Abstract
A historical account of land dispossession in South Africa is required for any discussion of land expropriation without compensation.1 In Shoprite Checkers v Member of the Executive Council for Economic Development,2 the Constitutional Court determined that the pre-constitutional conception of property was derived from the history of dispossession of property from South Africa’s indigenous black people.3 In Daniels v Scribante and Another,4 the Constitutional Court also noted that the dispossession of land was mainly a result of colonialism and apartheid.5 The Court in Daniels further highlighted that land was seized first by force, and then by the enforcement of discriminatory laws.6
In Agri South Africa v Minister for Minerals and Energy,7 the Constitutional Court maintained that s 25 of the Constitution must be interpreted in light of South Africa’s gross inequality in wealth and land distribution.8 The Court’s analysis of s 25 in Agri South Africa demonstrates the significance of judicial interpretation in shaping the content of the right to property and the requirements for land expropriation. Given South Africa’s history of land dispossession, land expropriation without compensation may be required to advance land reform. S 25(3) of the Constitution specifies the factors that must be considered when calculating just and equitable compensation for land expropriation.
S 25(2) of the Constitution provides that property may be expropriated in terms of law of general application, for a public purpose or in the public interest subject to payment of just and equitable compensation. S 25(3) of the Constitution states that the compensation amount should reflect an equitable balance between the public interest, the interests of those affected, and all relevant circumstances, such as the current use of the property, the history of the acquisition and use of the property, the market value of the property, the extent of direct state investment and subsidy in the acquisition and beneficial capital improvement of the property, and the purpose of the expropriation.9 For purposes of this study, I will concentrate on s 25(3)(b) of the Constitution, specifically the history of the acquisition of the property factor. The history of the acquisition of the property factor is important for the determination of just and equitable compensation of land expropriation, especially when land was acquired through forced removals or dispossession, where the land was made available to white farmers at low prices and/or with the aid of state subsidies.
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In Khumalo and others v Potgieter and others,11 the two-stage approach was first applied in calculating compensation for expropriation. The court began by assessing the market value of the land to be expropriated, then assessed the remaining four considerations specified in s 25(3) of the Constitution to adjust the compensation amount.12 In the case of Du Toit v Minister of Transport (Du Toit CC),13 the Constitutional Court decided that section 25(3) of the Constitution does not place an emphasis on market value in determining whether compensation is just and equitable.14 The Constitutional Court held that matters of expropriation and compensation are matters of “acute socio-economic concern” and cannot be left solely for market value determinants.15 Langa J stated that the Constitution requires a method of calculating compensation that prioritises justice and equity.16 Notwithstanding the above, the court in Du Toit CC applied the two-stage approach by enquiring what compensation is payable under s 12 of the Expropriation Act (market value) and later considering whether that compensation is just and equitable under s 25(3) of the Constitution.17
Although, the Constitutional Court in First National Bank of SA Limited t/a Westbank v Commissioner for the South African Revenue Services and Another18 did not consider s 25(2) and s 25(3) of the Constitution, it considered foreign law and found that from a comparative perspective, there are appropriate circumstances where it is permissible for legislation, in the broader public interest, to expropriate property without compensation, in addition, there must be an appropriate relationship between the sacrifice the individual is asked to make and the public purpose this is intended to serve.
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The Land Claims Court, in Msiza v the Director General for the Department of Rural Development and Land Reform,20 deducted R300 000 from the amount agreed by valuers after taking into account the factors listed in s 25(3) of the Constitution.21 This demonstrated that the guiding principle in s 25(3) of the Constitution is for just and equitable compensation rather than market value compensation, which means that, even if market value is a useful starting point for determining the amount of compensation, a court can award below-market value compensation if it is in the public interest.
In Uys No v Msiza,22 the Supreme Court of Appeal reversed the R300 000 deduction, citing that the various factors that the Land Claims Court in Msiza had considered to justify the reduction “had all been taken into account [by the valuer] in considering market value”.23 Furthermore, when calculating just and equitable compensation, the Supreme Court of Appeal used the two-stage approach, first considering market value and then the rest of the factors listed in s 25(3) of the Constitution.24 Van Wyk contends that the two-stage approach developed by our courts is not ideal because the goal is not market value but rather just and equitable compensation, as stated in section 25(3) of the Constitution.25 Nonetheless, our courts have used the two-stage approach in expropriation cases.
The Court in Msiza held that the objective of the history of acquisition of the property factor is to provide an avenue for the state to pay less than market value compensation where the owner of the property acquired the property below its market value from the apartheid regime.26 The history of property acquisition is an important factor in calculating just and equitable compensation for land acquired through forced removals or dispossession, especially where the land was made available to white farmers for low prices and with the aid of state subsidies and/or favourable loan conditions. Against this backdrop, I will concentrate on this factor to investigate whether it is just and equitable to award zero compensation for land expropriation.