Zoning – be warned

Here's an unusual warning for developers from a recent High Court case Eagle Creek Investment 138 (Pty) Ltd v Hibiscus Coast Municipality and Others (2806/2006) [2010] ZAKZDHC 24 - don't rely on the local authority to know the correct zoning of your property!

First, the history of this unhappy saga:

• The developer obtained a written zoning certificate from the local municipality to the effect that its property was zoned "General Commercial 2"
• Then the developer employed professionals, and prepared and lodged building plans with the municipality for the construction of motor-dealership premises
• The municipality approved the plans
• The developer's building contractor began construction
• The neighbours lodged objections with the municipality
• The municipality decided that in fact the property was zoned "Limited Commercial" - meaning that the plans could not be approved (it had apparently relied on incorrect zoning maps drawn for it by a third party)
• It accordingly demanded that the developer cease construction immediately
• 2 months later it did a U-turn and withdrew the "stop work" order
• The neighbours then obtained a court interdict halting construction, the Court in question agreeing with them that "Limited Commercial" was indeed the correct zoning, and thus setting aside approval of the plans
• The contractor sued the municipality for the R1.018.079-64 damages it had suffered as a result.

Unfortunately for the developer, the Court upheld the municipality's defence that it was by law immune from claims for damages arising from the negligent exercise of its statutory duties. Interestingly, the Court held that there was no immunity in terms of national legislation, only in terms of the local (KZN) Ordinance, which has since been repealed.

So developers - do your own homework on zoning, and take legal advice immediately if you run into problems.

And municipalities - check urgently whether you in fact have any protection from this sort of claim. The municipality in question would presumably have been liable for damages in the absence of the statutory indemnity.

Full judgment on Saflii website

Jack Crook (LLB Lond, LLB Rhod) is the author of LawDotNews, a monthly newsletter which is personalised and e-mailed to your firm's clients compliments of your firm. Readers are welcome to contact Jack, or visit his web site at http://www.dotnews.co.za for further details.