Warnings offered by Zambian land expropriation case

As South Africa moves towards more stringent laws to allow expropriation of property without compensation, cases in other parts of the region show the pitfalls of expropriation even where compensation is paid. A new case from Zambia’s apex court concerns land expropriated from a farmer, ostensibly for development in the public interest. It turned out, however, that fraud was involved and that after a long period in which nothing was done with the land, it was sold off – at one stage for the development of a luxury hotel and golf course. When nothing came of that project either, the land was allocated to other developers who re-sold the property for private development purposes. One of the questions the judges of Zambia’s apex court had to consider was what the court’s attitude should be in such a case, given that the fraudulent misrepresentation came to light only after the supreme court’s earlier judgment that found the expropriation had been lawful.

Read judgment

This is an extraordinary case in many ways. The contested expropriation took place 33 years ago. And this judgment represents the sixth time a court has considered related issues - despite the relevant law saying that once an appeal court has decided the matter it can go no further. At 136 pages, the judgment is also extraordinarily long.

Behind the disputed legal issues lies the story of Jonathan van Blerk, about half of whose land was expropriated by government 33 years ago. At the time it was made clear that the expropriation was for public purposes. But it gradually became clear that this was not so. Instead, some of it has been re-sold to private individuals for development.

Van Blerk was watching these developments. Initially he challenged the compulsory acquisition claiming that it was not in fact for public purposes, but the high court disagreed and found the expropriation was lawful. That finding was later confirmed by the supreme court. However it became increasingly obvious that there were problems with the expropriation. Van Blerk went back to court and he eventually landed before the apex court once again where he argued that the initial judgments in favour of the government had been obtained by fraudulent representation.

Ouster clause

What was to be done in the face of this argument, given the history of the matter, with the high court approving the expropriation, later backed up by the supreme court? Would the supreme court allow an appeal that would have the effect of challenging its own earlier decision? And what about the law that seemed to amount to an ouster clause, barring courts from re-visiting an expropriation once an appeal had been heard and decided?

In its introductory remarks, the court said that the land acquisition legislation under which land was acquired from Van Blerk was a ‘very powerful piece of legislation’ whose application had been a cause of much debate and litigation. The crucial question for the court, said the three judges, was whether a litigant could use misrepresentation or fraud ‘as a chink in the armour of the legislation to argue that a judgment … should be set aside on the ground that the judgment was obtained by fraudulent misrepresentation, given the glaring evidence that it was not in the public interest nor for the public benefit after all, but was meant to benefit private entities.’ 

As far as Van Blerk was concerned, there was another layer to the argument, however. ‘In a democratic country that placed a premium on free enterprise and where the rule of law requires that governmental actions and decisions are [transparent] and in good faith, [could] the right to question executive action … be gagged?’ He was referring to the apparent meaning of the section providing finality and which was seen by counsel for the respondents as providing a bar on courts re-visiting a decision even when fraud had been involved.

‘Grand powers’

The court summed up Van Blerk’s argument this way: can a party ‘get away with misleading the court in the interpretation and application of the legislation that gives the state such exceptionally grand powers, the exercise of which could have far-reaching, and in some cases non-remediable consequences for those whose lands are expropriated’?

If in fact arbitrary use of the power to expropriate was allowed, it could create ‘opportunities for corruption,’ counsel argued. On the other hand, by allowing the appeal, despite the finality clause in the expropriation legislation, the supreme court would be ‘playing its critical role in constitutional governance.’

Responding to the claims of Van Blerk who argued that the land should be returned to him since the reasons put up for expropriation were fraudulent, the respondents’ main argument was that finality had been reached and litigation had been ‘closed’. Further, it was now too late to do anything about the problem: it was time-bound. As Van Blerk had been paid for his land, he was just trying for a second bite at the cherry, said counsel. This was an abuse of process and could not be allowed.

Luxury hotel

The supreme court considered Van Blerk’s uncontested claims that the land had never been used for any public purpose, but that it had been allocated to an outfit that proposed to build a luxury hotel and golf course on it, and then, when that plan collapsed, it was made available to other private developers who further sold it on.

‘None of this is disputed.’

Was a judgment obtained through fraudulent misrepresentation liable to be set aside? Indeed, it was, said the court. The parties who argued that the law insisted on closure and finality to litigation are ‘missing the point’.

‘Shield’

The finality argument could not be used to stop court proceedings, since at the heart of the matter ‘is the very process of how that judgment was obtained’.

Allowing closure and finality to be used ‘as a shield’ in such a case would go against the values of the country’s judicial system, for once a deception was exposed ‘it unravels the judgment itself.’

The court quoted English cases that held the victim of a fraud could not be blamed for not exercising enough care. ‘It is not for the victim of a fraud to be perpetually on guard against dishonesty.’ And in obtaining a judgment based on fraud, the defrauder perpetrated a wrong not only on their opponent but also ‘on the court and on the rule of law.’

‘Instrument of fraud’

As to the clause that stopped any further legal action once a court had ruled in an expropriation matter, the court held that a statute cannot be used ‘as an instrument of fraud.’

The respondents argued that it would be impossible to return the land to Van Blerk since others had paid considerable funds to buy parts of it. This was not an insuperable problem, the court said. Quoting a Kenyan decision, the judges held that land could be returned to its original owner if it was compulsorily acquired for a public purpose but it later emerged that it was not for such a purpose after all.

The final decision of the court was that Van Blerk could ask the high court to consider whether the land had been fraudulently acquired by the state – although there was no dispute about the facts, no court had thus far charged anyone, nor made any ruling about the facts. Now the fraud claimed by Van Blerk ‘needed to be specifically pleaded and proved at trial’. The supreme court would thus not decide this aspect of the case itself, and certainly not at this stage.

Sobering

The court said it was ‘regrettable’ that this litigation had taken so long and expressed the hope that the high court judge allocated to deal with the matter would do so urgently.

Given the ease with which corruption can taint land issues, this is a sobering case and not just for Zambia. Any country in the region that permits compulsory acquisition by the state for public purposes must ensure that mechanisms are in place to prevent fraud from happening, and that the courts are not barred from inquiring into malpractice.

* 'A matter of justice, Legalbrief, 25 May 2021