Changes to the Expropriation Bill recommended by the Portfolio Committee on Public works
Note: Amendments highlighted in blue are improvements to the previous text from a landowner’s perspective, amendments in yellow are mere technical amendmends and amendments in red are worrying developments.
Section 1 – Definitions
The definition of “Magistrate Court” has been amended. A magistrate court in terms of this Bill will no longer to refer to all magistrate’s courts but only to those which have been designated by the Minister of Justice way of a notice in the gazette as being competent to hear a matter relating to administrative law.
A Definition for “expropriation” has been introduced. The definition reads as follows:
“the compulsory acquisition of property by an expropriating authority or an organ of state upon request to an expropriating authority…”
There are 2 important elements to this definition;
1. It indicates that this Bill does not grant the powers of expropriation to organ of states which do not have the power to expropriate in terms of any other legislation.
This must be read with the definition of an ‘expropriating authority’, which is an organ of state or person empowered by the Act or any other legislation to acquire property through expropriation. The only organ of state empowered by the Bill to expropriate is the Minister of Public Works. Any other organ of state will need to acquire that power by means of alternate empowering legislation. Where this is the case, the organ of state will be regarded as an expropriating authority in its own right. The effect is that by reading these 2 definitions together, it effectively puts the argument to bed that the Act empowers multiple organs of state to expropriate property. It therefore clarifies that this is not the case.
2. In accordance with the judgement by the Constitutional court in Agri SA, the definition appears to limit the scope of expropriation to those instances where the state conduct results in the acquisition of property. In other words, it seems to exclude the possibility of constructive expropriation in the event that state regulation impairs the owner’s use and enjoyment to such an extent that the owner loses effective control over it.
This is a substantive amendment that should be taken notice of
Definition of “Property” – The definition of property has been amended but it now simply refers to ‘property as contemplated in section 25 of the Constitution’. This definition is essentially superfluous. The Constitution does not define property other than to say that it is not limited to land. The Courts have the right to interpret and develop the definition in the Constitution anyways so referring to it is actually superfluous. In addition, any attempt to define it restrictively could result in it being unconstitutional if the courts do not interpret section 25 of the Cconstitution restrictively.
Section 3 – Powers of Minister of Public Works to Expropriate
This section has been reworded somewhat but the Minister of Public Works is still permitted to expropriate on behalf of an organ of state that requests it or for the Department’s own purposes. Where previously the Minister was only permitted to expropriate land and movables connected to the land, he is now permitted to expropriate any property. He is however only permitted to expropriate for purposes within his mandate. His mandate was previously open as it ‘included’ the provision of accommodation, land and infrastructure whereas now it is limited to those functions.
Section 5 – Investigation and gathering of information for purposes of expropriation
In subsection (5) (a) the owner was previously required to inform the expropriating authority of all holders of unregistered rights, non-compliance used to constitute an offence, however after the amendments this is now the subject of a civil (administrative) fine only. This has been amended so that the owner only needs to inform the authority of all holders of unregistered rights known to him. Any reference to holders of unregistered rights throughout the Bill has been changed to ‘known’ holders.
Furthermore the list of government departments that must be included in the communication is no longer a finite list but includes all departments ‘whose functions and responsibilities will be materially affected’. This only places an additional burden on the expropriating authority.
The process that must be followed to claim compensation for damage done during the investigation. Firstly, one could previously claim is ‘a person suffers damages’ whereas one can now only claim if the property that is the object of the expropriation is damaged. The previous process with a 12 month prescription period whereby the authority must be given 1 month’s notice of the claim has now been replaced with a letter of demand and reference to the Legal Proceedings Against Certain Organs of State Act.
Section 7 – Notice of intention to expropriate
Should the expropriating authority decide not to follow through with the expropriation, it now has to publish its decision in addition to informing the owner and rights holders.
Section 8 – Notice of Expropriation
The reference to the date on which the expropriating authority ‘takes possession’ has been replaced with reference to ‘the right to possession of the property’ passing. This may have been done to clarify the distinction between ownership and possession in reaction to the IRR’s statements that the Bill permits an eviction without a court order contrary to section 26 (3) of the constitution. Consequential amendments were made throughout the Bill.
Section 9 – Vesting and possession of expropriated property
Clause 9 (2) (b) previously stated that possession would be deemed to pass on the date of expropriation in the absence to an agreement to the contrary. This has now also been replaced with a clause stating that the ‘right to possession’ passes on the date of expropriation in the absence of an agreement to the contrary.
Clause 9 (3) (a) – If possession passes after expropriation, the former owner now has to take all ‘reasonable steps’ to maintain the property opposed to ‘caring for and maintaining’ the property.
Section 12 – Determination of compensation
All of the factors under sub-section (2) could previously not be taken into account in determining compensation. With the new amendment, a court should not take them into consideration “unless there are special circumstances in which it would be just and equitable to do so…”. It remains to be seen what these ‘special circumstances’ are but at least it affords the courts some leeway.
Section 15 – Offers of Compensation
Previously, if an owner did not accept the state’s second counter offer and failed to institute legal proceedings within 60 days, he was deemed to accept it. This was now amended to the effect that the parties can go to mediation or the state can initiate legal proceedings in terms of the reworked section 21 of the Bill (mediation and determination by court).
Section 16 – Requests for particulars and offers
The section has been reworded to make it clear that the party requesting particulars of the amount offered as compensation (this can apply to both parties as counter offers can be made) bears the burden of approaching the court for an order compelling the other party to furnish particulars.
Section 17 – Payment of amount offered as compensation
Section 17 (1) has been reworded to clarify that the owner is entitled to payment by no later than the date at which the right to possession passes (previously this was when the expropriating authority took possession), subject to sections 18 (mortgage bond), 19 (municipal rates) and 20 (deposit of money with the master).
The section regarding the payment of 80% of the compensation has been removed. In its place, it states that full payment must be made on the date that the right of possession passes irrespective of any on-going disputes regarding the compensation. Should the court determine that the amount is actually lower than the state’s original offer (which was paid in full), the ex-owner must repay the excess plus interest.
A dispute in relation to compensation will still not prevent the state’s right to possession from passing.
The parties are still permitted to agree on a later date of payment provided that if they cannot agree, an application can be made to the court to decide on the date.
Section 18 – Property subject to mortgage or deed of sale
This section has been redrafted in its entirety. The essence of the section is the same in that the owner and mortgagee must reach an agreement, failing which a court can determine the apportionment. Whilst the dispute is raging, the money can be deposited with the Master. The only real difference in the new wording is that it places the obligation faintly on the owner and mortgagee to inform the authority, within 30 days of when the right to possession passes, failing which the money can be deposited with the master.
Section 19 – Payment of municipal property rates and other charges out of compensation money
This section has also been entirely redrafted, however the provision seems to be substantively the same.
Section 21 – Mediation and determination by court
As we requested in Nedlac, the Act now makes provision for voluntary mediation to settle a dispute on the quantum of compensation prior to formal court procedures being followed. Mediation is not mandatory, the Bill simply makes provision for it.
The reworded text places the obligation on the state to initiate court proceedings for the determination of compensation if no agreement can be reached (following mediation if consented to or immediately if both parties to not consent to mediation).
Subsection (3) has been added to confirm that the courts have the competency to hear ‘any matter relating to the application of this Act’. This provision clarifies that a court can be approached to settle any dispute relating to the Act.
Sub-clause (4) states that a court can make any order it considers just and equitable in the event that the Act has not been complied with, but then strangely, factors are provided that the court can take into consideration. They include:
- The nature of the interests of the plaintiff;
- Materiality of non-compliance;
- The stage of the expropriation process; and
- The interests of other persons who may be affected.
This list is not exhaustive. This section seems strange as the court can surely take these matters into consideration anyway?
All provisions attempting to direct the court in how costs should be awarded have been removed.
Clause 22 – urgent expropriation
This clause was amended to clarify that a ‘temporary’ expropriation relates to the length of time that it is urgently required. A ‘temporary’ expropriation can therefore only take place for so long as the property is urgently required.
In addition, a phrase was added to clause 22 (5) that payment must be made as soon as possible after notice was given that the property is temporarily required.
Clause 27 – Civil fines and offences
Previously, a person would be guilty of an offence and liable to a fine or imprisonment not exceeding 6 months if that person failed to:
- Inform the authority of any holders of unregistered rights known to him;
- Inform the authority of any lease, purchase agreement or lien over the property; or
- The above information when the authority calls upon him to do so in the notice of intention to expropriate.
After the amendment, the listed conduct would no longer constitute an offence but rather the expropriating authority can impose a civil (administrative) fine not exceeding an amount yet to be prescribed.