South Africa’s Supreme Court of Appeal (SCA) is set to adjudicate a long-running dispute between South Africa’s richest man, Johann Rupert, and the Nkomazi municipality over the valuation of Rupert’s Leopard Creek golf estate.
With the hearing scheduled for August 27, Nkomazi municipality is challenging a 2023 ruling by the Mpumalanga High Court, which set aside its R1.5 billion ($82.4 million) valuation of Leopard Creek.
Leopard Creek is a luxurious 355-hectare estate bordering the Kruger National Park and is deemed a premier golfing destination.
Developed by Rupert, the property features an 18-hole golf course designed by Gary Player, a 3,600m² clubhouse complex, 97 residential sites, and several recreational facilities.
The expansive estate hosts the Alfred Dunhill Links Championship, which takes place annually and attracts top professional golfers from around the world.
Leopard Creek’s property portfolio also includes 113 developed sites, 59 undeveloped sites, and 90 unsold undeveloped sites.
Rupert owns 50 stands, each providing four memberships, while Leopard Creek Investments holds 47 stands that are not for sale. The estate employs approximately 130 people.
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Johann Rupert and Nkomazi Municipality’s dispute explained
The dispute between Rupert’s Leopard Creek and the Nkomazi municipality dates back to 2017. At the time, the municipality placed a R1.3 billion ($71.5 million) valuation on the property. However, Leopard Creek disagreed, insisting that the property was worth R450 million ($24.7 million).
During this same period, the municipality pressured Leopard Creek to pay R76.4 million ($4.2 million) in unpaid rates and taxes.
Leopard Creek Share Block had signed an agreement with the erstwhile transitional council in 1996 to pay only R35,000 ($1,924) a year. This arrangement stood even after Parliament passed the Municipal Property Rates Act in 2004.
The municipality felt that Leopard Creek was enjoying a sizeable rebate in its taxes considering the property’s size and value and wanted the company to pay about R8.8 million ($483,000) a year.
Speaking at the time, Nkomazi Local Municipality spokesperson Cyril Ripinga said, “The property is valued at R1.3 billion ($71.5 million), and Rupert’s company must pay. He pays millions to lawyers without feeling anything, but we, as a rural municipality, do feel the pain when we pay lawyers on this matter. He is prepared to spend more on lawyers than paying us money that would be distributed to all.”
Controversial valuation figures
The dispute between Leopard Creek and the Nkomazi municipality intensified, prompting Leopard Creek to approach the Valuation Appeal Board for the Ehlanzeni district, seeking to have the R1.3 billion ($71.5 million) valuation dismissed.
The board dismissed the objection and set the property’s value at R1.5 billion ($82.4 million).
Leopard Creek insisted that the figure was wrong, claiming that the property had declined in value from the R450 million ($24.7 million) they had earlier quoted to R330 million ($18.1 million).
The company then took the case to the Mpumalanga High Court, seeking the valuation to be set aside. It argued that the valuation appeal body failed to consider relevant considerations and acted arbitrarily in dismissing its application.
Extortion claims
Moreover, Forbes-listed billionaire Rupert claimed that the municipality’s actions were ill-intentioned. He said that they had agreed to pay the municipality fees even though the municipality provides no services to the property. Rupert claimed that the municipality wanted to extort them.
“We had a legal agreement, a contract. They accepted the money for a decade and then arbitrarily tore up the agreement and quadrupled the bill,” Rupert said. “They provide nothing. We do our own roads, our own water, and we buy electricity directly from Eskom. We told them to cut off our services, but they said they couldn’t because they don’t provide any.”
To strengthen its case, Leopard Creek hired property mogul David Nagle, who has been involved in developing Houghton Golf Estate, Eye of Africa Golf Estate, and Serengeti Golf Estate.
Nagle emphasized the challenges faced by the golf estate market. In his testimony, he said that the golf course estate market is saturated, leading to significant discounts on developments. He argued that while golf estates themselves are not highly profitable, the golf courses enhance property sales within the estates.
Additionally, he pointed out the high costs of maintaining the golf club and the estate’s location, which is far from any large city, affecting its value.
After hearing several other testimonies, the Mpumalanga High Court ruled in Leopard Creek’s favour. The court directed the valuation appeal body to reconsider the matter and weigh the evidence from both sides before concluding on the property’s value.
Now, the Nkomazi municipality is looking to overturn that ruling, even as Rupert insists that the property is only worth R330 million ($18.1 million).
