Expropriation: Don’t be alarmed – court may award nil compensation, but is not required to

The key difference between the repealed pre-democratic Expropriation Act of 1975 and the newly signed Expropriation Bill is that the court is given the right to award nil compensation in cases of expropriation of land.

“The difference really is that provision that explicitly states that a court may, not must, award a nil rand compensation,” says Annelize Crosby, head of legal intelligence at Agbiz.

Read: Ramaphosa signs off on Expropriation Act

This comes after President Cyril Ramaphosa assented to a new law that makes it easier for the government to expropriate land in the public interest, subject to equitable compensation being paid.

“That nil compensation is also misunderstood by many people because there’s a difference between no compensation and nil rand compensation,” says Crosby.

She explains that the nil rand implies that there must be a calculation taking into consideration the factors in Section 25 of the Constitution, which then comes to a result of nil rands.

Section 25 (2) of the Constitution states that property may be expropriated only in terms of law of general application — (a) for a public purpose or in the public interest; and (b) subject to 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.

“Each and every factor where compensation happens and money is subtracted from the market value, must be justified,” says Crosby.

“It’s not as if it is going to happen in every single case and that it is going to be automatic without any justification.”

Read: Top priorities for the new agricultural leadership

Crosby notes that expropriation happens in every country in the world and had been happening in South Africa during apartheid for decades. It is provided for in the Constitution and also specifically for land reform purposes.

“The Expropriation Act is really only the mechanism,” she says. “It does not grant powers of expropriation to anybody [other] than the Minister of Public Works and for the purposes that fall within the jurisdiction of the department of Public Works.”

Land expropriation ‘not new’

The ANC in 2017 proposed constitutional changes to make it easier for the government to take land without paying for it and address racially skewed land ownership patterns dating back to colonial and white-minority rule.

Crosby emphasises that this phenomenon is not new and that the power to expropriate for any purpose, whether it be for land reform or for roads, rail or dams, is within the ambit of Public Works.

There are expropriation powers in the Restitution of Land Rights Act and the Land Reform Act, which are two of the land reform laws that have been in place for decades.

Spokesperson in The Presidency Vincent Magwenya said in a statement that local, provincial and national authorities can use this legislation to expropriate land in the public interest.

He said an expropriating authority may not expropriate property arbitrarily or for a purpose other than a public purpose or in the public interest.

“Expropriation may not be exercised unless the expropriating authority has without success attempted to reach an agreement with the owner or holder of a right in property for the acquisition thereof on reasonable terms,” Magwenya said.

An expropriating authority is therefore obliged to enter into negotiations with the owner of a property required for such purposes.

Read: Zimbabwe fails to pay white farmers who had land expropriated

The law provides for disputes to be referred for mediation or to the appropriate courts.

The Democratic Alliance (DA) said it strongly reiterates its opposition to the Expropriation Bill.

“While the DA recognises that the Constitution allows for acts of redress and restitution, including land reform, we have serious reservations about the procedure as well as important substantive aspects of the Bill.”

The party said it is in discussions with its legal team to formulate its case.

Follow Moneyweb’s in-depth finance and business news on WhatsApp here.