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October : Appeal Court Judgement on Just and Equitable Compensation

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4 October, 2017

Appeal Court Judgement on Just and Equitable Compensation


Please refer to the media release received from Agri SA regarding the above matter.

In essence the Court has now set the benchmark for the payment of just and equitable compensation for expropriated land - using market value as the base and then making adjustments for the other factors contained in section 25 (3) of the Constitution, these being: 
  1. The current use of the property
  2. The history of the acquisition and use of the property
  3. The extent of direct state investment and subsidy in the acquisition and beneficial capital improvement of the property
  4. The purpose of the expropriation.  

This Court ruling has thus brought clarity to the matter and is to be welcomed.

Roger Godsmark
Operations Director
Forestry South Africa
Tel :+27 33 346 0344
Fax: +27 33 346 0399
E-mail: roger@forestrysouthafrica.co.za

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Media Release   

 Privaatsak / Private Bag X180 Centurion 0046,
Tel +27 (0)12 643 3400, Faks/ Fax +27 (0)12 663 3178

29 September 2017

AGRI SA WELCOMES APPEAL COURT JUDGEMENT  ON JUST AND EQUITABLE COMPENSATION

The Supreme Court of Appeal handed down its judgement in the case of Uys van Msiza and others on 29 September 2017.  The case dealt with the important question of what constitutes just and equitable compensation when land is taken for land reform purposes.  The Land Claims Court made an arbitrary deduction of R300 000.00 from the compensation amount, because the land was being taken for land reform purposes.

Ernest Pringle, the chairperson of the Agri SA Land Committee said that Agri SA joined the proceedings as a friend of the court and argued that such a deduction was not allowed by the Constitution.  Agri SA argued that market value should always be the point of departure when just and equitable compensation is calculated.  The Constitution does not represent an outright rejection of the market based approach to compensation where land reform is concerned. It simply provides for greater flexibility when establishing just and equitable compensation.

Regarding the approach adopted by the Land Claims Court, Agri SA argued that the market value of the land owner's agricultural land may not be arbitrarily reduced in a manner which is incapable of objective assessment. Such an approach is unfair, irrational and introduces an element of arbitrariness which undermines legal certainty on a subject, which is of critical importance to the agricultural sector and, by its potential impact on food security, on all South Africans. Agri SA also maintained that the financial burden of acquiring property for public purposes or in the public interest should be spread throughout society, and should not be imposed disproportionately on expropriated land owners.

The Court confirmed that the approach taken by the constitutional Court to the calculation of just and equitable compensation in the Du Toit v Minister of Transport case that was decided in 2006, was indeed correct.  In that case, the court suggested a two-staged approach, starting with market value and thereafter adding or subtracting amounts as the relevant circumstances in section 25(3) may require to arrive at just and equitable compensation. The Appeal Court rejected the reasoning of the Land Claims Court in making a deduction from the market value and found that there were no facts that justified the deduction of R300 000.00 from the market value.

Pringle said that Agri SA had achieved what it had hoped to get by getting involved in this matter.  The Appeal court has now made it clear that no arbitrary deductions can be done merely because land was being taken for land reform purposes and that market value, being the only factor in section 25(3) that was readily quantifiable, should be the starting point in calculating just and equitable compensation, which may be more or less than the market value.

Source: Agri SA

 


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