Tuesday, July 29, 2008

Why the new Expropriation Bill is harmful

It is of concern to the real estate industry that any counteraction or protest about expropriations under the new bill will now have to take place after the property has been taken over by the state.

"The fact that counteraction now takes place only post expropriation will make it extremely difficult to oppose the state because, as we all know, these cases can be drawn out for years, during which time the owner could be without a home, a factory or without an income from his property," said Tony Clarke, managing director of Rawson Properties.

Drawing attention to a Milton Matsemela A
ttorneys' newsletter that discusses the bill, Clarke said that he agrees with the author that the individual's rights in South Africa, which should under our constitution usually take precedence over those of the state, appear now to have been sidelined.

Clarke said the background to the new bill is that the government always has had the right to expropriate private property provided that it was needed for a "public purpose" and provided that the state paid a genuine market-related compensation negotiated transparently with all parties.

"In practice, the words 'public purpose' were usually taken to mean 'public works', e.g. a road, a pipeline or a school.

Furthermore, those calculating the compensation had to take in
to account an exceptionally wide range of factors such as the history of the property, the length and time that the current owner or his family had possessed it, the improvements carried out during that time, the return the state could achieve on it and the sentimental or emotional attachment the owners might have to it.

In addition, the state was obliged to take 'reasonable legislative or other measures' to help the dispossessed owner to find an alternative property 'on an equitable basis' if he required it."

Under the new Act, said Clarke, the words 'public purpose' have been replaced by 'in the public interest' and many lawyers are undecided as to how greatly this could empower the state.

Nor, added Clarke, are they sure that the new clause relating to the 'market value' being paid for the property will carry much weight because, again, this value can only be disputed after the expropriation.

"This is particularly worrying, because the value will be determined solely by the expropriators without, it seems, reference to independent consultants or valuers or the current owner."

Clarke said that the impression that many lawyers no
w have is that the state is seeking seriously to limit the courts' ability to delay or prevent expropriations.

Quoting from the Milton Matsemela document, Clarke said, "By excluding the courts' power to determine whether expropriation is truly in the public interest or not, the government has effectively, in a disturbingly immoral fashion, exploited the vagueness of the constitution on these matters and have given themselves virtual carte blanche."

Again referring to the Milton Matsemela report, Clarke added that because the state still has to pay "real money" for any expropriation, they would be very limited in their ability to carry out these on a large scale.

The bill is, therefore, likely to be applied almost exclusively in the cases of land reform.

"It seems clear that, unlike certain countries to the north of South Africa, the ANC are highly aware of the value of direct foreign investment and the benefits of being viewed globally as a capitalist economy. It is highly unlikely, therefore, that property rights will be seriously affected by this new bill, despite its ap
parently increased powers," said Clarke.

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