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Competing mineral interests: An analysis of current case law

Competing mineral interests: An analysis of current case law. By Robert Siddle. Background: The Mineral and Petroleum Resources Development Act 28 of 2002.

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Competing mineral interests: An analysis of current case law

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  1. Competing mineral interests:An analysis of current case law By RobertSiddle

  2. Background: The Mineral and Petroleum Resources Development Act 28 of 2002 • Brought an end to mineral law of the old order originally was developed as a limited real right/servitude as part of the law of property ownership vested in the landowner • Introduced a new state controlled system of prospecting and other such rights • This new dispensation was based on the legitimate Constitutional goal of reform of the previous dispensation, characterized by inequality and injustice • This reform however is to be balanced against the rights of the landowner and of the public as a whole

  3. Background cont’d • Mineral & petroleum resources are now considered as the common heritage of the people of South Africa • The State however is made custodian thereof for the benefit of all South Africans

  4. The Cases • Global Pact Trading 207 (Pty) Ltd v Minister of Minerals and Energy, Regional Manager, Free State Region; The Deputy Director General: Minerals and Energy 2007 OFS Global Pact Trading • Doe Run Explorations SA (Pty) Ltd, Hendrik Christiaan Brits, Hendrik Chrsitiaan Brits NO, Johannes Jacobus Brits NO, Helena Brits NO v Minister of Minerals & Energy, The Regional Manager: Minerals & Energy: Northern Cape, The Deputy Directory General: Mineral Regulation, Samber Trading 103 (Pty) Ltd 2008 OFS Doe Run • Meepo v Kotze and Other 2008 (1) SA 104 NC Meepo

  5. Global Pact Trading • This case emanates from a decision of the RM to deny the Applicant a prospecting right ito S 17 of the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA) • Issue: Whether the applicant (Global Pact) was obliged to exhaust internal remedies of review?

  6. S 17 of the MPRDA provides that the power to grant or refuse a right is given to the Minister S 103 of the MPRDA provides that the Minister may in writing delegate any power conferred on him by the MPRDA. S 96 of the MPRDA provides for internal review where a persons rights or expectations have been materially and adversely affected It provides explicitly for review up the chain of command, from the RM/officer to the DDG or from the DDG to the Minister. Relevant Provisions

  7. The court was of the opinion that the remedy of appeal was not available ito s 96 • Why? • The court identifies two forms of delegation; Decentralisation and Deconcentration. • Decentralisation Is when powers are transferred to an independent organ or body which carries out these powers or functions entirely in its own name The delegans (delegating authority) has no authority on behalf of the delegate and no control over the independent body.

  8. Deconcentration Is applicable where the functions are performed by the delegate in the name or on behalf of the delegans, the delegans acts by means of the delegate [attribution theory, agency/mandate] • This has 2 essential features; The delegans may withdraw the delegation at any time and perform the function themselves The delegans may exercise various forms of control over the delegate.

  9. S 103 (4) and (5) of the MPRDA provides specifically that; the Minister/DDG/RM or officer may at any time (a) withdraw a delegation (b) withdraw or amend the decision made by a person exercising a delegated duty. • (5) the above 3 are not divested of any power or exempted from any duty delegated. • The Minister had the power to revoke the delegation to the DDG [Minister v DDG] as well as being able to exercise the delegated power herself and the ability to exercise control over the exercise of the delegated power.

  10. The court considers this a scheme of deconcentration of public power. • Therefore it follows that when the DDG refused to grant the right the DDG acted on behalf of the Minister and the Minister acted through the DDG and that the decision to refuse must be regarded as a decision of the Minister. • On this basis no appeal in terms of s 96 is available.

  11. Effect of the Judgment • Effectively whenever the Minister delegates authority to the DDG and the DDG refuses an application for a prospecting right no remedy of internal review is available and the applicant may apply to court to have the decision set aside/reviewed

  12. Doe Run • Doe Run applied for a prospecting right in respect of 16 farms, but was declined on 14th September 2005. On 15 December 2005 it again applied for prospecting rights for the same 16 farms. • On 12 October 2006 Doe Run was informed by the RM that the application had been granted in respect of 9 of the farms. The remaining 7 farms were not mentioned and Doe Run enquired on 1st and 3rd November 2006. • Doe Run applied in respect of the decision not to award prospecting rights for the remaining farms.

  13. Relying on s 16(4) of the MRDPA, Samber [Resp] had failed to notify the Applicant as owner and occupier of the farm of their application for a prospecting right and to consult with the 2nd Applicant This was pleaded to be in contravention with s 6 (2) (b) of PAJA [procedure not complied with] The Applicant was an affected party within the meaning of s 16 (4). Notification and consultation in respect of the application was imperative. Respondents aver that this did occur No proof of this exists. This is therefore a bald statement. This is inadequate proof as regards compliance with s16(4). Importantly, no compliance with s 6 (2) (b) of PAJA; a mandatory and material procedure or condition prescribed by an empowering provision was not complied with [Referring to the MPRDA] Issue of Consultation

  14. The Respondents raised a number of cases and persuasive authorities to argue that the legislation was suggestive and wasn’t authoritative. The court distinguished these on the facts. • The court stated that the provision of s 16 (4) and s 16 (5) were peremptory and the use of the word ‘must’ is significant. • They highlighted the need for affected parties, land owners and occupiers, in respect of a right issued, quite clearly to be made aware of an application and consultation needs to follow so as to protect the rights. • The state conceded this point. • S 105 of the act provides for the scenario where the above parties cannot be found. This makes for a even more compelling reason to alert the interested parties. • The steps set out should have been followed by Samber. • The State conceded this.

  15. Effect of the Judgment • This case highlights the significance which the courts place on the protection of landowners and affected parties rights • Consultation is one of the few necessities when conducting prospecting and is critical to protecting the rights of others • The importance that the legislature places on consultation as a factor of public participation and transparency is made clear by the inclusion of modes of alerting affected parties even when they cannot be readily found [s 105 MPRDA]

  16. Meepo • Both Meepo and Kotze applied for prospecting rights over Kotze’s property (July 2001) • Meepo was granted a prospecting right and Kotze not. Kotze then refused Meepo access to the farm. • Meepo applied for a prospecting right, this was approved by the DDG n 6 January 2005. • On 24 March 2005 such a prospecting right was granted to Meepo ito s 17 of the MPRDA. The document was signed by the regional manager ‘for and on behalf of the minister’. = the 1st prospecting right • A second prospecting right was granted to Meepo ito s 17 of the MPRDA. This was also signed by the RM ‘on behalf of the minister’. • This document [2nd prospecting right] was duly registered in the Mineral an d Petroleum Titles Registration Office on 18 July 2005 • Meepo rely on this 2nd prospecting right.

  17. The Relevant Legislative Framework • The MPRDA repealed the Minerals Act of 1991. This introduced a number of fundamental changes to the regulation of mineral resources in RSA The traditional concept of ‘mineral rights’ has been done away with, the state is now custodian of the mineral and petroleum resources of RSA (s 3) The holder of a prospecting or mining right now has a limited real right in the land which is the subject-matter of the right and this right must be registered A consideration of the provisions of the MPRDA leads to a realization of conflict between the interests of the right holder or a prospecting right and that of the land owner [core rights enshrined in the Bill of Rights ss 24 and 25 of Constitution] When interpreting the applicable provisions of the MPRDA and in particular those sections which are capable of more than one interpretation, preference should be given to that construction which would result in the most rational balance between conflicting rights of a holder of a prospecting right and that of a land owner

  18. The Main Application • Meepo was prevented from exercising its prospecting right as Kotze was not allowing the right holder (M) onto his property. • Kotze submitted that Meepo was not entitled to access because of its failure to consult with the landowner (K) after it was granted a prospecting right and before demanding access to the farm as required by s 5 (4) (c) of the MPRDA • It was accepted that Meepo didn’t, subsequent to the granting of the prospecting right, consult or attempt to consult with Kotze before it demanded access to the farm. • The fate of the application therefore depended on the interpretation of s 5 (4) of the MPRDA and in particular whether s 5 (4) (c) refers to consultation pre or post the granting of a prospecting right. (4) No person may prospect for or remove, mine, conduct technical co-operation etc etc…without: • (c) Notifying and consulting with the landowner or lawful occupier of the land in question

  19. Meepo claimed that the provisions above were of a general nature and that once s 16 had been complied with no further consultation would be required. • The Court denied this. • The Court held the view that the provisions of the Act should be interpreted with due regard to the Constitutional rights, norms and values the legislature sought to encompass in the act. • The most significant rights: The custodial role of the State over mineral and petroleum rights of the state and the concomitant disposal of the traditional concept of state and or individual rights to unexploited mineral [s 3(1) MPRDA] The states obligation to protect the environment for the benefit of present and future generations [s 24 Constitution and preamble of MPRDA] Right to equitable access to the natural resources of the country [s 25 (4) Constitution] Right not to be deprived of property arbitrarily [s 25(1) Constitution]

  20. It was accepted that it was the intention of the MPRDA for a rational balance between; the rights of the holder of the prospecting right on the one hand and the property rights of a landowner on the other hand the fundamental right to have the environment protected that the provisions of the Act should be interpreted with due regard to the already mentioned Constitutional values and norms. • The court then highlights the importance of consultation in the process The granting of a prospective right as a necessary consequence results in serious inroads being made on the property rights of a landowner The legislature has sought to alleviate this by providing for due consultations between a landowner and the holder of or an applicant for a prospecting right Consultations is the only prescribed means whereby a landowner is to be appraised of the impact prospecting activities may have on his land

  21. It is for these reasons that the court came to the conclusion that these sections of the MPRDA which provide for consultations between applicant for and or holder of a prospecting right and a landowner should be widely held. • Judging by the heading of s 5 of the MPRDA ‘Legal nature of prospecting right, mining right, exploration right or production right, and rights of holders thereof’ it appears that the legislature intended that the provisions of this section are applicable to holders of rights already granted under the Act. • s 5 (4); as a holder of a prospecting right, that person is not allowed to prospect or …..without notifying and consulting with the landowner

  22. The courts view was that the consultative process envisaged by s 5 (4) (c) is intended to afford a landowner the opportunity of ‘softening the blow’ inevitably suffered as a consequence of granting of a prospecting or other right under the act. • This is the only means afforded to the landowner to protect his rights as such. [offered in the MPRDA] • This interpretation accords with the rational balancing of conflicting interests and or rights. • Court found by enacting s 5 (4) (c) the legislature intended that post the granting of a prospecting right and before the commencement of prospecting activities on any land which is the subject of such prospecting right, proper notice of intention to enter the land for purposes of prospecting should be given to the landowner, followed by a consultative process.

  23. The 2nd Prospecting right and its validity • Brief history of the process whereby Meepo attained the right to prospect Meepo applied for a prospecting right ito s 16 of the MPRDA [5 May 2004] Acceptance was issued by the RM [17 may 2004] The RM directed to the DDG a written submission for his approval. It sought to secure the DDG’s approval and contained a detailed confirmation that all statutory requirements had been compiled with. The document as well as a power of attorney was signed by the DDG [6 January 2005]

  24. It was accepted as common cause that: The Minister has properly delegated her power to the DDG That a RM has no such original or delegated power Any further delegation of its delegated powers by the DDG has be expressly prohibited by the Minister • It was on this, albeit ultra vires, delegation of power that the DDG, the RM and Meepo notarially executed a prospecting right [the 1st, 24 March 2005] • This 1st prospecting right could not be registered due to a certified sketch not being registered.

  25. The RM and Meepo notarially executed a second document [2nd Prospecting right] • This was registered at the offices of the Registrar of Mining Titles. [What Meepo relied upon for its main application] • The court found that the DDG merely approved the recommendation to – at some future, unspecified moment in time – grant a prospecting right to Meepo. It used the words ‘for a period of two years, subject to the terms and conditions as may be determined’. • No ‘terms and conditions’ were ‘determined’ in this document.

  26. It was thus held that it cannot be said that Meepo acquired any rights as holder of a prospecting right at the time of approval as no terms or conditions had been determined. • The right can only be granted once the terms and conditions have been determined and communicated to an applicant for his acceptance. This occurred when the notarial deed was executed by the RM and Meepo [the 2nd Prospecting right] • If the relevant right [the 2nd Prospecting right] was granted to Meepo on 1 July 2005, that right was granted by the RM, who was not authorized to grant the right on behalf of either the Minister or the DDG. • This was conceded by the counsel for Meepo, that the power of attorney was not a valid delegation of power by the DDG to the RM.

  27. The DDG empowered the RM to sign the prospecting right. According to the approval signed by the DDG he approved a granting of a prospecting right to Meepo ‘subject to the terms and conditions as may be determined’. It was signed by the RM. • These terms and conditions contained in the prospecting right were determined by the RM and NOT the DDG. The RM was NOT authorized to do this. • In casu the terms and conditions were not determined by the grantor of the right, they were in fact determined by the RM, he thus acted ultra vires of his statutory powers. • Result: The acceptance and processing of the application in disregard of the Respondents pending application was considered irregular and ultra vires of the powers of the RM and/or the DDG. • The prospecting right of Meepo therefore falls to be reviewed and set aside.

  28. Effect of the Judgment • This decision should give rise to serious concerns regarding the validity of prospecting rights granted under the signature of a Regional Manager of the Department of Minerals and Energy • Most, if not all, prospecting rights have been granted under signature of Regional Managers!!!! • It is seriously suggested that on the light of this decision that parties who rely on the validity of such prospecting rights review such rights as each case needs to be considered on its own facts

  29. The End • Questions?

  30. Bibliography • Cases Global Pact Trading 207 (Pty) Ltd v Minister of Minerals and Energy, Regional Manager, Free State Region; The Deputy Director General: Minerals and Energy [Case Nr 3118/2006(O)] unreported Doe Run Explorations SA (Pty) Ltd, Hendrik Christiaan Brits, Hendrik Chrsitiaan Brits NO, Johannes Jacobus Brits NO, Helena Brits NO v Minister of Minerals & Energy, The Regional Manager: Minerals & Energy: Northern Cape, The Deputy Directory General: Mineral Regulation, Samber Trading 103 (Pty) Ltd 2008 [Case Nr 499/07 (NC)] Meepo v Kotze and Other 2008 (1) SA 104 NC Mofschaap Diamonds (Pty) Ltd v The Minister of Minerals and Energy [Case Nr 3117/2006 (O)] • Atricles Nic Roodt,”Prospecting rihgts under threat; An analysis of the Meepo judgment” Bell Dewar Hall website http://www.belldewar.co.za/xComponents/xArticlesNews/default.aspx?CWXQ=CWX-23TShw0F4TDrj3DYjwhF240rg3aF4STR • Texts Badenhorst PJ, Mostert H, Pienaar JM Silberberg & Schoeman's The Law of Property , 5th edition. LexisNexis Butterworths, Durban, South Africa 2006 pg 667 - 713

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