The new Expropriation Act (“the new Act”) which was signed on 20 December 2024 has raised various important issues of substantive law.
It seems to me that in this regard two issues require definition and some reflection: firstly, what in fact is it that the new Act presents as new law, and, secondly, how does the new Act impact upon the Constitution of the Republic of South Africa, 1996 (the “Constitution”)?
The Expropriation Act
What then are the real issues that arise from this new Act?
Firstly, we should consider the impact of Chapter 5 of the new Act, which deals with Compensation for Expropriation, and, thereafter, Section 12 in Chapter 5 which defines how compensation is to be calculated.
Section 12 (1) states that “[t]he amount of compensation must be just and equitable reflecting an equitable balance between the public interest, the interests of those affected, including an owner …, 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; and
(e) the purpose of the expropriation.” (my underlining).
Section 12 (2) deals with issues which the expropriating authority may not take account of and for the sake of brevity I shall not deal in this article with such prohibitions. They form in my view in any event no substantive part of the essence of this article.
Section 12 (3) is, patently, the primary source of the public reaction to the new Act. What then does Section 12 (3) actually state?
Section 12 (3): “It may be just and equitable for nil compensation to be paid where land is expropriated in the public interest, having regard to all the relevant circumstances, including but not limited to-
(a) where the land is not being used and the owner’s main purpose is not to develop the land or use it to generate income, but to benefit from appreciation of its market value;” (my underlining).
Firstly, it should first be noted that the section deals only with land, and not with “property”. “Property” as defined in the Act has a wider meaning than “land”. Secondly, even if a portion of land falls within the narrow definition of Section 12 (3) (a), the section is not applicable if the proposed expropriation is “arbitrary and/or for a purpose other than a public purpose or in the public interest” (Section 2 (1) of the Act) (my underlining).
The Constitution
It should be stated up front that the new Act makes no amendment to the Constitution. All of the Constitution’s major provisions protecting the property ownership of its citizens remain intact. In brief these provisions are Section 25, Section 33(1) and Section 34.
Section 25 provides, inter alia, that “[n]o one may be deprived of property except in terms of law of general application and no law may permit arbitrary deprivation of property” (my underlining).
Section 33(1) provides that “everyone has the right to administrative action that is lawful, reasonable and procedurally fair” (my underlining).
Section 34 provides that “everyone has the right to have any dispute that can be resolved by the application of law decided in a fair public hearing before a Court …” (my underlining).
Notwithstanding all of the above, it is arguable that the provisions of the new Act are in conflict in particular with Section 25(3)(c) of the Constitution. That section makes the following statement:
“25(3) The amount of the compensation and the time and manner of payment must be just and equitable reflecting an equitable balance between the public interest and the interests of those affected having regard to all relevant circumstances, including –
(c) the market value of the property;”
It should be noted that the wording is precisely the same as is set out in Section 12 (1) of the new Act. The issue before us then is whether the intention of the new Act as expressed in Section 12 (3) is in conflict with Section 25 (3) (c) of the Constitution.
Effectively, the new Act seeks to legislate a market value of land as being of NIL value in certain circumstances.
The crisp issue then is whether the new Act imposes upon the interpretation of Section 25 (3) (c) of the Constitution a meaning and/or consequence which simply was not intended nor foreseen by the draftsmen of the Constitution, and that accordingly the new Act in essence seeks to amend the Constitution through the backdoor, so to speak.
I understand from the media that various entities are presently engaged with the compilation of Court papers which shall seek to set aside the new Act, or at least the provisions of Section 12 (3) thereof. Time shall tell.