A measured response

25 Mar 2021 12:00 am

Deon Welz gives a measured response to the view that the proposed Expropriation Act of 2020 will irrevocably change property rights, our country and our economy. He considers the process; its exceptional application; and the role of courts in upholding the Constitution.

I recently received a WhatsApp message with a startling video from an organization called IRR, setting out how South Africans could lose their property in 5 easy steps if the proposed law on expropriation was passed, and how this would irrevocably change property rights, our country and our economy. I felt the video was sensationalist and needed a response. Unfortunately to do a proper job required a little longer than a 3 minute 40 second video. But anyway, here goes.

False Proposition 1
If the proposed Expropriation Act becomes law, property rights in South Africa will never be the same again.

This is not true. The proposed Expropriation Act of 2020 is fully in line with our Constitution as it now stands and therefore changes nothing to the underlying position which has prevailed since 1994. It was always on the cards that an Act of this nature would be passed. It is remarkable that it has taken so long to happen.

Steps 1 & 2
The Expropriating Authority must investigate the property and negotiate to acquire the property with the owner.

If no agreement is reached between the Expropriation Authority and the owner, an expropriation notice is issued where the owner is invited to make representations as to why they should keep the property or what amount of compensation should be paid.

Summing up the pre-expropriation process in one or two sentences does not do it justice. The process is clearly laid out in the Bill and follows a transparent and logical path where everyone whose rights are affected are included.

An expropriating authority has to complete a substantial amount of preliminary work, which includes the instruction of a valuer to provide a valuation of the property, before starting the expropriation process.

An affected owner must then receive a “notice of intention to expropriate” which must set out, amongst other important details, the reason why and the purpose for which the property is required, along with the intended date of expropriation. These reasons and purposes must obviously be legitimate and in line with the requirements of the Constitution, i.e., for a public purpose and in the public interest.

The notice must give the affected owner 30 days to raise objections and to make submissions. It also calls upon the affected owner to furnish the details of the amount of compensation which he believes to be just and equitable and the details of the holders of any unregistered rights in the property (so that their rights can also be protected).

Within 20 days after receiving this notice from the owner the Expropriating Authority must reply on the issue of compensation, and if not agreed, the Expropriating Authority must make a counter-offer “furnishing full details and supporting documents in respect thereof”. This is a serious process in which the Expropriating Authority cannot just thumb suck a number or allege that no compensation should be paid.

A further period of 40 days is then given within which the parties can negotiate an agreement.

If no agreement is reached, and if the Expropriating Authority still wishes to proceed with the expropriation, it can then make a unilateral decision to expropriate. This decision to expropriate must be motivated and the reasons must be published with the notice. The amount of compensation must also be explained.

Such a decision to expropriate would be an “administrative act” and as South Africans, we all enjoy constitutional protection against unjust administrative actions.

In terms of section 33 of our Constitution we all have the right to administrative action that is lawful, reasonable, and procedurally fair, and if this is not the case, this administrative action can be taken under review by a court and set aside.

In addition, in terms of section 34 of our Constitution we all have the right to have any dispute that can be resolved by the application of law resolved by a court.

These are fundamental rights which are entrenched in the Constitution and both of these sections are highlighted in the preamble to the new Bill. An expropriated owner can therefore always approach the courts to set aside an unjust expropriation, and in certain circumstances there will be scope to approach the courts to stop the process before any final expropriation takes place.

Step 3
After this process the Expropriation Authority can issue a notice of expropriation which will set out a date on which ownership of the property will pass to the new owner. There is no time period stipulated for this.

This is also correct. One must however note that a fairly long period of time will have passed since the initial notice of intention to expropriate was given. There will also have been many attempts for the parties to reach agreement and for the parties to place their positions on record, substantiated with whatever documentary evidence they might have available.

Furthermore, in this notice the Expropriating Authority must set out their offer of compensation and explain how the amount (if any) was decided upon. All supporting documentation relating to this decision must also be attached.

The process is accordingly transparent. Should an Expropriating Authority be acting in bad faith or unreasonably this should be able to be demonstrated on the basis of the submissions already on record.

Step 4 & 5
Property owners with means can seek mediation or approach the courts to challenge the validity of the expropriation. Such a dispossessed owner will bear the onus of proof. This will leave people without the means to fight the matter. In addition, if the property owner is unsuccessful, they will have to pay the legal costs of the state.

This is partially correct. Mediation is specifically provided for because this is a cheaper process with less formality, and the purpose is to encourage the parties to reach agreement between themselves. If mediation fails, the parties can approach the courts.

It is true that the onus to prove their case will be on the expropriated owner and that these proceedings can be expensive. There is however no doubt that there will be many human rights and public interest organizations who will assist expropriated owners with these cases until such time as the courts have passed judgments and created precedents which will be able to be applied to other cases. These precedents will give us guidance as to how the courts view these matters, and this will assist parties to reach agreement.

In addition to this, on the issue of costs, the courts always have a discretion, and because of the political sensitivity and importance of these judgments, and provided that the expropriated owner has not acted unreasonably, I would not be surprised to see a court making an order in terms of which each party should pay their own costs, even if the landowner fails.

In Conclusion…
The fairness of the expropriation process depends on the state acting reasonably and honestly, and on the courts upholding our constitutional rights. For this process to turn into a plunder of assets, both of these attributes must be lacking. While there might be a question mark over the motives of certain highly placed politicians, our courts have thus far carried out their civic duty and upheld our constitution admirably.

Throughout the world, countries have laws which entitle the government to take assets from their citizens for the public benefit and South Africa is no different. The current expropriation laws that we have in place date back to 1975 and are long overdue for an update. Having regard to the specific provisions of our Constitution which deal with expropriation, this proposed Act was to be expected.

Finally, if one looks at the sections of the Act which deal with the calculation of compensation, it is clear that expropriation without compensation is intended to take place only in exceptional circumstances. If one needs more evidence of the government’s current policy towards land redistribution you need look no further than the budgeting of R9.3 billion to finalize 1409 Land Restitution claims over the next 3 years. Why would the government be budgeting to pay for land if they intended to pass a law that would entitle them to take it away without paying for it? It is therefore highly unlikely that this piece of legislation will change the nature of our economy or our country.

Deon Welz
Miltons Matsemela Inc.