Are South Africa’s property rights at risk?

Retired judge, Antonie Gildenhuys, who served in the Land Claims Court for 15 years, explains the difference between expropriation and deprivation, and the principle of ‘just and equitable’ compensation. He says the Commission on the Restitution of Land Rights needs more resources.

Are South Africa’s property rights at risk?
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The right to land restitution is a highly emotional issue in South Africa – for claimants as well as land owners. Therefore, the land restitution process should be conducted in a transparent and equitable manner. The USA established a land claims court for its land restitution programme in 1946 and the court finished its work in the late 1970s. In South Africa, the process formally started in 1994. There is still a long way to go.

For the Commission on the Restitution of Land Rights to do its work effectively, particularly after the recent re-opening of restitution claims, the institution needs to be given a bigger budget and have a larger, well-trained staff.

Expropriation vs deprivation
The South African Constitution recognises a distinction between the deprivation and the expropriation of property. In terms of section 25(1) of the Constitution, no one may be deprived of property except in terms of a law of general application. A person may be deprived of property by government through limitations on the use thereof, such as restrictions on the height of buildings that may be erected on a property, or restraints on the use to which it may be put, and also by government acquiring rights over a property, including rights of ownership.

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READ: Reforming land reform

Under Roman and Roman Dutch law, a land owner could essentially do what he chose on or with his land. In a modern state, this is no longer permissible, as the interests of society are taken into account when determining how and for what purpose property may be used.

According to section 25(2) of the Constitution, property may only be expropriated in terms of a law of general application, for a public purpose, or in the public interest, and subject to compensation. When land is expropriated, rights of ownership in almost all cases pass to the expropriator, usually government. Expropriation is a form of deprivation as it has an impact on property rights. But not all deprivations are expropriations.

The significance of the distinction lies in the fact that compensation is a constitutional imperative in cases where a owner is deprived of property through expropriation, which is not the case with other forms of deprivation. The US Constitution provides that private property may not be taken for public use without just compensation.The term ‘taking’ is used instead of ‘expropriation’. Two tests are applied to ascertain whether property was indeed ‘taken’ by the government.

Firstly, did ownership or other rights in respect of the property pass to government? Secondly, is the deprivation so serious
that the use of the property or a substantial portion thereof would, for all practical purposes, be terminated?

Water and mineral restrictions
In South Africa, after 1994, legislation was passed to control the use of water and mineral resources. In the past, the right to use these resources had been deemed to belong to the owner of the land where they occurred, but subject to significant restrictions. However, in terms of the National Water Act of 1998, government assumed public trusteeship of water resources, and along with that, the duty to ensure

that water is protected, used, developed, conserved, managed and controlled in a sustainable and equitable manner, for the benefit of all. Government has, however, not taken ownership of flowing water, because while water flows freely, it is not susceptible to private ownership. Therefore, government’s administering of the nation’s water resources can, at most, involve the deprivation of certain private ownership rights.

The Mineral and Petroleum Resources Development Act of 2002 states that mineral and petroleum resources are the common heritage of all South Africa’s people and the state is the custodian thereof for the benefit of all. The constitutionality of this Act was tested in the Constitutional Court on the basis that it removed the rights of land owners to sell, lease or cede their mineral rights, as well as their right to determine who may exploit the minerals on their land.

READ: Land reform dillema

The applicants contended that the removal of their rights constituted an expropriation of the rights. The Constitutional Court held that, since the state did not acquire any of the rights, there was no expropriation. The court did not consider the second test used in the USA, where the deprivation is such that the use of the property is effectively terminated.

Over the course of time, government may well introduce other measures that will further restrict ownership rights. Provided that such restrictions are deprivations, which are not arbitrary and do not constitute expropriations, they should pass constitutional muster.

In terms of the Constitution, the expropriation of property is subject to compensation, the amount of which has either been agreed to by those affected or decided or approved by a court. The compensation must be just and equitable. The court must look at all relevant circumstances when it determines what will be just and equitable compensation.

This includes the current use of the property, the history of the acquisition, the market value, the extent of direct state investment and subsidy, beneficial capital improvement, and the purpose of the expropriation.

Market value
The market value of the property is in most instances the only objectively determinable factor that a court has to take into account. In practice, it constitutes the point of departure to determine compensation, to be adjusted upwards or downwards as other circumstances require. But this seldom happens.

Land restitution claims for dispossessions occurring prior to the Natives Land Act No. 27 of 1913 are not allowed, as the Constitution limits the entitlement to restitution of dispossessed land rights to dispossessions which occurred after 19 June 1913, when the law came into force.