Expropriation without compensation would affect the rule of law

09 May 2018
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The Expropriation Act authorises government expropriation of private property for market-value compensation. 

The Constitution states that compensation for expropriation must reflect “equitable balance” between the public interest and interests of those affected, having regard to “all relevant circumstances” including the property’s current use, the history of its acquisition and use, market value, any state investment or subsidy in the acquisition or capital improvement of the property, and the expropriation’s purpose.

According to the Constitutional Court, though the Expropriation Act has been the primary instrument for expropriations, the Constitution now applies and compensation must be determined in two stages. A court first establishes the amount payable under the Act, considers if it is just and equitable under the Constitution, and makes any adjustment.

The Motlanthe independent High Level Panel reported in November 2017 that the State’s obligation to pay compensation for expropriation is not a constraint affecting land reform. More serious stumbling blocks have been corruption, diversion of the budget to elites, lack of political will, and lack of training and capacity.

The Panel, chaired by former president Kgalema Motlanthe, was established in 2015 by the legislative Speakers’ Forum to review the implementation of laws passed since 1994.

Its view was that government has not made effective use of the expropriation powers it already has for land reform or the Constitution’s provisions that allow compensation below market value in particular circumstances. The Panel reported that the budget for land reform is at an all-time low of less than 0.4% of the national budget, with less than 0.1% set aside for land redistribution.

Rather than recommend constitutional change, the Panel recommended that government use its expropriation powers more boldly.

Despite the Motlanthe Panel findings, a month later the African National Congress resolved to pursue expropriation without compensation “without destabilising the agricultural sector or endangering food security [or] undermining economic growth and job creation.”

In February 2018, President Ramaphosa stated that land reform must be guided by sound legal and economic principles. He is of the view that the party resolved that land will be expropriated without compensation where “appropriate and justifiable”.

On 28 February, the National Assembly resolved by a 74.38% majority to have the Constitution’s property clause amended to intensify land redistribution by expropriation without compensation. The Joint Committee on Constitutional Review is reviewing the matter and will report to the Assembly by 30 August.

The apparent intention is that compensation should not be payable in expropriations for redistribution in the interest of land reform, but continue to be paid in expropriations for other public purposes.

A constitutional amendment of the Bill of Rights (including the property clause) requires a two-thirds majority vote in the Assembly (and six of nine provinces in the National Council of Provinces).

But a 75% vote in the Assembly is required to amend the Constitution’s first provision (the country’s founding values).

The provision lays out fundamental values the Constitution is designed to achieve. It states that the Republic is founded on human dignity, achievement of equality and advancement of human rights, non-racialism, and supremacy of the Constitution and the Rule of Law.

The Constitutional Court has said that the Rule of Law and the other values are fundamental and give substance to all provisions of the Constitution. Commentators conclude that a 75% majority is needed for a constitutional amendment which affects one or more fundamental rights in a way that prejudices the Rule of Law.

A constitutional amendment to allow expropriation without compensation would not be a mere amendment of the property clause. It would limit other fundamental rights and the Rule of Law, and therefore, its adoption would require a 75% majority.

Amendment of the Constitution’s property clause to permit expropriations for land-reform redistribution without compensation would create an exception that will affect other clauses in the Bill of Rights, in violation of the Rule of Law.

The Bill of Rights stipulates that the State may not unfairly discriminate. Denying compensation for expropriations for one purpose, however worthy, while paying compensation for expropriations for other purposes, would be unfair discrimination and thus inconsistent with the Rule of Law.

The Bill of Rights states that everyone has the right to equal protection of the law. Expropriations without compensation would operate unequally: Owners who had completely paid off a mortgage over their land, or who paid the full purchase price for the land, would lose their entire equity in the property, and suffer more prejudice from an expropriation without compensation than owners who had paid only a small part of the mortgage or had paid only a deposit on the purchase price for the land.

While expropriation for the purpose of land reform may be desirable, it does not follow that the land should be expropriated without compensation. There is no rational connection between the principle that expropriation for land reform is desirable, and the notion that expropriations for that purpose should be without compensation. The one does not follow from the other. The Rule of Law requires the legislature to act rationally.

The Rule of Law also requires South Africa’s compliance with its obligations in international law deriving from treaty or international custom governing the conduct of nations. The 1948 Universal Declaration of Human Rights embodying international custom and the 1966 International Covenant on Civil and Political Rights stipulate that all are entitled, without discrimination, to equal protection of the law and to own property and not be arbitrarily deprived thereof.

In sum, expropriation without compensation for land-reform purposes would impair the Rule of Law by limiting the fundamental rights to property and equality, and against unfair discrimination, and by violating our obligations under international law.

Perhaps even a 75% majority will not suffice to introduce expropriation without compensation. Expropriation without compensation would be inconsistent with the fundamental premises of the constitutional State and impair the “basic structure” of the Constitution.

The Supreme Court of India has developed the doctrine that, even though the Constitution may authorise amendments of any of its provisions (by special parliamentary majority, and for some provisions by half the state legislatures), that power of amendment cannot be used to damage the Constitution’s “basic structure” or essential features, including the principle of equality, the Rule of Law, and judicial review of government action.

The Court developed this jurisprudence as a shield against prime minister Indira Gandhi’s attempts in the 1970s to expand executive powers.

The “basic structure” principle has been applied in Malaysia, is acknowledged by the highest courts in Canada (certain “unwritten principles” of the Constitution may be unassailable), and in England, where Parliament is supreme (the courts may have to consider whether there are “constitutional fundamentals” which even a sovereign Parliament cannot abolish).

In Belize, the supreme court has struck down constitutional amendments for violation of the Constitution’s basic structure. The amendments denied to owners of petroleum minerals located under the territory of Belize the right to apply to court for compensation in the event of being arbitrarily deprived of such interests by the State.

In South Africa, the Constitutional Court has left open the question whether the basic-structure doctrine applies. Prof Devenish of Natal says the doctrine is “waiting in the wings”.

Gary Moore is a South African lawyer and senior Free Market Foundation researcher

 

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