15 September 2011

Zoning certificates - developers beware

The KwaZulu Natal High Court (the Court) in Eagle Creek Investment 138 (Pty) Ltd v Hibiscus Coast Municipality and Another [2010] ZAKZDHC 24 (16 July 2010) recently gave developers an unusual warning. The Court, in its decision, warned developers not to rely on local authorities to know the correct zoning of their property.

The facts in the matter were that the developer obtained a written zoning certificate from the municipality which stated that its property was zoned "General Commercial 2". On the strength of this zoning certificate information, the developer prepared and lodged building plans with the municipality for the construction of a motor vehicle dealership on the property. The municipality approved the plans and the developer began construction of the dealership.

The owners of the neighbouring properties lodged objections against the construction of the dealership. The municipality then decided that the property was in fact zoned "Limited Commercial", which meant that the plans should not have been approved. The municipality reasoned that it had relied incorrectly on zoning maps drawn for it by a third party, and so demanded that the developer immediately cease construction of the dealership. Two months later, the municipality did an about turn and withdrew the "stop work" order, allowing the developer to continue with its construction.

The owners of the neighbouring properties subsequently made an application to court and were granted an interdict halting construction. The Court agreed with the neighbours and held that the property was indeed zoned "Limited Commercial" and therefore set aside the approval of the building plans.

As a result, the contractor sued the municipality for R1 018 079,64 that it claimed it had suffered as damages.

In its defence, the municipality claimed it was immune to claims of damages arising from the negligent exercise of its statutory duties. Unfortunately for the developer, the Court upheld the municipality's defence on the basis that the municipality enjoyed immunity in terms of the local (KZN) ordinance.

Developers should do their own homework and establish the zoning of their properties to ensure that these properties are appropriately zoned. If developers do run into any problems, it is advisable to obtain legal advice promptly.

Quintin du Plessis

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