by Piet Coetzer

The complex history of property rights

Expropriation bill and Constitutional Court judgment

Jeremy Cronin.jpg

South Africa's historical baggage is heavy, especially the ownership of land and related rights, which came sharply into focus in the last two weeks with the publication of an amended draft of the Expropriation Bill and a judgment by the Constitutional Court. What emerged was not only a highly emotive but also an extremely complex issue in which the courts are likely to play a key role for some time to come. 

First came an improved version of the draft bill that was first introduced into Parliament in 2008 but withdrawn again because of what seemed to be unconstitutional elements. In the new version, the rights of existing property owners to approach the courts if they dispute the compensation offered in the case of expropriation, absent in the original draft bill, is reaffirmed.

The bill, if it becomes law and replaces the existing Expropriation Act 63 of 1975, will also replace market value as the sole criteria to determine compensation with a basket of considerations in arriving at a “just and equitable” value. It is formulated to reflect a balance between the public interest and the interest of those affected, having regard to all relevant factors.

These factors include the current use of the property, the history of acquisition, the extent of state investment and/or subsidy in acquisition, the extent of capital improvement on the property and the purpose of expropriation.

The draft bill is not only directed at land, or even what can be described as fixed assets. Deputy minister of public works, Jeremy Cronin, during a media briefing on the bill said that while land and buildings would form the central focus of property, savings, shares, intellectual property or vehicles are not excluded. However, expropriation will always have to pass the test of public interest or public purpose.

That the bill is, at least in part, also aimed at facilitating land reform policies as confirmed by the deputy minister. The extension of the purpose for which property may be expropriated from the narrow term of 'public purpose' to include 'in the public's interest' is a critical tool to achieve government’s land reform goals and reforms for equitable access for all South Africans to the country’s natural resources.

The draft bill also echoes the Mineral and Petroleum Resources Development Amendment Act (MPRDA), which came into effect in 2004. The MPRDA aims at facilitating equitable access to opportunities in the mining industry in addressing gross economic inequality.

In his introduction to a judgment in a case brought before the Constitution Court by farmers’ organisation Agri SA relating to the MPRDA earlier this month, chief justice Mogoeng Mogoeng stated, “South Africa is not only a beauty to behold but also a geographically sizeable country and very rich in minerals. Regrettably, the architecture of the apartheid system placed about 87% of the land and the mineral resources that lie in its belly in the hands of 13% of the population.

“Consequently, white South Africans wield real economic power and the overwhelming majority of black South Africans are still identified with unemployment and abject poverty. For they were unable to benefit directly from the exploitation of our mineral resources by reason of their landlessness, exclusion and poverty. To address this gross economic inequality, legislative measures were taken to facilitate equitable access to opportunities in the mining industry.”

In this particular case, judgment went against Agri SA, which was seeking compensation for an alleged expropriation by the state of its mineral rights. In its reaction to the draft Expropriation Bill, Agri SA, in welcoming the return of the property owner’s right to approach the courts, described it as “not a bad bill”.

Agri SA’s legal officer, Annelize Crosby, however, also said that while the government was obliged to pay 80% of the amount owed to the expropriated subject on the date of expropriation, there was a clause that would provide the state with a loophole to delay this payment. Agri SA would challenge this clause during the public hearings.

The Freedom Front Plus spokesperson on agriculture and land reform, Pieter Groenewald, was less enthusiastic about the role of the courts. The fact that courts would have the right to decide on compensation, he said, is unreasonable toward land owners.

These provisions could have an extremely negative effect on owners, if the long waiting time for court cases and expensive legal fees are take into account. It means that owners could be pressurised into accepting whatever the state offers if they are not prepared to wait for a court decision, he said in a statement.

While expropriation is used extensively world-wide for 'public purposes', the addition of the criteria of 'public interest', especially in the context of the emotive issue of land ownership, combined with a troubled history and constitutional imperatives complicates the issue in South Africa.

In terms of the constitution, there rests a duty on the state not only to protect rights of ownership fairly and equally but also to address the inequities from the past. These factors do not always make easy bedfellows.

The draft bill, however, has the advantage that once it becomes law it will consolidate almost 150 disparate pieces of legislation and processes across all levels and spheres of government. It should then provide a basis to ensure consistency in applying the letter and spirit of the constitution.

From the widely different public reactions to the draft bill to date, it is clear that there is a range of competing interests at play. It is unavoidable that the courts will have a key role to play in making that consistency a reality for some time to come.

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