No subversion of justice through nil compensation

The recent promulgation of the Expropriation Act continues to raise heated debates from legal experts and laymen alike. UCT’s Dan Mafora, a senior researcher at the Council for the Advancement of the SA Constitution, says Martin van Staden’s argument (see Why ConCourt will not uphold Expropriation Act in Legalbrief Today) – claiming the concept of ‘nil compensation’ is an instance of Parliament seeking to subvert the Constitution by setting up a legalistic and formalistic ‘simulation’ to obscure and hide the substance or reality of what you are doing – is wrong. Mafora adds Van Staden claims Parliament is permitting the expropriation of property without compensation – contrary to what section 25(2)(b) of the Constitution requires. This, Van Staden argues, is because a ‘nil’ ‘amount’ cannot be ‘paid’ to the owner of expropriated property, hence the ‘simulation’. Mafora responds: ‘This would be true if it was the full story, but it is not.’ Outlining his position in a Thought Leader column in the Mail & Guardian, Mafora gives four arguments why Van Staden’s views are not a true reflection of how the law or the Constitution works:

* The concept of ‘nil compensation’ is what lawyers call a legal fiction: something that exists in law but not in reality. One example of a legal fiction is corporate legal personality, the idea that a company exists as an entity independent of its shareholders. This legal fiction limits the liability of the shareholders to give them an incentive to invest in businesses without putting their personal assets on the line in the case of a company failing. It is an indispensable legal fiction that is the bedrock of all economic activity in all market-based economies. ‘Nil compensation’ will function in a similar way. It will allow the state, in certain circumstances, to expropriate property without paying any compensation for it, in the public interest. Put otherwise, it will create the fiction that the property was paid for even though no money will be exchanged because the amount would be set at ‘nil’. This will be the case, in particular, where the expropriation is for the purposes of land reform. One may quibble with the purpose for which the concept of ‘nil compensation’ will be employed, but there is nothing inherently or necessarily unconstitutional about it. Like corporate legal personality, ‘nil compensation’ is a legally and constitutionally sound tool that Parliament has chosen to use to achieve legitimate governmental ends. It is not fraus legis to use legal fictions in legislation – it is how law works.

* Van Staden claims that the Expropriation Act is unconstitutional because it allows for the state to take possession of the expropriated property before compensation has been paid to the owner. However, in Haffajee NO and Others v eThekwini Metropolitan Municipality, the Constitutional Court held that ‘the provisions of section 25(2)(b) do not require that the amount of compensation and the time and manner of payment must always be determined … before expropriation under section 25(2)’, while acknowledging that it will be generally be just and equitable for compensation to be determined before expropriation takes place.

* Van Staden claims that expropriation has always been ‘irrevocably tied to compensation’ and that ‘expropriation without compensation’ is thus a contradiction in terms. Van Staden also claims compensation is an absolute requirement for lawful expropriation. However, that is not so. Most agree that compensation is not required in every case.

* Van Staden claims the Constitution requires compensation as an absolute requirement and that Parliament could not – through the Expropriation Act – deviate from that requirement. However, section 25(8) of the Constitution explicitly empowers the state to deviate from the other provisions of section 25. It states that: ‘No provision of this section may impede the state from taking legislative and other measures to achieve land, water and related reform, in order to redress the results of past racial discrimination, provided that any departure from the provisions of this section is in accordance with the provisions of section 36(1).’ Plainly, says Mafora, Parliament has the power to deviate from provisions of section 25 – including the compensation requirement in section 25(2)(b).

Full Thought Leader column in the Mail & Guardian

A different reaction to the promulgation of the Act is expoused by AfriForum’s Barend Uys, who argues the ANC does not want citizens or communities to own land. ‘It wants the state to own the land.’ This is despite the fact that when President Cyril Ramaphosa signed the Expropriation Act into law, the ANC, responded with a media statement: ‘This is a direct response to the needs of millions of South Africans who have been excluded from land ownership and access to natural resources for far too long.’ Writing in Business Day, Uys notes the land of the former homelands (about 17m hectares) was not transferred to the cultural communities whose property it was at the time of the regime change in 1994. ‘This land was transferred to the state. This same land is now held in custodianship by the state on behalf of the cultural communities to whom it actually belongs.’ He points out that although a legal mechanism has existed all along for the ANC to transfer the land of cultural communities to them in title, the government it has controlled for the past 30 years has failed to do so. ‘About 16m people who reside permanently in these areas would benefit from the transfer of such land from the state to the communities.’

Uys says the Upgrading of Land Tenure Rights Act of 1991 has been and still is available to transfer the land of cultural (traditional) communities from the state to the communities in title. Section 20 of the that Act reads: ‘A tribe may request the Minister to transfer tribal land the control of which vests in the tribe in ownership. If the land has been surveyed, the Minister may take steps to transfer the land concerned to the tribe in question. If the land has not been surveyed, the Minister may designate any person to investigate the feasibility of the request and to submit a report and recommendation to him or her in regard thereto.’ Uys asks: ‘Why has the ANC not used this Act to transfer the land to the traditional communities if it really wants to do something about South Africans who have been excluded from land ownership? Uys notes in 1996, the ANC government in fact weakened this Act (which predates 1994). The original wording of subsection (2) of section 20 read: ‘If the land has been surveyed and the Minister is of the opinion that the request is feasible, he shall forthwith take steps to transfer the land concerned to the tribe in question.’ Uys asks: ‘Why change “shall forthwith take steps” to “may take steps” if you are serious about the transfer of land in ownership?’ He notes similar changes were made to other sections in 1996 during the ANC’s first tenure as governing party. There was an attempt to repeal section 20 in its entirety, through the Communal Land Rights Act 11 of 2004. However, the Constitutional Court found the Act to be invalid in its entirety in 2010.

Full opinion piece in Business Day