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The repeal of the Subdivision of Agricultural Land Act – so close, yet so far

Fasken
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For many years, conveyancers, town planners, land surveyors and property developers have had to deal with issues surrounding the Subdivision of Agricultural Land Act 70 of 1970 (“SALA”). One of the key issues with SALA is that Ministerial consent is required for the subdivision of agricultural land, which can at best be described as a lengthy and onerous process[1].

It speaks for itself that any onerous regulatory process hinders growth and development and could also be seen as a major barrier to entry in the property industry. Ministerial consent in terms of SALA is particularly relevant in the renewable energy sector, where wind and solar projects are constructed on agricultural land. In most instances, a solar project or wind farm is constructed on a portion of a farm, which means that Ministerial consent is required.

SALA continues to serve a vital role in protecting agricultural land, of which the Department of Agriculture is the custodian of, however, balancing this interest with development needs will play an important part in land reform and economic growth for South Africa.

In this article, we briefly discuss-

  • the existing requirements of SALA which find common application when dealing with agricultural land;
  • some of the practical problems identified with SALA; and
  • an update on the status of the repeal of SALA.

 

The common requirements of SALA when dealing with land

SALA restricts the subdivision of agricultural land except with the permission of the Minister of the Department of Agriculture (the “Minister”).[2] For example, when entering into lease agreements, Section 3(d) of SALA provides that no lease in respect of a portion of agricultural land for 10 years or longer shall be entered into without the consent of the Minister.[3]

Similarly, before a servitude in respect of agricultural land can be registered in the deeds registry, the written consent of the Minister must be obtained unless the Section 6A exceptions are applicable[4].

A particularly important provision to consider would be Section 3(e)(i) of SALA which provides that  “no portion of agricultural land, whether surveyed or not, and whether there is any building thereon or not, shall be sold or advertised for sale, except for the purposes of a mine as defined in section 1 of the Mines and Works Act, 1956 (Act No. 27 of 1956)”, unless the Minister has consented in writing. This includes ‘a sale subject to a suspensive condition’ and an option for the sale of a portion of agricultural land[5].

The term “agricultural land” is of particular importance when applying the provisions of SALA. This dates back to concerns of the Department of Agriculture and the State Law Advisors in the years of 2000 and 2001. It was found that certain actions in relation to agricultural land were registered without the requisite consent of the Minister which was said to have serious economic implications.

According to the Chief Registrar’s Circular 6 of 2002, all farm property must, until proof to the contrary has been furnished, be regarded as agricultural land as defined in SALA. The practical effect of this circular was that either –

  • a consent by the Minister in terms of SALA; or
  • a letter by the Department of Agriculture to the effect that the land in question is not agricultural land as defined in SALA (and a consent by the local authority in whose area of jurisdiction the land is situated, as required by the relevant provincial legislation, if any, depending on the type of transaction),

would need to be lodged in the respective deeds registry when dealing with farmland which triggers the provisions of SALA. In light of the large extent of farmland and its potential for development, most transactions trigger the provisions of SALA.

 

Practical problems identified with SALA

Validity date

The consent by the Minister in terms of SALA is given a validity date[6]. This means that if the transaction is not registered in the deeds registry within the stipulated time frame, a new application (comprising of plans, documents and information as determined by the Minister[7]) will need to be lodged, which will be considered on its own merits.

Property description

The agricultural land to which the consent applies must be correctly identified otherwise this could lead to issues when:

  • surveyor general approval is sought in respect of surveyor general diagrams (for example, where a long term lease will be registered over a portion of agricultural land), and
  • when the documentation is lodged at the deeds registry.

Sketch Plans

Often a sketch plan is attached to the consent and duly endorsed with the consent number. In our experience, we have noted that due to the changing economic climate and other requirements by different governmental departments, the sketch plan will need to be amended to accurately reflect the latest developments on the land. This amended sketch plan is then resubmitted to the Department of Agriculture who will duly endorse the amended plan with the existing consent number. This could take months, which will delay the implementation of any development and has a knock-on effect on lodgment in the deeds registry.

Other shortfalls

Some of the other shortfalls identified by various professionals in the industry include[8]-

  • lengthy delays in processing applications and appeals;
  • inconsistent decision making due to lack of norms and standards;
  • ·no categorisation of applications, preventing minor applications and corrections to consents, from being expedited which would decongest the production line; and
  • custodianship is complicated by multiple legal systems and frameworks affecting each piece of land.

 

Case Law

 

A huge delay and challenge exists if the consent you have applied for is denied by the Department of Agriculture. For example, in the Supreme Court of Appeal (“SCA”) unreported judgment of Maxrae Estates (Pty) Ltd v The Minister of Agriculture, Forestry and Fisheries & Another[9], the appellant, Maxrae Estates (Pty) Ltd, being the registered owner of a farm, applied to the Department of Agriculture, Forestry and Fisheries (“DAFF”), as it was previously known, seeking approval for the subdivision of a farm and the establishment of a sectional title scheme on one of the subdivided portions.

The reason for the proposed subdivision was for the appellant to expand the existing warehouse which received and distributed fresh produce from local farms in order to cater for a wider market. The operator of the warehouse needed to invest in the upgrading of the warehouse and establishing a sectional title scheme would secure his financial interest over the warehouse portion and enable further investment and sourcing of funds to make the capital investment that the upgrade required.

This application was rejected by a delegate from DAFF on the basis that inter alia the property is situated in an area where agricultural activities are taking place and that the proposed subdivision would perpetuate the creation of smaller portions in the area, approval of which would set a precedent for similar applications in the area. It was followed by an unsuccessful appeal to the Minister. According to the Minister, the main challenge was the sectional title ownership of 2,5 hectares of agricultural land resulting in setting a precedent for similar applications.

The SCA accepted that the purpose of SALA is to prevent fragmentation of agricultural land into small uneconomical units that might lead to rural communities being impoverished. It was further accepted that the Minister exercised a wide discretion conferred upon him under Section 4(2) of SALA and that his decision constituted administrative action.

The SCA stated that the Minister’s decision comprised vague conclusions which included matters in respect of which there was no evidence before him. As an example, reference was made to his comments on climate change in respect of which there was no evidence before the Minister on the impact of the subdivision on climate change. It was found that the Minister did not apply his mind to the appeal and that the Minister’s decision be set aside and referred back to the Minister for due consideration.

This case reminds us that SALA, in its current form (i) frustrates potentially viable economic and sustainable development of agricultural land; (ii) is inconsistent insofar as the enforcement of its provisions and processes are concerned; and (iii) is in need of being updated to align with current economic and sustainable development trends.

 

An update on the repeal of SALA

On the 16th of September 1998, the Subdivision of Agricultural Land Act Repeal Act 64 of 1998 (the “Repeal Act”) was assented to, however, 23 years later, as at 21 July 2021, and a commencement date has not been forthcoming.

In a Committee Meeting on 11 February 2020, held by the Department of Agriculture, Land Reform and Rural Development (“DALRRD”)[10], the Chairperson questioned why the Repeal Act was not promulgated. Ms Kanthi Nagiah, Chief Director: Legal Unit, DALRRD in response said that, “There was no other law to substitute SALA if it were repealed. As a result, that would have caused a vacuum in that there would be no law to protect agricultural land. It would have been open to abuse and led to a loss of valuable agricultural land”.

The Preservation and Development of Agriculture Land Bill (“PDALB”) was introduced to the National Assembly on 22 April 2021 by the Minister of Agriculture, Land Reform and Rural Development. The PDALB provides for the amendment of the Repeal Act in terms of section 38 which provides a mechanism for the Repeal Act to commence and the introduction of transitional arrangements for the phasing out of SALA. It also appears to be the legislation intended to protect agricultural land as the successor-in-title to SALA. The transitional arrangements are as follows –

  • Any application or other process in terms of SALA, that at the commencement of the Repeal Act have not been decided or otherwise disposed of, must be continued and disposed of as if SALA had not been repealed.
  • Any consent granted or deemed to be granted in terms of SALA remains valid for the specified period or if not specified, for a period of five years from the date of commencement of the Repeal Act.

In it’s current form, the PDALB allows the Minister, after consultation with the MECs (Members of the Executive Council) to-

  • establish evaluation and classification systems to appraise the agricultural land capability, suitability, potential and use of agricultural land at national, provincial and local levels, to promote the preservation and sustainable development of agricultural land; and
  • spatially delineate agricultural areas according to shared characteristics in agricultural land capability, suitability, potential, use, location or any combination thereof.

This approach is more in line with the approach of the Spatial Planning and Land Use Management Act 16 of 2013. It is noteworthy that the PDALB still has to go through legislative process and may very well be amended in the future. Whilst an exact date upon which the Repeal Act commences cannot be estimated, it appears that a commencement date may be within the next 2 to 3 years.

 

Conclusion

The status quo will remain as is until the commencement date of the Repeal Act is communicated to the public. This means that the provisions of SALA will still need to be met when dealing with agricultural land.

However, the PDALB is in sight and will be the legislation to preserve and promote the sustainable development of agricultural land whilst providing a national regulatory framework to prevent the fragmentation of agricultural land and minimise the loss of agricultural land.

On this basis, it should be on our radars in order to adopt a proactive approach to our existing practices.



[1] Botha M ‘Options and the Subdivision of Agricultural Land Act: Some finalityLexisNexis Property Law Digest (2015) Vol. 19 Part 4. This view is supported by Botha who states that SALA poses significant commercial and administrative hurdles when a landowner wishes to dispose of a portion of agricultural land to a willing buyer. Furthermore, the current backlog and slow processing of applications for Ministerial consent results in transactions being delayed which is clearly unattractive from a commercial perspective.

[2] The rationale behind this prohibition is to avoid agricultural land from being rendered “economically unviable for the purpose of farming, as a result of uncontrolled subdivision”. ‘Subdivision and land use laws hinder land reform and are unconstitutional’ https://www.golegal.co.za/subdivision-land-reform-unconstitutional (accessed on 20 July 2021).

[3] The ten year prohibition includes a lease period for the life of a person as well as any renewal of such lease for a period which together with the first period of the lease amount in all to more than ten years.

[4] The Section 6A exceptions refer to-

  • a right of way, aqueduct, pipe line or conducting of electricity with a width not exceeding 15 metres;
  • a servitude which is supplementary to a servitude referred to above, and which has a servitude area not exceeding 225 square metres which adjoins the area of the last-mentioned servitude;
  • a usufruct over the whole of agricultural land in favour of one person or in favour of such person and his spouse or the survivor of them if they are married in community of property.

[5] Four Arrows Investment 68 (Pty) Ltd v Abigail Construction CC and Another [2016] JOL 37633 (SCA) para 10.

[6] Registrar’s Circular No 2 of 2015 from the Office of the Registrar of Deeds (Pietermaritzburg)

[7] Section 4 of SALA

[8] Mve Akoue M ‘Possible impacts of the Draft Preservation and Development of Agricultural Land Framework Bill on the geomatics profession’ Geomatics Indaba Proceedings 2015 – Stream 1 (Undated).

[9] (Case No 407/2020) [2021] ZASCA 73 (09 June 2021)

[10] This is the department that the Department of Agriculture from DAFF was absolved in.

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