South African Institute of Race Relations NPC
Submission to the Department of Public Works
regarding the
Expropriation Bill of 2013
Johannesburg, 30th April 2013
SYNOPSIS
The Expropriation Bill of 2013 (the Bill) is better than its 2008 predecessor in one key way, for it allows the courts, rather than the State, to decide the compensation payable for expropriated property.
The earlier expropriation bill of 2008 was evidently unconstitutional in attempting to prevent the courts from deciding the compensation due. By contrast, the current Bill gives the courts the power to decide on ‘just and equitable’ compensation, based on market value and four further factors, as the Constitution requires.
This is a major advance. However, while the Bill appears to be making a vital concession with one hand, in practice most of the benefit of this is removed with the other.
Among other things, the Bill still:
· extends the power to expropriate from the minister of public works to almost all organs of state at all three tiers of government, thus enabling some 500 or more state entities to expropriate all kinds of property;
· allows an ‘expropriating authority’ to take ownership and possession of property without prior court confirmation that the expropriation meets the Constitution’s requirements and before the State has paid any compensation at all;
· states that compensation becomes payable only when its amount has been agreed by the State or decided by the courts; and
· puts great pressure on the expropriated owner to agree to the amount of compensation offered by the State, rather than remain without the benefit of either the property or its value in money.
In practice, the option of applying to court to decide a different measure of compensation is likely to benefit only those with deep pockets – the few who, despite the loss of their property to the State, can afford the cost of lengthy litigation with no guarantee of success.
The Bill thus undermines the guaranteed right of access to court, under Section 34 of the Constitution. In addition, the Bill allows expropriation to take place before the State has shown that all the requirements for valid expropriation under Section 25 of the Constitution have been met. Moreover, the Bill fails to recognise that, where the property expropriated is, or includes, a person’s home, no eviction may take place without the State first obtaining a court order authorising this under Section 26(3) of the Constitution. These discrepancies between the Bill’s provisions and the Constitution’s requirements cast great doubt on the constitutionality of the Bill.
In addition, the Bill remains a draconian measure giving all state agencies, from municipalities upwards, the power to take from miners, farmers, firms, and ordinary people their most valuable assets – often their only assets, built up over a lifetime of endeavour. In return, expropriated owners will receive less than market value and consequential loss suffered.
No matter how sparingly the Government might now intend to use the measure, once it has been put on to the Statute Book there will be little to limit state agencies from resorting to it ever more often. The mere risk of this will be enough unsettle the property rights of all South Africans. This in turn will deter investment, undermine already faltering growth, and make it harder still to overcome poverty, inequality, and unemployment.
By contrast, the current Expropriation Act of 1975 allows the minister of public works to expropriate property for public purposes against payment of compensation based on market value, damages for loss suffered (including loss of income), and a further percentage as a solatium (solace). Though ownership and possession pass to the State on the dates specified in the expropriation notice, at least 80% of this compensation must be paid when the Government takes possession. Interest on the outstanding balance is also payable from then on.
These provisions in the current Act provide important safeguards against any abuse by the State of its power to expropriate.
However, the current Act is also out of line with the Constitution in various ways. These shortcomings can and should be corrected via the amendments outlined below, which would also obviate any need for the further wholesale changes envisaged in the Bill.
The Act should thus be amended to:
· give the minister of public works the power to expropriate ‘in the public interest’, as well as ‘for public purposes’;
· provide that the market value of the property must be balanced against the four other ‘discount’ factors listed in Section 25 (the current use of the property, the history of its acquisition, the extent to which the State has previously subsidised its acquisition or capital improvement, and the purpose of the expropriation);
· put the onus on the State to obtain a court order confirming that all requirements under Section 25 for a valid deprivation of property have been met before a notice of expropriation may be issued; and
· where the expropriated property is, or includes, a person’s home, make it plain that no person may be evicted without a court order expressly allowing this, as required under Section 26(3) of the Constitution.
These changes would bring the current Act fully into line with the Constitution. They would also avoid the negative economic ramifications of the Bill, along with well-founded doubts as to whether the proposed measure would pass constitutional muster. The Bill should thus be withdrawn in its entirety, in favour of a new amendment bill with the core provisions outlined above.
South African Institute of Race Relations NPC 30th April 2013
