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Legal Update On Land Expropriation - Different Viewpoints Discussed

Category Legal Update

 The ANC NEC held their summit in Boksburg the weekend of 19 May 2018.  The Summit was attended to by NEC members, ministers and deputy ministers, alliance leaders as well as former presidents Kgalema Motlanthe and Jacob Zuma.  Advocate Tembeka Ngcukaitobi also attended the summit. News24 reported that the summit was held primarily in an attempt to find consensus on the issue within the party, which remains divided over whether the Constitution should be amended and whether all land should be nationalised. 
In the article published by the Daily Maverick’s Qaanitha Hunter on 20 May 2018, emphasis was placed on the statements made by President, Mr Ramaphosa at the summit, which are as follows: 
“We are all at one in agreeing in saying yes, the land will be expropriated without compensation.  We may be divided on a whole number of other things but not on this one.”  
The President went further to say:  
“I think this workshop has given us the great opportunity and platform to be able to clarify our position on the question of land. But what is more important is from now onwards, the issue of land, which we heard and… we have been soft peddling on over a number of years… That is an admission we must make. Along the way there have been quite a number of mistakes and missteps that we got involved in. The resolution of the 54th national conference gives us this historic opportunity of being able to inject more energy, more urgency and more oomph in how we deal with land.”  
Hunter says that in December 2017 the ANC elected to make expropriation without compensation a policy without giving much attention to the practicalities, which it seems will now receive more attention.  Hunter further refers to the lack of government implementation and further quotes Mr Ramaphosa’ opening statement:  
“We need to acknowledge that the lack of progress in land reform can be attributed to a great extent to weaknesses in the institutions responsible for effective government our policies. Also to inconsistencies in legislation, including misguided interventions and also to a misallocation of resources.”  From the above it is clear that there are various practicalities and procedures to be considered before the governing expropriation legislation may be amended to adopt the ANC’s decision to proceed with expropriation without compensation.  
Source: Daily Maverick – 20 May 2018 - Qaanitha Hunter  

The Constitution  
• Section 25(2) of the Constitution states that property may be expropriated only in terms of law of general application for a public purpose or in the public interest; and subject to compensation. The Constitution specifies that the amount of the compensation and the time and manner of payment have to be agreed upon by those affected or decided by a court.
• Section 25(3) makes clear that the amount of compensation need not be equal to the market value of the property and provides a list of circumstances to be taken into account in order to determine the amount, i.e. current use of the property, history of acquisition, the purpose of the expropriation etc.  Market value being listed as a specific factor to be taken into account with the calculations.
• What is required is the payment of “just and equitable” compensation, reflecting an equitable balance between the public interest (including the pressing interest in land redistribution) and the interests of those affected.

• The debate regarding expropriation without compensation pivots around the question as to whether the Constitution in its current form allows same and whether the amendment thereof is required.  
View 1: Amendment of the Constitution is required  
• Expropriation without compensation will require the amendment of Section 25 of the Constitution.  Until the ANC summit of May 2018, this was the view strongly supported by many simply as the wording of the Constitution clearly and expressly provides for just and equitable compensation and further contains provisions regarding how the amount should be calculated.  

• Section 74 of the Constitution prescribes the procedures that must be followed to amend the Constitution, the aforesaid which has the prerequisite of a supporting vote of at least two thirds of the total number of members of the National Assembly (NA) (267 votes).  Additionally, it would require the support of 6 of the 9 provincial delegations of the National Council of Provinces (COP) to pass such an amendment. 

• The Constitution also imposes other procedural requirements that must be followed by the legislature when amending the Constitution, which includes the process of public participation. Further to the aforesaid, there is also the possibility of a constitutional challenge in the Constitutional Court.  
View 2: The Constitution in its current form allows for expropriation without compensation  
• One of the outcomes of the ANC summit was a recommendation that the state should commence expropriation without compensation in order to test whether same is permissible in terms of Section 25 of the Constitution.  

• The ANC’s approach herein is supported by the remarks by Advocate Ngcukaitobi who said that: “For purposes of expropriation of land without compensation, it is clear that there is no constitutional impediment as such. So, what I would suggest here is that we consider passing legislation that would make it explicit that the state has the power to expropriate without compensation.” 

• This proposal is still subject to approval by the NEC and a parliamentary committee is established to assess the viability of this approach.   

• In an article published by the Daily Maverick’s Greg Nicolson yesterday, he quotes Enoch Godongwana, head of the ANC’s economic transformation sub-committee, who said the proposal was not reckless and relied on principles of sustainable land reform.  

• It would appear that the ANC will endeavour to get the legislative frameworks in place by amending and enacting the Expropriation Bill, which is yet to be approved after issues regarding the process of public participation.  Further that the ANC will revisit redistribution of land rights legislation, no doubt a second attempt at the Restitution of Land Rights Amendment Act that was declared unconstitutional in 2016 by the Land Claims Court. 
Source: Constitutionally Speaking – 17 January 2018 -   & Daily Maverick – 21 May 2018 - Greg Nicolson 
• The Expropriation Bill was approved by Parliament but never signed by President Zuma. 

• The Bill brings land reform squarely within the scope and ambit of the Constitution, i.e. by aligning land reform with expropriation for purposes of “public interest” and “public purpose”.  By this it is meant that while expropriation for a public purpose has existed for more than 40 years in our law, the Expropriation Bill is intended to extend that concept to land reform, land redistribution and land restitution. 

• The current Expropriation Act does not determine a formula of how compensation would be determined within the Act, but utilised the concept of “willing buyer and willing seller” in order to determine compensation.  

• The government, after the adoption of the Constitution, also utilised the concept of “willing buyer willing seller” in the context of both expropriation and land reform.  But the constitution makes provision for “just and equitable” compensation and the Expropriation Bill, therefore, formally marks a deviation from a policy of compensating expropriated property solely based on the market, to one that will take into account “just and equitable” compensation, which will entail an assessment of various factors listed above. 
• The Restitution of Land Rights Act was initially passed to enable a process whereby people who were forcefully removed from land after 19 June 1913 under past racially discriminatory laws and policies, could receive restitution of their rights in land, whether by allocating land to them or by financial restitution. 

• The Act first came into operation in 1994. 

• The Act established the Commission on Restitution of Land Rights and the Land Claims Court.  The Commission is required to solicit claims, assist those who want to lodge claims, investigate the claims and attempt to resolve them through negotiation and mediation.  The Land Claims Court is a specialist court that adjudicates disputes on issues relating to land claims and rights of farm dwellers. 

• The Restitution of Land Rights Act in its original form required that land claims be lodged by no later than 31 December 1998.  An Amendment Act was passed in 2014 to allow those who missed the initial deadline to lodge their claims.  The deadline for submission of claims is extended to the end of July 2019.  The Amendment Act was declared unconstitutional in 2016. 
• The Agricultural Land Holdings Bill was published in March 2017 and elicited a lot of heated debate, understandably, for the reasons we will briefly refer to hereafter.  However, it is important to remember that the public participation process is continuing and changes may still be made.  

• The Bill is aimed at progressing land reform within the agricultural sector however will have a broader impact on the property market and specifically on foreign investments. 

• The Bill in its current form pertains only to agricultural land, which is defined as land other than land which forms part of a proclaimed township or land in respect of which an application for the establishment of a township has been submitted prior to the commencement of the Act with the exception of land excluded by the Minster by notice in the Government Gazette in accordance with the Spatial Planning and Land Use Management Act (SPLUMA).  

• Some pointers on the main provisions of the Bill are: 
(i) The Bill prohibits the outright sale of agricultural land to foreign persons and further provides that only long-term leases (30 – 50 years) may be registered against the title deeds in favour of a foreign person.  The Bill in its current form does not appear to have retrospective application.  The aforesaid is however in line with practices followed by various European and African countries.  
▪ A “foreign person” is defined as: - a natural person who is not a citizen or not ordinarily resident in South Africa; or - a foreign juristic person (i.e. foreign company); or - a juristic person in which a foreign person holds controlling interest, including trusts.  - Foreign juristic persons controlled by black persons as defined in the Employment Equity Act 1998 are excluded and will not be subject to the application of the Bill once enacted.  
▪ The long term leases must be registered in the Deeds Office within 90 days of conclusion thereof.  
(ii) It requires of all owners of agricultural land to register their land and ownership structures with a Land Commission to be established.   
▪ The Land Commission will be appointed by the Minister responsible for Rural Development and Land Reform.  The Land Commission will establish a register of public and private agricultural land ownership. 

▪ The requirement to notify the Land Commission extends to current owners of land and also to persons who are in the process of acquiring ownership of land.  
a) Current owners to register within 12 months of commencement of the Act, if enacted in its present form.  The notification will include information regarding race, gender, the nationality of the owner and the size and use of the agricultural land.  
b) Notice of change of status (when the owner becomes or seizes to be a foreign national) should be filed within 90 days of change of status.  
c) New owners that acquire private agricultural land after commencement of the Act, are required to lodge the appropriate notification with the Land Commission within 90 days of acquisition.  The Deeds Office may not register the transfer unless the notification is lodged with the Land Commission.  
(iii) It requires all foreign persons intending to sell their agricultural land to first offer their land to the Minister to purchase. 

▪ If the Minister, within 90 days, refuses such offer or does not respond to the offer, only then may the foreign person advertise the land for sale to South African citizens.  (Note that the definition of a ‘citizen’ excludes foreign persons, but does include any foreign person who has permanent resident status in terms of the Immigration Act.) 
▪ The Deeds Office will not register the transfer unless the above provisions have been complied with.   

(iv) It sets capped ownership parameters on agricultural land so that an owner may only have a predetermined extent of agricultural land and not more.  

▪ The Minister must, in consultation with the Land Commission and the Minister for Agriculture, determine the categories of ceilings for agricultural land holdings in each district.  In making the determination, regard must be given to “land capability factors” which include the following: cropping factors, current output, soils, viability, water availability and infrastructure, capital requirements, annual turnover, income levels, price margins etc.  The statements made on this point allude to a cap of 12 000 Ha however different caps will apply to different areas depending of the use of the agricultural land concerned.  The Regulations to the Act will hopefully provide more clarity in this regard. 

▪ Land in excess of these ceilings/limitations, is regarded as ‘redistribution agricultural land’ and must be offered for sale first to Black people (as defined in the Employment Equity Act, essentially being Indian, African and Coloured citizens) and thereafter to the Minister. 
a) The Minister then has a first right of refusal and if the Minister and owner cannot reach an agreement pertaining to the price, the Minister may expropriate subject to the applicable expropriation laws applicable at the time.  No mention is made of expropriation without compensation in the Bill.  
b) The Bill makes provision for any dispute regarding the redistribution to be referred for Arbitration.  
• There are quite a few concerns were the Bill to become law in its current form.  STBB, on behalf of various of its clients, have made representations to the Department, and so have many other role-players – and all are awaiting further feedback from the Department in this regard.  There is no certainty at present when the Bill will become law or when a further draft of the Bill will be released for public comment, if at all. 
There is no bar on foreign ownership of land 
• Currently there is no enacted legislation that prohibits a foreigner from purchasing property in South Africa, agricultural or otherwise.  The Agricultural Land Holdings Bill, although published, is yet to be enacted and will undoubtedly be the subject of various Constitutional challenges.  
The said Bill provides for long term leases and in its current form does not have retrospective application.  

Expropriation & Constitutional Protection  

• Section 25 of the South African Constitution prohibits the arbitrary deprivation of property as well as the expropriation of property.  The said section makes it clear that expropriation of property is permissible to effect land redistribution or to achieve some other public purpose or for the public interest, however that expropriation should be just and equitable and not be imposed by way arbitrary practices. 
• The ANC is yet to consider the submissions and proposals from the various commissions and then ratify it in the NEC, but there seems to be great consensus around the setting up of a high level panel located in the Presidency to align government’s efforts regarding land reform and guide the process at the helm of the executive.  This team, it was suggested, should comprise lawyers, NGO players and experts working in the field of land reform.  Ramaphosa himself proposed the igniting of what he called “an agrarian revolution” in government led by the Presidency which would see land placed at the center of his administration’s priorities.

Author STBB
Published 22 Aug 2018 / Views -
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