Newsflash: What You Need To Know About Expropriation Of Land Without Compensation
Category Property Market News
Introduction
On 27 February 2018 Julius Malema through the Economic Freedom Front (EFF) put forward a motion to amend the Constitution to allow for the expropriation of land without compensation. Out of the 13 political parties only 4 political parties namely, the Democratic Alliance (DA), Congress of the People (COPE), Freedom Front Plus (FFP) and the African Christian Democratic Party (ACDP) contested the motion. It was supported by all other political parties including the African National Congress (ANC).
The ANC in support of the motion called for parliament’s Constitutional Review Committee to review section 25 of the Constitution of the Republic of South Africa, 1996 (the “Constitution”) being the so called “property clause”. The Review Committee has been tasked to do so and to report back to parliament by 30 August 2018.
What can be expected?
The announcement of the motion for expropriation without compensation was received by many with fear and questions and for some, excitement. There has been a lot of misunderstanding over what is intended by the motion and if there is to be expropriation without compensation, what land is intended to be included and what form such expropriation will take.
Clarity of the position taken by the ANC may be found from the outcome from the Land Summit held by the ANC in May 2018. After the discussions held at the Land Summit, the National Executive Committee of the ANC reviewed the recommendations of the Land Summit and clarified the position on the topic.
The ANC has taken the position that section 25 of the Constitution must be used to implement the policy of expropriation of land without compensation. This is to test the assertions made in some quarters that the Constitution in its current form already enables expropriation without compensation. The ANC intends for parliament to table and pass a Redistribution Bill to enable government to ensure just allocation of land and this is to be done in conjunction with the Expropriation Bill. The Expropriation Bill has been in the works since 2011 and was sent back to parliament by the then President Jacob Zuma in 2016.
The ANC’s position on changes to section 25 of the Constitution entails considering whether or not the intention of section 25(2)(b) in its current form is clear enough to allow for expropriation without compensation. If the Constitution review process finds that this section does not allow for expropriation without the payment of compensation, and that this section in its current form will slow down the redistribution and reformation of land, then it should be changed.
What does the Constitution currently say about expropriation and compensation?
Section 25(2) of the Constitution provides as follows (our emphasis): -
“25. Property-
1. No one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property.
2. Property may be expropriated only in terms of law of general application-
a. for a public purpose or in the public interest; and b. subject to compensation, the amount of which and the time and manner of payment of which have either been agreed to by those affected or decided or approved by a court.”
Section 25(2)(b) in our view specifically and clearly provides that land cannot be expropriated without compensation.
Can the right to expropriation with compensation be validly limited in terms of the Constitution? Does the Constitution allow for expropriation without compensation?
Section 25(8) reads as follows:
25(8) “ 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).”
Section 25(8) creates a mandate for the government to ensure land reform. This mandate is not limited by the rights contained in section 25 of the Constitution which includes the right contained in section 25(2)(b) as discussed above. In other words, if the land rights contained in section 25 are to be limited they may only be limited in terms of section 36 of the Constitution. Section 36 of the Constitution creates the test for when a right contained in the Bill of Rights, in this instance the property right contained in section 25, may be limited.
The question then that must be asked is (i) does expropriation of land without compensation result in a valid limitation of the relevant right contained in the Constitution and as such is allowable in terms of our current Constitutional framework and limitations provisions; or (ii) does expropriation without compensation amount to an outright deprivation and extinguishing of the right to property which is beyond the limitation allowed for and as such is not permitted in terms of section 36 of the Constitution?
If section 25 of the Constitution prohibits expropriation without compensation and the limitation or extinguishing of these rights are found to exceed the powers afforded to the government in terms of the Constitution then any attempt to adopt such land reform method would be rejected by the Constitutional Court as unconstitutional. Should the government still wish to proceed with expropriation without compensation the only way forward would be an amendment to the Constitution.
How likely is it that the Constitution will be amended if the amendment is tabled?
The Constitution would be amended by the national government at a vote at the National Assembly. The National Assembly has 400 seats made up of the various political parties. If the Constitution was required to be amended the parties in favour would require a 2/3 majority (66.6%).
With elections coming up next year the seat allocation may change which may affect the percentage of those in support of the motion. In addition, certain individual members of the parties who are in favour of this motion may, notwithstanding their parties’ agenda, nevertheless vote against party lines and vote against such motion.
What impact will expropriation of land without compensation have?
The stance of the ANC regarding the expropriation topic can be taken out of context. The ANC has expressed that expropriation must be dealt with carefully and there must be a balance in order not to affect the economy.
A task team headed by the Deputy Public Works Minister Jeremy Cronin has drafted amendments to the forthcoming Expropriation Bill. Such amendments set out which land will be expropriated without compensation. The ANC has advised that if it is possible it would be preferable not to amend the Bill of Rights but rather to insert a brief limitation clause in the Expropriation Bill.
The ANC acknowledged that government is concerned about what impact this debate over the topic will have on investors and to organised agriculture. The ANC resolved that the ANC as a matter of policy is to pursue expropriation of land without compensation but, importantly, it should be pursued with keeping the following conditions in mind: -
• without destabilising the agricultural sector,
• without endangering food security in our country; and
• without undermining economic growth and job creation.
The President himself has made it clear that the ANC will not support any attempts at land-grabs. The intended expropriation will be dealt with on a case-by-case basis applying an established set of principles. The principles would be governed in terms of legislation and such legislation will still be tested by the courts.
The task team also identified land and property which could be potentially expropriated, which includes:
• abandoned buildings;
• unutilised land;
• commercial property held unproductively and purely for speculative purposes or underutilised property owned by the state; and land farmed by labour tenants with an absentee title holder.
Notwithstanding what side of the debate you may fall within, it is reassuring to note that the ANC, whose vote would be required (holding 249 seats in the National Assembly) to amend the Constitution, have clarified that they prefer not to amend the Constitution and also not to take any steps that will result in the destabilisation of the economy.
What is the foreign perspective?
Standard and Poor’s (S&P) one of the largest international rating agencies, kept South Africa’s rating unchanged despite the motion put forward in February 2018. S&P commented “It is still too early to tell how the process will unfold, but we expect the rule of law, property rights and enforcements of contracts will remain in place and will not significantly hamper investments in South Africa.”
Where to from here?
It is still early days in the discussion around expropriation without compensation. All eagerly await the feedback to be expected from the Constitutional Review Committee at the end of August to give more clarity on what will be considered and the way forward.
The Committee initially called for written submissions to be submitted before the closing date of 31 May 2018. The Committee received over 140 000 submissions from 13 April 2018 to 8 May 2018. The deadline was then extended to 15 June 2018 and there are currently over 700 000 submissions.
The Committee will travel in two teams to hold at least three meetings in each province starting from 27 June 2018 until 4 August 2018.There will also be an opportunity for members of the public to make oral submissions in Parliament from 7 – 17 August 2018 based on their written submissions.
Once the Committee has heard from the public, policy makers, civil society organisations and academics, the Committee will then report back to the National Assembly on 11 September 2018 with their recommendations on the process of land expropriation without compensation.
The above should be seen as a brief comment and our interpretation thereof and should not be seen as an extensive guideline. Please obtain a full legal opinion if you wish to act on any aspect hereof as the guideline is not fully comprehensive.
Author DVH Attorneys
Published 02 Jul 2018 / Views -