Appendix 1: Proposed Amendments to Specific Clauses of the Expropriation Bill of 2015 – 15 April 2016

Appendix 1: Proposed Amendments to Specific Clauses of the Expropriation Bill of 2015
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Appendix 1: Proposed Amendments to Specific Clauses of the Expropriation Bill of 2015 – 15 April 2016

Appendix 1: Proposed Amendments to Specific Clauses of the Expropriation Bill of 2015

South African Institute of Race Relations NPC (IRR)
Submission to the
Economic Development, Environment, Agriculture, and Rural Development
Portfolio Committee of the Gauteng Provincial Legislature,
to help inform the deliberations of the National Council of Provinces,
regarding the
Expropriation Bill of 2015 [B 4B-2015]
Johannesburg, 15th April 2016

Appendix 1: Proposed Amendments to Specific Clauses of the Expropriation Bill of 2015

Introduction

As stated in the IRR’s Full Submission and the Synopsis of this document, the purpose of the IRR’s proposed amendments to the Expropriation Bill (the Bill) is primarily to:

a) bring the definition of expropriation into line with the Constitution;
b) put the onus on an expropriating authority to prove that an intended expropriation complies with all relevant  constitutional provisions;
c) require an expropriating authority, whenever a dispute arises, to obtain a prior court order confirming the constitutionality of a proposed expropriation before it issues  a notice of expropriation;
d) allow expropriated owners and rights holders to obtain compensation for direct losses resulting from expropriation (such as moving costs and loss of income), as such compensation is necessary to bring about ‘an equitable balance between the public interest and the interests of those affected’;
e) ensure that those expropriated receive the compensation due to them before ownership passes to the expropriating authority; and
f) remove the unnecessary, contradictory and unconstitutional powers of expropriation specifically conferred on the minister of public works in Chapter 2 of the Bill.

In each case, the proposed amendment is set out, with new wording underlined and necessary deletions to a provision marked in bold. Each proposed amendment is followed by a brief explanation, marked in italics, of why the change is needed. A more complete account of why these changes are needed is set out in the IRR’s Full Submission and the Synopsis of this.

Section 1: Definitions

The particular definitions that need amendment are noted below:

A “disputing party” means an owner or holder of a right who has received a notice of intention to expropriate in terms of Section 7(1) and who does not accept the validity of the proposed expropriation, and/or the amount of compensation offered in that notice, and/or the legal authority of the expropriating authority to evict him or her from his or her home without a court order obtained under Section 26 of the Constitution.’ [delete existing definition]

The existing definition should be deleted, as it seeks to confine disputes arising from expropriation to disputes over the compensation payable. However, there may also be disputes over the validity of an expropriation (for example, whether it is really in the public interest), and disputes over whether people may lawfully be evicted from their homes without court authorisation. Attempting to narrow the disputes that can be brought to court in this way is thus inconsistent with Sections 25, 26, and 34 (the right of access to court), among other things.

“expropriation” means any nationalisation, expropriation (whether direct or indirect), and any measure(s) having an effect similar to nationalisation or expropriation, and 

“expropriate” has a corresponding meaning’  [delete existing definitions]

The existing definitions of “expropriation” and “expropriate” should be deleted, as they seek to narrow the normal meaning of expropriation in a manner that is not in fact authorised by the main judgment of the Constitutional Court in the Agri SA case. They are also inconsistent with the property clause (Section 25) and other guaranteed rights. By contrast, the proposed new definitions are in keeping with the Constitution.

Chapter 2: Powers of minister of public works to expropriate

Chapter 2 should be deleted in its entirety.

The powers of expropriation thus expressly given to the minister of public works (the minister) are unnecessary, as the Bill already empowers all organs of state to expropriate property. Hence, all organs of state – including the minister himself – qualify as ‘expropriating authorities’ in any event. These provisions of the Bill, in laying down different rules for ‘ministerial’ and other expropriations are sure to generate confusion and uncertainty.

In addition, the minister’s power to expropriate is expressly made ‘subject to the provisions of Chapter 5’ of the Bill, [Section 3(1), Bill] which deals with the amount of compensation and the time when it must be paid. Hence, this wording raises doubts as to whether ministerial expropriations are in fact subject to the other chapters in the Bill, particularly Chapter 3 (‘Investigation and valuation of property’), Chapter 4 (‘Intention to expropriate and expropriation of property’), Chapter 6 (‘Mediation and determination by court’), and Chapter 7 (‘Urgent expropriation’). 

As presently written, the Bill could allow the minister to brush aside all the requirements set out in all chapters other than Chapter 5. Among other things, this could bar an owner or rights holder who suffers a ministerial expropriation from having a dispute over the validity of such an expropriation, or of the compensation payable, referred to the courts.

This is objectionable and clearly unconstitutional, for any ministerial expropriation must of course comply with all relevant constitutional guarantees.

Since there is no need for the minister to have his own and seemingly different expropriation powers, the whole of Chapter Two should be deleted.

Section 7: Notice of intention to expropriate

The particular sub-sections that need amendment are noted below:

Section 7 (2): A notice of intention to expropriate must include --

(fh)(ii)   a written statement stipulating the amount claimed by him or her as just and equitable compensation, together with such further details as are contemplated in Section 14;

Section 7 (4): Subject to section 25, an owner or holder of a unregistered right responding to a notice contemplated in subsection (1) must within 30 days of the service of the notice or, if the notice has not been served on him or her, within 30 days of publication, as the case may be, deliver to the expropriating authority a written statement indicating –

(aa) whether he or she accepts that the proposed expropriation is valid in that it  meets all relevant constitutional requirements, including those contained in Section 25, and, if the property to be expropriated includes a person’s home, also those contained in Section 26(3) of the Constitution;

(a) the amount claimed by him or her as just and equitable compensation, should his or her property be expropriated....

Section 7 (7)(a): If no agreement on the validity of the expropriation or the amount of compensation payable has been reached between the expropriating authority and the owner or the holder of a right within 40 days of the expropriating authority receiving the statement contemplated in subsection (4), the expropriating authority must, if it wishes to proceed with the expropriation, first comply with the provisions of Section 21 before it issues a notice of expropriation.

Section 7 (7)(b)(i): delete, see rather new Section 21

Section 7(7)(b)(ii): delete, see rather new Section 21

Section 7(7)(b)(iii): delete, see rather new Section 21

It is inconsistent with Section 25 and other constitutional requirements for the expropriating authority to attempt to narrow disputes to those over the compensation payable. It is also inconsistent with Section 25 and other guaranteed rights for it to proceed with a disputed proposed expropriation before it has sought and obtained a court order confirming the validity of the proposed expropriation.

These amendments recognise that there may be disputes over issues other than the amount of compensation payable. They also make it clear that, when such disputes arise, an expropriating authority must seek a prior court order confirming that the proposed expropriation complies with all relevant constitutional requirements, including those in Section 26(3), before it may serve a notice of expropriation.

Section 8: Notice of expropriation

The particular sub-sections that need amendment are noted below:

Section 8 (1): If, having complied with the provisions of Section 21, the expropriating authority decides to expropriate a property, it must cause a notice of expropriation to be served...

Section 8(3): The notice of expropriation served as contemplated in subsection (1) must contain –

(aa) a summary of the agreement reached, or of the court order authorising the expropriation, as obtained under the provisions of Section 21, while a copy of this agreement or court order must be appended to the notice of expropriation;

(e): the date of expropriation, which may not be earlier than 60 days after the date of service of the notice of expropriation, or, as the case may be, the date from which the property will be used temporarily, and also stating the period of such temporary use;

(ee) the date on which the expropriation authority will pay all the compensation, which must be ten (10) days before the date of expropriation set out paragraph (e);

(f): the date on which the right to possession will pass to the expropriating authority, which may not be earlier than 30 days after the date of expropriation;

(g): except in the case of an urgent expropriation contemplated in Section 22, the amount of compensation payable, either as agreed or as decided or approved by a court under the provisions of Section 21;

(h) a statement confirming that the property subject to the notice of expropriation may not be sold, mortgaged, or otherwise disposed of without the prior written consent of the expropriating authority and that any sale, mortgage or other disposal of the property which is entered into in breach of this sub-section has no legal force or effect;

(i) if the property subject to the notice of expropriation is not transferred into the ownership of the expropriating authority on the date of expropriation, then the owner or rights holder is unjustly enriched by the payment of compensation under sub-section 8(ee) and must repay the amount received to the expropriating authority, together with interest at the prime rate plus two percentage points on any outstanding balance, until the full amount owing to the expropriation authority has been paid.

Section 8(4): The notice of expropriation served as contemplated in subsection (1) must be accompanied by documents detailing the following:

Delete Section 8(4) (a)

[The date of payment of the compensation must instead be included in the notice of expropriation, as stated Section 8(3)(ee), see above.]

(d): a copy of the agreement reached, or the court order authorising the expropriation, as obtained under the provisions of Section 21; [delete the existing provision]

Section 8(5) (a): Rights in a property may be expropriated from different owners and holders of unregistered rights in the same notice of expropriation, provided that the expropriating authority must comply with the provisions of Section 21 in relation to each owner or holder.

Section 8(5)(b): The just and equitable compensation payable to each owner or holder, as agreed or as decided by a court under the provisions of Section 21, must be stated in the notice of expropriation contemplated in paragraph (a).

The Bill’s existing provisions are inconsistent with Section 25 of the Constitution and other guaranteed rights. By contrast, these amendments confirm that an expropriating authority, in the event of a dispute over a proposed expropriation, must either obtain agreement through mediation or obtain a court order confirming the validity of the proposed expropriation. Only thereafter may it serve a notice of expropriation, to which a copy of the agreement reached or the court order obtained must be appended.

Changes are also needed to what the notice of expropriation must contain. In particular, the notice must allow 60 days from the date of service of the notice until the date of expropriation, so as to allow expropriated owners and holders of other rights to find alternative residential or business premises and otherwise prepare for the loss of their ownership or other rights. The notice of expropriation must also state the date when all the compensation due will be paid, which must be ten days before the date of expropriation. In addition, the date on which possession will pass must be at least 30 days after the date of expropriation, again to allow expropriated owners and holders time to prepare and make alternative arrangements.

All these amendments are needed so as to strike ‘an equitable balance between the public interest and the interests of those affected’ by an expropriation, as required by Section 25.

At the same time, the expropriating authority must also be protected in the event that it does not receive ownership of the property in return for the compensation it has already paid. Sub-section 8(3)(h) will help to prevent this happening, while sub-section 8(3)(i) and allow the expropriating authority to recover the compensation it has paid, plus interest at prime plus 2 percentage points, should this be necessary. The expropriating authority can also help to prevent any unauthorised sale, mortgage, or other disposal of the property or rights in question by including all details of an expropriation in the register of expropriations as soon as it issues a notice of expropriation.

Section 9: Vesting and possession of expropriated property

All sub-sections of this section require some amendment, as set out below:

Section 9(1):  The effect of an expropriation of property is that –

(a) the ownership of the property described in the notice of expropriation vests in the expropriating authority [delete: or in the person on whose behalf the property was expropriated, as the case may be] on the date of expropriation, provided that the  compensation payable has been paid in full to the owner within the period required by Section 8(3)(ee);

(aa) if the expropriating authority does not pay the owner the full amount of the compensation within the period required by Section 8(3)(ee), the notice of expropriation becomes invalid and has no further force or effect;

(b) Subject to paragraph (c) below, all unregistered rights in the property described in the notice of expropriation vest in the expropriating authority [delete: or in the person on whose behalf the unregistered rights were expropriated, as the case may be], on the date of expropriation, provided the compensation payable has been paid in full to the holders of such rights within the period required by Section 8(3)(ee);

(bb)if the expropriating authority does not pay the holders of such rights the full amount of the compensation due to them within the period required by Section 8(3)(ee), the notice of expropriation becomes invalid and has no further force or effect;

(c) Unregistered rights in the property described in the notice of expropriation will not be expropriated on the date of expropriation if --

(i) the expropriation of those unregistered rights is specifically excluded from the notice of expropriation; or

(ii) those rights, including permits or permissions, were granted or exist in terms of the provisions of the Mineral and Petroleum Resources Development Act, 2002 (Act no 28 of 2002);

[This provision is currently found in Section 9(1)(b) and now becomes Section 9(1)(c), without any change in the meaning of this sub-section.]

Section 9(6): If the property expropriated is land –

(a) the expropriated owner must deliver or cause to be delivered to the expropriating authority, subject to Section 25, within 30 days of the expropriating authority requesting the title deed to such land, or if it is not in his or her possession or under his or her control, written particulars of the name and address of the person in whose possession or under whose control the title deed is; and

(b) the person referred to in paragraph (a), in whose possession the title deed may be, must deliver or cause to be delivered the title deed in question to the expropriating authority within 20 days of ;the expropriating authority requesting it, subject to Section 25.

[This provision is currently found in Section 14(2), but no longer belongs there, so it has been shifted to Section 9, but without any change in the wording]

In order to maintain ‘an equitable balance between the public interest and the interest of those affected’ by an expropriation, there must be an effective sanction or penalty if an expropriating authority fails to pay the compensation due ten days before the date of expropriation. If the expropriating authority does not do so, the owner or rights holder will lose his or her ownership or other rights without having the money available to acquire alternative residential or business premises or other assets. Since many organs of state in practice fail to pay their bills on time (despite Treasury rules requiring this), there is also a real risk that the payment of compensation may frequently be delayed.

Since late payment cannot be ‘equitable’ within the meaning of Section 25, the proposed amendment provides an effective sanction. If payment is not made on time, then the notice of expropriation falls away and has no further force or effect. This will give expropriating authorities a compelling reason to ensure that payments are not late.

With the deletion of Chapter 2, there is no reason to include references to ‘the person on whose behalf the property was expropriated’. Every organ of state will be an expropriating authority in its own right and will thus have all the powers and obligations set out in the Bill.

For the rest, provisions which fit more logically here are moved from elsewhere to form part of this section, but without any changes to the wording of these clauses.

Section 11: Consequences of expropriation of unregistered rights and duties of expropriating authority

The particular sub-section that needs amendment is noted below

Section 11(1): An expropriated holder of an unregistered right in a property that has been expropriated by the operation of Section 9(1)(b) is, subject to Section 10 and this section, entitled to compensation, either as agreed or as decided or approved by a court under the provisions of Section 21.

The Bill’s existing provisions are inconsistent with Section 25 of the Constitution and other guaranteed rights. By contrast, these amendments confirm that an expropriating authority, in cases of dispute over the proposed expropriation of unregistered rights in property, must either obtain agreement through mediation or obtain a court order confirming the validity of the proposed expropriation. Only thereafter may it serve a notice of expropriation, to which a copy of the agreement reached or the court order obtained must be appended.

Section 12: Compensation for expropriation

The additional sub-section needed is noted below:

Section 12(1): The amount of compensation to be paid to an expropriated owner or an expropriated holder must be just and equitable, reflecting an equitable balance between the public interest and the interests of the expropriated owner or expropriated holder, having regard to all relevant circumstances, including –

(a) The current use of the property;
(b) The history of the acquisition and use of the property;
(c) The market value of the property;
(d) the extent of direct state investment and subsidy in the acquisition and beneficial capital improvement of the property; [delete and]
(e) the purpose of the expropriation; and
(f) an amount to make good any actual financial loss caused by the expropriation of the property.

Para (f) is based on the current wording in the Expropriation Act of 1975. Under Section 25 of the Constitution, compensation must be just and equitable in all the relevant circumstances. In addition, the list of five relevant factors included in Section 25 is not a closed list, but rather an open one. Hence, this additional factor can and should be inserted to help those affected by an expropriation with their moving costs, any temporary loss of income, and any other direct losses resulting from the expropriation.

This is particularly important for tenants of residential and business premises, whose expropriated leases may have little market value and who may thus receive little compensation under the current formula. It is also particularly important for the 2.8 million or so people who currently have unregistered rights of residence on commercial farms. These expropriated residence rights may also have little market value, which may leave farm residents with little compensation under the current formula.

Yet both tenants and farm residents may suffer many losses on expropriation. Among other things, they will probably have to find new homes and livelihoods and pay their moving costs. Tenants with business premises may also lose income in the period before they can restart their businesses, and could lose existing clients who find their new premises less convenient. In addition, farm residents will have to find new jobs and may be unable to keep their livestock, which might have to be slaughtered or sold.

Adding this factor to the existing formula will allow tenants and farm residents to claim for losses of this kind. Expropriated owners also need the benefit of this change, as they too will often suffer similar losses. Incorporating this factor into Section 12 is also consistent with Section 25 of the Constitution, which says that all relevant factors must be taken into account, and then goes on to list some of the factors that are relevant.

Section 13: Interest on compensation

This section should be deleted in its entirety.

Under the amendments earlier proposed, if compensation is not paid in full ten days before the date of expropriation stated in the notice of expropriation, the notice of expropriation becomes invalid and the expropriation cannot proceed. Hence, no provisions for interest on the late payment of compensation are needed.

Section 14: Compensation claims

All sub-sections of this section require some amendment, as set out below:

Section 14 (1):  An owner or holder of an unregistered right who receives a notice of intention to expropriate in terms of Section 7(1) must, subject to Section 25, within 30 days from the date on which that notice was served on that owner or holder, deliver or cause to be delivered to the expropriating authority a written statement –

(a) confirming that the compensation offered in the notice of intention to expropriate is agreed; or

(b) if no compensation was offered, as in the case of an urgent expropriation in terms of section 22, or if the owner or holder proposes a different amount, indicating the amount claimed by the owner or holder as just and equitable compensation; and

(c) furnishing full particulars as to how the amount contemplated in paragraph (b) is made up, including a copy of a valuation, other professional report or other document that forms the basis of the compensation claimed.

The current Section 14(2) should be deleted and moved to Section 9, where it becomes Section 9 (6), see above.

It is inconsistent with Section 25 and other guaranteed rights to allow an expropriating authority to proceed with a disputed expropriation which not in fact be valid because the compensation offered is not truly just and equitable in all the circumstances. This amendment thus makes it clear that an owner or rights holder must have the right to object to the compensation offered when he receives a notice of intention to expropriate and before a notice of expropriation has been served on him.

Section 15: Offers of compensation

The sub-sections requiring amendment are set out below:

Section 15(3): The provisions of Section 21 shall apply if –

(a) an owner or holder of an unregistered right does not deliver a statement in terms of Section 14(1); or

(b) the claimant does not accept the validity of the expropriation or the offer of compensation contemplated in subsection (1), by written reply within 20 days or within such additional term as may be permitted under Section 25; or

(c) the property to be expropriated includes a person’s home and the expropriation will result in the eviction of that person from his or her home.

It is inconsistent with Section 25, 26, and 34 of the Constitution, among other things, for the Bill to seek to confine the disputes that must be referred to court to disputes over the amount of compensation payable on expropriation. These amendments make it clear that disputes over the validity of an expropriation (for example, whether it is really in the public interest) and over the need for court authorisation for any eviction of a person from his or her home must also be referred to the courts.

Section 17: Payment of [delete: amount offered as] compensation

The amount of compensation may not be the amount earlier offered by the expropriating authority in its notice of intention to expropriate, but rather the amount decided by a court under Section 21. Hence, this heading should be reworded as shown.

The sub-sections requiring amendment are set out below. In this instance, the reasons why particular amendments are needed are explained in italics after each sub-section.

Section 17 (1): An owner or holder on whom a notice of expropriation has been served is entitled to payment of the full amount of the compensation ten days before the date of expropriation set out in the notice of expropriation, as required by Section 8(3)(ee). [delete existing Section 17(1)]

As earlier described, late payment cannot be condoned as it undermines ‘the equitable balance between the public interest and the interests of those affected’ which is required by Section 25 of the Constitution.

Section 17(2): If the expropriating authority does not pay the full amount of the compensation due to the owner or the holder within the period required by Section 8(3)(ee), the notice of expropriation becomes invalid and has no further force or effect; [delete existing Section 17(2)]

To prevent late payment, there must, as earlier described, be an effective sanction against late payment, which this amendment provides. In addition, it will not be possible for an expropriating authority to proceed with a disputed expropriation without either reaching agreement on compensation through mediation or obtaining a court order on the issue.

Hence, there is no need for the existing provisions of Section 17(2), which should be deleted.

Section 17(3): Property which is subject to a notice of expropriation served on the owner or the holder of a right may not be sold, mortgaged, or otherwise disposed of without the prior written consent of the expropriating authority, and any sale, mortgage or other disposal of such property, which is entered into in breach of this sub-section, has no legal force or effect.

Section 17(4): If compensation has been paid to the owner of property under sub-section (1) and the ownership of the property for which such compensation has been paid is not transferred to the expropriating authority on the date of expropriation set out in the notice of expropriation, then the owner is unjustly enriched by the payment of compensation and must repay to the expropriating authority the full amount received as compensation, together with interest (at the prime rate plus two percentage points) on any outstanding balance, until the full amount owing to the expropriating authority has been paid.

Section 17(5): If compensation has been paid to the holder of a right in a property under sub-section (1) and the right is not expropriated and transferred to the expropriating authority on the date of expropriation set out in the notice of expropriation, then the holder is unjustly enriched by the payment of compensation and must immediately repay to the expropriating authority the full amount received as compensation, together with interest (at the prime rate plus two percentage points) on any outstanding balance, until the full amount owing to the expropriating authority has been paid.

It is important that compensation should be paid to the owner or rights holder in good time, but the expropriating authority must also be protected in case it does not in fact obtain ownership of (or other rights in) the property. Sub-section 17(3) will help to prevent any unauthorised sale or other disposal of the property or rights in question, while  sub-sections 17(4) and (5) will allow the expropriating authority to recover the compensation it has paid, plus interest at prime plus two percentage points, should this be necessary.

The expropriating authority can also help to prevent any unauthorised sale, mortgage, or other disposal of the property or rights in question by including all details of an  expropriation in the register of expropriations as soon as it issues a notice of expropriation.

Delete Sections 17(3) and Section 17(4)

Late payment is inconsistent with Section 25 and other constitutional guarantees and is no longer permitted under the amendments earlier proposed. Hence, these sections, which have also been replaced by new Sections 17(3) and (4), should be deleted.

Delete Section 17(5)

Payment of compensation should not be made dependent on the tax status of the owner or rights holder.  If such an owner or rights holder is under an obligation to pay VAT, other mechanisms are available under other laws to enforce the payment of this tax.  Hence, this sub-section, which has also been replaced by a new Section 17(5) is not needed and should be deleted.

Section 17(3): The minister may prescribe the information and documentation to be delivered by a person to whom compensation [delete or interest] is payable in terms of this Act, in order to facilitate electronic payment thereof.

Under the proposed amendments, late payment will not be allowed. Hence, there is no need to provide for the payment of interest on compensation and the reference to this should be deleted.

Section 18: Property subject to mortgage or deed of sale

All sub-sections should be amended, as set out below:

Section 18(1): If property the expropriating authority intends to expropriate is encumbered by a registered mortgage bond or is subject to a deed of sale, the owner must inform the expropriating authority of this bond or sale agreement within 30 days of the service on him or her of a notice of intention to expropriate in terms of Section 7(1).

Section 18(2): If a notice of expropriation is later served on the owner under Section 8, the owner and the mortgagee, or the owner and the buyer, as the case may be, must agree on how the compensation payable is to be apportioned between them, and provide a written copy of their agreement to the expropriating authority within 20 days of the service of the notice of expropriation.

Section 18(3): If the owner and the mortgagee, and the owner and the buyer, as the case may be, fail to provide the expropriating authority with a written copy of their agreement, as required by subsection (2), the expropriating authority must deposit the compensation money with the Master of the High Court having jurisdiction in the area in which the property is situated and must do so within the period required by Section 8(3)(ee).

Delete existing Section 18

As soon as the owner receives a notice of intention to expropriate, it must inform the expropriating authority of any bond or sale agreement. If the owner is subsequently served with a notice of expropriation, he or she must reach agreement on the apportionment of the compensation payable with the bond holder or the buyer within 20 days of the service of that notice. The expropriating authority must then pay out the compensation in accordance with that agreement and must do so on the due date: in other words, ten days before the date of expropriation stated in the notice of expropriation. If such an agreement has not been concluded or notified to the expropriating authority, the expropriating authority must instead pay the compensation to the Master on the due date.

Mediation and determination by court

Each sub-section needs to be amended, in the manner shown below:

Section 21(1): If the owner or the holder of a right disputes the validity of a intended expropriation of which he or she has been given notice under Section 7(1), or if he or she disputes the amount of compensation offered in that notice of intention to expropriate, the expropriating authority and the owner or holder, as the case may be, may attempt to settle the dispute by mediation, which must be initiated and finalised without undue delay by either party; provided that if such agreement is reached, the expropriating authority should then purchase the property on the terms agreed rather than proceed with an expropriation.

Section 21(2): If an intended expropriation will involve the eviction of a person from his or her home, the expropriating authority must obtain an order of court authorising the eviction after considering all the relevant circumstances.

Section 21(3): If the expropriating authority and the disputing party are unable to settle the dispute by consensus in the manner contemplated in subsection (1), or if the disputing party did not agree to mediation, the expropriating authority must refer the validity of the intended expropriation and/or the amount of compensation payable to a competent court.

Section 21(4): In any court proceedings contemplated in subsections (2) and (3), the expropriating authority bears the onus of satisfying the court, on a balance of probabilities, that:

(a) the intended expropriation meets all relevant constitutional requirements,
(b) the compensation offered is in keeping with all the factors identified in Section 12 and is just and equitable in all the circumstances, and
(c) the eviction of a person from his or her home as a result of the intended expropriation should be authorised by the court after considering all the relevant circumstances.

Section 21(5):  If the court is satisfied on all the points set out in sub-section (4), it may issue an order authorising the intended expropriation, deciding the compensation payable, confirming that the compensation must be paid in full within the period set out in Section 8(3)(ee), and authorising the eviction of a person from his or her home as a result of the expropriation.

Section 21(6): If the court fails to grant the order contemplated in sub-section (5), the expropriating authority may not proceed with the expropriation.

Section 21(7): If the court grants the order contemplated in sub-section (5), the expropriating authority may proceed with the expropriation after 21 days, unless the owner or holder has lodged an appeal against the court order within that period, in which case the expropriation may not proceed until the relevant appeal court has refused leave to appeal or has granted an order authorising the expropriation, as contemplated in subsection (5).

Section 21(8): Once an expropriating authority has obtained a final court order authorising it to proceed with an expropriation under sub-sections (5) or (7), it must either serve a notice of expropriation on the owner within 60 days, or notify the owner or holder, also within 60 days, that it is not proceeding with the expropriation.

Delete all the current provisions of Section 21

Allowing an expropriating authority to press on with a disputed expropriation without a court order confirming the validity of the expropriation is inconsistent with Section 25 of the Constitution and other guaranteed rights. Allowing an expropriating authority to take possession of a person’s home and so evict them is inconsistent with Section 26(3) of the Constitution and other guaranteed rights. All existing provisions in Section 21 should therefore be deleted and replaced with these clauses so as to bring so as to bring the Bill into line with the Constitution.

Once an expropriating authority has obtained a final court order authorising the expropriation, it must decide within a reasonable time (identified as 60 days in sub-section 8) if it wishes to proceed with the expropriation or not.

Urgent and temporary expropriations

The amendment that is needed to one sub-section is shown below:

Section 22 (5A):  No person may be evicted from his or her home, even for the temporary periods contemplated in sub-sections (1) and (7)(c), without an order of court made after considering all the relevant circumstances.

No person may be evicted from his or her home, even for the purpose of a temporary expropriation, without a court order, as made clear by Section 26(3) of the Constitution. This amendment is needed to give effect to that constitutional guarantee.


South African Institute of Race Relations NPC – 15th April 2016

IRR TV

South African Institute of Race Relations NPC (IRR)
Submission to the
Economic Development, Environment, Agriculture, and Rural Development
Portfolio Committee of the Gauteng Provincial Legislature,
to help inform the deliberations of the National Council of Provinces,
regarding the
Expropriation Bill of 2015 [B 4B-2015]
Johannesburg, 15th April 2016

Appendix 1: Proposed Amendments to Specific Clauses of the Expropriation Bill of 2015

Introduction

As stated in the IRR’s Full Submission and the Synopsis of this document, the purpose of the IRR’s proposed amendments to the Expropriation Bill (the Bill) is primarily to:

a) bring the definition of expropriation into line with the Constitution;
b) put the onus on an expropriating authority to prove that an intended expropriation complies with all relevant  constitutional provisions;
c) require an expropriating authority, whenever a dispute arises, to obtain a prior court order confirming the constitutionality of a proposed expropriation before it issues  a notice of expropriation;
d) allow expropriated owners and rights holders to obtain compensation for direct losses resulting from expropriation (such as moving costs and loss of income), as such compensation is necessary to bring about ‘an equitable balance between the public interest and the interests of those affected’;
e) ensure that those expropriated receive the compensation due to them before ownership passes to the expropriating authority; and
f) remove the unnecessary, contradictory and unconstitutional powers of expropriation specifically conferred on the minister of public works in Chapter 2 of the Bill.

In each case, the proposed amendment is set out, with new wording underlined and necessary deletions to a provision marked in bold. Each proposed amendment is followed by a brief explanation, marked in italics, of why the change is needed. A more complete account of why these changes are needed is set out in the IRR’s Full Submission and the Synopsis of this.

Section 1: Definitions

The particular definitions that need amendment are noted below:

A “disputing party” means an owner or holder of a right who has received a notice of intention to expropriate in terms of Section 7(1) and who does not accept the validity of the proposed expropriation, and/or the amount of compensation offered in that notice, and/or the legal authority of the expropriating authority to evict him or her from his or her home without a court order obtained under Section 26 of the Constitution.’ [delete existing definition]

The existing definition should be deleted, as it seeks to confine disputes arising from expropriation to disputes over the compensation payable. However, there may also be disputes over the validity of an expropriation (for example, whether it is really in the public interest), and disputes over whether people may lawfully be evicted from their homes without court authorisation. Attempting to narrow the disputes that can be brought to court in this way is thus inconsistent with Sections 25, 26, and 34 (the right of access to court), among other things.

“expropriation” means any nationalisation, expropriation (whether direct or indirect), and any measure(s) having an effect similar to nationalisation or expropriation, and 

“expropriate” has a corresponding meaning’  [delete existing definitions]

The existing definitions of “expropriation” and “expropriate” should be deleted, as they seek to narrow the normal meaning of expropriation in a manner that is not in fact authorised by the main judgment of the Constitutional Court in the Agri SA case. They are also inconsistent with the property clause (Section 25) and other guaranteed rights. By contrast, the proposed new definitions are in keeping with the Constitution.

Chapter 2: Powers of minister of public works to expropriate

Chapter 2 should be deleted in its entirety.

The powers of expropriation thus expressly given to the minister of public works (the minister) are unnecessary, as the Bill already empowers all organs of state to expropriate property. Hence, all organs of state – including the minister himself – qualify as ‘expropriating authorities’ in any event. These provisions of the Bill, in laying down different rules for ‘ministerial’ and other expropriations are sure to generate confusion and uncertainty.

In addition, the minister’s power to expropriate is expressly made ‘subject to the provisions of Chapter 5’ of the Bill, [Section 3(1), Bill] which deals with the amount of compensation and the time when it must be paid. Hence, this wording raises doubts as to whether ministerial expropriations are in fact subject to the other chapters in the Bill, particularly Chapter 3 (‘Investigation and valuation of property’), Chapter 4 (‘Intention to expropriate and expropriation of property’), Chapter 6 (‘Mediation and determination by court’), and Chapter 7 (‘Urgent expropriation’). 

As presently written, the Bill could allow the minister to brush aside all the requirements set out in all chapters other than Chapter 5. Among other things, this could bar an owner or rights holder who suffers a ministerial expropriation from having a dispute over the validity of such an expropriation, or of the compensation payable, referred to the courts.

This is objectionable and clearly unconstitutional, for any ministerial expropriation must of course comply with all relevant constitutional guarantees.

Since there is no need for the minister to have his own and seemingly different expropriation powers, the whole of Chapter Two should be deleted.

Section 7: Notice of intention to expropriate

The particular sub-sections that need amendment are noted below:

Section 7 (2): A notice of intention to expropriate must include --

(fh)(ii)   a written statement stipulating the amount claimed by him or her as just and equitable compensation, together with such further details as are contemplated in Section 14;

Section 7 (4): Subject to section 25, an owner or holder of a unregistered right responding to a notice contemplated in subsection (1) must within 30 days of the service of the notice or, if the notice has not been served on him or her, within 30 days of publication, as the case may be, deliver to the expropriating authority a written statement indicating –

(aa) whether he or she accepts that the proposed expropriation is valid in that it  meets all relevant constitutional requirements, including those contained in Section 25, and, if the property to be expropriated includes a person’s home, also those contained in Section 26(3) of the Constitution;

(a) the amount claimed by him or her as just and equitable compensation, should his or her property be expropriated....

Section 7 (7)(a): If no agreement on the validity of the expropriation or the amount of compensation payable has been reached between the expropriating authority and the owner or the holder of a right within 40 days of the expropriating authority receiving the statement contemplated in subsection (4), the expropriating authority must, if it wishes to proceed with the expropriation, first comply with the provisions of Section 21 before it issues a notice of expropriation.

Section 7 (7)(b)(i): delete, see rather new Section 21

Section 7(7)(b)(ii): delete, see rather new Section 21

Section 7(7)(b)(iii): delete, see rather new Section 21

It is inconsistent with Section 25 and other constitutional requirements for the expropriating authority to attempt to narrow disputes to those over the compensation payable. It is also inconsistent with Section 25 and other guaranteed rights for it to proceed with a disputed proposed expropriation before it has sought and obtained a court order confirming the validity of the proposed expropriation.

These amendments recognise that there may be disputes over issues other than the amount of compensation payable. They also make it clear that, when such disputes arise, an expropriating authority must seek a prior court order confirming that the proposed expropriation complies with all relevant constitutional requirements, including those in Section 26(3), before it may serve a notice of expropriation.

Section 8: Notice of expropriation

The particular sub-sections that need amendment are noted below:

Section 8 (1): If, having complied with the provisions of Section 21, the expropriating authority decides to expropriate a property, it must cause a notice of expropriation to be served...

Section 8(3): The notice of expropriation served as contemplated in subsection (1) must contain –

(aa) a summary of the agreement reached, or of the court order authorising the expropriation, as obtained under the provisions of Section 21, while a copy of this agreement or court order must be appended to the notice of expropriation;

(e): the date of expropriation, which may not be earlier than 60 days after the date of service of the notice of expropriation, or, as the case may be, the date from which the property will be used temporarily, and also stating the period of such temporary use;

(ee) the date on which the expropriation authority will pay all the compensation, which must be ten (10) days before the date of expropriation set out paragraph (e);

(f): the date on which the right to possession will pass to the expropriating authority, which may not be earlier than 30 days after the date of expropriation;

(g): except in the case of an urgent expropriation contemplated in Section 22, the amount of compensation payable, either as agreed or as decided or approved by a court under the provisions of Section 21;

(h) a statement confirming that the property subject to the notice of expropriation may not be sold, mortgaged, or otherwise disposed of without the prior written consent of the expropriating authority and that any sale, mortgage or other disposal of the property which is entered into in breach of this sub-section has no legal force or effect;

(i) if the property subject to the notice of expropriation is not transferred into the ownership of the expropriating authority on the date of expropriation, then the owner or rights holder is unjustly enriched by the payment of compensation under sub-section 8(ee) and must repay the amount received to the expropriating authority, together with interest at the prime rate plus two percentage points on any outstanding balance, until the full amount owing to the expropriation authority has been paid.

Section 8(4): The notice of expropriation served as contemplated in subsection (1) must be accompanied by documents detailing the following:

Delete Section 8(4) (a)

[The date of payment of the compensation must instead be included in the notice of expropriation, as stated Section 8(3)(ee), see above.]

(d): a copy of the agreement reached, or the court order authorising the expropriation, as obtained under the provisions of Section 21; [delete the existing provision]

Section 8(5) (a): Rights in a property may be expropriated from different owners and holders of unregistered rights in the same notice of expropriation, provided that the expropriating authority must comply with the provisions of Section 21 in relation to each owner or holder.

Section 8(5)(b): The just and equitable compensation payable to each owner or holder, as agreed or as decided by a court under the provisions of Section 21, must be stated in the notice of expropriation contemplated in paragraph (a).

The Bill’s existing provisions are inconsistent with Section 25 of the Constitution and other guaranteed rights. By contrast, these amendments confirm that an expropriating authority, in the event of a dispute over a proposed expropriation, must either obtain agreement through mediation or obtain a court order confirming the validity of the proposed expropriation. Only thereafter may it serve a notice of expropriation, to which a copy of the agreement reached or the court order obtained must be appended.

Changes are also needed to what the notice of expropriation must contain. In particular, the notice must allow 60 days from the date of service of the notice until the date of expropriation, so as to allow expropriated owners and holders of other rights to find alternative residential or business premises and otherwise prepare for the loss of their ownership or other rights. The notice of expropriation must also state the date when all the compensation due will be paid, which must be ten days before the date of expropriation. In addition, the date on which possession will pass must be at least 30 days after the date of expropriation, again to allow expropriated owners and holders time to prepare and make alternative arrangements.

All these amendments are needed so as to strike ‘an equitable balance between the public interest and the interests of those affected’ by an expropriation, as required by Section 25.

At the same time, the expropriating authority must also be protected in the event that it does not receive ownership of the property in return for the compensation it has already paid. Sub-section 8(3)(h) will help to prevent this happening, while sub-section 8(3)(i) and allow the expropriating authority to recover the compensation it has paid, plus interest at prime plus 2 percentage points, should this be necessary. The expropriating authority can also help to prevent any unauthorised sale, mortgage, or other disposal of the property or rights in question by including all details of an expropriation in the register of expropriations as soon as it issues a notice of expropriation.

Section 9: Vesting and possession of expropriated property

All sub-sections of this section require some amendment, as set out below:

Section 9(1):  The effect of an expropriation of property is that –

(a) the ownership of the property described in the notice of expropriation vests in the expropriating authority [delete: or in the person on whose behalf the property was expropriated, as the case may be] on the date of expropriation, provided that the  compensation payable has been paid in full to the owner within the period required by Section 8(3)(ee);

(aa) if the expropriating authority does not pay the owner the full amount of the compensation within the period required by Section 8(3)(ee), the notice of expropriation becomes invalid and has no further force or effect;

(b) Subject to paragraph (c) below, all unregistered rights in the property described in the notice of expropriation vest in the expropriating authority [delete: or in the person on whose behalf the unregistered rights were expropriated, as the case may be], on the date of expropriation, provided the compensation payable has been paid in full to the holders of such rights within the period required by Section 8(3)(ee);

(bb)if the expropriating authority does not pay the holders of such rights the full amount of the compensation due to them within the period required by Section 8(3)(ee), the notice of expropriation becomes invalid and has no further force or effect;

(c) Unregistered rights in the property described in the notice of expropriation will not be expropriated on the date of expropriation if --

(i) the expropriation of those unregistered rights is specifically excluded from the notice of expropriation; or

(ii) those rights, including permits or permissions, were granted or exist in terms of the provisions of the Mineral and Petroleum Resources Development Act, 2002 (Act no 28 of 2002);

[This provision is currently found in Section 9(1)(b) and now becomes Section 9(1)(c), without any change in the meaning of this sub-section.]

Section 9(6): If the property expropriated is land –

(a) the expropriated owner must deliver or cause to be delivered to the expropriating authority, subject to Section 25, within 30 days of the expropriating authority requesting the title deed to such land, or if it is not in his or her possession or under his or her control, written particulars of the name and address of the person in whose possession or under whose control the title deed is; and

(b) the person referred to in paragraph (a), in whose possession the title deed may be, must deliver or cause to be delivered the title deed in question to the expropriating authority within 20 days of ;the expropriating authority requesting it, subject to Section 25.

[This provision is currently found in Section 14(2), but no longer belongs there, so it has been shifted to Section 9, but without any change in the wording]

In order to maintain ‘an equitable balance between the public interest and the interest of those affected’ by an expropriation, there must be an effective sanction or penalty if an expropriating authority fails to pay the compensation due ten days before the date of expropriation. If the expropriating authority does not do so, the owner or rights holder will lose his or her ownership or other rights without having the money available to acquire alternative residential or business premises or other assets. Since many organs of state in practice fail to pay their bills on time (despite Treasury rules requiring this), there is also a real risk that the payment of compensation may frequently be delayed.

Since late payment cannot be ‘equitable’ within the meaning of Section 25, the proposed amendment provides an effective sanction. If payment is not made on time, then the notice of expropriation falls away and has no further force or effect. This will give expropriating authorities a compelling reason to ensure that payments are not late.

With the deletion of Chapter 2, there is no reason to include references to ‘the person on whose behalf the property was expropriated’. Every organ of state will be an expropriating authority in its own right and will thus have all the powers and obligations set out in the Bill.

For the rest, provisions which fit more logically here are moved from elsewhere to form part of this section, but without any changes to the wording of these clauses.

Section 11: Consequences of expropriation of unregistered rights and duties of expropriating authority

The particular sub-section that needs amendment is noted below

Section 11(1): An expropriated holder of an unregistered right in a property that has been expropriated by the operation of Section 9(1)(b) is, subject to Section 10 and this section, entitled to compensation, either as agreed or as decided or approved by a court under the provisions of Section 21.

The Bill’s existing provisions are inconsistent with Section 25 of the Constitution and other guaranteed rights. By contrast, these amendments confirm that an expropriating authority, in cases of dispute over the proposed expropriation of unregistered rights in property, must either obtain agreement through mediation or obtain a court order confirming the validity of the proposed expropriation. Only thereafter may it serve a notice of expropriation, to which a copy of the agreement reached or the court order obtained must be appended.

Section 12: Compensation for expropriation

The additional sub-section needed is noted below:

Section 12(1): The amount of compensation to be paid to an expropriated owner or an expropriated holder must be just and equitable, reflecting an equitable balance between the public interest and the interests of the expropriated owner or expropriated holder, having regard to all relevant circumstances, including –

(a) The current use of the property;
(b) The history of the acquisition and use of the property;
(c) The market value of the property;
(d) the extent of direct state investment and subsidy in the acquisition and beneficial capital improvement of the property; [delete and]
(e) the purpose of the expropriation; and
(f) an amount to make good any actual financial loss caused by the expropriation of the property.

Para (f) is based on the current wording in the Expropriation Act of 1975. Under Section 25 of the Constitution, compensation must be just and equitable in all the relevant circumstances. In addition, the list of five relevant factors included in Section 25 is not a closed list, but rather an open one. Hence, this additional factor can and should be inserted to help those affected by an expropriation with their moving costs, any temporary loss of income, and any other direct losses resulting from the expropriation.

This is particularly important for tenants of residential and business premises, whose expropriated leases may have little market value and who may thus receive little compensation under the current formula. It is also particularly important for the 2.8 million or so people who currently have unregistered rights of residence on commercial farms. These expropriated residence rights may also have little market value, which may leave farm residents with little compensation under the current formula.

Yet both tenants and farm residents may suffer many losses on expropriation. Among other things, they will probably have to find new homes and livelihoods and pay their moving costs. Tenants with business premises may also lose income in the period before they can restart their businesses, and could lose existing clients who find their new premises less convenient. In addition, farm residents will have to find new jobs and may be unable to keep their livestock, which might have to be slaughtered or sold.

Adding this factor to the existing formula will allow tenants and farm residents to claim for losses of this kind. Expropriated owners also need the benefit of this change, as they too will often suffer similar losses. Incorporating this factor into Section 12 is also consistent with Section 25 of the Constitution, which says that all relevant factors must be taken into account, and then goes on to list some of the factors that are relevant.

Section 13: Interest on compensation

This section should be deleted in its entirety.

Under the amendments earlier proposed, if compensation is not paid in full ten days before the date of expropriation stated in the notice of expropriation, the notice of expropriation becomes invalid and the expropriation cannot proceed. Hence, no provisions for interest on the late payment of compensation are needed.

Section 14: Compensation claims

All sub-sections of this section require some amendment, as set out below:

Section 14 (1):  An owner or holder of an unregistered right who receives a notice of intention to expropriate in terms of Section 7(1) must, subject to Section 25, within 30 days from the date on which that notice was served on that owner or holder, deliver or cause to be delivered to the expropriating authority a written statement –

(a) confirming that the compensation offered in the notice of intention to expropriate is agreed; or

(b) if no compensation was offered, as in the case of an urgent expropriation in terms of section 22, or if the owner or holder proposes a different amount, indicating the amount claimed by the owner or holder as just and equitable compensation; and

(c) furnishing full particulars as to how the amount contemplated in paragraph (b) is made up, including a copy of a valuation, other professional report or other document that forms the basis of the compensation claimed.

The current Section 14(2) should be deleted and moved to Section 9, where it becomes Section 9 (6), see above.

It is inconsistent with Section 25 and other guaranteed rights to allow an expropriating authority to proceed with a disputed expropriation which not in fact be valid because the compensation offered is not truly just and equitable in all the circumstances. This amendment thus makes it clear that an owner or rights holder must have the right to object to the compensation offered when he receives a notice of intention to expropriate and before a notice of expropriation has been served on him.

Section 15: Offers of compensation

The sub-sections requiring amendment are set out below:

Section 15(3): The provisions of Section 21 shall apply if –

(a) an owner or holder of an unregistered right does not deliver a statement in terms of Section 14(1); or

(b) the claimant does not accept the validity of the expropriation or the offer of compensation contemplated in subsection (1), by written reply within 20 days or within such additional term as may be permitted under Section 25; or

(c) the property to be expropriated includes a person’s home and the expropriation will result in the eviction of that person from his or her home.

It is inconsistent with Section 25, 26, and 34 of the Constitution, among other things, for the Bill to seek to confine the disputes that must be referred to court to disputes over the amount of compensation payable on expropriation. These amendments make it clear that disputes over the validity of an expropriation (for example, whether it is really in the public interest) and over the need for court authorisation for any eviction of a person from his or her home must also be referred to the courts.

Section 17: Payment of [delete: amount offered as] compensation

The amount of compensation may not be the amount earlier offered by the expropriating authority in its notice of intention to expropriate, but rather the amount decided by a court under Section 21. Hence, this heading should be reworded as shown.

The sub-sections requiring amendment are set out below. In this instance, the reasons why particular amendments are needed are explained in italics after each sub-section.

Section 17 (1): An owner or holder on whom a notice of expropriation has been served is entitled to payment of the full amount of the compensation ten days before the date of expropriation set out in the notice of expropriation, as required by Section 8(3)(ee). [delete existing Section 17(1)]

As earlier described, late payment cannot be condoned as it undermines ‘the equitable balance between the public interest and the interests of those affected’ which is required by Section 25 of the Constitution.

Section 17(2): If the expropriating authority does not pay the full amount of the compensation due to the owner or the holder within the period required by Section 8(3)(ee), the notice of expropriation becomes invalid and has no further force or effect; [delete existing Section 17(2)]

To prevent late payment, there must, as earlier described, be an effective sanction against late payment, which this amendment provides. In addition, it will not be possible for an expropriating authority to proceed with a disputed expropriation without either reaching agreement on compensation through mediation or obtaining a court order on the issue.

Hence, there is no need for the existing provisions of Section 17(2), which should be deleted.

Section 17(3): Property which is subject to a notice of expropriation served on the owner or the holder of a right may not be sold, mortgaged, or otherwise disposed of without the prior written consent of the expropriating authority, and any sale, mortgage or other disposal of such property, which is entered into in breach of this sub-section, has no legal force or effect.

Section 17(4): If compensation has been paid to the owner of property under sub-section (1) and the ownership of the property for which such compensation has been paid is not transferred to the expropriating authority on the date of expropriation set out in the notice of expropriation, then the owner is unjustly enriched by the payment of compensation and must repay to the expropriating authority the full amount received as compensation, together with interest (at the prime rate plus two percentage points) on any outstanding balance, until the full amount owing to the expropriating authority has been paid.

Section 17(5): If compensation has been paid to the holder of a right in a property under sub-section (1) and the right is not expropriated and transferred to the expropriating authority on the date of expropriation set out in the notice of expropriation, then the holder is unjustly enriched by the payment of compensation and must immediately repay to the expropriating authority the full amount received as compensation, together with interest (at the prime rate plus two percentage points) on any outstanding balance, until the full amount owing to the expropriating authority has been paid.

It is important that compensation should be paid to the owner or rights holder in good time, but the expropriating authority must also be protected in case it does not in fact obtain ownership of (or other rights in) the property. Sub-section 17(3) will help to prevent any unauthorised sale or other disposal of the property or rights in question, while  sub-sections 17(4) and (5) will allow the expropriating authority to recover the compensation it has paid, plus interest at prime plus two percentage points, should this be necessary.

The expropriating authority can also help to prevent any unauthorised sale, mortgage, or other disposal of the property or rights in question by including all details of an  expropriation in the register of expropriations as soon as it issues a notice of expropriation.

Delete Sections 17(3) and Section 17(4)

Late payment is inconsistent with Section 25 and other constitutional guarantees and is no longer permitted under the amendments earlier proposed. Hence, these sections, which have also been replaced by new Sections 17(3) and (4), should be deleted.

Delete Section 17(5)

Payment of compensation should not be made dependent on the tax status of the owner or rights holder.  If such an owner or rights holder is under an obligation to pay VAT, other mechanisms are available under other laws to enforce the payment of this tax.  Hence, this sub-section, which has also been replaced by a new Section 17(5) is not needed and should be deleted.

Section 17(3): The minister may prescribe the information and documentation to be delivered by a person to whom compensation [delete or interest] is payable in terms of this Act, in order to facilitate electronic payment thereof.

Under the proposed amendments, late payment will not be allowed. Hence, there is no need to provide for the payment of interest on compensation and the reference to this should be deleted.

Section 18: Property subject to mortgage or deed of sale

All sub-sections should be amended, as set out below:

Section 18(1): If property the expropriating authority intends to expropriate is encumbered by a registered mortgage bond or is subject to a deed of sale, the owner must inform the expropriating authority of this bond or sale agreement within 30 days of the service on him or her of a notice of intention to expropriate in terms of Section 7(1).

Section 18(2): If a notice of expropriation is later served on the owner under Section 8, the owner and the mortgagee, or the owner and the buyer, as the case may be, must agree on how the compensation payable is to be apportioned between them, and provide a written copy of their agreement to the expropriating authority within 20 days of the service of the notice of expropriation.

Section 18(3): If the owner and the mortgagee, and the owner and the buyer, as the case may be, fail to provide the expropriating authority with a written copy of their agreement, as required by subsection (2), the expropriating authority must deposit the compensation money with the Master of the High Court having jurisdiction in the area in which the property is situated and must do so within the period required by Section 8(3)(ee).

Delete existing Section 18

As soon as the owner receives a notice of intention to expropriate, it must inform the expropriating authority of any bond or sale agreement. If the owner is subsequently served with a notice of expropriation, he or she must reach agreement on the apportionment of the compensation payable with the bond holder or the buyer within 20 days of the service of that notice. The expropriating authority must then pay out the compensation in accordance with that agreement and must do so on the due date: in other words, ten days before the date of expropriation stated in the notice of expropriation. If such an agreement has not been concluded or notified to the expropriating authority, the expropriating authority must instead pay the compensation to the Master on the due date.

Mediation and determination by court

Each sub-section needs to be amended, in the manner shown below:

Section 21(1): If the owner or the holder of a right disputes the validity of a intended expropriation of which he or she has been given notice under Section 7(1), or if he or she disputes the amount of compensation offered in that notice of intention to expropriate, the expropriating authority and the owner or holder, as the case may be, may attempt to settle the dispute by mediation, which must be initiated and finalised without undue delay by either party; provided that if such agreement is reached, the expropriating authority should then purchase the property on the terms agreed rather than proceed with an expropriation.

Section 21(2): If an intended expropriation will involve the eviction of a person from his or her home, the expropriating authority must obtain an order of court authorising the eviction after considering all the relevant circumstances.

Section 21(3): If the expropriating authority and the disputing party are unable to settle the dispute by consensus in the manner contemplated in subsection (1), or if the disputing party did not agree to mediation, the expropriating authority must refer the validity of the intended expropriation and/or the amount of compensation payable to a competent court.

Section 21(4): In any court proceedings contemplated in subsections (2) and (3), the expropriating authority bears the onus of satisfying the court, on a balance of probabilities, that:

(a) the intended expropriation meets all relevant constitutional requirements,
(b) the compensation offered is in keeping with all the factors identified in Section 12 and is just and equitable in all the circumstances, and
(c) the eviction of a person from his or her home as a result of the intended expropriation should be authorised by the court after considering all the relevant circumstances.

Section 21(5):  If the court is satisfied on all the points set out in sub-section (4), it may issue an order authorising the intended expropriation, deciding the compensation payable, confirming that the compensation must be paid in full within the period set out in Section 8(3)(ee), and authorising the eviction of a person from his or her home as a result of the expropriation.

Section 21(6): If the court fails to grant the order contemplated in sub-section (5), the expropriating authority may not proceed with the expropriation.

Section 21(7): If the court grants the order contemplated in sub-section (5), the expropriating authority may proceed with the expropriation after 21 days, unless the owner or holder has lodged an appeal against the court order within that period, in which case the expropriation may not proceed until the relevant appeal court has refused leave to appeal or has granted an order authorising the expropriation, as contemplated in subsection (5).

Section 21(8): Once an expropriating authority has obtained a final court order authorising it to proceed with an expropriation under sub-sections (5) or (7), it must either serve a notice of expropriation on the owner within 60 days, or notify the owner or holder, also within 60 days, that it is not proceeding with the expropriation.

Delete all the current provisions of Section 21

Allowing an expropriating authority to press on with a disputed expropriation without a court order confirming the validity of the expropriation is inconsistent with Section 25 of the Constitution and other guaranteed rights. Allowing an expropriating authority to take possession of a person’s home and so evict them is inconsistent with Section 26(3) of the Constitution and other guaranteed rights. All existing provisions in Section 21 should therefore be deleted and replaced with these clauses so as to bring so as to bring the Bill into line with the Constitution.

Once an expropriating authority has obtained a final court order authorising the expropriation, it must decide within a reasonable time (identified as 60 days in sub-section 8) if it wishes to proceed with the expropriation or not.

Urgent and temporary expropriations

The amendment that is needed to one sub-section is shown below:

Section 22 (5A):  No person may be evicted from his or her home, even for the temporary periods contemplated in sub-sections (1) and (7)(c), without an order of court made after considering all the relevant circumstances.

No person may be evicted from his or her home, even for the purpose of a temporary expropriation, without a court order, as made clear by Section 26(3) of the Constitution. This amendment is needed to give effect to that constitutional guarantee.


South African Institute of Race Relations NPC – 15th April 2016

Free Society Project