The Court a quo erred in law and in fact in not taking into account, in assessing compensation to be paid to the Respondent, that the rates paid by the Respondent were expenses in the acquisition of the fruits gathered by the Respondent for the duration of his possession of the Property in dispute.  The Court a quo more particularly erred in not offsetting the rates paid by the Respondent against the aforesaid fruits.

 

5                                           The Court a quo erred in law and in fact in not taking into account, in assessing the compensation to be paid to the Respondent, the encroachments of the buildings in the Property in dispute on adjacent properties because the usefulness of the said building is severely compromised by the encroachments which do not constitute an enrichment lien.

 

6                                           The Court a quo erred in law in ordering Appellant to pay the Respondent’s costs of suit.  The Appellant contends that the Learned Judge in the Court a quo should have in the exercise of its discretion, ordered the Respondent to pay the Appellant’s costs at attorney and client scale, regard being had to the Respondent’s conduct before and after institution of proceedings in the Court a quo. …

 

[10]             Both parties filed a lengthy Heads of Argument, again in my view dealing with irrelevant issues and both parties also filed substantial Bundles of Authority. 

 

[11]             Both parties applied for condonation for the late filing of the consolidated Heads of Argument and Bundles of Authority and despite my view that neither complied fully with the requirements of this Court, namely that the Application needs to be brought as soon as it becomes apparent that a party is out of time, that a full explanation needs to be given for the delay and that the party concerned needs to convince the Court that it has good prospects of succeeding in the Appeal concerned, condonation was granted but it needs to be placed on record that this was only in the interest of justice being served in this long suffering matter and non-compliance is not to be seen as a precedent for other similar Applications.

 

[12]             In my view the issues before us are crisp and to the point, disregarding the issues which I deem to be irrelevant and these issues are whether the Court a quo was wrong in finding that:

 

1.                                         The expert of the Respondent was more qualified and credible than that of the Appellant; and/or

 

2.                                         The Court a quo and the expert of the Respondent misinterpreted the Order of this Court relating to the method of computation of the compensation; and/or

 

3.                                         The Respondent was entitled to be refunded the amount of rates paid to the Nhlangano City Council by him; and/ or

 

4.                                         Disregarding the fact that the building on the Property encroached onto the adjoining property in arriving at the computation of the compensation; and/or

 

5.                                         The Court erred relating to the granting of the costs order.

 

ARGUMENT ON BEHALF OF THE APPELLANT ON THE RELEVANT ISSUES

 

[13]             Counsel referred the Court to Page 227 of the Record and as such the pre-trial minute where at 3.1 the Appellant apparently elected, despite the Order of this Court, and apparently on the basis that the Order was solely for his benefit, to disregard the Order and proposed that one enquiry into the second amount stipulated by this Court would suffice. 

 

[14]             Further that the Court a quo did not deal with the important issue of encroachment and the assertion of the Appellant’s expert that the costs of demolishing and rebuilding the improvements on the Property would be E206,646.80 (Two Hundred and Six Thousand Six Hundred and Forty Six Emalangeni Eighty Cents) and that this was undisputed by the Respondent.  He referred the Court to Hing, Muh Hon v Mkhabela, Solomon Solly – Gauteng High Court Case No. 2013/37921, date of Judgment 22 March 2017.

 

[15]             In an attempt to prove that the expert of the Respondent did not understand the remit of this Court he referred to the summary of the expert evidence, drawn by him it has to be said, at Page 300 of the Record. 

 

[16]             That the only interpretation which should have been placed on the Order of this Court was that the actual, undisputed construction costs namely the sum of E35,830.00 (Thirty Five Thousand Eight Hundred and Thirty Emalangeni) in respect of the 1986 improvements and the sum of E16,000.00 (Sixteen Thousand Emalangeni) in respect of the 1999 improvements should have been granted by the Court a quo as being the lesser of the two amounts to be calculated and as such that his client did not owe the Respondent anything.

 

[17]             He, as did Counsel for the Respondent, relied in part on the case of Fletcher and Fletcher v Bulawayo Waterworks Co Ltd 1915 AD 636, 656.  (This case will be referred to below). 

 

[18]             He further argued that the Court a quo was wrong as regards the rates issue as the Respondent had not tendered the fruits derived from the utilisation of the Property in dispute.

 

[19]             He further raised the issue of Attorney and client costs being awarded against the Respondent and that the Court a quo was wrong in its costs Order.

 

 

ARGUMENT OF COUNSEL FOR RESPONDENT ON RELEVANT ISSUES

 

[20]             As regards the pre-trial minute, he stated that this was only entered to assist the Court a quo and that the Respondent did not accept the purported election by the Appellant which flew in the face of the Order of this Court.

 

[21]             The Respondent is a bona fide possessor and was entitled to compensation as found by this Court and the only issue was the quantum of such compensation.  The Court a quo had originally awarded a sum of E250,000.00 (Two Hundred and Fifty Thousand Emalangeni) and that his client contended, at 2.2 of the pre-trial minute on Page 226 of the Record, that he was entitled to compensation for all buildings irrespective of when they were constructed and that the Court may take this into account when making the award and that as such the Appellant made the purported election at its own peril.

 

[22]             He conceded that there was in fact encroachment of the building on the adjoining property which was minimal but that the Appellant had the right to either leave the building as it was as the Nhlangano City Council had not demanded any action in that regard or the Appellant could purchase the adjoining property from the owner thereof.

 

[23]             He referred the Court to E. Buis Ellenberger “THE VALUER’S MANUAL” SOUTH AFRICAN INSTITUTE OF VALUERS 2nd Edition wherein the Judgment of Fletcher (referred to supra) and Banjo v Sungrown (Pty) Ltd 1969 1 SA 401 (N) 401H are referred to wherein the conclusion of the author is that:

 

“The conclusion arrived at is therefore that in order to conform to the principle or equity in terms of which both elements should concur, a valuer’s approach should be to estimate the cost of construction of the improvements at the time that the possessor surrenders occupation against payment of compensation.”

 

[24]             He further argued that the Rates levied over the property were an enhancement for the benefit of the Appellant and not a necessary expense as argued by the Appellant.

 

[25]             He further argued that the Court a quo was correct in its assessment and that the costs Order granted was appropriate.

 

[26]             He finally alleged that since the assessment was done in 2012, that there should be a new valuation exercise as the value would have increased since that date to the date hereof.

 

 

 

FINDINGS OF THIS COURT

 

[27]             In my view, the Order of this Court was clear and unambiguous in finding that the Respondent was entitled to compensation and the directions which it gave for the computation were also clear. 

 

[28]             It seems to me that it is inconceivable that the Appellant could go in the face of the Order of this Court and himself elect to decide on how the computation of the compensation was to be done and who would be liable for what.  I do not believe that the approach of the Appellant in that regard was either correct or acceptable.

 

[29]             The Court a quo clearly heard exhaustive evidence and facts and had the added benefit of observing the demeanour, behaviour and confidence levels of each of the experts as they gave lengthy evidence and were clearly cross-examined fully by Counsel for both parties.  On that basis alone the Court a quo was able to gauge the competence level and credibility of both the expert witnesses and as such this Court will be extremely hesitant to interfere in the observations and findings of the Court a quo in that regard.

 

[30]             This Court and I hasten to add, the Court a quo, cannot regard ourselves as experts in the field of valuations and we have to be guided by the evidence of experts in that field and the decisions of Courts in the region.

 

[31]             As indicated both parties relied on what is apparently the landmark case on the issue, namely Fletcher, referred to above.  The overriding principle which appears to be on point with the matter before us, it was held that the defendant company is entitled to compensation for the improvements to the extent to which the value of the plaintiff’s land had been enhanced thereby and not to return possession of the land until such compensation has been paid.

 

[32]             Under those circumstances and given what I have said above relating to the observations of the Judge in the Court a quo and the benefit of the physical presence of the experts before him, I cannot fault the decision of the Court a quo that the expert of the Respondent, his qualifications and his evidence was superior to that of the Appellant’s expert.  It is inconceivable that a fair calculation of compensation would be the actual building costs spent in 1986 and 1999 without any concern being had to inflation, the erosion of the value of money between those dates and the present and most importantly as was found in Fletcher and espoused by Ellenberger that the fair compensation calculation should be to estimate the costs of construction of the improvements at the time that the Respondent surrenders occupation against payment of compensation.  In addition it appears that the gross replacement cost of the building estimated by the Respondent’s expert was in the region of E800,000.00 (Eight Hundred Thousand Emalangeni) and as such the Appellant will inherit substantial value.

 

[33]             I accordingly find that for the ample and cogent reasons set out in its judgment, the computation of the compensation by the Court a quo cannot be criticised in anyway.

 

[34]             However, I respectfully disagree with the Court a quo on the issue of encroachment.  I believe that the argument of the Appellant in that regard is valid.  Surely the owner of the Property cannot simply be told that you must either go and speak to your neighbour about buying his property on which your property encroaches his or, worse still, that you should merely accept the Property as it is, encroachment on the neighbours property and all, on the basis that the Nhlangano City Council has not demanded that the encroachment issue be dealt with.  The Appellant did not do anything wrong relating to the erroneous erection of the buildings and in fact he did nothing at all to deserve the sort of option suggested by the Respondent. 

 

[35]             The Respondent admits that there has been encroachment on the neighbouring property, however insignificant.  Accordingly, allowance must be made for the rectification of that encroachment.  The choice I have considered is to once again refer the matter back to the Court a quo to decide on such deduction or to simply make an informed estimation of the value of rectifying the encroachment and given that this matter has dragged on for decades and must now reach an end I have decided on the latter course of action.   I agree with the dictum in the Hing Muh Hon matter referred to supra where it was stated:

 

                   “The Plaintiff cannot lawfully make use of the buildings in their current state and should he, given his present knowledge, sell the property in this state he would expose himself to potential claims, not only as against the purchaser, but in delict as against third parties who may be injured should the buildings, for instance, collapse.  Additional moneys would have to be expended in order to regularize the use of the buildings.”  (my underlining)

 

 

[36]             As referred to above, the expert for the Appellant estimated that the demolishment and rebuilding of all of the buildings would amount to approximately E206,000.00 (Two Hundred and Six Thousand Emalangeni).    It appears from the record that the Responded did not dispute the encroachment nor did he specifically dispute the computation thereof by Appellant’s expert and his own expert did not deal with the issue at all.  That is the extreme calculation in my view.  Given that the encroachment is relatively minor and that only a portion of the building will have to be dealt with so as to comply with City Council regulations, I believe that a sum of E100,000.00 (One Hundred Thousand Emalangeni) would be more than adequate to bring about the alterations concerned.

 

[37]             A further issue which perturbs me is that relating to the rates payable to the Nhlangano City Council and with respect I disagree with the Court a quo in that regard as well.  The Respondent has had the full benefit and use of the Property for the full period of time and for all intents and purposes seems to have acted as the beneficial owner of the buildings, deriving all income from the improvements and it would seem that the Appellant has not benefitted from any of that income.  Accordingly I believe that logically the payment of rates, together with all other utilities, constituted an expense of the Respondent and I do not believe that it is either fair or in the interest of justice that the Appellant should be mulcted with those costs.

 

[38]             As regards the issue of costs I wish to record the displeasure of this Court relating to the conduct of both the Appellant and the Respondent on the following grounds:

 

1.                                         Having read the Record and all the documents filed, it seems to me that no real attempt was made to reach an amicable agreement and it would seem to me that the only winners at the end of the day will be the legal advisors in this extensive litigation.

 

2.                                         The Record contained subject matter which was irrelevant to the chore issues before us and again the costs relating thereto will no doubt be astronomical and just another indication that litigation in our Courts is mostly beyond the reach of the Swazi in the street.

 

3.                                         On that basis each party will pay their own costs. 

 

[39]             Counsel for Respondent suggested that since the valuations were done a few years ago that there should be a revaluation exercise.  I believe this matter must now end forthwith and am satisfied that the order below is fair to both parties and as such I am not inclined to order any further valuations by either this Court or the Court a quo.

 

[40]             Accordingly the appeal succeeds partially only and the Order of the Court a quo is amended to read as follows:

                  

1.                                         The Applicant shall pay the Respondent compensation for the value of the Property as has been enhanced in the sum of E502,000.00 (Five Hundred and Two Thousand Emalangeni).  Upon payment of the said compensation less the sum referred to in Order 2 below, the Respondent shall restore possession and occupation of the property to the Applicant.

 

2.                                         This sum shall be reduced by the sum of E100,000.00 (One Hundred Thousand Emalangeni) in respect of the necessary costs to remedy the encroachment of the buildings on the neighbouring property.

 

3.                                         The Respondent shall bear the costs of the rates and taxes due to the Nhlangano City Council for the full period of his occupation of the Property. 

 

4.                                         Each party shall pay their own costs.

 

 

                                                                     _____________________________

                                                                    R. J.  CLOETE JA

                                                                   JUSTICE OF APPEAL

 

 

 

I agree                                                        _____________________________

                                                                    M. C. B. MAPHALALA JA

                                                                   CHIEF JUSTICE