BOSALETSE N.O. & OTHERS V Minister of Mineral Resources & Others (Unreported, Case No

BOSALETSE N.O. & OTHERS v minister of mineral resources & others (unreported, Case No. 1891/2013, Free State High Court, 26 September 2013)

Importance / On the one hand, this case is an object lesson in the unintended effects of courts’ intervention in the licensing process. A Community Trust’s quest to obtain prospecting rights to a tailings dump situated in their locality was essentially frustrated by previous decisions of the same High Court division, in which the court had held that the tailings dumps in question belonged to De Beers and in which it had ordered the DMR to grant De Beers a converted prospecting right. In this case, the court decided that it could not overrule these previous decisions. At least one of the reasons offered by the bench in this regard appears suspect: They stated that they could not overrule the prior decision because the DMR had not appealed it and had instead chosen to amend the MPRDA. What the court failed to highlight was that the DMR’s amendment of the MPRDA shows clearly that it considered the previous Ataqua decision to be wrong. This clear fact received no consideration in the Bosaletse case.
The applicants’ failure to rely on s 104 of the Constitution (preferent right to prospect) in this case can be explained on the basis they were not the registered owners (or in line to become the registered owners) of the land. This may also explain the failure to invoke the Bengwenyama precedent in claiming that the applicants should have been afforded a hearing prior to the granting of the converted prospecting right.
The case is memorable for the breadth of relief sought by the applicants (particularly the relief centring around compensation and forfeiture), and for the court’s obiter remarks about the conduct of the DMR toward the community.
Parties / First to Eighth Applicants: Residents of Itumeleng township and duly appointed trustees of the Jagersfontein Community Trust
Ninth Applicant: Businessman and resident of Kimberley, duly appointed trustee of the Jagersfontein Community Trust, and director and shareholder of Wheatfields.
Tenth and Eleventh Applicants: Both appointed trustees of the Jagersfontein Community Trust, though resident in different areas.
Twelfth Applicant: Wheatfields Investments, a private company with its principal place of business in Kimberley.
First to Third Respondents: Minster of Mineral Resources; D-G, Dept of Mineral Resources & Acting Regional Manager, Mineral Resources, Free State Region
Fourth Respondent: De Beers Consolidated Mines Ltd
Fifth to Seventh Respondents: The private companies and investment funds involved in prospecting after De Beers sold the tailings dump
Eighth to Twelfth Respondents: Trustees of the Itumeleng Trust
Thirteenth Respondent: Kopanong Local Municipality
Facts / The facts in this case hark back to a legal dispute between De Beers Consolidated Mines Ltd and Ataqua Mining (Pty) Ltd over the right to prospect a tailings dump situated on subdivision 16 of the farm Jagersfontein in the district of Fauresmith, Free State. The company that had initially mined for diamonds on this subdivision became part of the De Beers group of companies in 1932. By 1993 De Beers held all the mineral rights to precious stones, precious metals, base minerals and oil in respect of the farm and all the mining assets. It had also acquired a prospecting and mining authorization to this property under the Minerals Act, 1991. When the MPRDA commenced, De Beers was of the opinion that the MPRDA did not apply to tailings dumps created before the MPRDA entered into effect, and therefore failed to apply for conversion. In December 2006, however, the mineral authorities issued a prospecting right to the farm to newcomer Ataqua Mining. De Beers applied for an order that it was the owner of the tailings dumps on the farm, and for a review and setting aside of the Department’s decision to refuse to convert its rights. The case was heard in the Free State High Court (De Beers Consolidated Mines Ltd v Ataqua Mining (Pty) Ltd, unreported Case No. 3215/06, 13 December 2007). In the first case the court decided that the MPRDA did not apply to tailings dumps created before its commencement, and that De Beers was indeed the owner of the dump. In the second (cited De Beers Consolidated Mines Ltd v Regional Manager, Mineral Regulation, Free State Region: Department of Minerals and Energy, unreported Case No. 1590/2007. 15 May 2008) the court set aside the DMR’s failure to convert De Beers prospecting right, and directed them to do so. These decisions were not appealed. The DMR subsequently complied with the order and converted De Beers prospecting rights to the farm.
Although the DMR failed to appeal the decision, subsequent proposed amendments to the MPRDA provided ample proof of its intention to bring tailings dumps under the ambit of the MPRDA (see for instance the definition of “residue stockpile” in the MPRDA Bill (B 15B – 2013).
In July 2009 Wheatfields submitted a prospecting rights application to the farm to the DMR, and again in late 2012, but was rebuffed on both occasions. In September 2009 the Jagersfontein Community Trust submitted an application for prospecting rights to the farm to the DMR. At the time of the judgment, however, this application had not yet been processed.
During May 2010 De Beers invited several prospective buyers to submit bids for its Jagersfontein assets. JD Company (with investors from Luxembourg), and Wheatfields were amongst the bidders but ultimately, through the processes of tendering, JD Company won the bid. In September 2010 De Beers concluded a sale agreement with JD Company, the objects of which included the tailings dumps and the converted prospecting rights. In the conversion of De Beers prospecting right and the granting of consent to transfer the right to the JD company, the DMR failed to give the Jagersfontein Community Trust an opportunity to make representations as interested parties under s 3(2) and (3) of the PAJA.
JD Company started processing the tailings dumps on subdivision 16 in late 2011 or early 2012. The company concurred, however, that until the dispute with the Community Trust had been resolved it did not have the right to mine and sell the diamonds.
The applicants launched the application both to interdict De Beers, JD Company and its associates from conducting any prospecting or mining activities on the farm, and to secure substantive relief. At the applicants’ special request, the court was constituted as a full bench (three judges, see further issue 1 below).
Relief Sought / The relief sought by the applicant in this case ran to some 12 pages, and included the following elements, categorized on the basis of interim relief; review and related relief; and forfeiture and compensation respectively.
Interim Relief
·  An interim order interdicting De Beers, JD Company and its investor (the “mining proponents”) from conducting any prospecting or mining operations for diamonds on specified areas of the farm Jagersfontein without due authorisation under the MPRDA, National Heritage Resources Act 25 of 1999; National Water Act 36 of 1998; NEMA; and the Townships Ordinance 9 of 1969.
·  An interim order interdicting the mineral authorities from issuing any written authority under the MPRDA to the mining proponents in relation to the Jagersfontein land and mine, or from granting any authorization relating to the transfer of rights.
Review and Related Relief
·  An order setting aside the Minister’s decision to grant De beers a converted prospecting right, the notarial execution of that right and its registration in the Mineral and Petroleum Titles Registration Office.
·  An order setting aside the granting of the Minister’s consent authorising the transfer of De Beers’ prospecting right, if any.
·  Reviewing the Regional Manager’s administrative action in failing to process the Jagersfontein Community Trust’s prospecting application, and declaring that such prospecting right be granted.
·  Alternatively (to the prior two orders), an order declaring that Wheatfields’ prospecting rights application be duly accepted, processed and/or granted.
·  An order declaring and confirming the Minister’s duty to consider facilitating assistance to the Jagersfontein Community Trust as a historically disadvantaged person, and ensuring that the transformational objectives of the MPRDA are achieved.
·  An order declaring and confirming that the MPRDA applies to the Jagersfontein dumps in respect of minerals, including diamonds, occurring on such land or in the mine dumps.
·  An order interdicting the mining proponents from undertaking prospecting or mining on Jagersfontein mine and the Jagersfontein dumps; further, directing them to cease all mining operations; from obstructing the Jagersfontein Community Trust from acting under their prospecting right; and directing them to vacate the mines and the dumps, removing all mining and prospecting installations, structures and equipment.
·  An order exempting the applicants from failing to exhaust internal remedies.
·  An order condoning non-compliance with s 7(1) of PAJA regarding the time period for the institution of review proceedings.
Forfeiture and Compensation
·  An order directing that the mining proponents forfeit in favour of the State the proceeds and returns of any unauthorised and illegal prospecting, mining and sale of diamonds realized as a result of their extractive activities at Jagersfontein mine and dumps, since 2010, along with plant, infrastructure and equipment operated on the site.
·  An order directing the mining proponents (jointly and severally) to pay compensation to the Jagersfontein Community Trust (alternatively to Wheatfields), in an amount equal to the value of the diamonds mined by them.
·  An alternative order based on the relief deemed fit by the High Court, and after obtaining full disclosure of all results obtained in respect of prospecting and mining operations and/or related activities.
Legal Issues & Judgment / Issue 1: Was the court bound by the previous Ataqua decisions (which had been issued by a single judge), or could a full bench of the same division overrule them?
Judgment: This was presented as an ancillary issue, but as the judges correctly noted it actually formed the basis of the case (para 6). This is because the judgments in effect compelled the DMR to issue the converted prospecting right to De Beers. The applicants argued that the judges could overrule the previous decisions because (i) De Beers had not sought the declaratory relief granted (i.e. the court’s declaration that the MPRDA was not applicable to historic tailings dumps); and (ii) the applicants had not been party to the judgment ordering the DMR to issue the converted prospecting right to De Beers, and it was thus not binding upon them (para 17). The respondents argued that courts are bound by decisions that have not been set aside on appeal, particularly those that are not clearly wrong or where a case has not been made out for exceptional circumstances justifying a departure from the precedent (para 18).
The court decided that it was bound by the earlier Ataqua decisions because the DMR, which had been a party to those proceedings, had chosen not to appeal the decision but had rather opted to amend the MPRDA. The applicants had also not made out any case of exceptional circumstances justifying the court’s departure from the earlier decisions, nor explained why this would have been in the interests of justice (para 21). The argument that the previous decisions were not binding upon the applicants held no weight, as the decision was binding upon the DMR and “virtually disempowered it to grant any rights to any other party to the tailings dumps” (para 22).
Issue 2: Did the recent decisions of the Supreme Court of Appeal and Constitutional Court in the Agri SA matter empower the judges to overrule the previous Ataqua decisions?
Judgment: In the Agri SA matter, the Supreme Court of Appeal and Constitutional Court essentially decided that the MPRDA had not effected a wholesale expropriation of mineral rights, even while such had become vested in the State under the banner of “custodianship”. The applicants argued that these decisions constituted sufficient authority for the judges to overrule the previous Ataqua decision.
The full bench rejected this argument, stating that the Agri SA decisions were of little help to the applicants because they did not deal with the “crisp issue” of the Ataqua decisions, and had not even referred to the Ataqua decisions (para 23).
Outcome / The applicants had not satisfied the requirements for obtaining an interim order (para 28). The court’s findings on the ancillary issues (issue 1 and 2 above) were also dispositive of the main issues of the case.
Obiter dicta / In addition to obiter dicta on the applicants’ capacity to know about the other prospecting applications (para 30), and the excuse of indigency to justify tardiness in bringing the application to court (para 31); the court thought it fit to make some remarks on the manner in which the DMR had treated the Jagersfontein Community and (to a lesser extent) Wheatfields. The court stated as follows:
“The applicants were not properly assisted in what was obviously an effort to acquire prospecting rights over the tailing dumps on a piece of land which belonged to De Beers but had lain vacant and unused for a decade or so. Although the MPRDA does not impose an agreement on the part of the landowner, De Beers in this case, it was incumbent on the Department to have facilitated such engagement in good faith to attempt to reach accommodation to the satisfaction of both parties. Surely if the applicants were kept abreast of developments and assisted through some form of mediation by the Department instead of being shunted from one door to another … they would not have seen the court as their only hope after such an inordinate delay. … [I]t must be stated unequivocally that the Department missed an opportunity to redress the imbalance the MPRDA recognized and intended to correct. …” (paras 35–36).