Expropriation Act not about land reform - but nil compensation a concern

• 12 February 2025
• 0 Comments
• Agbiz
• Annelize Crosby

Given the current debate regarding the Expropriation Act that has recently been signed into law by the President, it is important to understand the role of expropriation in land reform.  The Expropriation Act is not a land reform act. It is a procedural piece of legislation that does not grant any new powers of expropriation.

Regarding land reform, powers to expropriate are granted in the Restitution of Land Rights Act, the Land Reform (Labour Tenants Act), the Extension of Security of Tenure Act and the Provision of Land and Assistance Act. When the Minister of Land Reform and Rural Development decides to exercise expropriation powers granted in one of these pieces of legislation, he is obliged to follow the procedure set out in the Expropriation Act.

There is an existing framework for land reform. The real reasons for the relatively slow pace of land reform to date, the loss in production on land reform farms, and the failure to empower people economically through land reform are a failure of implementation rather than a failure of the legal framework.

Expropriation is no silver bullet that will solve our land reform problems. To quote from the authoritative 2017 High Level Panel report: “The Panel is reporting at a time that some are proposing that the Constitution be amended to allow for expropriation without compensation to address the slow and ineffective pace of land reform. This is at a time when the budget for land reform is at an all-time low of less than 0,4% of the national budget, with less than 0,1% set aside for land redistribution. Moreover, those who do receive redistribution land are made tenants of the state, rather than owners of the land. Experts advise that the need to pay compensation has not been the most serious constraint on land reform in South Africa to date – other constraints, including increasing evidence of corruption by officials, the diversion of the land reform budget to elites, lack of political will, and lack of training and capacity have proved more serious stumbling blocks to land reform. The Panel is of the view that government has not used the powers it already has to expropriate land for land reform purposes effectively, nor used the provisions in the Constitution that allow compensation to be below market value circumstances.” 

The Constitutional provisions

Section 25 of the Constitution represents a balancing act between the protection of existing property rights and the need to effect land reform and provide redress to those who lost land or could not access and own land under the previous political dispensation. It provides for specific measures for restitution, redistribution and tenure reform. Various laws and programmes have been developed over the years to give effect to these constitutional imperatives.

Even though the formulation of section 25 (1) is phrased in the passive, in the sense that it provides that no one may be deprived of property,  the Constitutional court, in its certification judgement found that in section 25, “the protection for the holding of property” is implicit and it therefore is in line with international conventions such as the Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights (“ICCPR”) and the International Covenant on Economic Social and Cultural Rights.

Section 25(1) provides that no one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property. Section 25(2) then provides for expropriation, provided that it be done in terms of law of general application for a public purpose or in the public interest and subject to compensation. It also requires the compensation and the time and manner of payment 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.

The provisions of the Expropriation Act must comply with the provisions of section 25 of the Constitution, which means that the acid test will always be if the compensation offered is just and equitable, reflecting an equitable balance between the public interest and the interests of those affected.  This balance must be established regarding the relevant circumstances,, including the list of factors in section 25(3).

The question as to whether R Nil compensation can ever be just and equitable was posed during the parliamentary process, where an attempt was made to amend section 25 of the Constitution. Prof Elmien du Plessis and Hein Lubbe argued in a 2021 article entitled: Compensation for Expropriation in South Africa, and International Law: The Leeway and the Limits[1] that ‘without compensation’ will fall short of South Africa’s obligations, but that, in exceptional circumstances, ‘nil compensation’ can be justified after due process has been followed and relevant criteria considered.

Burton Meyer from Cliffe, Dekker, Hofmeyr attorneys also argues that section 25 of the Constitution as it now stands does, by implication, provide for expropriation without compensation in circumstances where a court could hold that such expropriation for nil value would be just and equitable in the circumstances.[2]

Has the new Act changed anything?

The new Act builds on the processes contained in the 1975 Act, adding steps like the requirement to attempt to come to an agreement with the owner or affected party before resorting to expropriation, bringing in a notice of intention to expropriate and a mediation process for disputes over compensation.  Also, the new Act is aligned with the Constitution, which also allows expropriation in the public interest, not just for a public purpose.  And the new Act also protects rights not only of property owners but also of unregistered rights owners.

Regarding the possibility of R Nil compensation, many scholars argue that the possibility of R Nil compensation is implicit in section 25 of the Constitution. The Constitutional court judgement in the case of Du Toit v Minister of Transport[3] made it clear that: “it is important to recognise and appreciate that since the inception of the Constitution, all applicable laws must comply with the Constitution and be applied in conformity with its fundamental values.

It is therefore, now the Constitution, and not the Act, which provides the principles and values and sets the standards to be applied whenever property is expropriated. Every act of expropriation, including the compensation payable following expropriation, must comply with the Constitution.” This means that the 1975 Expropriation Act had to be interpreted and applied in accordance with the constitutional provisions regarding compensation. So, arguably R Nil compensation and less-than-market-value- compensation were already possibilities under the 1975 Act. The new Act makes this possibility explicit but also sets the parameters for it. What is concerning is that the list of circumstances where R Nil may be considered just and equitable is not exhaustive, and there may be other circumstances under which land is expropriated for nil compensation.

Conclusion

Various land reform laws and programmes have been in place since 1994 to effect land reform. Although some of these provide for expropriation, expropriation has not really been used to date. For the most part, market-related prices were paid. There have been a few court cases where compensation at substantially less than market value was offered, and these were either settled or decided in favour of the landowners.

What is worrisome is that landowners have to foot the bill when challenging compensation that is offered.  If a case is decided in their favour, they may recover some of the costs but not all. There are lots of checks and balances in the Expropriation Act, but we do need to remain vigilant and monitor how it is implemented. More clarification from the courts on the interpretation and application of the so-called R Nil compensation clause will bring more legal certainty.

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