Expropriation legislation - The interpretation
A recent constitutional court judgment has left open the possibility that some home owners could lose their properties without knowing what they will receive in compensation.
The judgement, which also cleared up some uncertainties around expropriation, essentially placed public interest above private ownership on the issue . The court ruled that there are instances where expropriation of property can occur without prior determination of the compensation.
SA’s constitution contains property rights and protections, but expropriation policy is based largely on 1975 legislation. This has left uncertainty in interpretation.
The issue has also been made politically explosive by the ANC Youth League, which just two weeks ago served a memorandum on government calling for, among other things, the constitution to be amended to allow land expropriation without compensation.
The case, Haffejee vs eThekwini Municipality , ended up before the constitutional court after leave to appeal was refused by both the high court and the supreme court of appeal. The application was made by the trustees of the Haffe jee Family Trust after large pieces of a subdivided property they owned on the banks of the Umgeni River in Durban were expropriated by the municipality.
Communities living along the banks of the river were suffering the effects of flooding and the municipality decided to expropriate the properties for a canalisation programme.
Learning of the municipality’s intentions, the trust indicated that it was willing to give up the property but wanted alternative land as compensation. However, on serving the notice of expropriation, the municipality made no offer of compensation . It advised the trust a year later that it would pay 80% of the market value.
This was rejected by the trust, which went on to legally challenge aspects of the Expropriation Act of 1975 and the interpretation of sections of the constitution that deal with property rights, especially compensation for expropriation.
The trust argued that the amount of compensation should have been agreed to before the expropriation, while the municipality contended that haggling before the process would frustrate the socioeconomic rights of others — in this case, the people who were suffering the effects of flooding.
The constitutional court found there are circumstances, such as natural disasters, where expropriation before the determination of compensation is acceptable. However, Judge Johan Froneman and the justices of the court concurred that even in those cases compensation must be determined as soon as possible. Though allowing compensation after expropriation burdens the property owner , making it a precondition would undu ly burden the state. The court thus ruled in favour of the municipality.
Leza Kotzé, a partner in Shepstone & Wylie’s conveyancing and property law department, says the courts can bring some rational sense to much of the uncertainty around expropriation legislation. This is particularly important because SA’s land restitution process is drawing to an end, shifting the courts’ focus to expropriation and compensation .
Government is attempting to resolve some of the disparities between the 1975 act and the new constitution. In 2007 the Expropriation Bill was published for comment. Kotzé says the bill is an ambitious attempt to harmonise almost 100 pieces of legislation and ordinances dealing with expropriation.
While the bill states that compensation lies at the heart of SA’s expropriation regime, one provision which allows the relevant minister to determine compensation in some cases, subject to a judicial review, has caused some anxiety among property owners.
The bill is now on its way back to parliament.
