PUBLIC AND PRIVATE INTEREST IN EXPROPRIATION MATTERS

Transcription

1 PUBLIC AND PRIVATE INTEREST IN EXPROPRIATION MATTERS An Analysis of Developing Trends by Hannah Jessica Claassens (CLSHAN001) Submitted to The University Of Cape Town in fulfilment of the requirements for the degree LLB Faculty of Law, University of Cape Town Date of submission: 17 September 2010 Supervisor: Professor Hanri Mostert Department of Private Law, University of Cape Town

2 DECLARATION 1. I know that plagiarism is wrong. Plagiarism is to use another s work and pretend that it is one s own. 2. I have used the footnoting convention for citation and referencing. Each contribution to, and quotation in, this opinion from the work(s) of other people has been attributed, and has been cited and referenced. 3. This opinion is my own work. 4. I have not allowed, and will not allow, anyone to copy my work with the intention of passing it off as his or her own work. Signature i

3 PUBLIC AND PRIVATE INTEREST IN EXPROPRIATION MATTERS An Analysis of Developing Trends by Hannah Jessica Claassens (CLSHAN001) Word Count: This paper was written under the auspices of the LandLawWatch project. The views and opinions expressed here are the author's own and should not be attributed to the LandLawWatch project or the University of Cape Town. ii

4 ABSTRACT This paper examines the requirement of public purposes as one of the elements for a lawful expropriation. To determine the meaning of this term, its development is tracked through legislation and jurisprudence on purposes of expropriation from 1975, when it was enacted, until the present day. How South African courts have interpreted the term is juxtaposed with foreign jurisprudence on public purposes. Two approaches are distinguished the lenient approach and the strict approach. The author examines the particular purpose of expropriation for the benefit of a third party and whether this is appropriate in a South African context. Accordingly, it is argued that there are lessons to be learnt for South Africa s legislature and judiciary from the German approach to constitutional property. iii

5 Table of Contents 1. Introduction Terminology: Public Purposes Public Purposes: Public Purposes: (Interim Constitution) Public Purposes: 1996-Present Day (Final Constitution) The Public Purposes Requirement in Foreign Jurisdictions A Comparative Perspective The Lenient Approach The United States of America The European Court of Human Rights India Conclusion The Strict Approach Germany Conclusion Developing a South African Interpretation of the Public Purposes Requirement A Link Between Purposes and Reduction in Compensation? Judicial Discretion to Refuse an Expropriation Based on its Purpose Demands of the South African Context Conclusion Bibliography iv

6 1. Introduction In 2005, the government adopted a new strategy to handling expropriation in South Africa. The new restitution strategy was publicised widely in the media and white landowner fears materialised when Hannes Visser s North West farm became subject to the first expropriation for restitution since the African National Congress came into power. 1 Following over two years of failed negotiation, the Visser farm was served with a notice of expropriation marking the renewed governmental drive in implementing measures to achieve the ambitious land reform policies that had been promised to the ANC s electorate. The farm was expropriated for the benefit of a third party, and not in the public interest this itself being a progressive move and one that had not been undertaken before. 2 The academic debate about expropriation had moved from the theoretical realm into the concrete, and stimulated vigorous debate from both the public and private spheres, within South Africa and beyond our borders. The Expropriation Act 3, although still valid, is outdated. 4 It was conceived and implemented during the previous governmental regime for different purposes. The context in which expropriations now take place has changed, radically, and it is necessary to consider the concept of expropriation afresh, 5 especially in view of land reform revelations and commitments like the Restitution of Land Rights Act. 6 The property clause in the constitution must be viewed holistically, including the reformative provisions at section 25 (5), which require the state to takes measures to ensure the equal distribution of land, and section 25 (7) which allows citizens the right to land restitution. 7 Land reform involves state commitment to implement policies that correct the imbalance in property holding caused by apartheid land law. 8 Until a new act has been developed and enacted however, the judiciary faces the problem of having to resolve issues in respect of expropriation by relying on an act 9 that preceded the constitution by almost 10 years. The judiciary must engage in a balancing act taking into account competing rights such as the constitutional rights to housing at section 26 and to property at section 25, when interpreting legislation. The result has potentially serious implications for both private and public interests in property. 1 South Africa Land Expropriation to Start Soon Mail & Guardian ( ). 2 South Africa Land Expropriation to Start Soon Mail & Guardian ( ) of Du Toit v Minister of Transport 2006 (1) SA 297 (CC) Badenhorst Pienaar & Mostert The Law of Property of 1994: an act that was designed to right the land-wrongs caused by a legacy of racially discriminate land policies and statutes, to apply to those dispossessed of their land after 19 June Currie & De Waal Bill of Rights Handbook Currie & De Waal Bill of Rights Handbook The Expropriation Act 63 of

7 As the example of the Visser expropriation demonstrates, interests that serve an individual at first glance may really advance reformative purposes far better than interests that only superficially seem to adhere to the constitutional goals of, for instance, land reform. The real tension between the right to private property and the state s commitment to land reform will be explored in this paper, specifically as it relates to expropriation issues. The courts are under a duty to assess the state s fulfilment of land reform obligations, all the while balancing public and private interests. 10 When considering the dual function of the property clause having both protective and reformative functions the question inevitably arises as to how this impacts the requirement of public purposes in the Expropriation Act. 11 The dilemma of balancing private and public interests has a significant effect on how the requirement of public purposes is interpreted using the Expropriation Act. It will be argued that the protection afforded to private interests in property should not be disregarded because of the reformative purposes and aims of the property clause. Examining ways in which a balance can be achieved is necessary for judicial interpretation and application of the act which is now subject to the constitutional provision section The nature of private interest in property has changed because of the need to include considerations of reform in the enquiry. 13 The topic of expropriation is relevant here, not only in the context of the Act, but also in the context of the section 25 enquiry. The lawfulness of an expropriation of land is determined by whether the state expropriated it for the public purpose. This act as a gatekeeper - the safeguard against the expropriation being deemed unlawful or arbitrary, thus acting as a limitation on the power of the state to expropriate. 14 Interpreting how the act is to be applied in a constitutional context with regards specifically to the private interests and public duties involved is the topic of this paper. My focus is going to be on the interpretation of public interest or purposes as a requirement for expropriation and revealing how the focal point has shifted to one that is focused on compensation to individual property holders. I will examine and discuss how the topic of public purposes and public interest which at one time, during the constitutional negotiations, was a hot issue, has now become subsumed by the s 25 construction and does no longer seem as relevant as it once was. How to marry the constitutional requirements and the Expropriation Act is problematic, however, and this paper seeks a solution to it. 10 Mostert (et al) The Principles of the Law of Property in South Africa of 1975; Badenhorst, Pienaar & Mostert The Law of Property Mostert et al The Principles of the Law of Property in South Africa Badenhorst Pienaar & Mostert The Law of Property Budlender Latsky & Roux Juta s New Land Law

8 2. Terminology: Public Purposes The Expropriation Act has been subject to varying interpretations, in order to understand the requirement of public purposes we must first discover the meaning that has been attributed to it as it has developed through South Africa s legal ages. The term public purposes is potentially subject to a number of interpretations and this problem of ambiguity has been encountered in foreign jurisdictions. 15 A discussion of the various meanings attributed to it is necessary because of the implications for both private land ownership and land reform distribution programmes. The discussion of terminology will begin at the inception of the act and will end with the present understanding of public purposes. Three significant eras in the legal development of the term public purposes will be considered: the era from the inception of the Expropriation Act until the end of Apartheid, the following this when the Interim Constitution was negotiated and drafted, and finally the era of the Final Constitution to the present day will be discussed Public Purposes: The Expropriation Act 63 of 1975 defines public purposes of expropriation as the following: includes any purposes connected with the administration of the provisions of any law by an organ of State. Around 10 years after the Act was drafted, it must be noted that a court 16 found the favourable judicial interpretation of the term public purposes was broad one. After considering a broad meaning, which would include any purposes for the benefit of the public or a community, and the narrow meaning, which would relate to more specific governmental purposes, Leon J, in the White Rocks Farm v Minister of Community Development 17 judgment, found that the broad sense of the term public purposes would be more appropriate. One that includes, but is not limited to state purposes. 18 A significant element of state purpose was that of furthering racially divisive land policies and discriminating against black and coloured people who could not own land at the time. Another noteworthy aspect of pre-constitutional jurisprudence on the matter is that in some cases where the property subject to the expropriation was to be handed to a private individual, it was disallowed by the courts on the specific facts of the case. Thus this can be interpreted that the courts were not prepared to rule out the possibility altogether, and considered expropriations for the benefit of a private individual on a case by case basis. A suggested solution to this approach is to distinguish it from expropriations where an individual benefits incidentally as a result of an expropriation that took place 15 Eisenberg 1995 SAJHR White Rocks Farm (Pty) Ltd v Minister of Community Development 1984 (3) South Africa 785 (N). 17 White Rocks Farm (Pty) Ltd v Minister of Community Development 1984 (3) South Africa 785 (N). 18 Budlender Latsky & Roux Juta s New Land Law

9 with the view to fulfil a broader public policy or purpose. 19 This measured approach, not unlike that of the US courts, would mean that an expropriation is not nullified merely because a private person stands to benefit from the exchange, but rather has a view to the broader implications involved in the transaction. 20 The pre-constitutional jurisprudence that developed 21 remains relevant today and has an impact on how expropriation is considered. 22 The problem with public purposes being the standard required for a legitimate expropriation was that this would prohibit expropriation that had the purpose of delivering the property into the hands of a private person. In Administrator, Transvaal v Van Streepen, a case that was heard prior to the drafting of the interim constitution, the court emphasised the distinguishable qualities of the two terms, stating: The acquisition of land by expropriation for the benefit of a third party cannot conceivably be for public purposes. 23 The same however could not be said of an acquisition of land that is in the public interest, expropriation of land that takes place for the benefit of another individual may be in the public interest, but would not feature as an acceptable justification on the grounds of public purpose. The decision by the Appellate Division in the Van Streepen case centred on the desire to establish a private rail link over privately owned property, but the court considered the purpose rather than the transfer itself 24 when it held that the expropriation would not be for public purposes. The decision revealed the lenient pre-constitutional approach to the public purpose requirement to determine each dispute on a case by case basis, depending on the way in which the statute authorising the expropriation was phrased. 25 The narrow requirement of public purposes was partially suited to the contemporary circumstances as land redistribution and restitution was not government policy and therefore expropriation was not needed to address social reformative needs by transferring to individuals, as there is now. 2.2 Public Purposes: (Interim Constitution) Difficulties arose during the apartheid period with the requirement of public purposes because of the confusing approach adopted by the judiciary. Courts were predisposed to contrasting public purposes with public interest on the one hand and public use on the other. 26 This approach was unnecessarily complicated. Public interest seemed to denote a more abstract requirement that the public derive 19 Eisenberg 1995 SAJHR Eisenberg 1995 SAJHR Rondebosch Municipal Council v Trustees of the Western Province Agricultural Society 1911 AD 271; Fourie v Minister van Lande en n Ander 1970 (4) SA 165 (O) at 175D; White Rocks Farm (Pty) Ltd v Minister of Community Development 1984 (3) SA 785 (N) at 794B D; Administrator, Transvaal v Van Streepen (Kempton Park) (Pty) (Ltd) 1990 (4) SA 644 (A) 661D-E. 22 Badenhorst Pienaar & Mostert The Law of Property Administrator Transvaal v Van Streepen (Kempton Park) (Pty) (Ltd) 1990 (4) SA 644 (A) 661D-E. 24 Budlender Latsky & Roux Juta s New Land Law Van der Walt Constitutional Property Law Badenhorst Pienaar & Mostert The Law of Property 560; Eisenberg 1995 SAJHR

10 some benefit from the expropriation, this benefit or advantage does not need to be direct, and could in fact include public purposes. Public use or public purposes is considered a narrower requirement the public should derive some direct physical advantage from the expropriated property, from the use of it or from being able to access it. The drafters of the interim constitution recognised these difficulties and attempted to resolve the problem by including only one of the terms in the property clause they created in section 28. The interim Bill of Rights provided that the state s power to expropriate is governed by the condition that it may only do so if the expropriation was for a public purpose, thus utilising the same terminology as already existed in the Act. The term public purposes has been contrasted with that of public use and public interest as mentioned above. Public use and public purpose have been used as synonymous terms both interpreted in a narrow sense of the term, actual physical use of or access to the property was required for the expropriation to be justifiable. Public interest in contrast indicated that direct physical use of the property or actual gain was not essential. 27 What led to the manner in which the property clause in the final constitution was drafted? An examination of the negotiations that took place will provide us with the problems that existed and the attempted solutions. The conflicting ambitions of both the National Party (NP) and the African National Congress (ANC) were at risk during the multi-party negotiations, both rooting for different outcomes. The ANC wanted to ensure for its electorate that the vast majority of unaddressed land concerns could be solved by a policy of land reform and redistribution under a new constitution. 28 The NP wanted to ensure for its constituency that existing (mainly white) land owners would be secure in their tenure, without fear of losing their ownership at the hands of a vengeful black democratic government. 29 Both negotiating parties wanted to allay the dominant fears of their voters. The ANC did not want to leave their supporters out in the cold with no way of addressing the serious land problems. 30 The NP did not want to lose the white support they had garnered and would continue to keep if they could secure that private ownership rights would be protected. 31 The NP government s proposal on the property clause to be included in the Bill of Rights, stated public purposes as the standard for expropriation, whilst the ANC s proposal cited public interest as a 27 Eisenberg 1995 SAJHR Mostert South African Constitutional Property Protection Between Libertarianism and Liberationalism (2000) Mostert South African Constitutional Property Protection Between Libertarianism and Liberationalism (2000) Mostert South African Constitutional Property Protection Between Libertarianism and Liberationalism (2000) Chaskalson 1995 SAJHR

11 justification for infringements on property rights. 32 The resulting section 28 represented a middle ground for the dispute, effectively a compromise that had to be reached in order for negotiations to move forward. 33 It became clear in the early stages of the negotiation that the property clause would have to be included to protect existing property rights, in spite of resistance from the ANC on this point. 34 In spite of this recognition the ANC maintained that the clause should account for land reform and restitution objectives. 35 An aspect of the section 28 that required intense and lengthy deliberation was how to account for the regulatory power of the state to expropriate. Both the ANC and the NP agreed that the power of the state to expropriate should be a broad one, but formulation of the term that would grant wide powers to the state was problematic. The advisory Technical Committee researched both terms of public purpose and public interest and directed that the term public purpose would fit the more inclusive purposes desired by both parties. 36 This unfortunate recommendation was drafted into the interim constitution as the only mean by which state expropriation would be permitted. Clearly the Technical Committee had been erroneous in its research as public interest is the term which denotes a wider meaning, and can include the term public purposes. If the term of public purposes had been utilised in the final constitution by the drafting committee, any expropriation taking place for the benefit of a private individual in the public interest would not be permissible. Only those for public purposes would have been allowed, this would have had an adverse affect on land reform initiatives, and would have made any restitution of land to a private person that had been taken during apartheid nearimpossible. The effect of section 28 was to render the most important form of land reform (via expropriation) constitutionally unacceptable. This outcome in section 28 of the interim Constitution was unforeseeable considering that this was one aspect on which the parties to the negotiation did not quarrel; they merely sought guidance and advice from the Technical Committee, who gave it freely but erroneously. 37 The property clause in the final constitution, however, includes both protective and reformative aspects despite resistance from both political parties. 38 The final version of the property clause also sufficiently resolved the problem of a narrow public interest understanding by including both public interest and public purposes in its definition. The relevance of this aspect of section 25 must not be underestimated, a discussion of which will follow. 32 Chaskalson 1995 SAJHR Badenhorst Pienaar & Mostert The Law of Property Mostert 2000 HJIL 301, Mostert 2000 HJIL Chaskalson 1995 SAJHR Chaskalson 1995 SAJHR Mostert 2000 HJIL

12 2.3 Public Purposes: 1996-Present Day (Final Constitution) Section 25 of the final Constitution contains a number of provisions relating to the deprivation of property and, more specifically, expropriation of property. It defines the public purposes of the state relating to expropriation in a different manner from that of the act. Defined as in section 25(4)(a): The public interest includes the nation's commitment to land reform and to reforms to bring about equitable access to all South Africa's natural resources Furthermore, the state is given a duty to take measures to allow for fair distribution of land through various measures at its disposal, legislative and otherwise. Thus land redistribution and restitution programmes from which private individuals stand to benefit would not be excluded from the equation, and in fact was one of the primary reasons that section 25 was drafted. 39 A recent case 40 heard in the Supreme Court of Appeal emphatically held that industrial development is undeniably a public purpose and very important in the South African context. The case furthermore established that a seemingly private body, that is in fact wholly owned by the state, is entitled to expropriate private land for a public purpose, and should not be considered a private interest when its actions are sanctioned by the state and legislation. 41 The court adopted a pragmatic and flexible approach that was appropriate in light of pre-constitutional broad approach. 42 When the approach to public purposes is so broad one wonders how individual land title is protected or provided for, as this surely was one facet of the intention of the drafters of the Constitution and the Act. 3. The Public Purposes Requirement in Foreign Jurisdictions A Comparative Perspective Section 39(1)(b) and (c) of the Constitution states that courts may have regard to foreign law and must have regard to international law in interpreting rights in the Bill of Rights, however, even if the findings are persuasive, our courts are not bound by precedents from foreign judgments. 43 The hot topic in international and foreign jurisprudence is the underlying motive behind state expropriation: if the property is expropriated to be transferred to a private individual, would this still be considered as expropriation for a public purpose? 44 The problem comes when distinguishing between expropriation for public interest and expropriation for a public purpose. The former term having a broader construction, capable of encompassing public purposes, while the latter term having a narrower meaning limiting state expropriation to that which takes place for the purposes of the public as a 39 Chaskalson 1995 SAJHR Offit Enterprises v Coega Development Corporation (9/09) [2010] ZASCA 1(15 February 2010). 41 Offit Enterprises v Coega Development Corporation (9/09) [2010] ZASCA 1(15 February 2010) White Rocks Farm (Pty) Ltd v Minister of Community Development 1984 (3) South Africa 785 (N). 43 Currie & De Waal The Bill of Rights Handbook Eisenberg 1995 SAJHR 209; Gray 2005 Stell LR

13 whole. This would not include expropriating property from one individual to give it to another individual as this is not capable of being understood as for a public purpose. The approach of foreign courts to the public purpose requirement can provide South Africa with some valuable insights and lessons as to how to go about applying the inclusive standard required by section 25. Some courts, like the US, India, and ECHR display a deferential attitude towards the executive and the legislature in executing their duties of oversight and ensuring the process is legitimate. Others, like the German courts take advantage of the discretionary capacity they have been given and use it to impose strict regulatory controls over expropriation, especially over expropriations that benefit private persons (except in instances where the private person is acting in a public capacity and providing services that usually are provided by the state). This pragmatic approach allows the German Federal Court to tailor its response based on the interests at stake, whilst still acting as a necessary gatekeeper for the rights of existing private property owners. 3.1 The Lenient Approach The United States of America The courts in the United States of America have attributed a particular meaning to the term public use which is the threshold constitutional requirement before a legitimate expropriation, or use of eminent domain, can take place. The wording of the Fifth Amendment of the U.S. Constitution is as follows: nor shall private property be taken for public use, without just compensation and has been understood as implying that expropriation by the state is permissible on two grounds: it must be for public use, and adequate compensation should be paid. 45 Initially the approach taken was a narrow one which literally required that the public derive gain from the expropriated property. 46 This had the effect of excluding any purposes for which the public would not have actual access to the land, such as mining or construction. 47 This approach was found to be unfavourable in the rapidly modernizing country during the 20 th century with pressing needs for land for development and manufacturing purposes. The courts began to realise the need for a less literal approach and extended the scope of purposes that allowed for a legitimate expropriation by the state. The test requiring use by the general public was found to be inadequate in the landmark case of Mt Vernon Woodberry Cotton Duck Power Co v Alabama Interstate Power Co. 48 The new interpretation of public use that was adopted by the US Supreme Court is that of public advantage. This was a 45 Alexander The Global Debate over Constitutional Property Alexander The Global Debate over Constitutional Property Eisenberg 1995 SAJHR L ed 507 (1916). 12

14 suitably progressive approach and allowed for expropriation of property, the use of which would beneficially contribute in a general manner to the community, without it being necessary for the actual use of that property being made available to the public. 49 This inclusive broad view of the use of eminent domain in the United States contributed to its industrialization and the expansion of transport routes for railway lines. 50 It had, however, a negative effect when interpreted and applied too leniently in subsequent cases. The judiciary took a deferential approach and allowed the legislature to determine the requirement in a manner that suited private bodies and organisations seeking to expropriate land. 51 The case of Berman v Parker 52 illustrated the negative effect a lenient approach would have on private landowners who were situated on property that appeared attractive to a private developer. The court authorised the taking of private land for resale to a private third party who would use the land for a development plan this was condoned by the court as being in the public interest because it was authorized as legitimate by legislation in favour of the approach. 53 As this new tendency evolved and was followed in subsequent cases 54 it began to emerge that the courts accepted in some instances that the exercise of eminent domain was necessary when privately owned land was transferred to other private owners, but only if the use of the land by the new owner conceivably constituted a public benefit. 55 This acceptance was significantly conveyed in the case of Hawaii Housing Authority v Midkiff 56 where the purpose of the expropriation was to impose a fairer and more liberal land holding system via redistribution of the land (by breaking up large estates). This happened in an area that had been characterized by a hierarchical structure that was economically unviable and unsuitable to the land. The court also made a noteworthy observation: the judiciary has a discretionary, although minor, role to play in reviewing legislative actions and policies in this regard. 57 The decision in the Hawaii Housing Authority case was further justified on the grounds that the action taken by the state was rationally connected to a public purpose. 58 Transfer of land via expropriation from one private owner to another was now sanctioned by the US Supreme Court. 59 Thus began the series of subsequent cases that allowed for ever increasing infringements on the domain of private property ownership in favour of 49 Mt Vernon Woodbury Cotton Duck Power Co v Alabama Interstate Power Co 60 L ed 507 (1916). 50 Eisenberg 1995 SAJHR Van Der Walt Constitutional Property Law US 26 (1954). 53 Berman v Parker 348 US 26 (1954) Hawaii Housing Authority v Midkiff 467 U.S. 229 (1984); Kelo v City of New London 125 S Ct 2655, 162 L Ed 2d 439 (2005); Poletown Neighbourhood Council v City of Detroit 304 NW2d 455 (Mich 1981). 55 Gray 2005 Stell LR US , 81 L Ed 2d (1984). 57 Hawaii Housing Authority v Midkiff 467 U.S. 229 (1984) Hawaii Housing Authority v Midkiff 467 U.S. 229 (1984) 241; Van der Walt Constitutional Property Law Alexander The Global Debate over Constitutional Property

15 economic growth and profitable pursuits. 60 These developments had the unfortunate effect of blurring the important and necessary distinction between private purposes and public purposes. It revealed a disturbing outlook on the disposable nature of individual property rights and a judicial incapacity and unwillingness to protect these individuals from capricious state actions. 61 According to Gray, the approach has reached unheard-of proportions. 62 In some instances organs of state that have the authority to exercise powers of eminent domain are doing so upon the request of big business, charging sizable fees in return for this service, and achieving results that would otherwise have been unattainable through the usual methods of property sale and acquisition. 63 Just because a supposed public purpose or advantage can somehow be rationally, although distantly, connected to the transaction it is considered legitimate and justified in the eyes of the legislature (and to some extent, the judiciary). 64 The only advantage that the public is indirectly experiencing as a result of these highly manipulated transactions is general economic growth for the country as a whole. Does this approach not lose sight entirely of the reasons that the right to private property was drafted into the Fifth Amendment of the U.S. Constitution, not to mention the constitutional limitations imposed on the power of eminent domain? This evolution from the initial literal interpretation of public use, to one that is so broad that virtually any use of the property can somehow be rationally and justifiably connected to a public use, effectively negates the right of individuals to have secure rights in their own property and not to be subject to the whim of authorized state agencies or the quest for economic prosperity. A case which recently presented itself before the US Supreme court offered an opportunity to escape from the broad approach to public purposes that was worrying private title holders. The challenge in Kelo v City of New London 65 came from a private homeowner whose property happened to be situated in an area that was chosen for the substantial construction of a residential and commercial facility. The debate on the interpretation of public use was at issue in this watershed case where the constitutionally protected right to private property and the supposedly constitutionally limited power of eminent domain came head to head. 66 When judgment on the issue was finally handed down, the slim majority found that the taking of private property by the state to give to another private individual, which incidentally results in positive benefits for the public through economic development, would be a legitimate expropriation and meet the public use requirement. 67 The majority in this case further stated 60 Budlender Latsky & Roux Juta s New Land Law ; Kelo v City of New London 125 S Ct 2655, 162 L Ed 2d 439 (2005). 61 Gray 2005 Stell LR 403; Alexander The Global Debate over Constitutional Property Gray 2005 Stell LR Gray 2005 Stell LR Alexander The Global Debate over Constitutional Property Kelo v City of New London 125 S Ct 2655, 162 L Ed 2d 439 (2005). 66 Gray 2005 Stell LR Kelo v City of New London, above; Alexander The Global Debate over Constitutional Property (2006)

16 that due deference should be given to legitimate government decisions to expropriate for a public purpose, regardless of whether that purpose was the promotion of economic growth. The minority dissented, finding that the majority judgment placed all private property owners in a vulnerable position and would have the most detrimental and discriminatory effect on the vulnerable and poor in society. 68 The impact these decisions have had on the individual right to property must not be underestimated. In South Africa the right to property is important for a number of reasons, it allows for individual growth, wealth creation, and stability. Allowing the state to play such a regulatory role over privately owned property would detrimentally affect the individual property holder s capacity to have any stability in his land and could lead to the type of insecurity that was felt during the constitutional negotiations prior to the drafting of the Final Constitution The European Court of Human Rights The European Court of Human Rights (ECHR) has taken an approach that is generally quite lenient. The European Convention on Human Rights only allows for deprivation of property if it is in the public interests to do so. In James v United Kingdom 70 the court had to consider whether the compensation was adequate in British legislation that allowed long lease tenants to force their landlord s to sell them property which was touted as an expropriation. 71 This requirement was satisfied and can be considered in the public interest if the action taken conforms to social justice or economic policies, regardless of whether the public experiences a direct advantage from the taking of the property, or, whether the transfer was for the benefit of a private person. 72 Although the court examined whether the purpose was indeed justified and legitimate it nevertheless took a deferential attitude towards state policies promoting social or economic growth. The same court has also confirmed that in some instances 73 expropriation of land is permissible for agricultural purposes which fall under the umbrella of legitimate public interests. 74 The deferential attitude of the ECHR is framed on the basis that a national authority will be better versed in knowing the ways and means of securing growth for their country. Without having knowledge of a specific country s needs means that this international forum has decided it is not best placed to determine whether an expropriation of property was not justified in the circumstances. Respecting the expropriating authorities approach and the legislatures statutes enacted in this regard does not mean 68 Kelo v City of New London, above. Alexander, The Global Debate over Constitutional Property (2006) of the Republic of South Africa, James v United Kingdom (1986) 8 EHRR Alan 2007 MJLR James v United Kingdom (1986) 8 EHRR Hakansson and Sturesson v Sweden (1991) 13 EHRR Budlender Latsky & Roux Juta s New Land Law

17 that controversial expropriations are without review, but merely that the level of scrutiny does not impede on legitimate state purposes India Indian jurisprudence reveals a liberal trend in the interpretation of public purposes. Not requiring actual, physical enjoyment or use of the expropriated property by society at large but rather accepting that the greater public interest could be served even if the public do not directly benefit from the exchange. 75 The approach of the Indian courts is not unlike that of the US courts in that a wide interpretation is favoured, especially where social, economic and political directives are at stake. It was recognised that in order for the desired development to take place in India, it would be necessary to adopt a deferential approach to the legislature, giving those authorities a wide berth in which to allow the opportunity for growth Conclusion The lenient approach followed by India, the United States and the European Court of Human Rights has some lessons that can be gleaned for South Africa. The lenient approach is often characterised by a deferential approach, favouring policy and legislation over individual rights. This is problematic in a South African context with a Constitution such as ours where the courts are given a mandate by section 39 of the Constitution to promote the values of the Bill of Rights. This is not to say that the judiciary should play an unnecessarily political role or interfere in the legislature s domain, however, it does mean that the judiciary should not sanction any infringements on individual rights that are limited unjustifiably. In light of section 25, an unjustifiable limitation of the right to property would occur if an expropriation took place in a capricious instance like that of the Kelo case in the U.S. 77 We must learn that the dangers of a lenient approach could lead to disregard for the protective aspect of the property clause. This is a danger we must avoid as the Constitutional Court has emphasised that a balanced approach is needed when engaging in the dichotomous requirements of section The Strict Approach Germany The German constitutional property clause reveals a progressive approach to private ownership because it includes a social-obligation requirement which has a restrictive effect on individual ownership 37 Eisenberg 1995 SAJHR Eisenberg 1995 SAJHR Kelo v City of New London 125 S Ct 2655, 162 L Ed 2d 439 (2005). 78 First National Bank of South Africa Ltd t/a Wesbank v The Commissioner for South African Revenue Services 2002 (4) SA 768 (CC)

18 and emphasises the duty of property owners to the state. 79 The approach of German courts approach to state regulation of individual property rights is based primarily on the social obligation norm; this places duties on both state agencies and individual owners to serve the public weal in the use of the property. 80 Although the right to private property is protected in the German Constitution, it is contrasted with the obligation placed on the individual to heed their social responsibilities to the state. 81 The inclusion of the social obligation requirement in the German constitutional property clause has a mediating effect on resolving some of the tension that exists in any constitution that aims to both protect individual rights and promote social welfare with regards to property. 82 The German approach to public purpose requirement is regarded as relatively strict in the sense that the level of scrutiny when interpreting and applying the public purpose is quite high, while the approach is lenient in the sense that it allows for a broader interpretation of what constitutes public purposes. 83 This balanced approach means that the courts retain their discretion to challenge any expropriation on the grounds that it is rationally connected to the public purpose it is intended to serve (justified) and there is legislation authorizing the legitimacy of that particular expropriation. The authorizing legislation must correspond sufficiently with the expropriation in order to be justified and legitimate. 84 An expropriation is justified in the circumstances if it was considered the sole means of achieving that particular public purpose and if it was undoubtedly essential in achieving the desired outcome. The German courts also engage in a proportional analysis. The equilibrium between public interest and private interest is sought by treating rights and duties proportionally; this requires looking at the importance of satisfying that public purpose in contrast with the level of disruption that title holders will suffer when their individual interest in property becomes subject to a pressing social or developmental need. 85 This strict analysis is not applied in a mechanical fashion but rather assessed on a case by case basis, taking into account the individual and state concerns involved in the dispute. These requirements create a checklist for expropriations that is viewed in stark contrast to the easy-going indulgent approach of US courts. The German courts do not view economic pursuits that promote wealth creation and benefit the state as justifiable as there are often other means of achieving those ends. In addition to this, such expropriations cannot be deemed necessary for specific public purposes, the public purpose achieved in this manner would be incidental and the benefits acceded to the state would be greater. 86 Thus although expropriations that benefit private persons are in principle allowed, the norm is that they 79 Alexander The Global Debate Over Constitutional Law Alexander Alexander Alexander Van der Walt Constitutional Property Law Van der Walt Van der Walt Van der Walt Constitutional Property Law

19 are found to be unjustifiable, unless meeting the strict requirements imposed by German jurisprudence. The Federal Constitutional Court has however been quite accommodating for expropriations that benefit a private third party if that third party is in the business of providing services to the public as a result of privatisation, notwithstanding the fact that the expropriation must still be duly authorised by statute. 87 Although the requirements that need to be met for a valid expropriation to take place are quite stringent, they provide an effective control over the process, giving private title holders the due protection they deserve whilst still allowing for expropriation in the public purposes and even for the benefit of private persons if the need is pressing, justifiable, and legitimate in the circumstances Conclusion In spite of the structured approach of the German legal system to property, the balancing act required by its constitution is nevertheless a challenging task, made more so by matters involving the restitution of land to its original owners. 89 A positive lesson that the South African judiciary could gather from the German approach would be to assess the purpose of each expropriation on a structured case by case basis, rather than following the excessively lenient approach adopted in other jurisdictions. Alexander draws similarities between the South African and the German approach to constitutional property clauses, stating that the principled and sound position sought by both is enriched by a purposive approach. 90 However, what we can also acknowledge from the German example is that no matter how systematic the approach is, attaining a balance between private and public property interests will remain elusive because of the inherent tension tugging at both ends of constitutional property question. 4. Developing a South African Interpretation of the Public Purposes Requirement The purpose of this final section is to examine trends in constitutional property interpretation in South Africa and provide a coherent method for approaching the public purposes requirement in future. Having regard to our own context of judicial interpretation we look at what has developed and the future potential growth of the meaning of this concept. The three main themes explored in this section are as follows. The first examines the relationship between public purposes and the compensation requirement and whether a particular public purpose of land reform and redistribution can lead to a reduction in compensation. This theme explores the notion that even though the basis of public purposes may no longer be as relevant for the lawfulness of an expropriation, it still retains persuasive sway when considered as an element that could potentially reduce compensation. The second theme examines whether it is still prudent for a judge to refuse an expropriation on the grounds of its purpose in light of 87 Alexander The Global Debate Over Constitutional Law Van der Walt Mostert 2000 HJIL Alexander The Global Debate Over Constitutional Law

20 the development of constitutional property jurisprudence. The third and final theme looks at the seminal cases on constitutional property jurisprudence and what can be derived for expropriation specifically. In spite of the lessons we can learn from foreign jurisdictions, we are left with the application in a South African context which is fraught with the historical considerations of private property juxtaposed with the current desire for socio economic rights realization. Context is all important in the discussion of expropriation and as we have discovered and will discover in the ensuing sections assessment of each instance on a case by case basis is essential. 4.1 A Link Between Purposes and Reduction in Compensation? Although the topic of this paper does not focus on the compensation requirement of expropriation, but rather the purposes related to it, when the amount of compensation begins to vary depending on whether the expropriation was for land reform purposes or not this debate gains relevance. Section 25(4)(a) states that the public interest includes the nation's commitment to land reform, and to reforms to bring about equitable access to all South Africa's natural resources this explicit formulation reveals that land reform must play a visible role in the public purposes consideration. The question is how much influence can reformative purposes have in an expropriation and where does it manifest, in the compensation requirement or the public purposes requirement? Zimmerman argues that expropriations for the purposes of land reform play a pivotal role in ensuring that socio-economic interests are accounted for in the property clause. 91 Van der Walt disagrees on this point and says that land reform is not weighted more heavily than any other consideration for which expropriation may be necessary or that a court may take note of. 92 The fact that section 25(3)(e) and section 25(4)(a) make special note of the purpose as a relevant factor influencing the amount of compensation is what led Zimmerman to this understanding. Zimmerman suggests that a reduction in the compensation amount where land reform is at issue would be an appropriate and necessary response to the problem of slow redistribution. She states that judicial interference in expropriations should be minimal, as should the amount paid to the private owner in return for the disruption in his land title. 93 She advocates this view because of how land reform and redistribution appears to her to have been placed on a pedestal in the property clause. When examining what is just and equitable compensation in an expropriation for the purposes of land reform, Zimmerman believes that the public interest should be understood in this instance as conveying a special duty to take account of land reform. 94 The balance between existing owners and those who 91 Zimmerman 2005 SALJ 410, Van der Walt 2006 SALJ Zimmerman 2005 SALJ Zimmerman

21 had been dispossessed due to past injustices is clearly weighted in favour of the public interest, and not the private interest, she argues 95. The wording of section 25(3)(e) is instrumental in securing a proportional reduction in the price the state would pay, had the expropriation been for purposes of land reform. 96 An interesting proposal is thus made - by encouraging the use of the just and equitable standard to facilitate expropriation for transformative constitutional imperatives; she makes the bold suggestion that the market value of a property becomes an unnecessary calculation in some instances. 97 Zimmerman claims to have made these observations in order to illustrate the scope for interpretive possibility and the corresponding need for clearer and more directive policies in this regard. In some respects she is correct in stating that the market value approach adopted thus far has acted as an obstacle in bringing about any meaningful change in the unequal land distribution, however, she has not taken sufficient note of the fact that the property clause was not drafted to serve only public interests but protect private interests too. She fails to acknowledge that the property clause, as has been discussed in recent cases, serves a dual function, not one that is suited to one facet of the population but both public and private equally. 98 According to Currie and De Waal, the property clause should be read in two contexts, the narrow context attained from a holistic view of the Constitution and other rights in the Bill of Rights, and the wider context which is South Africa s legacy of discriminatory land ownership and racist policies. These authors claim that the mandate to achieve the goals set out as socio-economic rights necessarily requires that the state take reasonable measures to intervene and distribute wealth and property. 99 Van der Walt takes issue with a number of Zimmerman s arguments and did not find her article particularly convincing. 100 He claims that the majority of South African authors have not taken a marketcentric approach and have merely noted it as one of a factor of many. He too takes issue with her lack of discussion on the fine balance that has to be achieved when engaging with constitutional property rights. 101 Zimmerman appears to take to the typical deferential US approach to public purposes by suggesting that judicial discretion should be limited in favour of allowing state redistribution programmes to go ahead unhindered, leading to the realisation of land reform goals and targets. Van der Walt predicts the 95 Zimmerman Zimmerman Zimmerman Currie & De Waal The Bill of Rights Handbook Currie & De Waal Van der Walt 2006 SALJ Van der Walt