Expropriation Bill [B4-2015]: Chapter 4 proposed amendments, with Deputy Minister

Public Works and Infrastructure

21 October 2015
Chairperson: Mr B Martins (ANC)
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Meeting Summary

The Committee continued deliberations on the official list of committee proposed amendments to the Bill (A-list) accompanied by the B version which incorporated all the proposed amendments into the Bill. Chapter 4 on Intention to Expropriate and Expropriation of Property  was completed.

A DA member suggested that the Department should add the date of expropriation which should not be earlier than 90 days from the date of such service in clause 8(3)(e) and (f) so as to indicate an appropriate timeframe for the transfer of ownership and possession. The Parliamentary Legal Adviser maintained that the matter had already been covered in clause 9(2)(a) and 9(4) and there was no need for it to be repeated. Members wanted clarity on clause 9(1) particularly where the property to be expropriated was under a mortgage bond. The Department explained that clause 9(1)(a) made it clear that the property is released from the mortgage bond on the date of expropriation; therefore, the owner’s responsibility to pay the mortgage bond is suspended. It was important not to confuse date of possession with the date of expropriation.

An EFF member asked for general consensus on the need to delete “just and equitable compensation” in Clause 12 as this was already covered in section 25 of the Constitution.  He expressed concern that there seemed to be an obsession with compensation. The Bill was meant to focus on expropriation. He pointed out that section 25 of the Constitution makes it clear that there is a need to take into account how the property was acquired. The Bill ignored how to settle the matter if the property was acquired unjustly. He added that the party was also totally against Chapter 5 of the Bill which deals with compensation and it was strange that compensation seemed to be in the foreground. The EFF was adamant that there should be no compensation in the process of expropriation of property as this was unaffordable to government. The Minister of Finance together with the Deputy President had made it clear that the country did not have enough spending or borrowing capacity as the economy was not doing well. Section 25 of the Constitution talked about the need to redress the imbalances of the past.

The Deputy Minister of Public Works indicated that the EFF had a right to propose the removal of chapter 5 in the Bill but the focus at the moment was not on the inputs of political party positions. It must be stated categorically that the government would fall short if the suggestion for the removal of chapter 5 was to be endorsed as this was not in line with the Constitution.

Members suggested that the word “expropriated holder” should be replaced by “expropriated person” as the word “holder” had a different connotation. Members expressed concern that the date of taking possession of the expropriated property was not stipulated in clause 8(3)(1). Also it was important to know the action that was to be taken if the owner of the property to be expropriated had not found an alternative location. It was confirmed that the notice of expropriation would be given to both owner and holders of unregistered rights such as farm workers or farm-dwellers.

Meeting report

Clause 7: Notice of intention to expropriate
Ms A Dreyer suggested that in clause 7(7)(i) the Department needed to add “provided that it has made a reasonable effort to reach an agreement on compensation within the specified timeframe and provided that the determination of just and equitable compensation will be determined as soon as reasonably thereafter”.

Mr M Filtane (UDM) said the content of the addition sounded plausible but wanted to know the rationale for this addition as there is always an assumption that things would be done within a reasonable time.

Dr Q Madlopha (ANC) indicated there was no rationale behind the addition suggested by Ms Dreyer as those additions had already been contained in the Bill and “reasonable effort” was part of the process of expropriation.

Mr K Sithole (IFP) also asked for the rationale for the addition suggested by Ms Dreyer as “reasonable time” and “just and equitable compensation” were all included in the Bill.

Ms Dreyer clarified that this was not a major concern but an effort to improve the Bill as there is a huge variety of expropriating authorities and some might just sit and wait for the 40 days to pass and the purpose was to ensure that the process was expedited.

The Chairperson said that the brunt of the contribution from the Member is that the matter is already adequately covered in the Bill.

Ms Vuyokazi Ngcobozi, Parliamentary Legal Adviser, agreed with the view that the matter is indeed already adequately covered in the Bill and therefore there was no need for it to be regurgitated. The intention is to have the chronological order of events and they needed to be cautious in making additions that would muddle that order.

Members agreed with the suggestion.

Clause 8: Notice of expropriation
Dr Madlopha suggested that the Department needed to add “and other relevant departments” in clause 8(ii), in order to be consistent to the similar addition in clause 7.

Mr Filtane said that the suggestion seemed to be superfluous and might not be needed.  

Ms Ngcobozi supported the addition of “and other relevant departments” for the sake of consistency.

Members agreed to the suggestion.

Ms Dreyer suggested that the word “approximate” in clause 8(b)(i) and (ii) should be deleted as it had the potential to create uncertainty.

Mr Andre Meiring, Chief Director: Property, responded that the removal of the word “approximate” would imply that the portion of the property to be expropriated must firstly be surveyed and this was a time consuming process as it  needed to be approved by a Surveyor General. The whole process had the potential to greatly extend the process of expropriation, and therefore the compensation would be subject to the subsequent survey of the land. In essence, the removal of the word “approximate” would compel the Department to survey the land before making compensation to the expropriated owner.

Ms Dreyer asked if the extent of the property was not stipulated in the title deed so as establish the money to be compensated.

Mr Meiring responded that this scenario only applied to the situation where the state was expropriating only a portion of the surveyed piece of land.

Members agreed with the clarification.

Mr Filtane asked the rationale behind giving a notice not to expropriate the property as stipulated in clause 8(2)(b).

Mr Meiring responded that in this instance, the state would not be expropriating that particular right but the underlying ownership of the land is going to change. Therefore, the person who holds the right to land would be unaffected as far as his/her right is concerned, but that individual should be informed that ownership of the land is due to change.

Members agreed with the clarification.

Ms Dreyer suggested that the Department should add the date of expropriation which should not be earlier than 90 days from the date of such service in clause 8(3)(e) and (f) so as to indicate the appropriate timeframe for the transfer of ownership and possession.

Dr Madlopha clarified that the reason for expropriation is because there was no agreement in the negotiations between the expropriating authority and the owner of the property.

Ms Dreyer explained that her point was merely trying to highlight that expropriation should not be earlier than 90 days and this is to allow the expropriated owner sufficient time to find an alternative accommodation.

Dr Madlopha insisted that there was a long process including notices which attempt to notify the owner of the intention to expropriate the property and the need to start looking an alternative property. It must be highlighted that the expropriation in clause 8 was already in the middle and therefore it would be counterproductive to attempt to reintroduce the process of notices at this stage.

Ms Dreyer maintained that her proposal was to ensure that reasonable time is given between the notice that is issued for the intention to expropriate and the taking of possession by the expropriating authority.

Dr Madlopha said the process was already contained in clause 8 and therefore the owner to be expropriated would be issued with a date on which the expropriating authority would be taking possession of the property.

Ms Dreyer expressed concern that there was no process prior to the notice of expropriation and the fear is that the notice to expropriate could be issued, for example, today and then expropriate the property by tomorrow, allowing very little time for the owner to find an alternative location . The notice of expropriation must be served and the date of the actual expropriation.

Ms Ngcobozi responded that the matter was already in clause 9(2)(a) and clause 9(4) and therefore there was no need for it to be repeated.

Dr Madlopha maintained that clause 9(4) made it clear that “a notice of 20 days before the date on which the expropriated owner or expropriated holder desires to place the expropriating authority in possession of the property”.

Mr Sithole asked if clause 8(4)(b) did not cover the concern of Ms Dreyer.

Ms Ngcobozi clarified that clause 7(2)(e) and (f) contained the notice of the intended date of expropriation.

Ms Dreyer maintained that the “intended date” could still be tomorrow and there was no limit on the period provided and this compelled the need to give the owner a sufficient time period to make other arrangements. It was unfortunate that there was no support from other Members on the matter and it would be best to agree to disagree.

Mr F Adams (ANC) added that clause 7(2)(g) also covered the concern of Ms Dreyer.

The Chairperson said that there was indeed no consensus on the matter and therefore it would be useful to agree to disagree.

Ms P Kopane (DA) suggested the copy of the notice should be given to both owners and holders of unregistered rights including farm workers or farm-dwellers.

Mr Sithole supported Ms Kopane's suggestion as the processes that were followed in the Bill needed to be known by all the affected parties or stakeholders.

Dr Madlopha wanted to get the clarity on whether the holders of unregistered rights also included the farm workers or farm-dwellers, as they cannot be expropriated but they occupy the property to be expropriated.

Deputy  Minister Cronin responded that the rights of the holders of unregistered rights would also be expropriated and therefore the notice to be issued would be the same to the owners and holders of unregistered rights.

Ms Dreyer agreed with the clarification but said that the wording should be explicit that there should be copies issued to all the affected parties or stakeholders.

Mr Adams said that the matter was adequately covered in clause 24(1) and clause 24(3)(a).

Ms Dreyer maintained that there was no disagreement on the matter but it was imperative to make it explicitly clear that the notice should be provided to all the affected parties or stakeholders.

Dr Madlopha insisted that clause 8(5)(a) made it clear that “rights in a property may be expropriated from different owners and holders of unregistered rights in the same notice of expropriation”.

Deputy Minister Cronin added that clause 8(1) also covered the concern of Ms Dreyer.

Members agreed with the clarification.

Clause 9: Vesting and possession of expropriated property
Ms Dreyer wanted clarity on clause 9(1) particularly on what would happen in the case where the property to be expropriated was under a mortgage bond. It was impossible for the bondholder to agree to transfer of ownership without receiving payment for the mortgage bond.

Mr Meiring responded that there is a transfer of ownership on the date of expropriation and the normal legal requirements of transfers in the Deeds Office like the payment of the bond is not incumbent on this process. The bond remains in place and would only be undone upon payment to the bondholder and the fact that ownership has changed from the expropriated owner to the state is not to the detriment of the bondholder as the bondholder would still receive its bond amount.

Ms Dreyer expressed concern that the expropriated owner may be at disadvantage by having to pay the ongoing bond repayments of the expropriated property and the property owner could be exploited by the state.

Mr Meiring clarified that clause 9(1)(a) made it clear that the property is released from the mortgage bond on the date of expropriation; therefore, the owner’s responsibility to pay the mortgage bond is suspended and the bond would be paid on the amount to be compensated. It was important not to confuse the issue of date of possession to the date of expropriation.

Mr M Dlamini (EFF) expressed concern that there seemed to be an obsession with compensation. The Bill was mainly meant to focus on expropriation. It must be flagged that section 25 of the Constitution makes it clear that there is a need to take into account on how the property was acquired. It is unclear how to settle the matter if the property was acquired unjustly.

Ms Dreyer insisted that it must be made clear that the owner of the property is no longer responsible for the payment of the bond to the bank as the bank would still hold the expropriated owner to account for the payment of the bond.

Mr Meiring noted that clause 18 deals with the payment of the outstanding bond and there is an emphasis that the offer of compensation must be the portion after dealing with the bond. In cases where the bond was higher than the “just and equitable” amount to be compensated, then the Department would need to consider whether the financial institution concerned had considered all the factors before awarding the bond.

Ms Dreyer asked exactly what would happen in the situation where the compensation amount is less than the amount still owed on the mortgage bond.

Ms Ngcobozi responded that if the claimant and bondholder failed to conclude an agreement as contemplated in clause 18(1)(b), then any of the mentioned individuals may apply to the court for an order whereby an expropriating authority is directed to pay the compensation amount in terms of clause 17(2). Essentially, it would be up to the court to decide when there was a disagreement on the amount to be paid for compensation to the bondholder.

Ms Kopane asked who was responsible for the payment of the legal costs in this process of adjudication.

Ms Ngcobozi responded that it was also the court that makes a determination on the person responsible for the litigation costs.

Mr Dlamini expressed concern that the Department seemed to resort to court whenever there is a stalemate between the expropriating authority and the owner of the property. Again, section 25 of the Constitution makes it very clear that there is a need to consider how the property was acquired in the process of compensation. He asked if the Bill would compensate owners that had acquired land unjustly or stolen the property. It was concerning that the Bill encouraged people to buy properties that had been acquired unjustly knowing that they would be compensated by the state.

Dr Madlopha agreed with Mr Dlamini. There was a need to investigate how the property was acquired before making any compensation. The court is the only independent body that could assist in the case where there is a dispute. It must be flagged once again that this Bill was not about compensation but expropriation.

The Chairperson reminded Members that there is Chapter 6 of the Bill which deals precisely with mediation before even going to court.

Ms Dreyer indicated that clause 9(1)(d) made it clear that the “property remains subject to all unregistered rights, with the exception of the mortgage bond” and this looked to be contradictory to the statement that the mortgage bond was to be included in the compensation of the expropriated property.

Mr Johannes Lekala, Deputy Director: Expropriation, DPW, responded that immediately when the property is possessed, then the mortgage bond is cancelled and therefore the state takes the property free from any incumbency. The payment of a mortgage bond is effected first because the mortgage is a secured creditor.

Ms Dreyer asked who was responsible for the cancellation of the bond.

Mr Lekala responded that the bond was cancelled by effecting the payment and therefore the Department was responsible for the payment of the mortgage bond.

Ms Dreyer asked the timeframe for the payment of the mortgage bond of an expropriated property.

Mr Lekala responded that it was difficult at the moment to specify the timeframe for when the payment of the bond would be effected.

Ms Dreyer expressed concern that there was a possibility that the expropriated owner could be compensated an amount that would be less than the amount that would be required to pay the mortgage bond.

Deputy Minister Cronin highlighted that the compensation must be “just and equitable” so all the concerns about the mortgage bond were adequately covered in the Bill. The current use of the property and the means of production in the property to be expropriated were one of the issues that must be weighed in the process of expropriation and compensation. The payment of a mortgage bond on the expropriated property would be made no later than the date on which the state takes possession of the property by the expropriating authority. There are some matters that complicate the process of compensation and these include how the property was acquired. The Department currently has an operation of taking back property like buildings and farms that had been illegally occupied. This was intended to undo the criminal act by not doing expropriation by an expropriating authority but a different legal process would be followed. The Department will also consider whether there was reckless lending by the financial institution on the mortgage bond and these are matters that could not be stipulated in the Bill but were adequately covered the National Credit Act.

Ms Dreyer asked for clarity on the position of temporary expropriation, as temporary expropriation in the previous version of the Bill was referred to as "all registered rights in the property, other than the right to use, are not suspended unless or until such registered rights are temporarily expropriated from the holder according to the provision of the Act”.

Mr Meiring asked which previous version of the Bill was Ms Dreyer referring to.

Ms Dreyer replied that she could not recall which previous version of the Bill it was but it was clause 10(c)(ii).

Deputy Minister Cronin asked that DPW be given time to investigate the matter raised by Ms Dreyer.

Ms Dreyer expressed concern that the date of taking possession of the expropriated property was not stipulated in clause 8(3)(1).It was important to know the action that was to taken if the owner of the property to be expropriated had not found an alternative location. It must be highlighted that it was the responsibility of the state to ensure that the owner to be expropriated was provided with alternative accommodation, in cases where it was difficult for the property owner to do so. She proposed an amendment which would read: “Should the expropriated owner or holder of unregistered right refuse to vacate the property on the date on which possession is supposed to pass to the expropriating authority, the expropriating authority must approach a court to institute an eviction proceeding”.

Mr Filtane suggested that “refuse” in Ms Dreyer's proposed amendment should be replaced by “failed” as there would be a need to prove in court that the owner or holder of unregistered rights had “refuse” to vacate property.

Deputy Minister Cronin again requested that DPW be given time to apply their mind to the suggestions made by Ms Dreyer and Mr Filtane.

Dr Madlopha indicated that Chapter 6 / Clause 21 Mediation and determination by the court makes the provision for any party that is dissatisfied with any application of the Act to take the matter to court. DPW had highlighted that the mediation process was the preferred one as it was not costly but any party can still   approach the court if  dissatisfied with the results of mediation.

Ms Kopane suggested that in clause 9(3)(a) the Department needed to add “take reasonable care and maintain the property at the same standard the expropriated owner or holder was doing so immediately prior to the commencement of the expropriation process.

Mr Sithole expressed concern about the inclusion of the phrase “reasonable care” in the maintenance of the property as this was still unclear.

Mr Filtane stated that the Department needed to be aware of the suggestion made that “expropriated holder” should be replaced by “expropriated person” as the word “holder” had a totally different connotation.

Ms Kopane maintained that her point was to highlight that the expropriated owner or holder who is in possession of the property concerned, should take reasonable care in the maintenance of the property.

The Chairperson said that clause 9(3)(a) already adequately covered that the expropriated owner or holder, who is in possession of the property, should take reasonable care in the maintenance of the property.

Dr Madlopha agreed with the Chairperson and added that the inclusion of “reasonable care” was ambiguous and could be subject to many interpretations.

Mr Dlamini said that the focus of the Bill should be on redressing the imbalances of the past in terms of access to land. The focus at the moment seemed to have shifted to houses while the bigger picture was not being focused on which was expropriation.

The Chairperson corrected Mr Dlamini, saying that Members were entitled to utilise examples of any property in making their points.

Ms Ngcobozi clarified that the expropriated owner or holder needed to have wilfully and negligently failed to take care of the property in order for the expropriating authority to recover the amount of depreciation.

Members agreed with the clarification.

Ms Dreyer mentioned that there seemed to be a contradiction between clause 9(3)(c) and 9(5).

Mr Meiring responded that there was no contradiction as clause 9(3)(c) referred to damages caused in an unnatural way like inclement weather conditions but he admitted that the Department could still improve clause 9(3)(c) in order to be clear.

Clause 10: Verification of unregistered rights in expropriated authority
Ms Dreyer suggested that in clause 10(5)(c), the expropriated authority should provide reasons for the rejection of the claim as this was part of administrative justice.

Deputy Minister Cronin responded that indeed it was appropriate to provide reasons for the rejection of the claim as this was part of administrative justice.

Mr Filtane proposed that in clause 10(4), the Department needed to specify the kind of comments that would be required to be submitted by the Director General referred to in subsection (3). This was to ensure that the Director General was fully aware of the comments to be made so as to avoid the possibility of halting the process.

Deputy Minister Cronin responded that clause 10(3) already clarified that the Director General was to make comments on the verification of such claim.

Mr Sithole proposed that there was a need to add “any other relevant department” in clause 10(3) in order to be inclusive of all organs of state.

Deputy Minister Cronin agreed with the suggestion made by Mr Sithole.

Members agreed with the clarifications.

Clause 12: Determination of compensation
Mr Dlamini asked for general consensus on the need to delete “just and equitable compensation” in this clause as this was already covered in section 25 of the Constitution.

The Chairperson clarified that the general consensus was the expropriation of the property needed to take section 25 of the Constitution into cognisance and this could be achieved by ensuring that any expropriated owner or holder receives ‘just and equitable compensation”.

Mr Dlamini wanted to be upfront that the EFF was against the compensation part of the Bill and it was strange that compensation seemed to be the foreground matter when dealing with section 25 of the Constitution and the reference to taking into consideration how the land was acquired, is ignored. The EFF is still adamant that there should be no compensation in the expropriation of property as this was unaffordable to government. The Minister of Finance together with the Deputy President had made it clear that the country did not have enough spending or borrowing capacity as the economy was not doing well. Section 25 of the Constitution talked about the need to redress the imbalances of the past. It must be highlighted that 75% of the land and the economy was still in white hands as it was before 1994.

The Chairperson commented that all political parties were allowed to articulate their party political positions on each and every clause in the Bill.

Mr Sithole asked what precisely was the concern of Mr Dlamini as section 25 of the Constitution was clear that compensation needed to be “just and equitable”.

Mr Filtane said the process of a Regulatory Impact Assessment on the Bill needed to be taken into consideration instead of rejecting it in its entirety because of the fact that the Bill could be unaffordable to the state.

Mr Dlamini clarified that the position of the EFF was that the Bill must not be forfeited but there should be a review of some of the clauses, particularly Chapter 5 Compensation for Expropriation. He asked why compensation was given priority in the Bill instead of including other matters flagged in section 25 of the Constitution.

The Chairperson reiterated that Members were still going to be given an opportunity to articulate their party political positions.

Deputy Minister Cronin responded that the EFF had a right to propose the removal of Chapter 5 but the focus at the moment was not on the inputs of political party positions. It must be stated categorically that the government would fall short if the suggestion for the removal of Chapter 5 was to be endorsed as this was not in line with the Constitution. The Committee was currently dealing with the A-list of the Bill and contemplating all the inputs of Members.

Mr Dlamini asked whether Deputy Minister Cronin implied that the Bill had almost been approved in its current state and that there was no room to make additional inputs.

The Chairperson responded that Members were still going to be afforded an opportunity to make their party political inputs. The A-list of committee proposed amendments provided to Members was not a closed list as Members would still be given an opportunity to make further inputs. He wanted to make it clear that the views of Members were not stifled as everyone was at liberty to express one's views in the best possible manner. The Committee will convene again next week beginning at Chapter 5.

The meeting was adjourned.

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