The Expropriation Bill of 2008 (the bill) was tabled in Parliament on 16th April 2008. It is intended to repeal and replace the Expropriation Act of 1975 (the act) and to rationalise all other laws on expropriation. It will trump all existing provisions on expropriation inconsistent with its terms.

Under the act, the minister of public works may expropriate property for public purposes against payment of compensation based on market value, damages for loss suffered, and a further percentage as a solatium (solace).  Ownership and possession pass to the state on the dates specified in the expropriation notice, but at least 80% of the compensation must be paid when the government takes possession. Interest on the outstanding balance is payable, while disputes can be taken either to court or to arbitration.

The bill vests the power to expropriate not only in the minister of public works but also in all organs of state at all levels of government.  As under the act, ownership and possession pass to the state on the dates specified in the expropriation notice. However, compensation becomes payable only when its amount has been determined, either by agreement or by the expropriating authority.

The bill allows for expropriation not only for public purposes but also ‘in the public interest’. It says that compensation must be ‘just and equitable’ in the light of various factors, including market value, but adds that market value must not be given ‘undue weight’.

These provisions of the bill mirror similar provisions in the property clause (section 25) in the Constitution. However, other aspects of the bill undermine the requirements of section 25. In particular, the bill states that the state’s administrative actions in deciding on compensation ‘must be regarded as final’, subject to a limited form of court review.

According to the bill, either party may apply to court for ‘approval’ of the state’s decisions on compensation. The court must assess whether the compensation is just and equitable in the light of all relevant factors. However, if the court ‘cannot approve’ the state’s decisions on compensation, it cannot substitute its own more equitable order. Instead, the decision on compensation must be referred back to the expropriating authority for reconsideration. Thereafter, either party may again apply for approval of the new decision. Other than allowing the expropriating authority (but not the owner) to call a halt by appealing to a higher court, the bill envisages no alternative to this ping-pong process.

This lengthy and inadequate process of judicial review will put pressure on expropriated owners to settle with the state. The impetus to settle will be strengthened by:

• the provision that compensation is payable only when the relevant amount has been agreed or decided by the state; and

• the fact that ownership and possession will generally already have passed to the state on the dates specified in the notice of expropriation.

In these circumstances, it is likely that only aggrieved owners with deep pockets will be able to challenge the state’s decisions on expropriation and compensation.

The government asserts that the bill complies with the property clause in the Constitution because decisions on compensation are subject to approval by the courts. (It bases this on  a part of section 25 saying compensation must either be agreed ‘or decided or approved by a court’.) However, the bill downplays the rest of the property clause, which provides that ‘no one may be deprived of property’ unless all the requirements of section 25 have been met. Moreover, the onus lies on the state to show that any given expropriation is not arbitrary, that it is objectively in the public interest, and that all factors relevant to ‘just and equitable’ compensation have been taken into account. The bill discounts these requirements, making its constitutionality questionable on this basis alone.
            
-  Anthea Jeffery
Head of Special Research
Tel: (011) 403-3600 Ext 202

Note: A more detailed analysis of the Expropriation Bill of 2008 will be published in the May issue of Fast Facts.