As the new year gets under way, property rights – their maintenance or degradation – look set to be a major policy theme.
This has been the case for some years and was given additional momentum last year with the publication of the Expropriation Bill. The latter is the latest in a series of attempts to produce new expropriation legislation. And in common with earlier iterations, the current bill seeks to enhance the power of the state in relation to those subject to it. This means both private individuals and the private sector.
This is not always properly understood.
In a recent interview with the Farmer’s Weekly, Professor Elmien du Plessis remarks of the Expropriation Bill: ‘It sets out the procedure that the authorities must follow when expropriating property, how compensation must be calculated and paid, and where and when decisions can be challenged. It includes a comprehensive mediation process, and guarantees access to the courts as the final form of oversight.’
This would bring ‘clarity’ for all concerned.
But this misreads the legislation and its likely impact.
READ MORE Landreform Update- South Africa- April 2019
Process of expropriation
The process set out in the Bill is revealing. It requires an ‘expropriating authority’ to investigate the property it wants. Then it must then negotiate with the owner for its purchase. If no agreement can be reached, it can turn to expropriation. This it does by issuing a notice of intention to expropriate. This invites representations on the expropriation and compensation envisaged – but these must only be considered, not necessarily responded to. The ‘authority’ is not required to explain the reasons for a decision to reject them.
Then comes a notice of expropriation. This will set out the dates on which ownership will pass to the state. This could be very soon indeed, since the only time limit imposed is that ownership cannot pass on a date which is ‘earlier than the date of service’ of the notice.
Under Clause 21 (1), mediation may be sought to challenge the compensation offered. There is no explicit right to dispute the validity of an expropriation – is it really in the ‘public interest’? – but this does seem to exist in Clause 21(6). Recourse to the courts over the amount of compensation is expressly provided for in the Bill, but this wording ‘does not preclude a person from approaching a court on any matter relating to the application of this Act’.
But the protection this provides is rather diminished by the fact that ownership and the right to possession will pass to the state on the dates provided in the notice of expropriation. This is irrespective of any ongoing dispute over the compensation to be paid, as set out in Clause 21(8).
The upshot is that the Bill establishes a relatively simple and convenient system for expropriation – for the state. For those losing their property, it is less generous. Launching a court challenge will not be possible for many people whose property is to be expropriated. In view of the way the process is structured, they may well have to challenge the taking after they have already lost their property and suffered other indirect damages such as moving expenses, the possible loss of income, and so on.
Note that this is not simply about the risk of ‘nil’ compensation being paid for individual properties, as serious as that may be. The danger is of an expropriation regime that empowers the state to deprive those subject to it of their holdings without adequate compensation, and as a matter of course. (Keep in mind too that regulations gazetted in late 2019 under the Property Valuation Act of 2014 proposed a formula for evaluating property for land reform purposes that seems to grant the state generous discounts when calculating compensation.)
Danger for property owners
Indeed, the very understanding of expropriation in the Bill – ‘the compulsory acquisition of property by an expropriating authority or an organ of state’, which means that the state must become the new owner – raises an additional peril for property owners. This definition builds on the 2013 judgement in the Agri SA case, which ruled (in brief) that as the state had become a custodian and not a true owner of mineral rights, no compensation would be payable to those who had lost their rights. While this judgement was explicitly limited to the facts of the case, its potential application elsewhere has piqued policy makers’ interest.
The Expropriation Bill envisages turning this approach into a general principle of law. The implications of this are extensive and concerning, since from it could follow a compensation-free taking of all land with the state as custodian.
Defenders of the Bill have argued that it is in line with Section 25 of the Constitution. Yet to quote Prof du Plessis, this is the ‘biggest contention’. Frankly, there is no clarity at all as to where this will lead. It is entirely possible that the amended Section 25 might propel major (unwelcome) changes to the Bill. Recall that just before the pandemic hit, the African National Congress said that it rejected the proposed amendment and wanted the Constitution to specify that expropriation decisions would vest in the executive and not the courts.
Prof du Plessis, however, goes on to say that farmers should not get ‘worked up’ about the amendment. She doesn’t see it affecting working farms – although elsewhere she refers to the fact that the government’s 700 000-hectare redistribution programme has targeted a number of these. So, taken together, the Expropriation Bill and the associated moves on property rights constitute a seminal peril to the country. This will only be compounded by complacency.
