A comparative analysis between prescribed valuation methodology and the judicial interpretation of just and equitable compensation
Boshoff, Theo Charl
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When the Property Valuation Act was passed in 2014, the Office of the Valuer-General was established to create valuation capacity within the state and assist the Minister with valuing land identified for acquisition as part of the land reform programme. As envisioned in the Green Paper on Land Reform, the Office of the Valuer-General was created to facilitate the shift from acquisitions based on the willing-buyer, willing-seller principle, towards acquisitions based on just and equitable compensation as prescribed by section 25 of the Constitution. Regulations were also promulgated in 2018 prescribing a formula to be used by the Valuer-General when valuing properties identified for acquisition by the state under land reform legislation. This legal regime places an obligation on the Valuer-General to determine the value according to a formula which mirrors the calculation of just and equitable compensation for expropriation in section 25 (3) of the Constitution. If a valuation conducted under these requirements can accurately predict a value that reflects just and equitable compensation, it can assist to inform the Minister's offer during expropriation proceedings or when negotiating a purchase price for the property. It is assumed that an accurate valuation will promote efficient land reform by assisting the parties to reach agreement, thereby avoiding the costs and time value lost to litigation about the quantum of compensation. A detailed analysis reveals and inconsistency between the flexible approach followed by the judiciary when applying listed and unlisted factors to determine just and equitable compensation for expropriation, and the codified formula prescribed by Regulations to the Property Valuation Act. The judicial approach to interpreting just and equitable compensation is supplemented by a limited comparative legal study looking at the interpretation of Article 14.3 of the German Basic Law by the German Federal Constitutional Court and the European Court of Human Rights. The inconsistency is, however, unlikely to affect the constitutional validity of the Property Valuation Act. Recent caselaw confirmed that a valuation by the Valuer-General does not oust the jurisdiction of the courts to determine just and equitable compensation nor does it bind the Minister when formulating offers of compensation. A comparative legal study with similar legislation enacted in Australia and Eastern European countries suggests that statutory valuation bodies can influence the calculation of compensation to a varying degree but never assumes the role of a final arbitrator to the exclusion of a court. Domestic caselaw and foreign, persuasive authority suggests that a valuation by the Valuer-General can at best be used to inform an offer of compensation and should not offend section 25 of the Constitution as the court remains the final arbitrator of just and equitable compensation. Amendments to the Expropriation Bill and the Regulations to the Property Valuation Act can clarify the Valuer-Generals' role in expropriation proceedings and improve the accuracy of its valuations vis-à-vis just and equitable compensation.
- Law