CALCULATING LOSS: HOW TO ‘MAKE AMENDS’ IN

CALCULATING LOSS: HOW TO ‘MAKE AMENDS’ IN
TERMS OF THE RESTITUTION OF LAND ACT
Florence v Government of the Republic of South Africa (CCT 127/13)
[2014] ZACC 22 (26 August 2014)
This judgment’s main focus deals with the question how one arrives at a figure to
compensate someone who lost a home as a result of apartheid legislation. The court held
that each circumstance had to be determined on its own facts, but that using the CPI
index was a fair measure for determining “changes over time in the value of money” as
stipulated in the Restitution of Land Act. For those involved in such claims, the discussion
of the various methods to do the calculation is a valuable reference and in any event an
interesting read.
The Judgment can be viewed here.
FACTS
Ms Florence instituted a claim for financial compensation under the Restitution of Land
Rights Act (‘the Restitution Act’). Her claim related to the family home on which the
Florence family lived for almost twenty years (in the present day Rondebosch, Western
Cape). Because the area was classified as a “White Group Area” in terms of apartheid
legislation, the Florence family was forced to leave the property in 1970.
The Land Claims Court found that Ms Florence met the requirements for restitution and
determined the amount of compensation due by escalating the value of the loss in 1970 to
present-day monetary terms using the Consumer Price Index (‘the CPI’).
Ms Florence also claimed the costs of erecting a memorial plaque on the property. In this
regard, the court held that it lacked jurisdiction to make an order regarding the memorial
plaque since it was the subject of a private agreement between the current property owner
and the Florence family.
Ms Florence appealed to the Supreme Court of Appeal (‘the SCA’) which affirmed the
Land Claims Court’s decision to use the CPI as the method of conversion. However, with
regard to the plaque, the SCA held that the Land Claims Court had a very wide remedial
discretion under the Restitution Act which allowed it to order the State to pay for the
erection of such a plaque.
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Ms Florence then applied for leave to appeal to the Constitutional Court against the SCA
judgment with regard the finding that the CPI Index was an appropriate measure in the
circumstances. The cross-appeal of the State dealt with the duty of the state to bear the
costs of erecting a memorial plaque on the property.
The Constitutional Court granted Ms Florence leave to appeal.
HELD:
The application of the CPI as measure for calculation of compensation:
• The court agreed with the existing SCA case law on this issue, which determines that
the application of returns on investment on a historical loss is likely to result in
overcompensation, which is at odds with the purpose of the Restitution Act. The
market value of the property is but one of the factors which must be taken into
account when determining what would be fair compensation.
• As such, where the Land Claims Court and the Supreme Court of Appeal opted for
the CPI to measure “changes over time in the value of money”, as required in section
33 of the Restitution Act, this constituted an appropriate measure.
The appeal accordingly failed.
(A minority judgment rejected the use of the CPI, finding that it would not result in just and equitable
redress in the present matter. Since the Restitution Act prioritises restoration of land, claimants who
can only be compensated financially, should – as far as possible – be put in the same position as if
the land had been restored to them. If no accurate current market value is available, the value of
the property at the time of the loss must be adjusted to present-day value. It held that the CPI was
not an appropriate tool for adjustment because it measures the change in the costs of consumption,
rather than returns on investment, and therefore does not adequately account for the loss of
immovable property. It held further that whilst a 32-day notice deposit rate is not without
shortcomings, it was a more appropriate measure available given the evidence before the court in
the present matter.)
With regard to the memorial plaque:
• The Court held that under section 35 of the Act a court could grant “alternative relief”.
But this was only available in a case where the relief of restoration of a right in land or
equitable redress was not appropriate or competent.
• The present matter was not however such a case, as Ms Florence was granted just
and equitable compensation, being a part of equitable redress. (In terms of the
Restitution Act, the remedy for dispossession of land is either restoration of a right in
land or equitable redress.)
The State’s cross appeal was accordingly upheld in respect of the memorial plaque.
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