Witbank Bricks (1961) (Pty) Ltd v Vandu Mining CC and Another (2034/17) [2018] ZAGPPHC 897 (27 November 2018)

REPUBLIC OF

SOUTH AFRICA

IN THE

HIGH COURT OF SOUTH AFRICA

MPUMALANGA

DIVISION

(FUNCTIONING AS GAUTENG DIVISION PRETORIA - MIDDELBURG CIRCUIT COURT)

CASE NO: 2034/17

In the matter between:

WITBANK BRICKS (1961) (PTY) LTD Applicant

and

VANDU

MINING CC

First Respondent

AND

OTHERS Second

to Twelfth Respondents

JUDGMENT

Roelofse AJ:

[1] The applicant is the holder of a mining right granted to it in terms of Section 23(1) of the Mineral and Petroleum Resources Development Act, 28 of 2002 (“the MPRDA”). The mining right commenced on 9 May 2016 for a period of 15 (FIFTEEN) years. The mining right was registered on 17 November 2016.

[2] In Clause 1 of the mining right, the mining area is determined. A mining area is defined under the definition of “mining area” in Section 1 of the MPRDA, in relation to a mining right or a mining permit, “….the area on which the extraction of any mineral has been authorised and for which that right or permit is granted;”

The mining area includes various portions of the farms Joubertsrust 310 JS, Kromdraai 292 JS, Uitspan 293 JS and Blesboklaagte 296 JS (excluding Portion 181 of the farm Blesboklaagte 296 JS). In terms of Clause 2 of the mining right, the mining right grants the applicant the sole and exclusive right to mine, and recover coal in, on and under the mining area for the applicant’s own benefit and account, and to deal with, remove and sell or otherwise dispose of the minerals, subject to the terms and conditions of the mining right, the provisions of the MPRDA and any other relevant law in force for the duration of the right.

[3] The applicant seeks an interdict in respect of Portion 2 of the farm Kromdraai (“Portion 2”), a portion of Portion 26, Portion 27 and Portion 137 of the farm Blesboklaagte. I shall refer to Portion 137 of the farm Blesboklaagte as “Portion 137” hereinafter. These properties form part of the mining area.

[4] The second respondent is the owner of Portion 27 of the farm Blesboklaagte and Portion 137. The fifth respondent is the owner of

Portion 2. The fifth respondent is the only member of the first and second respondents and the only shareholder in the third respondent.

[5] The third respondent conducts a coal beneficiation plant on Portion 137. The application was withdrawn against the third respondent by agreement between the parties after the third respondent has delivered its answering affidavit. The fourth and sixth respondents opposed the application, delivered an answering affidavit as well as a Rule 35(12) notice. At the hearing, the applicant did not seek relief against the fourth and sixth respondents. The seventh to tenth and twelfth respondents did not deliver notices of their intention to oppose the application. The eleventh respondent filed and delivered a notice to abide.

[6] The lis is therefore between the applicant and the first, second and fifth respondents. I shall refer to these respondents as “the respondents” hereinafter.

[7] The second respondent is mining for coal on the properties. The respondents allege that the second respondent is entitled to do so on the strength of a purported right of first refusal to mine that was granted to the second respondent by a third party in terms of a written agreement entered into by the second respondent with the third party on 5 May 2009 (“the agreement”). The second respondent commenced with prospecting and/or drilling on Portion 137 some-time prior to January 2015. The respondents admit that the second respondent was mining coal on the properties in September 2017.

[8] The applicant approaches the court on the basis that the respondents are mining unlawfully because the applicant has a mining right for coal in respect of the properties.

[9] I briefly deal with the background to the dispute as it is not necessary to fully do so in order to determine the dispute.

[10] On 19 January 2015, the applicant informed the Department of Mineral Resources (“the department”) that that it has come to the applicant’s attention that a contractor is core-drilling/prospecting within the area over which the applicant has applied for the mining permit. The contractor ostensibly relied upon a mining permit that was issued by the department to a third party.

[11] On 18 February 2015, the applicant’s attorneys sent a letter to the department. In this letter the department was informed

that the fifth respondent and/or first respondent and/or the third party profess that they have a mining permit in respect of Portion

137 and requested the department to confirm the existence and validity of such permit. The department was informed that the fifth

respondent would start mining within two to three weeks.

[12] In a letter on 20 February 2015, the applicant’s attorney informed the department that if a mining permit was indeed granted, it must have been granted after the applicant’s application for a prospecting right has been lodged or approved.

[13] On 10 March 2015 the applicant’s attorney wrote to the department to confirm discussions that were held with the department

on that day. In the letter, the applicant’s attorney confirmed that the department advised him that a mining permit was issued to the first respondent to mine for sand, clay and coal on Portion 2. The applicant’s attorney also confirmed that he had a discussion with the sixth respondent who confirmed that the sixht respondent had indicated that he and the fourth respondent was to commence with the mining of coal on Portion 2. In the letter, the applicant’s attorney confirmed that the department has conformed that a permit for the mining of coal was not granted to the first or fifth respondents or anyone else.

[14] On 12 March 2015, the applicant’s attorneys wrote to the fourth respondent. In this letter, the applicant’s attorneys

informed the fourth respondent that the applicant has applied for a mining right over Portion 2. The applicant’s attorney informed the fourth respondent that the mining permit in respect of Portion 2 upon which the fourth respondent relies was invalid because the department has not issued same in respect of coal.

[15] In a further letter, also dated 12 March 2015, the applicant’s attorney informed the first and fifth respondents that the department

confirmed that a permit was not granted to the first (or fifth) respondent to mine for coal on Portion 2 or, if the permit was

granted, it was granted in error or fraudulently.

[16] On 24 March 2015, Messrs. Weber Wentzel wrote to the department on behalf of the applicant. In this letter, in essence, the applicant’s stance as set out in the letters discussed above was confirmed. The department was requested to issue a notice to the first respondent to cease its mining activities on Portion 2.

[17] On 1 April 2015, the department sent a letter to the members of the first respondent. In this letter, the department confirmed that the first respondent has applied for a permit to mine coal on Portion 2 and that the first respondent is the holder of such permit.

However, the department alleged that that there was a “…… discrepancy uncovered in relation to the mineral description contained in the mining permit you [first respondent] hold [sic] and the actual mining permit issued to your corporation by this Department.” The department proceeded to say that “Therefore, this is to put to you indisputably that your permit is only in respect of sand and does not include coal for the reason mentioned above. The permit you produced as proof of the right to mine coal on the above properties contradicts the Departments [sic] record and thus regarded [sic] regarded as unlawful.” The department informed the first respondents that it has the right to mine for sand in terms of the permit and that if the first respondent should proceed to mine for coal (on Portion 2), the first respondent would be in contravention of Section 5(4) of the Act and will be committing an offence and that if the first respondent would present the permit that was issued to it, the

first respondent would be committing fraud. The first respondent was requested to “discard” the permit that was issued. The first respondent was given another permit (which bears the same date stamp as the original permit, being 28-10-2014). The second permit only refers to sand.

[18] On 8 September 2015, the department issued an order in terms of Section 93(1)(B)(i) of the MPRDA to “TAKE IMMEDIATE RECTIFYING STEPS FOR MINING ACTIVITIES CONDUCTED ON [Portion 2]” The order referred to a site inspection that revealed that the first respondent was “….continuing to mine coal, exceeded a permitted mining area of 1.5 hectares, sand processing plant and pollution control dam.

[19] On 15 September 2015, the department issued a compliance notice in terms of Section 31L of the National Environmental Management Act 107 of 1998 to the first respondent. In this notice, various alleged non-compliances by the first respondent within the area mined was pointed out.

[20] On 1 August 2017, the applicant’s attorney wrote to the first respondent. In this letter the applicant’s attorney confirmed that the first respondent is continuing with the illegal mining on the properties and the fraudulent use of the agreement in order to demonstrate the first respondent’s purported right to mine for coal on the properties. The applicant’s attorney reiterated the purported agreement did not confer a consent by the applicant to the first respondent to mine on the properties.

[21] On 5 September 2017, a notice in terms of Section 54 of the Mine Health and Safety Act, 29 of 1996 was issued to the applicant by the department, through the inspector of mines. The said notice listed various alleged non-compliances that were allegedly being committed by the applicant in respect of the mining on the properties. The most relevant of these transgressions was that the applicant was not the entity or person who was conducting mining operations on the properties in terms of the mining permit. The notice was confirmed by the Principal Inspector of mines. Certain orders were issued in the notice. These included that the applicant must halt all mining activities. The notice recorded that the instructions contained therein will remain in force until applicant has complied with the instructions so issued. The notice took effect on 5 September 2017 at 13h00. From 5 September 2017 to 18 September 2017, the first respondent ceased mining on the properties.

[22] On 11 September 2017, the department, in an email, confirmed that the first and second respondents’ mining activities are illegal and that the “un-licenced activities” must stop. In a further email on that day, the department confirmed that: the applicant is the holder of the mining rights; the second respondent does not have a “mining licence” for the “property”.

If there had indeed been an agreement between the second respondent and the applicant, same had to be consented to by the Minister. The department’s issue was clearly that in the event that there had indeed been a right granted inter-partes, same had to the dealt with in terms of Section 11 of the MPRDA.

[23] On 20 September 2017, by way of an e-mail the first respondent’s attorneys informed the applicant’s attorneys that the first respondent would continue to mine on Portion 2, Portion 27 and Portion 137 “….After carefully considering our alternatives our client has decided to carry on its mining activities on the three properties mentioned below. We will resolve the non-compliance concerns of the DMR individually and directly with them in as far as we are able to do so. We deny that our clients [sic] conduct is unlawful or hazardous to the safety of workers as contended by your client.”

[24] This prompted the applicant to launch an urgent application on 26 September 2017 in terms of which the applicant sought an interim

interdict in terms of which the first to sixth respondents be interdicted from conducting any mining activities, alternatively, any operational activities incidental to mining within the area the applicant’s mining right in respect of the properties.

[25] On 10 October 2017, a draft order was granted by agreement between the parties which, inter alia, provided that pending the determination of the relief sought in the notice of motion, the first, second, fourth to sixth respondents undertook and were ordered not to conduct any mine activities, alternatively any operation or activities incidental to mining on the properties. The further orders contained in the draft order related to the further prosecution of the application.

[26] The respondents do not rely upon the mining permit issued to the first respondent in respect of Portion 2 for a defence to the application. Righty so because that mining right, to the extent that it included the mining for coal on Portion 2, in any event, in terms of the permit, lapsed on 27 October 2016. Therefore, for purposes of the adjudicating this application, the validity of that permit (and its subsequent replacement by the department) is irrelevant because any rights the first respondent may have had in terms thereof have lapsed by September 2017.

[27] The respondents rely upon the agreement for their right to mine coal on the first and second respondents’ properties. In

paragraph 17.10 of the first, second and fifth respondents’ opposing affidavit, the fifth respondent alleges as follows:

“……I wish to state, with respect, that a right of first refusal entails the right to mine the coal, crush, screen and sell the coal for my/ the Respondents [sic] own benefit and to pay a monthly royalty in respect thereof to the holder of the mining rights. The right of first refusal ensures protection of my right to apply for and mine the minerals on the properties owned by me/the Respondents.”

This allegation was made in the context of the first and fifth respondents granting consent to the applicant to mine on their properties.

[28] It therefore becomes important to set out the terms of the agreement. The agreement, in relevant part, reads as follows:

“Whereas the Company [Kairos] has obtained the Rights in and to the Minerals on the Properties, and

Whereas the Contractor [Second Respondent] is willing to mine, purchase and rehabilitate the coal on the said properties, and

Whereas the Company is willing to make available certain rights in and to the properties to the Contractor.

Now the parties therefore agree as follows:

1. The Company hereby gives a Right of First Refusal to the Contractor to obtain the Rights from the Company, to mine and produce the Minerals in and to the properties and afterwards rehabilitate the site.

2. The Company confers the Right of First Refusal on the Contractor for an indefinite period of time and the Company undertakes to afford the Contractor a reasonable time to exercise his Right of First of Refusal from time to time”.

In the preamble of the agreement, the properties amongst other properties, are specifically referred to.

[29] The agreement was signed in eMalahleni on 5 May 2009. It was signed by a representative of Kairos and the fifth respondent. It was

conceded during argument that the applicant has a right to mine for coal over the properties and that Kairos had no such a right in September 2017. The concession was righty made as it was not disputed that the applicant is the current holder of a mining right for coal over the properties and as it appears nowhere from the papers that Kairos ever had a mining right over any of the properties. Even if Kairos “…..has obtained the Rights in and to the Minerals on the Properties”, the respondents’ own version, contemplates that mining right would still be required and still had to be applied for by the entity that wished to mine on the strength of the agreement. This first respondent did only in respect of Portion 2, which right has already lapsed by September 2017.

[30] The respondents raise the defence of non-joinder in respect of Kairos. These is no merit in this defence as Kairos never had a mining right over the properties. A party is necessary in proceedings where an order in the proceedings would affect such parties’

rights. Kairos has no rights which may be affected by this application. The respondents raise the defence of dispute of fact. The dispute raised in this regard is the issue of the alleged granting of the right of first refusal in the purported agreement.

This issue does not constitute a real dispute of fact because the determination of whether or not the agreement was entered into and whether or not rights and obligations flowed therefrom cannot oust the applicant’s clear right to mine for coal in the mining area.

[31] The gravamen of the respondents’ challenge to the applicant’s mining right is that the mining right was issued unlawfully.

[32] The granting of a mining right to the applicant constitutes an administrative action. Section 6 of the MPRDA specifically requires that decisions taken in terms of the MPRDA must be conducted or taken within a reasonable time and in accordance with the principles of lawfulness, reasonableness and procedural fairness and subject to the Promotion of Administrative Justice Act 3 of 2000. Until the administrative act of the granting of said right is set aside in proceedings for judicial review, it exists in fact and it has legal consequences that cannot simply be overlooked and “…….even an unlawful administrative act is capable of producing legally valid consequences for so long as the unlawful act is not set aside.” - Oudekraal Estates (Pty) Ltd v City of Cape Town and Others [2004] 3 All SA 1 (SCA) at para.

26. In addition, Section 96 of the Act provides for an internal appeal process and access to courts for any person whose rights or legitimate expectations have been materially and adversely affected or who is aggrieved by any administrative decision in terms of the Act. The respondents did not follow this procedure upon the granting of the mining right to the applicant. They also have not approached court to challenge the issuing of the mining right to the applicant. The respondents continued to mine in blazon disregard of the applicant’s mining right.

[33] The applicant applies for a final interdict. In order to succeed, the applicant had to satisfy the trite requisites for a final interdict. These requisites are: a clear right, a reasonable apprehension of irreparable harm; and that the applicant has no other

remedy– see: Setlogelo v Setlogelo 1914 AD 221 227

[34] It is not in dispute that the applicant is the holder of a mining right in respect of the properties. The mining right was granted for a period of 15 years. Therefore, in September 2017, when the first respondent on its own admission conducted mining activities

on the properties, the applicant was the holder of a mining right.

[35] In terms of Section 5(1) of the MPRDA, once a mining right is registered in terms of the Mining Titles Registration Act, 1967, (Act No. 16 of 1967), it constitutes a limited real right in respect of the mineral or petroleum and the land to which such right relates.

[36] Section 5(3) of the MPRDA provides that subject to the act, any holder of a prospecting right, a mining right, exploration right

or production right may: enter the land to which such right relates together with his or her employees, and bring onto that land any plant, machinery or equipment and build, construct or lay down any surface, underground or under sea infrastructure which may be required for the purpose of prospecting, mining, exploration or production, as the case may be; prospect, mine, explore or produce,

as the case may be, for his or her own account on or under that land for the mineral or petroleum for which such right has been granted; remove and dispose of any such mineral found during the course of prospecting, mining, exploration or production, as the case may be; and carry out any other activity incidental to prospecting, mining, exploration or production operations, which activity does not contravene the provisions of the MPRDA. In addition, Section 24 of the MPRDA grants the holder of a mining right the exclusive right to apply for and be granted a renewal of the mining right in respect of the mineral and mining area in question.

[37] The applicant was granted the rights in Section 5(3) of the MPRDA when the mining right was granted to it. These rights are the clear.

[38] The mining right also carries with it obligations and responsibilities which are set out in the mining permit and the MPRDA and for which the applicant is responsible. If the obligations and responsibilities are breached or not complied with, the applicant

will be called to account. The applicant may be held responsible for the acts of the respondents on the properties. The Section 54 notice is an example. Section 5A is a further example. That section prohibits certain illegal acts. It provides that no person may prospect for or remove, mine, conduct technical co-operation operations, reconnaissance operations, explore for and produce any mineral or petroleum or commence with any work incidental thereto on any area without a reconnaissance permission, prospecting right, permission to remove, mining right, mining permit, retention permit, technical co-operation permit, reconnaissance permit, exploration right or production right, as the case may be. The respondents are mining without a mining permit upon the properties. I therefore find that the applicant has established an reasonable apprehension of irreparable harm should the respondents’ conduct not be interdicted.

[39] In face of the respondents’ indication that they would continue with their mining activities on the properties, I find that

the applicant had no other remedy but to seek interdictory relief.

[40] I was requested by the applicant to grant a punitive cost order against the first, second and fifth respondents. Although costs must follow the result, I am of the view that it would not be fair to award a punitive cost order against the first, second and fifth respondents. It will not be fair because they may have been ill advised when they, on the basis of the agreement, continued and later threatened to proceed with the unlawful mining on the properties.

In the premises, I make the following order:

1. The first, second and fifth respondents are interdicted and restrained

from mining for coal and/or conducting any associated activities on Portions 27 and 137 of the farm Blesboklaagte 296 J.S. and on the Remaining Extent of Portion 2 of the farm Kromdraai 292 J.S.

2. The first, second and fifth respondents are ordered to pay applicant’s

costs jointly and severally, the one paying the other to be absolved.

3. The applicant is ordered to pay the third respondent’s costs up to and including 2 October 2017.

JH Roelofse

Acting Judge of the High Court

APPEARANCES:

FOR THE APPLICANT: Advocate Roux SC

Instructed by Boshoff Smuts Inc.

FIRST,

SECOND AND

FIFTH RESPONDENTS: Advocate Bolt

Instructed by Van Quickelberger Attorneys

DATE OF HEARING: 22 November 2018

DATE OF JUDGMENT: 27 November 2018