By Ian King / Managing Partner / Mooney Ford Attorneys
The legal framework governing expropriation in South Africa has undergone significant reform with the introduction of the Expropriation Act 13 of 2024 (“New Expropriation Act”), which replaces the Expropriation Act 63 of 1975 (“Old Expropriation Act”). I have endeavoured herein to provide an objective comparison between the two legislative frameworks, focusing on key differences in their scope, definitions, procedural requirements, and the much publicised and controversial compensation provisions.
Context
The Old Expropriation Act was enacted in 1975, when South Africa was still a parliamentary democracy under a government that was in the midst of implementing its policy of apartheid. A parliamentary democracy is a form of government where the head of government derives their democratic legitimacy from their ability to command the support of the majority of the legislature, to which they are held accountable. In other words, the executive branch of government is accountable to parliament.
Setting aside the fact that the majority of South Africans were disenfranchised at the time of the enactment of the Old Expropriation Act (which is an entirely separate debate that I do not intend to touch on herein), it’s primarily purpose was to facilitate the expropriation of land and other property for public purposes, with compensation provisions being a fundamental aspect of the process.
In 1994, South Africa completed its transition from a system of parliamentary sovereignty to being a constitutional democracy. In a constitutional democracy, the authority of the majority is limited by legal and institutional means so that the rights of individuals and minorities are respected. In other words, rather than parliament being the highest power in the land, a constitutional democracy is a system of government where state power is limited by the constitution. Put simply, all laws enacted in a constitutional democracy must fit within the confines of the constitution, failing which they can be held to be invalid and set aside.
The South African Constitution
Section 2 of the Constitution provides that the Constitution is the supreme law of South Africa, and that any law or conduct that is inconsistent with it is invalid.
The Bill of Rights, which is contained in Chapter 2 of the Constitution, bars the State from unfairly discriminating directly or indirectly against anyone on the basis of race, gender, sex, pregnancy, marital status, ethnic or social origin, colour, sexual orientation, age, disability, religion, conscience, belief, culture, language and birth unless is it established that the discrimination is fair.
The Bill of Rights also provides at Section 25 that no one may be deprived of their property except in terms of law of general application, and that no law may permit the arbitrary deprivation of property.
Section 25 further provides that property may only be expropriated in terms of law of general application for a public purpose or in the public interest and subject to compensation, the amount of which, and the time and manner of payment of which, have either been agreed by those affected (what has come to be known as the willing buyer willing seller clause) or approved by a Court.
Section 25 goes further, and provides that the amount of compensation and the 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, which include:
- The current use of the property;
- The history and acquisition 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.
Crucially, the Constitution also states that 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, and that property is not limited to land.
The New Expropriation Act
The New Expropriation Act’s purpose is to provide for the expropriation of property for a public purpose (consistent with the Old Expropriation Act) or in the public interest (an addition to the Old Expropriation Act, but consistent with the Constitution), to regulate for such circumstances, including the payment of compensation, and to identify certain instances where nil compensation may be just and equitable for expropriation in the public interest (a new possibility, but one which would need to be consistent with the Constitution, failing which it would be invalid and be set aside by the Courts).
Key Differences Between the Old and New Expropriation Acts
The New Expropriation Act introduces several notable changes when compared to its predecessor.
Public Interest: The Old Expropriation Act defined “public purposes” as purposes connected with the administration of any law by an organ of state. The New Expropriation Act expands this definition and introduces “public interest,” which includes land reform and equitable access to natural resources as provided for in the Constitution.
Inspection: Under the Old Expropriation Act, authorities could enter any premises for inspection with 24 hours’ notice. The New Expropriation Act requires a court order if the owner does not consent to entry for inspection, and thus an enhanced protection for property owners.
Valuation: Whereas there was no specific requirement in the Old Expropriation Act for the use of a valuer, the New Expropriation Act allows the expropriating authority to appoint a valuer with extensive powers to assess compensation.
Notice Requirements: Whereas the Old Expropriation Act required only a notice of expropriation to be served on the owner, the New Expropriation Act mandates both a notice of intention to expropriate and a notice of expropriation, including details on the purpose and determination of compensation.
Judicial Oversight: The Old Expropriation Act permitted expropriation of property for public purposes with limited judicial oversight. The New Compensation Act requires expropriation to be justifiable in the public interest or for a public purpose, with a focus on equitable compensation. Any expropriation, including expropriation without compensation, would need to fall within the ambit of both the New Compensation Act and the Constitution, and any attempt to expropriate land for nil compensation is thus capable of being challenged in the Courts.
Dispute Resolution: The Old Expropriation Act provided for arbitration or court referral for disputes. The New Expropriation Act introduces mediation as an alternative dispute resolution mechanism, in addition to court referral. This is in line with the general move in all Courts to encourage parties to mediate their disputes before litigating them.
Rights of Third Parties: Under the Old Expropriation Act, expropriated property remained subject to third-party rights (except mortgage bonds) unless explicitly expropriated. The New Expropriation Act introduces mechanisms for resolving disputes between mortgage bond holders and property owners, and directs that funds are to be held by the Master of the High Court until either agreement is reached, or a Court has made an order in respect thereof.
Compensation: The Old Expropriation Act mandated compensation for all expropriations. The New Expropriation Act allows for nil compensation where land (not property, only land) is expropriated in the public interest having regard to all relevant circumstances, including but not limited to:
- 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;
- 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, and the organ of state acquired the land for no consideration;
- Where an owner has abandoned the land by failing to exercise control over it despite being reasonably capable of doing so; and
- 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.
Conclusion
The New Act introduces significant changes to the expropriation process, particularly in terms of constitutional alignment, procedural safeguards, and the introduction of nil compensation provisions. It establishes clearer guidelines for expropriation in the public interest while emphasizing procedural fairness and equitable compensation. It also provides for redress to the Courts for any individuals affected by any proposed expropriation, including those who are facing expropriation without compensation,
