By: Umar Khan (Candidate Attorney), Ziyaad E Patel Attorneys
Introduction
In Changing Tides 74 (Pty) Ltd v City of Johannesburg, the Johannesburg High Court held the City of Johannesburg Metropolitan Municipality liable for damages of R12,374,993.00 plus interest for its failure to provide temporary emergency accommodation to unlawful occupiers residing in a building owned by Changing Tides 74 (Pty) Ltd. The claim was based on delictual liability for pure economic loss, together with a request for declaratory and related relief.
The principal issue before the court was whether the City’s failure to provide emergency accommodation to the unlawful occupiers, as required by a court order, constituted wrongful conduct and infringed various constitutional rights.
The case is significant because it illustrates the tension between private property rights and the constitutional obligation to provide access to adequate housing. It also raises important questions regarding municipal accountability and the legal consequences of non-compliance with court orders.
Background
Changing Tides owned a property situated at 191 Jeppe Street, Johannesburg, consisting of an eleven-storey building known as Chung Hau Mansions. The building had been unlawfully occupied by approximately 249 men, women, and children and was commonly described as a “hijacked building”. As a result, Changing Tides instituted eviction proceedings against the occupiers.
On 14 June 2012, Claassen J granted an order directing the City to provide temporary emergency accommodation to the unlawful occupiers by 30 January 2013, before their eviction on 15 February 2013. Despite this order, the City failed to provide the required accommodation by the specified date.
The unlawful occupiers subsequently launched enforcement proceedings, resulting in further orders issued by Lamont J and Satchwell J during February and April 2013. These orders again required the City to provide temporary accommodation. Although the City appealed against the Lamont and Satchwell orders, it did not challenge the original Claassen Order. The appeals were ultimately unsuccessful, culminating in the dismissal of the City’s application to the Constitutional Court in June 2015.
During this period, Changing Tides continued to bear the burden associated with the occupation of its property. In November 2015, the company applied to re-enrol the matter so that the court could determine new dates for the provision of emergency accommodation and the relocation of the occupiers or alternatively grant other just and equitable relief. The application also required certain City officials to explain under oath the steps taken to ensure compliance with the existing court orders. At the same time, the occupiers sought a declaration that the City was in contempt of court.
Faced with the prospect of contempt proceedings, the City eventually provided temporary emergency accommodation to the occupiers on 10 January 2016. The matter was later designated as a commercial case on 16 November 2020.
Changing Tide’s Claims & The City’s Defense
Changing Tides argued that the City’s failure to comply with the Claassen Order caused substantial financial losses, constituted wrongful conduct, and violated the occupiers’ constitutional right of access to adequate housing. The company further contended that its right to property under Section 25(1) of the Constitution had been infringed because it was deprived of the use and enjoyment of its property for approximately three years. As a result of the City’s failure to provide accommodation timeously, Changing Tides was unable to renovate the building and lease it to students from February 2014, only being able to commence earning rental income from February 2017.
The City disputed the wrongfulness of its conduct and argued that it lacked sufficient resources to comply with the Claassen Order. It maintained that it had acted within its available means to address homelessness and relied on several proposed accommodation arrangements as evidence of its efforts to comply.
Wrongfulness & Negligence
The court found that Changing Tides had successfully proved that the City failed to comply with the Claassen Order before January 2016. In considering the accommodation proposals advanced by the City, the court concluded that none amounted to proper compliance.
The first proposal involved accommodation at Ekuthuleni, but the available beds were insufficient and there were disputes regarding whether the facility was already occupied. The facility was also criticised for its “day-time lockout rule”. The second proposal involved accommodation at the Linatex Building, but this was considered unsuitable because it prohibited children, separated family members, and imposed similar lockout conditions. The third proposal involved the construction of a temporary relocation area, but the project never materialised in a manner that fulfilled the City’s obligations.
The court rejected the City’s argument that the Claassen Order imposed obligations exceeding those contemplated by Section 26 of the Constitution, the Housing Act, or the Constitutional Court’s Blue Moonlight judgment. Since the City had not appealed the Claassen Order, it remained binding and enforceable. The court further rejected the City’s reliance on limited resources, noting that the Claassen Order specifically required the provision of emergency accommodation irrespective of the City’s financial position. Importantly, the City had agreed to the relevant deadlines despite being fully aware of its resource constraints.
The court also emphasised that the City never sought a variation of the Claassen Order, even after claiming that compliance was impossible due to financial limitations. This failure weighed heavily against the City’s defence.
Regarding property rights, the court accepted that the City’s non-compliance effectively deprived Changing Tides of access to, control over, and beneficial use of its property between January 2013 and January 2016. The court clarified that the requirement of arbitrariness under Section 25 of the Constitution applies only where deprivation is authorised by a law of general application. The Claassen Order did not constitute such a law and therefore the City could not rely on this argument.
The court further held that the City’s conduct undermined Sections 34 and 165(4) of the Constitution. By disregarding binding court orders, the City weakened the effectiveness of the courts and undermined the rule of law.
The court agreed with Changing Tides that the City’s conduct demonstrated a lack of political will and commitment to fulfilling its legal and constitutional obligations. At best, the City’s conduct amounted to gross recklessness. This conclusion was reinforced by the fact that the City only complied after the threat of contempt proceedings became imminent.
The court found that a reasonable municipality in the City’s position would have foreseen that failure to comply with the Claassen Order would deprive Changing Tides of the use of its property and prevent it from generating rental income. Accordingly, the court concluded that the City’s conduct was both wrongful and negligent and that considerations of public policy justified imposing delictual liability for the losses suffered by the plaintiff.
Court Order
The court determined that Changing Tides had suffered a loss of rental income for a period of three years, from 1 February 2014 to 1 February 2017. Had the City complied with the Claassen Order by the end of January 2013, the plaintiff would have been able to renovate the property and commence earning rental income significantly earlier.
As a result, the court awarded damages in the amount of R12,374,993.00 together with interest.
Significance of The Judgement
The judgment reinforces the principle that all organs of state, including municipalities, are bound by court orders and must comply with them. The court made it clear that the City’s failure to obey the Claassen Order undermined the rule of law and directly caused financial harm to a property owner who was deprived of the use of its property because the municipality failed to provide alternative accommodation to unlawful occupiers.
Although the court acknowledged that the Claassen Order may have imposed obligations exceeding the City’s general duties under Section 26 of the Constitution, it emphasised that once a valid court order has been issued, compliance is mandatory. The City’s resource-based arguments were therefore unpersuasive, particularly because it never sought to vary the order.
The judgment establishes a strong standard of accountability for municipalities when court orders relating to housing and constitutional rights are issued. It also represents an important precedent in which a private company successfully recovered damages from a municipality for losses caused by the municipality’s failure to comply with a court order.
The decision therefore provides support for future claims by individuals and entities who suffer financial loss as a direct consequence of a municipality’s failure to fulfil legally mandated obligations.
Conclusion
The judgment strengthens the authority of the courts and reaffirms the constitutional obligation of state entities to comply with judicial orders. It further demonstrates that municipalities may be held delictually liable for financial losses suffered by private parties where those losses result directly from a failure to comply with court orders, particularly those involving constitutional rights.
More broadly, the decision signals an increased willingness by courts to hold organs of state accountable for non-compliance and may encourage greater adherence to court orders and a more responsible approach to litigation by municipalities in the future.