The Expropriation Bill B23-2020

Where do I begin?

I simply do not have a better heading for this than “the Expropriation Bill”, a Bill that has traveled a long road to be where it is today. And the topic is fairly comprehensive and complicated, that trying to capture it in a heading is almost impossible.

Where it is open access, I place a link. Where it was behind a paywall, I got permission to share it here.

Late last year I wrote a piece for the Conversation that can be viewed here.

Earlier this year, this Whatsapp dropped into my inbox:

Whatsapp doing the rounds from Free State Landbou

Concerned about certain misconceptions that there may be, I wrote an opinion piece for News24 (link here, posted below).


Making law is a political process, but the law must not be misconstrued

The time for commenting on the Expropriation Bill is running out, and once again, the debate is heating up. The past week there has been commentary from various organisations that have made people understandably worried.

I think it is helpful to remember that law-making, especially in legislation, is inherently political. And with this, I don’t just mean party politics – it is about the lines we draw between what we think is fair or not, what type of interest we seek to protect, or not. And this makes the making of legislation inherently messy.

Otto von Bismarck said, “If you like laws and sausages, you should never watch either one being made”.

And yet, the past couple of years, the law-making process of the Expropriation Bill and the Bill to Amend Section 25 of the Constitution (two different processes) was put on full display. It showed us that decision-making is not a linear process. The making of legislation is marred with contestation – it is inherently political.

Thus, while I am mindful of the grey areas between law and politics, my concern is how the Expropriation Bill will impact the current law.

It is impossible in a piece like this to go through every clause of the Bill. But I can say that much of what is in the Expropriation Bill is contained in the current Expropriation Act, read together with the Constitution. And not only section 25 (the “property clause”), but also sections 33 (just administrative action) and 36 (limitations), to name a couple of others.

The Bill aims to provide a consolidated framework to guide processes and procedures to ensure uniformity in the way that expropriation is done.

Expropriation as a tool for acquisition – it does not govern what happens afterwards

Perhaps part of the bigger conversation is to understand that expropriation is an example of original acquisition – a way (for the state, in this case) of acquiring property without the previous owner’s co-operation. It does not govern what happens after the expropriation, safe insofar as it must be done for a specific public purpose or public interest made clear in the expropriation process.

Since it is an invasive state power, the powers are carefully circumscribed and set out. In terms of the Constitution, the (general) requirements are:

1) It must be for a public purpose or in the public interest;

2) Just and equitable compensation is due;

3) It must be done in terms of a law that applies generally; and

4) It must be done in terms of a procedurally fair process.

Let’s look at each requirement a bit closer.

The public purpose or public interest requirement

This requirement is there to ensure that the state does not abuse its power for companies or individuals’ private gain and clarifies the purpose for which the property is required. For instance, Volkswagen should not lobby with the government to expropriate well-suited land to build a factory. Nor should politically connected individuals be able to pursue the government to take your property for personal use.

This requirement is linked to the compensation requirement in the following way: if an individual’s property is expropriated to use it for a public purpose that the general public will benefit from, then the individual should not be expected to pay the price for such a project by donating my property. Think of losing your property to a major road project. The Constitution (and Expropriation legislation) allows for this. That specific purpose must be set out in the legislation that authorises the expropriation – for instance – the Road’s Act that authorises the Minister to expropriate land for the purpose of building roads.

What is unique to South Africa is the insertion of “public interest” in the Constitution, which broadens the scope. Section 25(4) states that this includes the nation’s commitment to land and other reforms. This, of course, opens the door for the taking of private land to transfer to a private beneficiary, which is ordinarily not something allowed in expropriation. Still, in South Africa, it is because the Constitution provides for it.

Scary? It can be if those powers are not curtailed. But there must be legislation that specifically authorises the expropriation for a specific purpose. For instance, the Restitution of Land Rights Act empowers the Minister to expropriate land for restitution purposes within the Act’s confines.

When the state expropriates property, it will become the owner of it once all the legal requirements set out in the Act are met. Once the state is the owner, it transfers the property to the land reform beneficiary in line with the authorising legislation, which criteria for beneficiary selection must be set out in legislation. These two processes can happen simultaneously in the Deed’s office.

There are concerns that the definition of “public interest” is too vague in the Bill. The Constitution’s definition limits it to reform, which reform one presumes would be set out in legislation that is deliberated upon in an open forum like the National Assembly, with adequate public participation. Uncertain, perhaps, as most things political are at the best of times. However, the Expropriation Bill does not add anything new that does not already exist in law. It merely mimics the Constitution.

We lack framework legislation that sets out when the Minister may expropriate land for land redistribution purposes. It is also not clear how the state will select beneficiaries. What is problematic in this regard is that the Department of Rural Development and Land Reform uses a draft policy (where it allocates state land for leasing for agricultural purposes).

The just and equitable compensation requirement

Just and equitable compensation is and remains the compensation standard for expropriation in the Bill. What is just and equitable will differ from case-to-case. When the state makes a compensation offer, it must set out how the compensation is calculated and why it deems the amount offered just and equitable.

In terms of the Expropriation Bill, and in line with just administrative principles, there are various moments in the process where owners can contest this amount by bringing their own valuations. If there is no solution to disagreement, an owner can go to court. The court will look at the expert evidence of the two parties’ valuers, and fulfil the role of “super valuer” by determining and amount.

So does the Bill make it possible to expropriate without compensation? Again, yes, but is not a blanket or unfettered authorisation. In my opinion, it clarifies the position in the Constitution by stating that in some instance, when all the factors are taken into account, it may expropriate property at nil compensation. It will still have to justify why it is just and equitable.

Do we need more clarity on the list in clause 12(3) pertaining to nil compensation? Yes. Whether that happens in the legislation itself, or through judicial interpretation, remains to be seen. But what the Bill does not do, and this is important, is to authorise extensive expropriation of productive land arbitrarily, at nil compensation.

Although the amendment of section 25 of the Constitution is not concluded, and it is still unclear what the outcome might be, the current proposed amendment does not change this position. In fact, the Bill makes “explicit what is implicit” in the Constitution as legislation, and not a constitutional amendment, should.

Law of general application

As was explained above, under the public purpose requirement, there must be a law that authorises a Minister to expropriate for a particular purpose. This law, which in South Africa is in the form of legislation, must be applicable in general – it cannot single out a specific owner. That would be arbitrary. This law must also be clear and precise. The public must know the law – it cannot be a hidden draft policy document gathering dust in officials’ offices.

It isn’t very likely that such an Act can provide for a blanket provision of nil compensation. The Constitution’s compensation requirement is and remains just and equitable. Since the Constitution is the framework in which these laws must be interpreted – the legislation can only provide detail. Still, it may not go outside the confines of what the Constitution allows.

Perhaps interestingly is the fact that in 1915, the Appellant Division as it was then, in Simmer and Jack Proprietary Mines Ltd Appellant v Union Government (Minister of Railways and Harbours) Respondent, alluded to the fact that the legislature may make laws that deprive owners of property without compensation. The case dealt with mining rights and the question of whether a resolution by the Executive Council of Transvaal amounted to an expropriation that requires compensation. The appellant court remarked: “It is, of course, within the power of the Legislature to deprive an owner of valuable property without compensation”. Of course, there was no Constitutional framework back then, with no judicial oversight in law-making. It is doubtful if a blanket authorisation like that will be possible today unless the compensation requirement is entirely removed from the Constitution or the compensation standard is no longer set at “just and equitable”.

Procedural fairness

This is perhaps the most important contribution that the Expropriation Bill makes: it sets out the procedure. An official in charge of the process will know what to do, owners and people effected will know what their rights are and what they can do.

An exciting addition is an allowance for mediation regarding the compensation amount, although more clarity is needed about the process. Mediation is quicker and cheaper and does not necessarily end up in a win-lose result as litigation often does.

Are we speaking only of land?

The Expropriation Bill is not only applicable to land. It might be useful to know in terms of current law, it is possible to expropriate limited real rights, personal rights, immaterial property rights and so forth. The focus on land is largely because clause 12(3) dealing with nil compensation and the Constitutional Amendment process only focusses on land specifically.

I want to contribute, should I make a submission via a website of an organisation?

My advice would be no. Many of these sites have no way of proving that a person only made one submission, which undermines the legitimacy of the submissions through the website. There is also a likelihood is that all such submissions will be regarded as one, because they are the same in substance.

Section from advice from the law advisors in parliament, to be found here: https://pmg.org.za/committee-meeting/31929/

This is not a referendum. I think organisations encouraging people to submit via their website should be careful not to call for a referendum on this issue. This should not preclude you from partaking; just do so by sending it through any of the various channels listed on the website: https://pmg.org.za/call-for-comment/1007/.

Why is the state not distributing its own property?

That is a very valid question. The state is attempting to do that, as the release of state land for agriculture signals. But one should not conflate the issue of expropriation as a tool for acquisition with the process that follows. The same goes for the pressure on the government to transfer the land into the name of beneficiaries. The Expropriation Bill can be finalised, and pressure can be put on the government to make sure that they also use other, perhaps cheaper and faster, ways of distributing property.

Expropriation is one tool in the toolbox of the state to acquire a property. It can also get property by donations, for instance, or by purchasing land. An added new requirement in the Expropriation Bill is that the state should first try and acquire the property by agreement before it goes over to expropriation.

Conclusion

This version of the Bill comes from 2013 before the call for a Constitutional amendment. It has been through various Nedlac processes, and has been teased out and changed. It is not perfect, but it is a good piece of legislation. We have been waiting for it for 26 years. To reduce it to an instrument of expropriating land at nil compensation is an oversimplification of what the Bill seek to do.

The Bill does not want to limit land ownership – such a view conflates the role of expropriation with the processes and procedures that follow after the expropriation. While neither process operates in a vacuum, it is vital to understand the process, to make an accurate diagnosis of the problem to provide sensible solutions.

Expropriation also functions in a market economy, where private property is protected. It was and remains a legitimate way for the government to tackle public projects such as building a road or facilitating land reform. The question instead turns around the extent to which the state may limit private property rights, for what reason, and how we make sure that the state does not abuse its powers.

Von Bismarck was wrong. Making laws is not like making sausages. I can make sausage on my own, while many cooks make laws. The process of making sausage is also better planned and follow a linear path. And the making of laws is a constant tug of war between competing interests and values to find consensus.


So, after this, the Institute of Race Relations responded, which response you can view here. I was given the opportunity to respond to their response, which response I place below.


My response to Dr Jeffery

It seems that Dr Jeffery, like me, is concerned about this country’s future and the state of land reform.

But we also differ on many things.

While I am well aware that I am taking on the IRR’s formidable media machinery, I feel it is important to respond to Dr Jeffery’s article for two reasons. One, I can’t entirely agree with the interpretations given to specific clauses in the Bill. And for this, engagement is important. Even if I find labels like “extraordinarily naïve” unhelpful when issues are diagnosed differently, I will continue this conversation on the Expropriation Bill. And we owe the public a balanced debate highlighting all the different perspectives. The second reason why I am disregarding the advice is that I was taught that the challenge in life is not (only) to love thy neighbour but to love those who I disagree with.

Let me state up front that I do not mind these disagreements. I think it is crucial to have debates and conversations about legislation (or bills) to find the meaning of the provisions. And if we only engage with people we agree with, we miss other possible meanings.

Also, even if there are things that we disagree about, there are many things that we do agree about. Issues like these should divide us on clear cut lines, where the end game is all or nothing.

I want to acknowledge that some of my responses are based on discussions a group of property law scholars recently had. These discussions took place to prepare a submission on the Bill, under the guidance of the South African Chair in Property Law. And in a scholarly fashion, I also make clear the assumption that the response is based on: the Bill is good, but it is not perfect.

When ownership passes

The first comment is on the time of passing of ownership. Without going into too much legal jargon: as a method of acquiring property, legal principles dictate that the property will pass on the date on the notice of expropriation. These are well laid down legal principles. When comparing the Act with the Bill, there is not much difference: Section 8 of the 1975 Act states that “ownership of property expropriated in terms of the provisions of this Act shall […]and on the date of expropriation, vest in the State”.  Clause 9 of the Bill states “[t]he effect of an expropriation of property is that the ownership of the property described in the notice of expropriation vests in the expropriating authority or in the person on whose behalf the property was expropriated, as the case may be, on the date of expropriation”. I, therefore, disagree that this is a “key problem” in the Bill.

Quick process

Expropriation is not a quick process. The Bill requires that the State first try and negotiate. After that, the State must serve a notice of intention of expropriation, and only after that the notice of expropriation. There are various time-frames involved in this. On one calculation, if all the processes are followed in their maximum time-frames, the process takes 8 months.

Expropriation is not cheap, and it is not quick. It is not the panacea to the slow pace of land reform.

As an administrative process, it is governed by the principles of just administrative action. There are opportunities for people whose rights are affected to object or to make presentations during the process.

Dr Jeffery interprets this to mean that the owner must run to court every time. Instead, this means that the owner should use the administrative process opportunities to avoid going to court.

During the NEDLAC process, mediation was also inserted in the Bill to avoid the prohibitive costs and lengthy processes involved in going to court. We are asking clarity on how this will work and what it involves in our comments.

Ownership passes without payment of compensation

Dr Jeffery also states that “transfer of ownership and possession will happen automatically on the stated dates … irrespective of any dispute on the validity of the expropriation or the adequacy of the … compensation being offered”.

Clause 17 lays down the norm: “an expropriated owner or expropriated holder is entitled to payment of compensation by no later than the date on which the right to possession passes to the expropriating authority”. In other words, when the State takes possession, compensation must be paid.

There may be a deviation from this rule, but subclause 4 clarifies that this can only be done by agreement or a court order. While this principle is in line with the Haffejee case, we have noted in our submission the absence of the other requirements laid down in the Haffejee case. Therefore, it is advisable that it be changed to provide that the State may only take possession before the payment of compensation if a delay would unfairly prejudice the expropriating authority and if it is just and equitable to do so.

Definition

Dr Jeffrey and I share concerns on the definition. The definition is limiting. My suggestion for a definition (if one is needed) in previous rounds of public engagement was the following:

“expropriation is, but is not restricted to, the compulsory acquisition of property by an expropriating authority, and must be authorised by legislation that specifically provides for expropriation, that sets out the public purpose or public interest for the expropriation, and that makes provision for the payment of “just and equitable” compensation.”

This will ensure that expropriation is always done in terms of legislation that clarifies the reason for the expropriation (another form of accountability against the State), and that the payment of compensation is provided for in such legislation.

Land custodianship

The so-called custodianship principle is not a general principle in South African law. It was imported on a piecemeal basis from American law regarding water, minerals and the environment in South Africa.  In each of those cases, it was done through legislation specific to the subject matter at hand.  The State can exercise no powers other than those specifically spelt out in the legislation.

No such legislation currently exists in respect of land ownership.

In these specific instances, public trusteeship has to do with confirming the State’s duty to regulate the country’s natural resources to benefit the people of South Africa.

The Expropriation Bill does not expand the application of the custodianship principle.  Whilst it is not unforeseeable that this can be done through other land-related legislation which may still be drafted in future, no such legislative provisions currently exist that places land under the trusteeship of government.  If that does happen, the attack should lie against that legislation and not the Expropriation Bill.

National democratic revolution?

It becomes difficult for me to engage with the argument when what is going on in South Africa is reduced to a diagnosis of a National Democratic Revolution,  as “Soviet-inspired strategy” with full-on communism as the conclusion. I am not convinced by the arguments made in this regard. But that is a conversation for another day.

I disagree with the diagnosis that Dr Jeffery places the myriad of problems experienced in land reform on the Bill’s shoulders. Expropriation is a means for the State of acquiring property, but it does not govern the process after that. That is the realm of policy and other legislation.

And here there are overlaps of agreement between Dr Jeffry. I agree that there are inherent problems with the State Land Lease and Disposal Policy and its application. In general, there needs to be a cleanup and a consolidation of land reform policies and legislation to ensure effective implementation and better accountability mechanisms. But that lies in policy and other legislation, not the Bill.

The problem is that once the narrative of the National Democratic Revolution is put forth and defended at all cost, and when unwavering blame is placed on the Expropriation Bill, the scope for constructive engagement becomes difficult and narrow, and the space for an agreement limited.

This is a pity, because I think we, and many others, share a concern about state accountability and the dire state of land reform currently.

Most people want land reform to happen sustainably and fairly, based on sound legal principles and within the rule of law.

It is on the how that we differ.


ps. And who are you, missy?

Jip, you do get people who ask how I dare speak on this issue (I’m not an economist, in case you haven’t noticed). Good to ask – we should always scrutinize sources. So, apart from the fact that I am a believer in “all voices count”, just some background. My opinions are based on 15+ years of doing research in property law in general, and expropriation law specifically. My doctorate in laws (University of Stellenbosch) conferred in 2009 was on “Compensation for Expropriation under the Constitution”. While I stand by my research, in line with scientific thinking, I am also open to being convinced otherwise if evidence persuades me.

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