The passing of the Expropriation Bill by the National Assembly on 23 February 2016, has once again, caused a fair amount of panic and uncertainty. The Bill is now destined to be passed by the National Council of Provinces for adoption.

Is expropriation a new concept in our law?

It is crucial to trace the genesis of the concept of expropriation in South African law. Expropriation as a legal concept, predates the advent of our Constitution, 1996. Expropriation formed part of South African law and was passed as a statute in June 1975. Expropriation entails the State purchasing movable and immovable from a natural and/or juristic person for a public purpose, which was, prior to its recent amendment, defined to mean “for the administration of any law”.

Whilst expropriation as a statutory concept has existed for over 40 years, land reform, land redistribution and land restitution, on the other hand, are newer policies and constitutional directives which emanate directly from section 25 of the Constitution.

Whilst section 25 of the Constitution protects the right to property, it also in the same provision, obliges the State to ensure that it achieves land reform and redress in favour of historically dispossessed and disadvantaged communities. When the “property clause” was finalised and became part of the Constitution, the old Expropriation Act was not amended and/or repealed in order to take into account land reform.  

So what’s new?

The Expropriation Bill will now bring land reform squarely within the scope and ambit of the Bill, in the sense that expropriation for purposes of” public interest” and “public purpose”, will include land reform.

The old Expropriation Act did not determine within Act, a formula of how compensation would be determined within the Act, but opted to utilise the concept of “willing buyer and willing seller” in order to determine compensation. The ANC-led 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. Contrary to the latter, the Constitution makes provision for “just and equitable” compensation.

The Expropriation Bill therefore formally marks a deviation from a policy of compensation solely based on compensating expropriated property solely based on the market, to one that will into account “just and equitable” compensation, which will entail an assessment of the following:

• the current use of the property
• the history of the acquisition of the property
• market value
• extent of the state investments
• purpose of expropriation.

Where to from here?

Whilst there is an intention to shift the manner in which expropriated property is compensated from market-value to “just and equitable”, it was interesting to note that Minister Pravin Gordhan made no specific mention of land reform allocations in his recent Budget Speech, signalling that the government, given the current demands in the economy, are opting to be slow to commit additional funds to an already overburdened fiscus on land reform.

In the absence of land reform playing a prominent role in the new financial year in the fiscus, coupled with the re-opening of land claims until 30 June 2019 and the added burden of the need for foreign direct investment, it remains to be seen whether or not the legislative changes being made by the Ministry of Land Reform and Rural Settlements in the form of the Expropriation Bill will ultimately be enough in order to achieve the objectives of the Constitution.

The challenge for government remains the balancing of the constitutional rights to property as against the need to achieve land reform, in the current economic climate where the country is in dire straits to achieve economic growth.

Written by Bulelwa Mabasa, Director and Land Claims Specialist, Werksmans Attorneys