Read between the lines to understand the pernicious Expropriation Bill - Farming Portal

Martin van Staden

In a well-meaning and thoughtful piece (‘Putting the Expropriation Bill into perspective – it’s not the ugly ogre some make it out to be’) Annelize Crosby argues in the Daily Maverick that many of the concerns with the 2020 Expropriation Bill are overblown.

It is impossible to hold the Expropriation Bill side-by-side with the expropriation legislation of other countries and, on the strength of broadly similar textual provisions, conclude that the bill is generally benign.

To get an accurate understanding of the Expropriation Bill, one must read beyond its text. And when one does have regard to its provisions, they cannot be considered in isolation from one another – or indeed from the surrounding South African political climate and context. All of this is crucial to understanding why this bill should set off alarm bells.

Expropriation – as Crosby rightly notes – is a perfectly normal legal institution found in the toolkit of every government around the world. None of the opponents of the Expropriation Bill have seriously argued that the South African government must be fully divested of its power to expropriate. In fact, the IRR has itself proposed a better Expropriation Bill (see Appendix 1 here). However, the bill before Parliament is by no means a normal expropriation statute.

While there are many problems in the bill that are exhaustively discussed here and here, the two interrelated items I focus on in this article – which underlie all the other problems and make the Expropriation Bill decidedly abnormal – are the perverted purpose of expropriation law, and the underrated importance of market-value compensation.

Drastic intervention

Crosby correctly explains that expropriation is a ‘drastic intervention’ and is therefore legally limited by such institutions as compensation. This analysis is, however, understated. Not only is expropriation something to be limited, but it is something to be actively avoided, and invoked exclusively under strictly necessary circumstances.

Why is this?

‘Blameworthiness’ is an important legal concept, and it is entwined with the social contract that exists between the political authority and legal subjects. When people conduct themselves in a manner that harms the interests of another, an institution is necessary to resolve this conflict rather than leaving it to the parties themselves. This is the basis of the state: individuals have given up their executive power, or their right to ‘self-help’, so that the state, through its institutions, can create order, certainty, and harmony.

Following from this, when the party that has done something wrong did so in a particularly egregious way, the state prosecutes them under criminal law. Alongside this prosecution exists a litany of procedural and substantive rules and safeguards designed to ensure that no innocent person is punished, and that no guilty person is punished excessively. Similarly, when the party has done something less serious, they can be sued in terms of the law of delict (or some other branch of private law).

In both the cases of crime and delict, someone needs to go to an impartial court and prove to this body that the defendant or respondent is in fact blameworthy, whether intentionally or negligently. This identifiable individual person, through their conduct, has done something wrong, and the law must set that right. In terms of property, criminal prosecution might lead to asset forfeiture, and delictual liability might lead to damages being paid or property being ‘vindicated’ (recovered).

What does expropriation have to do with any of this? Nothing, and that is precisely the problem with the general tenor of the Expropriation Bill.

Owners whose property is expropriated have done nothing wrong – they are not blameworthy. If they have done something wrong, they would need to be pursued criminally or delictually, not in terms of expropriation law. Cases of expropriation are not situations where the political authority must step in to resolve a conflict between legal subjects due to the one or other party’s unlawful conduct.

Expropriation is a unique legal institution that governments only get to use when, truly and clearly, not to do so would lead to some kind of serious harm to society. It is something government does to protect society. Therefore, for instance, the ostensible need to erect electricity pylons might lead to government expropriating property, lest a whole section of the population be left permanently without power, which is economically ruinous.

What expropriation is not, and cannot be, then, is a tool of punishment, of vengeance, of spite, or even, yes, of ‘justice’. If the government seeks to punish or to let justice be done, it must use the justice system and all its associated institutions and guardrails. But in the (imperatively) unlikely event that government does seek to use expropriation for something other than protecting society, the burden of compensation must increase.

Market value and saying sorry

Crosby quotes the United Nations, which correctly likens expropriation to ‘compulsory sale’. This is the correct way to think of this non-penal institution, meaning that the owner may and must not be harmed. It is a sale, not plunder. Market value is therefore the absolute minimum amount of money property may be expropriated for – a notion very annoying to the proponents of the Expropriation Bill and the associated failed constitutional amendment.

But above market value is likely to be the fairest price to pay in a compulsory sale. This is because when we ‘sell’ something, we sell it at a price where the money we receive is of greater value to us subjectively, than the value of the property is to us subjectively. This might be the market price, but given sentimental and other attachments, it is likely higher.

In addition to this, and because expropriation is a non-penal institution that government invokes begrudgingly rather than liberally, there must also be payment of solatium. Solatium, which the 1975 Expropriation Act provides for and which the 2020 Expropriation Bill removes, is a payment in addition to compensation that stands in for a government apology.

Remember, the owner is not being punished. Owners have done nothing wrong to invite the seizure of their property. Government is expropriating it because it has no other option. And as such, government must apologise and make right the (usually severe) inconvenience that it is causing to a blameless property owner.

This is also how section 25(3) of the Constitution should be construed: the factors listed to arrive at the amount of compensation must use market value as the starting point and the floor, only to move upward. If we move downward, we are harming the owner, which would enter the realm of punishment, vengeance, or spite. There is no public-interest reason for government to harm blameless legal subjects. In fact, it is unlawful.

Land ownership too explosive an issue to allow reckless inaccuracies

If readers take one thing from this article, it is what the government and the courts must always have foremost in mind when considering an expropriation (as opposed to criminal prosecution or delictual lawsuit):

The Owner Has Done Nothing Wrong

Friends of the Expropriation Bill would be quick to point out that the constitutional standard of compensation is ‘just and equitable’, not ‘market-based’, and this is correct.

However, given what I have argued, just and equitable (the word ‘equity’ is often confused as a synonym for ‘equality of outcomes’ but historically is rather concerned with fairness) is likely to be above market value. When this is understood, it is clear that Crosby is incorrect to say the ‘predefined norm’ of ‘market value’ does not align with the constitutional framework. It aligns perfectly.

This is all to say that when expropriation takes place, the owner must receive at least market-value compensation, but must usually receive more than market-value compensation and the payment of solatium. It might be difficult to quantify exactly how much above market-value to pay in compensation, but what the owner demands is usually a good starting-point.

Finally, if the government seeks to use expropriation (as opposed to the justice system) as a means of achieving ‘justice’, the compensatory burden must necessarily increase significantly. Since these owners whose property must as a matter of justice be seized have done nothing wrong, and the property is not being seized for the protection of society, they must not only be compensated for the loss and inconvenience, but they must be handsomely rewarded for the sacrifice.

Government’s nefarious intentions

The fact that the government has attempted, as Crosby points out in the case of the Office of the Valuer-General, to reduce the compensatory burden on itself in the past, is a clear indication that the Expropriation Bill, despite its ostensibly benign text, would not be wielded in a benign fashion. In my view, the government has shown decidedly malicious intentions with its approach to land reform in recent years.

Here are select examples:

State Land Lease and Disposal Policy: As colleague Terence Corrigan has repeatedly explained, the government’s land policy is premised on state ownership and civilian use. Rather than seeking to truly do justice with its coercive power over property by expanding ownership, the state instead seeks to increase its own property portfolio.

Original sin: President Cyril Ramaphosa infamously invoked biblical terminology by, in substance, referring to the continued ownership of land by white individuals in South Africa as resulting from ‘original sin.’ We must all agree that colonial dispossession was wrong, but ‘original sin’ means modern-day innocents are somehow still culpable for that centuries-old violence. In reality, land has changed hands many times, and even if a property remains owned by the descendants of colonial dispossessors, the current owners – blameless as they are – are just as entitled to compensation as the descendants of the dispossessed are (and they are) to have their land ownership vindicated.

Constitutional change: The African National Congress and Economic Freedom Fighters sought to have South Africa’s historic political compact changed in a way that would have empowered the government to seize property without being required to pay any compensation. They called this ‘expropriation’, but sans the compensatory requirement, the amendment was in fact one of confiscation. This trickery was an attempted defrauding of the South African public, which thankfully failed.

All of these phenomena and more need to be seriously factored into any evaluation of the Expropriation Bill.

Crosby is right that expropriation should be a last resort, but it necessarily seems to be the case that it will not be used as a last resort in good faith. Senior members of government have indicated that they seek to use the power of expropriation more than they have in the past, which is hardly indicative of an institution government may only utilise under exceptional circumstances, and begrudgingly.

If anything, any government should be dead set on utilising the expropriatory power as little as possible, if at all.

It is unfortunate, then, that Crosby joins a group of thinkers, among them the South African government, who submit that there is at least an implicit tension ‘between the public interest and the owner.’

The reality is that the committed protection of private property rights is entirely aligned with the public interest, as is paying blameless owners (at least) the market value of their expropriated property. The public interest is served by a government that places the private property rights of owners (rich or poor) at the top of its list of things to protect. This is the only sure-fire way of creating a sustainably prosperous society.

A concluding note

As a concluding note, I fear some readers might be left with the impression that I have argued that ‘property owners can do no wrong.’ Allow me to clarify for posterity: In those cases where expropriation law is utilised, the owner has done nothing wrong. Property owners can do plenty wrong, and when that happens, the government or the victims of their misbehaviour, if they seek legal recourse, must make use of criminal law or a branch of private law (primarily the law of delict) to seek redress. The law does have mechanisms of punishment and justice, but expropriation law is not one of them.

In criminal law and delict, the owner pays, because they have done something wrong. In expropriation law, the owner gets paid, because they are being wronged.

This is the paradigm through which the Expropriation Bill must be viewed. And when viewed as such, it is immediately clear that it does not stand up to scrutiny.

Martin van Staden is the Deputy Head of Policy Research at the IRR

https://www.farmingportal.co.za/index.php/farming-news/south-africa/9449-read-between-the-lines-to-understand-the-pernicious-expropriation-bill

This article was first published on the Daily Friend.