Submission: Regulation of Agricultural Land Holdings Bill

18 April 2017
Views 1 124


Submission
to the
Department of Rural Development and Land Reform
on the
Regulation of Agricultural Land Holdings Bill

Contents
1. Executive Summary 
2. The Free Market Foundation & Rule of Law Project 
3. Introduction 
4. The Nature of Property Rights 
5. The Constitutional Right to Property 
6. The Rule of Law, Discretionary Power & Good Law 
7. Problematic Provisions in the Bill 
8. Toward Meaningful Land Reform 
9. Conclusion 

1. Executive Summary

The hallmark of Apartheid was its denial of property rights to black, coloured, and Indian South Africans. Starting in 1913, various draconian ‘land’ and ‘group area’ laws were enacted which allowed government to move ‘non-white’ South Africans around the country as it saw fit, without regard for their choices. South Africa’s new constitutional order brought this state of affairs to an end, and gave private property constitutional protection.

While private property is often branded as a ‘protection’ of ‘white privilege’, it is something which many black South Africans died for during the struggle – a struggle which continues to this day.

In this submission, the FMF lays out the nature of private property in the conceptual as well as constitutional sense, and explains how the Bill potentially does not adhere to this framework.

The Regulation of Agricultural Land Holdings Bill (“Agricultural Holdings Bill”) falls foul of the constitutionally-required respect for private property. It does this by removing owners’ entitlement to alienate, as it requires government to be given right of first refusal when agricultural land is being disposed of. It furthermore empowers the Minister to expropriate agricultural land if they are unable to reach an agreement with an owner.

The Bill also discriminates unfairly against non-South Africans by disallowing them ownership of agricultural property. This violates section 25(1) of the Constitution which provides that anyone, foreigners included, may own property.

The Bill makes much reference to race and gender, which must be disclosed for various reasons. This betrays the non-racial and non-sexist spirit of our constitutional order.

Crucially, the Bill approaches land reform from a ‘redistribution’ rather than ‘restitution’ perspective. Restitution is required by the Constitution on an appropriate reading of the entire property rights provision, whereas redistribution is not mentioned or implied anywhere in our highest law.

The Free Market Foundation has suggested which provisions need to be altered to bring the Bill in line with the Constitution, however, principally recommends that the Bill be abandoned entirely.

Instead, the FMF believes private property is the key ingredient for land reform. Government continues to own vast tracts of land and millions of South Africans continue to live on council-owned property. Before anything of the Agricultural Holdings Bill’s nature is considered, government must first ensure all the more effective and constitutionally-sound avenues have been exhausted in its pursuit of land reform.

Martin van Staden
Legal Researcher
Rule of Law Project
Free Market Foundation

2. The Free Market Foundation & Rule of Law Project

The Free Market Foundation (FMF)1  is an independent public benefit organisation founded in 1975 to promote and foster an open society, the Rule of Law, personal liberty, and economic and press freedom as fundamental components of its advocacy of human rights and democracy based on classical liberal principles. It is financed by membership subscriptions, donations, and sponsorships.

Most of the work of the FMF is devoted to promoting economic freedom as the empirically best policy for bringing about economic growth, wealth creation, employment, poverty reduction, and human welfare.

The FMF’s Rule of Law Project is dedicated to promoting a climate of appreciation throughout South Africa, among the public and government, for the Rule of Law; continually improving the quality of South African law; identifying problematic provisions in existing and proposed laws and, where feasible, correcting them. 

3. Introduction

The Constitution of the Republic of South Africa, 1996,2 and the interim Constitution3  before it, was a break from the previous constitutional dispensation wherein the legislature – Parliament – was sovereign, and could pass whatever laws it deemed appropriate.4  Indeed, in the case of Sachs v Minister of Justice5  the Appellate Division of the Supreme Court said “Parliament may make any encroachment it chooses upon the life, liberty or property of any individual subject to its sway, and… it is the function of courts of law to enforce its will”.6  This was the bedrock upon which the previous regime was able to construct Apartheid, as no court of law or civil rights association could challenge the rightfulness or legality of that system according to a set of principles which regulate governance.

The characterising feature of Apartheid was its denial of property rights to black South Africans. The 1993 (interim) Constitution and the 1996 (current) Constitution were a significant break from this era of tyranny, in that both recognised private property rights for all South Africans, regardless of their race. These constitutions also brought an end to parliamentary sovereignty, and brought about the beginning of constitutional supremacy. This means that all law and legal conduct must be in line with the text, spirit, and purport of the Constitution, and especially the Bill of Rights.7 

Section 1(c) of the Constitution provides that the Constitution itself, as well as the Rule of Law, is what the non-racial and non-sexist South African state shall be founded upon. 

On Friday, 17 March 2017, the Minister of Rural Development and Land Reform published the Regulation of Agricultural Land Holdings Bill, 20178  in the Government Gazette.9  The Bill’s stated purpose is, inter alia, to redistribute land, promote food security, “ensure redress for past imbalances in access to agricultural land”, enable the state to “monitor and evaluate its compliance with the Constitutional directive to ensure land, tenure and related reforms in respect of land with the intent of taking measures to redress results of past racial discrimination”, to enable the state to meet its policy and legislative objectives, and “provide certainty regarding the ownership of public and private agricultural land”.10  

This Bill is highly questionable in its accordance with the Constitution, on the grounds of non-racialism, property rights, and non-discrimination against foreigners. In this submission the nature of property rights will be laid out in detail, as a concept and as a constitutional feature. The problematic provisions of the Bill will also be scrutinised.

4. The Nature of Property Rights

4.1 Elementary principles of property rights

Much emphasis in constitutional discourse is placed on freedom of expression, so much so that it is often regarded as the basic right which makes all other rights possible. The property right, on the other hand, is oftentimes seen as clinical or merely ancillary. Indeed, the property right of individuals is arguably the most disregarded right,11  as well as the right treated with the most scorn.12  

Property rights are often misconstrued as the protection of ‘white privilege’. They should rather be appreciated as one of the rights for which the struggle was fought, as something black people lived and died for, as a fundamental right for black South Africans that should never again be compromised. The FMF is proud that this has been our position for 45 years. We are surprised by how easily the legal means by which black land rights were violated can be forgotten and Apartheid-style legislation reconsidered.

The property right of the individual is not merely a superficial medium by which the individual is able to exercise control over objects. Instead, the property right is a right foundational to various other rights, such as human dignity,13  life,14  trade,15  and housing.16 

The essence of ‘property’ lies in ownership. Ownership is what makes an ‘object’ or a ‘thing’ into property. When something is unowned or cannot be owned – like the Sun and Moon – we would have no reason to conceive of it as anything other than a thing or object. Therefore, in a world where only one person lives, without the possibility of there being others, the concept of ‘property’ will not exist, because there is nobody to challenge this person’s exercising of the entitlements of ownership.

Various entitlements flow from ownership, some of which will be listed below. However, the essence of all of them, is that the owner has the right to decide what to do or not to do with his property. This is why deprivation of ownership is treated as a serious matter; indeed, the deprivation of black South Africans of their property by the Apartheid government was widely condemned, and to this day is a painful reminder of an oppressive pas. Some entitlements are: 17
  • The entitlement of control
  • The entitlement of use
  • The entitlement of enjoyment of the fruits of the property
  • The entitlement of encumbrance18 
  • The entitlement of alienation19
  • The entitlement of vindication20 
  • The entitlement of defence21 
These entitlements of ownership are the vehicles by which property rights can emancipate the poor, and give them dignity in their ownership.

4.2 Conflict avoidance

The most crucial function of the property right is to avoid conflict. Once a property right over a thing is established, there can be no question about that individual’s rightful use, enjoyment, and alienation of the thing. In times past, this guarded against self-help, whereby individuals would simply take what they want from each other, and hurt one another if necessary. The property right was an inevitable consequence of human nature.

The French assemblyman and political and economic philosopher Frederic Bastiat considered the nature of law and property in his 1850 text, The Law.22  According to Bastiat, the law came about as a consequence of human nature. Writes Bastiat:23 

“Existence, faculties, assimilation — in other words, personality, liberty, property — this is man.

It is of these three things that it may be said, apart from all demagogic subtlety, that they are anterior and superior to all human legislation.

It is not because men have made laws, that personality, liberty, and property exist. On the contrary, it is because personality, liberty, and property exist beforehand, that men make laws. What, then, is law? As I have said elsewhere, it is the collective organization of the individual right to lawful defense.”

In other words, positive law – what Bastiat calls “human legislation” – is a result of the pre-existing attributes of humanity, as a mechanism to protect those attributes and their exercise. Bastiat further discusses the origin of the property right:24 

“Man can only derive life and enjoyment from a perpetual search and appropriation; that is, from a perpetual application of his faculties to objects, or from labor. This is the origin of property.

But also he may live and enjoy, by seizing and appropriating the productions of the faculties of his fellow men. This is the origin of plunder.”

Individuals enter into an ‘agreement’ with the state to avoid this ‘plunder’. In exchange for protection of their persons and property, individuals agree to adhere to the law which does the protecting, and, therefore, not resort to self-help. This agreement is known as the ‘social contract’, and the social contract is the framework within which governance must take place. Bastiat sets out this framework thus:25 

“When law and force keep a man within the bounds of justice, they impose nothing upon him but a mere negation. They only oblige him to abstain from doing harm. They violate neither his personality, his liberty, nor his property. They only guard the personality, the liberty, the property of others. They hold themselves on the defensive; they defend the equal right of all.”

This social contract, however, has not been adhered to, according to Bastiat. He writes:26 

“[The law] has acted in direct opposition to its proper end; it has destroyed its own object; it has been employed in annihilating that justice which it ought to have established, in effacing amongst Rights, that limit which it was its true mission to respect; it has placed the collective force in the service of those who wish to traffic, without risk and without scruple, in the persons, the liberty, and the property of others; it has converted plunder into a right, that it may protect it, and lawful defense into a crime, that it may punish it.”

What Bastiat is referring to here is the law being used as a tool for ‘redistribution’ of property, which evidently violates private property.  

‘Redistribution’, in this context, is a rejection of the social contract, however, ‘restitution’ is not. This submission should therefore not be construed as an argument against restitution. Where a true owner has had his property deprived from him by someone else, be it a criminal or government, he does not lose ownership.27  Government must restore the property to its rightful owner. This principle applies to the descendants of true owners as well, which is a relevant consideration in post-colonial and post-Apartheid South Africa.

5. The Constitutional Right to Property

The Preamble of the Bill correctly notes the provisions found in sections 25(2) to (9), however, it curiously appears to ignore – as does the remainder of the Bill – the foundational provision of the section, section 25(1). 

In the case of S v Makwanyane,28  Chaskalson J held29  for a majority of the Constitutional Court, that a provision of the Constitution “must not be construed in isolation, but in its context, which includes the history and background to the adoption of the Constitution, other provisions of the Constitution itself and, in particular” other provisions in the chapter of which it is a part. This supports the idea that the Constitution must be read holistically, bearing in mind the values and purpose of the entire text as well as the particular provisions. 

Section 25 must therefore be construed holistically. Section 25(1) cannot be disregarded or treated as an afterthought.

Section 25(1) provides:

“No one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property.”

This is a ‘negative’ right, in that it protects individuals from government interference in their proprietary affairs. Sections 25(2) to 25(9) are mostly ‘positive’ in nature, meaning that they oblige the government to do something, rather than refrain from doing something. By these latter sections’ nature, however, they depend upon section 25(1). Without the first subsection, none of the others would make sense or be enforceable.

The ‘general limitations’ provision found in section 36 empowers the state to limit any right in the Bill of Rights if the limitation adheres to the criteria set out in that section. Section 36 provides as follows:

“36. (1) The rights in the Bill of Rights may be limited only in terms of law of general application to the extent that the limitation is reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom, taking into account all relevant factors, including —
(a) the nature of the right; 
(b) the importance of the purpose of the limitation;
(c) the nature and extent of the limitation;
(d) the relation between the limitation and its purpose; and
(e) less restrictive means to achieve the purpose.

(2) Except as provided in subsection (1) or in any other provision of the Constitution, no law may limit any right entrenched in the Bill of Rights.”

While the courts may take into account factors other than those listed in section 36(1)(a) to 36(1)(e), it has been customary for the courts to limit themselves to these five factors which appear in the text. 

Laws which limit rights must be “reasonable and justifiable in an open and democratic society”.

The FMF was instrumental in having this portion of section 36 added to the Constitution, and thus we write with confidence when we say that the ‘open society’ is a concept developed by Karl Popper in his work The Open Society and Its Enemies.30  The ‘open society’, according to Dr Alan Haworth, “is a society characterised by institutions which make it possible to exercise the same virtues in the pragmatic pursuit of solutions to social and political problems”. These ‘virtues’ which must be possible to exercise are “creativity and imagination in the formulation of theories and hypotheses, as well as in devising experiments with which to test them; critical rationality in the assessment of theories and other claims; the toleration required to recognise that other peoples’ theories could be rivals to your own”.31 

Therefore, for a limitation to be justifiable in an open society, the limitation must still allow individuals to exercise these aforementioned virtues in their daily lives. In other words, they must have the freedom to express themselves and manifest their own ‘experiments’ to arrive at certain conclusions. 

The Constitution’s provision could have stopped at “open and democratic society”, but it goes further, and says “an open and democratic society based on human dignity, equality and freedom”. These values of dignity, equality, and freedom also appear in section 1 of the Constitution, meaning these are founding values for South Africa, and not simply filler text. These values also complement one another, in that no individual’s dignity is truly being respected if he has no substantive freedom. A dignified existence implies enjoying the fruits of one’s labour and being able to leave a proprietary legacy for one’s descendants, without the state micromanaging one’s affairs as if one were a perpetual child.

Furthermore, the factors listed in section 36(1)(a) to 36(1)(e) further narrow the scope of the limitation of rights, and allow the courts to take other, unlisted factors into account, to decide whether or not the limitation is justifiable in an open and democratic society which is committed to the values of human dignity, equality, and freedom.

We will briefly discuss this right in relation to each of the factors listed in section 36(1)(a) to 36(1)(e).

(a) The nature of right.

The nature of the property right is discussed in detail above, and the ways in which the Agricultural Holdings Bill does not adhere to that nature is discussed below.

It is sufficient to note here that the nature of the property right is exclusionary, i.e. in its effort to avoid conflict between individuals and groups, it must of necessity exclude non-owners from the use, enjoyment, and alienation of the property without the wilful consent of the owner.

(b) The importance of the purpose of the limitation.

In our view, the purpose of the limitation, i.e. redistribution of land, is not important. As discussed below, to correct the legacy of Apartheid, a process of restitution must be preferred, along with a respect for private property rights, which will empower the poor. The Constitution makes redressing the legacy of Apartheid an imperative for government, which is, in our view, a particularly specific reference to restitution. The text of the Constitution does not provide or imply that redistribution must take place, and, on an honest reading of the text with due regard to the nature of property rights, redistribution appears to be unconstitutional.

(c) The nature and extent of the limitation.

The extent of the limitation has an undeniable effect on its justifiability. If property rights are violated in toto then the limitation will never be justified. The more severe the nature and extent of the limitation, the greater the chances of it being unjustifiable.

As we discuss below, the extent of the limitations on the property right found in the Agricultural Holdings Bill are very severe. 

(d) The relation between the limitation and its purpose.32 

This is simply the requirement of rationality restated in constitutional terms. Rationality is one of the two legs of reasonableness. Reasonableness, in this context, means that a reasonable person will come to the conclusion that the limitation will achieve its purpose. As we already know, a limitation must be “reasonable and justifiable” to persist, in terms of the Constitution.

For the limitation to be justifiable, thus, it must be rational, meaning the limitation must be objectively capable of achieving the purpose. In other words, evidence must support the notion that the limitation will effectively combat the problem identified.

(e) Less restrictive means to achieve the purpose.

This is the second leg of reasonableness, and is a constitutional restatement of the requirement of proportionality. In S v Manamela33  the Constitutional Court described proportionality as the notion that one ought not to use a sledgehammer to crack a nut.

If less restrictive means are available to the government to achieve the purpose, then it must exhaust those means before resorting to harsh action, such as the Agricultural Holdings Bill.

As will be discussed below, restitution is a less restrictive, a more effective, and more constitutionally-sound alternative to the redistribution contemplated in the Bill. 


6. The Rule of Law, Discretionary Power & Good Law

6.1 The Rule of Law

Chapter 1 of the Constitution is known as the ‘founding provisions’, and can be considered the very basis upon which this nation is founded. Indeed, section 1 is entitled ‘Republic of South Africa’, and what follows under that section is what the Constitution envisages will characterise this state. 

Section 1 reads as follows:

“1. The Republic of South Africa is one, sovereign, democratic state founded on the following values:

(a) Human dignity, the achievement of equality and the advancement of human rights and freedoms.

(b) Non-racialism and non-sexism.

(c) Supremacy of the constitution and the rule of law.(d) Universal adult suffrage, a national common voters roll, regular elections and a multi-party system of democratic government, to ensure accountability, responsiveness and openness.” 

This section explicitly states that the Republic per se, i.e. by virtue of its existence, by default, is founded on the values that are listed. Unlike other provisions which are found in the Bill of Rights, which obligate the state to ‘progressively realise’ the content of the provision, the state has no choice or discretion vis-à-vis these values.

Section 1(a) says that the state is founded on “the advancement of human rights and freedoms”; section 1(c) says the state is founded on the “Supremacy of the constitution and the rule of law”; and section 1(d) says the state is founded on “a multi-party system of democratic government, to ensure accountability, responsiveness and openness.”

It would be improper to overlook section 2 of the Constitution. On the face of it, this might appear to be a redundant provision, because it essentially repeats what has already been said in section 1(c) above. However, in light of the fact that this repetition does appear in the constitutional text, it stands to reason that the constitutional drafters considered this to be a provision of paramount importance.

Section 2 of the Constitution, entitled ‘Supremacy of Constitution’, reads as follows:

“2. This Constitution is the supreme law of the Republic; law or conduct inconsistent with it is invalid, and the obligations imposed by it must be fulfilled.”

This section has the effect of strengthening not only section 1 above, but the Constitution as a whole. Laws which are passed by any level of government which are inconsistent with the constitutional text are invalid by default.34  Any law thus which violates the Rule of Law is, by virtue of its inclusion in the constitutional text in section 1(c), invalid.

Section 1(c) of the Constitution provides that the supremacy of Constitution, as well as the Rule of Law, are what the South African state is founded upon. This provision elevates the principles of the Rule of Law to a status higher than any statutory law, secondary only to the text of the Constitution itself.

In light of this provision, it is pertinent to ask “what is the Rule of Law?” Let us consider the jurisprudence surrounding this constitutional principle.

In the Constitutional Court case of Van der Walt v Metcash Trading Ltd35 Madala J said36  the following:

“[65] The doctrine of the rule of law is a fundamental postulate of our constitutional structure. This is not only explicitly stated in section 1 of the Constitution but it permeates the entire Constitution. The rule of law has as some of its basic tenets:

1. the absence of arbitrary power – which encompasses the view that no person in authority enjoys wide unlimited discretionary or arbitrary powers;

2. equality before the law – which means that every person, whatever his/her station in life is subject to the ordinary law and jurisdiction of the ordinary courts.

3. the legal protection of certain basic human rights.

[66] The concept of the rule of law has no fixed connotation but its broad sweep and emphasis is on the absence of arbitrary power. In the Indian context Justice Bhagwati stated that:

‘the rule of law excludes arbitrariness and unreasonableness.’

I would also add that it excludes unpredictability. In the present case that unpredictability shows clearly in the fact that different outcomes resulted from an equal application of the law.”

It is important to note the following observations made by the honourable judge. The Rule of Law:
  • Permeates the entire Constitution.
  • Prohibits unlimited arbitrary or discretionary powers.
  • Requires equality before the law.
  • Excludes arbitrariness and unreasonableness.
  • Excludes unpredictability.

The Good Law Project’s Principles of Good Law report largely echoes this, saying:37 

“The rule of law requires that laws should be certain, ascertainable in advance, predictable, unambiguous, not retrospective, not subject to constant change, and applied equally without unjustified differentiation.”

The report also identifies four threats to the Rule of Law,38  the most relevant of which for purposes of this submission, is the following:

“[The Rule of Law is threatened] when laws are such that it is impossible to comply with them, and so are applied by arbitrary discretion […]”

Albert Venn Dicey, known for his Introduction to the Study of the Law of the Constitution, and considered a father of the concept of the Rule of Law, wrote that the Rule of Law is “the absolute supremacy or predominance of regular law as opposed to the influence of arbitrary power, and excludes the existence of arbitrariness, of prerogative, or even wide discretionary authority on the part of the government”.39 

Friedrich August von Hayek wrote:40 

“The ultimate legislator can never limit his own powers by law, because he can always abrogate any law he has made. The rule of law is therefore not a rule of the law, but a rule concerning what the law ought to be, a meta-legal doctrine or a political ideal.”

What is profound in Von Hayek’s quote is that he points out that the Rule of Law is not the same as a rule of the law. Indeed, any new Act of Parliament or municipal by-law creates and repeals multiple ‘rules of law’ on a regular basis. The Rule of Law is a doctrine, which, as the Constitutional Court implied in Van der Walt, permeates all law, including the very Constitution itself. 

6.2 Discretionary Power

Dicey writes “the rule of law is contrasted with every system of government based on the exercise by persons in authority of wide, arbitrary, or discretionary powers of constraint”.41  He continues, saying the Rule of Law means “the absolute supremacy of predominance of regular law as opposed to the influence of arbitrary power, and excludes the existence of arbitrariness, of prerogative, or even of wide discretionary authority on the part of the government”.42 

The opposition to arbitrary power should not be construed as opposition to discretion in and of itself. Officials use discretion to determine which rules to apply to which situation, and thus some discretionary power is a natural consequence of any system of legal rules. However, the discretion must be exercised per criteria which accords with the principles of the Rule of Law, and the decision itself must also accord with those principles.

A common example of arbitrary discretion is when a statute or regulation empowers an official to make a decision “in the public interest.” What is and what is not “in the public interest” is a topic of much debate, and empowering officials to apply the force of law in such a manner bestows upon them near-absolute room for arbitrariness. The “public interest”, however, can be one criterion among other, more specific and unambiguous criteria. 

The fact that some discretion should be allowed is a truism; however, the principle that officials may not have decisions of a substantive nature still applies. Any decision by an official must be of an enforcement nature, i.e. they must do what the legislation substantively requires. For instance, an official cannot impose a sectoral minimum wage. The determination of a minimum wage is properly a legislative responsibility, because it is of a substantive nature rather than mere enforcement. Unfortunately, the Basic Conditions of Employment Act43  gives the Minister of Labour the authority to make “sectoral determinations” – which includes determining a minimum wage – which is a clear violation of the Rule of Law and the separation of powers.44 

6.3 Good Law

The Rule of Law is a non-negotiable, prerequisite characteristic of any state which purports to call itself a constitutional democracy founded on values such as equality, freedom, and justice. In South Africa, the principles of the Rule of Law were explicitly adopted into our law by the constitutional drafters in section 1(c), and this provision, due to its inclusion in the Constitution, cannot be limited,45  modified, or abridged, by virtue of section 2 of the Constitution.

The concept of Good Law, however, is wider than the concept of the Rule of Law, and is not a rigid rule. Rather, it is a guideline which a state can adhere to, to various extents, if it wishes to be a prosperous, successful, and free society. A law must certainly adhere to the Constitution and the Rule of Law in the first place, in order to be a good law; but what makes good law broader than the Rule of Law, is the inquiry into whether or not a particular law is both feasible and desirable.

The goal of the law, as well as the textual provisions in the law, must plausibly be achievable, for the law to be feasible. 

The movement control laws of the Apartheid era, for instance, were certainly not feasible. The desire of the people to move into urban areas and earn a living was too great for the law to ever hope to control. This is why the Apartheid government, almost immediately after enacting those laws, started chipping away and relaxing them, to the extent of them being virtually repealed in many cases, by the late 1980s.

A law must, furthermore, be desirable. This does not mean that bureaucrats and Members of Parliament desire a law, but rather, it is an inquiry into whether something is jurisprudentially desirable. 

For instance; passing a law which creates three new government agencies which do exactly the same thing, would not pass the desirability test, even if it is feasible and constitutionally permissible. 

If the goal of government is to encourage legislation which advances transformation and makes South Africa a prosperous society for all to live in, then it will be wise for it to adhere to the principles of Good Law, and not only those of constitutionality or the Rule of Law.


7. Problematic Provisions in the Bill

7.1 Unconstitutional discrimination against foreigners

Chapter 6 of the Bill is aimed at the prohibition of the acquisition of and lease of agricultural land by foreign persons.46  Section 19(1) provides that no foreign person can acquire ownership of agricultural land, and section (2) provides an exception for juristic persons wherein a black person has a controlling interest.47  Instead, section 20 provides that foreign persons may lease agricultural land.

Section 21(1), furthermore, provides that when a foreign person is disposing of agricultural land which they currently own, they must offer to the Minister the right of first refusal.

As we now know, a constitutional provision cannot be interpreted or applied in isolation from the rest of the Constitution, and certainly not isolated from the other provision in its chapter.

It is, therefore, important to take note of the language used by the constitutional drafters throughout the Bill of Rights.

Section 7(1) provides that the Bill of Rights enshrines the rights of “all people in our country.” This indicates, quite clearly, a general territorial application, saying that anyone who find themselves in South Africa enjoy the protection of the rights in the Bill of Rights.

Section 8(2) provides that the nature of the right in question determines whether and how it applie
s to a natural or juristic person. Therefore, whether and how a right will apply to a foreign person is determined by the nature of the right itself.
Sections 9(1), 9(4), 10, 11, 12, 13, 14, 15(1), 16(1), 17, 18, 21(1), 21(2), 23, 24, 25(1), 26(1), 27(1), 27(3), 28, 29, 30, 32, 33, 34, and 35 are framed in the language of general application. They provide “everyone has a right to…” and “no one may…”, indicating that South African citizenship is not a criterion. On the other hand, sections 19, 20, 21(3), 21(4), and 22 are framed in the language of citizenship, indicating that only citizens benefit from those rights and obligations. 

This differential use of language cannot be disregarded as merely stylistic. A canon of constitutional interpretation, as discussed above, is that every word must be given effect to, and that the Constitution must be read holistically.

We recommend that sections 19 and 21 be removed from the Bill.

7.2 It betrays the non-racial and non-sexist spirit of the Constitution

The Agricultural Holdings Bill makes various references to the disclosure of inter alia race and gender.

In section 1(3) the Bill mandates that persons must indicate they are “Black, Indian, Coloured, White or other” and whether they are “female or male” when prompted in terms of the Bill.

Section 9(a) provides that the Land Commission may investigate the correctness of disclosures of inter alia race and gender by land owners.

Section 15(2)(a) provides that owners must include inter alia their race and gender in their notification of ownership to the Land Commission. This requirement does not apply to foreign persons, according to section 15(4).

When an agricultural land holding is acquired, section 16(1)(b)(i) requires new owners to indicate inter alia their race and gender to the Land Commission.

These provisions are present, as is made clear in the preamble, objects, and memorandum of the Bill, to enable government to engage in transformation and land reform. Section 2(b) of the Bill provides that the Bill is intended to “ensure redress for past imbalances in access to agricultural land”.

The property rights provision of the Constitution requires the state to take “reasonable” measures “to foster conditions” which enable previously disadvantaged citizens “access to land on an equitable basis”.48  This provision can only be departed from in instances where such departure is justifiable in terms of the limitations provision found in section 36.49 

The founding provisions of the Constitution, contained in chapter 1, must inform the interpretation of the rest of the document, especially the Bill of Rights. Section 1(b) of the Constitution, thus, provides that “non-racialism and non-sexism” are founding values of South Africa. Both the property rights provision as well as he limitations provision are informed by this, and therefore non-racialism and non-sexism must always be first considerations.

The constant reference to race presumes there to be a statutory definition of race and the perpetuation of race classification. There is, however, no coherent way to define race in any coherent sense: legally, socially, ethnically or genetically. Initial transformation targets presupposed good faith and the absence of formal race classification. This proposal presupposes the reintroduction of Apartheid-style race classification.

Transformation and, especially, land reform, need not occur along racial lines. Indeed, as will be discussed below, true transformation can be achieved through far less draconian means, spearheaded by the people of South Africa, for the people of South Africa.

In this respect, we recommend all references to “race” and “gender” be removed from the Bill.

7.3 It continues an Apartheid-esque mindset about land ownership & property

The Bill’s preamble mentions all the other subsections of section 25 but omits its foundational provision – section 25(1). This omission appears to permeate the entire Bill, as it disregards the nature of property rights as discussed above; the nature of which is an imperative consideration as contemplated by section 36(1)(a) of the Constitution. 

A crucial entitlement of property is the ability to alienate.

The automatic rights of first refusal contained in sections 21(1) and 26(2)(a) are rooted in a faulty understanding of land rights and property which the Apartheid government espoused, and substantially negate the entitlement of alienation. The philosophy of the Apartheid regime was that the state – not the people – must be the custodian and owner of land, and should thus be able to decide how and under what conditions owners dispose of their land. This was an anti-economic, anti-people philosophy. 

Government today still controls a substantial amount of land, especially in the historically-black areas, however, these sections place the onus of enabling black South Africans to share equitably in land on private citizens.50  And it does so by depriving them, unjustifiably, of their alienation entitlement. 

In 2001, the Demographic Information Group and Population of South Africa (Popsa) found that a quarter of land in South Africa was owned by municipal government.51  According to the Centre for Development and Enterprise, in 2008, national and provincial governments owned about 25 million hectares of land.52 

By 2013, the total state-ownership of land appears to have decreased to about 14% of all land in the country.53  It remains unclear, however, for which departments, and what purposes, land is being held. As recently as 2007, some departments did not know that they had been allotted land as reflected in the Deeds Registry. This can likely be partly attributed to the complex and confusing nature of Apartheid land law inherited by government.

It is therefore still unknown what that 14% is measuring: all land area, all agricultural plots, all commercial agricultural plots, etc.? The FMF has not received a clear answer to this question.

Whatever the case, it is trite that Apartheid was characterised by state dispossession of private and community land. It fundamentally assumed that government can be a more effective caretaker land than the people themselves. Indeed, for much of our colonial history the so-called native ‘reserves’ were administered by government, rather than by the ‘natives’ they were ‘reserved’ for. Such a bizarre mentality has no place in our democratic dispensation where South Africans are recognised as adult decision-makers who do not need government to decide for them what is and is not in their interest.

The FMF, therefore, recommends that all provisions giving the Minister or another government body the right to first refusal in the alienation of agricultural land be removed from the Bill.  

The Bill’s provision in section 26(2)(c) giving the Minister the power to expropriate agricultural land when government and the owner are unable to reach an agreement also betrays a proper understanding of private property. Why would the Bill imply that both the Minister and the owner are engaging in good faith negotiations to reach an “agreement” when the Minister, if they are unhappy about the offer of the owner, can simply disregard it all, and expropriate? It is akin to telling someone that they have a choice in the matter, but they just aren’t allowed to say “no.” 

The use of the word “agreement” in this context is therefore suspect, as it vests the Minister with a great amount of power which upsets the balance in bargaining power between both parties. In ordinary contract law, such a situation would not constitute a valid framework for an agreement due to this unfair imbalance.

The FMF recommends that section 26(2)(c) be removed from the Bill.

8. Toward Meaningful Land Reform

8.1 Private Property is the Answer

No meaningful transformation can take place in South Africa if property rights, as discussed above, are not expanded to all, and respected. 

Measures aimed at empowering South Africa's black majority to share in the wealth provided by our land have long been supported by the FMF. Apartheid spatial planning was a travesty, which saw unelected and prejudiced bureaucrats control the use and allocation of residential, as well as agricultural land.

The Khaya Lam (My Home) Land Reform Project, one of the FMF's flagship initiatives, is dedicated to transformation through ownership. Between 5 million and 7 million urban plots - mostly residential - throughout South Africa are owned by local government, and not the people who live on them. Converting these plots from council-owned to privately-owned with full freehold title deeds will bring a sense of pride and dignity to the occupants, who, as 'new owners', will be able to invest in and perhaps generate an income from their property.

In many cases, ownership is all that is needed for millions of South Africans to enter the market as legitimate small business owners, or landlords to others who do not yet have the means to own property.

As discussed above, government owns a substantial amount of unutilised land – both urban and rural –  according to the Deeds Registry. In certain areas, there is land marked as "reserved" for specific government functions. However, due to the complexity of apartheid land law the government inherited, the departments which are to use these plots, in many cases, do not even know they exist.

The government, therefore, has it well within its means to convert millions of plots across the country to full ownership title and to distribute, at virtually no cost, unused government land to landless black individuals. The massive amount of land the state owns has not been given the attention it deserves in the national conversation about land reform.

Where the government has done substantial good – RDP houses – it has not gone far enough. RDP title deeds include "pre-emptive clauses" that prohibit owners from selling their home for a specified time period. These clauses nullify a central feature of property ownership, which is the choice and the ability to sell or let.

This phenomenon has led to 80 percent occupancy of RDP homes by people who "bought" them illegally from the previous owners. There is no justice in forcing poor homeowners to choose between losing their home and getting a job in another city, or remaining where they are and jobless, just because they are not permitted to sell their house and move to another area.

FMF argues that the government should treat black South Africans the way whites are treated. Whites are allowed to let and sell their property; so too should black people be allowed to utilise their most valuable asset.

Finally, the Subdivision of Agricultural Land Act54  (an apartheid land law) prohibits owners of "agricultural" land from subdividing it without jumping through bureaucratic hoops.

Poor individuals cannot buy a small plot of land from a farmer for their own purposes, unless they get consent from the Minister.

To add insult to injury, the Minister may dictate "as he deems fit" the purposes for which the new subdivided land may be used,55  which is a clear violation of the Rule of Law as discussed with reference to discretionary power above. As with RDP homes, this is an instance of the government severely limiting ownership rights to the detriment of the poor. The Subdivision Act should be substantially amended to reflect our post-apartheid dispensation, or repealed entirely.56 

Unfortunately, the Agricultural Holdings Bill, like the Subdivision Act, places too little emphasis on private property.

Many often assume that poor, landless South Africans want the state to ‘own’ property on their behalf, rather than them owning it individually. The innate desire to own the property on which we live and the wealth-generating property with which we work, however, is a difficult thing to suppress. We must not approach land reform through a state-centric lens, as this is the primary obstacle to meaningful empowerment for the landless poor. Our focus should be on empowering individuals and communities, not expanding government reach and power. Land reform must fundamentally be a people-centric phenomenon.

8.2 Restitution vs. Redistribution

The FMF recognises the authoritarian illegitimacy of the dispossession of millions of black, coloured and Indian South Africans which occurred under the previous regime. Apartheid land and group laws did not respect nor recognise the private property rights of these South Africans and used the power of the state to expropriate property for the government’s own social engineering purposes.

There are various ways in which land reform can, and has, been undertaken. The two most prominent forms are redistribution and restitution. There are, however, two other vehicles for land reform which are underemphasised, namely, exchange and conversion.

Redistribution of property can take place from civilian to civilian, from government to civilian and from civilian to government. The FMF has long advocated, as did the land white paper during the early years after the end of Apartheid, redistribution of superfluous government land to black South Africans. What most people think “redistribution” means is taking from some civilians and giving to others, with or without fair compensation or payment. What actually happens in most cases is redistribution to government, with black individuals becoming mere occupiers under some of other form of lease or compromised tenure. This is the least desirable of the four forms of redistribution.

Exchange of property is a very common, yet rarely appreciated, form of land reform. In more than half of all property transactions between willing buyers and willing sellers, the buyers are black. Many of the six million middle class black people have bought and are buying their own land. This is an extremely common and desirable form of market-based reform of Apartheid ownership patterns.

Conversion (to full, unambiguous, uncompromised freehold title) is technically ‘redistribution’ from government to civilians, because the legacy we inherited from Apartheid is that black people live on government-owned or controlled land. If that ghastly legacy is to be addressed morally and meaningfully, black-occupied land should be considered already owned by the occupiers, and conversion should be regarded as merely the paperwork that formalises it.

As discussed above, vindication of property is an entitlement of ownership, meaning that if your legitimately-held property is taken away from you, you have the right to get it back. In this respect, we fully support the restitution of property which was taken from landowners – without their wilful consent – by the previous government. The Independent Entrepreneurship Group also recommends that land forcefully taken by the Apartheid regime which remains in state ownership today, should be “returned to the disenfranchised under a system of property-titling and private ownership”. Private ownership of property would be a sure way to propel the South African majority out of poverty.57

The process of restitution, however, is a fact-based enquiry, whereby a claimant must show that they were indeed deprived under Apartheid land law, with reference to a particular plot of land. Once this is proven, the land is returned to the true owner, and the current illegitimate possessor of the land must receive due compensation, given that in all likelihood they held the land believing in good faith that they were the true owner.

The Agricultural Holdings Bill, however, is concerned with redistribution (from owner to government), as it does not identify land or property which was per se deprived under Apartheid as the subject matter. Instead, the Bill identifies any and all agricultural land. This means that the Bill is not intended as a measure of redress for the actual wrongs committed by the previous regime, but in fact proposes a redistribution of property which may be held entirely validly. This is, as part of the transformation agenda, arbitrary, and falls foul of the Rule of Law as well as the Constitution, which requires redressing the ills of Apartheid – restitution.

9. Conclusion

9.1 Summary of suggestions

The suggestions and recommendations found throughout this submission will be summarised here:
  • The FMF opposes the entirety of the Bill in principle, but for the creation of a Land Commission to conduct a land audit and assist with the restitution process, as it assumes ‘redistribution’, instead of ‘restitution’, as a constitutional imperative. The Constitution makes restitution an imperative, and redistribution is arguably unconstitutional.
  • The FMF recommends that sections 19 and 21 be removed from the Bill.
  • The FMF recommends that all references to “race” and “gender” be removed from the Bill.
  • The FMF recommends that all provisions giving the Minister or another government body the right to first refusal in the alienation of agricultural land be removed from the Bill. 
  • The FMF recommends that section 26(2)(c) be removed from the Bill.

9.2 Afterword

The hallmark of Apartheid was its denial of property rights to black, coloured, and Indian South Africans. Starting in 1913, various draconian ‘land’ and ‘group area’ laws were enacted which allowed government to move ‘non-white’ South Africans around the country as it saw fit, without regard for their choices. South Africa’s new constitutional order brought this state of affairs to an end, and gave private property constitutional protection.

The Agricultural Holdings Bill falls foul of the constitutionally-required respect for private property. It does this by removing owners’ entitlement to alienate, as it requires government to be given right of first refusal when agricultural land is being disposed of. It furthermore empowers the Minister to expropriate agricultural land if they are unable to reach an agreement with an owner.

The Bill also discriminates unfairly against non-South Africans by disallowing them ownership of agricultural property. This violates section 25(1) of the Constitution which provides that anyone, foreigners included, may own property.

The Bill makes much reference to race and gender, which must be disclosed for various reasons. This betrays the non-racial and non-sexist spirit of our constitutional order.

Crucially, the Bill approaches land reform from a ‘redistribution’ rather than ‘restitution’ perspective. Restitution is required by the Constitution on an appropriate reading of the entire property rights provision, whereas redistribution is not mentioned or implied anywhere in the text.
The Free Market Foundation has suggested which provisions need to be altered to bring the Bill in line with the Constitution, however, principally recommends that the Bill be abandoned entirely.

1 www.freemarketfoundation.com

2 Henceforth “the Constitution”.

3 Constitution of the Republic of South Africa Act (200 of 1993).

4 This is made clear by the remarks of Didcott J in Nxasana v Minister of Justice and Another 1976 3 All SA 57 (D), where the Court said “under a constitution like ours, Parliament is sovereign, and the Courts can no more assume a power which it has decreed that they shall lack, or set its enactments at naught, than can anyone else.”

Sachs v Minister of Justice 1934 AD 11.

6 At par 37.

7 Chapter 2 of the Constitution.

8 Henceforth “the Agricultural Holdings Bill” or “the Bill”.

9 Department of Rural Development and Land Reform (Notice 223 of 2017).

10 Section 2 of the Agricultural Holdings Bill.

11 For instance, when new taxes are levied in order to fulfil certain welfare obligations, ministers of finance make scant reference to the fact that increasing taxes takes more property away from ordinary citizens. Similarly, when civil society organisations campaign for government programmes, they often omit acknowledging that such programmes inevitably involve limiting the property rights of citizens. On the other hand, the same is not true for measures which violate, for example, the right to dignity or freedom of expression.

12 See variously: http://www.sabc.co.za/news/a/ca61e500402f4d068001ebf8e0b8bbd7/EFF-calls-for-amendment-to-Property-Clause-20172402; https://www.pressreader.com/south-africa/business-day/20170306/281788513850731. Accessed: 29 March 2017.

13 Section 10 of the Constitution. A dignified existence implies enjoying the fruits of one’s labour and being able to leave a proprietary legacy for one’s descendants, without the state micromanaging one’s affairs as if one were a perpetual child.

14 Section 11 of the Constitution. Life is a logical impossibility without accepting the premises of private property. See Hans-Hermann Hoppe. The Economics and Ethics of Private Property. (2006, 2nd edition). 339-346. Available online: https://mises.org/system/tdf/Economics%20and%20Ethics%20of%20Private%20Property%20Studies%20in%20Political%20Economy%20and%20Philosophy_3.pdf?file=1&type=document. Accessed: 29 March 2017.

15 Section 22 of the Constitution. Freedom of trade necessitates the ability to trade in one’s own property.

16 Section 26 of the Constitution. Section 26(3) mentions South Africa’s “homes”. Ownership of the property of the home establishes a connection necessary for dignified living between the resident and the physical home. Being ‘housed’ on public property cannot create the ‘homey’ condition, and places the resident’s security of tenure in permanent question.

17 L Neil van Schalkwyk & P de W van der Spuy. General Principles of the Law of Things. (2012, 8th edition). 96.

18 I.e. to encumber the property with limited real or personality rights, such as a bond.

19 I.e. to sell, destroy, donate, or otherwise dispose of the property.

20 I.e. to have the property returned to the true owner if someone else unlawfully controls it.

21 I.e. to defend the property against unlawful infringement.

22 Frederic Bastiat. The Law. (1850). Available online: https://mises.org/system/tdf/thelaw.pdf?file=1&type=document. Accessed: 29 March 2017.

23 Bastiat (footnote 22 above) 2.

24 Bastiat (footnote 22 above) 5.

25 Bastiat (footnote 22 above) 19.

26 Bastiat (footnote 22 above) 4.

27 This is true even for expropriation. The Apartheid government used its lawful expropriation powers liberally during the previous era, and this is considered illegitimate, rightly, under our current constitutional dispensation. Expropriation must be just – not merely legal – to qualify as a valid transfer of property.

28 S v Makwanyane 1995 (3) SA 391 (CC).

29 At par 10.

30 Karl Popper. The Open Society and Its Enemies. (1945).

31 https://philosophynow.org/issues/38/The_Open_Society_Revisited. Accessed: 13 April 2017.

32 We rely in large part on the following book for the following two sections.
Cora Hoexter. Administrative Law in South Africa. (2012, 2nd edition). 340.

33 S v Manamela 2000 (3) SA 1 (CC)

34 It is trite that a law is only ‘unconstitutional’ when a court of law declares it as such, however, the text of section 2 seem to imply that the law is invalid ab initio. In any event, the effect of this section is that laws which conflict with the Constitution do not carry the legitimate force that characterizes the modern state.

35 Van der Walt v Metcash Trading Ltd 2002 (4) SA 317 (CC).

36 At pars 65-66.

37 Good Law Project. Principles of Good Law. (2015). 14.

38 On page 29.

39 AV Dicey. Introduction to the Study of the Law of the Constitution. (1959, 10th edition). 202-203.

40 FA von Hayek. The Constitution of Liberty. (1960). 206.

41 Dicey (footnote 39 above) 184.

42 Dicey (footnote 39 above) 198.

43 Basic Conditions of Employment Act (75 of 1997)

44 Section 51 of the Basic Conditions of Employment Act.

45 Section 1 is not part of the Bill of Rights (Chapter 2, sections 7-39), hence the general limitations clause which appears in section 36, which will be discussed below, does not apply.

46 Defined in section 1 of the Bill as a natural or juristic person or a trust which is inter alia not a citizen of South Africa or is not ordinarily resident in South Africa.

47 A black person means “Africans, Coloureds and Indians” who are citizens of South Africa, as defined in section 1 of the Employment Equity Act (55 of 1998).

48 Section 25(5) of the Constitution.

49 Section 25(8) of the Constitution.

50 We are pleased to note that the Department of Rural Development and Land Reform, in the memorandum attached to the Bill, realizes that there is a pressing need to for a state land audit to determine just how much land in South Africa is in government hands.

51 Yolandi Groenewald. “Who owns what land in South Africa?” Mail & Guardian. (2009). https://mg.co.za/article/2009-01-23-who-owns-what-land-in-south-africa. Accessed: 11 April 2017.

52 Centre for Development and Enterprise. “Land Reform in South Africa: Getting back on track”. (2008). 21. Available online: http://www.cde.org.za/wp-content/uploads/2013/02/Land%20Reform%20in%20SA%20full%20report.pdf. Accessed: 11 April 2017.

53
Hopewell Radebe. “State ‘owns 14% of land in SA’”. Business Day. (2013). See also https://africacheck.org/reports/do-40000-whites-own-80-of-sa-the-claim-is-incorrect/. Accessed: 11 April 2017.

54 Subdivision of Agricultural Land Act (70 of 1970).

55 Section 4(2) of the Subdivision Act.

56 Temba A Nolutshungu. “There’s more to land reform than expropriation.” Business Report. (2016). Available online: http://www.iolproperty.co.za/roller/news/entry/there_s_more_to_land. Accessed: 12 April 2017.

57 Independent Entrepreneurship Group. “Mayors can unlock growth by delivering on Property Rights.” (2016). Available online: http://ineng.co.za/mayors-can-unlock-growth-by-delivering-on-property-rights/. Accessed: 12 April 2017.

Prepared by:
Martin van Staden
Legal Researcher
Rule of Law Project
Free Market Foundation


Comments on Submission: Regulation of Agricultural Land Holdings Bill