On the relativity of property rights in the Constitution

August 29th, 2016
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People Development Process

By Johan van der Merwe

The very first founding provision of the Constitution declares that the Republic is a state founded on values. Our social order is in the first place a value based society, and not rule based. The importance of this point of departure can hardly be underestimated, because it means that the rules must be adapted from time to time to give clearer expression to those values which the Constitution entrench, namely, human dignity; human rights and freedoms; and social justice.  The Constitutional Court (CC) plays a decisive role in this process of the continuous adaption of rules to better express, protect and promote our constitutional values: ‘The challenge for South African courts is to develop a substantive account of the values and purposes which the socio-economic rights protect …’ (S Liebenberg Socio-Economic Rights (Cape Town: Juta 2010) at 42).

This article aims to consider briefly, and in very broad strokes, how the concept of property rights in a democratic constitution differs from the pre-constitutional dispensation, what the values are that underlie the rules of constitutional property rights, particularly vis-à-vis use rights, the impact on social and environmental justice, and how the CC is giving effect to these changes.

Property rights before and after the Constitution

The right of ownership at common law was the most extensive right in respect of property. It was an independent real right and it was broad, almost unlimited and absolute in ambit (see for instance CG van der Merwe Sakereg 2 ed (Durban: LexisNexis 1989) at 175ff). A duly registered property right granted an almost free reign to the owner to do as he or she deems fit with his or her property. The extent of this right is evident from, inter alia, the ability to reclaim possession of one’s property regardless of how possession was lost, the ability to trump competing use rights of others, and the stringent requirements, and extraordinary long time periods, to achieve acquisitive prescription. This notion of property rights is the product of a particular world order and could be described as the liberal perception of rights.

However, this perception of rights is no longer acceptable in a constitutional dispensation: ‘The idea behind this liberal perception of rights is that property rights are natural rights that predate social or state organisation and that they are therefore absolute or inclusive of all conceivable entitlements in their “normal” form; restriction comes later through state intervention that follows the social contract. Accordingly, restrictions that limit the pre-existing right require special authorisation and, in suitable cases, compensation. However, the classic liberal notion of property rights is outdated. Most theorists now accept that property, like any other economic right, is a social construct that depends on social, political and legal rules for its existence, its nature and its scope’ (AJ Van der Walt Constitutional Property Law 3ed (Cape Town: Juta 2011) at 172) (my italics).

In Europe, this development is referred to as the ‘social dimension of ownership’ (V Sagaert ‘The Gradual Erosion of the Distinction between Deprivation and Regulation of Ownership’ in S Scott & J Van Wyk (eds) Property Law Under Scrutiny (Cape Town: Juta 2015) at 94).

The values that underlie property rights

Property rights have a profound enabling and facilitating effect on human dignity, personal security, and security of tenure, and these values are evidently a matter of public interest. Property rights have a direct and fundamental impact on the landless and poor masses, as well as on the wealthy elite of landowners. Thus these rights do shape society, and have the potential to benefit innumerable occupiers, and could enhance and materially increase the quality of life especially of large numbers of rural dwellers. ‘Judging from European Convention case law and recent South African case law, the courts might bend over backwards to protect socially or economically insecure land-use rights, particularly residential rights that affect the human dignity and personal security of people’ (Van der Walt (op cit) at 187). There can be no doubt that the increased security of tenure, and of pride of possession, shall establish and elevate the perceived and experienced dignity of persons who are not landowners.

Property rights can no longer be viewed in isolation, and are relative to the rights and interests of non-property rights holders. ‘The Constitutional Court has held on a number of occasions that the core constitutional values of human dignity, equality and freedom are implicated in circumstances of material deprivation’ (Liebenberg (op cit) at 100). Property rights cannot be exercised in isolation, but only in the public arena. The public interest in private property rights refers to the social dimension of ownership, which ‘requires a private owner to take into account the effects of the exercises of ownership on society as a whole. … The pendulum has swung in the direction of communisation of ownership since the twentieth century: “land ownership entails communityship”’ (Sagaert (op cit) at 95) (my italics).

This mantra, ‘land ownership entails communityship’ captures the essential values, which underlie and inform the concept of private property rights in the Constitution. The public interest in property rights affect a large number of people and directly impact on the material quantity and spiritual quality of their lives, and these must be weighed against the private individual interest of an individual who, at common law, was entitled to yield the mere absence of consent, and nothing else, to undermine and frustrate the aims of social justice.

It follows that ‘… existing and new property interests are recognised and protected when and in so far as it is necessary to establish and uphold an equitable balance between individual property interests and the public interest, with due regard for the historical context within which property holdings were established and the constitutional context within which they are protected’ (Van der Walt (op cit) at 189).

In the premises the very same values that promote the public interest and social justice, namely dignity, equality and freedom, also underlie the concept of private property rights.

Environmental justice

The constitutionally sanctioned values of property rights outlined above also offer a rational basis to facilitate, and give effect to, the environmental imperatives in the Constitution.

When approached with a communal sense of ownership, it becomes possible to provide for the protection of the environment in a holistic fashion. The rules, which would ensure that the environment is protected for future generations, will often impact on the sphere of private property rights and interfere with the domain of the landowner. In a pre-constitutional dispensation such regulation was largely subject to the whims of the individual landowner. This, however, is changing.

Not surprisingly, theoretical frameworks have been developed to allow for the shift in the concept of property rights with a view to accommodating environmental justice. In this regard, see for instance ‘Re-examining the Ownership Paradigm: Rights of Ownership or Rights of Use? The Need for a New Conceptual Basis for Land Use Policy’ (ET Freyfogle, MC Blumm and B Hudson Natural Resources Law: Private Rights and the Public Interest (West Publishing Company 2015) and ‘The Public Trust Doctrine as a Background Principle of Property Law’ (MC Blumm and MC Wood The Public Trust Doctrine in Environmental and Natural Resources Law 2ed (Carolina: Academic Press 2016).

Constitutional Court

The CC had occasion from time to time to give account of the changing rules of property rights.

In First National Bank of SA Ltd t/a Wesbank v Commissioner, South African Revenue Service and Another; First National Bank of SA Ltd t/a Wesbank v Minister of Finance 2002 (4) SA 768 (CC) the CC found that: ‘The purpose of s 25 has to be seen both as protecting existing private property rights as well as serving the public interest, mainly in the sphere of land reform but not limited thereto, and also as striking a proportionate balance between these two functions’ (para 50).

Invariably, the references to Shoprite Checkers (Pty) Ltd v MEC for Economic Development Eastern Cape and Others 2015 (6) SA 125 (CC) in the majority judgment of Froneman J should be extensive, as the CC decided: ‘… to determine what kind of property deserves protection under the property clause cannot be restricted to private-law notions of property. To do so would exclude other potential constitutional entitlements that may deserve protection from the ambit of protection under the property clause. … In all of this, the fundamental values of dignity, equality and freedom play a central role. Our conception of property must be derived from the Constitution. … The other building blocks for the proper conceptualisation of property and the function that its protection will serve have already been laid in FNB:

(i) the protection of property as an individual right is not absolute but subject to societal considerations;

(ii) that property should also serve the public good is an idea by no means foreign to pre-constitutional property concepts; and

(iii) neither the subjective interest of the owner in the thing owned, nor the economic value of the right of ownership, can determine the characterisation of the right.

The objective normative values of the Constitution thus require us to determine what kind of property deserves protection under the property clause, by reference to the Constitution itself. The fundamental values of dignity, equality and freedom necessitate a conception of property that allows, on the one hand, for individual self-fulfilment in the holding of property, and, on the other, the recognition that the holding of property also carries with it a social obligation not to harm the public good. The function that the protection of holding property must thus, broadly, serve is the attainment of this socially-situated individual self-fulfilment. The function of personal self-fulfilment in this sense is not primarily to advance economic wealth maximisation or the satisfaction of individual preferences, but to secure living a life of dignity in recognition of the dignity of others. And where the holding of property is related to the exercise, protection or advancement of particular individual rights under the Bill of Rights, the level of the protection afforded to that holding will be stronger than where no relation of that kind exists’ (paras 43 to 50) (my italics).

The FNB and Shoprite cases dealt with the concept of property in the context of what constitutes property. In Molusi and Others v Voges NO and Others 2016 (3) SA 370 (CC) an eviction application in terms of Extension of Security of Tenure Act 62 of 1997 (ESTA) brought s 26(3) to the fore and the CC had occasion to pronounce on the concept of property in the context of how s 25 property rights should be limited. The court, referring to the common-law claim for eviction, decided ‘… that common-law claim is now subject to the provisions of ESTA. The provisions of ss 8, 9, 10 and 11 of ESTA have the result that the common-law action based merely on ownership and possession, as in Graham v Ridley [1931 TPD 476], is no longer applicable’ (para 37).

In Molusi the CC also referred to how the balancing of the rights of the owner and that of the occupier must be done in order to infuse justice and equity into the inquiry, and referred to Hattingh and Others v Juta 2013 (3) SA 275 (CC), where the court held: ‘[T]he part of s 6(2) [of ESTA] that says: “balanced with the rights of the owner or person in charge” calls for the striking of a balance between the rights of the occupier, on the one side, and those of the owner of the land, on the other. This part enjoins that a just and equitable balance be struck between the rights of the occupier and those of the owner. The effect of this is to infuse justice and equity into the inquiry required by s 6(2)(d)’ (para 32).

Conclusion

Property rights, in the context of either s 25 or s 26 of the Constitution are no longer absolute. Molusi was the final nail in the coffin of absolute private property rights at common law, and the balancing exercise described in the Hattingh and in Molusi cases confirmed the relativity of constitutional property rights, and paves the way for interpreting, and balancing, property rights in future.

 

Johan van der Merwe BCom BA (Hons) LLB (Stell) LLM (University of Kiel) (Germany) is an attorney at JD van der Merwe Attorneys in Stellenbosch.

This article was first published in De Rebus in 2016 (Sept) DR 32.

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