Expropriation as punishment

Spiteful approach has no place in a constitutional democracy.
Among other things, government seems to have abandoned any notion of market-related value as compensation for expropriation. Image: Shutterstock

In addition to the multiple concerning provisions in the new Expropriation Bill published on October 9, 2020,  it is clear that government has adopted an entirely new conceptualisation of expropriation.

No longer is expropriation regarded as a terrible inconvenience that blameless property owners must be compensated for, but rather as a crude tool of policy, one which government can even use to selectively punish South Africans.

This conceptualisation is entirely incompatible with our constitutional democracy.

Nowhere in the democratic world is expropriation regarded as a form of punishment. Since the Constitution of South Africa was adopted in the 1990s, this has been the case in South Africa as well. Until now.

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A tool, not a weapon

Expropriation is a tool in any government’s arsenal to fulfil its ostensible twin roles of delivering basic services and providing an environment conducive to prosperity, including by constructing infrastructure.

Sometimes, private property stands in the way of government doing so, and therefore the option to expropriate that property is available – almost exclusively as a very last resort.

This does not mean the owner of that property has done anything wrong. They are not criminals. They have not committed a tort or delict – a civil harm – against anyone simply by reason of owning property.

Property ownership is as old as humanity itself and is a crucial driver of welfare and human flourishing. There is nothing untoward about ownership.

There are laws that deal with property used in criminal offences (like asset forfeiture) or delicts (like being ordered to compensate victims for any harm done). In both cases, the individual wrongdoer is punished, with the hope that in the future they will not repeat their wrongful conduct. There is evidence, and due process of law is allowed to play out. Expropriation and expropriation law has nothing to do with either situation.

Instead, expropriation is about taking property when it is necessary for some majority notion of the public good, without punishing or harming the blameless owner.

The Expropriation Bill currently under consideration by parliament turns this reality on its head. There is a very clear tone of retribution, spitefulness, and a desire to harm owners that runs throughout the bill. A few examples bear mentioning.

Demonstrations of spitefulness

The first is that government seems to have abandoned any notion of market-related value as compensation for expropriation.

Government, in other words, has an overriding desire to place the victims of expropriation in a worse position they would otherwise have been had they been able to sell the property on the open market.

The constitution allows for below-market value compensation, but this should clearly be the exception, not the rule.

The second is that government wants to be able to take possession of expropriated property before legal disputes about the expropriation have been settled. In other words, government regards owners making use of constitutional due process to vindicate their rights as an annoyance that cannot be allowed to stand in its way.

The third and most obvious example of the bill’s spitefulness is its provision that no solatium will be paid for expropriations. Solatium is compensation for inconvenience, and hitherto in South Africa and elsewhere has been paid in addition to the compensation for the value of the property.

Clause 4 of the schedule to Kenya’s Land Acquisition Act, for example, provides for the addition of an amount of 15% of market value to the compensation, as “compensation for disturbance”.

A weaker but similar provision exists in Section 12(2) of South Africa’s present Expropriation Act of 1975.

This makes sense. Remember, owners are not criminals or wrongdoers. Therefore, when a well-meaning government expropriates property, it additionally compensates the owner for the immense hardship that is being caused by government to an innocent person. It is a way of apologising and trying to make right the apparently necessary injustice government is causing.

No more of this in South Africa, however. The bill ends the paying of solatium.

Owners, if they are lucky enough to be offered compensation for the value of the property at all, will only receive that compensation, and no more. In other words, even if they receive market-based compensation, owners will be in a worse position than they were before the expropriation, because they still valued their property enough to want to keep it rather than sell it. Even market value then is below the subjective valuation (which might be sentimental) they had for their property.

Expropriation, as government envisions in the bill, clearly disregards any subjective concerns, sentiments and plans of property owners.

New definition of ‘abandonment’

And finally, another example, arguably worse than the elimination of solatium, is the bill’s redefinition of “abandonment” for the purposes of expropriation without compensation.

Under our common law, and under the previous version of the Expropriation Bill, abandonment is defined as 1) no longer controlling property, and 2) no longer having the manifest intention to own the property. The bill eliminates the later requirement, defining abandonment as merely the failure to exercise control over the property.

This means that if any property owner is unlawfully or mistakenly evicted from their property (for instance, by criminals or by locking themselves out respectively), government may, under the bill’s provisions, regard this as a ground to expropriate that property without compensation.

Thankfully, it is unlikely that our courts will allow such an obviously unjust and inequitable event to occur.

But that the bill makes it possible, unfortunately, shows the attitude with which government today approaches the notion of expropriation: pure spite or a coarse political calculus.

All property owners are at risk

Race has been avoided here given its tendency to distract some from the pertinent issues at play. Everything mentioned above applies to property owners of whatever race.

Nobody is exempt, and owners in a lower income bracket have more reason to be concerned.

It is them, not the wealthy, who will be unable to fruitfully challenge government’s spiteful conduct in court. In any event, as far as I am aware, government is not taking strides to make legal aid available to expropriation victims who may want challenge such decisions in court. Groupings in civil society may want to consider starting such funds.

The constitution requires government to be respectful of property owners. Indeed, it requires government to expand and enlarge ownership through a land reform programme that respects property rights.

The constitution certainly does not condone the expropriation-as-punishment conceptualisation government has adopted in the Expropriation Bill.

It is incumbent on constitutionalists of all stripes to reject this new approach.

Martin van Staden is a legal fellow at independent business community Sakeliga.

Listen to Nompu Siziba’s interview with Banking Association of SA GM Pierre Venter (or read the transcript here):

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Brilliant Article Mr Martin van Staden

“But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.” – Frederic Bastiat
http://bastiat.org/en/the_law.html

This simple quote is a clear sign of the times to come should EWC become law.

Nobody in a market society is able to buy, or keep property if he does not apply it for the benefit of his fellow man. The farm, factory, tractor, house or car must earn an income to pay the bond and the insurance. That income can only be generated by providing services or products to eager consumers. Property is the reward for serving the consumer. Society rewards those who add value to their fellow humans by providing them with the means to buy a property. If the owner wants to keep that property he has to serve the consumer on a continued basis. Anybody who owns property is, per definition then, in the perpetual service of his fellow man.

Property is the product of man’s diligent application of his faculties. An individual’s property is the physical manifestation of his work ethic, his mental capacity, his ability to learn, and most importantly of the value he adds to his fellow man. His property is a condensed version of his life. The government that has the power to expropriate property, inevitably, also has to power to expropriate life itself.

When a self-centred and myopic socialist society expropriates property, they are in fact punishing people who add value to society. They disincentivise the service to the fellow man. They reward the exploitation of the shared resource and the plundering of the nation. Such a society cannot survive.

In a perfect world yes , but you are pretending that exploitation is not a real thing as well.

People don’t become super rich without at least screwing over a couple of people along the way

oracle, thanks for the comment.

People who support collectivist ideas see exploitation everywhere, whereas people form a capitalist, free-market background experience mutually beneficial cooperation that benefits society as a whole. Consumers support the service provider or manufacturer of their choice. They are free to buy, or to refuse, the service or the product. They are free to work for whom they want or to remain unemployed if that is their preference.

No form of exploitation can exist in a free market society where individuals are free to work for whom they want and to purchase products from the best manufacturer. Exploitation is inherent to the socialist society where citizens are at the mercy of the politically connected elite. Kindly refer to the testimony before the Zondo Commission if you need proof of this concept.

The socialist unionised workers exploit the unemployed masses by destroying job opportunities through stringent labour laws and militant strike action. The politically connected cadre exploits society through loaded BEE tenders.

You cannot enjoy the priveledges and advantages of a free society and shout exploitation the next moment. You have an equal opportunity to make your mark and to earn your profits. You are a free man! You are not a slave! Only those who are mentally enslaved see exploitation everywhere in capitalist societies.

@TheOracle, it’s the government’s job to make laws, protect the vunreble and to ensure that the law is enforced.

What you are saying is successful people own their success to bad side of exploitation. Unfortunately nouns like Exploitation, Discrimination and Capitalism are made to be Enimies of the state and this propaganda has been brainwashed into the greater society.

Discrimination is a very healthy part of human life is allows us to cater for our individual needs buy discriminating against which product can best suit our needs, however that is were rule of law and enforcement comes in and that is to protect any harm from being caused.

Humanity has progressed to the point where we know both collectively and individually right from wrong.

The irony of EWC is that it will impoverish people more than they are currently. And just like in Zim, the expropriated(confiscated) land will be divided among the political and looting elite. Cry my beloved country

It is indeed ironic. And in a twisted way I am looking forward to watching this play out in future – from afar of course. Weird that I am eagerly anticipating the schadenfreude which will bubble in my breast when I read about the results of this socialist / communist tragedy, but I am. As you might surmise, I have already emigrated in a spiritual sense. I am currently stateless, so no tears from me.

The image in the article (locked gate with agricultural land in background) is partially relevant.

A more suitable image would’ve been:

– of a frontal view of residential cluster homes, with vehicles parked in the street (like you see on real estate developer ‘glossies’)

– of an image of the ivory towers/grand entrance of a large financial institution.

The incorrect image in this article create the skewed impression EWC deals mostly with farmland. It gives the majority of us (city/town dwellers) a false sense of security…that it’s only farmland.

(Farmland offers very little to squatters. Your and my residential assets, investment accounts, vehicles…yes, now we’re talking)

Hope after this comment, we become more at unease….EWC is closer to home than you may realise.

There is a solution to all of this : Australia !

The ANC know no other way but to take, as they are incapable of bringing anything else to the table that can add value.
In their history they have either only, taken, or been given, never have they had to build, grow or establish anything to add value! It is foreign to them, and a culture!

They are actually further from being a Government, and no different, than a bunch of youths kicking a can outside the Spaza shop!! And both are what out of control population growth does!

Fail!

If an owner faces confiscation he has nothing left to lose. Government can expect to receive what they paid for. Burn everything to the ground, collapse the bridges, concrete the borehole, take down the fences, blow up the damned dam wall.

Mr Buys is correct – owners whose property is confiscated have nothing to lose – so too do those that own nothing….hence we see the rise of political parties promising the world for nothing. Beware the trap of “nothing to lose” on both sides of the coin. There has to be compromise…it’s called a Constitution and it’s NOT to be messed with.

End of comments.

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