A much better Expropriation Bill – BizNews.com, 15 April 2015

By Caitlin Hogg: 

A point of reference internationally as one of the most progressive in the world, our Constitution appears to hold less and less weight with Government and seems more something to circumvent than anything else – the latest proposed Expropriation Bill being no exception. The standing Bill of 1975 needs updating, this much is obvious; and in theory, the idealistic Robin Hood-esque proposal to ‘take from the previously advantaged and give to the previously disadvantaged’ is romantic, if acknowledged at a glance. Realistically, however, a Bill that allows Government to take any land up front, at any time, for any reason from any person with no clear enforcement of compensation for that land is rather unsettling, to say the least. Anthea Jeffery, Head of Policy Research for the IRR has written a great piece below, proposing a tighter, more constitutionally-aligned and fairer alternative to the Act being proposed. Much better.

By Anthea Jeffery: 

The current Expropriation Act contradicts the Constitution and needs to be changed, but the Government’s proposed Expropriation Bill is equally unconstitutional. The IRR has thus developed an alternative bill, with three core improvements. Under the IRR’s proposals, the State must obtain a High Court order confirming the constitutional validity of a proposed expropriation before it proceeds to take property; the owner is entitled to damages for all consequential loss; and the State must pay the compensation due before it takes ownership of the property. These three safeguards will help encourage the investment, growth, and jobs vital to the upward mobility of all South Africans.

The current Expropriation Act of 1975 needs to be changed to bring it into line with the Constitution. However, the Government’s proposed Expropriation Bill is just as unconstitutional as the Act it is intended to replace.

The IRR has thus drafted an alternative expropriation bill, which is different from the one put forward by the Government in three key ways:

First, under the IRR’s proposal, any expropriating authority must obtain a High Court order confirming the validity of a proposed expropriation – and the adequacy of the compensation being offered – before it issues a notice of expropriation.

Under the Government’s Bill, by contrast, the State will be able to take ownership and possession of property upfront, leaving it to the owner to object thereafter to the amount of compensation offered. But most owners will find it too expensive to litigate – particularly if they have already lost ownership and possession of their most important assets. Moreover, the Bill gives the owner a mere 60 days in which to sue, failing which he will be deemed to have accepted whatever compensation the State has offered.

These provisions contradict both the common law and the Constitution. The common law recognises the right to property as a key element in individual liberty. It thus bars the State from simply seizing property – even property suspected of being linked to serious crimes – without first obtaining a court order in the form of a search-and-seizure warrant. The Constitution adds to this common-law protection by laying down various requirements which have to be met before an expropriation can be valid.

The Government’s Bill rides roughshod over these protections, whereas the IRR’s proposed measure gives full effect to them.

Second, under the IRR’s proposal, the compensation payable on expropriation begins with market value, minus the four ‘discount’ factors listed in the Constitution (the history of the property, for instance). However, it also includes damages for consequential loss, including moving costs and any loss of future income.

A similar provision on consequential loss already forms part of the current Expropriation Act – and there is no reason to exclude it, as the Government’s Bill seeks to do. The Constitution’s list of the factors relevant to compensation is clearly an open one. Hence, non-listed factors can also be taken into account in striking ‘an equitable balance between the public interest and the interests of those affected’, as the Constitution requires.

Moreover, expropriation is a drastic measure which places an inordinately heavy burden of redress for past societal wrongs on the shoulders of particular individuals. If justice is to be done to those affected, the full extent of their consequential losses must be taken into account, not disregarded.

Third, under the IRR’s proposed bill, the compensation due to the owner must be paid in full 15 working days before ownership passes to the State, failing which the relevant notice of expropriation automatically becomes invalid and has no legal force.

By contrast, the Government’s Bill at best requires the State to pay 80% of the compensation due after it has already taken ownership and at the time it takes possession. Worse still, the State can easily delay even further by proposing ‘later’ dates for payment in its notice of expropriation. (In theory, the owner will be able to contest these later dates in court, but again most people will find this unaffordable.)

It is neither just nor equitable for individuals to be deprived of ownership, and then left dependent on the State to make payment long thereafter. This is particularly so when government delays in making payments are notorious. Moreover, the Government’s Bill has no penalty for failing to pay timeously, whereas the IRR’s proposed bill gives the State good reason to pay on time to avoid its notice of expropriation becoming invalid.

The IRR’s bill has many other sound proposals too, which the Government’s one omits. If the poor are to have any real prospect of a better life, South Africa must attract investment, raise the growth rate, and generate millions more jobs. But the country cannot do so while the property rights of all South Africans – black and white, individual and corporate – are under growing threat. The best solution in these circumstances is to jettison the Government’s Bill and adopt the IRR one instead.