The Expropriation Bill [B4-2015]

Address by the IRR (Institute of Race Relations),

To the Portfolio Committee on Public Works, 28 July 2015

How the Bill would work

• Say, the Pinetown municipality wants communal land in KwaNdengezi for RDP houses

• This land is held by the local chief and allocated in plots to residents with unregistered land-use rights, who have built houses on it

• Under the Bill, the municipality must start by negotiating with the chief and residents

How the Bill would work in practice

• Say the municipality offers 70% of market value, but the chief and residents reject this

• After inspecting the land and inviting objections – which it can reject without giving reasons – the municipality can serve a “notice of expropriation” on the chief and residents.

• Ownership of the land and houses will pass to the municipality on the date specified in the notice, which could be the very next day.

How the Bill would work in practice

• Ie, if the notice is served on 1 November 2015, ownership could pass on 2 November 2015.

• The right to possess the land/houses will pass to the municipality on the date specified, which could be 3 November 2015

• The municipality could say it will pay 70% of market value, but only on 1st May 2016

• It might in fact pay much later than that date.

How the Bill would work in practice

• If the residents want to object to the compensation, they must sue within 60 days

• If they don’t, they are “deemed” to have accepted this amount

• How can they find the money to sue, especially when they have already lost ownership and possession of their land and homes?

• The Bill thus makes it difficult for them to have the amount of compensation decided by a court

How the Bill would work in practice

• Plus, the Bill does not allow the courts to examine and rule on the validity of the expropriation

• Is the expropriation truly “in the public interest”?• Is the compensation truly “just and equitable”?• What about all the residents’ extra losses: the

costs of moving out, finding other homes, or developing other businesses?

• Is it “just” that the compensation comes so late?

The Bill Conflicts with Section 25

• Under Section 25, an expropriation may not be “arbitrary”, it must be “in the public interest”, and there must be “just and equitable compensation”

• If the expropriation does not in fact meet these tests, it is unconstitutional and invalid

• Who should have to prove that it does meet these tests, and when should this proof be provided?

The Bill Conflicts with Section 25

• The MUNICIPALITY must prove the tests are met. • It must do so BEFORE it issues a notice of

expropriation and takes ownership/possession.• The onus lies on the State to prove validity, not

on the residents to try and disprove this.• Plus, the Bill gives them no chance to do this.• The Bill allows the courts to decide on the

compensation, but NOT on the validity of the expropriation, which never has to be proved.

The Bill Conflicts with Section 34

• Section 34 says all legal disputes should be decided, after a fair public hearing, by an independent court

• The Bill (unlike the 2013 one) does not allow legal disputes about the validity of the expropriation to be decided by the courts, which can decide only on the compensation.

• The Bill also tries to limit how often people can go to the courts on the amount of compensation

The Bill Conflicts with Section 33

• Section 33 says administrative actions must be “reasonable” and “procedurally fair”

• But the municipality decides for itself if the tests in Section 25 are in fact met; and also, in most cases, if the compensation is truly “just and equitable”.

• It is also not “reasonable” that people get nothing to cover additional losses (like moving expenses) and may wait so long for payment

A better bill can easily be drafted

• This bill must allow expropriation “for public purposes” and “in the public interest”, in exactly the way that the Constitution says

• The municipality must begin with negotiations, failing which it must notify the residents it wants to expropriate.

• It must give 180 days’ notice of the court order it will seek, and allow residents to take part too by paying their reasonable legal costs.

A better bill can easily be drafted

• The municipality must prove to the court that the proposed expropriation is not “arbitrary”, that it is truly “in the public interest” and that the compensation is truly “just and equitable”

• If the court is satisfied on all these points, the municipality may THEN issue a notice of expropriation, which must have a copy of the court order attached to it.

• Under this notice, ownership will pass in 90 days, and the right to possession in another 90 days

A better bill can easily be drafted

• Compensation begins with market value, less the four “discount” factors in Section 25 – but this list is not closed, so other factors can be included.

• The compensation should thus include damages for additional losses (moving expenses, the extra cost of new houses, the loss of income from spaza shops, etc, until these can start again)

• The compensation must be paid 15 working days BEFORE the municipality takes ownership, or the expropriation is automatically invalid

This complies with the Constitution

• The municipality shows that the tests in Section 25 are in fact met

• The residents are given their right of access to court: on the validity of the expropriation, as well as on the amount of compensation

• The residents are treated “reasonably” and there is “procedural fairness”

• If people are to be evicted from their homes, there is a court order authorising this

Good for economy, plus the people

• SA’s growth rate was 1.5% of GDP in 2014• Other African countries have 5% or more• 8.7m people are jobless (up from 3.7m in 1994)• We need higher growth for more employment. • 8.6m black people own homes, 16.5m have

customary land-use rights, all need protection• Property rights are a key foundation for

investment, growth, jobs, and prosperity for all.