Expropriation without compensation- what you need to know

One of the cornerstones of the Constitution of the Republic of South Africa (“the Constitution”) is the Bill of Rights. The rights contained therein form the cornerstone of South African democracy and, as such, they reaffirm the democratic values of human dignity, equality and freedom.

Written By of Cowan-Harper-Madikizela Attorneys

These values are promoted by the establishment and maintenance of a well-functioning economy.  The basis upon which an economy is established is the concept of the private ownership of property.

This concept and the legal principles that are based thereon and have been developed in respect thereof, allow for free-trade, which trade, between both private individuals and juristic persons, enable enterprise and wealth production.

The protection of the right of private ownership of property has always been entrenched in Section 25 of the Constitution.

In its current form, Section 25 of the Constitution provides that:-

“25(1) No one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property.”

This section goes further and provides that property can only be expropriated for a public purpose or in the public interest and subject to compensation, the amount of which and the time and manner of payment of which have either been agreed to by those affected or decided or approved by a Court.

As a result, no person could be arbitrarily deprived of their property and no person could be deprived of their property unless:-

  • it was in terms of a law of general application;
  • deprivation was for a public purpose or in the public’s interest; and
  • it was subject to compensation.

Over the past few years, several political parties have sought to have Section 25 of the Constitution amended to allow for the expropriation of property without compensation.

To this end, a draft Expropriation Bill was published in the Government Gazette on 21 December 2018 (“the Expropriation Bill”).  This article does not seek to deal with the Expropriation Bill specifically, but it is important to bear in mind that such a Bill exists and should be considered in considering whether or not the proposed amendment to Section 25 of the Constitution and the manner provided for therein of depriving persons of property without compensation is just and equitable, or unconstitutional and against the laws of Natural Justice as applied world-wide.

This article seeks to deal with the draft Constitution 18th Amendment Bill (“the Bill”), which has been published by the Ad Hoc Committee dealing with the amendment of Section 25 of the Constitution. It is not clear why this Bill has been published at such a time that many people are away and during the Festive Season

In terms of the Bill, the following important proposals are made:-

  • that property may be expropriated only in terms of the general Law of Application for a public purpose or in the public interest and subject to compensation. However, provision is made that a Court may, where land and any improvements thereon are expropriated for the purposes of land reform, determine that the amount of compensation is nil;
  • that the circumstances under which a Court may determine that the compensation should be nil should be dealt with in legislation. This Bill must therefore be read together with the Expropriation Bill, particularly Section 12(3) thereof.

Section 12(3) of the Expropriation Bill reads as follows:-

“It may be just and equitable for nil compensation to be paid where land is expropriated in the public interest, having regard to all relevant circumstances, including but not limited to:

  • where the land is occupied by a labour tenant;
  • where the land is held for purely speculative purposes; 
  • where the land is owned by a state-owned corporation, or other state-owned entities;
  • where the owner of the land has abandoned the land;
  • where the market value is equivalent to, or less than, the present value of direct state investment or subsidy in its acquisition and beneficial capital improvement of the land…”.

It is to be noted that the wording “having regard to all relevant circumstances” is extremely wide and leaves it open, in our view, for nil compensation to be applied in almost any circumstance which a court, for political reasons, may consider to be relevant. We do not intend to address herein all of the inherent difficulties and obvious shortcomings of this Section.

Suffice to say that, to the extent that these two Bills are promulgated into law, without amendments thereto, both foreign and local investment in the economy may be severally jeopardised and prejudiced. It shall also be necessary for the legislature to consider whether or not the proposed amendments, as read with the Expropriation Bill, do not undermine the democratic values of equality and dignity.

It is our view that this is an issue which will directly affect all citizens of this country and accordingly, all citizens and legal entities, both foreign and domestic, should consider the provisions of these Bills and the impact that they may have on the continued operation of their business.

Members of the public may provide feedback to the legislator in respect of this Bill in written submissions which must be received on or before Friday, 31 January, 2020. Written submissions may be sent to Section25@parliment.gov.za.

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