In this virtual meeting, the Committee continued with its clause-by-clause deliberations on the Expropriation Bill. The Committee discussed chapter 5 of the Bill, clauses 12 to 20.
The DA stated that clause 12 – which dealt with the determination of compensation - was unconstitutional and should be removed. The party argued that because the Constitution 18th Amendment Bill failed to pass, the Bill needed to be re-drafted to be consistent with the Constitution. The Bill was an attempt to amend the Constitution through ordinary legislation rather than through a process that complied with the requirements set out in the Constitution for a constitutional amendment. If it was previously agreed and accepted that a constitutional amendment would be necessary to enable nil compensation and expropriation without compensation, then it could not be enacted through the backdoor by this Bill. The DA said that the clause completely eliminated consensus and usurped the authority of the judiciary because it predetermined the amount of compensation to be nil in the defined circumstances.
In addition, the DA stated that the initial offer should come from the expropriating authority and not from the owner of the property. In terms of doing due diligence, the state would have had all the information needed plus all the resources it needed to establish an idea of how much it was prepared to pay on that property. The Committee needed to re-look at this in terms of the balance of power. The initial offer should be made by the state
The DA indicated that it had no issue with expropriation and understood that it was a necessary function of state to expropriate property in the furtherance of its projects and policies. However, people still needed to be protected against thesState unfairly prejudicing their rights.
The ANC stated that it was fully behind the current format of the Bill; it had no intention to make amendments and that the bill was in line with the Constitution. The party did not agree that this Bill would scare away investors. The spirit and intent of the Bill were to advance the expropriation of the land in the public interest and to redress the land injustices of the past.
The ANC said the courts and arbitrators were being empowered by this Bill to look at equitable and just compensation to the person who was affected by expropriation. It felt that the Bill was not open to abuse. Any person who was permitted to expropriate a particular property would have to work within the framework that was in the Bill. This was not the only relevant legal framework.
The Office of the Chief State Law Advisor pointed out that many of the provisions came from the current Expropriation Act including the clause on mortgage bonds, which was virtually identical. He assured Members that expropriation could not be arbitrary, as held in the FNB judgement and other Constitutional Court judgements. Where an expropriation was held as arbitrary, it had to be considered if such an arbitrary expropriation was just and equitable in respect of section 36 of the Constitution.
The Chairperson welcomed Members of the Committee and all of those in attendance to the meeting. Today, the Committee would continue where it left off last Wednesday where it was dealing with the Expropriation Bill clause by clause.
The Bill was intended to repeal the existing Act, the Expropriation Act of 1975. The Committee was there to finish what it had started. The Committee would be starting with chapter 5, clause 12 of the Bill. The Committee was looking at what the people of South Africa said. Whatever the Committee discussed was within the ambits of the law. The Committee wanted an Act that spoke to the current Constitution, which was adopted in 1996. It was crucial that whatever the Committee did it needed to understand that.
The Chairperson noted that the previous day, the President spoke on Human Rights Day in the North West. One of the things the President mentioned was that the recent World Bank study had said that South Africa was one of the most unequal countries. That inequality was glaring across racial lines. When the members dealt with this Bill, they needed to remember that. The Committee needed to remember where it was coming from. It must ensure that a Bill was passed that would speak to the transformation of the country. A Bill that would speak to what government could do when there was public interest, especially in terms of properties. The Committee needed to remember that. South Africans should never forget those who died at the hands of the brutal apartheid police on 21 March 1960. South Africans were enjoying freedom today because their blood nurtured this freedom. As the members discussed, they needed to converge so that this country could not go back to where it was before. The Committee would continue with its deliberations and discussions.
The Chairperson asked the Content Advisor to present chapter 5, clause 12 of the Bill.
Consideration of the Expropriation Bill clause by clause
Clause 12 – Determination of compensation
Mr Shuaib Denyssen, Committee Content Advisor, took the Committee through the Expropriation Bill starting with clause 12.
The Chairperson invited the members to deliberate on clause 12. She would not give the members any time limit on their contributions. The members were encouraged to express themselves up to their satisfaction.
Ms S Graham (DA) said that the Chairperson might regret giving the members unlimited time on this clause as it was the most contentious part of the entire Bill. She wanted to preface her inputs on this clause by citing from the book ‘Land Matters’ by Adv Tembeka Ngcukaitobi. He said that just compensation, which had not been defined, was based on the idea of justice. Expropriation in the public interest was not intended to cause future injustices but rather to reverse past injustices. He then stated further, ‘the focus should be on striking the proper equilibrium between the interests of the nation in land reform, the landless and those who must ultimately give up the land’. She thought that this was a balanced approach to the issue of compensation. She believed that this clause was no longer valid and constitutional. She would explain why she said that. There was only one example of a country where a constitutional amendment failed to pass and where government proceeded to implement it through ordinary legislation. That was in Venezuela. A proposed constitutional amendment, through which it was to entrench Venezuela as a socialist state was defeated in a referendum but then implemented via ordinary laws. The rest was history.
Given that the 25th Constitutional Amendment Bill did not pass, the Expropriation Bill needed to be re-drafted to be consistent with the Constitution as it stands. Insistence to retain the current wording would render this Bill unconstitutional. Not only because of that inconstancy but also because it would be an attempt to amend the Constitution through ordinary legislation rather than through a process that complied with the requirements set out in the Constitution for a constitutional amendment. It cannot be argued that the Bill in its current format does not seek to amend the substance of the constitutional provisions contained in section 25. If it was previously agreed and accepted that a constitutional amendment would be necessary to enable nil compensation and expropriation without compensation then it could not be enacted through the backdoor by this Bill, given that the constitutional amendment did not pass. Public participation on the Expropriation Bill was conducted on the current version of the Bill as inextricably linked to the nowdefunct 25th Constitutional Amendment Bill. It will in all probability be necessary now to subject this clause, irrespective of whether it was amended or not, to fresh public participation given that the constitutional amendment did not pass. South Africans needed to be consulted again on the way forward in light of the changed circumstances.
She moved on to the clauses that existed. While the DA did not dispute that just and equitable compensation might amount to nil compensation, the converse did not apply. By identifying specific incidents where nil compensation was applicable, this Bill was already making a determination on the value of the compensation. A proper assessment was required to determine just and equitable, which the clause rendered unnecessary. Section 25 (2)(b) of the Constitution stated that the amount of compensation, the time and manner of payment thereof must have been agreed to by those affected or decided by a court. This clause completely eliminated consensus and it usurped the authority of the judiciary because it predetermined the amount of compensation to be nil in these defined circumstances. This contravened the doctrine of separation of powers. In addition, a recent judgement in the Land Claims Court found that in determining just and equitable, the full market value must be the starting point when no other factors, such as those covered by section 25 (3) of the Constitution applied. She wanted it placed on record that this clause was unconstitutional and should be removed in its entirety on the basis of the aforementioned points. However, since the Committee was debating it and had not removed it, yet she would still provide inputs on it.
She addressed clause 12 (1). The Minerals Council South Africa suggested that this section should include ‘and the time and manner of payment’. It should say, ‘the amount of compensation and the time and manner of payment’. That aligned with section 25 (2) (b) and (3) of the Constitution, in which it was clearly stated. This might also affect the timelines. If the Committee was giving effect to the Constitution with this Bill, then it could not exclude time and manner of payment. It also said, ‘expropriated owner or expropriated holder’. Why is it ‘or’ and not ‘and/or’? What happened if both qualified for compensation? The list was flawed. Consideration should also include the mortgage. The amount cannot be calculated without due regard to what was owed on the mortgage in terms of the relevant circumstances. The principle of equivalence needed to be applied. This principle states that affected owners should be neither impoverished nor enriched as a result of expropriation. This was important when the Committee was considering just and equitable because nobody should be impoverished, and nobody should be enriched. While public interest was given great significance in this section, there were the forced removals conducted under the Native Administration Act of 1927 which she had quoted last week. There was only one restriction, that it must be deemed to be expedient in the general public interest. Public interest was too vague and created a broad set of circumstances that could be abused as it was during the forced removals.
She addressed clause 12 (2)(a). Sakeliga highlighted that the state was not dealing with criminals. Although there were people who believed that the land was stolen, the existing owners were not the ones who stole the land. The existing owners may have benefited from it. The existing owners were not the actual land thieves. The people the state was dealing with were not criminals. They were innocent people who were having their property taken away from them without their consent. Expropriation should not be used as a punitive action. It should provide for compensation of the expropriated owner or holder. Section 25 (3) of the Constitution stated that compensation must be calculated having regard to all relevant factors. Sakeliga believed that the property being taken away without consent of the owner was a very important factor.
She discussed clause 12 (3). This related to land. The problem was that land for the purposes of this section had not been defined. Property and a land parcel were defined in the Act but not land. Did it include improvements? Did it include a sectional title and other aspects? This supported her proposal that a narrower definition of property would better suit the needs of this Bill than the all-encompassing referencing to section 25 of the Constitution, which created confusion. Would an abandoned building in the centre of Cape Town that had been invaded qualify under this clause? But it was not defined as land. Land remained an issue in this Bill. The definition of property remained an issue. Clause 12 (3) stated, ‘including but not limited’. In the DA’s submission, and submissions by others, this phrase was described as extremely dangerous. It created expectations of any number of applications. This should be removed. It should either be a finite list, or nothing should be specified because it did not specify who determine what other circumstances may apply. In other words, anyone could make a determination that the ‘not limited to’ applied to something else. There were no specifics around how that determination would be made and that opened it up to abuse.
She discussed clause 12 (3)(a). This dealt with when someone owned more than one property. This clause discouraged speculation and dissuaded investors. She understood that land was emotive and that there were many people who wanted land. This made it difficult to justify people owning land and not using it. She agreed that that was heinous. However, land speculation was a legitimate form of work. The Mineral Council goes so far as to say that this clause contravened section 9 of the Constitution, which provided for equality, and section 22, which provided for freedom of trade, occupation and profession. It argued that that might render this clause unconstitutional. In addition, there might be reasons why the land was not being used. People could be waiting for planning permissions. People could be holding it for their children when their children grew up. A legitimate owner should not be penalised.
She discussed clause 12 (3)(b). This clause pits the purpose of the state against the purpose of the expropriation. In that case, which of these should have precedence?
She discussed subsection (3)(c). This could not be sufficient cause as the failure to exercise control may not be the fault of the owner. Abandoned land was not defined. However, it was common cause that for it to be deemed abandoned the owner must have relinquished control as well as abandoned the intention to own the property. If both were present the property was deemed to no longer belong to the owner. She provided an example of a judgement where the owner was awarded damages as the State failed to protect his property rights despite him having lost effective control of his property due to a land invasion. It did not make sense then to legislate for nil compensation on the same basis. If the person’s name appeared on the title, that person was the owner unless that person died intestate with no beneficiaries or if the property was owned by a company that de-registered. If this clause was retained there should be a detailed process to determine loss of control and abandonment as part of this subsection. This clause could also promote land invasions to force the development of housing. It also placed control of the land above ownership and the rights of title deed holders.
She discussed subsection 3(d). Sakeliga raised the concern around perpetual expropriation where a beneficiary of expropriation or land reform could have their land taken away for no compensation. This would be extremely unfair. Du Toit v Minister of Transport stated that the state should start with market value. The state investment value was subtracted and where the difference was less or nil in terms of market value, nil compensation would be acceptable. That rendered this clause superfluous because it was already legislated in such a way that it would apply.
She discussed subsection 3 (e). There was no reason why this would warrant nil compensation. Would this qualify after it was already earmarked for expropriation? Or would it be expropriated because it posed a health risk? Why would government burden itself? Who determined the risk? What degree of risk qualified? What about illegal dumping sites? Do they qualify? A quantifiable risk should be stipulated to and the costs to remedy should exceed the market value to justify this. She emphasised again that this entire clause was unconstitutional as these amendments were not made in the constitutional amendment of section 25. As such, it could not be legislated through the backdoor as a constitutional amendment.
She discussed clause 12 (4). Sakeliga believed that this gave persons with inferior claims more rights to the property than the owner. This was problematic. She agreed. Attempting to address an administrative mess, like the processing of claims, through legislation was unacceptable. There we 20 000 outstanding claims that needed to be processed. This clause would have no effect on that. It would just reduce rights. It was her opinion that this clause should be removed.
Ms A Siwisa (EFF) focused on the issue of property. The Bill spoke about the history of acquisition, the use of property and the market value. All the members knew where the history of acquisition of property came from in South Africa. The clause stated that owners were going to be compensated based on the history of acquisition but all the property and the land in South Africa had been stolen. How was the history of acquisition going to be determined and valued? People were moved from better places and dumped into worse places. People had been moved from very productive land to land where they could not plant, plough or have their cattle. The history of acquisition was going to be irrelevant in this case. Ms Graham said that if an individual had a title deed, then they were the owner. Those owners did not steal the land but the people who were on that land before were the rightful owners. Everyone knew how property was acquired in South Africa. It was not rightfully acquired. Thus, it could not be compensated. The Bill spoke about possible compensation. She noted that the purpose of expropriation was in the interest of all South Africans. If it was for the interest of all South Africans to expropriate property or land, then the same people the land was being expropriated from were also going to benefit. Why should government spend money that was not there to compensate people that were also going to benefit from the land that was expropriated? All South Africans were going to benefit. At this moment South Africa did not have money. Government was billing on money that was not there. The people that were going to be paid were also going to benefit from the land that was going to be expropriated.
She discussed clause 12 (2) and the special circumstances. What special circumstances were there that needed to determine whether a person was going to be compensated? If the Bill spoke of special circumstances, everyone would come with special circumstances. If the Bill was mentioning nil compensation, then there should not be any special circumstances to determine who was going to be compensated. What informed these circumstances that made them special? What does the Bill say? What was being referred to by special circumstances? Nil compensation was for the public interest. Whether the land was used or not used, all the land needed to be expropriated with nil compensation. There might be different versions as to how the property was acquired but those that were the rightful owners were still sitting without land. There were still people who had been moved from their properties and being dumped on land that was so stony they could not do anything on the property. She noted the history, the special circumstances. How were special circumstances defined in this issue? How did one define the genuine history of acquisition of the property in reference to clause 12?
Mr E Mathebula (ANC) said that the ANC was fully behind the current format of the Bill. The ANC members had no intention to make amendments. The Bill was in line with the Constitution. He heard Ms Graham say that the clause the Committee was dealing with was not in line with the Constitution. It was said that section 25 of the Constitution was no longer valid and relevant. He did not think the members should say that. For a clause in particular legislation to be invalid and irrelevant there needed to be an amendment to it. If that clause was still there, as section 25 of the Constitution was, it remained valid and relevant.
He discussed clause 12 (1). That subsection was directly taken from the Constitution, that was section 25 (3). This Bill was in line with the Constitution. Any person who felt that the Bill was not in line with the Constitution had the right to approach the courts to seek an application of invalidation of that section.
He discussed clause 12 (3)(a). It stated that, when ‘the land is not being used and the owner’s main purpose is not to develop the land or use it to generate income, but to benefit from appreciation of its market value’. Why would government allow such individuals or state organs to have land that was not used? Instead, that land could be taken and used to the benefit of the public. The Bill spoke about the interests of the public. It spoke of those that were affected, including the person that was not using that particular land. Those people would be taken into account and consideration. The current setup of the constitutional arrangement in this country did not allow for one to arbitrarily take land or property without the involvement of the other party who was affected by the expropriation.
He discussed nil compensation. No one was going to respect nil compensation. This Bill was not made for particular people or for people of a particular colour. Any person could be affected by this Bill. Conditions that could result in a person being compensated or be nil compensated were going to be taken into consideration. He referred to section 25 (3) of the Constitution. It spoke of just and equitable compensation. Even if a person was going to receive nil compensation, it had to be just and equitable. There was no way that all of the land that was expropriated would be compensated. That was not true. There were certain conditions that were set by the Bill. For example, if the land was unused. That was where nil compensation would occur.
He discussed clause 12 (4). It stated, ‘when a court or arbitrator determines the amount of compensation in terms of section 23 of the Land Reform Act, it may be just and equitable for nil compensation to be paid, having regard to all relevant circumstances’. The courts and arbitrators were being empowered by this Bill to look at equitable and just compensation to the person who was affected by expropriation. He could not agree with someone who said that this Bill was open to abuse. Any person who was permitted to expropriate a particular property would have to work within the framework that was there. This was not the only relevant legal framework. There was the Constitution and other relevant legislation. There were many other pieces of legislation that would inform the expropriation of property. He did not agree that this Bill would scare away investors. Parliament had been open to the public and was talking to the world. This Bill had been coming a long way. People had been reading about what was happening in South Africa. Investment had been coming and people were showing interest that Government was going to expropriate land. There was no fear whatsoever. The ANC took a decision in 2017 that it was going to expropriate. No one had pulled out investing or supporting South Africa in terms of trade. South Africa continued to grow economically. Where the economy had dropped, it was because of Covid-19 but not because of the fear of the expropriation of land.
Ms L Mjobo (ANC) aligned herself with the input from Mr Mathebula. She was covered and happy with his input. Chapter 5 of the Bill was very important. The clause was transparent and balanced. The spirit and intent of the Bill were to advance the expropriation of the land in the public interest. Its intent was to redress the land injustices of the past.
Ms L Shabalala (ANC) said that she was also partly covered. Nothing should be taken out of this part of the Bill. This Bill was not exhaustive. It was transformative. There was also a part that spoke about access to courts where anyone had the right to have any dispute that could be resolved. The application of law was decided in a fair public hearing before a court. This Bill was consistent with the Constitution. If it passed the test of consistency with the Constitution, then there was no problem. The issue of expropriation was not news to South Africa. There was a Transnet rail line that went through all the farm areas. In her province, there were road networks that went through a certain farm, taking a portion of the farm. Expropriation was not anything new. In Cape, Town there were also examples of the expropriation of land without any compensation. There were some cases where land was expropriated for a sports ground. What was worse was when it was not even in the interest of the public. Members of Parliament were public representatives. Anything that the Members stood for would be around what was in the interest of the public, as it was emphasised in this Bill. This Bill was in line with section 25 of the Constitution. This Bill was never dependent on the amendments of section 25. Members should not confuse themselves with these issues. The provisions found in clause 12 did not negate consensus. Consensus was entrenched in section 25 (2) of the Constitution. She was comfortable that the Constitution allowed for nil compensation. It was part of all of South Africa’s international trade. She discussed the issue of investors. Investors, even in their own countries, were aware of land acquisition. South Africa’s government was part of international agreements.
Ms S Van Schalkwyk (ANC) said that she was mostly covered by the previous speakers. The Expropriation Bill should not be confused with the amendment of section 25 of the Constitution. Many of the inputs had confused the two when the Committee was doing the public hearings. She urged Members to be concise and straight to the point. Members should not confuse the two Bills. She concurred with the previous speakers in terms of the international trade agreements which made provision for nil compensation. This was a practice globally. It was not a new phenomenon, globally. That was the reason why this Bill was proposed. It was meant to streamline and monitor that there were no such things as land grabs but rather that things were taking place in a very managed position. There had been different opinions, like from the Office of the Chief State Law Advisor (OCSLA), which stated that the issue of expropriation without compensation was not provided. The state was not talking about that. What the ANC Members were referring to was the issue of nil compensation. That was afforded for. She agreed with Ms Shabalala that the issue of expropriation was not something new in the country. The DA was always proud of where they governed. The DA was not telling the public that where it governed in the Western Cape that it was a regular phenomenon that expropriation without compensation took place, and it was not necessarily in the public interest. What had been happening in Woodstock and areas like in Bo-Kaap was to the disadvantage of previously disadvantaged individuals of the country. Those people were not consulted like what Parliament had done in the formulation of this Bill. There was no public consultation taking place. Some land was being sold to developers and it was not in the public interest. It was for profit-making by developers and was advancing the interests of the previously advantaged. The members of the ANC agreed that no clauses should be removed. The Bill should proceed as it stood.
The Chairperson thanked the Members who contributed to this clause. She asked for a legal comment on this clause from Adv van Breda. She noted some of the issues that he had presented to the Committee in an opinion. The issue of compensation was discussed. In paragraph 56 of the presentation, it read as follows, as heard by the Constitution Court in the FNB judgement, the protection of property as an individual right in terms of section 25 of the Constitution was not absolute but subject to societal considerations. The purpose of section 25 was not merely to protect private property but also to advance the public interest in relation to property. That point was very crucial as the Committee dealt with the Bill. This Bill was trying to advance the interest of the public. The interest of the public could not be less than the interests of the private owners. However, the Constitution protected everyone in the country.
Adv Shaun van Breda, Senior State Law Adviser, OCSLA, addressed some of the concerns raised in respect of clause 12. In the legal opinion of the OCSLA, dated 23 February, it discussed the Constitutional Court judgements which it believed the Committee should take into consideration when considering clause 12. He discussed clause 12 (3) which provided for nil compensation. In the FNB Constitutional Court judgement and the Fick Land Claims Court judgement, the courts ruled that there were appropriate circumstances in which it was permissible for legislation in the broader public interest to deprive persons of property without payment of compensation. He discussed the instances where nil compensation may be offered as listed in clause 12 (3). The Department had indicated in its previous presentation that it intended to propose amendments to that list, especially subclause (3)(c) which provided for the abandonment of property. The Department was best placed to address the concerns raised in respect of those instances under subclause (3). He discussed the concerns raised over mortgage bonds existing on land where nil compensation may be offered. The Committee needed to take note of section 25 (3) of the Constitution, which provided that the amount of compensation and the time and manner of payment needed to be just and equitable, reflecting an equitable balance between the public interest and the interests of those affected, having regard to all relevant circumstances. Then it listed a non-restrictive list of examples of such circumstances. Clause 12 (1) of the Bill was identical to section 25 (3) of the Constitution. The Bill does provide - in accordance with section 25 (3) of the Constitution - that the amount of compensation had to be just and equitable, reflecting an equitable balance between the public interest and the interests of the expropriated owner or the expropriated holder. The provisions of the Bill in respect of mortgage bonds were virtually identical to those provisions in the current Expropriation Act. He discussed the expropriation of land for nil compensation where a mortgage bond exists on such land. It must be determined whether nil compensation for such expropriation would be just and equitable. It must also be determined whether it would reflect an equitable balance between the public interest and the interest of those affected. This was ultimately for a court to decide upon, whether such an equitable balance exists when there was an offer for nil compensation for such land. He noted the expropriation as discussed in the opinion. An expropriation could not be arbitrary, as held in the FNB judgement and other Constitutional Court judgements. The meaning of arbitrary was where the expropriation was not for good reason or was procedurally unfair. Where an expropriation was held as arbitrary, it had to be considered if such an arbitrary expropriation would be just and equitable in respect of section 36 of the Constitution. The Committee should also take note of section 25 (8) of the Constitution. It stated, ‘No provision of this section may impede the state from taking legislative and other measures to achieve land, water and related reform, in order to redress the results of past racial discrimination, provided that any departure from the provisions of this section is in accordance with the provisions of section 36(1)’. The Bill did provide that no expropriation of land may be arbitrary. That would then include instances where land would have a mortgage bond on such property. It would have to be determined if it would be just and equitable for nil compensation to be offered for such land.
The Chairperson thanked Adv Van Breda for his explanation and response. It assisted the Committee in moving forward. The Committee had agreed that the Department would respond when it was through with all of the clauses.
Ms Graham said that she was not aware that the Parliamentary Legal Advisor was not in the meeting. That was a bit of an issue. She requested that the Parliamentary Legal Advisor revisit the inputs that had been made in today’s meeting and provide the Committee with a written opinion on what had been raised.
The Chairperson agreed to the request. The Committee would move to consider clause 13.
Clause 13 - Interest on compensation
Mr Denyssen read through clause 13 of the Bill.
Clause 14 - Compensation claims
Mr Denyssen read through clause 14 of the Bill.
Ms Graham discussed clause 13 (c). It stated that ‘interest due in terms of this subsection must be regarded as having been paid on the date on which the amount has been made available or dispatched’. She proposed that the clause was amended. The part about being made available or dispatched by ‘prepaid registered post, or electronically transferred to his or her account, as the case may be’, needed to be amended. It should say that ‘interest due in terms interest due in terms of this subsection must be regarded as having been paid on the date on which the amount had been received by the expropriated owner or holder’. The fact that it had just been sent should not be sufficient acknowledgement that the payment had been made. It must have been received by the expropriated owner or holder. She discussed clause 14. What about the bondholder? They were also deemed to be an owner so what was their role and input in all of this? At this stage, it was an owner or a holder of an unregistered right who had to respond. What about the bondholder? Under clause 14 (1)(e), should remove facsimile because it was a redundant technology, and nobody used it anymore.
Mr Mathebula said that the Bill was balanced. It took into consideration all the circumstances that surrounded the issue of expropriation. In particular, it took note of issues relating to payment, timeframes as well as interest. He was of the view that the Bill, in the current form, covered everything that was required to expropriate as the state. He did not see the need to make any amendments unless Members wanted to make unnecessary amendments. The Bill was in the correct form. He discussed clause 13 (c). It said that the interest would begin the moment the money was sent to the person whose property was being expropriated. That was correct. The moment money left one’s purse it belonged to the person to who the money was sent. As such, the interest should begin at that time and not when the person received the money. If that was allowed, it would open up potential abuse by the people who were receiving money. He noted the issues of the Financial Intelligence Centre Act (FICA). If there was a suspicion of a fund that was to be received by a particular person, then through FICA the payment could be stopped. Whose problem was that? It could not be made the problem of the state. There were many other things that could be done, or someone could say that they had not received the money. The Bill in its current form should be accepted as it was.
The Chairperson said that the Committee agreed that the Post Office, as slow as it was, must be used. There were people who relied on it. The Committee also agreed that electronic mail should be included in the Bill. She responded to Ms Graham’s comments on fax. There were people who still used faxes. The Committee should allow for all those forms to be used as part of communicating in this Bill. The Bill needed to be covered in all aspects so that no one could claim that they did not receive communication. Once the Bill was passed and became an Act and there were no longer faxes then maybe it could be amended and faxes could be removed. The Committee agreed that it had to continue with the Post Office even though it had its own challenges. The Committee would not want to open up a gap in the Bill and have someone challenge the means of communication that was used. She asked Adv Van Breda if he had any responses to the comments of members?
Adv Van Breda responded that he did not have any inputs. Regarding clause 14, there was a valid concern that perhaps the mortgagee and mortgage bondholder would also need to be informed. The Department would cover that when it came time for it to present.
The Chairperson said that on that issue the Committee was still going to come to clause 18 which dealt with property subject to mortgage or deed of sale. Maybe it would be explained further in that section of the Bill.
Clause 15 - Offers of compensation
Mr Denyssen read through clause 15 of the Bill.
Clause 16 - Requests for particulars and offers
Mr Denyssen read through clause 16 of the Bill.
Mr Graham said that she had heard from Mr Mathebula several times that he believed nothing should be amended in this Bill. While she accepted that this was his opinion, it was the Committee’s job to discuss the Bill clause by clause to determine that it was the best possible piece of legislation that could be offered to the country at this stage. The Committee needed to have regard for everyone that was impacted by expropriation, that being the state, the expropriated owner and the beneficiaries thereof. The Committee needed to bear in mind that not every expropriation was a land reform issue. There would be a number of expropriations that were for the furtherance of the state’s objectives, like building a road or highway. It was easy to justify expropriation and the failure to address rights adequately when it was a land reform issue and the people who were benefiting were unfairly prejudiced in the past. It needed to be kept in mind that there would be expropriations that had no emotive value. Further, at no point had the DA said that they did not agree with expropriation. This Bill was repealing an existing Expropriation Act. In other words, expropriation had been happening for the last 40 years. The DA had no issue with expropriation and understood that it was a necessary function of state to expropriate property in the furtherance of its projects and policies. However, people still needed to be protected against the state unfairly prejudicing their rights.
Under clause 15 (2), it stated that the ‘offer of compensation contemplated in subsection (1) must be accompanied by copies of reports detailing how the offer of compensation was determined if the amount is different from the amount offered by the expropriating authority in terms of section 8(3)’. Why would it be different? There was no reason given why it would differ from section 8 (3)(g). The Committee should remove the balance of the sentence from ‘if the amount is different’. All that needed to happen was that information needed to be provided on how it was calculated. She did not see why that would be an issue. The timeframes remained an issue. She would raise it even more when she came onto clause 16. She did not think 20 days was sufficient time for people to be negotiating on something as huge as property, particularly where someone’s livelihood was invested in that property or if someone was living in a house and would be evicted as a result of it. 20 days was a very short timeframe to be negotiating this level of contract.
She discussed clause 16 (1). She again came back to the timeframes. There were only 20 days allowed for a consideration of a claim and an offer. There were 20 days on the one side and 20 days for the counter. It was a very short period.
She discussed 16 (2). It stated that if ‘the expropriating authority or the claimant fails to comply with a request in terms of subsection (1), the requesting party may, on notice, apply to a court for an order’ requesting further information. When a counteroffer was made there were 20 days within which to respond to that, but it was said that particulars could be requested. The person had to provide those particulars within 20 days. If the person was asked on day 18 of the 20-day period, that had been allocated to address the issues, then that person still had 20 days. That took the requesting party outside the time mandated by this legislation to respond. There seemed to be a disjuncture between the timeframes. If the process went to court that would further delay the process and would take place outside of the 20 days. Subsections (2) and (3) were redundant because courts could be involved at this point and then the process would fall outside of those timeframes. A party could withhold information in order to push the process out. The request for particulars and offers and the timeframes offered here should be amended. The initial offer needed to come from the expropriating authority and not from the owner of the property. In terms of doing due diligence, the state would have had all the information needed plus all the resources it needed to establish an idea of how much it was prepared to pay on that property. The Committee needed to relook at this in terms of the balance of power, the initial offer should be made by the State and then all of this could be dealt with in the processing of that offer.
Mr Mathebula discussed the issue of the offer. South Africa was a democratic state. He provided an example of the state approaching a person who owned property for expropriation and made an offer for the land. That would not fit within the description of a democratic state. The person from whom the state was expropriating needed to be allowed to make an offer on the property. There needed to be a negotiation between the state and the owner of the property. People could balloon values of properties. Someone may ask for R20 000 for something that was worth R15 000. The state would use its laws and infrastructure to determine how much the value of the property could be. Even if the state did not agree with that particular individual, the matter could still be settled by the court.
He discussed clause 16 (3). It spoke about the compensation that had been approved by the court. The court would play an important role in determining the compensation for a property that had been expropriated. He discussed the issue of timeframes that were given. He could not see the timeframe of 20 days being a problem. He provided an example. If there was a matter that was decided at the High Court, and someone wanted to appeal that matter then 15 days would be allowed after that person became aware of the judgement to file a notice. Then there were another 30 days to file the application. This Bill was saying that there were 20 days to furnish the particulars. He did not see the timeframes to be unfair. The time that was proposed was fair enough for one to furnish their particulars and for the payments to be made. The issue of people sleeping on the job needed to be avoided. The timeframes needed to be adhered to because this process could not take forever. It needed to be done as speedily as possible. The Committee was dealing with a very sensitive matter. In South Africa, under the leadership of the ANC, this was one of the best ways of dealing with the issue of expropriation of land. In other countries, the issue of expropriation of land with compensation was not even looked at. In other countries, they simply took the land and then it belongs to the state. It was because South Africa was a democratic state, Government needed to exercise democracy in performing expropriation.
Ms Shabalala said that in history there were practical lessons like why government was here without having distributed land to the people of South Africa. It was because government had open-ended processes that did not assist it. She discussed the issue of the claimant making the first offer on the land. The claimant knew what additional work went into the land or property. It could not be the expropriating authority that would determine that but rather the claimant. This showed that this Bill was not arbitrary in its form. She did not know about the issue of 20 days. Clause 15 (3)(b) spoke about 20 days. It did give additional time as may be permitted in terms of clause 25. In her view that meant that not everything needed to be pushed to happen within 20 days. It did accommodate for additional time.
Adv Van Breda added that the Committee also needed to consider clause 25, as Ms Shabalala had mentioned. He did not have any further inputs.
Clause 17 - Payment of amount offered as compensation
Mr Denyssen read through clause 17 of the Bill.
Ms Graham said that the clause was a bit problematic in terms of the fact that possession can go to the expropriating authority without compensation being finalised or agreed to. The DA had an issue with the fact that the right to possession passes irrespective of whether the payment of compensation had been dealt with. Agbiz, in their submission, said that in terms of subsection (2) a slight delay may be allowable in clauses 18, 19 or 20 but no other grounds should exist for the expropriating authority to delay payment in order to allow for possession.
She discussed the Haffejee case. In that case, the court had to decide whether it was just and equitable for possession to pass before compensation had been paid. The court said that there were two scenarios. Was it just and equitable in terms of the landowner or was it just and equitable in terms of the expropriating authority? In that case, the court found it to be just and equitable in terms of the expropriating authority because the land was being used for socio-economic development and there was no reason for there to be a delay in the possession of the land. Where a delay may unfairly prejudice the owner, then it was no longer a just and equitable process and needed to be reviewed. This should only happen where a delay may unfairly prejudice the State and where it was just and equitable to do so. This should be rephrased in order to ensure that there was adequate protection for either party. It could not be allowed that people would be evicted and had nowhere to live as a result of the state taking possession of their property. That would be unfair, it would not be just and equitable. Something needed to be done to address the fact that possession could take place without the finalisation of compensation.
She discussed subsection (5). Agri SA raised the issue of tax. The state should not be a tax collector for SARS. By making it SARS compliant, the state was forcing an individual who owned a property to submit tax returns. She did not know how serious that was, but it was something that needed to be looked at. She discussed subsection (6). Subsequent to this Bill being drafted the POPI Act came into effect. Anywhere where there had to be the provision of personal information, the Committee needed to ensure that there was strict compliance to the POPI Act.
Mr Mathebula said that the state cared about its own people. He responded to the comments made by Ms Graham that the state could take possession of a property and leave the property owner without shelter. He did not think that the state could do that. If there were circumstances under which there was a delay of payment, then certain steps needed to be taken in order to remedy that particular situation. Even if the state took possession of that particular property, he was sure that the expropriated individual would still have a place to be accommodated, whether it was the same place or elsewhere. He did not want to talk more about modalities because some of these issues were not issues of the Act but were administrative issues. What Ms Graham had raised was encroaching on administrative things that would have to be done once the property had been expropriated by the state. He discussed the issue of producing a tax certificate. Members of Parliament could not be promoting people not complying with the law. Anyone who earned an income was required by law to declare to SARS that they were receiving an income. Whatever money the state was going to pay, that money needed to be subjected to SARS to see if that particular individual had been complying with SARS. The state did not want to pay or have a contract with people who did not comply with the law. If people did not comply with the law they needed to be made to comply with the law. The issue of compliance with SARS, as indicated in this Bill, was very important.
Ms Shabalala said that the Committee needed to be consistent when it came to its oversight. Everyone was supposed to be compliant when it came to FICA documents. Everyone was supposed to submit those. In the past, the Department had even informed the Committee that it could not pay the non-governmental entities for the EPWPs because they were not compliant. The Department could not pay a certain service provider because then there would have been a breach in the law on the part of the officials if they paid the service provider without the tax clearance.
Ms Mjobo said that this clause made the issue of compensation more transparent. It ensured that expropriation and compensation complied with other legal precepts, such as tax and refunds.
Adv Van Breda said clause 17 (1) was identical to what was provided for in the Expropriation Act. The date of expropriation and the date of taking possession of property were two different dates. As provided in the Haffejee Constitution Court judgement, it was not necessary for compensation to be determined prior to expropriation. However, in those instances where compensation was determined after expropriation it must be done as soon as reasonably possible. He referred to subclause (1). It stated that, ‘an expropriated owner or expropriated holder is entitled to payment of compensation by no later than the date on which the right to possession passes’. Subclause (3) provided that, ‘any delay in payment of compensation to the expropriated owner or expropriated holder by virtue of subsection (2) or any other dispute arising will not prevent the passing of the right to possession to the expropriating authority unless a court orders otherwise’. The Committee could consider rephrasing the subclause to provide that the compensation taking place after the passing of possession would be subject to a court order. That was in the Committee’s prerogative.
Clause 18 - Property subject to mortgage or deed of sale
Mr Denyssen read through clause 18 of the Bill.
Ms Graham said in terms of the determination of compensation there was no guarantee that the amount of compensation would cover the full balance of the mortgage. Although the expropriation dissolved the rights in the land it did not dissolve the contract between the landowner and the bank. Mortgages were determined on the market value of the property should the property be sold. Where a mortgage exists, and a compensation offer was made it might distinguish the full balance of the mortgage, but it might not. That would unfairly prejudice the landowner or property owner who then might be insolvent as a result of not being able to take of his mortgage or might not have enough money left over for it to be a just and equitable matter. There have been people who bought properties legitimately and had bonds on those properties. Those bonds were very high. In agriculture, the farmers were hooked to the hilt with banks to cover costs, especially after seven years of drought. They needed to know that those mortgages could be extinguished and that there was sufficient money left over for them to potentially start again or find alternative mechanisms. If this became a dispute, then often what would happen was that the banks wielded more power than the owners. The banks would have an unfair advantage over private property owners. There was a bit of a concern around the mortgage clause. The concern related to whether the owner of the property would be unfairly prejudiced when the negotiations happened with respect to the bond. She was not sure how it could be re-worked but it was something the Committee looked at. The Committee needed to make sure that the bank’s settlement is not made and then the owner then still owed the bank or received absolutely nothing as a result. She highlighted a concern raised by either Agri SA or Agbiz on the event of a dispute arising as stated in subsection (3). The subsection stated, ‘in the event of a dispute arising out of subsection (1)’. An agreement in terms of doing a value of a mortgage bond was not necessarily a dispute that needed to be determined by a competent court but that there needed to be sufficient negotiations around this. It was saying that the bondholder needed to be notified but they were not notified in terms of clause 14 of the Bill. Clause 14 needed to make provision that at that point the bondholder or the bank was engaged as part of the deliberations around this, in order to justify the deliberations that happened under clause 18.
Mr Mathebula said that some of the properties were mortgaged. There were plans in place to deal with that as per the Bill. He could not see a property owner being prejudiced by how the expropriation process was going to unfold. He provided an example of an owner who had a particular piece of land. The owner then went to the bank for a loan and mortgaged their property. That farmer has then already paid a certain amount of the loan. When the state engaged the farmer, it would not leave out the bank. The compensation needed to be just and equitable in terms of Section 25 of the Constitution. The state would look at the value of the property. The state would pay the outstanding amount to the bank. The state would then look at how much that particular property would be worth. The state would then determine how much the property owner would be paid. He could not see any prejudice against the property owner. Some of the properties were inheritance. That was why in this particular instance, the state would involve the Master of the High Court. The state would approach the competent jurisdiction of the court where an order had to be issued directing the Master of the High Court to make a compensation paid because that matter was subject to a will. In this particular clause, the Bill was stating that any steps that were going to be taken were going to be protective of both the mortgager and the expropriating authority that had been empowered by the state. He did not foresee any problems.
Mr T Mashele (ANC) said that Mr Mathebula had explained what he wanted to say. There was no ambiguity in this clause. It should not always be the responsibility of the state to make sure that the bond a person owed should be paid off. It should be equitable. The land would be evaluated. There was no way that less than the value of the land would be paid. He did not see any problem with clause 18. He was in agreement with it.
Adv Van Breda said that what was provided in clause 18 of the Bill, in respect of mortgage bonds, was identical to what was provided for in the existing Exportation Act. The Bill was consistent with section 25 (3) of the Constitution. The amount of compensation and the time and manner of payment must be just and equitable, reflecting an equitable balance between the public interest and the interest of those affected. While having regard to all relevant circumstances. The existence of a mortgage bond was a relevant circumstance. The Constitution also provided that there could not be an expropriation that was arbitrary unless it could be justified under section 36 of the Constitution.
The Chairperson said that the reference to the existing Act was good. Parliament was repealing an Act that was in existence. The Committee was trying to ensure that the Act that was coming out of this Bill was in line with the Constitution.
Clause 19 - Payment of municipal property rates, taxes and other charges out of compensation money
Mr Denyssen read through clause 19 of the Bill.
Ms Graham referred to the Tshwane Municipality v PJ Mitchell case. The outcome of that case was that debt to a municipality could not prevent the transfer of the property to a new owner. Why did that then remain in clause 19 (1), ‘the charges referred to are municipal property rates, taxes or other charges that must be paid in order for ownership of land to be transferred’. She was not sure that was still applicable in the light of that judgement. Transfer of ownership could not be prevented on the basis of historical debt to a municipality. That needed to be revisited. It also spoke about other charges. That should be clarified because there should be a limit to what charges were owed to a municipality if they did not fall within the Municipal Systems Act.
She discussed clause 19 (4)(b). If the date of possession was later than the expropriation date, the municipality should not be allowed to hold the former owner responsible. It was not fair. It was very difficult, in terms of the law, to hold the expropriating authority, who was in possession of the property but not the owner, responsible for those rates and taxes. Somehow that allowance needed to be made so that the former owner was not being unfairly prejudiced because there was a delay in transfer and the possession had already been affected to the expropriating authority. That was something that needed to be looked at.
Mr Mathebula said that he could see the payment of rates and taxes to the municipality being a barrier for the state to expropriate property. However, any property that needed to be expropriated that owed money to a municipality could not be taken without paying the municipality in terms of the Property Rates Act. There had to be a settlement of what was outstanding that the property had incurred in terms of the expenses, which needed to be paid to the municipality. From the look of the Bill, it was not clear how that was to be done. It would have to be covered. He provided an example of a property still belonging to a person where there was a delay in the transfer of possession to the state. The property still belonged to the first from who the property must be expropriated. He could not see any prejudice. The property owner still used water and stayed in that particular property. The property owner was being made to pay for something that they had been using. He did not see that amounting to any kind of prejudice.
Adv Van Breda said that he did not have any inputs on that clause. The Department would be best placed to respond once it made its presentation.
Clause 20 - Deposit of compensation money with Master
Mr Denyssen read through clause 20 of the Bill.
The Chairperson said that this was the last clause of chapter 5.
Ms Graham said that she did not have any inputs on this clause. She proposed that the Committee start chapter 6 the following day.
Mr Mathebula said that he was in full agreement with clause 20. He noted the involvement of the court and the Master. Money would be deposited and made available to the relevant individuals. He also noted the Public Finance Management Act and how the payments would be made and complied with.
Ms Mjobo agreed with Mr Mathebula on this clause.
The Chairperson said that clause 20 was clear and self-explanatory. She noted Ms Graham’s proposal that the Committee start with chapter 6 the following day.
Ms Mjobo supported the proposal.
The Chairperson said that the Committee only had two days to deal with the entire Bill. Tomorrow, the Committee needed to increase the pace at which it was dealing with the clauses. She appreciated the work that went into research and all of the deliberations by the Members. It showed that the Members had read and had case laws. The members had read the documents that had been provided to them in order to make their deliberations. There were people who had commented on the Bill and the Committee had also looked at that. The Department would respond to the Committee after it was through considering the Bill clause by clause. The Department needed to respond to the concerns raised and where clauses needed to be changed a bit so that it was not easy for it to be challengeable.
The meeting was adjourned.
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