Compensation for Expropriation Under the Constitution
349 Pages Posted: 9 Jul 2014
Date Written: April 1, 2009
Since the advent of constitutional democracy in 1994 South African courts have been faced with new interpretive imperatives. The courts have to reevaluate existing legislation with reference to the Constitution, as well as interpret the Constitution itself. Section 25 of the Constitution, "the property clause", is a telling example of this kind of provision. It protects property rights but at the same time provides for the expropriation of property, as long as such expropriation is duly authorised, is for a public purpose or in the public interest, is procedurally fair and provided that "just and equitable" compensation is paid. "Public interest" includes the nation’s commitment to land reform.
Pre-constitutional expropriation law benchmarked market value as the fore-most determinant of compensation. This gave rise to a legal culture dominated by the belief that payment of an amount equating the market value of the property was the best way of duly compensating a property owner. The Constitution, however, lists market value as but one of several factors that need to be taken into account when compensation is calculated, and shifts the interpretive focus from the notion of "market value" to what would be "just and equitable" compensation in the particular circumstances of each case. The law regarding compensation for expropriation has therefore changed, but the legal culture seemingly not. If compensation is going to continue to be paid at market value in the land reform context, transformation is not going to succeed because the acquisition of land for land reform purposes will become too expensive. This raises the following question: Can section 25(3) of the Constitution together with related constitutional as well as statutory land reform measures, construed in a particular manner, have a transformative impact on land reform and, eventually, on the broader socio-economic reality in South Africa?
This question is answered affirmatively, and this dissertation endeavours to provide guidelines to construe relevant constitutional provisions and applicable legislation in a transformative manner. It does so, first, by looking at pre-constitutional expropriation law in order to give a picture of the conventional legal culture of expropriation. The impact of the Constitution on expropriation law since 1994 is then assayed, concluding that constitutional democracy has had but a limited impact in this area due to the persistence of a legal culture placing too much emphasis on existing property interests and too little on transformation. A comparative perspective with reference to Germany, the United States of America and Australia is put forward in order to offer alternative angles on the compensation question. This is followed by a theoretical consideration of the question why compensation is paid, what is compensated, when compensation is due and how much is to be paid. This leads to a conclusion providing guidelines for an interpretation of compensation for expropriation provisions which is more transformative than existing practice.
Keywords: compensation, expropriation, constitution, South Africa
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