IURA 414 Land Law Notes - North-West University PDF

lOMoARcPSD|18834397 IURA 414 LAND LAW Notes Land Law And Registration / Grond- En Aktesreg (North-West University) Scan to open on Studocu Studocu is not sponsored or endorsed by any college or university Do...

lOMoARcPSD|18834397 IURA 414 LAND LAW Notes Land Law And Registration / Grond- En Aktesreg (North-West University) Scan to open on Studocu Studocu is not sponsored or endorsed by any college or university Downloaded by Luke ([email protected])  lOMoARcPSD|18834397 IURA 414 notes Study unit 2.2 – constitutional property clause and overview of land reform programs Outcomes: - Discuss S 25 to property - Discuss deprivation and expropriation - Overview of land reform legislation Introduction: The right to property has been fundamental in South Africa since the introduction of a constitutional property clause in the interim Constitution. This notion was reaffirmed in the 1996 Constitution through the continued protection and regulation of property. Section 25, along with the right to housing, challenges the traditional division between private and public law. Historically, regulations concerning property were considered part of private law, while public law addressed issues of liberty and equality. However, the South African property clause is now understood as a dual mechanism. It serves to protect private property from unjust interference and also facilitates the transformation of existing patterns of property ownership Structure, application and interpretation of section 25: Section 25 provides: 1) No one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property. 2) Property may be expropriated only in terms of law of general application A) for a public purpose or in the public interest; and b) subject to compensation, the amount of which and the time and manner of payment of which have either been agreed to by those affected or decided or approved by a court. 3) The amount of the compensation and the time and manner of payment must be just and equitable, reflecting an equitable balance between the public interest and the interests of those affected, having regard to all relevant circumstances, including a) the current use of property b) the history of the acquisition and use of the property c) the market value of the property; d)the extent of direct state investment and subsidy in the acquisition and beneficial c apital improvement of the property; and Downloaded by Luke ([email protected])  lOMoARcPSD|18834397 e) the purpose of the expropriation. 4) for the purposes of this section 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; and b) property is not limited to land. 5) The state must take reasonable legislative and other measures, within its available resources, to foster conditions which enable citizens to gain access to land on an equitable basis. 6) A person or community whose tenure of land is legally insecure as a result of past racially discriminatory laws or practices is entitled, to the extent provided by an Act of Parliament, either to tenure which is legally secure or to comparable redress. 7) A person or community dispossessed of property after 19 June 1913 as a result of past racially discriminatory laws or practices is entitled, to the extent provided by an Act of Parliament, either to restitution of that property or to equitable redress. 8) No provision of this section may impede the state from taking legislative and other measures to achieve land, water and related reform, in order to redress the results of past racial discrimination, provided that any departure from the provisions of this section is in accordance with the provisions of section 36 (1). 9) Parliament must enact the legislation referred to in subsection (6). Content of Section 25: On a structural level, the property clause comprises two seemingly contradictory parts. Whereas the clause is about the protection of property rights, it is also designed to guide the constitutionally mandated reversal of centuries of racial and economic discrimination. On the one hand, section 25 contains provisions that have a protective purpose: Section 25(1), dealing with deprivation section 25(2) and (3), dealing with expropriation read with the interpretation provisions of section 25(4), protect existing property interests against unconstitutional interference. section 25(5) (9) have a reform purpose and promote transition of the prevalent system of property holdings and property law when read with the interpretation provisions of section 25(4). Downloaded by Luke ([email protected])  lOMoARcPSD|18834397 The property clause: 1. Interpreting the property clause The interpretation of the property clause is determined: 1) by the specifically stipulated interpretation provisions of section 25(4) and then by section 39(1) of the Constitution. The context and purpose of the clause are further important considerations that determine its interpretation. Section 25(4) deals with two particular aspects relating to the interpretation of the property clause: 1) section 25(4)(a) specifies that the term '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 enables a justification of expropriation of land for purposes of land reform, which places a specific reformative spin on the provisions protecting existing property relations in sections 25(2) and (3). 2)section 25(4)(b) specifies that property is not limited to land, which enables a very broad range of corporeal movables, incorporeals, commercial interests and intellectual property to fall within the protective ambit of the property clause. Section 39(1) of the Constitution applies to all fundamental rights. It provides that interpretation of any of the fundamental rights must promote the values underlying an open, democratic society based on human dignity, equality and freedom. In such interpretation, international law and foreign law must be considered. With regard to constitutional property law, the focus to date has been on the comparative functions of foreign law, rather than on international law pertaining to property protection. By now it is accepted that legal comparison has an important role to play in the development of a South African theory of constitutional property protection. Legal comparison should be approached cautiously, with sensitivity for the mixed roots of the South African legal system and concomitant hybrid legal mechanisms. Since the introduction of a new constitutional dispensation in 1994, South African courts have been committed to 'purposive' interpretation of the Constitution. With this kind of interpretation the objective is to give effect to the underlying policy, object or purpose of a law when it is interpreted. The purposive approach to constitutional interpretation has been described as 'nuanced, context oriented and court driven'. Downloaded by Luke ([email protected])  lOMoARcPSD|18834397 To give effect to fundamental rights, such as property, the courts will take guidance from the fundamental constitutional values, other constitutional rights, comparative and international law, and the relevant historical and social background. This means that the dual nature and function of the property clause must form part of the interpretive exercise. An effort must be made to find an interpretation in which both the protective and transformative aspects of the clause are acknowledged and optimised. The acknowledgement of the 'creative tension’ between the protective and reformative aspects within section 25 as interpretive starting point is the key to an optimisation of the interests affected in any given situation pertaining to property protection and regulation. The constitutional protection of property is hence to be understood against the backdrop of the foundational constitutional values, the importance of socioeconomic development, international law, and South Africa's peculiar and unfortunate history of dispossession, and its hopes for a democratic future. Therefore, the achievement of an equitable balance between private and public interests hinges on acknowledgement of both the protective as well as the reformative function of the property clause. The constitutional purpose of transforming the property regime is an important consideration in this regard. However, it should be emphasised that the property clause does not create a positive claim for anyone to receive property from the state, but it confirms that existed property holdings are protected against arbitrary interferences. A further guideline is that the constitutional property clause protects individual freedom to exercise property rights to the same extent as it protects the public interest in individual property. Case: In First National Bank of SA Ltd t/a Wesbank v Commissioner for the South African Revenue Service; First National Bank of SA Ltd t/a Wesbank v Minister of Finance the context sensitive, balancing of interests approach resulting from purposive interpretation was confirmed. After analysing the role and meaning of the requirement that no deprivation of property may be arbitrary, the Constitutional Court confirmed that the arbitrariness test is in essence an exercise in balancing various interests, and one which can range in intensity from anything between rationality review on the one hand, to a proportionality analysis on the other. The court's approach was subsequently criticised for affording too much importance to the question of arbitrariness of the law resulting in the infringement on property. Downloaded by Luke ([email protected])  lOMoARcPSD|18834397 This effectively limited the possibilities of interest balancing to the single, dominating possibility that 'sufficient reason' for a law infringing on property may not have existed. In this manner, primary importance is placed on the arbitrariness test of section 25(1), while other possible tests emanating from the property clause are demoted. The Constitutional Court's approach further leaves little scope for flexibly interlinking various overlapping aspects of the property clause. In subsequent case law, the court relied on the arbitrariness test as formulated in FNB but exercised the discretion conferred by the broad formulation of this test with notable self-restraint. 2. Application of the property clause: Section 8 of the Constitution regulates the applicability of the Bill of Rights, including the property clause. First, section 8(1) provides that the Bill of Rights applies to all law and binds the legislature, executive and judiciary and all organs of state. This refers to the obvious vertically binding effect of the Bill of Rights: the various branches of state power are curtailed by the protection of individual rights incorporated in the Bill. There is no question about the applicability of the constitutional property clause in protecting property from unjustified state infringement. It is widely accepted, further, that vertical application of the property clause is also at stake where private parties are conducting themselves in a way authorised by law. Secondly, section 8(2) provides that the provisions of the Bill of Rights may also bind natural and juristic persons where applicable, if the nature of the right and any duties imposed by it are taken into account. This provision renders the rights in the Bill of Rights enforceable between private persons and private institutions, thus bringing private law disputes under the ambit of the Constitution. There are differences in opinion as to exactly how the Bill of Rights is applicable horizontally, among private parties. It is accepted that there is scope under the Constitution for both direct and indirect horizontal application. Most instances of constitutional influence on private disputes will probably involve at least indirect horizontal application of the Constitution, although direct horizontal application may still be possible. To understand the application of the property clause, specifically the deprivation and expropriation provisions, we must consider one particular aspect of the wording, Downloaded by Luke ([email protected])  lOMoARcPSD|18834397 namely that no person may be deprived or expropriated of property 'except in terms of law of general application'. The details regarding this phrase as a requirement is discussed below under the respective analyses of deprivation and expropriation. However, in addition to being a requirement, the phrase 'in terms of general application' also speaks to the application of section 25. First, if deprivation or expropriation takes place without being authorised by law, it is unconstitutional and invalid for that reason alone. Indeed, the interference would be unlawful and may even be illegal (that is to say, it may amount to theft). Secondly, the focus of the regulation of deprivation and expropriation is on the law that authorises the action, not necessarily on the action itself. Put differently, a constitutionality challenge is brought against the law that authorised the interference, not against the action as such. In this sense, the status of the person who performs the action is not so important (whether a private or public actor) but the emphasis is on the provisions of the law in terms of which the action was taken. Section 25(1) contains a phrase that supports this approach, namely that 'no law may permit arbitrary deprivation'. The focus of the property clause on the law that authorises the interference, and not the person who operates under such authority, is a clear indication that the clause has indirect horizontal application in so far as a private person acts on the authority of law of general application and in doing so causes a deprivation of property. 3. Persons entitled to protection: With some exceptions, the Bill of Rights applies to natural persons, and to juristic persons to the extent required by the nature of the rights and the nature of the juristic person. According to the decision in FNB, the protection of section 25 extends to juristic persons. This ruling is based on the relevance of property protection for the promotion of democracy and economic growth. Case: In City of Tshwane Metropolitan Municipality v Link Africa (Pty) Ltd, the Constitutional Court confirmed that, unless acting in the public interest, the state (a municipality in casu) does not enjoy protection under section 25 of the Constitution. 4. Structure of a section 25 inquiry: Generally, in South African fundamental rights adjudication, a two stage approach is followed. Downloaded by Luke ([email protected])  lOMoARcPSD|18834397 This means that the applicant first has to establish the existence of a right protected by the Constitution and that a curtailment of this right occurred. In the context of the property clause, this means that it must first be asked whether a right contemplated in section 25 has been limited. Thereafter, the defendant has the opportunity to show that the curtailment of a constitutionally protected right is nevertheless justifiable in the particular instance. Even so, the Constitutional Court in FNB developed a specialised step-by-step structure for constitutional property inquiries. To summarise, the structure of a constitutional property inquiry is as follows. First, it must be determined whether the interest affected by the operation of a particular law qualifies as property under section 25. If so, it must be determined whether a deprivation of that property interest has occurred. If it has, the next question is whether the deprivation is in conflict with section 25(1), in particular the requirement of no arbitrariness. If this much has been established, it must be determined whether the limitation of the right in section 25(1) is justifiable in terms of the general limitations clause (section 36(1)) of the Constitution. Thereafter it must be determined whether the deprivation amounts to an expropriation in terms of section 25(2) and, if so, whether it complies with the requirements of section 25(2)(a) and (b). If it does not, the final question is whether the limitation of the right in section 25(2) is justifiable under section 36. Whereas the decision was welcomed for clarifying many of the unresolved issues raised by the phraseology of section 25, it may also be criticised because it resulted in a contraction of the two stage inquiry into a single analysis of whether the law at stake is justifiable against a flexible standard of review that may be anything between a 'thin' rationality test or a 'thick' proportionality test. This leaves very little room for other possible ways in which the property clause could be employed to strike a balance between private and public interests, and can prove to be much less flexible than was originally intended. 5. Relevance of the general limitations clause: As indicated above, the court in FNB held then whenever someone's rights under either section 25(1) or 25(2) are limited, the next step in each instance is to determine whether such limitation is justifiable under the justification test in the general limitations clause (section 36(1)) of the Constitution. Downloaded by Luke ([email protected])  lOMoARcPSD|18834397 According to section 36(1), rights in the Bill of Rights (which naturally includes the rights guaranteed in the property clause) 'may be limited only in terms of law of general application to the extent that the limitation is reasonable and justifiable in an open and democratic society based on human dignity, equality and freedom, taking into account all relevant factors'. It goes on to list five no exhaustive factors: the nature of the right the importance of the purpose of the limitation the nature and extent of the limitation the relation between the limitation and its purpose and less restrictive means to achieve the purpose. Although section 36(2) confirms that no right may be limited other than in terms of this or another provision in the Constitution, there is some uncertainty with regard to the actual relevance of section 36 in disputes concerning the property clause. In the past, there had been much uncertainty about the manner in which these sections should be read to give effect to the constitutional objectives. Whereas some authors argued that the negative formulation of section 25 excludes a meaningful application of section 36 completely, others have constructed various possible conjunctive readings of the two provisions to indicate the ways in which the provisions of section 36 may insulate otherwise unconstitutional infringements on property from impugnment. Some important elements may be taken from this debate: first, it identified particular components within the property clause that constitute inherent limitations of the fundamental right to property. These appear in the form of internal modifying components or specific limitations, which could play an important role when and where section 36 needs to be applied to a constitutional property inquiry. Secondly, it set the parameters within which the applicability of a proportionality test to constitutional property inquiries could be developed. The approach in the FNB decision dispensed with much of the debate about when and how section 36 should be applied to a section 25 inquiry. By contracting the first and second stages of the property analysis and assigning a flexible definition to the levels of scrutiny to be applied in the context of a property inquiry, it changed the focus that was formerly placed on rationality and proportionality review. Downloaded by Luke ([email protected])  lOMoARcPSD|18834397 It may now be accepted that constitutional property inquiries may be subject to varying levels of scrutiny, in some cases amounting to no more than the establishment of a rational connection between means and ends, and in other cases amounting to a substantive balancing process under the dictates of the proportionality test as espoused in section 36. Based on the court's approach, it may be unlikely that an infringement on property not complying with the requirement of 'generally applicable law' in section 25(1) or (2) can be in line with this requirement where it is considered under section 36(1). Neither will a deprivation or expropriation that does not meet the public purposes requirement of section 25(2), which is implicit in section 25(1) too, pass the general limitation analysis, because it could not possibly be reasonable or justifiable in terms of section 36(1). In addition, a deprivation that is arbitrary in terms of section 25(1) cannot possibly be reasonable under section 36(1), since one of the core notions of arbitrariness points to unreasonableness. Moreover, because of the context sensitive formulation of the compensation requirement in section 25(3), it is unlikely that an expropriation which does not pass muster in terms of the compensation clause will ever be justifiable in terms of section 36(1), because it will fail the reasonableness standard. Despite these criticisms, the Land Claims Court accepted in Nhlabati and Others v Fick that a general limitations analysis could be undertaken where expropriation without compensation was legislatively mandated. In the Opperman cases, both the high court and the Constitutional Court found that section 89(5)(c) of the National Credit Act limited section 25(1) of the Constitution because it permitted arbitrary deprivation of property. Therefore, the next question before both courts was whether this limitation could be justified under section 36(1) of the Constitution. The high court acknowledged that it would be difficult to argue that a limitation based on arbitrariness could ever be justifiable in view of the core values of the Constitution. Further, the court pointed out that the factors relevant to the arbitrariness test would correspond to those that would influence the section 36 justification test. Notwithstanding, the high court went through the exercise of conducting a section 36 analysis and confirmed that the means used to achieve the purpose underlying section 89(5)(c) of the Act would, in many cases, be 'unreasonably and unjustifiably disproportionate' in its effects and therefore the provision could not be saved under section 36(1). Downloaded by Luke ([email protected])  lOMoARcPSD|18834397 In its judgment, the Constitutional Court similarly asked whether an arbitrary deprivation of property could ever be reasonable and justifiable in an open and democratic society. The Constitutional Court agreed with the high court that many of the factors taken into account under the arbitrariness test would lead to the same conclusion when doing a section 36(1) test. For instance, the court pointed out that section 89(5)(c) of the National Credit Act dismally failed the 'less restrictive means' test in section 36(1)(e) of the Constitution. In Shoprite Checkers (Pty) Limited v Member of the Executive Council for Economic Development, Environmental Affairs and Tourism: Eastern Cape, the Constitutional Court took a more pertinent stance on the relevance of section 36(1) and found that, once a deprivation is found to be arbitrary, it would be impossible to justify the infringement in terms of section 36(1). Threshold test: constitutional meaning and scope of property 1.The notion of constitutional property protection The interim Constitution use the term 'rights in property' while the Constitution refers to 'property'. The current property clause protects property negatively, by excluding deprivations of property not complying with the specifications of the Constitution, rather than by explicitly guaranteeing the right to property. The Constitutional Court has held that negative protection of property is generally accepted as appropriate, and that property can be institutionalised even in the absence of a clause expressly guaranteeing the existence of the right to property. It must hence be accepted that the full content of property and not something 'less than property' is protected by section 25(1), even though the provision is formulated in the negative. Further, according to the Constitutional Court, the right to hold property is implicit in section 25(1). The property clause's negative formulation therefore does not preclude the judiciary from accepting that property 'holding' (that is, the individual's right to acquire, hold and dispose of property in particular circumstances) is protected. Section 25 does not provide individuals with positive claims against the state for the provision of property. Furthermore, the wording of section 25 raises doubts whether the right to both individual property (in other words, property in the 'holding' sense) as well as the institution of property (in other words, property as a 'regime') is protected. Another issue is whether substantive or only procedural protection is afforded by the property guarantee. Downloaded by Luke ([email protected])  lOMoARcPSD|18834397 It was assumed that if section 25 provided only procedural protection, and did not institutionalise private property in an economic or political sense, it would sanction reforms to a greater extent. The Constitutional Court's ruling in Ex parte Chairperson of the Constitutional Assembly: In re Certification of the Constitution of the Republic of South Africa (the First Certification Case) confirmed, however, that despite the negative formulation of section 25, property can be substantively protected under the Constitution, and that the right to hold property is implicit in section 25(1).85 It is now accepted that section 25(1) provides much more than procedural protection, and that it guarantees the full content of property. South African case law supports the protection of property in the sense of individuals' rights to acquire, hold and dispose of property in particular circumstances. The idea that property 'holding' is protected constitutionally in this way nevertheless should not be mistaken to mean that all existing property interests are guaranteed absolutely against any interferences not authorised or consented to by the owner. The Constitutional Court in the First Certification Case accepted that property can be institutionalised even in the absence of a clause expressly guaranteeing the existence of the right to property. Hence even a negatively formulated property clause can guarantee the institution or 'regime' of property. This is evident from the constitutional commitment to land reform, access to resources, restitution of land and the security of tenure, which contrive to create an economy in which a newly empowered part of the South African society can benefit from an institutional property guarantee. These considerations underscore the state's duty to safeguard the institution of property. The Constitutional Court's indifference in the First Certification Case towards the manner in which the property clause is phrased, supports the idea that section 25 entails an institutional guarantee of property. In FNB this notion is apparently accepted. The dispute in FNB related to the property rights of third parties against a particular state organ (the Receiver of Revenue) in the context of improvement of fiscal efficiency. The Constitutional Court undertook a historical and contextual interpretation of the property clause and specifically considered the 'need for... redressing... the grossly unequal distribution of land in South Africa'. Downloaded by Luke ([email protected])  lOMoARcPSD|18834397 The court focused on the reform oriented aspects of the property clause to emphasise that the constitutional protection of property as an individual right is not absolute but subject to societal considerations, such as those contained in the preamble to the Constitution: the establishment of a society based on democratic values, fundamental human rights, and also social justice. Whereas property as an institution is recognised by the Constitution and distinguished from its private law counterpart, transformation necessitates a continuous review of the property regime, even in the non-reform context of innocent third parties being held liable indirectly for the tax debt of others. 2.Guidelines for the threshold test: The 'threshold question' in any constitutional property dispute is whether a particular interest qualifies as 'property' worthy of protection under the clause. Section 25 of the Constitution does not contain a comprehensive definition of property. The only express guidance is found in section 25(4)(b), which specifies that 'property is not limited to land'. Although this obviously implies that 'land' (immovable property or anything classified as such in law) qualifies for protection under section 25, the judiciary is called on to define the constitutional content, scope and limits of property. In FNB, the Constitutional Court stated that it would be practically impossible and judicially unwise to prescribe a numerus clausus of the kinds of property relations that would or should be protected constitutionally. The court hence treated the 'threshold question' very leniently, subjecting it to a very low standard of scrutiny. This suggests that the court is open to a wide, accommodating notion of property, which is also in line with the tendency in constitutional law to be generous in the acknowledgement of interests which would not qualify as property in a private law context. In FNB, the court indicated that both the nature of a particular interest involved as well as the object of such an interest must be considered in order to determine whether it is protected under the Constitution. In other words, protection is afforded not only to the proprietary object ('thing') itself but also to rights in that object. It is relatively clear that interests regarded as property in private law will enjoy protection under the property clause as well. In addition to land, which is classified as property in section 25(4)(b), corporeal movable things undoubtedly also qualify as property, which is evidenced by the FNB case wherein motor vehicles were the subject of the dispute. Downloaded by Luke ([email protected])  lOMoARcPSD|18834397 In FNB, the Constitutional Court also indicated that at the threshold stage it would concern itself neither with the 'subjective interest' of a claimant in the object of the right, nor with the 'economic value of the right'. The legal form of the right at the time of infringement would be the important consideration. The question of whether the relevant interest is property, is an objective one. Deprivations: 'deprivation' of property could be described as the (usually) uncompensated, duly authorised and fairly imposed restriction on the use, enjoyment, exploitation or disposal of property for the sake of the common good. However, no comprehensive definition of this term has as yet been accepted in case law. In FNB, the Constitutional Court described the term very generally, indicating that basically any interference with the use, enjoyment or exploitation of private property involves some kind of deprivation relating to the entitlements to the property concerned. According to the court's example, a 'deprivation' could entail the dispossession of 'all rights, use and benefit to and of corporeal movable goods', but the court foresaw that 'deprivation' could also entail an infringement on only some of the ownership entitlements. In Mkontwana v Nelson Mandela Metropolitan Municipality; Bissett v Buffalo City Municipality; Transfer Rights Action Campaign v Member of the Executive Council for Local Government and Housing, Gauteng - the Constitutional Court (again without seeking to define the term) stated that the existence of a deprivation depends on the extent of the interference with or limitation of use, enjoyment or exploitation of property. It stated that substantial interference or limitation going beyond the normal restrictions on property, its use or enjoyment in an open and democratic society would amount to 'deprivation'. This statement is criticised for being ambiguous. Generally, case law tends to focus on the formal requirements for deprivation, rather than attempting to define the concept. In City of Johannesburg Metropolitan Municipality v Blue Moonlight Properties (Pty) Ltd, a question was raised whether a delayed eviction amounted to an arbitrary deprivation of the affected landowner's property rights. The Constitutional Court confirmed that '[u]unlawful occupation results in a deprivation of property' but stressed that it would pass constitutional muster if it mandated by law of general application and not arbitrary. Downloaded by Luke ([email protected])  lOMoARcPSD|18834397 Formal requirements In FNB, the Constitutional Court indicated that the starting point of any constitutionality analysis of infringements on property must be section 25(1). This means that all deprivations (also expropriations) must meet the requirements of section 25(1); in other words, they must be authorised by a generally applicable law and they may not permit arbitrary deprivation. If these requirements are not met, the infringement on property will be unconstitutional and invalid, unless they are justifiable under section 36(1) of the Constitution. (a) Law of general application The first requirement, that only a law of general application may limit property rights, appears not only in section 36(1) of the Constitution, but also twice in the property clause itself. Administrative regulations or decrees are less likely to pass this requirement. The limitation must be authorised by the democratically elected legislature, acting within the constitutional parameters. The limitation must furthermore be generally applicable. Most laws affect classes or groups of people, rather than all members of society. This does not mean that these laws will not pass the requirement of 'general applicability'. Instead, a law will not comply with this requirement if it singles out a particular (group of) person(s) for discriminatory treatment. (b) The arbitrariness test In the second place, section 25(1) provides that generally applicable laws imposing on private property rights may not be arbitrary. In FNB it was held that arbitrariness encompasses both procedural and substantive arbitrariness. The substantive nonarbitrariness standard of section 25(1) is now accepted to denote that the law effecting deprivation should not only illustrate a rational connection between a legitimate governmental purpose and the manner in which it should be achieved, but that there should be adequate cause for a deprivation. At the very least, the nonarbitrariness requirement represents a formal procedural safeguard in that it ensures clear criteria for the exercise of the state's regulatory powers. Downloaded by Luke ([email protected])  lOMoARcPSD|18834397 Additionally, however, the non arbitrariness requirement may necessitate that a proportionate balance be struck between the public purpose served by a deprivation, and the inroads it causes on private property. Depending on particular circumstances, the arbitrariness test may be anything between a purely procedural test or a thorough, substantive balancing of competing interests. In the latter sense, the concept of nonarbitrariness overlaps with the idea of 'proportionality'. 'Proportionality' as envisaged by section 36(1) broadly refers to the justifiability and rationality of a particular imposition on property, when measured against the general limitations clause. It includes the idea that, as a final measure in determining whether a particular infringement is permissible, competing interests need to be balanced on the basis of specific requirements listed in section 36(1)(a)(e) of the Constitution, thereby complying with a requirement of proportionality in a 'stricter' sense of the word. The requirement in section 36(1) that an infringement must be 'reasonable' means that it may not be 'arbitrary, unfair or based upon irrational considerations,' whereas the requirement that the infringement must be 'justifiable' necessitates a 'meansends' analysis to determine whether a limitation is suitable or appropriate to achieve a specific objective. The same 'meansends' and 'rational connection' analysis was applied with reference to nonarbitrariness in some of the early Constitutional Court decisions without providing guidance as to the nature of the arbitrariness standard as either purely procedural or as substantive. In FNB, it was held that the provisions of section 25(1) form a 'filter' to the true limitation analysis (in other words, the proportionality test of section 36(1)). According to this approach, the question whether a particular infringement is arbitrary, should be determined apart from any possible proportionality review. The court refers to nonarbitrariness as a 'wider concept' and a 'broader controlling principle', which stretches beyond a mere rationality review, while simultaneously also representing a 'narrower and less intrusive concept than that of the proportionality evaluation required by... section 36' of the Constitution. According to the court's approach, the arbitrariness question may be distinguished from rationality review (in other words, the reasonableness question) in that the latter is regarded as a single component of the over all proportionality test of section 36(1), whereas the former represents a more flexible test through which the 'fairness' of a particular infringement may be tested at various points of the inquiry and with different levels of intensity. Downloaded by Luke ([email protected])  lOMoARcPSD|18834397 Most notably, it enables a consideration of the 'fairness' of a particular infringement early on in the inquiry, when the existence of an imposition on property has to be determined. The nonarbitrariness requirement therefore is more than merely a component of the formal requirements to be met before the proportionality inquiry commences, and also more than simply an element of the 'reasonableness' inquiry within the proportionality test itself. According to the court, a deprivation of property is 'arbitrary' when the 'law' referred to in section 25(1) does not provide 'sufficient reason' for the particular deprivation in question or is procedurally unfair. The interplay between variable means and ends, the nature of the property in a specific instance and the extent of the particular deprivation will in some circumstances result in sufficient reason being established by 'no more than a mere rational relationship between means and ends', while in other circumstances it will call for proportionality review. The nonarbitrariness of limitations may therefore be relevant, applicable and decisive at practically any point in the inquiry, and will determine the circumstances under which an imposition on property '[has cast] the net far too widely.' c)Public purpose The place and content of a public purpose requirement in determining the constitutionality of deprivations therefore still needs to be decided. It may probably be accepted, on the basis of comparative law and the function of the state's regulatory powers that deprivations undertaken for reasons of public health and safety will pass constitutional scrutiny if all other requirements are also met. It is more difficult, however, to assume that deprivations undertaken for purposes other than these core obligations of the state will pass muster without further ado. The dual purpose of section 25 as an instrument to protect individual freedom and to promote social change implies that the interplay between existing private ownership interests and state purposes will be an important element in determining when deprivations are for a public purpose. Deprivations undertaken for constitutionally acknowledged objectives such as land reform, and provision of housing, will probably relatively easily be accepted as valid if all the other requirements are met. Expropriations South African case law regards expropriation as a particular kind a subspecies of deprivation. Downloaded by Luke ([email protected])  lOMoARcPSD|18834397 In the constitutional context, this means that an expropriation has to comply with both requirements of section 25(1), which deals with deprivation of property, and section 25(2) and (3), which deals with expropriation and just compensation. South African common law contains principles and rules for expropriation, as stipulated in the Expropriation Act. In the new constitutional dispensation, the framework within which this Act is applied, must necessarily be reconsidered. Even so, existing expropriation law maintains a profound influence on the manner in which expropriation in a new dispensation is understood. The aspects which continue to influence post 1996 expropriation law are discussed briefly in the following paragraphs, to illustrate the manner in which the constitutional and statutory frameworks interact on matters such as validity requirements and terminology. Relation between the constitutional expropriation provisions and the Expropriation Act 63 of 1975 Since the Constitution is supreme law, the pre-constitutional provisions of the Expropriation Act are valid and applicable only in as far as they do not conflict with the constitutional framework. Where there are inconsistencies between the Expropriation Act and the provisions in the Constitution, the legislation will be invalid. Moreover, the procedures and principles for expropriation as set out in the preconstitutional Expropriation Act must be interpreted and applied anew, within the new constitutional framework. The preconstitutional requirements for expropriation as well as the manner in which preconstitutional law distinguished between expropriation and other infringements on private property remain relevant for present purposes are discussed briefly below. Formal requirements Expropriation may be the result of statutory provisions directly, or of administrative action based on generally applicable statutory provisions. I In both cases, the expropriations have to comply with the requirements for a valid expropriation in terms of section 25(2) of the Constitution. This means that expropriations must take place in terms of generally applicable law. They must be for a public purpose or in the public interest, and they must be accompanied by compensation as defined in section 25(3). Since the South African courts regard expropriation as a subset of deprivations, the requirements of section 25(1) of the Constitution must first be met. Downloaded by Luke ([email protected])  lOMoARcPSD|18834397 Expropriation by virtue of an administrative act in terms of a statute also has to comply with the constitutional requirement of just administrative action. Thus administrative deprivations of ownership must be lawful, reasonable and procedurally fair and must be substantially justifiable in terms of the reasons furnished by the administrator to the person whose rights have been affected. The manner in which the Constitutional Court interprets the requirement of nonarbitrariness when investigating the validity of deprivations might mean that very few cases will ever proceed to a consideration of the requirements of sections 25(2) and (3). It remains necessary, however, to consider the relationship between the constitutional and common law provisions dealing with expropriation. (a) Law of general application The requirement that an infringement be undertaken in terms of a law of general application appears not only in section 25(2) but also in the context of deprivation. The system for dealing with infringements on property proposed by the court in FNB suggests that this requirement will be considered once, at the outset of the investigation into the constitutional validity of such infringements. As such, the content of this requirement in section 25(2) will be very much the same as that of sections 25(1) and 36(1). In the context of expropriation specifically, 'law' can mean a statute or the common law. Apart from recognising the state's power to expropriate against payment of compensation, the South African common law does not endow any authority in South Africa with the power to expropriate. In so far as expropriation based on the common law seems unlikely at this point, the source of law of general application would therefore apply to statutes and other legislative measures making provision for expropriation or amounting to expropriation. Most authors agree that internal administrative policy documents cannot be described as law for purposes of this requirement. The Expropriation Act, which is the most important piece of legislation in the context of expropriation, may be regarded as an example of a law of general application. Expropriation is the prerogative of the state and may only take place under certain well defined circumstances. (b) Public purpose/Public interest Expropriation must take place for a public purpose or in the public interest. Downloaded by Luke ([email protected])  lOMoARcPSD|18834397 This requirement ensures that the state's power of eminent domain is not abused, by preventing expropriation of private property for improper or unlawful purposes and by controlling the legitimate exercise of the power to expropriate. Public purpose, when used in a wide sense, can refer to all purposes which pertain to or benefit the general public (as opposed to private individuals). The term can also be used in the narrow sense of governmental purposes. A range of interpretative possibilities exists between these poles, in terms of which more benefits than only those that relate strictly to public use are incorporated. In preconstitutional case law, courts took an ad hoc approach to the term 'public purpose' and tended to consider the particular authorising statute at stake before delimiting the term. For purposes of the expropriation, the concept of public purpose was used in the wide sense. Under the Constitution, the terms public purpose and the public interest probably may be used interchangeably with reference to expropriation. Compensation Under the Constitution, expropriation will only be valid if the infringing law provides for compensation of the affected right holder. Section 25(2)(b) provides for three possible methods of determining the amount, time and manner of compensation, namely by (i) agreement between the expropriator and expropriatee (and other affected persons); (ii) approval of such an agreement by a court; or (iii) a decision by court. The norm of compensation for expropriation is that it must be just and equitable, as reflected by the fact that the compensation has to be agreed on by those affected and approved or decided by a court. This norm is applicable to the amount of compensation, the time of payment thereof as well as the manner of payment. If one of these aspects proves to be unjust or inequitable, there is no compliance with the standard of compensation guaranteed by the Constitution. It is further required that an equitable balance between the public interest and the expropriatee's and other affected persons' interests must be reflected by the compensation amount. All relevant circumstances must be considered in determining whether the compensation complies with this norm, including (i) the current use of property; (ii) the history of acquisition and use of the property; (iii) the market value of the property; (iv) the extent of direct state investment and subsidy in the acquisition and Downloaded by Luke ([email protected])  lOMoARcPSD|18834397 beneficial capital improvement of the property; and (v) the purpose of the expropriation. The requirements of section 25(2) and (3) with regard to the justness and equitability of the compensation amount involve balancing the interests of affected individuals against those of the public carefully. The constitutional compensation norm is not readily equated with the market value of the expropriated property. The demotion of the place of market value in calculating compensation is conducive to arguments that compensation that is lower than market value may be justified in terms of the Constitution, even though this is an issue that is difficult to resolve, be it on the level of governmental policy or economic, legal and constitutional theory. In cases concerning expropriation that were decided under the new constitutional dispensation, our courts have indicated an awareness of the fact that the basis for calculating compensation has shifted. In Kerksay Investments (Pty) Ltd v Randburg Town Council the Transvaal Division of the High Court indicated that the traditional view that market value forms the basis of the compensation norm in terms of the Expropriation Act should be rejected. In Du Toit v Minister of Transport the Cape Division of the High Court confirmed that, although the Expropriation Act remains relevant, it has to be applied with due regard for the constitutional property clause. The interpretation of section 12 of the Expropriation Act must accordingly be brought in line with the intention displayed by the constitutional property clause. Downloaded by Luke ([email protected])