TEMBEKA NGCUKAITOBI: New Expropriation Act is a promising start

Of all the clauses in the new Expropriation Act of 2024, none has generated more heat than section 12(3), which enables the state to offer “nil compensation” in certain instances to an owner of expropriated property. Here I offer some light to add to the abundantly generated heat.

To start with, under the SA constitution no expropriated property owner is entitled to the market value of their property. Rather, in terms of section 25(3) the amount, timing and manner of payment must be agreed with the owner. In the absence of agreement, a court must decide all three items.

Furthermore, what is to be “paid” to the owner is not the price or the value of the property. An owner’s entitlement to compensation is subject to two factors — what is just and equitable, and what would reflect an equitable balance between the public interest and the interests of those affected.

Plainly, the drafters of the constitution rejected the idea, entrenched in the apartheid-era Expropriation Act of 1975, that an expropriated owner should be placed in the position they would have theoretically been in had the expropriation not taken place. Also cast aside by the constitution are rigid economic formulas to determine compensation.

Market value

Instead, nuanced approaches steeped in history, economics, social justice and equity are the telos of the constitution. The market value of the property is one of the considerations taken into account. It is not the first, nor the most important consideration.

However, I regret to point out that it is not only property owners who have elevated the position of market value in expropriation. Post-apartheid judges have also — wrongly — assumed that market value plays a preponderant role in the determination of compensation. They have done so on the incorrect assumption that market value is “easily quantifiable”, and that by starting with it, subtractions and additions can be made to that value to arrive at a fair price for the owner.

In doing so, judges, especially of the Land Claims Court, overlooked the plain text of the constitution and did not give due consideration to the ambiguities and imprecisions inherent in market value — usually referenced as “willing seller, willing buyer”. They failed to appreciate that there is no real “open” market for expropriations, and there are no willing sellers, or willing buyers.

It is interesting to note is that under apartheid judges long rejected the idea of a willing seller, willing buyer in expropriation cases, holding that the number arrived at to calculate the price of an expropriated property is ultimately an approximation — a thumb-suck, if you like. So a proper construct of the constitution should start here: accepting that market value in expropriation cases is an economic construct, a mirage.      

Racial redress

There is another clause of the constitution that is central but often overlooked by opponents of the new law. Section 25(8) provides an instruction towards interpretation: no provision in the whole of section 25 must be construed to prevent the state from taking reasonable legislative and other measures to ensure land reform and to redress the effects of racial discrimination.

This means that racial redress is viewed to be a central pillar and tenet of the new constitutional order. Without racial redress, especially in property and land, the struggle for freedom is reduced to a meaningless gesture, a pretence. 

Time now to look at section 12(3) of the Expropriation Act. Some explanation is warranted here. The section does not apply to all “property”. It is tailored to affect only “land”, a concept that is not defined, but a “land parcel” refers to land that has been surveyed and is either registered or not yet registered at the deeds office.

This therefore excludes land that has not been surveyed, of which there is plenty in SA. Also, the section does not apply where the state acquires land for “public purposes”. While the distinction between public purpose and public interest can be an illusory one in some cases, it is an important one.

Public purpose boils down to whether the acquired property is required by the state in the discharge of its legal duties, and will be used by the public or for the benefit of the public. For instance, the department of basic education is required by law to provide education and may require property for this purpose. While it has the right to ask the department of public works to assist it to expropriate private property to implement the law, it has no right to do so on a nil compensation basis.

Public interest has not been satisfactorily defined, but the act says it includes land reform. That means land that is required for land reform purposes may be expropriated on a nil compensation basis. Here the act goes a bit wobbly, because its thrust is not land reform. This is a law designed to help the department of public works fulfil its obligations, which is to hold state property.

There is more: the mere fact that land is needed for land reform is not a general entitlement to take it for nil compensation. Nil compensation must also be just and equitable. Some factors are highlighted as possible indicators of where nil compensation may be just and equitable — land speculation, land held by organs of state but not used productively and where it was acquired for no consideration, abandoned land, and where state investment on the land outweighs present market value.

Much has been said about the uncertainty inherent in this provision, but this is an exaggeration. It is clear that the state has no unqualified power to grant nil compensation. Also clear is that only judges may make such decisions. If anything, this is a strength of the act. Not only is it inspired by the obvious and manifest need to end the deprivation of property, which overwhelmingly affects black people, it also seeks to do so through the rule of law.

While the act is constrained in its ability to address spatial apartheid, land injustice and property racism, it is a promising start in its commitment to the rule of law. That means it has the potential to be a good law overall. 

• Ngcukaitobi, an advocate and legal scholar, is author of “Land Matters: SA’s Failed Land Reforms And The Road Ahead.