Compensation for excessive but otherwise lawful regulatory state action

Thesis (LLD)--Stellenbosch University, 2015

ENGLISH ABSTRACT : Section 25 of the South African Constitution authorises and sets the limits for two forms of legitimate regulatory interference with property, namely deprivation and expropriation. The focus of this dissertation is on the requirement in section 25(1) that no law may authorise arbitrary deprivation of property. According to the Constitutional Court, deprivation is arbitrary when there is insufficient reason for it. The Court listed a number of factors to consider in determining whether there is a sufficient relationship between the purpose to be achieved by deprivation and the regulatory method chosen to achieve it. The outcome of the arbitrariness question depends on the level of scrutiny applied in a particular case. The level of scrutiny ranges from rationality review to proportionality review. Deprivation that results in an excessively harsh regulatory burden for one or a small group of property owners will probably be substantively arbitrary and in conflict with section 25(1). Courts generally declare unconstitutional regulatory interferences with property rights invalid. However, invalidating legitimate regulatory measures that are otherwise lawful purely because they impose a harsh and excessive burden on some property owners may not always be justified if the regulatory measure fulfils an important regulatory purpose. Invalidating excessive regulatory measures may in some instances also be meaningless and may not constitute appropriate relief in vindicating the affected rights. The purpose of this dissertation is to investigate the appropriateness of alternative solutions to invalidating otherwise lawful and legitimate but excessive regulatory deprivations of property. The goal is to identify remedies that allow courts to uphold the regulatory measure and simultaneously balance out the excessive regulatory burden it imposes on property owners. One alternative solution is to transform the excessive regulatory measure into expropriation and require the state to pay compensation to the affected owner. This approach is referred to as constructive expropriation. However, in view of the Constitutional Court’s approach to and the wording of section 25 it seems unlikely that it will adopt constructive expropriation as a solution. Another alternative solution is for the legislature to include a statutory provision for compensation in the authorising statute. Examples from German, French, Dutch and Belgian law show that this approach balances out the excessive regulatory burden and allows courts to uphold the otherwise lawful and legitimate but excessive regulatory statute without judicially transforming the deprivation into expropriation. An overview of South African law indicates that there is legislation that includes non-expropriatory compensation provisions. In cases where the regulatory statute does not contain a compensation provision, the courts might consider reading such a duty to pay compensation into the legislation or awarding constitutional damages. In conclusion, it is possible for the state to deprive owners of property in a manner that may result in an excessive regulatory burden being suffered by one or a small group of property owners if the regulatory purpose is necessary in the public interest, provided that the legislature explicitly or implicitly provides for non-expropriatory compensation in the regulatory statute.

AFRIKAANSE OPSOMMING : Artikel 25 van die Suid Afrikaanse Grondwet magtig en stel grense daar vir twee regmatige vorme van regulerende staatsinmenging met eiendom, naamlik ontneming en onteiening. Die fokus van hierdie proefskrif is op die vereiste in artikel 25(1) dat geen wet arbitrêre ontneming van eiendom mag toelaat nie. Volgens die Grondwetlike Hof is ʼn ontneming arbitrêr as daar nie ʼn voldoende rede daarvoor is nie. Die Hof het faktore gelys wat oorweeg moet word om te bepaal of daar ʼn voldoende verhouding bestaan tussen die doel wat die staat met ontneming van eiendom nastreef en die regulerende maatreël wat vir die doel gebruik word. Die uitkoms van die toets vir arbitrêre ontneming hang af van die hersieningsstandaard wat die howe in ʼn spesifieke geval gebruik. Die standaard wissel van ʼn redelikheidstoets tot ʼn proporsionaliteitstoets. ʼn Ontneming wat ʼn oormatige swaar las op een of ʼn beperkte groep eienaars plaas sal waarskynlik arbitrêr en teenstrydig met artikel 25(1) wees. Die howe se benadering is om ongrondwetlike ontnemings van eiendom ongeldig te verklaar, maar dit is nie altyd geregverdig om toelaatbare en andersins regmatige ontnemings wat ʼn oormatige las op sommige eienaars plaas ongeldig te verklaar nie. Die ongeldigverklaring van wetgewing wat ʼn oormatige ontneming magtig mag soms ook nutteloos wees en nie ʼn gepaste remedie wees om die eienaar se regte te herstel nie. Die doel van hierdie proefskrif is om die geskiktheid van alternatiewe oplossings tot die ongeldigverklaring van andersins regmatige maar oormatige ontnemings van eiendom te ondersoek Die doel is om remedies te identifiseer wat die howe toelaat om regulerende ontnemings in stand te hou en terselfdertyd die oormatige las op enkele eienaars uit te balanseer. Een alternatiewe oplossing is om die oormatige ontneming te omskep in onteiening en die staat sodoende te verplig om aan die eienaar vergoeding te betaal. Hierdie benadering staan bekend as konstruktiewe onteiening. Gegewe die Grondwetlike Hof se benadering tot en die bewoording van artikel 25 is dit onwaarskynlik dat die howe konstruktiewe ontneming as ʼn oplossing sal aanvaar. ʼn Ander alternatiewe oplossing is vir die wetgewer om ʼn statutêre bepaling vir vergoeding in die magtigende wetgewing in te voeg. Voorbeelde uit die Duitse, Franse, Nederlandse en Belgiese reg toon aan dat hierdie benadering ʼn oormatige las kan uitbalanseer en die howe toelaat om die andersins geldige en regmatige ontneming in stand te hou sonder om dit in onteiening te omskep. ʼn Oorsig van Suid Afrikaanse reg dui aan dat daar wetgewing bestaan wat wel voorsiening maak vir sodanige vergoeding. In gevalle waar die magtigende wetgewing nie vergoeding voorsien nie kan die howe oorweeg om ʼn vergoedingsplig in die wet in te lees of om grondwetlike vergoeding toe te ken. Hierdie proefskrif kom tot die gevolgtrekking dat dit grondwetlik moontlik is vir die staat om eienaars van eiendom te ontneem op ʼn wyse wat soms daartoe kan lei dat enkele eienaars ʼn oormatige swaar las moet dra, mits die ontneming ʼn belangrike openbare doel dien en die wetgewer uitdruklik of implisiet voorsiening maak vir vergoeding.