Newsflash

Released - 12 June 2023

Dear members.

The minutes of the AGM, held on 17 November 2022, and the January 2023 newsflash will probably have left some of you with the impression that the application to have the claim de-gazetted and withdrawn from the court roll had actually been submitted to the court and that LCAG was in  the position of awaiting feedback on the success, or otherwise, of the application.

Unfortunately this is not the case. The application has not been submitted for a number of reasons, as follows:-
1) The need for the legal team to gather much more information before any application could be made;
2) The absence of standard routines and formalities for the application process, exacerbated by the fact that such an application is complex and had not previously been made by anybody; and
3) A misunderstanding, with regard to intentions, between the Committee and the legal team.

When the Committee became fully aware of the situation they made an appointment (for 26 May 2023) to meet with the legal team (Advocate Henk Havenga and Attorney Peet Grobbelaar).

On 23 May, before the planned meeting could take place, Advocate Havenga phoned and stated, conclusively, that the intended application to have the claim de-gazetted and withdrawn from the court roll had absolutely no prospect of success and in addition would be hugely expensive. The Advocate, however, gave some good news (consolation prize?) that:-

• The State has appointed an attorney (Attorney Russia Langa) for the Claimants; and
• An application to have another pre-trial conference on a date in late June (optionally 19th or 20th or 21st or 22nd) had been made and that Attorney Langa has already accepted.

The Committee has not yet had an opportunity to meet to discuss the above developments but will do so in due course. They will also discuss:-
1) The 9 wasted months between the date (1 September 2022) when approval was given to lodge an application to have the claim de-gazetted and the 23 May when it was finally determined that such an application was not possible;
2) Whether any remedial action needs to be taken;
3) Next steps and where to from here.

2.  Expropriation Bill

The expropriation bill was adopted by the National Assembly on 28 September 2022 and was passed to the National Council of Provinces where, at the end of May 2023, it is still under consideration.

Two articles, one expressing a “PRO” and the other a “CON” viewpoint, have appeared in the press recently. The first article, written by Annalize Crosby (Head of legal intelligence at Agbiz) was published in The Daily Maverick on 16 April 2023.

The second article, a response to the first article, was written by Martin Van Staden (Deputy Head of policy research at the Institute of Race Relations and an advisor to the Free Speech Union SA) and was published in The Daily Friend on 25 May 2023.
Because of the importance of the topic, to every property owner, they are reprinted in full at the end of this newsflash.

If, after reading both articles, you personally believe that the South African Government truly has your best interests at heart then you will probably favour the first article. If you have doubts that the South African has your best interests at heart, then you might well favour the second article!

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The above matters are updates to the recent previous newsflashes and, for clarity, should be read in conjunction with them.
As a formality I should like to record that the opinions stated above are my own and are made without prejudice to any legal or any other position that may exist insofar as the Broederstroom Land Claim is concerned.

Leon Scholtz, our Chairman, is overseas and out of contact at the moment and he has asked me to finalize and sign this newsflash.

                                                                                                               
Our bank account details
26778 Land Claim Committee; Standard Bank; Van Der Walt Street PTA.
Clearing Code 010145; Cheque account 410776882.
Please email the deposit slip to accounts@broederstroomlandclaim.co.za.  Please use your membership number as a reference.

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LAND REFORM OP-ED
Putting the Expropriation Bill into perspective – it’s not the ugly ogre some make it out to be
By Annelize Crosby,16 Apr 2023

The Expropriation Bill guarantees that expropriation can only be used as a last resort after all other attempts to buy the property have failed. The extent of expropriation is therefore not determined by any political party’s land reform targets.
So much has been written and said regarding expropriation and the Expropriation Bill over the past number of years, and yet, there still seem to be many misconceptions about the bill and what it is trying to achieve.

The possibility of government or some organ of state taking private property against the will of the owner understandably instils fear in and resistance from individuals and companies. The state is powerful and the idea of the state targeting one’s property for expropriation leaves people feeling very vulnerable.

Having said that, expropriation is internationally entrenched as a legitimate part of the functions of a state, and is recognised as such, even by the United Nations.

In the Encyclopaedia Britannica, “expropriation” is defined as follows: “expropriation implies legal process and just compensation for goods or property taken for public use, with judicial redress as a remedy for inadequate compensation. Expropriation is not ordinarily a method of supplying the common needs of the government but is directed toward the satisfaction of specific government objectives.”

Because expropriation is such a drastic intervention, its application is limited and its use qualified by international and national law. The right of the property owner to be adequately compensated for losses incurred by expropriation is recognised in international law and finds constitutional protection in many jurisdictions.

International context
Every government in the world can resort to expropriation as a means to acquire property for certain public purposes. The Food and Agricultural Organization (FAO) of the United Nations published a guide on international best practice for expropriation in 2009. In the document the FAO explains why expropriation or compulsory acquisition is important.

It states: “Sustainable development requires governments to provide public facilities and infrastructure that ensure safety and security, health and welfare, social and economic enhancement, and protection and restoration of the natural environment. An early step in the process of providing such facilities and infrastructure is the acquisition of appropriate land. That land may not be on sale at the time it is required. In order to obtain land when and where it is needed, governments have the power of compulsory acquisition of land: they can compel owners to sell their land in order for it to be used for specific purposes.”

Compensation and fair procedure lie at the heart of expropriation. The right not to be arbitrarily deprived of property and the right to fair compensation in the event of expropriation is protected in one form or another in international human rights instruments such as the United Nations’ Universal Declaration of Human Rights, the European Convention on Human Rights and the African Convention on Human Rights (African Charter on Human and Peoples’ Rights).

The modern approach to compensation is based on the principle of equality in the bearing of public burdens. This is a principle adopted by French, German and American law.

According to this approach, “where one or more individuals must bear a sacrifice (being the loss of property) for the common good, their individual and excessive burden should be compensated by the community (thus the State).”

The point of departure of the document is that forced acquisition of property is a necessary power for the state but that measures should be in place to prevent abuse. The guide requires, among other things, clear and transparent procedures for forced acquisition of property, and compensation that will ensure that the affected persons are not worse off after expropriation than they were before.

It further states that affected persons must not only be compensated for the loss of land but also for improvements made and for the disruption that accompanies expropriation. Subject to a few issues that have consistently been raised by Agbiz, the Expropriation Bill seems to incorporate these elements.

The South African Constitution
The Constitution deals with expropriation and compensation in section 25(3). Sections 25(2), (3) and (4) are of relevance and provide as follows:-

“Property may be expropriated only in terms of law of general application–

(a) for a public purpose or in the public interest; and

(b) 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.

(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–

(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.

(4) For the purposes of this section–

(a) the public interest includes the nation’s commitment to land reform, and to reforms to bring about equitable access to all South Africa’s natural resources.”

There was a failed attempt from 2018 to 2021 to amend section 25 of the Constitution. This means that section 25 remains as it is and that all expropriations and expropriation legislation must be compliant with these provisions. This is very important, as the test in section 25(3) for compensation requires that it must be just and equitable and also requires that the court is the final arbitrator in any disputes regarding expropriation and compensation.

The Valuer-General attempted to implement regulations regarding compensation that were not completely aligned with the Constitution and as a result had to settle a dispute in the Melmoth restitution claim in KwaZulu-Natal and lost a case regarding the Moloto community restitution claim in Gauteng.

The Valuer-General tried to reduce the concept of just and equitable compensation to a fixed formula and bring in a concept of “current use value”, which in many cases reduced the compensation amount offered to the landowner drastically.

The Land Claims Court found that: “In the absence of any other information and satisfactory evidence upon which just and equitable compensation can be assessed, this Court is constrained to conclude that market value is, in the circumstances of this case, just and equitable compensation as the landowners contend.”

The courts will only consider factors in coming up with just and equitable compensation where there is proof of the quantum of such factors and if it is justifiable to take such factors into consideration. In this case there was no concrete proof that “current use value” was a relevant factor.

Businesses and property owners understandably seek to pin compensation to predefined norms such as “market value” while radical calls have been made for a discounted value to be paid, including no compensation. Neither option aligns with international standards nor our own constitutional framework.

Compensation is a normative judgment that looks at the subjective circumstances of the owner in addition to the objective value of the property itself to strike a fair balance between the public interest and the owner.

Advantages of enacting the bill
Firstly, it must be emphasised that we do have a current Expropriation Act on the statute books and in many respects the bill is an improvement on the 1975 Expropriation Act. It provides for a uniform process that must be followed when property is expropriated and remedies many of the deficiencies contained in the current act.

For instance, it provides for extensive consultation with affected parties, including financial institutions that hold bonds over the affected property and persons who have rights to the land but are not landowners. It also provides for a series of offers and counter-offers in an attempt to promote agreement between the owner, bond holder and authority on the amount of compensation. Should it be impossible to reach agreement, then compensation must be decided upon by a court of law.

It also contains many checks and balances, including a provision that there must be an attempt to settle before the state decides to expropriate and an opportunity to object to the intention to expropriate. This is absolutely vital as it cements the role of expropriation as a last resort.

In many respects, this provision allays fears that the state could go on a large-scale expropriation drive akin to Zimbabwe or Venezuela that threatened food security.

In fact, this provision calls into question any economic modelling done to try to predict the impact that the Expropriation Bill could have on property prices, investments or food security as there is simply no way to determine how often expropriation will be used.

The bill guarantees that expropriation can only be used as a last resort after all other attempts to buy the property have failed. The extent of expropriation is therefore not determined by any political party’s land reform targets but rather by the degree to which landowners and the state hold out in negotiations or choose to make a genuine attempt at reaching a fair settlement.

Simply put, there is no way to accurately predict the impact that expropriation will have because there is no way to predict how often it will be used.


Challenges posed by the bill:
Nil rand compensation
One of the concerns regarding the Expropriation Bill is that it provides in clauses 12(3) and (4) for the possibility of nil rand compensation in certain circumstances. The clauses are worded as follows:

“(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 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;

(b) where an organ of state holds land that it is not using for its core functions and is not reasonably likely to require the land for its future activities in that regard, and the organ of state acquired the land for no consideration;

(c) notwithstanding registration of ownership in terms of the Deeds Registries Act, 1937 (Act No 47 of 1937), where an owner has abandoned the land by failing to exercise control over it;

(d) where the market value of the land is equivalent to, or less than the present value of direct state investment or subsidy in the acquisition and beneficial capital improvement of the land; and

(e) when the nature or condition of the property poses a health, safety or physical risk to persons or other property.

(4) When a court or arbitrator determines the amount of compensation in terms of section 23 of the Land Reform (Labour Tenants) Act, 1996 (Act No 3 of 1996), it may be just and equitable for nil compensation to be paid, having regard to all relevant circumstances.”

While there is certainly criticism to be levelled at this wording and some of the categories listed, it is still subject to the test of whether it is just and equitable. Awarding little or no compensation will have to be justifiable in an open and democratic society and the state will have to show exactly how and why it arrived at nil rand compensation.

It remains unclear what the impact will be of listed specific circumstances on compensation, but many of the country’s best legal minds have consistently argued that it is unnecessary and short sighted to list specific circumstances in a framework bill that will have wide application.

Any attempt to award nil compensation will have to be justified and a calculation would need to be made using the values afforded to all relevant factors to show how a nil rand value was arrived at.

The definition of expropriation
Constitutionally speaking, there are two concepts that are relevant when it comes to the taking of property, namely deprivation and expropriation. Deprivation is the wider concept, expropriation is a form of deprivation. Only expropriation attracts compensation. That is why the definition of expropriation is so important – if an action by government that has an impact on property falls outside the definition of expropriation, it will be regarded as a deprivation and no compensation will be payable.

The definition in the Expropriation Bill is very narrow and has a strong focus on the acquisition of the property by the state. It does not consider the loss that the property owner suffers. The definition reads as follows:

“‘Expropriation’ means the compulsory acquisition of property by an expropriating authority or an organ of state upon request to an expropriating authority, and ‘expropriate’ has a corresponding meaning.”

This definition may have the effect of excluding all instances where the state does not acquire the property but nevertheless limits the owners’ rights to such an extent that it becomes of no value. It opens up the possibility of all sorts of regulatory limitations on property with no compensation and of the state acquiring property on behalf of third parties, while now acquiring the property for itself.

It should be noted that this cannot be done at the discretion of an official but only through the enactment of laws or the implementation of a law that places limitations on the use and enjoyment of property by an owner.

Internationally, the concept of “expropriation” has been developed by the courts on a case-by-case basis over a considerable length of time. The majority of these jurisdictions have opted for the courts to retain the discretion as to when government action which encroaches upon an owner’s right to use and enjoy the property will amount to an expropriation. Ideally this should also be the case in South Africa.

The definition of expropriation should be scrapped from the bill to allow our courts to consider each case that comes before them on its own merits and decide whether the deprivation amounts to an expropriation or not.


Conclusion: the bill on balance
There is no doubt that South Africa needs a new Expropriation Act. It is important to note that the Expropriation Bill is merely a procedural bill, it grants no powers of expropriation to anyone other than the minister of public works and infrastructure and only for purposes connected to his/her mandate.

Powers to expropriate for various purposes already exist in more than 200 other pieces of legislation and these powers may be extended by legislation such as the proposed Redistribution Bill. Stopping this bill will not take away the state’s powers to expropriation as this originates directly from the Constitution. Should the bill fail to pass, the powers of expropriation will still exist but the processes, checks and balances in this bill will fall by the wayside.

It is very likely that there will be a lot of litigation over the nil rand compensation clauses and eventually jurisprudence will hopefully develop regarding what is just and equitable in this regard and what is not.

The definition of “expropriation” and how that will be applied and interpreted does remain a cause for concern.

Annelize Crosby
(Annelize Crosby is Head of Legal Intelligence at Agbiz.)

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OPINION
Read between the lines to understand the pernicious Expropriation Bill
By Martin Van Staden, May 25, 2023

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. 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 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.

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

The opinions expressed in this newsletter are my own and do not necessarily represent those of the Committee or of the appointed legal team.