Expropriation Bill [B4-2015]: public hearings with Deputy Minister in attendance Day 1

Meeting report

Chairperson’s opening remarks
The Chairperson said that in 2013 the Minister of Public Works had published a draft bill for public comment with the purpose of ensuring that the provisions of the Expropriation Act were brought in line with the Constitution. Since 2013, a revised bill has been tabled in Parliament and public comment has been requested. Today commences that process.

South African Institute of Race Relations (SAIRR) submission
Dr Anthea Jeffrey, SAIRR Head of Policy Research, looking at expropriation in rural areas, said that under the Bill, a municipality would need to start by negotiating with the chief and residents who held unregistered land-use rights and have built houses on it. After inspecting the land and inviting objections – which could be rejected without giving reasons – the municipality can serve a “notice of expropriation” on the chief and residents. The right to possess the land/houses would pass to the municipality on the date specified, and if the residents wanted to object to the compensation they would need to do so within 60 days. Where would the money to sue come from, especially when the residents had already lost ownership and possession of their land and homes?

In addition the Bill made it difficult for the compensation amount to be decided by a court, and the Bill did not allow the courts to examine and rule on the validity of the expropriation. She argued that the Bill conflicted with Section 25 of the Constitution. Under Section 25, an expropriation may not be “arbitrary”, it must be “in the public interest”, and there must be “just and equitable compensation”. Who would prove that the Bill met these requirements? The Bill allowed the courts to decide on the compensation, but not on the validity of the expropriation, which never has to be proved. The Bill did not allow legal disputes about the validity of the expropriation to be decided by the courts and the Bill tried to limit how often people could go to court on the amount of compensation. The IRR recommended that instead of 60 days that a 180-day notice be given to allow residents to pay their reasonable legal costs. Also compensation should thus include damages for additional losses (moving expenses, extra cost of new houses, loss of income from spaza shops, etc, until these can start again). Compensation needed to be paid 15 days before the municipality took ownership of the land or property. Over 8.6m black people owned homes and 16.5 million had customary land-use rights, all needed protection.

Discussion
Mr K Sithole (IFP) indicated that most of the land in rural areas was under the authority of the local chief. Did the IRR engage with local communities before drafting this submission? What was the chief’s input? Also most of the land in KwaZulu Natal was under the Ingonyama Trust; has the Trust been engaged?

Mr J Steenhuisen (DA) asked for clarity on whether IRR challenged only the compensation aspect of the Bill or the whole expropriation process.

Mr M Filtane (UDM) asked why the submission was referring to “black land ownership only”, there were many other people who owned land but were not black. South Africa was a multiplicity of races. What was the reason for isolating land owned by blacks; what point was the IRR trying to drive home?

Mr P Groenewald (FF+) asked whether the IRR would consider going to the Constitutional Court with the matter if the Bill in its current state was not changed. He noted that the majority of people were of the view that expropriation would only be taking place of farm land; however expropriation did not exclude property in towns and cities.

Dr Jeffrey responded to the questions about land ownership in rural areas and the Ingonyama Trust, saying the IRR had not make contact with any of these parties. On whether the challenges were around compensation or the validity of the entire expropriation, she said the problem with the present Bill was that the courts were given power in the situation where people could sue within 60 days to adjudicate on the amount of compensation that was fair but not on any other issue. Whereas the 2013 Bill has a clause which did not prevent other issues from being raised in the courts. Under the 2013 Bill it would have been possible to challenge the validity of the expropriation itself. This was one of the reasons why the IRR believed that the current Bill was unconstitutional.

On why the IRR was focusing on black land ownership, Dr Jeffrey said this came from the institution’s long history and stance on discrimination and the IRR had taken particular interest in the restrictions placed on black land ownership. Since the apartheid era, there has since been a rapid growth of land and home ownership by black people and this was something which needed to be accelerated. Currently there were 8.6 million black land owners in comparison to 1.1 million white ones. There was this assumption that expropriation would only affect white land owners but this was not the case, all South Africans would be at risk. On whether the IRR would go to the Constitutional Court, she hoped that it would not get to that point and that Parliament would not pass legislation which was not constitutional. The IRR has put forward an alternative Bill which was fully compliant with the Constitution and the IRR hoped that Parliament would adopt the alternative Bill instead. If this did not happen, organisations in the country which felt strongly about this would go to the Constitutional Court. The damage to the economy and to the poor in adopting a Bill of this kind would be severe. She said it would be all types of property which could be affected by the proposed Expropriation Bill.

Ms E Masehela (ANC) thanked the IRR for the submission. She noted that according to the submission, the IRR was formed in 1929 to oppose racial discrimination. Since 1929 there has been a lot of land dispossession and discrimination, what wondered what the IRR done to assist black people who were losing their land.

The Deputy Minister of Public Works, Jeremy Cronin, thanked the IRR for its input. He would engage the inputs in detail when the Committee deals with the Bill clause by clause. However the starting point of the submission was based on the mis-reading of the Bill. He referred Members to Clause 17(2) and (4). According to the submission, the payment made could occur after the expropriation has occurred and it could be a little less than the market value. He explained that the Bill of Rights’ property clause made it very clear that the market value was not the only consideration which would be taken into consideration. Clause 17 said at least 80% of the fair and equitable value must be paid at the time of expropriation. There was a provision made for a delay in payment, but this would have to be granted by the court. With regard to compensation, Section 33 of the Bill of Rights dealing with the right to administrative justice, would prevail. This was why a great deal of the Bill was focused on the process which needed to be followed.

The Department has had a look at the alternative Bill proposed by the IRR and the Department received an ex parte opinion from senior counsel. The opinion received was that the proposed alternative Bill was highly unconstitutional. The Department could table the ex parte opinion to the Committee. Lastly, it was very important that the Committee remained mindful that the possibility of expropriation for public interest or for a public purpose was not just about white farmers. Expropriation included property which might be required for a public purpose in terms of land reform. Expropriation without compensation was not constitutionally compliant.

Chairperson Martins asked that the legal opinions on any of the issues raised be provided to the Committee. He said the Committee would appreciate a copy of the legal opinion the Department had received.

Ms Vuyokazi Ngcobozi, Parliamentary Legal Advisor, referred to Section 34 of the Constitution and said the right of any organisation or person to go to court could not be taken away.

Mr Groenewald asked what the definitions were for ‘public purpose’ and ‘public interest’. How did the IRR interpret this?

Dr Jeffery responded to the question around what the institution has done to improve the lives of black people during the apartheid era, she said when the forced removals took place in the 1960’s and 1970’s the IRR helped various communities in this regard. She said the way the Bill was structured did have a few sub clauses which would make it difficult for individuals to afford the route of litigation because it was very expensive. There were all sorts of weaknesses in the legislation, what was needed was that the Bill recognizes the need for the intervention of the court. The Bill as it stood did not seek a prior court order before valuation of the land for expropriation and this was the main difference between the Bill and that being proposed by the IRR. This was a critical difference which made the IRR alternative Bill the compliant one. She asked for a copy of the Department’s legal opinion. The definition of ‘public purpose’ was for things such as the building of a road, public interest needed to be defined by the Constitution. One of the flaws in the Bill was that it used a definition which was too wide and was not consistent with the definition of the Constitution.

Mr Filtane said given the discussions differentiating between ‘public interest’ and ‘public purpose’; what was the reason for the IRR lumping these two definitions together?

Mr Steenhuizen asked how the IRR defined property and what was the IRR’s thoughts on the current Bill? Was it too broad and how should it be defined seeing that Section 25 did not limit property to land?

Dr Jeffery said expropriation should be committed in the public interest. The IRR was suggesting a wide definition of property and the Bill should trump other expropriation measures. All constitutional requirements needed to be taken into consideration before expropriation takes place. The Bill left people with very little protection.

Eskom submission
Ms Mmamoloko Seabe, General Manager: Eskom Real Estate, said Eskom was currently experiencing significant delays in acquiring servitudes for the construction of transmission and distribution infrastructure. This was largely due to lack of an effective expropriation process as per the current legislation. The proposed amendments did not address these delays. Two examples of these were the Mercury Perseus 765 kV power line where the expropriation process took 6 years to conclude and the Etna Glockner 400 kV power line which took more than 4 years since 2010. These delays had serious negative impacts on Eskom’s ability to achieve its electrification targets. Eskom was recommending a fair process where market related payments would be made in transparent and timely manner.

Currently, precedent for effective expropriation existed in companies such as Transnet and SANRAL. Eskom was therefore requesting that for public infrastructure, the power to expropriate be vested with the Chairperson, the Chief Executive or similar executive head of the expropriating entity. The acquisition of servitudes was often the longest activity in the construction of Eskom power lines and power plants. Due to expected delays in expropriation, Eskom pursued sub-optimal alternatives in obtaining property. For example; Eskom would pay more than market value which violates the Public Finance Management Act, buying whole farms rather than strip servitudes, and continually amending environmental and other authorisations with alternative routes to accommodate the needs of the farmers. The delays resulted in loss of revenue and the subsequent economic benefit. Government was at risk of not reaching its electrification targets unless the expansion of the transmission network could be expedited in time. For example, 44 086 connections in Limpopo and 23 135 connections in the North West Province may be at risk if transmission lines were not in place to transmit power to these communities.

The ability to connect big business and heavy industry in an expedient manner was key for economic development and a number of Eskom projects were at risk, most of which were in Gauteng, Free State, KwaZulu Natal, Eastern Cape, Western Cape and Limpopo provinces. Eskom was committed to the constitutional values outlined in Section 25. Other recommendations were that the state provides a standardised process for expropriation and that the right of expropriation for public infrastructure be limited.

Discussion 
Ms A Dreyer (DA) asked why Eskom needed to own the land to construct distribution lines, were there no other alternatives? According to the submission Eskom needed to buy the whole land and not just the servitudes. How did this affect urban areas?

Mr Sithole asked what were other implications for the delays Eskom was experiencing in obtaining servitudes? What were some of the job losses which Eskom referred to in its submission?

Mr Groenewald said according to the submission one of the problems which Eskom put forward was that the present Expropriation Act was not sufficient in ensuring quick development of processes. Why was Eskom referring to the present Act? According to the submission, Eskom was recommending a fair process for everybody and the payment of market related prices for the land. This was very good as it related to fair compensation because the Act at the moment was talking about paying people less than the market value. How did Eskom see this situation?

Mr Filtane said all title deeds had a provision that when government needed to render certain services it had the right to do so. Why did Eskom need to expropriate when this was a standard clause in title deeds? He said the Eskom submission seemed to suggest that Eskom wanted to be the entity responsible for expropriation when required to be, whereas the Minister of Public Works had the final authority. Eskom seemed overly concerned about the individual rights of landowners, why was this the case?

Ms Seabe responded to the question on why Eskom needed to own land, saying Eskom paid for the use of a right and this right was limited to a 99 year period. This was a right to use a particular strip for a particular period; Eskom was not necessarily buying land. Where Eskom ended up buying land it would be because Eskom found itself in a difficult situation and could actually not reach an agreement with the land owner for a particular servitude. As one of the options, Eskom would offer to buy the property, with the intention of reselling the property at a later stage. She agreed that urban areas were also affected; Eskom was not only looking to acquire servitudes in rural areas. On servitudes and the market value, she explained that when Eskom was offering a price and the land owner was not agreeing to the offer, Eskom ended up increasing the price to avoid any further delays. Delays were very costly. With regard to loss of jobs and/or skills, she said during the delayed period when Eskom was trying to secure a servitude, many suppliers end up cutting jobs because contracts were not being finalised.

Mr Amos Mboweni, Eskom Senior Executive Manager: Land and Rights, explained that before negotiations Eskom embarked on a process of identifying land through various studies. Land owners would be consulted and various negotiations would take place; Eskom would also do various environmental studies. He emphasized that in negotiations Eskom used the market value for costing the servitude right even though Eskom was not buying the strip. He said most South African cooperated with the process. The delays in acquiring land had serious impacts on jobs because construction companies could not start investing in infrastructure if they could not be able to connect the beneficiaries. By giving expropriation powers to Eskom’s executive, these delays would be minimized and addressed. Eskom’s processes and studies would be independent and the proper public participation and environmental assessment processes would be followed.

Mr M Ndlozi (EFF) said the six year delay which Eskom was confronted with was not acceptable. Why was Eskom not proposing that the lines would be for public use and public benefit, Eskom should take the land they need without compensation or at least without market value? How was that expropriation? Eskom indicated the challenges it was facing with projects being delayed for almost six years, these needed to be dealt with as being for public interest and/or public benefit. Expropriation meant that a person could be forced to give government land or property; instead Eskom was involved in lengthy and fruitless negotiations. Expropriation meant that the rights would be suspended.

Deputy Minister Cronin said in terms of the Expropriation Act of 1975, there was nothing preventing the expropriation of servitudes for public purposes, and there was nothing in the property clause of the Bill of Rights which says market value needed to be paid, it only made mention of compensation. Expropriation without compensation was therefore not an option; however compensation did not need to be according to the market value. What Eskom has described was the way in which the company has tried to acquire servitude for power lines. Government and the Deputy Chief Justice have made the point that government has been far too timid in using the property clause in the Bill of Rights to exercise its constitutionally empowered right. There was no “willing buyer-willing seller” clause in the Bill of Rights. However there has been a lot of uncertainty on what met constitutional approval and what did not. He agreed that in the case of Eskom, public resources were being held back resulting in the delay of projects. The Bill prescribed a process which would need to be followed in expropriation process so that an expropriating entity had guidelines. Guidelines on the process would also be provided to the courts to ensure a just process. This was the crux of the Bill.

However there was a specific problem with Eskom, which was that the Electricity Regulation Act requested that expropriation go through the Minister of Energy who would then pass it on to the Minister of Public Works. Eskom wanted to have the power, however expropriating powers could only be vested within an executive authority; all publicly elected entities had expropriating power. However it was important to note that this was about a process which needed to be followed, it was not about the Minister of Public Works. To achieve what Eskom was asking, Parliament would need to look into the Electricity Regulation Act. Some property/land owners were holding government to ransom when engaging in the expropriation process and government could not allow this to continue any further.

Dr Groenewald asked in what way would the proposed amendment speed up the process of expropriation. How long did the request for expropriation by Eskom to the Minister of Energy and the Minister of Public Works take?

Ms Masehela asked whether the Bill dealt with the delays currently being experienced by Eskom. Also when Eskom was targeting communal land, how did Eskom deal with matters of compensation in such instances?

Mr Mboweni said there were a number of challenges Eskom faced with expropriation and the company hoped that the engagements on the proposed amendment would assist in resolving some of these. In cases of communal land, Eskom worked with the Department of Rural Development and Land Affairs and with the various communities. Money was put in a trust through a consultative process.

Deputy Minister Cronin commented that it took a long time for requests for appropriation to move from Eskom to the Minister of Energy and then to the Minister of Public Works due to administrative delays. However these administrative delays had been partly caused by the fact that there was little confidence within government in dealing with matters relating to expropriation. Bureaucratic delays were another concern.

Centre for Constitutional Rights (CCR) submission
Mr Johan Kruger, CCR Director, said the oral submission would move from the premise that the full submission has been read, therefore CCR would deal only with certain aspects of the submission.

Ms Phephelaphi Dube, CCR Legal Officer, said the CCR welcomed the Bill in so far as it sought to align the expropriation process to what was provided for in the Constitution. That said, there were a number of concerns the CCR held and the key ones were noted.

CCR had concerns with the following definitions:
• Property – the definition was overly broad creating legal uncertainty
• Public interest – the definition was wholly inadequate and it lacked precision, creating real possibility for arbitrary expropriation
• Compensation – there was a need for the definition to reflect equitable balance between public interest and property holder.

Clause 1 of the Bill defined those having the power to expropriate as the Minister, the executive authority of a national or provincial department, the municipal council of a municipality or an organ of state as expropriating authority. The CCR recommended that the power to expropriate was too wide and should be limited to the Minister. The Bill allowed the expropriating authority to take ownership and possession before paying compensation contrary to section 25(3) of the Constitution. The CCR recommended that the time of compensation and manner of payment be just and equitable. The Bill should also be aligned with other relevant legislation such as the Property Valuation Act, the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act and the Promotion of Administrative Justice Act. Compensation should be paid before the state took possession of property.

Discussion
Mr Sithole asked about the recommendation which the CCR was referring to in its submission. Parliament has not made any such recommendation to the CCR.
Chairperson Martins reminded Members that the submission was only a small fragment of the CRR’s submission; the full submission had been made available to Members at an earlier stage.

Ms Dreyer said the CCR’s concerns around the definition of ‘public interest’ and ‘property’ have been noted. Would the CRR like to suggest a definition for these?

Dr Groenewald asked what uncertainty did the definition of ‘property’ cause the CCR. According to the Constitution, property was not limited to land.

Mr Filtane partly agreed that compensation should precede ownership. Transfer of ownership should therefore only take place after compensation, or simultaneously. The state could not acquire ownership before compensation.

Mr Ndlozi said the FW De Klerk Foundation [of which the Centre for Constitutional Rights was a unit] was formed by the last apartheid government. There was a predicament around Section 25 of the Constitution, and how the section about historical redress would be achieved. Apartheid was a crime against humanity, part of this included property theft. There were practical examples of property being taken by force in areas such as Cape Town.

Dr Groenewald raised a point of order; Members should ask questions on the submission rather than make statements around the stealing of land. This should not be tolerated. These allegations would cause serious problems in how the meeting would proceed.

Chairperson Martins said public hearings were for presenters, stakeholders and for Members to articulate their views. Members of Parliament had the right to engage these submissions. The manner in which a Member articulated himself or herself was a right they held as a Member of Parliament, even if other Members did not like it. The focus should be on engaging stakeholders in their entirety.

Mr Ndlozi said the CCR submission centered on Section 25(4a) of the Constitution but the matter of historical redress was not clearly articulated. How would the CCR achieve historical redress; what was the CCR’s sense of historical redress? What should it entail? Did the CCR and the De Klerk Foundation agree with the notion that apartheid was a crime against humanity, and land acquired by the colonial and apartheid government was taken unjustly? Did the CCR agree that this land should be compensated during expropriation and historical redress? Would this be constitutional?

Ms P Adams (ANC) reiterated the question about what the CCR’s definition of property and ‘public interest’ was. With regards to compensation, were the interests of the unregistered land holder taken into consideration? What role has the institution played in informing local communities about their rights in this regard?

Ms Masehela asked when was the CCR formed? What were the exact issues which the organisation was not comfortable with within the amendment? Could the CCR explain its understanding of Clause 17 of the Bill?

Ms Dube responded and explained that the CCR’s reasoning behind advocating that the Minister’s powers should be limited was that because of the country’s electoral system, every five years there would be a new Minister with a different vision and a different idea on how departmental policy should be implemented. The danger with this was that ‘public interest’ and public process requirements were not clearly defined in the Expropriation Bill and it would be up to government to fill this vacuum. Whatever decisions the government of the day made would therefore not be aligned with the incoming government’s decision, therefore the laws being created would only be applicable to the present day as opposed to laws which had legal certainty in the future. In addition, CCR was advocating for limiting ministerial powers to limit the possibility of abuse. For example General Motors in the United States expropriated people’s homes in order to build a plant which had no element of public interest.

Mr Kruger responded and said the CCR would provide definitions at a later stage. On the question on the power to expropriate, this kind of power was administrative power which gave a lot of intrusive power to the Minister and this should be limited or the Minister should be able to delegate this power. The purpose of the legislation was to expropriate for effective planning and construction which has not happened at the moment. On the question of CCR’s views on the Constitution, he said the CCR was committed to upholding the Constitution in its totality. With regard to the definition of ‘property’, he said the CCR was very concerned with how the legislation defined property. The objective of the Act was to expropriate property; however the meaning of ‘property’ and ‘public interest’ should not be widely defined. The Bill needed to provide better clarity on this.

Mr Ndlozi said if the Committee was to mobilise a meaningful conversation on expropriation, the “elephant in the room” needed to be addressed: the matter of Section 25(4)(a) which deals with historical injustice, through colonization and apartheid. If he had proof that a piece of land was stolen or forcefully taken by the previous government, during expropriation, should that current land owner be compensated, and if so, why? For example, farms should be able to be returned according to criminal law without compensation.

Dr Groenewald also referred to Section 25(4) and the definition of land. Should the Bill put in a definition of how far the government should go back into history? For example, should the government not go back to when the blacks came to the southern parts of Africa and stole the land of the Khoi and the San, so that there could also be expropriation to ensure that the Khoi and the San get their stolen land back? The claim that apartheid was a crime against humanity was rejected by Sweden, France and the United States and it was never endorsed by the UN Security Council. Members should refrain from making general sweeping statements about how far the process of expropriation should go back. The Expropriation Bill was about compensation and not about land reform.

Chairperson Martins indicated that only Members of Parliament could ask questions and make comments. There were a number of visitors in the room and as the topic became animated, a number of hands have been rising and he was did not recognize them as Members. This session was only for Members of Parliament and he was issuing a gentle reminder.

Ms Dreyer said she had attended meetings in the Committee during the Fourth Parliament, when the 2013 Expropriation Bill was tabled as a slightly different version. She had then raised a concern about the lack of clarity in the definition of ‘property’. What did ‘property’ include and what did it not include? This question has still not been addressed. Why was a proper definition not included in the 2015 Bill? Was this deliberate?

Mr P Mhlongo (EFF) said as a point of caution, government was a presiding entity over the society at large; therefore the question previously raised by Mr Ndlozi about the country’s colonial history could not be ignored.

Chairperson Martins reminded the Committee that Members of Parliament were within their right to articulate their views, whether another Member agrees with these view or not. A Members’ right to articulate these views should be respected.

Mr Steenhuizen said the Committee had put out a notice for various stakeholders and members of the public to come and engage Parliament on the Expropriation Bill. It was unfair to expect people to come to the Committee to engage on the Bill and then interrogate them on things such as the history of this country. The meeting was not a platform to discuss ideologies. He appealed that Members not invite people based on a particular brief and then move them into a different direction.

Chairperson Martin said his role as Chairperson was to ensure that discourse was fair and that engagements with stakeholders were conducted in such a way that respects Parliament. He would not allow for time to be wasted on debates among Members of the Committee. Members could not frame other Member’s views.

Deputy Minister Cronin responded to the question on the definition of ‘property’. He explained that the Department needed to be mindful of a ruling from the Constitutional Court on the FNB judgment which stated that it was comprehensively unwise to define property in terms of Section 25. According to the court it was important to move away from the static, typically private law conceptions to a dynamic view of the Constitution as an instrument for social change and transformation. The Department was therefore guided by this ruling. With regard to the definition of ‘public interest’, he said the CCR seemingly did not have a problem with the Bill but with the Bill of Rights. The Department has followed very clearly the definition of ‘public interest’ in the Bill of Rights, which states that ‘public interest’ was about bringing about quick access to the country’s natural resources. He said people should be mindful of coming to Parliament to defend the Constitution when they are interpreting the Constitution unwisely. For the process of the current Bill, the definitions needed to be forward looking. He agreed with the EFF and said calling the historical events theft was an understatement. There were massive, genocidal dispossessions which took place and some form of redress was needed.

He said the Bill was not empowering the Minister of Public Works to delegate expropriation responsibilities, the political decision would be made by the Minister of Public Works or by any other current Minister, Premier or municipality. No other official would have power to expropriate, only one of these political officials. With regard to compensation, he indicated that Clause 17(4) allowed for compensation to be paid later if parties agreed or by a court ruling. He said the Bill was very much about upholding constitutional democracy.

Mr Kruger responded that land reform was of utmost importance to the country, and the Constitution as a transformation document allowed for this to be achieved through various processes. The CCR’s view was that the Expropriation Bill was only one tool but the process should not be misused for the purpose of restorative justice. With regards to the CCR’s concerns around the property and the public interest clause, he said it might be feasible to incorporate the constitutional wording into the Bill. He said the current wide scope which was left open for interpretation was a serious concern. He reassured the Committee that the CCR fully supported the Bill of Rights and the Constitution as a whole.

Mr Ndlozi said he did not want the presenters to leave with the impression that Members of Parliament, in asking their views on certain ideological matters, were attacking them. Members were simply looking to share ideas on how the whole country could work together.

National African Farmers Union submission
Mr Ronald Lemola, attorney at Ndobela & Lamola Inc, represented the National African Farmers Union. He said the difficult history from which South Africa was coming needed to be acknowledged. Section 25(2)(b) of the Constitution that said expropriation should be subject to compensation did not allow the country to achieve the objectives of the Bill. What was just and equitable compensation, how would this be defined? Would this be defined according to the market value? The Bill needed to deal with these questions, together with the question of acquiring land without compensation. The Expropriation Act needed to achieve equitable access for a new generation to access land and to assist in incorporating young people into the economy. Certain aspects of the Bill needed further discussion.

Mr Ivan Ka-Mbonani, Attorney at Ka-Mbonani Inc, said the Apartheid Government enacted various pieces of legislation in order to dispossess African people of their land. Some of these racially discriminating laws were: the Land Act of 1913, the Urban Areas Act of 1923 and subsequent amendments to it and the Native Trust and Land Act, 1936. These are some of the primary laws directed against the African population. The effect of these Acts was that only approximately 8% percent of South Africa’s total land area was set aside as “native reserves”. It was extremely concerning that 21 years into democracy these consequences have not been reversed and that current laws still left in place very deep racist patterns of land and property ownership in the country.

Section 25(2)(b) of the Constitution states that expropriation must be subject to compensation. The compensation must be determined in one of the following way. Firstly, the compensation must be set by agreement between the affected parties, secondly where agreement cannot be reached, a court must either decide or approve the compensation formula. The submission emphasised that the court cannot both decide and approve the amount of compensation. In this regard, the recommendation was that the executive authority be empowered to decide on the amount of compensation to be paid to the expropriatee. The role of the courts should be limited to approving the compensation decided by the expropriating authority. Section 25(3), as it stands, did not provide an adequate algorithm for computing compensation when expropriating property.

Expropriation was an important tool which government could use for important purposes in the public interest such as provision of utilities, land settlement, land reform and more importantly, to allow people who were previously disadvantaged to speedily access South Africa’s natural resources, so that their lives can change. The powers of the Land Claims Court should be extended to deal with all disputes arising out of expropriation matters.

Discussion
Ms Dreyer asked for clarity on whether the submission was proposing to give government more powers in making decisions about expropriation and compensation, limiting the role of the courts. Government would then have more power over individual citizens. If this was the proposal, this was a very dangerous proposal, putting the rights of citizens at the mercy of a big authoritarian government.

Mr Sithole said, according to the submission, compensation should be set by agreement between the affected parties; where an agreement could not be reached, a court would approve the compensation formula. Clause 21(a) of the Bill indicated that a court, in the absence of agreement, would resolve any issue between the expropriation authority and the expropriation owner or holder and any agreed upon compensation would be paid by the expropriation authority. What kind of formula was the submission referring to?

Dr Groenewald said the submission made a lot of recommendations; one was that there should be no private land; all land should reside with the state. Was this the correct understanding of the recommendation? Another recommendation was that government should expropriate illegally acquired land without compensation; what was illegally acquired land?

Mr Steenhuizen shared the Members’ concerns with the submission. It seemed as though the submission was looking for a constitutional amendment, something the Committee was not empowered to make. The Committee could not pass any legislation which was in conflict with the Constitution. He indicated that the submission was suggesting that the executive authority should be empowered to decide on the amount of compensation to be given to the exproprietee. The courts only role was to approve the compensation decided upon by the expropriation authority. This was unprecedented because it suggested that the rights of the expropriatee to challenge this and to make submissions to court were being taken away. History has proven that the executive authority did not always know what was in the country’s interest and this was where the court’s role of adjudicating came in. Section 33 of the Constitution ensured that all citizens were entitled to just administration and their proposal would limit the rights of the citizen. The assumption that the submission was making was that the executive authority was an unbiased player in the transaction and this was not the case. The state was looking to pay the least amount of money for compensation especially because government funds were limited. Government was not an impartial player in such transactions.

Mr Ndlozi welcomed the submission. He supported the recommendation of expropriating without compensation. He said this would be great if it was coming from the government of the day or from the African National Congress (ANC). The question of expropriation in the public’s imagination spoke to the illegality of the institutions of apartheid and colonization. He agreed that the reach of the submission went beyond the mandate of the Expropriation Bill. The Land Act of 1930 meant a lot of land was acquired by the apartheid government unjustly. With regard to their proposal that the majority of land should belong to the state, he asked that more clarity be provided to the Committee on this matter. What did this exactly mean and what was the purpose of this?

Ms Masehela said the submission indicated that if the land was not adequately used, the state would “terminate the lease”; what did terminating the lease mean? More clarity was needed on this statement.

Mr Filtane said the two interests stated in the Bill needed to be treated differently; these were ‘public interest’ and ‘public purpose’. One seemed to overcrowd the other. He said the submission given was clouded because the two presenters had openly associated themselves with the ANC. He referred to paragraph 2.14 of the submission and said it openly glorified the ANC versus the white minority, and this undermined the whole submission. How did the presenters expect government and interested parties to make an equitable and just offer to take over private land?

Ms Adams referred to paragraph 2.11 which suggested that a body be created to advise the expropriating authority on matters which required attention of the expropriating authority. Could clarity be given about this?

Mr Lamola responded and agreed that the Committee did not have powers to amend the Constitution, However the Committee could not speak about expropriation without speaking about Section 25 of the Constitution. With regard to the ownership of private land, he said the Constitution protected these rights. However land needed to be made available for equitable redress. The state should therefore be able to expropriate land which was in private hands for the public interest. For example, there were a number of young people who wanted to be farmers but they could not access land. A lot of compromises were made during the CODESA negotiations.

Mr Ka-Mbonani responded to the question on whether the submission was proposing to limit the role of the courts by giving the Minister more power. He said the submission was not seeking to limit the role of the courts. Section 25(2)(b) said compensation was subject to the amount which had been agreed to by those affected to be decided and approved by the court. The submission suggested that the decision to decide compensation which was just and equitable reside with the executive. When the person was not satisfied with the amount, they could then approach the courts. Clause 21 of the Bill states that in the absence of agreement between the executive and the expropriate, they could then go to court for a decision. However the courts were not best suited to decide, they should only approve. With regard to minimum compensation, certain property required for public interest should be expropriated without compensation or with very minimal compensation, depending on the nature of the public interest. The submission was concerned that the chunk of the land in South Africa was not in the hands if the state. The state needed to own land on behalf of its people. The majority of the land should therefore be expropriated to the state, while still allowing some land to be owned privately. The majority of the land needed to be owned by the state. The submission was simply calling on a debate on a possible amendment of the Constitution. The manner in which Section 25(3) was constructed did not assist the executive or the courts in arriving at a just and equitable compensation.

Chairperson thanked the presenters for their submission. All the views would be taken into consideration during the Committee’s deliberations.

Afternoon session
Banking Association South Africa (BASA) submission
Mr Pierre Venter, BASA General Manager, stated that BASA had had to exert a certain pressure in order to be allowed to present. He argued that the Expropriation Bill had thus far been assessed as not beneficial to the banking sector by both the Parliamentary Finance Standing Committee and the South African Reserve Bank. He reminded the prevailing importance of maintaining, at the national level, a constant balance between the state, its powers, its security and the interest of individuals and actors of the private sector. He quoted in this regard the paper on Best Practice for the Compulsory Acquisition of Land by the UN Food and Agriculture Organisation (FAO), which warns that the power of compulsory acquisition can be abused. 

He reassured the Committee that BASA was broadly supportive of land reforms and the different governmental initiatives aiming at the reduction and challenge of past inequalities. 

He suggested four critical themes of needs for the Bill, namely the alignment to international norms and the Constitution, the completeness of definitions, the protection of the rights of owners and holders of registered and unregistered rights, and the principles of equity and justice to provide underpinning support for owners and holders of rights.

Mr Venter said that the Preamble of the Bill should be aligned with section 25(4)(a) of the Constitution, restricting the definition of property to land reform and equitable access by all to South Africa’s natural resources such as land or water. Similarly, the Bill should be aligned to relevant international norms and standards, and for this to be restricted to real rights in respect of immoveable property and natural resources. It is in this regard that the inclusion of personal rights and disrespect of international conventions could have an adverse impact on international investments into South Africa, including trade in the South African stock and bond markets. He thus recommended that the definition of ‘property’ should be restricted to “real rights” in property only and to equitable access to all South Africa’s natural resources.

The Bill’s definition of ‘public interest’ needed to be in tighter alignment with the Constitution, notably in order to prevent the occurrence of third party transfers that would benefit a private person but not the public. He recommended that ‘public interest’ within the Bill should be restricted to land reform and to reforms that bring about equitable access to all South Africa’s natural resources, in line with section 25(2) of the Constitution. It additionally ought to be restricted to consumptive and non-profit purposes. He argued that the notion of ‘public purpose’ required a similar constitutional realignment. 

He stated that Clause 8(1) provides for the expropriating authority to unilaterally decide whether to expropriate a property, which unfairly and unjustly prejudices the expropriating owner while clause 21(2) also protects the State against misguided objections. Consequently, Mr Venter recommended that where disputed, the final decision to expropriate a property should vest with the courts who should consider whether the state has demonstrated the need for expropriation in terms of public interest and public purpose, as well as the amount of compensation to be paid.

In the determination of compensation, he asserted that should the compensation paid by the expropriating authority be less then market value, in some cases loans would exceed the compensation amount paid and financial institutions and owners would suffer a loss. He warned that in turn, inadequate management of credit risk can lead to systemic consequences for the economy and financial system as evidenced by the global financial crisis. A critical consequence of the Bill would be a negative impact on the stability of or losses suffered by commercial banks, which would ultimately result in trends of food instability, job losses and financial exclusion.

Mr Venter referred to the 18 October 2012 policy framework for land acquisition and land valuation in a land reform context and for the establishment of the Office of the Valuer General, which had been approved by Cabinet. He quoted from this document that the market value of property should be aligned with the international definition and be interpreted to exclude prices paid by Government as evidence for market value, which would have the immediate effect of aligning prices paid by Government with private lenders. He criticised the change to “just and equitable” compensation in the Bill which would have negative implications on the collateral value of the existing debt. He urged the Committee to empower the Government to automatically guarantee the difference between “just and equitable” compensation as contemplated in section 25(3) of the Constitution and market value.

Mr Venter referred to clause 17(2) of the Bill that provides for only 80% of the compensation to be paid on the date of expropriation or a date agreed to by the parties. There is no explicit reference as to when the balance would be paid, this does not reflect a “just and equitable” position to expropriated owners or holders of registered or unregistered rights, as it is unfair for individuals to be deprived of property and further be deprived of payment by the State.

He recommended that the full amount should be paid as at the date of expropriation. Where all parties agree to 80% only being paid at date of expropriation, the balance should be paid within 12 months, while this should be cross-referenced to clause 13(1) of the Bill. Additional compensation based on the average income foregone should be paid pro-rata for the period of late payment. 

With regards to mortgage bonds, he stated that clause 18 of the Bill provides for property subject to a mortgage bond or deed of sale, while clause 8 of the Bill makes it clear that if land in which unregistered rights exist is expropriated, the expropriating authority must offer compensation for both the land and the unregistered right. However the clause is less clear in the context of mortgage bonds specifically in relation to clause 8(3)(g), as this clause does not compel the expropriating authority to offer compensation to the holder of a mortgage bond over the property in respect of the termination of his rights under the bond. 

Mr Venter hence argued that not to offer compensation to a mortgagee would result in the applicable provision being unconstitutional as it would contravene section 25 of the Constitution. He strongly recommended that the expropriating authority must offer compensation not just for the property but for the mortgage bond as well, while the total amount offered should be divided between the property owner and the mortgagee, in accordance with factors listed in clause 12, the payment of mortgage bond first and the ability to refer to courts in the case of a compensation dispute. He advised that clause 21 of the Bill should provide a swift alternate dispute resolution mechanism option that parties may voluntarily agree to, as dispute resolution through the court is both costly and protracted. Recommendations by BASA also included that in clause 26(1) and clause 9, the Bill needs to provide that the Deeds Office should receive Notice of Expropriation as contemplated in the Deeds Registries Act 47 of 1937. Furthermore, this should be captured and maintained in a publicly accessible register, otherwise credit providers would be adversely affected, notably between date of intent to expropriate and actual expropriation. Clauses 7, 8 and 9 should include the need to advise “registered rights” holders of the intention, notification and amount of compensation to be paid, while clause 23 would need to define who pays for the costs for cancellation of an expropriation and how one would reinstate a mortgage bond.

Mr Venter concluded by expressing BASA’s concerns that the Bill could have both economic ramifications for South Africa and systemic implications for financial institutions, as banks are compelled in terms of local and international regulatory frameworks to use market value as the basis of determining security held in support of loans, mortgages and other forms of acceptable security. Similar concerns arose with regards to the Bill’s potential for the dilution of property rights. He again emphasised the importance of avoiding the discouragement of both local and international investment, while highlighting the importance of protecting the South African banking sector. 

Discussion 
The Chairperson thanked Mr Venter for his constructive input on behalf of the South African banking sector and of BASA in particular.

Ms A Dreyer (DA) expressed her concerns with regards to the definition of ‘property’. She briefly referred to the First National Bank (FNB) case and emphasised that current legislation was not clear on the matter, while it was not the courts’ role to provide such a public definition. 

She directed her questioning towards the matter of bonds and mortgages as highlighted in the submission, and asked what would happen if the latter would not receive enough compensation to cover their respective costs. 

Mr M FIltane (UDM) directed his questioning towards the notion of international norms to which Mr Venter referred in his submission. He asked how would such norms be localised. The notion of international norms often does not take into consideration African realities. To which precise norms did BASA refer? 

He pinpointed a similar lack of clarity with regards to the notion of market value associated with the compensation for expropriation. He asked whose value this was, and which actor would undertake this evaluative process. There existed myriads of different valuation systems. He questioned how one could know with assurance which mechanism was the most just and fair, as values tend to fluctuate significantly in the short and long run. Values do not necessarily drop as the result of government intervention and in this case of land expropriation. 

He referred to page 22 of the BASA submission, stating that it was the property owner’s duty to make sure that the property’s value was optimised, for this was not the government’s role to do so. 

He agreed with Mr Venter on clause 21 which suggested that the Bill should provide a swift alternate dispute resolution mechanism that parties may voluntarily agree to, as dispute resolution through the courts are both costly and protracted.

Dr P Groenewald (FF+) expressed his concern about clause 18 of the Bill, stating that the property would be taken too early in the process of expropriation, and that a substantial extension would be necessary. 

Mr K Sithole (IFP) thanked Mr Venter for his highly enlightening submission. He asked with regards to page 8 of the submission, what the notion of only “real rights” in property corresponded to. He asked for an accurate description of the concept of property rights. 

Mr Venter replied that real rights designated both movable and immovable properties, while excluding intellectual property. The notion of ‘public interest’ was clearly defined by international norms, and that South Africa ought to define it in similarly accurate terms, in order not to scare investors away. 

Mr Venter acknowledged the intrinsic fluctuation of market values, which he described as primarily shaped by forces of demand and supply. Additionally the market value of land was influenced by the values of neighbouring properties, while in the case of a farm, additional agents ought to be taken into consideration such as the presence of water and the farm’s production capacity, amongst others. 

With regards to the general assumption that the expropriation process would necessarily decrease the value of a given property, he expressed a certain scepticism towards the validity of this statement. He argued that if the process was undertaken in a comprehensive and constitutional manner, it could not bear any impact on the asset’s value. 

He addressed Ms Dreyer enquiry and stated that if the value of compensation was less than that of the actual loan, the bank would still pursue the initial loan value, thus placing the expropriated land owner into a complicated position. He emphasised that land could not be expropriated independently from a mortgage bond associated with it, and that the process should occur in a holistic manner. 

Dr Groenewald asked if he was a land owner who had contracted a loan, he would still liable for this loan even after the expropriation’s occurrence, thus causing a substantial loss for him. 

Mr Venter confirmed Dr Groenewald’s supposition and he explained that such a case could easily occur with the present Bill. 

Mr Jeremy Cronin, Deputy Minister of Public Works, indicated that since 2013, the Department had been working with the banking sector in the crafting of this Bill. He acknowledged the need for balance. The Expropriation Bill sought equilibrium between public purpose and the interest of the South African individual. He added that the present process was part of the broader scheme of empowering transformation within the constitutional framework. He indicated that certain warnings from the Constitutional Court had provided the Department of Public Works with a strong incentive to further align the Bill with the Constitution. 

Deputy Minister Cronin specified that the Expropriation Bill was a law of general application, which did not seek to target specific citizens. Nonetheless, even within the realm of general application, one ought to remain careful to ensure the constitutionality of the process. He referred to the recent case of Shoprite-Checkers which sought justice from the Constitutional Court. He argued in this instance that members of the court had been divided during the process of jurisdiction, and compared this situation to the one of the DPW where officials were similarly divided with regards to the precise definition of the notion of property. 

He argued that the influence of the state, particularly through investment, also bore a significant impact on different asset values. He referred to the case of the Gautrain, which saw the value of the neighbouring properties of the development rise considerably.

He suggested the possibility that certain property would receive compensation at a rate of only 80%, while each case would in practice be characterised by a long period of time between the expropriation and the acquisition of the land asset. 

Mr S Masango (DA) stated that if judges could not agree on the definition of property, it would prove to be a major issue for the practice of the courts and the constitutional application of the Expropriation Bill.

The Chairperson indicated that such a concern had been noted and would be addressed. 

Deputy Minister Cronin said the Expropriation Bill was likely in the steps that followed to be crafted to include mortgages as components of the compensation scheme. He reassured Committee of the Department’s commitment to provide comprehensive and accurate definitions, in order to prevent any form of arbitrary expropriation. 

Webber Wentzel (WW) submission
Mr Ben Winks, Associate at Webber Wentzel law firm, noted that the notion of land expropriation exists in most countries in the world. 

He said the Expropriation Bill took impressive strides towards a more uniform and procedurally fair expropriation regime than the current Expropriation Act of 1975. He described the Bill as limiting individual discretion, referring to the bestowing of allocating power to the Minister of Public Works. Although a certain sense of improvement was acknowledged, he pinpointed an insufficient clarity regarding which authorities may request the Minister of Public Works to expropriate property.

He additionally described as constitutional inconsistencies the insufficient direction about the date on which ownership and possession pass to the state, the insufficient direction about the determination of compensation, the unfair burdening of responsibility of the property right holder with the onus and costs of approaching a court to decide on compensation and finally the undue scope for delay in determination and payment of compensation. 

He asserted that the current Bill could potentially result in an unfair and one-sided system, and therefore praised the importance of aligning the instruments of state power with the Constitution. He appraised the constitutional inconsistencies as easily remediable, through a succession of relatively minor amendments. 

Mr Winks referred to clause 3(1)(a) and suggested as a remedy to the lack of constitutional alignment, the fact that the Minister may, subject to the obligation to pay compensation which is just and equitable, expropriate property for a purpose connected with the execution of his or her mandate or upon request by another expropriating authority, and not any organ of state as stipulated in the Bill. 

In order to comply with the Constitution, Clause 7(2) which addressed the notice of intention to expropriate, should rely on a statement of the intention to expropriate the property, including the date or dates on which it is intended that ownership and possession will pass to the expropriating authority, a full description of the property, a short description of the purpose for which the property is required and the address at which documents setting out the particulars of the purpose may be obtained during business hours, and finally the reason for the intended expropriation of that particular property, as well as the reason for the particular date or dates on which it is intended that ownership and possession will pass to the expropriating authority.

He then targeted clause 8(3) as lacking guidance for expropriating authorities, thus recommending that the notice of expropriation contain the date of expropriation, which shall, unless otherwise agreed, be no earlier than ninety days from the date of such service, and no later than ninety days after the date of expropriation or, as the case may be, the date from which the property will be used temporarily while also stating the period of such temporary use.

Mr Winks noted the inconsistency of clause 12(2) which failed to provide comprehensive guidelines to the expropriating authorities in order to convey the expropriation process in a just and equitable manner, ensuring appropriate compensation. He suggested as remedies to this worrying absence of procedural mechanisms that in determining the amount of compensation to be paid in terms of this Act, the expropriating authority shall request and accept the determination of the value of the property from the Office of the Valuer-General in terms of section 12(1)(b) of the Property Valuation Act (No 17 of 2014): Provided that, if such determination is not practicable, the expropriating authority shall adopt the market value of the property as determined by a valuer, subject to the subtraction there from of any amount by which the claimant would be unjustly enriched.

The offer of compensation as described in clause 15(3) similarly ought to be more aligned to the Constitution. In this instance, unless the expropriating authority and the claimant have agreed otherwise, the expropriating authority must be regarded as to have accepted the amount claimed by the claimant in terms of section 14(1), if the expropriating authority fails to make an offer in terms of subsection (1) or, having made such offer, fails to institute legal proceedings for the determination of the compensation before a date stipulated in such offer, provided that the said date may not be a date later than 60 days from such offer.

The actual payment of compensation in clause 17 of the Bill was also  potentially unconstitutional, thus requiring as an amendment that an expropriated owner or expropriated holder is entitled to compensation payable, subject to sections 18 and 19, on the date of expropriation, that the expropriating authority must pay, on the date contemplated in subsection (1), not less than 80% of the amount or offer of compensation as stipulated in the notice of expropriation, to the claimant concerned; and that the amount so determined as compensation is less than the amount paid, the claimant to whom or on whose behalf the last-mentioned amount was paid must refund the difference to the expropriating authority together with interest at the rate contemplated in section 13(1) from the date on which the amount was so paid.

With regards to the role of the court in the expropriation process and potential disputes associated with it, Mr Winks recommended that the Land Claims Court must, in the absence of agreement, determine any dispute between an expropriating authority and an expropriated owner or expropriated holder on the compensation to be paid on any property expropriated by an expropriating authority. He moreover stated that the claimant party shall bear their own cost only in cases where the compensation awarded by the Land Claims Court is equal to or less than the amount last offered by the expropriating authority. The court ought to be able to decide for the compensation to its own discretion in the cases of abuse by the claimant or party or any form of abuse for instance. 

The final proposed amendment was to clause 24(1) on the service of documents as part of the expropriation process and notification. He suggested that the original or a certified copy of the expropriation notice must be delivered or tendered to the addressee personally at his or her residential address, place of work, place of business or at such address or place as the expropriating authority and the addressee may, in writing, agree upon. Options of posting by pre-paid registered post to the postal address of the addressee or publishing the given notice in the manner contemplated in subsection 2 were also accounted for as strong recommendations to enhance the constitutionality of the Bill’s service of documents. 

Mr Winks noted the challenge of the High Court’s volume of cases, where a case easily takes three years to actually begin and even six years to reach an end. He argued that the High Court might not be equipped to effectively apply this jurisdiction, while it may as well rely on a jurisprudence lacking coherence. He subsequently referred to the Land Claims Court as much more consistent and uniform, yet requiring a significant increase in its budget and capacity. 

The Chairperson thanked the Webber Wentzel representative for his constitutional enlightenment on the Bill. 

Discussion 
Dr Groenewald assessed the submission as highly technical. He asked Mr Winks if the Bill would be rated as unconstitutional if the Committee failed to comply with the WW proposals and initiate a significant shift of the Bill towards a greater constitutional alignment. 

Mr Masango observed that provincial and municipal levels of government were not referred to in the submission. He enquired as to the reasons for this exclusion and to which extent their authority ought to play a role in the expropriation process. 

Ms E Masehela (ANC) sought confirmation on whether the Minister would act of behalf of the different organs of state mandating him to initiate expropriation processes. 

Mr Filtane referred to clause 3(1)(a) and asked why WW would praise limitation of the allocating power while the state should actually create new organs with a more appropriate and comprehensive ability to refer cases to the Minister. 

He suggested with regards to clause 21 and the determination of dispute by courts which could be easily overwhelmed, the establishment of new institutions with similar powers to that of courts, in order to effectively enforce the Bill’s mandate. 

Mr Filtane additionally argued that the process of compensation should be shaped to a great extent by its ability to provide the land owner with the capacity of buying a property similar to the expropriated one, within a given area for instance. 

The Deputy Minister thanked Mr Winks as well as Webber Wentzel for its constitutional inspection of the Bill. He referred to clause 3(1)(a) and acknowledged that the notion of an organ of state was rather vague and represented clumsy drafting, which would wrongly enable any public entity to approach the Minister on the matter. He hence stated that the mandate would require to be partially redrafted. 

He similarly conceded the importance of producing accurate timelines. He indicated that the Department would seriously consider the eventuality of reinforcing the Land Claims Court. He however expressed his belief that DPW should not interfere with the judiciary process of the courts, and for instance the determination of compensations in the case of a dispute. 

Mr Winks thanked the Committee as well the Deputy Minister for engaging in a critical appraisal of his submission. He reasserted the importance of developing an appropriate court system that would support the Expropriation Bill, for a failure to do so would weaken the Constitution and its enforcement. 

He emphasised with regards to the expropriation authorities that the Bill did not intend on designating the Minister as a proxy. This mandate should indeed not equip him with a mandate of individual discretion but rather ensure his information by governmental bodies. He referred to the responsibility of allocating the right
government entity to Parliament. He moreover claimed that this Bill would not enable the Minister to delegate past expropriations.

Mr Winks then addressed the questioning of whether expropriation disputes should be arbitrated by a court or another institution. Different countries had diverse judiciary agents to address the matter. For example, Botswana had created a specific board facilitating the discussion and the resolution of disputes. However in the South African case, the Constitution explicitly designated courts for the purpose of resolving disputes linked to expropriation. He explained to the Committee that such an allocation of authority was necessary to sustain the division of power in the country, and ensure the democratic nature of the system. 

He argued that the DPW’s experience was key to the process of developing informative guidelines and ensure the comprehensiveness and coherence of the Expropriation Bill. He expressed his surprise at the Deputy Minister’s presence at the meeting, which he described as an indicator of the Department’s strong commitment. 

The Chairperson thanked Mr Winks for his substantial input to the discussion. 

Southern African Catholics Bishops Conference (SACBC) submission
Mr Mike Pothier, Research Coordinator for the Catholic Parliamentary Liaison Office of the SACBC, indicated that the Catholic Church held to the principle of the universal destiny of all goods, although private property must be respected at all times, and there can be no arbitrary dispossession of property, for all forms of property ownership exist within a given context. He however stipulated that this right to private property must never be exercised to the detriment of the common good and of the community. 

Mr Pothier expressed the SACBC’s belief that the proposed legislation will, for the most part, enhance the ability and capacity of the state to secure property necessary for the implementation of just and fair policies for the public good, yet he also mentioned certain reservations about the proposed changes. 

He criticised the excessively broad, and therefore potentially dangerous, definition of “public purpose”. He emphasised that the notion of expropriation was one of last resort which should not occur at a superficial level, which could potentially be the case with the open definition in clause 2.

Acknowledging that some of his points echoed arguments of the previous submissions, he referred to clause 5 and argued that the most fair process of evaluation of the property would be to rely on municipal rates valuations. Also most land assets generated certain rates of income, which in turn were subject to taxation. These taxes could be referred to as an indicator of compensation, for one could not possibly receive compensation which would be proportionally lower than the value of the asset. 

Mr Pothier then referred to principle of subsidiarity as core to the Catholic dogma, and praised the importance of allocating power to the right agents. He thus underlined the importance of restricting the scope of agency of state organs in their broad ability to delegate cases to the DPW and particularly to the Minister. He nonetheless repeated the importance of involving local levels of government, for most expropriations occur at the local level. He therefore stated that municipal government agents should be able to approach the Minister if necessary, as part of a trend of preserving municipal government’s capacity of action. 

With regards to the suggested expansion of the Land Claims Court, he argued that the Constitution envisaged that parties would reach an agreement, along the lines of section 25(2)(b), which would occur prior to resorting to a Court. He moreover asserted that one shall learn from other countries’ experiences, thanking Mr Winks for enlightening the Committee on the case of Botswana. 

Mr Pothier claimed that the timelines of the expropriation process ought to be significantly extended, particularly to allow an enhanced process of consultation and negotiation. He pinpointed the experience of changing homes as a traumatic one, where the individuals affected often required long periods of time to adapt to and overcome this brutal change. He referred in this instance to the case of “red ants” and of the human damage associated with this phenomenon. He assured the Committee that even though this extension of the time frames could potentially hinder the expropriation process, it was a necessary measure. He said that rather, the necessary extension of time frames should be a strong incentive for the expropriation process to develop plans with greater accuracy and begin such initiatives sooner. He stipulated that even in cases of alleged urgent expropriations, the Bill should ensure that compensation cannot be paid to a value below the legitimate one. 

Discussion 
Mr Filtane addressed Mr Pothier’s reference to municipal levels of governance and of their role in the process of expropriation. He asserted that although most municipalities did respect the law, it was not always the case and some of them failed to do so. He gave as an example, King Sabata Dalindyebo (KSD) Local Municipality, and stated that deficient local governmental units should not be involved in the process of evaluating the value of the expropriated asset. He also pointed to a lack of guidelines surrounding the expropriation process.

Deputy Minister Cronin repeated that the Bill was broadly aligned with the spirit of the Constitution, and would therefore not take away from municipal and provincial executives their capacity for expropriation. He added that municipal property ratings to which the SACBC had referred were often related to the asset’s market value. The latter was however described as one indicator amongst others which ought to be taken into consideration in the evaluation of the asset’s value. 

He indicated that the numerous criticisms directed towards the Bill’s appraisal of timelines had been taken into consideration and that these were likely to be re-conceptualised. He agreed with the stance of most submissions, and argued that the Expropriation Bill should ensure that communities would be allocated enough time to comprehensively engage with the process. 

He however reminded the Committee of the inclusion in the Bill of an urgent procedure of expropriation, characterised by a maximum period of 45 days to expropriate a given asset. However, such urgent measures were only to be implemented in times of armed conflict or major crisis. 

Business Unity South Africa submission
Mr John Purchase, Chief Executive Officer of the Agricultural Business Chamber and representative of the Business Unity South Africa (BUSA) introduced his organisation by summarising BUSA’s involvement as ensuring the contribution of the business sector to the process of South African development. He stated that most issues related to the Expropriation Bill had been accurately raised by the previous submissions.. 

He agreed with the importance of providing more accurate wording for most definitions contained in the Bill and therefore minimise the zones of uncertainty. He placed a particular emphasis on the concept of ‘public interest’, which ought to be aligned to the Constitution and the notions of justice and equity.

He asserted that expropriation was a drastic measure which places an inordinately heavy burden on particular individuals, and that if justice was to be done to those affected, the full extent of their consequential losses should be taken into account, not disregarded. He hence argued with regards to clause 12(2)(a), that BUSA disagreed with the fact that property that had been taken without the consent of the expropriated owner or expropriated holder should not be taken into account in determining the amount of compensation payable.

Mr Purchase referred to clause 13(1) and proposed that the interest rate payable on outstanding compensation should be the greater of the rate stipulated in the Public Finance Management Act (PFMA) or the interest rate payable on the property by the expropriated owner.

With regards to clause 17(2), BUSA was concerned about the withholding of 20% of the compensation amount for the payment of municipality property rates or other charges contemplated in clauses 19 and 20. He deduced from these sections the absence of guarantee that the State would not delay even further the compensation by proposing later dates for payment in its notice of expropriation. He pinpointed the option of challenging such a situation in court as facing many obstacles, particularly financial, for most individuals would find this last resort unaffordable. He further argued that payment delay by government was a notorious practice in South Africa that government itself has not managed to resolve. It was thus highly problematic that the Bill does not have any form of penalty for late payments, although this would appear as necessary given the current public sector inefficiencies.

Mr Purchase asserted that without these penalties, people affected by expropriation will suffer grave injustices as they may not be in a position to afford to go to court to challenge this process. He noted that some had gone as far as recommending that the penalty for government’s failure to make timeous payments should be the notice of expropriation becoming invalid, and he expressed BUSA’s support for such an amendment. 

He shared his disagreement with the Bill’s incorporation of historical factors into the evaluation of the compensation, while he criticised the lack of acknowledgment of the structural factors of the expropriation such as moving costs or the loss of future income. 

BUSA disagreed with clause 22(5) saying that it was the holder’s right to be compensated first. 

He concluded by saying that BUSA understood the country’s need for expropriation, but he urged the government to perform this process with the greatest caution and alignment with the Constitution. South Africa could not afford to adopt an Expropriation Bill that would work against investment promotion and growth. He warned that the Expropriation Bill in its current form was threatening to further hinder the already low investment climate and deter future investments.

Discussion 
Mr Filtane asked the extent to which BUSA considered that the present Bill would actually have a significant impact on the level of investment in South Africa. He asked for concrete justifications instead of the general pessimism developed by the private sector towards governmental initiatives. 

Ms Masehela expressed her disagreement with BUSA’s undermining of historical conditions and of not including the notion of land previously taken by force into the evaluation process of compensation. She referred to page 7 of the submission, and asked Mr Purchase to provide greater detail on his conceptualisation of penalties, particularly associated with payment delays. 

Mr Purchase began his response by stating that special circumstances should allow for greater delays in the expropriation process. He expressed his view that the most determining part of the process would be the actual implementation of the Bill, which would require a particular enforcement from the executive in the first place. He moreover argued that it was only if the Bill would fail to be properly implemented, that investors would receive negative signals. 

He then argued that historically stolen properties should somehow be taken into account in the process. 

He reiterated BUSA’s stance on penalties, arguing that the government had an extremely poor track record of paying on time. He thus described as a necessity, government’s duty to pay penalties to individuals in the case of a failure to honour their obligations in due time. 

The Deputy Minister expressed his agreement about Mr Purchase’s appreciation of the situation of foreign investors. He similarly argued that it was only a weak and inaccurate implementation of the Bill which would send a negative message to investors, indicating that such a situation would not occur. He stated that the EFF would take a much more radical approach to the matter, which would bear significantly more dramatic consequences. He however shared that he had received negative feedback in the potential scepticism of certain American investors. He hence expressed his hopes that BUSA would send a positive message to the business sector and support the Government in its expropriation initiatives. 

He assured the Committee and the different stakeholders of the Department’s commitment to maintaining a balance in expropriation. 

Concluding Remarks
The Chairperson thanked the Deputy Minister for his concluding remarks, as well as the different stakeholders for their enlightened input which enabled both Members of Parliament and Department officials gain a greater understanding of societal and private actors’ concerns about the Expropriation Bill. He indicated that the process of consultation was to resume on the following day. The meeting was adjourned.