The draft Expropriation Bill

17 January 2019

INTRODUCTION

Whilst the National Assembly is still dealing with a proposed amendment to the Constitution on expropriation without compensation, the Draft Expropriation Bill (“the Draft Bill”) was published on 21 December 2018 for public comment (to be submitted within 60 days). Its purpose is to repeal and replace the Expropriation Act of 1975, but has to be read within the context of the public debate on the subject of expropriation without compensation and the claimed need to amend the Constitution to allow for it.

THE CONTENT OF THE DRAFT BILL

The main provisions are:

- no expropriation may be done arbitrarily or for a purpose other than a public purpose or in the public interest[1];

- expropriation of property may not take place unless an attempt to reach an agreement on reasonable terms with the owner, was unsuccessful;

- the suitability of the property must be ascertained[2] for the purpose for which it is required and the notice of expropriation must include a description of that purpose and the reason for the expropriation;

- compensation must be just and equitable reflecting an equitable balance between the public interest and the interests of the expropriated owner, having regard to all relevant circumstances, including the current use of the property, the history of its acquisition and use, the market value, the extent of state investment in the acquisition and improvement, and the purpose of the expropriation[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 by not limited to: where the land is occupied by a labour tenant[4], if it is held for purely speculative purposes, if it is owned by a state-owned corporation, if the land has been abandoned or where the market value is equal to or less than the state investment or subsidy in its acquisition and improvement; and

- if no agreement is reached on the amount of compensation, the expropriating authority and owner may attempt to settle the dispute by mediation and if that is not successful, the matter must be referred to a court to decide.

Even if the circumstances in which nil compensation may be payable is not of a definitive or exhaustive nature in the Draft Bill, it is apparent from its wording that the circumstances in which this may be done are limited in extent.[5] Reference also has to be made to the current public debate which, for whatever reason, simply assumes that property can only be expropriated in terms of current legislation for what it would fetch in the open market on a “willing seller/willing buyer” basis. However, this provision does not appear in the Constitution. It is found in the Expropriation Act of 1975 (which the Draft Expropriation Bill is to replace), where it is used to place a ceiling on the price to be paid on expropriation (and not to determine the actual amount). The Draft Expropriation Bill does not contain similar provisions.

HOW SHOULD WE VIEW THE PUBLICATION OF THE DRAFT BILL AT THIS STAGE?

In a recent newspaper article,[6] Thulas Nxesi and Jeremy Cronin (the Minister and Deputy-Minister of Public Works, respectively), state that the Bill will not be passed in the current Parliamentary term (which ends on 20 May 2019), but that it is being submitted for public comment to enable the next Parliament to deal with it and “to provide a clear signal of the government’s intentions”.

They also mention that whatever Parliament decides in relation to a constitutional amendment (which they expect to be of a minor nature), a law of general application to govern the expropriation process will nevertheless be required. Our view is that this has always been clear, even if the whole public debate has obscured this aspect by focusing only on the Constitution, which is only able to lay down broad general principles. 

We see the Draft Bill as being consistent with the Constitution as it stands now, especially if the wording of Section 25(8) of the Constitution is taken into account:

“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).” (Note: the latter section refers to a law of general application).

Against this background, the question arises as to why a change to the Constitution is still deemed necessary. The reasons for such a change lie in the emotionally charged public debate rather than in the draft Expropriation Bill. The demand for expropriation without compensation unexpectedly arose at the last minute in a resolution at the national ANC conference in December 2017 (in circumstances that are still not all that clear) and the push for a change to the Constitution was subsequently contained in a motion in the National Assembly, supported by the ANC and EFF. The focus on a change to the Constitution has provided the ANC with an opportunity to avoid blame for its lack of action on land reform over more than two decades.[7] For its part, the EFF has found it to be a useful means of attempting to raise its own public profile, especially at public meetings during the public consultation process. 

WILL AN AMENDMENT TO THE CONSTITUTION BE VOTED ON BEFORE THE ELECTIONS?

The ad hoc multi-party committee established by a motion in the National Assembly on 6 December 2018 to formulate the necessary amending legislation for a change to the Constitution has to report by 31 March 2019. It is not clear whether a proposed amendment will be adopted within the current parliamentary term, which ends on 20 May 2019, given the timelines set out in the Constitution. These timelines require a Bill amending the Constitution to be published for public comment at least 30 days before it is introduced to Parliament. After such introduction, it may not be put to the vote within 30 days.[8] 

An amendment to Section 25 of the Constitution may only be amended by the support of at least two-thirds of the National Assembly and six out of nine provinces in the National Council of Provinces. 

HOW ARE PROPERTY OWNERS’ RIGHTS PROTECTED?

The Draft Bill expressly states that expropriation cannot be implemented unless the expropriating authority has attempted to reach an agreement with the owner on reasonable terms, but without success. This makes it legally impermissible for expropriation authorities to attempt to use their powers without an attempt to reach such an agreement. It is, however, apparent that a problematic issue may well arise on the question of how an attempt to reach an agreement on reasonable terms is compatible with expropriation without compensation. 

The Draft Bill states that a dispute on the compensation which is payable in the event of expropriation, will not on its own, preclude the act of expropriation. However, this would not prevent dissatisfied owners seeking legal redress to prevent expropriation, quite apart from any disputes on compensation.

CONCLUDING COMMENTS

Even if all the Constitutional timelines can be complied with, it remains to be seen whether the EFF and the ANC will be able to agree on the actual text for the proposed change to Section 25 of the Constitution. Comments from the EFF (now also echoed by former President Zuma) still mention the need to nationalise all land, without, however, giving any detail on how such a process can be implemented[9]. A wholesale nationalisation would not be acceptable to the ANC and it does not appear in the ANC’s 2019 Election Manifesto which was published on 12 January 2019.

The further question is whether the EFF will be prepared consent to what may be portrayed as a relatively minor change to the Constitution, just before a national election. Without support from the EFF for the precise wording of a change to the Constitution, the required two-thirds majority will not be achieved in the life of the current Parliament. The prospects for change in the next Parliament will depend on the outcome of the coming election.

Anton van Dalsen is Legal Counsellor at the Helen Suzman Foundation and Mira Menell Briel, Legal Researcher. 

[1] “Public purpose” is defined as including any purposes connected with the administration of the provisions of any law by an organ of state. “Public interest” is defined as including “the nation’s commitment to land reform, and to reforms to bring about equitable access to all South Africa’s natural resources in order to redress the results of past racial discriminatory laws or practices.”

[2] Chapter 3 of the Bill provides for an investigation and information gathering stage in the expropriation process. Emphasis is placed on ensuring a thorough valuation of the property can take place by a valuer. While this focus is not disputed, it is curious that the opportunity was not taken to solidify the role of the Office of the Valuer-General (established by the Property Valuation Act of 2014).

[3] The wording is practically identical to that of Section 25(3) of the Constitution.

[4] To give some context to the concept of a “labour tenant”: in an article in Business Day of 13 December 2018, the Minister and Deputy-Minister of Public Works mention the case of 20 000 families in KwaZulu-Natal and Mpumalanga whose farms were expropriated but were allowed to stay on as labour tenants, in exchange for providing free labour for six months of the year to the new white owners. They are described as active farmers without secure tenure.

[5] While ‘property’ is defined very broadly in Section 1 of the Bill, it must be noted that Section 12, which outlines circumstances where compensation may be nil, explicitly refers to the expropriation of land. This should allay fears of the policy of expropriation without compensation being extended to all forms of property.

[6]Business Day, 13 December 2018

[7] For more detail, see our submission to Parliament of 14 June 2018 on this question: https://hsf.org.za/publications/hsf-briefs/submission-to-parliamentary-committee-on-whether-the-constitution-has-to-be-changed-to-permit-expropriation-without-compensation.

[8] Section 74 of the Constitution.

[9] Let alone the disastrous consequences of such a policy on business confidence and on the economy as a whole.