Compensation for Expropriation Under the Constitution

Abstract

Since 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 Constitution, as well as interpret Constitution itself. Section 25 of Constitution, the property clause, is a telling example of this kind of provision. It protects property rights but at same time provides for expropriation of property, as long as such expropriation is duly authorised, is for a public purpose or in public interest, is procedurally fair and provided that just and equitable compensation is paid. Public interest includes nation’s commitment to land reform. Pre-constitutional expropriation law benchmarked as fore-most determinant of compensation. This gave rise to a legal culture dominated by belief that payment of an amount equating of property was best way of duly compensating a property owner. The Constitution, however, lists as but one of several factors that need to be taken into account when compensation is calculated, and shifts interpretive focus from notion of market value to what would be just and equitable compensation in particular circumstances of each case. The law regarding compensation for expropriation has therefore changed, but legal culture seemingly not. If compensation is going to continue to be paid at in land reform context, transformation is not going to succeed because acquisition of land for land reform purposes will become too expensive. This raises following question: Can section 25(3) of 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 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 conventional legal culture of expropriation. The impact of Constitution on expropriation law since 1994 is then assayed, concluding that constitutional democracy has had but a limited impact in this area due to 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, United States of America and Australia is put forward in order to offer alternative angles on compensation question. This is followed by a theoretical consideration of 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.