Financial value must inform land settlements

Author: Trudi Makhaya

Last week, the Constitutional Court passed judgment in Florence versus the government, a case dealing with land reform, one of the most important instruments for dealing with the injustices of the past. The law provides that where it is not possible to return claimants to their land, equitable redress in the form of financial compensation is granted.

 

One of the main issues in contention in this case is whether the consumer price index (CPI) is an appropriate way to converting past loss into present-day monetary terms for the purpose of calculating such compensation. In 1970, the Florence family had paid off a property that was about to be transferred into their ownership. The Group Areas Act, which declared Rondebosch a white area, made the transfer impossible. The family was forced to sell the property back to its previous owner for a token amount, close to 5% of the property’s market value in 1970. The Land Claims Court found this payment was not just and equitable, and did not prevent the family from lodging a claim. The family was found to have been undercompensated by more than R30,000 in 1970.

 

The Land Claims Court and the Supreme Court of Appeal calculate the value of compensation for dispossessed property by establishing the value of the land at the time of the loss, and then escalating this by CPI. Does property grow in value at the rate of consumer goods? Haven’t landowners pushed to be expropriated at market value? Would this not prejudice claimants receiving cash versus those restored to property? These are some of the questions that come to mind.

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