Comment on the Expropriation Bill, 2020

Section 25 of the Constitution of South Africa, quoted in the preamble to the 2020
Expropriation Bill, reads as follows;

“25. (1) No one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property.

(2) Property may be expropriated only in terms of law of general application —
(a) for a public purpose or in the public interest; and
(b) subject to compensation, the amount of which and the time and manner of payment of which have either been agreed to by those affected or decided or approved by a court.

(3) The amount of the compensation and the time and manner of payment must be just and equitable, reflecting an equitable balance between the public interest and the interests of those affected, having regard to all relevant circumstances, including—
(a) the current use of the property;
(b) the history of the acquisition and use of the property;
(c) the market value of the property;
(d) the extent of direct state investment and subsidy in the acquisition and beneficial capital improvement of the property; and
(e) the purpose of the expropriation.

(4) For the purposes of this section—
(a) the public interest includes the nation’s commitment to land reform, and to reforms to bring about equitable access to all South Africa’s natural resources; and
(b) property is not limited to land.

(5) The state must take reasonable legislative and other measures, within its available resources, to foster conditions which enable citizens to gain access to land on an equitable basis.

(6) A person or community whose tenure of land is legally insecure as a result of past racially discriminatory laws or practices is entitled, to the extent provided by an Act of Parliament, either to tenure which is legally secure or to comparable redress.

(7) A person or community dispossessed of property after 19 June 1913 as a result of past racially discriminatory laws or practices is entitled, to the extent provided by an Act of Parliament, either to restitution of that property or to equitable redress.

(8) No provision of this section may impede the state from taking legislative and other measures to achieve land, water and related reform, in order to redress the results of past racial discrimination, provided that any departure from the provisions of this section is in accordance with the provisions of section 36(1).

(9) Parliament must enact the legislation referred to in subsection (6).”

The above section and specifically sections 25(8) and (9) provide the authority for the drafting of expropriation and other legislation to redress the injustices of the past.

Currently (Expropriation Act 1975) the amount of compensation for expropriation can be agreed to by those affected. Where there is no agreement the amount of the compensation must be “decided on” or “approved” by the courts. Therefore, in the case of no agreement, the courts will decide but the wording of the section also implies that the sanction of the court will be necessary either way.

Section 25 of the Constitution states that, the courts will be guided by what is just and equitable and find a balance between public interest and the interests of those affected. Market value of the property will not be the only deciding factor, but it will be one of the factors considered.

The Expropriation Draft Bill 2019 went through the process of consultation (the 60- day period for comment came to its conclusion on 31 March 2020) and then went on to cabinet for approval by the requisite majority after certain amendments were made. On the 9 th of October 2020 Government Notice (GN 1082) was gazetted to the effect that, in terms of Rule 276(1)(b) of the Rules of the National Assembly, the Minister of Public Works and Infrastructure intends to introduce the Expropriation Bill, 2020, in the National Assembly shortly. Following on this, there will be public comment and public hearings as well as input from the Provincial legislatures. It can be safely assumed that there will be some further amendments to the 2020 Bill once the consultative phase has been completed. On average draft legislation can take more than two years before being signed into law, however the current time frames indicate that this issue is high on the political agenda and enjoys priority and current attention from the legislator.

GN 1082 commences with the publication of a (self) Explanatory Summary on the Expropriation Bill 2020, a copy of which is attached to this article. The preamble to the 2020 Bill further makes mention of sections 33 (“Everyone has the right to administrative action that is lawful”) and 34 (“everyone has the right to have any dispute that can be resolved by the application of law decided in a fair public hearing before a court or, where appropriate, another independent and impartial tribunal or forum”) of the Constitution.

The contentious section of the Expropriation Bill 2020 (note 1), as it currently reads, can be found in section 12(3):

Chapter 5 – COMPENSATION FOR EXPROPRIATION

Section 12 – The determination of compensation:

“12(3) – It may be just and equitable for nil compensation to be paid where land is expropriated in the public interest, having regard to all relevant circumstances, including but not limited to:

(a) Where the land is not being used and the owner’s main purpose is not to develop the land or use it to generate income, but to benefit from appreciation of its market value.

(b) Where an organ of state holds land that is not using for its core functions and is not reasonably likely to require the land for its future activities in that regard, and the organ of state acquired the land for no consideration.

(c) Notwithstanding registration of ownership in terms of the Deeds Registries Act, 1937 (Act No. 47 of 1937) where an owner has abandoned the land by failing to exercise control over it;

(d) Where the market value of the land is equivalent to, or less than, the present value of direct state investment or subsidy in the acquisition and beneficial capital improvements of the land; and

(e) When the nature or condition of the property poses a health, safety or physical risk to persons or other property

(4) When a court or arbitrator determines the amount of compensation in terms of section 23 of the Land Reform (Labour Tenants) Act, 1996 (Act No. 3 of 1996), it may be just an equitable for nil compensation to be paid, having regarding to all relevant circumstances.

In terms of the above it may be “just and equitable” to consider nil compensation if land is expropriated in the public interest. Public interest is defined as the “nations commitment to land reform……. in order to redress the results of past racial discriminatory laws or practices;”. The section goes further to mention that all relevant circumstances must be considered when dealing with (nil) compensation. It goes on to refer to specific circumstances which, in context, would most likely invite nil compensation. It therefore appears that the possibility of nil compensation under the “just and equitable” principle and as qualified by section 12(3) is a reality.

In further qualification to the above, section 21 of the Draft Expropriation Bill 2020 (note 2) reads as follows;

Chapter 6 – MEDIATION AND DETERMINATION BY COURT

Section 21

(1) If the expropriating authority and expropriated owner or expropriated holder do not agree on the amount of compensation, they may attempt to settle the dispute by mediation, which may be initiated and finalized without undue delay by either party.

(2) If the expropriating authority and disputing party do not settle the dispute by consensus or mediation, either party may, within 180 days of the date of notice of expropriation, institute proceedings in a competent court for the court to decide or approve the amount of just and equitable compensation.

(3) The disputing party may, instead of instituting such proceedings himself or herself, within 90 days of the date of the notice of expropriation request the expropriating authority must institute such proceedings within 180 days of receiving such request.

(4) A court may extend the time periods in subsections (2) and (3) on good cause shown and if the interests of justice so require.

(5) The onus or burden of proof is not affected by whether it is the expropriating authority or the disputing party which institutes the proceedings referred to in this section.

(6) Subsection (2) does not preclude a person from approaching a court of any matter relating to the application of this Act.

(7) Where a court finds that a provision of this Act has not been complied with, it must make such order as it considers just and equitable, having regard to all relevant circumstances, including-

(a) the nature and extent of the interest of the person who has challenged the conduct in question;

(b) the materiality of the non-compliance;

(c) the stage which has been reached in the expropriation process; and

(d) the interests of other persons which may affected by the relief which is ordered.

(8) A dispute on the amount of compensation alone does not preclude the operation of section

Section 21(8) appears to imply that a dispute on compensation only will not prevent the expropriation process to proceed i.e. the expropriation can be concluded and the dispute regarding compensation may only be adjudicated thereafter subject to the proviso that this is the only dispute in respect of the process as mentioned.

In summary it appears that the draft legislation will amend the current legal position in two significant respects. Firstly, it specifically makes provision for compensation at R nil and secondly a dispute, on compensation only, will not prevent expropriation. Any one of the parties will have to initiate mediation and thereafter court proceedings should they not be satisfied with an order. The current position makes provision for “approval” or “decision” by the courts in the absence of agreement, without which expropriation may not proceed and be finalized.

Given the fact that our current expropriation legislation (the Expropriations Act 1975) is outdated and no longer seems to be in context with the Constitution the time may be right for amendment of our Expropriation law.

It is clear that any amendment of current legislation or any draft legislation that will not make provision for or allow recourse to the courts when an executive decision has been made will be unconstitutional as the constitutional right of access to the courts is an entrenched one and forms the gist of our legal system. It is therefore highly unlikely that the executive will be able to make decisions such as expropriation, be it with or without compensation, without such decision-making being subject to juristic sanction. This can be seen from the above quoted sections.

Although somewhat more certain than the 2019 draft due to amongst other, the amendment of section 25 of the Constitution, the legal position as discussed above in terms of the 2020 Expropriation Bill is still uncertain and therefore it will be necessary to make comment once the proposed legislation is finalized.

Note 1: The wording of the 2019 Expropriation Bill differed somewhat:

“(3) It may be just and equitable for nil compensation to be paid where land is expropriated in the public interest, having regard to all relevant circumstances, including but not limited to:

(a) Where the land is occupied or used by a labour tenant, as defined in the Land Reform (Labour Tenants) Act, 1996 (Act No. 3 of 1996) ;

(b) where the land is held for purely speculative purposes;

(c) where the land is owned by a state-owned corporation or other state-owned entity;

(d) where the owner of the land has abandoned the land;

(e) where the market value of the land is equivalent to, or less than, the present value of direct state investment or subsidy in the acquisition and beneficial capital improvement of the land.”

Note 2: The wording of the 2019 Expropriation Bill differed somewhat:

“21. (1) If the expropriating authority and expropriated owner or expropriated holder do not agree on the amount of compensation, they may attempt to settle the dispute by mediation, which must be initiated and finalized without undue delay by either party.

(2) If the expropriating authority and disputing party are unable to settle the dispute by consensus in the manner contemplated in subsection (1) or if the disputing party did not agree to mediation, the expropriating authority must refer the matter to a competent court to decide or approve just and equitable compensation provided that nothing in this section alters the ordinary civil onus.

(3) Subsection (2) does not preclude a person from approaching a court on any matter relating to the application of this Act.

(4) Where a court finds that a provision of this Act has not been complied with, it must make such order as it considers just and equitable, having regard to all relevant circumstances, including (

a) the nature and extent of the interest of the person who has challenged the conduct in question;

(b) the materiality of the noncompliance;

(c) the stage which has been reached in the expropriation process; and

(d) the interests of other persons which may be affected by the relief which is ordered.

(5) A dispute on the amount of compensation alone shall not preclude the operation of section 9.”

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Written by Wessel de Kock

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