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[2016] ZASCA 80
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Palala Resources (Pty) Ltd v Minister of Mineral Resources And Energy and Others (479/15) [2016] ZASCA 80; [2016] 3 All SA 441 (SCA); 2016 (6) SA 121 (SCA) (30 May 2016)
Links to summary
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No:479/15
DATE: 30 MAY 2016
Reportable
In the matter
between
PALALA RESOURCES
(PTY)
LTD
...............................................................................
APPELLANT
And
MINISTER OF MINERAL
RESOURCES AND
ENERGY
............................................................................................................
FIRST
RESPONDENT
REGIONAL MANAGER:
LIMPOPO REGION
.....................................
SECOND
RESPONDENT
HECTOCORP (PTY)
LTD
.............................................................................
THIRD
RESPONDENT
Neutral citation:
Palala Resources v
Minister of Mineral Resources and Energy
(479/15)
[2016] ZASCA 80
(30 May 2016)
Coram
:
Maya DP, Tshiqi, Majiedt, Wallis and Zondi JJA
Heard:
12
May 2016
Delivered:
30
May 2016
Summary:
Mining
and minerals – Companies – interpretation and application
of s 56(
c
)
of the
Mineral and Petroleum Resources Development Act 28 of 2002
and
s 73(6A) of the Companies Act 61 of 1973 – deregistration of a
company which is the holder of a mineral prospecting right
does not
result in that company irretrievably losing that right –
subsequent restoration of company’s registration
having the
legal effect of retrospectively reviving the lapsed prospecting
right.
ORDER
On
appeal from:
Gauteng
Division of the High Court, Pretoria (Keightley AJ, sitting as court
of first instance)
(a) The appeal
is upheld with costs.
(b) The order
of the court a quo is set aside and substituted with the following:
‘
1
The first respondent’s decision on 30 April 2014, upholding the
third
respondent’s
appeal, is reviewed and set aside;
2 It is
declared that the prospecting right (registered under the number
LP1488)
granted to the applicant was retrospectively restored to it by virtue
of the restoration of the applicant’s registration
as a company
on 13 September 2010;
3 The first
and second respondents are directed to take the necessary and
reasonable steps to give effect to the order in paragraph
2;
4 The third
respondent is to pay the applicant’s costs of the application.’
JUDGMENT
Majiedt
JA (Maya DP and Tshiqi, Wallis and Zondi JJA concurring):
[1]
This appeal turns on the interpretation and the application of s
56(
c
)
of the Mineral and Petroleum Resources Development Act 28 of 2002
(the MPRDA) and s 73(6A) of the previous Companies Act 61 of
1973
(the Companies Act), which was in force at all material times. The
appellant, Palala Resources (Pty) Ltd (Palala), appeals
against an
order of the Gauteng Division of the High Court, Pretoria, that
Palala’s mineral prospecting right had irretrievably
lapsed
upon Palala’s deregistration as a company and that the
subsequent restoration of its registration did not retrospectively
revive the lapsed right. The judgment of the court a quo is reported
sub nom
Palala Resources
(Pty) Ltd v Minister of Mineral Resources and Energy & others
2014 (6) SA 403
(GP). This appeal is with the leave of the court a
quo.
[2]
Prior to the hearing the parties’ attention was drawn to this
court’s judgment in
Newlands
Surgical Clinic (Pty) Ltd v Peninsula Eye Clinic (Pty) Ltd
[2015]
ZASCA 25
;
2015 (4) SA 34
(SCA). At our request they filed
supplementary heads of argument on the question ‘whether the
appeal has not become moot
due to the expiry of the right despite the
restoration exercise’. I shall deal with that aspect presently.
[3]
The common cause material facts are as follows. Palala was granted a
mineral prospecting permit on 20 May 2009 in terms of s
17 of the
MPRDA. It was thereby permitted to prospect for gold and pyrite on a
designated prospecting area on a portion of the
farm Malamulele 234
LT in Limpopo (the prospecting area). The mineral prospecting right
was stipulated to endure for a period of
two years, ie until 19 May
2011. As a consequence of its failure to timeously file its company
returns, Palala’s company
registration was cancelled in terms
of s 73(5) of the Companies Act with effect from 16 July 2010, when a
notice to that effect
was published in the Government Gazette and on
the website portal of the Companies and Intellectual Property
Registration Office
(CIPRO). During 2010 (the exact date is not
apparent from the papers), the third respondent, Hectocorp (Pty) Ltd
(Hectocorp), had
lodged with the Department of Mineral Resources (the
Department) its first application for the same prospecting rights
previously
granted to Palala. This application was rejected by the
Department’s regional manager on 31 August 2010 by reason of
the
fact that the ‘rights have already been issued to another
entity for the same minerals on the same area under application’.
[4]
Palala’s company registration was restored on 13 September 2010
in terms of s 73(6A) of the Companies Act. In the interim
(again the
exact date cannot be discerned from the papers), Hectocorp had
submitted a second application to the Department for
prospecting
rights over the same property. Despite Palala’s objection in
this regard, Hectocorp was notified by the Department’s
regional manager that its second application to prospect for gold on
the prospecting area had been accepted. On 27 October 2010
Palala
submitted an application to the Department for the renewal of its
prospecting right. In reply, the Department advised Palala
on 16
November 2010 that Palala’s prospecting right had lapsed due to
Palala’s deregistration. Palala lodged an appeal
against this
decision with the Department on 27 June 2011. The Acting
Director-General upheld the appeal on 24 October 2011 on
the
following basis: ‘. . . there was no sufficient proof that the
Appellant was finally deregistered, the deregistration
process having
been cancelled and thus it has not been proven that Appellant’s
prospecting rights have lapsed in terms of
section 56(c) of the Act’.
Hectocorp successfully appealed in terms of
s 96(
b
)
of the MPRDA against the Acting Director-General’s decision to
the first respondent, the Minister of Mineral Resources and
Energy
(the Minister). In upholding the appeal, the Minister concluded that
the Acting Director-General’s findings that the
deregistration
process was not finalised and that Palala’s right had been
restored upon its reinstatement as a company was
‘clearly
misguided and misleading’. Palala sought a review and setting
aside of the Minister’s decision. Keightley
AJ dismissed the
application with costs on the basis that Palala’s prospecting
right had lapsed upon its deregistration and
that its subsequent
restoration did not retrospectively revive the lapsed right.
[5]
Section 56 of the MPRDA provides as follows:
‘
Any
right, permit, permission or licence granted or issued in terms of
this Act shall lapse, whenever . . . a company or close corporation
is deregistered in terms of the relevant Acts and no application has
been made or was made to the Minister for the consent in terms
of
section 11 or such permission has been refused.
’
This
court has held that deregistration has the effect of putting an end
to a company’s existence and that ‘its corporate
personality ends in the same way that a natural person ceases to
exist on death’ (per Cloete JA in
Miller
& others v Nafcoc Investment Holding Company Ltd & others
[2010] ZASCA 25
,
[2010] 4 All SA 44
(SCA),
2010 (6) SA 390
(SCA) para
11). In the same vein Keightley AJ described the rights that have
lapsed due to deregistration as ‘legally dead’
and
incapable of being revived retrospectively by restoration. The key
question before us is whether the learned judge was correct
in her
finding that restoration does not constitute a Biblical Lazarus
moment for a lapsed mining right.
[6]
Section 73(6A) of the Companies Act reads:
‘
Notwithstanding
subsection (6), the Registrar may, if a company has been deregistered
due to its failure to lodge an annual return
in terms of section 173,
on application by the company concerned and on payment of the
prescribed fee, restore the registration
of the company, and
thereupon the company shall be deemed to have continued in existence
as if it had not been deregistered: Provided
that the Registrar may
only so restore the registration of the company after it has lodged
the outstanding annual return and paid
the outstanding prescribed fee
in respect thereof.
’
[7]
In
Newlands Surgical Clinic
, which had not been decided when
the court a quo was dealing with this application, this court had to
consider the effect of company
reinstatement in terms of s 82(4) of
the present
Companies Act 71 of 2008
. That subsection reads as
follows:
‘
If
the Commission deregisters a company as contemplated in subsection
(3), any interested person may apply in the prescribed manner
and
form to the Commission, to reinstate the registration of the
company.
’
Brand
JA, writing for a unanimous court, referred to the various
conflicting decisions in the respective divisions of the high court
on this aspect. Those decisions ranged from findings of no
retrospectivity at all, to partial retrospectivity and to full
retrospectivity.
One of the cases he alluded to was
Bright Bay
Property Service (Pty) Ltd v Moravian Church in South Africa
2013
(3) SA 78
(WCC) in which it was held that the section has no
retrospective effect at all. Keightley AJ found support for her
finding in that
judgment. In overruling
Bright Bay
and the
Western Cape Division’s decision before it (which had held that
the section has only partial retrospectivity) this
court held that
s
82(4)
had full retrospective effect. Brand JA held as follows:
‘
As
I see it, the wording of the section leaves no room for the pragmatic
approach adopted by the court a quo. The only meaning available
on
that wording, as I see it, is that
s 82(4)
has automatic
retrospective effect, not only in revesting the company with its
property
but
also in validating its corporate activities during the period of its
deregistration.
In
short, there is no textual basis to distinguish between revesting of
property and revesting the company with the capacity
to continue
operating
’
(own
emphasis).
[8]
It was contended with some force on behalf of Hectocorp that the
potential grave prejudice to bona fide third parties militates
against full retrospectivity. One of the main reasons why the Western
Cape Division in
Newlands
Surgical Clinic
had
baulked at unqualified full retrospectivity was the potentially
prejudicial effect on third parties. In addressing that concern,
Brand JA pointed out that this court has held in a number of
decisions that notwithstanding ‘these potentially prejudicial
consequences resulting from automatic retrospective validation . . .
this construction of
s 73(6)
and
s 73
(6A) could not be avoided’.
Reference was made to:
Insamcor
(Pty) Ltd v Dorbyl Light & General Engineering (Pty) Ltd;
Dorbyl Light &
General Engineering (Pty) Ltd v Insamcor (Pty) Ltd
[2007] ZASCA 6
;
2007 (4) SA 467
(SCA) para 23;
CA
Focus CC v Village Freezer t/a Ashmel Spar
[2013] ZASCA 136
;
2013 (6) SA 549
(SCA) paras 10-21;
Kadoma
Trading 15 (Pty) Ltd v Noble Crest CC
[2013]
ZASCA 52
;
2013 (3) SA 338
(SCA) paras 13 and 14. These cases
concerned
s 73(6)
and
s 73(6A)
of the
Companies Act and
the virtually
identically worded
s 26(7)
of the
Close Corporations Act 69 of 1984
.
Those provisions all include a deeming clause as set out in para 6
above, a feature which, as Brand JA correctly observed in
Newlands
Surgical Clinic
(para 19)
,
‘
compelled
this conclusion’.
[9]
It is axiomatic that the retrospective validation of a company’s
corporate activities during its period of deregistration
holds
inherent risk to third parties, as was recognised in
Newlands
Surgical Clinic
.
Deregistered companies often continue carrying on business as if the
deregistration had never occurred and while third parties
are
completely unaware of the deregistration. In this sense therefore, as
was correctly observed in
Newlands
Surgical Clinic
, it
is not strictly correct to compare the effect of deregistration of a
company to that following upon the death of a natural
person. One
must also be mindful that a refusal to validate a company’s
corporate activities during the period of its deregistration
can be
just as severely prejudicial to third parties.
[10]
Both Keightley AJ as well as counsel for Hectocorp had approached the
matter on the basis that there was tension between
s 56(
c
)
and
s 73(6A).
In addition, the learned judge stated that
s 56(
c
),
and not
s 73(6A)
, must be the point of departure. On the basis of
this approach the court a quo found that the deeming provision in
s
73(6A)
only revived legal personality but not lapsed rights. The
court a quo also considered the effect of the maxim
lex
posterior priori derogat
(a
later statute takes away the effect of a prior one) inasmuch as
s
73(6A)
had been enacted later than
s 56(
c
).
This approach is unsound. As I see it, there is no reason why the two
sections cannot harmoniously co-exist. They concern two
different
situations at two different points in time.
Section 56(
c
)
concerns the legal situation at deregistration, while
s 73(6A)
deals
with the legal scenario that prevails when a company’s
registration is restored. In the latter instance the deeming
provision is conclusive – upon restoration of the company’s
registration all the company’s corporate activities
are
retrospectively validated as if the company was never deregistered.
It is a complete restoration of the status quo ante. All
its assets
and rights revest in the company. It was faintly suggested on behalf
of Hectocorp that mineral rights under the MPRDA
should be treated
differently than other rights as far as this retrospective validation
was concerned. The contention lacked both
conviction and motivation
and can be dismissed without more. The court a quo’s
construction of
s 73(6A)
would lead to an anomalous situation in that
while it permits a deregistered company to regain its legal
personality upon restoration,
it does not allow it to regain the
assets it lost following deregistration.
[11]
There is nothing in the scheme of the MPRDA which, as the court a quo
found, buttresses the conclusion that
s 73(6A)
does not
retrospectively revive rights which had lapsed in terms of
s 56(
c
).
The court a quo reasoned that a retrospective revival of rights would
undermine the purpose and objectives of the MPRDA, since
‘the
Department would be compelled in every case where a company is
deregistered to treat its MPRDA rights as frozen’.
I disagree.
As stated, third parties are at risk in their dealings with a
deregistered company, even where they have no knowledge
of such
deregistration. Restoration of registration operates retrospectively
and ex post facto validates all the company’s
corporate
activities (including its mineral prospecting rights), even to the
detriment of third parties. The legislature is presumed
to know the
law and when it enacted
s 56(c)
of the MPRDA it must have been
aware that companies and close corporations that had been
deregistered could be restored to the
register with automatic
retrospective effect. Yet it did not qualify its reference to
‘whenever a company or close corporation
is deregistered’
as a trigger for the lapsing of mineral rights, by saying that the
right would not be restored if the company
or close corporation was
restored to the register. Had it wished to ensure the finality of the
lapsing of a mineral right on deregistration,
it could easily have
done so. The legislature could have excluded mineral rights from the
rights restored to a company or close
corporation on being restored
to the register.
[12]
On the facts of this case a relatively short period had elapsed
between Palala’s deregistration and its restoration (16
July
2010 to 13 September 2010). The inference is irresistible that the
deregistration was as a result of an administrative oversight.
No
sound reason exists why in such circumstances Palala should lose a
potentially valuable mineral prospecting right, even though
its other
assets and other rights are revested upon restoration. In the
circumstances and for the reasons set out above, the court
a quo
erred in its finding that Palala’s restoration had not
retrospectively restored its mineral prospecting right. The
appeal
must consequently succeed.
[13]
Mootness does not arise. As stated, Palala had on 27 October 2010
applied to the Department for the renewal of its mineral
prospecting
right. That application was never finalised, instead a decision was
taken that the right had lapsed. Appeals to the
Acting
Director-General and the Minister followed and the review application
in the court a quo ensued thereafter. Palala’s
pending renewal
application must be finalised by the Minister in accordance with the
outcome of this appeal. In considering that
renewal application there
are a number of factors to be considered by the Minister in terms of
s 18
of the MPRDA.
[14]
The following order is issued:
(a) The appeal
is upheld with costs.
(b) The order
of the court a quo is set aside and substituted with the following:
‘
1
The first respondent’s decision on 30 April 2014, upholding the
third
respondent’s
appeal, is reviewed and set aside;
2 It is
declared that the prospecting right (registered under the number
LP1488)
granted to the applicant was retrospectively restored to it by virtue
of the restoration of the applicant’s registration
as a company
on 13 September 2010;
3 The first
and second respondents are directed to take the necessary and
reasonable steps to give effect to the order in paragraph
2;
4 The
third respondent is to pay the applicant’s costs of the
application.’
S A MAJIEDT
JUDGE OF APPEAL
APPEARANCES
For Appellant: A I S Redding SC
Instructed
by: Seleka Attorneys, Pretoria
Gerber
Junius Attorneys, Bloemfontein
For
First and Second Respondents: No appearance
For Third Respondent: A F Arnoldi SC
Instructed
by: Couzyn Hertzog & Horak
Spangenberg
Zietsman Attorneys,
Bloemfontein