I have said and written much about the Expropriation Bill of 2020, which will likely become the Expropriation Act of 2021 sometime this year. In this article I would like to focus on one particularly troubling aspect of the proposed legislation: Its conceptualisation of ‘abandonment’, especially as it relates to expropriation without (or for ‘nil’) compensation. The implications of this for property owners are potentially dire.
The bill
Section 12(3)(c) of the bill provides:
“(3) It may be just and equitable for nil compensation to be paid where land is expropriated in the public interest, having regard to all relevant circumstances, including but not limited to —
(c) notwithstanding registration of ownership in terms of the Deeds Registries Act, 1937 (Act No. 47 of 1937), where an owner has abandoned the land by failing to exercise control over it;” (my emphasis)
Prior to the bill
Although I have always opposed the introduction of a legal regime of expropriation without compensation into South African law, I have been less critical of it provided two circumstances obtained: 1) Property that is owned by the State, or 2) Abandoned property.
If either of these two types of properties were to be ‘expropriated’ without compensation, I would offer no objection. The reason is simple: There is no victim and no harm. The State has no rights, only powers, thus its property being expropriated by another organ of State is at worst a value-neutral occurrence, and at best, beneficial. And an owner who has abandoned their private or personal property is not harmed if that property were to be ‘expropriated’. Indeed, it would not legally qualify as expropriation, as abandoned property is unowned. A person cannot be aggrieved if something they have decided to abandon is taken by someone else.
I have argued this position for many years, and in principle, stand by it.
The problem with abandonment in the bill
The Expropriation Bill, however, does something very clever, but quite nefarious. All South Africans should be concerned about this innovation.
The way I understand South African property law (which I freely admit is not my field of expertise), property will be considered ‘abandoned’ if:
- The owner no longer controls the property (they are failing to exercise dominium over it); and
- The owner no longer has the manifested subjective intention to own the property (they no longer want it, and this is clear to a reasonable person).
Both these reasons make sense. Just because someone does not control their property does not mean they have abandoned it. They might simply be locked out of their property, or might have been unlawfully or mistakenly evicted. Furthermore, if one still controls property that they no longer wish to own, that also cannot mean the property has been abandoned. Putting up a “for sale” sign is a clear indication that someone no longer wants a particular property, but they have not yet decided to end their relationship with the property.
In Reck v Mills & Another, the Appellate Division noted:
“… volgens ons gemene reg word eiendomsreg oor ‘n saak deur derelictio verloor wanneer ‘n eienaar sy saak prysgee of abandonneer met die bedoeling om nie meer eienaar daarvan te wees nie.”
Section 12(3)(c) of the Expropriation Bill removes the latter requirement. It states, for the purposes of expropriation without compensation, property will be regarded as abandoned if the owner simply has failed to exercise control over it.
Nefariousness
Of all the problematic clauses in this bill, including various that could be regarded as malicious, I rank section 12(3)(c) as perhaps the worst offender. To me, it indicates an underlying agenda that amounts to fraus legis – a fraud on the law.
Imagine that government has identified a piece of property it wishes to expropriate without compensation. Say, the headquarters of Discovery Health in Sandton. The bill provides that only “land” may be expropriated, but if the Constitution Eighteenth Amendment Bill is enacted into law, land will include the “improvements” on the land, which would include buildings. The government wants Discovery’s headquarters because it wants a nice, shiny new head office for the National Health Insurance’s administrators.
But to expropriate this particular plot of land and the building that stands atop it would likely cost government tens of millions of rands, and there would be no real basis for government to try to negotiate the price down from market value. Government, therefore, has a clear interest to rather expropriate it without compensation.
Several weeks later, ten full busses arrive outside Discovery headquarters. The hundred or so red-clad occupiers disembark and proceed to violently make their way into the building, pushing security aside. They pull fire alarms, create smoke, or spill their faeces (this has happened before) around the building to ensure everyone inside leaves. Once they have succeeded in clearing out the building, they ensure nobody else – the police included – gains entry again. They claim they have seized the property from ‘White Monopoly Capital’ and will not disperse unless housing is provided to some nondescript community elsewhere in South Africa.
At this point in time, Discovery can no longer exercise any control over their property. But they certainly intend to remain the owner.
Government plays along, half-heartedly negotiating for the occupiers to hand control back to Discovery. This fails – the occupiers remain at Discovery’s headquarters for a month.
The government announces that it has exhausted all reasonable avenues for bringing the situation to a resolution. But Discovery intends to continue agitating for the return of its property; government shrugs its shoulders.
Some time later, once the media storm has died down – and many of the occupiers have started returning home, leaving only a small core occupation force – the Minister of Public Works and Infrastructure quietly publishes a notice in the Government Gazette and informs Discovery that the property has been targeted for expropriation without compensation, by reason of abandonment.
Discovery can, and likely will, challenge this in court for some time to come. But assuming the courts adopt a formalistic approach (and it is hoped they will not), it will be concluded that government has acted entirely lawfully and intra vires. The expropriation will be condoned, and the National Health Insurance administrators will move into their new head office within weeks. The red-clad occupiers will be gone.
What has happened here – which is entirely plausible and conceivable in terms of the Expropriation Bill – is that government deployed a third party, on its behalf, to occupy the premises. This is definitely illegal, but the chances of Discovery or anyone else proving it are negligible. The owner of the property was unlawfully evicted, and the government then used the unlawful occupation as a pretext to argue that the owner had abandoned the property. This allowed it to expropriate without compensation.
Fraus legis, briefly, means that one has done something indirectly which they are not allowed, by law, to do directly. The Expropriation Bill does not allow government to force the abandonment of property, which is what would sooth the concerns of most people (after all, they will never “fail to exercise control” over their property, so what is there to worry about?). But government has achieved the same end indirectly. If government’s ploy is discovered, fraus legis would be part of the argument against government’s conduct.
Conclusion
Whether making this type of event possible is government’s direct intention or not is irrelevant to the fact that this is what section 12(3)(c) of the Expropriation Bill will allow in practice. To me, it is quite evident that this is government’s agenda, because whoever wrote the bill – a property law bill – is well aware of the common law definition of abandonment. Indeed, the previous version of the Expropriation Bill, from 2018, had a similar provision to section 12(3)(c), which provided property would be expropriatable inter alia “where the owner of the land has abandoned the land”. This would have retained the ordinary common law definition of abandonment, which would have required the owner to no longer have the intention to own the property.
Thankfully, I do not believe the courts will easily go along with the kind of situation described above. But this is no reason to rest assured. It remains a profound threat to the Rule of Law to allow legislation to contain provisions so obviously inconsistent with the text and spirit of the Constitution and of constitutionalism, even though it might never be enforceable. The Expropriation Bill needs serious revision.
“… according to our common law, property rights over a thing are lost by derelicto if an owner abandons the thing with the intention of no longer being the owner.” Reck v Mills & Another [1990] 1 All SA 560 (A) at para 16.
Martin van Staden LL.M. (cum laude) (UP) is a Member of the Rule of Law Board of Advisors and of the Executive Committee of the Free Market Foundation. He is pursuing an LL.D. at the University of Pretoria.