The writer says even if the Treasury’s independence and SA’s investment-grade credit status are maintained and economic growth improves, a major historic challenge appears to have been provoked. Picture: SUPPLIED
The writer says even if the Treasury’s independence and SA’s investment-grade credit status are maintained and economic growth improves, a major historic challenge appears to have been provoked. Picture: SUPPLIED

MARKET value is not the sole determinant for compensation when land was being expropriated for restitution purposes, according to a Land Claims Court judgment on Tuesday.

While some political parties, notably the Economic Freedom Fighters, have criticised the Constitution’s property clause for entrenching historic inequality, others have argued that the radical potential of its expropriation provisions has yet to be tested.

Although the judgment remained within the boundaries of the Constitutional Court’s and Land Claims Court’s earlier approach to expropriation, it emphasised that while market value should be considered, this was not the only factor.

According to the Constitution, when expropriating property, compensation must be "just and equitable". Determining what would be just and equitable requires considering and balancing "all relevant circumstances" including market value, the property’s acquisition history and the purpose for expropriating it.

Acting Judge Tembeka Ngcukaitobi said that the Constitutional Court and Land Claims Court had adopted a two-stage approach to determine just and equitable compensation: first to determine the market value; then to consider the other factors.

However, while this approach of considering multiple factors had been used by a number of courts, in some cases market value had played "a disproportionately significant role", the judge said.

"In my view, the purpose of expropriation should be given due weight. The recognition of labour tenants’ rights ... is as important as the market value of the property," said Ngcukaitobi.

He said if the Constitution was properly interpreted, compensation below market value could be paid in land reform cases.

In this case, labour tenant Msindo Msiza’s family had been living on and farming the claimed land since 1936. The current owners had bought the farm for just R400,000 in 1999 — knowing that it was the subject of a restitution claim — and now wanted to sell just a portion, 45 hectares, for more than R4m.

Ngcukaitobi said the increase was so significant that it would "run counter to the objects of compensation" set in the Constitution.

"The object is not to reward property speculators. It is to serve the public interest," he said. The court ordered a downward adjustment to R1.5m. Ngcukaitobi said he had followed the two-stage approach as it had been followed by the Land Claims Court.