Smith v Minister of Mineral Resources and Others (19740/19) [2021] ZAGPPHC 476 (27 July 2021)

REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

CASE NO: 19740/19

NOT REPORTABLE

NOT OF INTEREST TO OTHER JUDGES

REVISED

27/07/2021

In the matter between:

DARREN JAMES SMITH Applicant

And

MINISTER OF MINERAL RESOURCES 1st Respondent

THE DIRECTOR – GENERAL:

DEPARTMENT OF MINERAL RESOURCES 2nd Respondent

CANDERO MINING AND CONSULTING (PTY) LTD 3rd Respondent

JUDGMENT

The judgment and order are accordingly published and distributed electronically. The date and time of hand down is deemed to be 10:00 on 27 July 2021.

TEFFO J

Introduction.

[1] This is an application in terms of section 6 of the Promotion of the Administrative Justice Act, 3 of 2000 (“PAJA”),

alternatively in terms of section 172 of the Constitution of the Republic of South Africa, Act 108 of 1996 (“the Constitution”)

to review and set aside a decision taken by the first respondent (“the Minister”) on 27 September 2018 in terms of which the Minister dismissed an appeal submitted to him by the applicant in terms of section 96 of the Mineral and Petroleum Resources

Development Act, 28 of 2002 (“the MPRDA”).

[2] The applicant’s appeal related to a decision by the second respondent (“the Director General”) to uphold an appeal

submitted to him by the third respondent (“Candero”) also in terms of section 96 of the MPRDA against a decision by the Deputy Director General (“DDG”) of the Department of Mineral Resources (“DMR”) to grant the applicant a prospecting right to prospect for “the aggregates and gold ore (in respect of surface waste rock dumps)”on portions 69 and 71 of the farm Nooitgedacht 434 IP and portion 5 of Strathmore 436 IP situated in the magisterial district of Klerksdorp, North West Province (“the property”).

[3] The applicant also sought an order substituting the first respondent’s decision with the following order:

3.1 directing that the third respondent’s appeal to the first and second respondents is set aside;

3.2 upholding the applicant’s internal appeal.

[4] The relief sought in para (3) above has been abandoned. The applicant seeks the court to remit the matter back to the first respondent

(with or without directions in accordance with section 8 (1)(c)(ii) of PAJA), should it decide to review and set aside the first

respondent’s decision.

[5] The first and second respondents did not oppose the application. The application is only opposed by the third respondent.

[6] The answering and the replying affidavits were filed late. Condonation for their late filing was not opposed. It was accordingly granted.

The parties.

[7] The applicant is Mr Darren James Smith. He will be referred to as the applicant. The first respondent is the Minister of Mineral Resources (“the Minister”). The second respondent is the Director-General of the Department of Mineral Resources (the DG”). The third respondent is Candero Mining and Consulting (Pty) Ltd “(Candero”). The respondents will be referred to separately as the first, second and third respondents.

Background.

[8] On 19 November 2003, prior to the coming into operation of the MPRDA, a section 161 Permit was purportedly transferred from Holmes to the third respondent. The third respondent has been the holder of the section 161 Permit in terms of the Mining Rights Act, 20 of 1967 (“the Mining Rights Act”). The permit permitted the third respondent to treat the Tailings (“the dump”) on the farm Strathmore 436 IP and farm Nooitgedacht 434 IP, Klerksdorp, North West Province.

[9] The Mining Rights Act was repealed by the Minerals Act, 50 of 1991 which was later repealed by the MPRDA.

[10] The MPRDA came into force on 1 May 2004 and created a “new order” prospecting and mining rights.

[11] The third respondent converted its section 161 Permit to a “new order” mining right in terms of the MPRDA over Portion 5 of the Farm Strathmore 436 IP and Portion 71 of the farm Nooitgedatcht 434 IP. The mining right commenced on 23 June 2005 and lapsed on 22 June 2010. The third respondent did not apply for the renewal of its mining right.

[12] On 13 July 2010, the applicant lodged an application for a prospecting right for aggregates and gold ore over portion 5 of the farm

Strathmore 436 IP and portions 69 and 71 of the farm Nooitgedacht 434 IP (“the property”).

[13] The applicant was granted a prospecting right in respect of the dump on 22 July 2011 over the property.

[14] On 15 July 2013, the third respondent lodged an appeal against the decision granting the prospecting right to the applicant (“the first appeal”). The first appeal was decided by the second respondent who upheld it in December 2014.

[15] Subsequently, the third respondent addressed a correspondence to the second respondent advising him of his error in excluding Portion 69 of the farm Nooitgedacht 434 IP.

[16] As a result, on 10 June 2015, the second respondent upheld the appeal in respect of portions 69 and 71 of the Farm Nooitgedacht 434 IP and portion 5 of the farm Strathmore 436 IP.

[17] On 23 July 2015, the applicant lodged an appeal against the second respondent’s decision.

[18] On 14 September 2015, the third respondent replied in terms of regulation 74(7) of the Regulations to the MPRDA. The second respondent did not respond as required in terms of the Regulations.

[19] This prompted the applicant to bring review proceedings against the first and the second respondents in this court under case number 45845/2016 (“the previous review”). The matter was set down for hearing on 26 February 2018. It had to be postponed sine die after the court raised issues of whether there had been compliance with Regulations 74(6) and 74(8) of the Regulations of the MPRDA and the applicant was afforded an opportunity in case he wished to supplement the papers or not. The applicant did not supplement the papers as he alleged that he was awaiting the second respondent’s decision.

[20] Various correspondence was addressed to the second respondent in March and April 2016 requesting reasons for his decision.

[21] On 12 April 2016, the applicant’s erstwhile attorneys received correspondence from the second respondent requesting the applicant to furnish his comments within 21 days of receipt thereof. The correspondence further advised him that should he fail to respond as requested, they shall proceed with the processing of the appeal without further notice to him.

[22] The applicant’s erstwhile attorneys responded to the correspondence and called for reasons and also advised that should the reasons not be provided, an application to compel the second respondent for reasons will be launched.

[23] No reasons were provided and the applicant brought an application to compel the second respondent to furnish reasons for his decision.

[24] The order was granted on 8 June 2016 under case number 33610/162, compelling the second respondent to furnish reasons for his decision given on 9 December 2014.

[25] The court order was sent to the second respondent on 5 July 2016. The second respondent did not comply with the order.

[26] On 27 September 2018, the Minister upheld the appeal by the third respondent and set aside the granting of the applicant’s prospecting right.

[27] It is this decision that the applicant seeks to review and set aside.

The reason for the decision.

[28] Paragraph 3 of the Minister’s decision reads as follows:

“The reasons for my decision appear below:

3.1 The issue determinative of the of the dispute between the parties; i.e. Smith and Candero, is the question as to the nature and ownership of the dumps.

3.2 Evidence produced during the appeals and related litigation between the parties show the following:

3.2.1 The main dump was created in 1963 and is situated on portion 5,71 and 69 of the properties in question;

3.2.2 Portions 69 and 71 of the properties in question is owned by Ellaton Gold Mining Ltd and portion 5 is owned by the Local Municipality.

3.2.3 A number of historic transactions to transfer the dumps as movable has occurred, effected by transfer and sale of a section 161 Dump Permit in terms of the Mining Rights Act 20 of 1967, which allowed the holder of the permit to retain possession of and treat or otherwise utilise any tailings, slimes, waste rock or other residues situated on the surface of the properties in question, including Portion 69.

3.2.4 Candero became owner of the dumps pursuant to acquisition of the section 161 Permit from Cecil Dean Holmes (“Holmes”) in 2003.

3.2.5 Evidence presented during the trial also shows that Ellaton never laid claim of the dump as it continued to receive payments from Holmes, which was due and payable by the holder of a section 161 permit to a surface owner.

3.3 It follows that when Smith acquired the land from Ellaton, he did not acquire the dump, because the dump remained movable and owned by Candero separate from the surface of the land.

3.4 Consequently, the MPRDA does not regulate the tailings situated on the disputed portions 5,71 and 69 which in turn renders the prospecting right granted to D J Smith by the Deputy-Director General: Mineral Regulation as invalid.”

The grounds of review

[29] The applicant relies on various grounds to seek the review and the setting aside of the first respondent’s decision in his founding affidavit. He filed supplementary heads of argument in which he abandoned all the grounds on which he initially relied. The following grounds have been relied on: That the first respondent’s decision was:

(a) materially influenced by an error of law (section 6 (2)(d) of PAJA);

(b) made as a result of the Minister taking into account irrelevant considerations (sections 6 (2)(e)(iii) of PAJA); and

(c) not rationally connected to the information before the Minister nor the reasons given for it by the Minister (section 6 (2)(f)(ii)(cc) and 6 (2)(f)(ii)(dd).

Applicable Legal Principles

[30] In Rustenburg Platinum Mines Ltd (Rustenburg section) v Commission for Conciliation, Mediation & Arbitration[1], the court stated that:

“In a review, the question is not whether the decision is capable of being justified…., but whether the decision maker properly exercised the powers entrusted to him or her. The focus is on the process, and on the way in which the decision-maker came to the challenged conclusion.”

Discussion.

The Minister’s decision was materially influenced by an error of law.

[31] The applicant contends that the first respondent took into account the issue of ownership of the dump when determining whether the dump was movable or not and relied in particular on various purchases and transfers of the section 161 permit. It was submitted that the first respondent’s reliance on this, is founded in his misrepresentation of the provisions of section 161 of the Mining Rights Act. He equated the third respondent’s purchase of the permit with its purchasing the dump.

[32] It was argued that section 161 and a permit issued in terms thereof, does not confer ownership of the subject matter of the permit (i.e. the tailings, slimes, waste rock or other residues (in this case, the dump) on the permit holder. The section and the permit, only provides the holder with the right to: “…retain possession of and treat or otherwise utilise any tailings, slimes, waste rock or other residues or any proclaimed land.

[33] The applicant asserts that since the provisions of section 161 provides that a permit issued to one person may lapse and then another permit may be issued to another person (importantly, in relation to the same residues covered by the first permit), the section itself demonstrates that no ownership over the ‘residues’ themselves is transferred through the granting of a section 161 Permit. Accordingly, if the Minister had correctly interpreted section 161, he would have noted that the purchase and transfer of the permit from one entity to another over time could not in any way, assist him in determining who owns the residues forming the subject matter of the permit (in this case the Dump); or whether the subject matter of that permit (the Dump) is movable or immovable in nature.

[34] Furthermore, it was submitted that from the first respondent’s reasoning, it is apparent that his determination that the Dump is a ‘movable’ and accordingly that the MPRDA does not apply to the Dump, was materially influenced by his misrepresentation of section 161 (his error in law).

[35] The applicant further contends that a permit in terms of section 161 of the Mining Rights Act could be issued also in respect of a dump that was immovable property. Further that the fact that such a permit was issued and transferred in respect of the dump does not show that the dump is movable property.

[36] I agree with the third respondent’s Counsel that this is a new ground of review which was not dealt with in the applicant’s founding affidavit. The third respondent was not afforded an opportunity to answer it and the other respondents have not been made aware of it.

[37] In Telcordia Technologies Inc v Telkom SA Ltd[2], the SCA remarked that the grounds of any review as well as the facts and circumstances upon which the applicant wishes to rely on, have to be set out in the founding affidavit. These may be amplified in a supplementary founding affidavit after receipts of the record from the presiding officer, obviously based on the new information which has become available.

[38] This ground therefore falls to be dismissed.

The Minister took irrelevant considerations into account when making his decision and the decision is not rationally connected to the information before the Minister nor to the reasons given for it by the Minister.

[39] Relying on paragraph 3.1 of the Minister’s decision, it was submitted that the two issues the Minister found to be determinative of the dispute before him (i.e. the appeal) were: (a) the nature of the dump (whether it was movable or immovable); and (b) ownership of the dump.

[40] It is asserted that the Minister clearly relied upon his determination of who owned the dump to decide whether the dump was a movable and therefore, whether the MPRDA applied to it. He did not have to determine ownership of the dump in order to decide the appeal before him. What he had to do consider was whether the dump was movable or not.

[41] The applicant claims that considering his stance that the transfer of a section 161 permit can never equate to the transfer of ownership of the dump (i.e. can never prove that the dump is a movable), the Minister’s reliance on the issue of ownership (as having its origin from section 161 permit) as a significant reason for his determination was bad and also irrelevant.

[42] In support of his argument, he placed reliance on the decision of the Supreme Court of Appeal in the matter of Westinghouse Electric

Belgium SA v Eskom Holdings (SOC) Ltd and Another[3] where it was held that:

“it is a well-established principle that if an administrative body takes into account any reason for its decision which is bad or irrelevant, then the whole decision, even if there are other good reasons for it, is vitiated… The taking of a decision for a reason that is assailable …clearly vitiates the decision itself.”

[43] It was submitted that having regard to the bad reason relied upon by the Minister in arriving at his decision, it follow that it was not rationally connected to the reasons for his decision as a whole[4].

[44] The third respondent disagrees with the applicant’s submissions. It is asserted that the Minister determined that the dump is movable property because of the fact that a section 161 permit had been issued and transferred in respect of the dump. The Minister’s reasoning cannot be faulted.

[45] It is conceded that the Minister went further and stated that the third respondent was the owner of the dump which is movable property. The finding was not necessary for his decision and the correctness thereof is not a matter for the determination by this court for purposes of this application. If the contents of the dump are movable property and therefore not subject to the MPRDA as the first respondent has correctly concluded this was the position on the facts before him, then the DDG could not grant a prospecting right over the dump, regardless of the identity of the owner of the dump and the second respondent was correct to overturn the DGG’s decision on appeal. If, on the other hand, the dump is subject to the MPRDA, then the DDG could equally grant a right over the material in the dump regardless of who the owner was.

[46] A submission was made that once the Minister correctly found that on the facts before him, the applicant has not proved that the dump was immovable property, then that resolved the applicant’s appeal. Any finding made by the Minister as to who owned the dump, was therefore not material to the determination of the appeal. Even if the Minister made an error of fact or law in this regard, this would not give rise to any ground of review of his decision. Reliance thereof was placed on the decision reached in Johannesburg Metropolitan Municipality v Gauteng Development Tribunal and Others[5] and South Durban Community Environmental Alliance v MEC for Economic Development, Tourism and Affairs, Kwa-Zulu Natal Provincial Government and Another[6].

[47] In the above matters[7], the Constitutional Court and the Supreme Court of Appeal held that an error is not material if it does not affect the outcome, in other words, if the decision maker would have reached the same decision, despite the error. This is so whether the error is treated as an error of fact or law.

[48] Having considered the arguments before me and the Minister’s decision, it cannot be concluded that the Minister relied heavily on the issue of ownership as a significant reason for his determination. There were other factors, e.g. the fact that the section 161 permit had been issued and transferred to various parties who included the third respondent. His reliance on ownership was not material to the determination of the issues before him. It was in fact, not necessary and this does not vitiate his decision. The same conclusion could have been arrived at even if the issue of ownership was not relied upon.

[49] It does not therefore follow that the Minister’s decision was not rationally connected to the reasons for the decision he made. I am therefore not persuaded that the Minister has not properly exercised the powers entrusted to him.

[50] Consequently, the review application falls to be dismissed.

[51] In the result, the following order is made:

1. The application is dismissed.

2. The applicant is ordered to pay the costs of the application.

M J TEFFO

JUDGE OF THE HIGH COURT

Appearances.

For the Applicant A

Steneken

Instructed by K

G Tserkezis Inc

For the third respondent M Wesley

Instructed by Malan

Scholes Inc

C/O Klagsbrun Edelstein Bosman

De Vries Inc

Date Heard 27

January 2021

Date handed down 27

July 2021

[1] 2007 (1) SA 576 (SCA) para 31

[2] [2006] ZASCA 112; 2007 (3) SA 266 SCA at par 32.

[3] 2016 (3) SA 1 SCA at paras 44-45.

[4] Rustenburg Platinum Mines Ltd (Rustenburg Section) v Commission for Conciliation, Mediation and Arbitration 2007(1) SA 57.

[5] 2010 (6) SA 182 (CC) at para [91].

[6] 2020 (4) SA 453 (SCA) at paras [21] - [24].

[7] supra