Presentation to Public Works Portfolio Committee

Department of Public Works

17 April 2013

12013-04-17

The purpose of this presentation is to brief the Portfolio Committee on Public

Works on the status of the review of the Expropriation Act 63 of 1975

22013-04-17

BackgroundExpropriation Act 63 of 1975

Reason for review of the current Expropriation Act, 1975Concerns raised on the withdrawn Expropriation Bill, 2008 [B16 – 2008]

Definition of Public Interest Definition of Juristic Person Definition of Property Determination of compensation Role of the Court Urgent Expropriations

32013-04-17

Draft Expropriation Bill, 2013

Principles underpinning the Draft Expropriation Bill, 2013

Empowers the Minister of Public Works to expropriate for a public purpose or in the public interest, subject to compensation

Acknowledges and compensates holders of unregistered rights (for such rights extinguished in an expropriation)

Provides for the payment of just and equitable compensation determined by considering all relevant factors

Introduces uniform procedures for expropriation, to be applicable to all expropriating authorities when exercising their respective powers of expropriation

42013-04-17

Expropriation process

Investigation and gathering of information for purposes of expropriation

Notification of intention to expropriation

Notification of Expropriation

Process in negotiating compensation

Process of verifying claims for compensation made after date of expropriation

Urgent Expropriations

Withdrawal of an Expropriation

52013-04-17

The review of the Expropriation Act, 1975 is necessary to ensure consistency with the spirit and provisions of the Constitution.

The Expropriation Act, 1975 limits expropriation of property for public purposes.

• The Constitution extends the scope of expropriation to permit expropriations for a public purpose or in the public interest

Compensation in terms of the Expropriation Act, 1975 is determined primarily on the basis of the market value of the expropriated property.

• The Constitution, in section 25(3), requires the payment of just and equitable compensation, which is to be determined by having regard to all relevant circumstances, without giving undue weight to any single or particular factor.

62013-04-17

The Expropriation Act, 1975 limits the payment of compensation to an owner, holders of register rights and holders of certain unregistered rights in the expropriated property.

• Property rights, in terms of section 25 of the Constitution, are protected from expropriation without the payment of compensation to persons affected by an expropriation.

• The above read with the constitutional definition of “property” as “not limited to a right in land” and therefore extends such protection to both registered and unregistered (including informal) rights in property.

• A holder of a right in property, whether registered or unregistered, is Constitutionally entitled to compensation when his or her property is expropriated(without limitations as to which property right are subject to compensation, when expropriated).

72013-04-17

The expropriation procedure in the Expropriation Act, 1975 does not embody the Constitutional principles of just administrative action, such as

• providing for notification to all known affected persons of an intended expropriation, incorporating the purpose and rationale for such expropriation;

• affording such parties an opportunity to raise objections and make representations to the expropriating authority before a decision to expropriate is taken; and

• requiring an expropriating authority give consideration to all submissions by persons whose rights and interests may be adversely affected, before deciding whether to proceed with the expropriation.

82013-04-17

Principles of just administrative action, such as

• providing for notification to all known affected persons of an intended expropriation, incorporating the purpose and rationale for such expropriation;

• affording such parties an opportunity to raise objections and make representations to the expropriating authority before a decision to expropriate is taken; and

• requiring an expropriating authority to give consideration to all submissions by persons whose rights and interests may be adversely affected, before deciding whether to proceed with the expropriation.

92013-04-17

The Department also found a need to provide uniform expropriating procedures, applicable to all expropriating authorities-

There is an array of authorities within the national, provincial and municipal spheres of government that are empowered to expropriate property, through some 150 pieces of legislation.

Within National Government, the President and various cabinet ministers are empowered to exercise expropriation powers – (1) Agriculture, Forestry & Fisheries; (2) Arts & Culture; (3) Energy; (4) Mineral Resources; (5) Environmental Affairs; (6) Public Works; (7) Rural Development & Land Reform; (8) Trade & Industry; (9) Transport and (10) Water Affairs.

102013-04-17

In addition, the Department of Economic Developments draft Infrastructure Development Bill, 2013 proposes that a Presidential Infrastructure Co-ordinating Commission be granted the power to expropriate land and or rights.

The array of legislation empowering expropriation prescribe varying procedures in the implementation of an expropriation. Government, through the draft Bill seeks to achieve certainty and give guidance to those involved in or subject to an expropriation process, both for the State, as well as a private individual. The draft Expropriation Bill thus proposes the introduction of uniform expropriation procedures which will have to be followed by all expropriating authorities, when exercising their powers of expropriation, derived from their respective pieces of legislation.

112013-04-17

Definition of Public Interest

Definition of Juristic Person

Definition of Property

Determination of compensation

Role of the Court

Urgent Expropriations

122013-04-12

Definition of Public Interest

The definition of “public interest” was objected to as being too wide and therefore open to abuse by expropriating authorities. The withdrawn Expropriation Bill defined ‘‘public interest’’ as including –

“the nation’s commitment to land reform, reforms to bring about equitable access to all South Africa’s natural resources and other related reforms in order to redress the results of past racial discriminatory laws or practices”

as defined in the Constitution [section 25(4)(a)]

The draft Expropriation Bill, 2013 retains the definition of “public interest” as defined in the Constitution.

Property rights are Constitutionally protected against abuse by expropriating authorities, in the exercise of their expropriation power, both-

in terms of the requirements of just administrative action (Promotion of Administrative Justice Act, 1999), which requires such decision to be lawful (authorised by law), reasonable (justifiable) and procedurally fair (all persons to be affected by an administrative decision, an opportunity to be heard and their inputs considered when making such decision. )

An expropriation is an administrative act which must inter alia be reasonable justifiable, decision to expropriate is an administrative when an expropriating authority exercises a power to expropriate in the public interest,

132013-04-17

“juristic person” is defined to refers to a juristic person established in terms of law and who accounts for the management of its finances in terms of the Public Finance Management Act, 1999 or the Local Government: Municipal Finance Management Act, 2003

“property” is not limited to land and includes a right in or to such property

142013-04-17

The Preamble indicates the purpose or intention of the Draft Bill. The Draft Bill-

Provides for the expropriation of property for a public purpose or in the public interest, subject to compensation

Provides for the determination of just and equitable compensation by the consideration of all relevant factors

Provides a framework of the procedures to be followed by all expropriating authorities when exercising the power to expropriate

Provides for the acknowledgement and compensation of unregistered rights in property which are extinguished by expropriation

152013-04-12

Application of the Act [clause 2]

The procedures in the Draft Bill apply to all expropriating authorities

The existing powers of expropriating authorities, as granted in terms of their empowering legislation, are to remain intact, subject to the exercise of such power in accordance with the uniform procedures proposed in the Draft Bill

Powers of the Minister of Public Works [clauses 3 & 4]

Power to expropriate property for a public purpose or in the public interest

Power to expropriate on behalf of a juristic person, for a public purpose or in the public interest

162013-04-12

Expropriation of property on behalf of juristic person [clause 4]

The Minister may, at the request of the minister responsible for the administration of the law that establishes a juristic person, expropriate property on behalf of the juristic person, if such juristic person has satisfied the ministers that-

it requires property for a public purpose or in the public interest; All negotiations with the property owner/s have ended in a deadlock; It has the ability and capacity to give effect to the purpose for which property is

required to be expropriated; and It has in writing accepted the Minister’s conditions

The property vests in the juristic person from date of expropriation

172013-04-12

Expropriation of property on behalf of juristic person (cont.)The juristic person must transfer the property to the state if the juristic person-

Fails to give effect to the purpose for which the property was expropriated or the purpose approved by the Minister; or

Continues to use the property for a purpose other than for which it was expropriated or for which approval was given by the Minister

If the property is transferred by the juristic person to the state, as detailed above, the Minister must, within 180 days of such transfer, decide whether to retain it.If retained, the Minister must compensate the juristic person for the value of the property, less the cost of determining such valueIf the property is not to be retained, the juristic person must be compensated from the proceeds of the disposal, less the cost incurred by the Department in maintaining and disposing of the property.

182013-04-12

Delegation of powers and duties by the Minister [clause 5]

Minister is granted a general power of delegation, subject to certain exceptions

Exceptions- Minister may not delegate- the power to expropriate the power to decide-

on the amount of compensation to be offered or counter-offered on whether to expropriate on an urgent basis

on the withdrawal of an expropriation

the power to issue regulations

192013-04-12

Investigation [clauses 6 & 7]

The Draft Bill provides a pre-expropriation processAn expropriating authority must investigate, inter alia,-

suitability of the property for the purposes for which it is required impact of the expropriation on existing and future engineering services,

infrastructure and housing and town planning; and existence of registered/unregistered rights in the property

An expropriating authority must, inter alia, call upon the Departments of Mineral Resources and Rural Development & Land Reform, as well as the relevant Municipalities to provide requisite information.

202013-04-12

Notice of Intention to Expropriate [clause 8]A notice of intention to expropriate must be–

published, informing the public of such intention; delivered to DRDLR and relevant Municipality; and served on all known affected persons, inviting them to lodge any objections or

submissions.The prescribed process includes the following steps prior to making a decision to expropriate-:

notification of an intention to expropriate (“administrative decision”), Invitation to comments or submission, consideration of or consultation on such comments or submission, decision on whether to expropriate the property or not, and Notification of the decision

212013-04-12

Notice of expropriation [clause 9]

The decision to expropriate property is made by serving a notice of expropriation to the owner and know holders of registered and unregistered right in such property.

222013-04-12

The Notice of Expropriation is also required to be- Published – in the Gazette and two local newspapers of different official

languages Delivered to the Registrar of Deeds, and any other government office in which

rights in the property are registered or recorded, e.g. the Registrar of Mining Titles

Directors-General of DPW; DRDLR and DMR Municipal Manager Holder of a mortgage bond Holders of other registered rights and holders of unregistered right of whom the

expropriating authority is aware and whose rights are not to be expropriated.

232013-04-12

The Notice of Expropriation must include- [Clause 9 (4)]

purpose of the expropriation;

reasons for the expropriation of that particular property;

date of expropriation and date of possession of the property;

amount offered as compensation (including compensation offered to known holders of unregistered rights in the property);

an explanation of what the amount of compensation comprises; and

copies of reports detailing how the amount of compensation was determined.

242013-04-12

Vesting of expropriated property [clause 10]

The effect of an expropriation-

Expropriated property vests in the state or juristic person, as the case may be, released of mortgage bonds

All unregistered rights are simultaneously expropriated, unless otherwise stipulated

Other registered rights remain unaffected unless specifically expropriated

252013-04-12

Verification of unregistered rights and consequences of expropriation on unregistered rights [clauses 11 & 12]

All unregistered rights are simultaneously expropriated, unless otherwise stipulatedThe draft Bill provides a process for the verification of claims by persons to have held unregistered rights in property prior to date of expropriation and for which they have not been compensated. The process includes the following steps-

Request for evidence to substantiate claim; receipt and forwarding evidence to DRDLR; making a determination on the claim; Notification of the determination; If the claim is valid, negotiation on and payment of compensation

262013-04-12

Determination of Compensation [clause 13-18]

The draft Bill provides for the payment of just and equitable compensation, which is to be determined by taking into consideration all relevant factors, including (but not limited to-

The current use of the property;

The history of the acquisition and use of the property;

The market value of the property;

The extent of direct state investment and subsidy in the acquisition and beneficial capital improvement of the property; and

The purpose of the expropriation

272013-04-12

Process in negotiating compensation The Notice of Expropriation must include an offer of compensationExpropriated owners and holders of rights must indicate, in writing, whether the compensation offered is accepted

If not accepted, the expropriated owners and holders of rights must indicate the compensation claimed and provide full particulars of such claim (including valuations or other professional reports informing the claim)

If the expropriating authority does not accept the claim by the expropriated owner or holder of rights, he/she must make a revised offer; indicating the details thereof

A claim for compensation and an offer of compensation remain in force until the – expropriating authority makes a revised offer; claim or offer has been accepted; or compensation has been decided or approved by a court.

282013-04-12

Property subject to mortgage bond or deed of sale [clause 19]

Compensation may not be paid, without agreement between buyer, mortgagee and claimantIn the absence of an agreement, any of the aforesaid parties may approach the court for an order determining the rights of the parties and directing the expropriating authority in the payment of the compensation

Payment of municipal rates and other charges [clause 20]

Municipal manager must inform the expropriating authority of any outstanding municipal rates and other charges on the property

292013-04-12

Deposit of compensation with the Master of the High Court [clause 21]

An expropriating authority may pay the compensation to the Master of the High Court, if-A court directs so;The owner or affected person cannot be ascertained; or The address of the affect person is not ascertainable or if he or she fails to supply the banking details to effect electronic payment of compensation

302013-04-12

Access to Court [clause 22]

A party to an expropriation may approach court-

to decide or approve the amount of compensation or the time or manner of payment of compensation; or

To resolve any other dispute between the parties resulting from or relating to the application of the Act

312013-04-12

Urgent Expropriations [clause 23]The draft Bill provides for urgent expropriations under the following circumstances:

In the case of a disaster, as defined in the Disaster Management Act, 2002 (Act No. 57 of 2002); or

Where a court grants an order that an expropriating authority is entitled to use the provisions relating to urgent expropriation

In the case of urgency, an expropriating authority may take the right to use a property temporarily, subject to the payment of compensationThe expropriating authority may, during temporary use of the property, commence with the process of expropriating the property on a permanent basis.

322013-04-12

Withdrawal of Expropriation [clause 24]The Minister may withdraw an expropriation if the withdrawal is-

In the public interest; or Expedient

Notices of withdrawal - served parties who received a notice of expropriationWithdrawal of the expropriation will be effective from the date mentioned in the notice Withdrawal of an expropriation is not permitted-

3 months after the date of expropriation – exception: may be withdrawn by consent of the parties or order of court;

If the property (land) has been transferred to the State or juristic person; If compensation has already been paid – exception: may be withdrawn by consent of the

parties.

332013-04-12

Expropriation Register [clause 26]

The Director-General of Public Works must establish and maintain a register of- :

All intended expropriations

All expropriations effected

All decisions not to proceed with an intended expropriation; and

All expropriations withdrawn

All expropriating authorities are required to submit the necessary documentation to the Department, as required for purposes of keeping the register updated.

342013-04-12

Transitional Arrangements [clause 30]

The Act will not apply to the consequences of expropriations effected prior to the commencement of the Act.

Proceedings for the determination of compensation must be instituted, or if already instituted, finalised as if the Act was not passed–

exception: the parties may consent to the application of the provisions of the Act in the determination of compensation.

352013-04-12

THANK YOU

362013-04-12