Quote of the week

[Nostalgia] is rarely the past as actually experienced, of course; it is the past as imagined, as idealized through memory and desire. In this sense … nostalgia is less about the past than about the present. It operates through what Mikhail Bakhtin called an ‘historical inversion’: the ideal that is not being lived now is projected into the past.

David Medalie
13 June 2013

Willing buyer, willing seller works…. if you have a lifetime to wait

Few reasonable people would disagree that the pace of the constitutionally mandated redistribution of land in South Africa has been far too slow. One of the many reasons for this slow progress on land reform is the government’s current “willing buyer willing seller” land redistribution policy. The proposed Property Valuations Bill, read with the provisions of the Expropriation Bill, may begin to address this problem. Unfortunately the Bills are not without their faults, opening up a space for the “we-are-going-the-way-of-Zimbabwe” alarmists to delegitimise these proposed legislative measures which are aimed at speeding up land reform.

The South African Constitution places a positive obligation on the state to “take reasonable legislative and other measures, within its available resources” to effect land redistribution. Section 25 of the Bill of Rights also explicitly allows the state to expropriate property – forcibly, if necessary – to achieve this purpose. This means the state may validly expropriate property (even in cases where the owners of that property are unwilling to part with the property or unwilling to part with it at the price offered), if the expropriation is aimed at redistributing land to address the effects of widespread colonial and Apartheid-era land dispossession.

There is therefore nothing in the Constitution that requires the state to stick to a “willing buyer willing seller” land redistribution policy. This policy has so far allowed property owners to block redistribution efforts, as it allows property owners to refuse to have their property expropriated and also allows them to hold the government to ransom by demanding that the state pay exorbitant prices for property intended for expropriation. (Think of it as a form of tender corruption – but by white property owners.)

Given the slow pace of land reform and the exorbitant cost of the “willing buyer willing seller policy”, it is possible to argue that the existing land reform policy is unconstitutional because the measures are not reasonable in that they do not allow the state to move as expeditiously as possible to address the effects of past unfair (race-based) land dispossession. A new approach – along the general lines of the proposed Property Valuations Bill and Expropriations Bill – is therefore needed to deal with land redistribution.

However, the Constitution also prohibits the arbitrary deprivation of property and states that expropriation is made subject to the payment of 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 I have explained before, the Constitution does not require the state to pay the owner of expropriated property the market value for the property when it is expropriated. Instead, the state is required to pay “just and equitable” compensation, “reflecting an equitable balance between the public interest and the interests of those affected”. In deciding what would constitute just and equitable compensation, section 25 of the Constitution requires that the following factors must be considered:

  • the current use of the property;
  • the history of the acquisition and use of the property;
  • the market value of the property;
  • the extent of direct state investment and subsidy in the acquisition and beneficial capital improvement of the property; and
  • the purpose of the expropriation.

Of course, there are many problems with the government’s current land redistribution programme. A lack of support and training for emerging farmers, as well the lack of a coherent long term strategy aimed at redistributing land while enhancing food security, bedevils current efforts to redistribute land in a manner that would enhance economic growth, while speedily addressing the current untenable, racially skewed, distribution of land.

The proposed Bills will not address all these problems.

The Bills are, however, intended to deal with the slow process of the current land reform programme as well as the exorbitant and thus unsustainable cost of the programme. The Expropriation Bill authorises the relevant Minister to expropriate property for the purposes of land redistribution – even without the consent of the property owner. The Bill provides several procedural safeguards in this respect, including the opportunity for the owner of property to lodge an objection to the decision to expropriate his or her property and then to negotiate with the authorities about the intended expropriation.

The Bill then provides for a decision to be taken on the expropriation within 60 days. Even if the owner is not happy with the amount of compensation offered, the Bill provides for the expropriation to go ahead. However, crucially, section 22 of the Bill states that if the owner and the expropriation authority cannot agree on the terms of an expropriation any party to an expropriation has the right to approach a court to decide or approve the following matters:

  • the amount of compensation;
  • the time of payment of compensation; or
  • the manner of payment of compensation.

This means that the Expropriation Bill would allow (but would not require) a court to make a final determination on the compensation paid for expropriated property. Although as it stands section 22 of the Bill provides an important safeguard for owners of property whose property is to be expropriated, it would not prevent the expropriation from being effected before the court makes a final determination on the compensation. In fact the involvement of the court in determining the compensation would be optional, not mandatory.

This is in conflict with the provision in section 25 of the Constitution which requires compensation to be either “decided or approved” by a court when the expropriation is not by agreement.

Although the Bill appropriately allows for the expropriation of property – even without the consent of the owner of the property – it fails to provide for the mandatory involvement of the court in the determination of the compensation. A property owner with the necessary funds would be able to approach a court to challenge the amount or the manner of payment of compensation, but if he or she does not do so, then the court will not be involved in deciding or approving the compensation – in conflict with the Constitution.

Moreover, it is unclear how these provisions fit in with the provisions of the Property Valuations Bill. This Bill would create the Office of the Valuer-General who would be tasked with the duty of valuating all properties that will be expropriated and to develop criteria for the valuation of such properties. These will obviously mirror those listed in section 25 of the Constitution, which means that although a valuation process will always start by considering the market value of the property, other relevant factors might be used to reduce the valuation of the property.

But the problem is that these provisions do not refer back in any way to the provisions of the Expropriation Bill, giving the impression that the drafters of the one Bill had no idea about the provisions of the other Bill being prepared.

But if one assumes that the newly created Valuer-General will finally decide of the amount of compensation to be paid in the event of a forced expropriation, it is unclear how this will be done and to what extent the court would be involved in the decision.

The Property Evaluations Bill provides for an elaborate review process and allows a review committee to review the amount of compensation to be paid for an expropriated property. The Bill states that the decision of a review committee would be deemed “final and binding subject only to a review by a court”. But once again, there is no provision for the automatic involvement of the courts in the establishment or approval of the amount of compensation that will have to be paid, which renders the Bill unconstitutional.

It seems to me the only way the land reform could be speeded up and the cost kept down in a constitutionally valid manner, would be to create a dedicated Valuations Court and to require the new Court to sign off on all determinations of the compensation to be paid to property owners in the event of forced expropriation.

All the elaborate review mechanisms contained in the Property Evaluations Bill therefore seems completely unnecessary. It will only create another layer of bureaucracy without providing for a constitutionally valid mechanism for the determination of compensation to those whose property were forcibly expropriated.

The Constitutional court remarked recently in its judgment in Agri South Africa v Minister for Minerals and Energy that the obligation imposed by section 25 of the Constitution requires it not to “over-emphasise private property rights at the expense of the state’s social responsibilities” to effect land reform.

It must always be remembered that our history does not permit a near-absolute status to be given to individual property rights to the detriment of the equally important duty of the state to ensure that all South Africans partake of the benefits flowing from our mineral and petroleum resources.

But where forcible expropriation occurs, it is important that a credible body (In this case a court of law) always has the final say on whether just and equitable compensation was paid for the expropriated land. In the absence of such a mechanism, land expropriation may well become mired in corruption, which would not further the constitutional interests of speedy but effective land redistribution. It is for that reason that the proposed Bills need to be amended to require a court to approve all forms of compensation in cases of forced expropriation.

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