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Wednesday Dec 05, 2012

When the state expropriates private property

Governments or their agencies have the power to take away privately-owned land or property - usually for public use.

Most governments compensate the deprived owner for the expropriated property. In some countries, like the US, an owner's permission to expropriate property is not needed, although the owner is "justly compensated".

The South African constitution requires the government to pay the owner the market value, or what is "just and equitable" in a particular situation.

Does a tenant have any claim for compensation if the owner's property is expropriated?

Take the case of an owner who agrees to his property being expropriated in return for payment.

He is allowed to continue occupying the property as a tenant, but later discovers that the municipality has changed the purpose for which the property would be used.

Does he have a claim against the municipality for "misleading" him, or can he have the expropriation reversed?

Legal complications may follow when properties are expropriated for a specific use, but are later used in a different manner.

The previous owner may challenge a municipality for unjust administrative action in the wrongful expropriation.

Such was the case that started in 1997 when the Richards Bay Council (later to become the Umhlatuze Municipality) expropriated John Rex Harvey's properties ( Harvey v Umhlatuze Municipality & others).

Together with other properties that formed "The Ridge" that was rezoned as public open space, the council intended to develop, for public use, a passive recreational open space and conservation area.

Harvey continued to occupy the property on a short-term lease agreement after it was transferred to the municipality.

Several new town planning proposals were presented over the next five years, and by 2002 the rezoning was changed for commercial usage.

In 2006, the council resolved that the consolidated proposals would be put out for public tender.

Harvey objected to the new rezoning since it deviated from the council's declared purpose for which his and other properties were expropriated.

He also claimed that his property was a Heritage Site which would now be affected by the rezoning for commercial purpose.

Harvey argued that this was not just and equitable in terms of the country's constitution and the Promotion of Administrative Justice Act.

The council responded to his objections by adopting a resolution on March 20, 2007, that the intended museum and ancillary facilities were excluded from the rezoning due to many unsuccessful attempts to have these established.

The council resolved that the successful tenderer must provide a solution in the event Harvey's property was found to be a Heritage Site.

Harvey and other previous owners were informed that their request to reverse the expropriation was denied.

Harvey's appeal to the council's appeal committee was dismissed in January 2008 and by February, Crystal Lagoon Investments 44 CC was awarded the tender.

Harvey eventually took the matter to the KwaZulu-Natal High Court, Pietermaritzburg, challenging the council to have his properties returned to him at market value.

The court, in a lengthy judgment in which the laws on expropriation of a number of countries were examined, found that the council did not violate Harvey's constitutional rights.

The only right Harvey had was that of a tenant, and any eviction would follow the due legal process.

He was not entitled to have his properties back, despite the fact that the council had changed its declared purpose regarding the properties.

The council was the owner of Harvey's properties through expropriation and did not violate "any of its constitutional and legal obligations" to Harvey.

"In our country there is no principle of law whereby 'property that was expropriated for a public purpose that was never realised (or for a purpose that ceased to exist) should be returned to the original owner, even if compensation was paid for it'. Such a principle cannot be extracted from the jurisprudential framework established by the Constitutional Court..."

The case was dismissed and no cost order was made against Harvey since the case raised a unique and novel issue, which, in turn, raised important constitutional and legal considerations.

For tenant's rights' advice, contact Loshni Naidoo or Pretty Gumede at 031 304 6451

Dr Sayed Iqbal Mohamed
Chairperson, Organisation of Civic Rights
Daily News


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