COAL OF AFRICA LTD V AKKERLAND BOERDERY (unreported, Case No. 38528/2012, North Gauteng High Court, 5 March 2014)
Importance / This case belongs to the suite of cases dealing with access to land and to cases, decided subsequent to Maccsand, dealing with the intersection between mining authorisations and land use planning laws. It is an important case, albeit disappointing, that further weakens the position of surface owners and shows that the victory that Maccsanddepends largely on the particular land use planning instrument in force.A landowner, AkkerlandBoerdery, had refused to allow the prospecting rights-holder, Coal of Africa, access to the land for purposes of conducting its prospecting operations. COA sought an interdict restraining Akkerland from continuing to refuse access to the land and was successful on all the points of law raised. The points of law clarified in the case and decided in COA’s favour are the following:
- It is not necessary for a prospecting right to be registered in the Mining Titles Office in order for it to be effective and enforceable.
- An administrative action (e.g. the granting of a prospecting right) remains valid and enforceable – even when it is potentially voidable on the basis of an irregularity – up and until a court of law pronounces authoritatively on its invalidity. A person contending that an administrative action is invalid (in this case AkkerlandBoerdery) has a responsibility to initiate judicial proceedings and cannot adopt an indifferent attitude. Conduct pursued in the light of a voidable administrative act is similarly valid until a court pronounces otherwise. This means that a landowner cannot refuse to grant access on the basis of a subjective belief that the administrative action is unlawful. He or she must take steps to take that decision on judicial review. Claiming the invalidity of an administrative action as a defence can take place in very narrowly prescribed circumstances (e.g. when a public authority initiates enforcement action against a person).
- While prospecting must comply with relevant zoning requirements, much depends on the wording and interpretation of the actual land use planning instrument in question. In casu, the judge found that the Makhado Land Use Planning Scheme created a “permanent exemption” in favour of allowing mining to occur without the need to apply for a special consent use in areas that fell within the jurisdiction of a local municipality but outside the area of a proclaimed township.
- Section 54 of the MPRDA is designed to deal with disputes relating to compensation and does not suspend the operation of a prospecting or mining authorization; i.e. landowners cannot strategically use the issue of access as a point of leverage to force dispute resolution over compensation.
The judge made no reference to the broader unfair positioning of surface owners that occurs as a result of the failure to require consultation upon the amendment of a prospecting work programme or environmental management plan. The 2014 EIA Regulations, however, largely remedy this defect since consultation will now be required in these circumstances.
Parties / First Applicant:Coal of Africa Ltd (COA)
Second Applicant:Regulus Investment Holdings (Pty) Ltd (wholly-owned subsidiary of COA)
Respondent:AkkerlandBoerdery (Pty) Ltd
Facts / This case initially involved disputes surrounding the refusal to grant access to two farms (Lukin and Salaita) in favour of COA and Regulus Investment Holdings respectively. The application relating to Salaita was withdrawn, however, as the prospecting right granted to Regulus had expired due to effluxion of time.
AkkerlandBoerdery was the owner and holder of the surface rights to he farm Lukin. The mineral rights to this farm had been reserved to the State in 1944. Consequently, Akkerland had no claim to the mineral rights or to compensation in respect of them.
The reasons for AkkerlandBoerdery’s refusal to grant COA access to the farm Lukin rested on the following inter-related grounds:
(i)the prospecting right granted to COA did not exist, alternately, that it was not validly conferred by the DMR because the officials who attended to the right had not been delegated authority to do so;
(ii)the prospecting right could not be enforced because the EMP was not validly approved;the prospecting work programme (PWP) did not comply with the MPRDA regulations; and the prospecting right had not been registered in terms of the Mining Titles Registration Act, 1967;
(iii)the prospecting right had expired (and a renewal of the right was not pending with the authorities, as contended by COA);
(iv) proper consultations relative to the issue of access to the land had not been undertaken;
(v)the farm Lukin was not zoned for prospecting or mining activities;
(vi)any prospecting on Lukin would breach the provisions of the National Water Act, 1998;
(vii)the requirements for the grant of an interdict (specifically a “clear right” and the “lack of an alternative remedy”) were not clearly made out.
The history behind the prospecting rights to Lukin is set out in paras 47–52. Between 2006 and 2011 Lukin was first included in one prospecting right, then moved to another prospecting right (held by Motjoli Resources) when an application for the renewal of both rights was made. The reason for this was that the prospecting rights in the area had been granted in a “disorganized fashion”, and the various rights holders operating in the area had agreed to a way of consolidating and restructuring their claims. An application to amend the prospecting rights (and their supporting PWPs and EMPs) was subsequently lodged in terms of s 102 of the MPRDA and approved. The amendment was not merely formal but included substantive changes to the PWP, in particular, indicating that an additional 120 boreholes would be drilled. At the same time, an application to transfer the prospecting right from Motjoli Resources to COA was made and approved. The variation to prospecting right PR 38 (reflecting the right holder as COA, the inclusion of Lukin, and the amendment of the PWP), was notarially executed on 19 January 2011 an lodged for registration on 31 January 2011. However, by the time the matter was argued the registration had not yet taken effect.
Relief Sought / An order interdicting and restraining AkkerlandBoerdery from refusing COA access to the farm Lukin, and authorising the company to enter upon the land with their employees and plant to lay down the infrastructure required for prospecting.
Legal Issues & Judgment / Issue 1:Was it necessary for the right to have been registered in terms of the Mining Titles Registration Act to be enforceable? That is, does a prospecting right become an enforceable limited real right upon granting by the DMR or upon registration in the Mining Titles Office?
Judgment: Kgomo J proceeded from the claim that prior to the MPRDA it had been “universally accepted” that mineral rights were real rights (para 23). The MPRDA has done away with common law mineral rights as previously known, and had replaced these with various statutorily defined rights, including prospecting rights. Prospecting rights were limited real rights in respect of the mineral and the land to which such right related (para 24). There was nothing in s 5(1) of the MPRDA to suggest that the recognition of a prospecting right as a limited real right rested upon registration in the Mining Titles Office (para 24). A prospecting right thus becomes a limited real right when it is granted in terms of the MPRDA (para 25).
Further, based on a reading of s 19(2) read with s 17(5) of the MPRDA, a distinction could be drawn between the date of the right becoming effective and the date of registration in the Mining Titles Office. According to s 17(5), a right becomes effective on the date of approval of the EMP. The duty to lodge the right for registration, in turn, needs to occur within 30 days of the right becoming effective (s 19(2)(a), MPRDA). The duty to commence with prospecting activities is also linked to the date upon which the right became effective, not the date of registration (s 19(2)(b), MPRDA).
Agreeing with COA, Kgomo J thus concluded that a plain reading of s 19(2) indicated that (a) registration may occur after the right has become effective; and (b) a prospecting right becomes enforceable from the date it is effective in terms of s 17(5) (para 30).
Kgomo J buttressed this finding with the following additional considerations:
- An interpretation that a right could be both “effective” and yet unenforceable (by virtue of lack of registration) would be impractical as well as stultify the broader operation of the MPRDA. It would also result in an absurdity because it would render the strict time periods within which prospecting needs to be conducted ineffective (para 32).
- The definition of “right” in s 1 of the MRPDA indicated that a right existed where it had been registered or was capable of being registered (para 34). Further, s 18(5) of the MRPDA stated that a prospecting right in respect of which an application for renewal has been lodged, remains in force until the application for renewal has been granted or refused (para 35).
Issue 2: Was Akkerland entitled to disregard the administrative acts (i.e. the granting of the prospecting right) because it believed they were invalidly conferred?
Judgment: Kgomo J decided against Akkerland on this ground. While the judge’s reasoning on this point is quite dense and convoluted, in essence it boils down to the following four reasons:
- Firstly, there is an established principle of South African law and common law that an administrative action is treated as valid unless and until a court pronounces authoritatively on its invalidity (para 62). The most recent authoritative confirmation of this principle was by the Supreme Court of Appeal in the case of Oudekraal Estates (Pty) Ltd v City of Cape Town 2004 (6) SA 222 (SCA). The reason for this principle is largely “pragmatic”, as articulated by Kgomo: “the proper functioning of a modern State would be considerably compromised if all administrative acts could be given effect to or ignored depending on the view individuals take of the validity of the act in question” (para 65). The value of certainty in a modern bureaucratic state is a desirable objective (para 66). A party contending that an administrative act is unlawful can therefore only rely upon the fact that the act is voidable, not void. This means an onus rests upon such person to initiate review proceedings to set the administrative action aside, and until they do so the administrative act is valid and has legal consequences (para 67). Akkerland had not brought such review proceedings.
- Secondly, where “consequent acts” (e.g. the right to demand access to land for purposes of mining) are linked to the validity of an initial administrative act or acts (e.g. the granting of the prospecting right, the amendment of the prospecting right, the grant and variation of the EMP or PWP, the giving of ministerial consent under s 11; etc), such consequent acts will not necessarily be unlawful where it is contended that the initial administrative act is flawed. The question to ask here is whether the substantive validity of the initial administrative act was a precondition for the validity of consequent acts. Where, however, “the validity of consequent acts is dependent on no more than the factual existence of the initial act, then the consequent act will have legal effect for so long as the initial act is not set aside by a competent court” (para 61). In other words, the consequences of a voidable administrative act also have legal effect unless and until a court sets aside the initial administrative act.
- Thirdly, instead of initiating review proceedings to set aside a voidable administrative act, a party to legal proceedings could raise the invalidity of the administrative action as a defence (the strategy, in effect, for which Akkerland had opted). In the Oudekraal Estates case, the SCA has articulated the two conditions that would need to be present for the invalidity of administrative action to succeed as a defence. In short, these were that (i) the person or official placing reliance on the first invalid administrative act has legal power to act validly notwithstanding the invalidity of the act; and (ii) the subject is sought to be coerced by a public authority into compliance with an unlawful administrative act (para 70). In order for the invalidity of an administrative act to succeed as a defence, therefore, it was necessary that some enforcement action had been initiated against the respondent (paras 75 – 76).
Issue 3: Had COA consulted with Akkerland in the prescribed manner?
Judgment: Akkerland lost on this point as well. On the facts the judge found that COA had sent a letter to Akkerland in January 2012 in which they had sought to consult for purposes of obtaining access to the farm. He thus found that Akkerland had refused to consult or frustrated attempts to get the consultation going (paras 82–83). The prior lack of consultation in the amendments to the PWP and EMP received no comment.
Issue 4: Does the failure to rezone the land for prospecting/mining bar the prospecting or mining operations from taking place?
Judgment: Citing the Constitutional Court’s decision in Maccsand (Pty) Ltd v City of Cape Town and others 2012 (4) SA 181 (CC), Kgomo J established the principle that compliance with zoning requirements is an essential part of the grant and utilization of a prospecting right (para 84). The court noted that in Maccsandthe need to comply with the Cape Land Use Planning Ordinance emerged as a result of the wording of s 23(6) of the MPRDA (which states that a mining right is subject to “any relevant law”). In the case of prospecting rights, the applicable provision is the similarly worded s 17(6). Kgomo J agreed with COA that s 17(6) rendered the exercise of a prospecting right subject to the applicable Land Use Planning Ordinance. The planning ordinance in question was the Makhado Land Use Scheme, 2009, an instrument developed in terms of the (Transvaal) Townships and Town Planning Ordinance 15 of 1986 (para 88).
Akkerland lost heavily on this point, however, on the basis of the interpretation of the Makhado Land Use Scheme. It was not in dispute that the Makhado Land Use Scheme was applicable to the area of the Makhado Local Municipality; that the farm Lukin fell within the jurisdiction of this municipality; that the farm had been zoned for agricultural use (the primary use); and that no special “consent use”(or secondary use) authorising prospecting on the farm had been obtained (paras 92–94). The crux of the judge’s reasoning on this issue rested upon the interpretation of Part VI of the Scheme, which dealt with the rules and procedures for obtaining consent uses. Par 25.1 of the section of the Scheme provides as follows: “Without prejudice to the powers of the local municipality derived from any law, or the remainder of this Scheme, nothing in the foregoing provisions of this Scheme shall be construed as prohibiting or restricting the following: the exploitation of minerals on any land not included within a proclaimed township” (see para 97).
It was not in dispute that the farm Lukin had not been included within a proclaimed township (para 95). Articulating a variety of reasons centred mostly upon the relationship of par 25.1 with other portions of the Land Use Scheme, Kgomo J found that the Scheme created a “permanent exemption” to the need to apply for a consent use (paras 96 and 108). Clause 25 was there, he held “to ensure that mining exploration, which includes prospecting is not interfered with as long as it takes place outside of an established township” (para 102). The import of this interpretation is not only that mining was permitted to occur on the farm Lukin notwithstanding the primary zoning of “agriculture”, but also that mining could occur without the need for any application for a consent use from the local authority (para 111).
Issue 5: Did COA have a suitable alternative remedy?
Judgment: Akkerland argued that an alternative remedy existed to the granting of an interdict, namely the invocation of s 54 of the MPRDA (which lays down a procedure for the resolution of disputes regarding access as well as the payment of compensation to the landowner – see para 114).Citing the decision in Joubert NO v Miranda Mining 2010 (1) SA 198 (SCA). The court dismissed this argument on the basis that s 54 is geared toward dealing with disputes relating to compensation. This section was not authority for the proposition that mining operations should be suspended whilst the parties were still in dispute (para 117 – 118). The respondent’s case was not advanced by the fact that he appeared to be lining up “grandiose schemes of operating hospitality business and other activities” while the legal proceedings dragged on (para 119).