By Ivan Ka-Mbonane & Hannah Hilson
Prior to the President assenting to the Expropriation Act No 13 of 2024 (“the Act”), South Africa has already been able to expropriate land for over 50 years, using legislation which predates the Constitution.
Land and its ownership has always been a polarising topic in South Africa, making the drafting of the Act more perilous than usual for the drafting team and the Department of Public Works and Infrastructure.
The promulgation of the Act has been a topic of debate, in and outside South Africa, for many years and part 1 of this article will look at the following aspects and concerns surrounding the Act:
- Brief overview;
- Purpose for which property may be expropriated; and
- The process to be followed.
Part 2 will consider:
- The calculation of compensation; and
- Effect on investors.
Brief overview
In terms of the Act, expropriation means “the compulsory acquisition of property for a public purpose or in the public interest by an expropriating authority, or an organ of state upon request to an expropriating authority”. However, the Act places onerous obligations on the State before any property may be expropriated.
Section 25(2)(a) of the Constitution of the Republic of South Africa (“the Constitution”) states that Property may only be expropriated in terms of law of general application “for a public purpose or in the public interest”.
Expropriation currently takes place in terms of the Expropriation Act 63 of 1975 (“the 1975 Act”). In terms of the 1975 Act, expropriation can only take place for public purpose, which is not in line with the Constitution. Accordingly, the main need for a new act stems from the need to align current legislation with the Constitution. The public interest element further aligns with the constitutional obligation on the State to take reasonable and legislative steps to enable citizens to gain access to land on an equitable basis and ensure equitable redress for the injustices of the past.
Purpose for which property may be expropriated
In terms of the Act, property can be expropriated for only two reasons, namely for a public purpose or in the public interest.
Public purpose
Public purpose is defined in the Act as including “… any purposes connected to the administration of any law by an organ of state, in terms of which the property concerned will be used by or for the benefit of the public”.
Public purpose includes instances where the government needs to expropriate the land for city planning purposes such as to build a school or a road. This is in line with previous expropriation laws, in particular the 1975 Act. It is generally known as declaring land “eminent domain”, and accepted in other jurisdictions around the world, in particular the United States and the United Kingdom.
Public interest
Public interest is broader than public purpose and is defined in Section 25 (4)(a) of the Constitution to include “… the nation’s commitment to land reform, and to reforms to bring about equitable access to all South Africa’s natural resources”. The Act extends the definition to include “… in order to redress the results of past racial discriminatory laws or practices.”
The concept of public interest includes land reform, which is divided into 3 broad categories, namely:
Ø land redistribution, which aims to promote equitable access to land (sec 24(5)).
Ø tenure reform, aimed at provision of legally secure tenure (sec 25(6)).
Ø land restitution, which is aimed at providing for restitution of land dispossessed after 19 June 1913 (sec 25 (7)).
Certainly, legislation designed solely to advance any of these three goals result in progressive land reform. The public interest element has now been introduced in the Act, which aligns with the purpose and intention of the Constitution. It may be necessary for the Minister to issue guidelines in a form of Regulations to provide clarity on the implementation of the Act, in light of the broader aspect of public interest.
The process to be followed
The Act clearly states that property may not be arbitrarily expropriated or expropriated for a purpose other than a public purpose or in the public interest.
The Act further states that: “Subject to section 20 (which deals with urgent expropriations), a power to expropriate property 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.”
Prior to any expropriation occurring, the following steps must be undertaken:
1. Investigation and valuation of property
Prior to declaring a property expropriated, the expropriating authority must consider all relevant circumstances and must ascertain:
a) The suitability of the property for the required purpose.
b) The existence of registered and unregistered rights in the property.
c) Facts relevant to calculating an amount of compensation and formulate an offer of just and equitable compensation for each person who would be affected if the property were expropriated.
The expropriating authority must also consult with the municipality where the land is situated to explain how the expropriation will affect municipal planning.
2. Notice on intention to expropriate and expropriation of property
Notice of intention to expropriate must be served on the owner, mortgagee and holder of a right known to it at the time, which must also be published and delivered in accordance with section 22 of the Act.
The notice of intention to expropriate must be comprehensive and include, among other things, a statement of the intention to expropriate, the reason for the intended expropriation, the intended date of expropriation, an invitation to any affected person to lodge any objections or submissions, an offer of compensation which the expropriating authority considers just and equitable and an explanation of how the amount was calculated.
The owner or holder of a right has an opportunity to, if they do not accept the offer of compensation, dispute the amount of compensation, lodge any objections or submissions or request further details.
If the expropriating authority decides not to expropriate, it must inform the owner, mortgagee or holder of a right and publish the notice in accordance with the Act.
Mediation and access to courts
The Act states that if a dispute arises pertaining to the payment of compensation, the parties must try to settle the dispute by mediation, without unreasonable delay.
Should the parties be unable settle through mediation, either party may, within 180 days of the date of the notice of expropriation, institute legal proceedings for the court to decide or approve the amount, time and manner of payment of just and equitable compensation.
In order to alleviate a burden on the expropriated person, the Act provides that the disputing party, instead of instituting proceedings himself/herself, may within 90 days of the date of notice of expropriation request the expropriating authority, in writing to institute proceedings to decide or approve the amount, time and manner of payment of just and equitable compensation.
It is important to note that the Act states that despite section 18 of the Superior Courts Act 10 of 2013, which states that any order which is subject to an appeal is automatically suspended, any appeal against the decision of a court on the amount of compensation will not prevent the expropriating authority from expropriating for the amount approved or decided, unless a court grants an interim interdict based on compelling prospects of success of the appeal.
Part 2 of this article will explore how compensation should be calculated and whether expropriation will have any impact on foreign investment.