In a recent Investment Research Note put out by Nedbank Private Wealth, political analyst JP Landman claims to be ‘cutting through the noise’ surrounding the draft constitutional amendment bill introducing expropriation without compensation (EWC). However, his analysis is fundamentally flawed.
According to Mr Landman, there is nothing new or disturbing in the recent proposal by the ANC’s national executive committee that ‘the power to determine the quantum of compensation for land expropriation should reside in the executive’.
Yet this proposal clearly conflicts with Section 25 of the Bill of Rights. This provision currently states that ‘the amount’ of compensation on expropriation must either be agreed by the parties or ‘decided’ by a court.
Mr Landman nonetheless claims that ‘the hysteria that the courts are being cut out is wrong’. He also asserts that ‘the courts retain the right to review and can amend or set aside any executive decision (including R nil decisions) that do not meet the requirements of our law’.
This is mistaken and misleading. The power to review and set aside may still remain – though even that is subject to some doubt, as set out below – but the crucial power to ‘amend’ what the executive has decided will generally not apply.
The courts’ powers of administrative review derive primarily from Section 33 of the Bill of Rights, which gives everyone the right to administrative action that is ‘lawful, reasonable, and procedurally fair’. Important too is the Promotion of Administrative Justice Act (PAJA) of 2000, which was adopted to ‘give effect’ to Section 33.
Under PAJA, the courts may review administrative decisions that are procedurally flawed in various ways. Defects may arise, for instance, because the administrator was ‘biased’, or made ‘an error of law’, or acted ‘in bad faith’, or failed to comply with ‘a mandatory and material procedure’, or acted ‘so unreasonably’ that no reasonable person could have done the same.
Where such flaws are apparent, a court may ‘set aside the administrative action’ and ‘remit the matter for reconsideration by the administrator’. However, only in ‘exceptional cases’ is a court permitted to ‘substitute or vary the administrative action’.
Contrary to what Mr Landman claims, the courts cannot generally ‘amend’ administrative decisions. They can merely set procedurally defective decisions aside and send them back to administrators to consider afresh. They certainly cannot adjudicate on the key substantive issue of what compensation on expropriation would be just in all the circumstances.
In addition, the courts have no jurisdiction under PAJA to set aside decisions which do not amount to ‘administrative action’. Moreover, PAJA’s definition of ‘administrative action’ expressly excludes ‘the executive powers or functions’ of the ‘national executive’, the ‘provincial executive’ or ‘the executive powers or functions of a municipal council’.
What then would be the position under PAJA if Section 25 of the Constitution were indeed to be amended, as the ANC proposes, to take the power to decide on compensation away from the courts and vest it in the executive?
If the land minister then decided that ‘nil’ compensation should be paid on the expropriation of a particular farm or urban plot, her decision might rank as the exercise of an ‘executive power or function’, rather than as an ‘administrative action’.
According to the Constitutional Court, the key issue is not the identity of the decision-maker, but whether the decision is of ‘an administrative nature’. This in turn depends on the surrounding circumstances.
The courts have found, for instance, that a municipal council’s decision to appoint a municipal manager is indeed ‘administrative action’. By contrast, a municipal council’s decision to change a street name is not ‘administrative action’ (as the Supreme Court of Appeal or SCA ruled in 2011) because it is ‘legislative’ in nature and is ‘clearly influenced by political considerations’ for which the council is ‘politically accountable’.
The land minister’s decision on compensation ought to count as administrative action, but the matter is not clear cut. Rather, there is a risk that a ‘nil’ compensation decision could be seen as a primarily ‘political’ one aimed at reversing the ‘original sin’ of land dispossession.
If the PAJA definition is not met, the minister’s decision cannot be set aside under that statute. Expropriated home (and other) owners would then have to rely on the ‘principle of legality’, under which the exercise of public power is ‘only legitimate when lawful’.
As the SCA puts it: ‘The principle of legality not only requires that the decision must satisfy all legal requirements, it also means that the decision should not be arbitrary or irrational’. However, notes the court: ‘The rationality standard does not have a high threshold. All it requires is that the impugned decision must be aimed at the achievement of a legitimate government object and [be] the chosen method to achieve that object. The standard does not require that the decision is reasonable, fair, or even appropriate. It is of no consequence that the object could have been obtained in a different or better way.’
This test points to the real reason the ANC wants to amend the Constitution to make EWC ‘a legitimate option’ for land reform. If the courts then find themselves confined to applying the ‘principle of legality’ test, the scope for judicial scrutiny will be narrow.
Under the ‘legality’ test, procedural defects in the taking of the minister’s decision would warrant intervention. But on the substantive issue of the compensation to be paid, it will not matter whether the minister’s ‘nil’ decision is ‘reasonable, fair, or even appropriate’. Nor will it count that the land reform objective could be ‘obtained in a different or better way’.
The ANC’s game plan – to oust the current jurisdiction of the courts to adjudicate on EWC – is becoming ever more apparent. Mr Landman nevertheless (and quite astonishingly) asserts that the doctrine of the separation of powers will be breached if the courts are ‘made responsible for…taking decisions on when an expropriation should be [for] R nil’. Judges would then start ‘acting as civil servants’, he suggests.
This perspective is wrong in every way. The courts already have the task of ‘deciding’ on the compensation payable on expropriation under Section 25. In addition, the primary role of judges is to adjudicate on disputes, which they do by evaluating the evidence put before them by the parties and applying the relevant rules to the facts as so ascertained. To suggest that the exercise of this adjudicative function turns judges into ‘civil servants’ is bizarre.
Equally absurd is Mr Landman’s assertion that ‘some political parties want a change that will put the decision-making power with the courts’. This, he says, is a shift ‘the ANC is unlikely to accept’. This once again ignores the current wording of Section 25. It also implies that the ANC is only the organisation that is acting reasonably in resisting a ‘change’ that opposition parties are wrong to propose.
In fact, of course, it is the opposition parties that are trying to resist a change to Section 25 that the ANC is determined to bring about – not to help with land reform – but rather to weaken the free market system and advance its socialist national democratic revolution (NDR).
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