LION S HILL DEVELOPMENT COMPANY (PTY) LTD PROVINCIAL GOVERNMENT OF THE WESTERN CAPE GROUNDS OF APPEAL

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1 LION S HILL DEVELOPMENT COMPANY (PTY) LTD Appellant and PROVINCIAL GOVERNMENT OF THE WESTERN CAPE Respondent GROUNDS OF APPEAL 1 Ground The immovable property to which this appeal relates, namely Erf 1526 Tamboerskloof (hereinafter the immovable property ) was previously owned by the Provincial Government of the Western Cape (hereinafter Respondent ). 1.2 On 12 December 2006 Respondent sold the immovable property to LIONS HILL DEVELOPMENT COMPANY (PTY) LTD (hereinafter Appellant for a purchase price of R60-million. 1.3 The aforesaid purchase price was determined on the basis of valuations inter alia obtained pursuant to an agreed Order of the High Court, Cape Town, determining the basis to be followed in determining the value of the immovable property.

2 2 1.4 Respondent initially obtained the valuation in respect of Erf 1526 as at 1 April 2004 (effectively being the initial tender closure date valuation) annexed hereto marked A and provided this to Appellant: In terms of the aforesaid valuation the immovable property was valued at R43-million as at 1 April As appears from Section II, clause 4.2 of the valuation, the immovable property was valued on the basis that the site is covered in alien vegetation and is capable of development As appears from Section I, paragraph 4.3 of the valuation, the immovable property was valued on the basis that the property is not environmentally impaired or contaminated As appears from Section II, paragraph 3.1 of the valuation, the immovable property was valued on the basis that the current zoning was R5, permitting use of the property for general residential purposes including blocks of flats, dwelling houses and other residential buildings As appears from Section II, clause 5.2 of the valuation, the immovable property was valued on the basis that the property is capable of optimum development.

3 3 1.5 Due to delays on the part of Respondent in implementing the tender process and the increase in the value of the property due thereto, the Western Cape High Court, by agreement between Appellant and Respondent ordered that a process be followed to determine the market value of the property and that the Provincial Cabinet thereafter declare the decision as to the proposed sale by tender of the property. 1.6 Pursuant to the aforegoing, Respondent obtained a further valuation in respect of the immovable property as at 9 February 2005 in the terms appearing from the copy thereof annexed hereto marked B and provided this to Appellant: In terms of this valuation, the property was valued as at 9 February 2005 at R66-million As appears from Section I, clause 4.3 of the valuation, the immovable property was valued on the basis that that property is not environmentally impaired or contaminated As appears from Section III, clause 4.2 of the valuation, the immovable property was valued on the basis that the site is covered in alien vegetation and was capable of development.

4 As appears from Section III, paragraph 3.1 of the valuation, the immovable property was valued on the basis that the current zoning was R5, permitting use of the property for general residential purposes including blocks of flats, dwelling houses and other residential buildings As appears from Section III, clause 5.2 of the valuation, the immovable property was valued on the basis that the property is capable of optimum development As appears from Section IV, Part 2, the valuation of R66-million was based on a valuation of R2, per square meter on the full extent of the immovable property As appears from Section IV, Part 3, the valuation on the residual method calculation was R61-million on the basis that the entire extent of the property (with a coverage of 50%) could be developed optimally. 1.7 Pursuant to the aforegoing valuations provided by Respondent, Appellant made representations to Respondent as to the market value of the immovable property at the material dates and these representations led to conclusion of the agreement of sale between the parties on 12 December 2006.

5 5 1.8 The purchase price of R60-million agreed upon in terms of the agreement of sale concluded between the parties on 12 December 2006 comprised a valuation of the immovable property at R per square meter for the full extent of the immovable property of 24429m 2 and a residual method calculation based on the full extent of the property being optimally developable at a coverage of 50%. 1.9 The property was accordingly sold by Respondent to Appellant on the basis of representations in the valuations furnished by Respondent that the site was covered by alien vegetation, was not environmentally impaired and that the full extent of the property was optimally developable at a coverage of 50% Respondent, in subsequently refusing Appellant authorisation for the clearing of vegetation on the relevant portion of Erf 1526 in order to develop that portion, failed to have regard to the fact that Respondent sold the property to Appellant for that express purpose and on the basis that the full extent of the property was optimally developable. 2 Ground Despite the property having been sold to the Appellant on the aforesaid basis (inter alia that the entire property was covered by alien vegetation and was optimally developable by Respondent), it transpired subsequently that a portion of the property (being that on which Block

6 6 E was planned to be built) contained indigenous vegetation classified as critically endangered by the National Special Biodiversity Assessment (2004). This comprised 0.14 hectares of partly degraded Peninsula Shale Renosterveld and 0.54 hectares of party degraded Peninsula Granite Fynbos deemed to be of medium negative regional significance. 2.2 Only Block E is situated within the classified vegetation zone as appears from the coverage plan annexed marked C. 2.3 The Department of Environmental Affairs and Development Planning of Respondent in paragraphs 2 and 3 of its confirmation dated 30 September 2010 (Annexure D hereto) confirmed that only Block E (the 5th block) triggered a listed activity and thus that the development of the remaining four Blocks on Erf 1526 would be allowed prior to the outcome of the environmental process in relation to the matter under appeal. 2.4 The classified vegetation zone (and the intended Block E ) are located in the north-eastern corner of Erf 1526 as indicated on the annexed coverage plan marked C. 2.5 This zone, as appears from the plans, is bounded on the one side by an existing residential development, would be bounded on the other two sides by the proposed development (which in turn is bounded by

7 7 sports fields and residential developments) and only one small boundary adjoins vacant land connecting ultimately to the Table Mountain National Park. 2.6 This section of land is relatively small and some distance from the Table Mountain National Park. 2.7 As stated on page 7 of the Executive Summary, even if Block E is not developed, the linkage (of the section of land) to the Table Mountain National Park will remain tenuous as the management of the adjacent land is not guaranteed. 2.8 Similarly and on page 28 of the Executive Summary, in considering the alternative that the section of land could be set aside for conservation purposes to protect the Peninsula Shale Renosterveld on the site, it is recorded that the site is so limited in size and relatively isolated from the Table Mountain National Park that this has not been considered as a reasonable and feasible alternative. 2.9 The Notification of the Decision dated 16 November 2011 repeated in paragraph 6, Alternative 2 in relation to such alternative that the site is considered to be so limited in size and relatively isolated from the Table Mountain National Park that to set it aside for conservation purposes is not a reasonable and feasible alternative.

8 In reaching the decision appealed against, Respondent failed to have proper regard to the fact that the property concerned is surrounded by existing residential development, that it is itself zoned for residential development, that the portion containing the aforesaid indigenous vegetation is not only degraded but is limited in size, is tenuously linked through other property to the Table Mountain National Park and is so small and relatively isolated from the Table Mountain National Park that the conservation alternative is not reasonable and feasible. 3 Ground As recorded in the Botanical Survey Report by Nick Heime on page 14 to 15, offset opportunities exist on erven within 150 metres of the northern boundary of Erf Furthermore, as stated by N. Heime, alternative offset areas could be established between the Appellant, Dr P Holmes of the City s Biodiversity Management Branch and M Slayen of the Table Mountain National Park. The Appellant would be required to provide adequate funding to transfer at least 1.36 hectares of currently unconserved Peninsula Shale Renosterveld. 3.3 As stated earlier, the site comprises 0.14 hectares of partly degraded Peninsula Shale Renosterveld and 0.54 hectares of party degraded Peninsula Granite Fynbos totalling 0.68 hectares. The offset site of at

9 9 least 1.36 hectares derives from the following recommendation in the executive summary: It is recommended that should the proposed development be authorised that a biodiversity offset of at least 2:1 be secured to add to the conservation of Peninsula Shale Renosterveld on Lion s Head. The loss of this unique vegetation from the site should benefit its overall conservation. 3.4 In reaching the decision, Respondent failed to give effect to the aforegoing and ought to have granted the authorisation sought, subject to Appellant purchasing and transferring at least 1.36 hectares of conservation worthy Peninsula Shale Renosterveld identified by the Biodiversity Network as Category CBAiB or CBAiC and to be agreed upon and located in conjunction with Appellant, Dr Holmes and Mr Slayen. 3.5 The statement in paragraph 2.5 of the Notification of the Decision dated 16 November 2011 that the finding of identical land with the same orientation close to the site in the urban environment was nearly impossible implies that it is possible and this is supported by the report of N. Heime. 3.6 Moreover, Respondent erred in finding that offset opportunities had to be restricted to identical land within the same orientation close to the site in the urban environment.

10 Alternatively, the authority sought ought to have been granted subject to a financial offset being paid by Appellant to support a land acquisition fund for conservation management in other sites as suggested in paragraph 3 of Annexure 1 to the letter from the City of Cape Town, Strategy & Planning dated 30 August Ground In paragraph I1 of the Notification of the Decision Respondent correctly recorded that the NEMA principles require that environmental management places people and their needs at the forefront of its concern and serve their interests equitably. 4.2 Respondent in refusing the authorisation for the building of Block E did not properly take into account the positive benefits of the residential units envisaged (Respondent s own valuation of the immovable property Section II, clause 5.3 of Annexure A records that there is a huge demand for residential property in the immediate surrounding area ) and the employment created thereby and overstressed the value of the small area (0.14 hectares) of party degraded Renosterveld, largely surrounded by existing residential properties (including multi storey buildings) tenuously linked through private property to the Table Mountain National Reserve and regarded as so small and isolated as to be not feasible for conservation acquisition.

11 11 5 Ground Respondent in reaching its aforesaid decision and as reflected inter alia in paragraph 2 of the Notification of Decision dated 16 November 2011 took into account averments by the City of Cape Town relating to the immovable property as a whole and to the City s Biodiversity Network categories and spatial development frameworks. 5.2 Given that the application only related to the aforesaid portion of the property identified on annexure C hereto, such consideration was irregular and went beyond the issues on which the application property had to be considered. DATED AT CAPE TOWN THIS DAY OF JANUARY 2012