Market Commentary 17 April 2018
It is difficult to navigate a way through the current expropriation-with-or-without compensation debate to get to the crux of the issues. There seems to be a general misconception about the specific legalities of the process. From a property law perspective, the following information will hopefully empower people to have meaningful conversations when discussing the issue.
Expropriation is a way for the state to acquire property as opposed to acquiring land in the open market, based on market value mechanisms and principles. Only the state has this power. No private person can expropriate property. While courts have hinted at holding the state accountable to use its power, no person or court can force the state to use these powers.
When the state decides to expropriate property, the owner from whom the property is expropriated also cannot choose not to be expropriated. This does not mean that the owner is not protected. Apart from Constitutional protection (that it must be done in terms of a law of general application, that it must be for a public purpose or in the public interest and against the payment of compensation), there are also procedural guidelines set out in legislation ( e.g. the Expropriation Act 63 of 1975).
It is not possible for a private individual to expropriate property. The issue of a private person receiving ownership through expropriation (where the state expropriates and transfers the land to a private third-party) is a controversial and contentious issue in other jurisdictions. In South African law, expropriation must not only be for a public purpose, it can also be in the public interest. Public interest is qualified in the Constitution as including the nation’s commitment to land reform. This seems to leave the door open for the state to expropriate property and transfer it to a private land reform beneficiary. In terms of the new Expropriation Bill, should the state not use the expropriated property for this specific purpose, the owner can apply to have his/ her property returned.
The Constitution also qualifies “property” as not being limited to land. This is therefore a different concept than the notion of property in private law and can include licences. In the whole current conversation, however, it is not clear if the proposed amendment would include the possibilities of expropriating anything other than land.
The power to expropriate is not an unusual power. Most states need this power to ensure that public projects, for example building a road, are possible and not crippled by one owner who does not want to sell their property. This is an acceptable limitation on private property rights and, if done in terms of the rule of law and mostly when compensation is paid, does not undermine the system of private property rights.
The reason for paying compensation is that we do not want to burden one individual unfairly for a public purpose from which everyone benefits. Arguably, we all benefit from land reform and addressing inequality. Pre-constitution this compensation had to be market value, but the Constitution requires compensation to be “just and equitable” by taking into account certain constitutionally listed, as well as other, factors.
One of these factors is market value. While in theory market value has been relegated to a list along with at least five other factors, our courts have elevated it to a central position. The courts are hungry to re-interpret section 25 of the Constitution in a land-reform context but have not had the opportunity to do so until now. That would have arguably solved some of the current problems. The one seminal case, the so-called MalaMala (Game Reserve) case (Mhlanganisweni Community v Minister of Rural Development and Land Reform and Others), was settled two weeks before it was to be heard in court. For full market value. The politics of settling the case instead of allowing the courts to give direction, can therefore also be placed on the list of land reform inertia. Government, therefore, is now contemplating amending a provision that it has not used to its fullest nor taken to its logical conclusion.
These are the legalities of expropriation. Of course, politics comes into play in complex ways. The EFF’s motion, for example, called for the expropriation in order for the state to become owner of all land, supposedly under a “custodianship” model. Besides the issue that an owner and a custodian are two different concepts, it should be noted that the ANC deliberately deleted that from the motion. The ANC therefore does not seem to support large-scale state ownership of land. It would be interesting to see if the EFF will vote on an amendment in the absence of the state becoming owner.
It is important to recognise the importance and the urgency of land reform. We need to have conversations about the problems experienced in the land reform context, and we need to properly identify where we went wrong. The so-called High Level Report (entitled Report of the High Level Panel on the Assessment of Key Legislation and Acceleration of Fundamental Change, chaired by former President Kgalema Motlanthe) provides a good blueprint and starting point. In a sense, we should thank this motion for opening up that conversation again – a conversation that so far seems to be inclusive, and serious. Solutions are complex and will have to encompass more than just agricultural land or the transfer of land. We cannot simplify the consequences of centuries of fights about land resources in one-liner slogans.
This also means that expropriation without compensation is not a panacea for land reform ills. It also does not guarantee the needed political will to drive the process. So, where do we go from here?
A good start is to encourage the government to enact the Expropriation Bill. While this has everyone’s attention, we also need to encourage the government to start implementing (and seriously considering) the findings of the November 2017 High Level report, before the end of August. In addition, when we, the people of South Africa, are invited to come and sit around the table to discuss this issue, we need to do so – not only to talk, but also to listen.
Written by Elmien Du Plessis
Associate professor in law, North-West University
Elmien Du Plessis originally wrote this article for Huffington Post and has rewritten it for Anchor Capital.