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[2011] ZAGPPHC 62
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Agri South Africa v Minister of Minerals and Energy and Another (55896/07) [2011] ZAGPPHC 62; [2011] 3 All SA 296 (GNP); 2012 (1) SA 171 (GNP); 2012 (1) BCLR 16 (GNP) (28 April 2011)

REPORTABLE
IN THE HIGH COURT OF
SOUTH AFRICA
(NORTH GAUTENG, PRETORIA)
Case No: 55896/07
Date
heard: 7/3/2011 - 18/3/2011
Date
of judgment: 28/04/2011
In
the matter between:
Agri
South
Africa
...............................................................................................................
Plaintiff
and
Minister
of Minerals &
Energy
......................................................................................
Defendant
and
Centre
for Applied Legal
Studies
..............................................................................
Amicus Curiae
JUDGMENT
DU
PLESSIS J:
Introduction
[1] This is a claim for
compensation consequent upon an alleged expropriation by the State.
[2] The Mineral and
Petroleum Resources Development Act, 28 of 2002
("the MPRDA")
came into force on 1 May 2004. Section 3(1) thereof provides:
"Mineral and petroleum resources are
the common heritage of all
the people of South Africa and the State is the custodian thereof for
the benefit of all South Africans."
Apart from transitional
measures to which I shall refer later, the MPRDA does not recognize
the existence of common law mineral
rights as they existed directly
before the act took effect.
[3]
When the MPRDA commenced, a company, Sebenza Mining (Pty) Ltd
1
(Sebenza), held the coal rights on and under Portion 4 of the
farm Goedehoop 169 and also those on and under the Remaining Extent

of the same farm. (I shall refer to these two farms collectively as
"the farms".)
[4]
The plaintiff, as cessionary of Sebenza's alleged right to
compensation, contends that Sebenza was on the date of commencement

of the MPRDA expropriated of its coal rights. It is the plaintiffs
case that the very enactment of the MPRDA constituted an
expropriation.
Accordingly, the plaintiff claims compensation
2
from the Minister of Mineral Resources
3
who, as the appropriate member of the National Executive, is cited
for and on behalf of the State.
[5]
By order of this Court, the Centre for Applied Legal Studies was
allowed to intervene as amicus curiae ("the amicus) in
respect
of the constitutional issue that arises. The amicus adduced no
evidence nor did its counsel cross examine any witness.
At the end of
the trail its counsel presented helpful written and oral argument for
which the court is indebted to them.
The
Issues
[6]
Subsections 25(1) and (2) of the Constitution of the Republic of
South Africa, 1996 provides as follows:
"(1)
No one may be deprived of property except in terms of law of general
application, and no law may permit arbitrary deprivation
of property.
(2) Property may be expropriated only in terms of law of general
application—
(a)
for a public purpose or in the public interest; and
(b) subject to
compensation, the amount of which and the time and manner of payment
of which have either been agreed to by those
affected or decided or
approved by a court."
[7]
It is the plaintiff's case that on the commencement-date of the
MPRDA, Sebenza's coal rights were expropriated in terms of section
5
as read with sections 2, 3 and 4 of the MPRDA. Accordingly, the
plaintiff contends that, viewed through the prism of the
Constitution
4
,
it is entitled to compensation determined in terms of the MPRDA
5
read with the Expropriation Act, 63 of 1975.
[8}
Stripped of issues that have been resolved between the parties and
also of amplifications that are in the defendant's plea,
the plea
raises essentially three issues: Did the MPRDA deprive
6
Sebenza of its coal rights? If so,
7
was Sebenza expropriated of its coal rights? If so, is Sebenza (and
thus the plaintiff as cessionary) entitled to compensation?
[9]
It is of note that Mr Badenhorst for the defendant and Mr Budlender
for the amicus accepted that Sebenza's coal rights as they
were
before the
enactment of the MPRDA
constituted property as envisaged in section 25 of the Constitution.
As will more fully appear from my analysis
of the nature and content
of common law mineral rights (of which the coal rights constitute a
species), this concession was rightly
made.
The Facts
[10]
The plaintiff called three factual and two expert witnesses. The
defendant called two factual and one expert witness.
[11]
It is convenient to deal with the evidence of each witness when
discussing the respective issues to which the evidence of each

relates. The essential facts are uncontroversial. What follows is a
brief overview thereof.
[12]
Agri Suid Afrika (Agri SA) is an important role player in the field
of commercial agriculture in South Africa. It is a federal

association representing the interests of commercial farmers. Its
members are provincial faming associations and a number of farming

interest-groups. Agri SA's provincial members in turn have local
agricultural unions as their members. Individual farmers belong
to
local agricultural unions. Although it thus has no individual farmers
as members, Agri SA ultimately represents the interests
of commercial
farmers. In various ways and by various means, Agri SA seeks to
contribute to the well being of agriculture in this
country. It
regularly engages with the government regarding matters that concern
farmers and agriculture in general.
[13]
Agri SA established the plaintiff, an association not for gain under
section 21 of the Companies Act, 61 of 1973. Under its
articles of
association, three of the plaintiff's objects are to make
representations to Parliament in relation to legislation
that might
affect commercial farming, to institute court proceedings to
challenge, in the interest of farming, such legislation
and to
institute legal proceedings to protect the rights and interests of
the commercial farming community.
[14]
Mr JF van der Merwe, one of the plaintiff's directors and the chief
executive of Agri SA, explained that Agri SA took an active
part in
the consultation process that preceded the enactment of the MPRDA.
When the MPRDA was enacted, Agri SA obtained counsel's
opinion that
the act constituted an expropriation of property. The Minister and
the Department of Mineral Resources (DMR) did not
agree. Agri SA
decided to institute court proceedings in order to seek legal
clarity.
[15]
Agri SA instructed their attorneys, MacRobert Inc ("MacRoberts")
to find a suitable case to serve as a test case
and to obtain cession
of the relevant right holder's right to compensation. Sebenza was
identified as a suitable cedent. I now
turn to a brief account of the
background to Sebenza's coal rights and the cession.
[16]
Sebenza had bought the relevant coal rights in November 2001 for R1
048 000. The rights were delivered to it by way of a notarial

cession. Sebenza, however, never obtained a prospecting permit or a
mining authorisation under the Minerals Act, 50 of 1991 ("the

Minerals Act.)
8
There also is no evidence that Sebenza ever conducted mining or
prospecting operations on the farms.
[17]
On 29 April 2004 the members of Sebenza took a special resolution
that the company be placed under a creditors' voluntary winding
up.
9
On 18 May 2004 the resolution was registered with the Registrar of
Companies and Sebenza was placed under liquidation. Provisional

liquidators were appointed in September 2004 and in the same month
they advertised Sebenza's coa! rights for sale. It is important
to
note that by then the MPRDA had commenced.
10
[18]
The liquidators received an offer from Metsu Trading (Pty) Ltd
(Metsu) to purchase the coal rights for R750 000. They instructed
an
auctioneer, Mr Bonini, and a mining engineer, Dr Peter Cox
11
to visit the farms so as to evaluate the coal rights. Bonini and Cox
advised the liquidators that if the latter could obtain a
price of
R700 000, they should accept it.
[19]
The liquidators accepted Metsu's offer. After the purchase price had
been paid, the liquidators and Metsu respectively received
legal
advice that the purported sale was void in view thereof that, in
terms of the MPRDA, the coal rights had ceased to exist.
The
liquidators repaid the R750 000 to Metsu.
[20]
In March 2006 the liquidators, contending that Sebenza had been
expropriated, lodged with the DMR a claim for compensation
12
.
At this stage, Agri SA identified Sebenza's claim as a suitable one
to serve as a "test case", and the claim for compensation

was ceded to the plaintiff. The plaintiff paid the liquidators R250
000 for the ceded right. The DMR rejected the claim and these

proceedings were commenced.
[21]
When he cross examined Mr Van der Merwe
13
,
counsel for the defendant put questions that seemed to imply some
sort of impropriety on the part of Agri SA and the plaintiff
in
launching these proceedings. On the pleadings no such impropriety is
raised. It suffices therefore to state that Mr Van der
Merwe candidly
and satisfactorily explained that, from the point of view of Agri SA
this is a "test case" instituted
in the interests of legal
certainty. There is nothing in his evidence, or in the evidence of
any other witness, that goes towards
indicating anything other than a
genuine desire to obtain clarity. Obviously, Agri SA has a viewpoint
as to whether the MPRDA effected
expropriation. The defendant holds a
contrary viewpoint. That is ultimately what this case is about.
Rights to Minerals Before
and After the MPRDA.
[22]
in order to decide whether Sebenza has been expropriated by the
enactment of the MPRDA, it is first necessary to determine
the
content of its rights as they were before the MPRDA took effect. It
is also necessary to determine how the MPRDA affected,
not only the
coal rights as such, but also the content of those rights. I start
with mineral rights as they existed before the
MPRDA took effect.
Mineral
Rights Before the MPRDA
14
[23]
In principle, an owner of land is at common law also the owner of
everything below the surface, including minerals
15
.
Such owner was therefore, in principle, at common law entitled to
prospect for valuable minerals, to mine them and to keep, sell
or
otherwise alienate them.
16
The owner's right to mine and dispose of minerals has, however,
throughout South Africa and from early on been restricted and
regulated by various statutes. It is for present purposes unnecessary
to go into the nature and effect of statutory restrictions
that
affected landowners.
[24]
A corollary of the principle that land is owned upwards and downwards
from the surface is that under our law horizontal layers
of land
cannot be owned separately.
17
Yet, due to our mineral wealth and extensive mining activities, the
need arose for the possibility that rights to minerals be separable

from the land title. Relatively early in our legal history, our
courts and legislatures evolved a structure whereby mineral rights

could be registered separately and thus be separated from the title
to the land.
18
In the result it became "generally accepted that a distinction
must be made between the owner's rights on and to the surface
of
land, and those of the holder of mining and mineral rights."
19
[25]
From a deeds registry point of view, separation of mineral rights
could be effected by way of, essentially, two methods
20
:
A certificate of rights to minerals could be taken out and a notarial
deed of cession of mineral rights could be registered against
the
title deed of the property. The underlying causa for the separation
could, of course, vary.
21
!t is in the factual context of this case of note that, with an
exception that is not now relevant, separation could take place

"either in respect of all minerals generally or of a particular
mineral or minerals ...".
22
Thus, in this case, Sebenza held rights only to coal.
[26] "The nature of
rights to minerals which had been separated from the ownership of the
land, as they had developed in South
Africa, was describer by Innes
CJ in Van Vuuren and Others v Registrar of Deeds 1907 TS 289 at 294
as being the entitlement 'to
go upon the property to which they
relate to search for minerals, and, if he (the holder) finds any, to
sever them and carry them
away'. As those rights could not be fitted
into the traditional classification of servitudes with exactness ...
they had to be
given another name, and the Chief Justice dubbed them
quasi-servitudes, a label that has stuck
23
.
They are real rights. Their exercise may conflict with the interests
of the landowner. In a case of irreconcilable conflict the
interests
of the latter are subordinated, for if it were otherwise the grant of
mineral rights might be deprived of content....
For so long as
minerals remain in the ground they continue to be the property of the
landowner: only when the holder of the right
to minerals severs them
do they become movables owned by him." (Trojan Exploration
Company (Pty) Ltd and Another v Rusteburg
Platinum Mines Ltd and
Another 1996 (4) SA 499 (AD) at 509G to 51 OA).
[27]
As to the ownership of minerals once they are severed from the land,
Schutz JA, who wrote the majority judgment in the Trojan-case
24
said: "It has been argued, and i think that the argument
is correct, that in 1966
25
already, contingent intentions were formed, by the landowner to
transfer ownership of severed ore to the holders of the mineral

rights, and by each of the latter to receive such ownership. The
contingency was severance." Botha JA, who wrote a separate

judgment concurring with the majority, expanded on this contingent
ownership: "In my judgment the legal principles by which
the
issues are to be resolved can be briefly stated as follows. In
general, when a cession of mineral rights is effected, both
the
cedent and the cessionary intend that the transfer of the rights will
ultimately result in the transfer of the ownership in
the minerals to
the cessionary, if and when the minerals are severed from the land.
The immediate transfer of the ownership of
the minerals is impeded
only by the fact that they still form part of the land. That
impediment is removed as soon as the ore containing
the minerals is
severed from the (and. A new movable res is then created which is the
object of separate ownership. At that moment,
in my opinion, the
ownership of the ore vests in the cessionary, as was envisaged in the
act of the cession, and this vesting takes
place automatically, by
operation of law, and by virtue of the act of severance. It does not
matter, in my opinion, how and by
whom the act of severance is
effected, whether by natural forces, or by the holder of the rights,
or by the landowner, or by a
thief. This is the only way of which I
can conceive in which the law can give proper effect to the unique
features of the reservation
of mineral rights and their transfer as
recognised in this country. If this manner of the passing or the
acquisition of ownership
does not fit into any hitherto recognised
niche, a new one will have to be found to cater for it."
26
[28]
By virtue of his real right to the relevant minerals, the mineral
rights holder could grant to a third party by way of a prospecting

contract or a mineral lease, the right to prospect for or to mine the
relevant minerals. In return for such grants, the holder
of the
mineral right could receive, in different forms, payment and,
depending of course on the minerals in question, substantial
payment.
For instance, royalties received under a mineral lease could, and in
many cases did, serve as a handsome pension.
27
[29]
To sum up thus far, but without attempting an exhaustive list
28
,
the holder of mineral rights had a reai right entitling him or her to
go upon the land to search for minerals. If minerals were
found, the
holder was entitled to sever them and to carry them away
29
.
Such holder held a contingent right to the ownership of the relevant
minerals: Once they were severed from the land
30
,
the minerals became his or her property. These rights were
transferable and could be sold, otherwise alienated, used as security

and in general be dealt with to the benefit of the holder. The holder
of mineral rights was, as a general proposition, under no
obligation
to exploit the minerals.
[30]
It follows that the mineral right holder's rights constituted a
valuable asset that he "could bequeath to his heirs.
He could
sell it".
31
He could in general deal with it to his advantage and he could also
retain it as an investment.
[31]
As to the right not to exploit the mineral in question, Mr Badenhorst
for the defendant emphasised that that meant that the
holder of the
mineral rights could sterilize or hoard the minerals. That is true.
But it is equally true, as Mr Van der Merwe pointed
out in his
evidence, that there is also a social imperative to balance the
agricultural value of the surface against the need to
exploit
minerals under that surface. That is of particular importance in the
case of open cast mining operations. Environmental
considerations
also play a role. In short, the right not to exploit minerals is not
necessarily negative or contrary to the public
interest.
[32]
I now turn to statutory regulation of mineral rights, including coal
rights.
[33]
The Minerals Act, 50 of 1991 came into force on 1 January 1992. It
repealed most of the preceding mining legislation
32
and
it was current until the MPRDA repealed practically the whole of it.
33
The content of Sebenza's rights as they existed directly before the
enactment of the MPRDA must therefore be determined in the
light of
the Minerals Act.
[34]
Section 5 of the Minerals Act confirmed that the right "to enter
upon ... (the) land ... to prospect and mine for such
mineral... and
to dispose thereof vested in the holder of mineral rights
34
and in persons authorised by such holder. Under the same act, the
exercise of these rights was subject to regulation, however.
35
[35]
The Minerals Act provided for the issue by the State of prospecting
permits
36
and mining authorisations.
37
These entitlements to prospect or mine could only be issued to the
holder of the right to the mineral in question or to a person
who had
"acquired the written consent of such holder".
38
In the case of a mining authorisation the applicant who applied with
the consent of the holder of the mineral rights also had to
have the
written authorisation to mine for the mineral in question on his own
account and to dispose thereof.
39
[36]
In a nutshell, directly before the MPRDA came into force, Sebenza had
the common law rights summarised in paragraph 28 above.
Although the
rights included the right to prospect and to mine, the exercise of
those rights were subject to authorisation by the
State. No person or
entity other than Sebenza had the right to prospect for or mine coal
on the farms if such person or entity
had not acquired Sebenza's
written consent. It is self-evident that, apart from commercial value
of the coal rights as such, the
written consent to prospect or to
mine also had commercial value.
The Effect of the MPRDA
[37]
Schedule II of the MPRDA contains transitional arrangements that are
directly relevant to the issues in this case, i shall
first consider
the provisions of the MPRDA itself and thereafter those of the
transitional arrangements contained in Schedule II
thereto
The
MPRDA
[38]
The enactment of the MPRDA must be understood in the context of our
history of racially discriminatory property laws. As Mr
Budlender for
the amicus pointed out, the practical effect of this history is that,
because property was almost exclusively owned
by white people, it
followed that mineral rights were also in the hands of almost
exclusively white people.
[39]
According to its long title, the MPRDA was enacted to "make
provision for equitable access to and sustainable development
of the
nation's mineral and petroleum resources According to its preamble
the enactment of the MPRDA reaffirms, inter alia, "the
State's
commitment to reform to bring about equitable access to South
Africa's mineral and petroleum resources". By enacting
the
MPRDA, Parliament also took into consideration "the State's
obligation under the Constitution to take legislative and
other
measures to redress the results of past racial discrimination."
It is, therefore, not surprising that, in terms of section
2(c), it
is one of the objects of the MPRDA to "promote equitable access
to the nation's mineral and petroleum resources to
all the people of
South Africa".
40
The Constitutional Court has repeatedly stressed the need for and the
constitutionality of measures aimed at attaining and ensuring

substantive equality.
41
In Bengwenyama Minerals (Pty) Ltd and Others v Gemorah Resources
(Pty) Ltd and Others (Bengwenyama-ye-Maswati Royat Council
Intervening)
42
the Constitutional Court pointed out that the MPRDA was enacted
"amongst other things to give effect to those constitutional

norms". Accordingly, the constitutionality of the MPRDA is not
in issue in this case.
[40]
Further objects of the MPRDA are to "recognise the
internationally accepted right of the State to exercise sovereignty

over all the mineral and petroleum resources within the Republic"
43
and
to "give effect to the principle of the State's custodianship of
the nation's mineral and petroleum resources."
44
[41]
In terms of section 3(1) mineral resources "are the common
heritage of all the people of South Africa and the State is
the
custodian thereof for the benefit of all South Africans". Under
section 3(2) the State, as the custodian of the nation's
mineral
resources, may through the Minister "grant, issue, refuse,
control, administer and manage any ... prospecting right,
permission
to remove, mining right, mining permit
45
...
(and) retention permit ...".
46
[42]
Under section 16 of the MPRDA any person who wishes to do so, may
apply to the Minister for a prospecting right. Such an application

must comply with stated requirements and it is submitted to a
Regional Manager of the DMR. If the requirements are met and no other

person holds a prospecting right, mining right, mining permit or
retention permit "for the same mineral and land", the

Regional Manager must accept the application. On acceptance, the
Regional Manager must notify the applicant to submit an environmental

management plan and to give written notice to the land owner, the
lawful occupier or other affected person and to consult with
them. On
receipt of the environmental management plan and a report as to the
outcome of the consultations, the Regional Manager
submits the
application to the Minister.
[43]
The Minister's powers and duties regarding the grant or refusal of a
prospecting right are set out in section 17. A prospecting
right is
granted for a limited period
47
but it can be renewed.
48
[44]
Section 5 of the MPRDA determines the legal nature of prospecting
rights (and other rights that are relevant in this case)
and also the
nature of the rights of the holders of such rights. The section
provides:
"(1)
A prospecting right (or), mining right,... granted in terms of this
Act is a limited real right in respect of the mineral...
and the land
to which such right relates.
(2)
The holder of a prospecting right (or) mining right... is entitled
to the rights referred to in this section and such other
rights as
may be granted to, acquired by or conferred upon such holder under
this Act or any other law.
(3)
Subject to this Act, any holder of a prospecting right (or) a mining
right... may -
(a)
enter the land to which such right relates together with his or her
employees, and may 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
purposes of
prospecting, mining, exploration or production, as the case may be;
(b) prospect (or)
mine,... as the case may be, for his or her own account on or under
that land for the mineral... for which such
right has been granted;
(c)
remove and dispose of any such mineral found during the course of
prospecting (or) mining,... as the case may be;
(d)
subject to the National Water Act, 1998 (Act No. 36 of 1998), use
water from any natural spring, lake, river or stream, situated
on, or
flowing through, such land or from any excavation previously made and
used for prospecting (or) mining, ... or sink a well
or borehole
required for use relating to prospecting (or) mining ... on such
land; and
(e)
carry out any other activity incidental to prospecting (or)
mining,which activity does not contravene the provisions of this
Act.
(4)
No person may prospect for or remove (or) mine ... any mineral... or
commence with any work incidental thereto on any area without
-
(a)
an approved environmental management programme or approved
environmental management plan, as the case may be;
(b) a reconnaissance
permission, prospecting right, permission to remove, mining right,
mining permit (or) retention permitas the
case may be; and
(c)
notifying and consulting with the land owner or lawful occupier of
the land in question.
[45]
n addition to the rights referred to in section 5, the holder of a
prospecting right has the exclusive right to apply for a
renewal of
the prospecting right and for a mining right.
49
Such a holder also has an exclusive right to remove and dispose of in
limited quantities any mineral to which the right relates.
50
The holder must pay to the State prospecting fees and royalties in
respect of minerals removed and disposed of.
51
Prospecting rights are registered in the Mining Titles Office
contemplated in section 2 of the Mining Titles Registration Act, 16

of 1967.
52
[46]
The holder of a prospecting right must generally commence prospecting
within a limited time period.
53
Under section 31 the holder of a prospecting right may, however,
apply for a retention permit. Apart from other requirements that
are
presently irrelevant, the holder of the prospecting right can apply
for a retention permit if he or she has prospected, established
the
existence of a mineral reserve with mining potential and has "studied
the market and found that the mining of the mineral
in question would
be uneconomical due to prevailing market conditions".
54
The Minister has a discretion to refuse a retention permit.
55
A retention permit is granted for a limited period
56
and the holder thereof has an exclusive right to apply for a mining
right.
57
A retention permit can be renewed.
58
[47]
The second relevant real right created by section 5 is a mining
right. Section 22(1) of the MPRDA provides that any person
may apply
for a mining right. The application procedure is similar to that for
a prospecting right albeit that the requirements
are more onerous and
costly. The latter is apparent from the undisputed evidence of Dr
Peter Cox who gave expert evidence for the
plaintiff.
59
The holder of a mining right has the exclusive right to apply
for renewal thereof.
60
The holder of a mining right must pay royalties to the State.
61
Mining rights are also registered in the Mining Titles Office.
[48]
Under section 11 of the MPRDA prospecting and mining rights and
interests in such rights are transferable subject to the Minister's

written consent. With such consent, the rights can be "ceded,
transferred, let, sublet, assigned, alienated or otherwise disposed

of. The Minister's power to refuse consent is limited by section
11(2). Such rights can, however, without the Minister's consent
be
encumbered by mortgage.
62
Transfers and mortgages are registered in the Mining Titles
Office,
63
[49]
There is some debate as to the legal nature of the custodianship
created in section 3 of the MPRDA and as to the effect thereof
on the
landowner's ownership of the minerals before they are severed from
the land.
64
It is unnecessary for purposes of this judgment to consider that
issue and I express no view theron.
[50]
The MPRDA does not recognise the quasi-servitude of the holder of
mineral rights that have been severed from the land title.
In fact,
it has become settled that those rights have disappeared with the
enactment of the MPRDA.
65
Under the MPRDA the holder of mineral rights no longer has an asset
that can be sold, otherwise alienated, used as security or
kept as an
investment. The mineral right holder's contingent ownership in the
minerals, once severed, has similarly disappeared.
The right to
grant, subject to statutory regulation, the right to others to
prospect for and mine has disappeared. In sum the holders
of mineral
rights have, since the enactment of the MPRDA, not one of the
competencies that the law conferred upon them by virtue
of the
quasi-servitude. All that the MPRDA conferred on those holders is the
right to apply, in competition with any other person,
to be granted a
prospecting right or a mining right. Such rights are granted on a
"first-come-first-serve" basis. If
applications are
received on the same day, preference is given to applications from
historically disadvantaged persons.
66
[51]
Although the concept of holding mineral rights as a quasi-servitude
has disappeared, the content of those rights have not.
As is evident
from my summary of the provisions of the MPRDA, the act has conferred
upon the Minister the power to grant prospecting
and mining rights.
The previous system of an underlying private law real right as a
prerequisite for prospecting and mining entitlements
have been
subsumed into the Minister's power to grant mining and prospecting
rights.
67
[52] When the Minister
grants a prospecting or a mining right, she grants, in terms of
section 5 of the MPRDA, a limited real right
the content whereof is
similar to the content of the rights of the holder of mineral rights.
The combined rights
68
of
the holders of prospecting and mining rights are to go upon the land,
search for minerals and if found, mine them, carry them
away and
dispose of them. It is the Minister who grants those rights. Even the
right for a limited period not to exploit the minerals
for economical
reasons can be granted under a retention permit.
The Transitional
Arrangements in Schedule II
[53]
Schedule II to the MPRDA ("the Schedule") uses the terms
"old order right", "old order mining right",
"old
order prospecting right" and "unused old order right".
The Schedule confers on the holders of such "old
order rights"
entitlement to rights under the MPRDA. It is important to bear in
mind that these concepts are defined in the
Schedule and must
therefore not simply be equated with rights that existed before the
MPRDA came into force. "Old order right"
is defined as 'an
old order mining right, old order prospecting right or unused old
order right, as the case may be". "Old
order prospecting
right" and "old order mining right" deal with cases of
active prospecting and mining at the time
of the commencement of the
MPRDA. It is common cause that they are not relevant to the present
case.
[54]
"Unused old order right" is defined as "any right,
entitlement, permit or licence listed in Table 3 to this
Schedule in
respect of which no prospecting or mining was being conducted
immediately before this Act took effect". The first
category of
rights listed in Table 3 of the Schedule comprises: "A mineral
right under the common law for which no prospecting
permit or mining
authorisation was issued in terms of the Minerals Act". It is
not in issue that Sebenza's coal rights fall
into category 1 and
therefore is an "unused old order right" as defined.
[55] Item 8 of the
Schedule deals with the"unused old order rights". The item
provides as follows:
"8.
Processing of unused old order rights.—(1) Any unused old order
right in force immediately before this Act took effect
continues in
force subject to the terms and conditions under which it was granted,
acquired or issued or was deemed to have been
granted or issued for a
period not exceeding one year from the date on which this Act took
effect.
(2)
The holder of an unused old order right has the exclusive right to
apply for a prospecting right, or a mining right as the case
may be,
in terms of this Act within the period referred to in subitem (1).
An
unused old order right in respect of which an application has been
lodged within the period referred to in subitem (1) remains
valid
until such time as the application for a prospecting right or mining
right, as the case may be, is granted and dealt with
in terms of
this Actor is refused.
(4)
Subject to subitems (2) and (3), an unused old order right ceases to
exist upon the expiry of the period contemplated in subitem
(1)."
[56]
The only right that item 8 confers upon the holder of an unused old
order right is, as was correctly pointed out by Mr Grobler
for the
plaintiff, the exclusive right for one year to apply for a
prospecting or a mining right under the MPRDA.
69
Such holder's application, and the holder, had to comply with all the
requirements that the MPRDA sets in respect of the respective
rights.
[57]
It is in the context of what the Schedule has conferred upon Sebenza
that item 8(1) must be understood. In Sebenza's case,
where no
private law prospecting or mining rights had been granted and no
prospecting permit or mining authorisation had been issued,
Sebenza's
old order right continued in existence for a year after the enactment
of the MPRDA but the right had no content other
than entitling
Sebenza exclusively to apply for a right under the MPRDA. The coal
rights with their content as they existed before
the MPRDA had been
legislated out of existence.
70
[58]
For the plaintiff Dr Peter Cox, a mining engineer, gave expert
evidence. His undisputed evidence was that in 2005 an application
for
a prospecting right under the MPRDA would have cost approximately R50
000. Also in 2005, an application for a mining right
would have cost
approximately R1,5 million.
Expropriation
[59]
Item 12(1) of the Schedule provides as follows: "Any person who
can prove that his or her property has been expropriated
in terms of
any provision of this Act may claim compensation from the State."
[60]
As with all law, the provisions of item 12 must be read and
understood in the light of the relevant provisions of the
Constitution.
Section 25 of the Constitution provides:
(1) No one may be
deprived of property except in terms of law of general application,
and no law may permit arbitrary deprivation
of property.
(2)
Property may be expropriated only in terms of law of general
application—
(a)
for a public purpose or in the public interest; and
(b) subject to
compensation, the amount of which and the time and manner of payment
of which have either been agreed to by those
affected or decided or
approved by a court.
(3)
The amount of the compensation and the time and manner of payment
must be just and equitable, reflecting an equitable balance
between
the public interest and the interests of those affected, having
regard to all relevant circumstances, including—
(a)
the current use of the property;
(b)
the history of the acquisition and use of the property; c) the
market value of the property;
(d)
the extent of direct state investment and subsidy in the acquisition
and beneficial capital improvement of the property; and
(e)
the purpose of the expropriation.
(4)
For the purposes of this section—
(a)
the public interest includes the nation's commitment to land reform,
and to reforms to bring about equitable access to all South
Africa's
natural resources; and
(b)
property is not limited to land.
(5)
The state must take reasonable legislative and other measures,
within
its available resources, to foster conditions which enable
citizens
to gain access to land on an equitable basis.
(6)A
person or community whose tenure of land is legally insecure as a
result of past racially discriminatory laws or practices
is entitled,
to the extent provided by an Act of Parliament, either to tenure
which is legally secure or to comparable redress.
(7)
A person or community dispossessed of property after 19 June 1913 as
a result of past racially discriminatory laws or practices
is
entitled, to the extent provided by an Act of Parliament, either to
restitution of that property or to equitable redress.
(8)
No provision of this section may impede the state from taking
legislative and other measures to achieve land, water and related

reform, in order to redress the results of past racial
discrimination, provided that any departure from the provisions of
this
section is in accordance with the provisions of section 36 (1).
(9)
Parliament must enact the legislation referred to in subsection (6)."
[61]
When it is contended, as in this case, that a person has been
expropriated as envisaged in section 25(2), the first question
is
whether that person has been deprived of property as envisaged in
section 25(1). That is so because "deprivation"
in section
25(1) encompasses a wide variety of possible interferences with
property, while "expropriation" as used in
section 25(2)
constitutes "a subset of deprivations".
71
Deprivation
[62]
The defendant and the amicus accepted that Sebenza's coal rights
constituted property for purposes of section 25 of the Constitution
72
.
The question thereof is whether Sebenza has been deprived of that
property.
[63]
There are various means by which the State could deprive a person of
property, for instance, by administrative act or by an
order of
court. In this case it is the plaintiff's contention that the act of
deprivation (and of its species, expropriation) was
effected by the
very enactment of the MPRDA. Neither the defendant nor the amicus
took issue with the contention that a legislative
act could amount to
a deprivation.
73
The point in issue is whether the MPRDA did indeed deprive Sebenza of
its coal rights.
[64]
In the First National Bank case
74
("FNB") the Constitutional Court stated: "In a certain
sense any interference with the use, enjoyment or exploitation
of
private property involves some deprivation in respect of the person
having title or right to or in the property concerned".
75
The
exact ambit of the term "deprivation" was, however, not at
issue in that case. From later judgments
76
of
the Constitutional Court it is apparent that the ambit of the word
"deprivation" is not necessarily as wide as the
above
quotation may convey. In Mkontwana v Nelson Mandela Metropolitan
Municipality and Another
77
the majority of the Constitutional Court found it unnecessary to
determine the exact meaning of "deprivation". Yacoob
J, who
wrote the majority judgment, however, stated
78
that whether "there has been a deprivation depends on the extent
of the interference with or limitation of use, enjoyment
or
exploitation........... No more need be said than that at the very
least, substantial interference or limitation that goes beyond
the
normal restrictions on property use or enjoyment in an open and
democratic society would amount to deprivation". In a
minority
judgment O'Regan J (Mokgoro J concurring) wrote
79
that "deprivation" should "not be given too limited a
meaning. It should be emphasised,
[65]
Paraphrasing and slightly changing his submission, Mr Grobler for the
plaintiff correctly summarised the jurisprudence regarding
the
meaning of deprivation in section 25(1): The physical taking of
property is not required. It suffices if one or more of the

entitlements of ownership are interfered with. In order to determine
whether there has been a deprivation of property, a court
must
consider the extent of the interference with the use and the
enjoyment of the property. I would, as a proviso, repeat the
words of
O'Regan J: "It should be emphasised, however, that there may be
limitations on property rights which are either so
trivial or are so
widely accepted as appropriate in open and democratic societies as
not to constitute 'deprivations' for the purpose
of s 25(1)".
[66]
The main contention on behalf of the defendant and of the amicus was
that the MPRDA did not deprive Sebenza of its coal rights
but only
regulated the use thereof.
[67]
I cannot agree. Regulating the use of property presupposes that the
person whose use is regulated still has the property, albeit
with
truncated content. It is, as I have pointed out, settled that
Sebenza's coal rights have been legislated out of existence.
From the
date that the MPRDA took effect, it no longer had coal rights the use
whereof could be regulated.
[68]
There is no doubt that since its commencement the MPRDA has been
regulating the use of all minerals and the entitlement thereto.
But
it does not regulate the use of their property by holders of
erstwhile quasi servitudes. Since the enactment of the MPRDA the

latter do not exist.
[69]
As authority for the proposition that the MPRDA only regulates the
use of their property by erstwhile mineral rights holders,
Mr
Badenorst for the defendant referred to the judgment of the German
Constitutional Court in the case of Nassauskeisung
80
.
The question of whether there has been a deprivation of property
depends to a large extent on the legal nature and content of
the
property right in question. That is something that can be determined
only with reference to, and knowledge of, the domestic
law involved.
I am, therefore, hesitant to rely on the judgment referred to as an
aid to decide whether the MPRDA merely regulated
Sebenza's coal
rights or whether it deprived Sebenza thereof. With that cautionary
remark in mind, I observe that the use of groundwater
in that case
was one of the competencies of the landowner. The legislation in
question, regulating the use of groundwater, deprived
the owner of
that competency but not of the property itself.
[70]
Mr Badenhorst further submitted that the MPRDA is regulatory of the
rights of the holders of quasi-servitudes in that it aims
at
preventing the sterilisation and hoarding of mineral resources
against the public interest. To that end, counsel argued, the
MPRDA
introduced into our law the internationally accepted principle of
"use it or lose it". Prof. Barton's evidence
illustrates
that the principle is indeed internationally accepted. His evidence,
however, does not assist in determining the constitutional
context in
which the principle is internationally applied and accepted. I need
not go into that because in my view the MPRDA did
not introduce the
use it or lose it principle. From what I have said, it is apparent
that the MPRDA with Schedule II introduced
a principle of "You
have lost it. Now apply within a year and if you qualify, you may use
it". In that sense the MPRDA
is, purely as an anti-sterilisation
and an anti-hoarding instrument, rather blunt, f need not consider
what the position would
have been if the MPRDA had indeed introduced
the use it or lose principle.
[71]
Its objects
81
fortify the view that the MPRDA deprived the holders of common law
mineral rights of their property: The State could not exercise

sovereignty over all the minerals in the country and it could not
become the custodian thereof on behalf of all South Africans
as long
as private law mineral rights existed. As Heher JA put it in the
Holcum-judgment
82
,
"The new system and the old system of common law mineral rights
are mutually exclusive".
[72]
It was submitted on behalf of the defendant that the MPRDA did not .
deprive Sebenza of its coal rights. Sebenza lost its
coal rights, it6
was argued, by reason of its own failure to use the transitional
arrangements under the Schedule. Deprivation
of property is a legal
fact. If an interference with the use, enjoyment and exploitation of
property has occurred that is sufficient
to constitute a deprivation,
that fact cannot be undone by offering to the deprived party
something in the place of the deprived
property. I agree with
Hartzenberg J
83
that "item 8 of Schedule II does no more than to afford an
opportunity to the holders of affected rights to mitigate their

damages".
[73]
Particularly in Sebenza's case the evidence shows that it was,
firstly, financially unable to apply for either a prospecting
right
or a mining right.
84
Secondly, being a company under liquidation, it clearly did not have
the access to financial resources that the MPRDA requires
of an
applicant for those rights. Thirdly, as Mr Grobler for the plaintiff
pointed out, rights under the MPRDA lapse if the holder
thereof is
liquidated or sequestrated
85
.
Even if Sebenza had had the required financial resources, rights
could not have been granted to it: they would have lapsed
immediately.
[74]
In his testimony the Director-General said that Sebenza could have
utilised the transitional provisions of item 8 by way of
what was
termed a "simultaneous cession". Mr Nogxina explained that
Sebenza could have identified a willing purchaser
for the rights to
be obtained under the MPRDA. It could then have applied for the
relevant right and at the same time have applied
for a transfer of
the right, once granted, to the purchaser. As was pointed out to the
witness in cross examination, Sebenza could
not have used this
"simultaneous cession" procedure. For it to have applied
and be granted rights under the MPRDA, Sebenza
had to comply with all
the requirements of the MPRDA for the grant of such a right. It did
not, and could therefore not have been
granted such rights.
Moreover,
as it was in liquidation, rights could not have been granted to it.
In any event, to utilise the "simultaneous cession",
the
purchaser also had to comply with the requirements for the grant of
the right. From facts put to Mr Nogxina, facts that he
could not
dispute, it is clear that Metsu did not have the required access to
financial resources. Generally, I am in any event
of the view that
the question whether holders of quasi-servitudes should or should not
have used the "simultaneous cession"
procedure does not
inform the question as to whether there has been a deprivation of
property. It informs the question as to whether
reasonable steps to
mitigate the loss of property have been taken.
[75]
Finally, as to deprivation, Mr Badenhorst submitted that, in any
event, Sebenza was not deprived of its property on 1 May 2004
(when
the MPRDA commenced). The argument continued that the deprivation, if
there had been one, took place a year later when the
transitional
right under item 8 lapsed. For the reasons that I have given, I do
not agree. As Mr Grobler put it, on the day before
the commencement
of the MPRDA Sebenza had a real right in the form of quasi-servitude.
On the following day it only had a right
to apply to be granted
competencies that the real right had conferred upon it.
[76]
The MPRDA is a law of general application as is required by section
25(1) of the Constitution. The plaintiff did not contend
that the
MPRDA arbitrarily deprived it of its property. Although arbitrariness
is not in issue, I must make a few remarks about
it. Counsel for the
defendant and counsel for the amicus made much reference to the
objects of the MPRDA, to the fact that it seeks
to redress the
effects of past racial discrimination and to the fact that its
objects and it regulatory scheme are internationally
accepted.
86
As I have said, deprivation of property is a legal fact resulting
from an act, administrative, judicial or legislative. The object
of
the act in question may be of limited relevance to determine whether
the interference was sufficiently substantial to qualify
as a
deprivation. From the judgments in FNB
87
and Mkontwana
88
it is apparent that when the court is considering section 25(1), the
purpose of the act in question is really relevant as part
of the
inquiry into arbitrariness. It is in that context that the purpose of
the act and the method of achieving, the proportionality
between end
and means, are relevant. Put differently, the purpose of an act of
deprivation cannot change that which is a deprivation
into not being
a deprivation.
[77] I conclude that the
MPRDA, by its very enactment, deprived, as envisaged in section 25(1)
of the Constitution, Sebenza of its
coal rights.
Expropriation
[78]
The next question is whether the deprivation constituted an
expropriation as envisaged in section 25(2) of the Constitution.
For
an expropriation to have occurred, there must, in addition to the
deprivation of property, be "appropriation by the expropriator

of the particular right, and abatement or extinction, as the case may
be, of any other existing right held by another which is
inconsistent
with the appropriated right."
89
In
the Reflect-AN judgment
90
Nkabinde J said that "courts should be cautious not to extend
the meaning of expropriation to situations where the deprivation
does
not have the effect of the property being acquired by the State".
[79]
Starting from the premise that the MPRDA has destroyed common law
mineral rights, Mr Badenhorst submitted that those rights
were not
acquired by the State.
[80]
Before dealing with the respective arguments, it is necessary to
stress the following: The question of the expropriator acquiring

rights must not be understood to mean that there must be a transfer
of rights in the legal sense. "The expropriating authority
does
not derive its title from its previous owner, but obtains its title
by reason of the consequences attached by iaw to the operation
of a
valid notice of expropriation".
91
Expropriation is an original and not a derivate form of
acquisition.
92
Also,
and I understood Mr Badenhorst and Mr Budlender to have accepted
this, it matters not what the right is called in the hands
of the
expropriator. The essential inquiry is whether the substance of the
rights has been acquired by the expropriator.
[81]
With a notable exception to which I shall refer, the Minister, when
granting a prospecting or a mining right, is granting
a real right
with substantially the same content as the rights that the holders of
quasi-servitudes had before the MPRDA. That
is apparent from section
5 of the MPRDA that bears repetition here:
"(1) A prospecting
right, mining right, exploration right or production right granted in
terms of this Act is a limited real
right in respect of the mineral
or petroleum and the land to which such right relates.
(2) The holder of a
prospecting right, mining right, exploration right or production
right is entitled to the rights referred to
in this section and such
other rights as may be granted to, acquired by or conferred upon such
holder under this Act or any other
law.
(3)
Subject to this Act, any holder of a prospecting right, a mining
right, exploration right or production right may—
(a)
enter the land to which such right relates together with his or her
employees, and may 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
purposes of
prospecting, mining, exploration or production, as the case may be;
(b)
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;
(c)
remove and dispose of any such mineral found during the course of
prospecting, mining, exploration or production, as the case
may be;
(d)
subject to the National Water Act, 1998 (Act No. 36 of 1998), use
water from any natural spring, lake, river or stream, situated
on, or
flowing through, such land or from any excavation previously made and
used for prospecting, mining, exploration or production
purposes, or
sink a well or borehole required for use relating to prospecting,
mining, exploration or production on such land;
and
(e)
carry out any other activity incidental to prospecting, mining,
exploration or production operations, which activity does not

contravene the provisions of this Act.
(4)
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) an approved
environmental management programme or approved environmental
management plan, as the case may be;
(b) 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; and
(c) notifying and
consulting with the land owner or lawful occupier of the land in
question."
[82]
From a reading of sections 3 and 5 it is apparent that, when the
MPRDA commenced, the State, acting through the Minister, was
vested
with the power to grant rights the contents whereof were
substantially the same as, and in some respects identical to, the

contents of the quasi-servitude of the holder of mineral rights. It
follows that, by the enactment of the MPRDA, the State acquired
the
substance of the property rights of the erstwhile holders of
quasi-servitudes. The fact that the State's competencies are
collectively called custodianship matters not.
[83]
It might be argued that while the power to grant rights substantially
the same as those that holders of quasi-servitudes had,
the MPRDA did
not vest the rights themselves in the State.
93
I would not agree with such an argument: It begs the very question
whether the MPRDA offends against section 25(2); as long as
their
quasi-servitudes remained property in the hands of the holders
thereof, the content of those rights could not be conferred
on
others. I nevertheless deal with the argument. In this regard it must
be borne in mind that under section 25(2)(a) of the Constitution

expropriation may also be "in the public interest". Under
section 25(4)(a) the "public interest" includes "the

nation's commitment... to bring about equitable access to all South
Africa's natural resources". That constitutional principle
is
reflected in section 2(c) and (d) of the MPRDA. It follows that in
terms of the Constitution the content of the property rights

expropriated need not always be acquired by the expropriator (the
State). It would be sufficient if the property is expropriated
in
order in the public interest
94
to be acquired by third parties.
95
[84]
Mr Badenhorst stressed that the holder of mineral rights had the
competency not to use the mineral rights, for whatever reason.
The
State, counsel pointed out, did not acquire that competency. Save to
the limited extent that retention permits can be granted
under the
MPRDA, the submission is correct. It does not follow, however, that
there was no expropriation. Every owner of property
has, subject to
regulations, the right not to use the property. Every expropriation
must, in terms of section 25(2) of the Constitution,
be for a public
purpose or in the public interest. From that it follows that, when
property is expropriated, it must be used for
a public purpose or in
the public interest. The State cannot expropriate property in order
not to use it. I hold that the mere
fact that the State cannot, as a
general proposition
96
,
decide not to use mineral rights does not mean that the State did not
acquire the particular property in question, that is, Sebenza's
coal
rights.
[85]
It is in this context important to bear in mind, as Mr Grobler has
submitted, that because expropriation is an original and
not
derivative form of acquisition, the rights destroyed by the
expropriation and those acquired by the expropriator need not be

identical. As Gildenhuys
97
puts it: "Onteiening is die eensydige uitwissing deur die
owerheid van vermoensregte van 'n persoon ten aansien van goed,
en
daarmee saam die eensydige verkryging van vermoensregte oor daardie
goed deur die owerheid of deur iemand anders"
98
[86]
Mr Badenhorst submitted that, in order to determine whether there has
been an expropriation, not only the effect but also the
purpose of
the act of alleged expropriation must be had regard to. For the
reasons stated the objects of the MPRDA could not be
achieved without
depriving mineral rights holders of their property and without
vesting in the State similar rights. While not
expressly stated,
expropriation was one of the purposes of the MPRDA.
[87]
In terms of section 25(2) of the Constitution property may only be
expropriated in terms of a law of general application. That
is not in
issue in this case. The requirement that the expropriation must be
for a public purpose or in the public interest is
also not in issue.
[88]
It is concluded that Sebenza's property (its coal rights) has been
expropriated by the enactment of the MPRDA, specifically
in terms of
section 5 read with sections 2 and 3 thereof.
Compensation
[89]
Item 12(3) of the Schedule provides that "in determining just
and equitable compensation all relevant factors must be
taken into
account including, in addition to section 25(2) and 25(3) of the
Constitution ... the State's obligation to redress
the results of
past racial discrimination in the allocation of and access to
mineral... resources the State's obligation to bring
about reforms to
promote equitable access to all South Africa's mineral resources ....
(and) the provisions of section 25(8) of
the Constitution".
[90]
By virtue of regulation 82A(7) of the regulations published under the
MPRDA the method of determining compensation is, among
others,
informed by section 14 and 15 of the Expropriation Act, 63 of 1975.
Under the relevant provisions of the Expropriation
Act, it is for the
Court to determine just and equitable compensation. In doing so, the
Court is not bound by what the expropriate
claims nor by the offer,
if any, of the expropriator.
99
[91]
Section 25(3) of the Constitution provides that the compensation must
be just and equitable "reflecting an equitable balance
between
the public interest and the interest of those affected, having regard
to all relevant circumstances". Included in
the relevant
circumstances are the market value of the property and the purpose of
the expropriation.
[92]
Section 25(4)(a) of the Constitution provides that for the purpose of
section 25 "the public interest includes the nation's
commitment
to land reform". Mr Grobler submitted that this partial
definition of "public interest" cannot apply
to the term as
it is used in section 25(3) because, as I understand the submission,
that interest is not quantifiable in money.
I accept that the Court
must work with monetary quantification when it determines just and
equitable compensation. The court must,
however, use those monetary
quantifications to arrive at compensation that reflects an equitable
balance between the public interest,
which includes the partial
definition in section 25(4)(a), and the interests of those affected.
There is, in my view, no sanction
for excluding the partial
definition in section 25(4)(a) from the public interest as used in
section 25(3).
100
[93]
Having said that, I agree with Mr Grobler that the starting point for
determining just and equitable compensation in this case
must be the
market value of the property concerned.
101
In so using market value as a starting point, the Court must
bear in mind that it is but one of the circumstances to be taken into

account.
[94]
Before embarking upon the actual determination of just and equitable
compensation, it is necessary to deal with two contentions
put
forward by the defendant. It was contended that, having regard to the
circumstances and in particular to the purpose of the
expropriation
in this case, nil compensation should be awarded. That contention in
effect seeks a result whereby Sebenza was expropriated
without
compensation. That is not in accordance with section 25(2) of the
Constitution. It seeks, in reality, to limit the fundamental
right to
compensation. If, in view of the objects of the MPRDA, the State
wished to expropriate mineral rights without the attendant
obligation
to pay compensation, it had to invoke the provisions of section 25(8)
and prove the requirements of the Constitution's
limitation clause,
section 36(1). That was advisedly not done in this instance.
[95]
A second contention that was advanced is that, if it is held that the
MPRDA expropriated all mineral rights, the State would
not be able to
afford paying compensation. First, it is unnecessary in this case to
decide whether the MPRDA expropriated all mineral
rights. I accept,
however, that being a "test case" interested person will
probably seek to apply the principles decided
herein in a wider
context. Bearing that in mind, it is in any event no defence for the
State, or any expropriator, to plead that
it cannot afford to pay
compensation. Again, such a plea would amount to invoking a
limitation of the fundamental right to compensation.
That is why
section 25(5) of the Constitution provides that the State "must
take reasonable legislative and other measures,
within its
available resources
, to foster conditions which enable citizens
to gain access to land on an equitable basis" (Emphasis added).
Furthermore, the
evidence as to the possible cost of paying
compensation for mineral rights is by no means persuasive. Mr Nogxina
and Mr Alberts
102
who testified for the defendant sought to establish that if
compensation had to be paid to all holders of mineral rights, it
would
cost approximately R90 billion. Both these witnesses had to
concede in cross examination that this figure is far from accurate,

and in reality has no foundation in fact. The figure was taken from
notices that the DMR received in terms of the Institution of
Legal
Proceedings against certain Organs of State Act, 40 of 2002
103
.
The evidence of the plaintiffs attorney established that the figures
contained in those notices do not reflect the true value
of the
mineral rights in question. The notices were prepared and submitted
in great haste and without proper consultation. To the
extent that it
might be relevant, I point out that Mr Ulrich Joubert, who gave
expert evidence for the plaintiff, expressed the
view that, even if
the figure were R90 billion, the State could afford it in view of the
government's sound fiscal and monetary
policies.
[96]That
brings me to the determination of just and equitable compensation. In
November 2001 Sebenza acquired the coal rights for
R1 048 000. It is
the undisputed evidence of Dr Cox that, when the MPRDA came into
force, the market value of the rights had risen
to R2 000 000.
Sebenza's liquidators, after having taken the expert advice of Dr Cox
and Mr Bonini, were prepared in 2004 to accept
a purchase price of
R750 000.
[97]
Dr Cox explained that the difference between his advice to the
liquidators in 2004 and his present evaluation of the coal rights

lies therein that he is now better informed than he then was. That
can be accepted. The fact of the matter, however, is that the
owner
of the coal rights was, after the MPRDA had commenced, prepared to
accept R750 000 for the rights. Mr Grobler submitted,
correctly, that
the price of R750 000 is not a good indicator of market value as it
was accepted in the course of liquidation.
It was, as counsel termed
it, a "fire sale".
[98]
I accept that the R750 000 is not a true reflection of the market
value of the coal rights. The fact that the liquidators were
prepared
to accept R750 000, however, is a quantifiable circumstance that must
be taken into account. It is the price they were
prepared to accept
after the coal rights had been advertised for sale and after they had
taken expert advice. It is true that the
liquidators had to sell the
coal rights, but the commencement of the MPRDA had nothing to do with
that.
[99]
Having regard to all the relevant circumstances R750 000 will in this
case be just and equitable reflecting an equitable balance
between
the public interest and the interests of Sebenza. Having regard to
the purpose of the MPRDA I do not think that it would
be just and
equitable to award the market value which is in excess of that which
the liquidators were prepared to accept. I do
not deem it just and
equitable that Sebenza should profit from the act of expropriation.
[100]
I must point out that the liquidators accepted R250 000 for the right
to claim compensation. That, in my view, is not relevant
because if
it had not accepted the figure and ceded the claim to the plaintiff,
it would have had to incur the costs of enforcing
their claim.
Costs
[101]
In view thereof that the defendant made no offer, costs must follow
the event. There is no doubt that the employment of two
counsel was
warranted.
[102]
The trial started before another judge who, after a few days had to
recuse himself for reasons that I need not deal with.
The parties
were unable to resolve the issue of costs possibly wasted by the
trial before that judge. They requested me to reserve
those costs so
as to enable them further to seek an amicable resolution of the
issue. I shall do so.
In
the result the following order is made:
1. The compensation to
which the plaintiff is entitled in consequence of the expropriation
of the coal rights of Sebenza Mining
(Pty) Ltd (in liquidation) is
determined in the amount of R750 000.
2. The defendant is
ordered to pay the plaintiffs costs, including the costs of two
counsel but excluding the costs of the trial
before Fabricius J.
3. The costs of the trial
before Fabricius J are reserved for determination at a later stage.
B.R. Du Plessis
Judge of the High Court
On
behalf of the Plaintiff: Macrobbert Inc
Macrobbert
BuildingCnr Charles and Duncan Streets
Brooklyn
Pretoria
Adv:
G.L. Grobfer SC Adv: J.L. Gildenhuys
On
behalf of the Defendant: The State Attorney
Bothongo Heights 8
,h
Floor
167 Andries Street
Pretoria
Adv:
C.H.J. Badenhorst Adv. M.A. Wesley
On
behalf of the Amicus Curiae: Legal Resources Centre
9
th
Floor, Bram Fischer House 25 Rissik Street Johannesburg
C/O
Louise Du Plessis Attorneys 116 Infotech Building 109O Arcadia Street
Hatfield
Adv.
G. Budlender SC Adv, M. Du Plessis Adv. J. Brickhill
1
The company was previously known as Bulgara Investment Holdings
(Pty) Ltd t/a Sebenza Mining. It is common cause that its name
was
changed to Sebenza Mining (Pty) Ltd and that is how I shall refer to
it.
2
Item
12 of Schedule II to the MPRDA provides for compensation. I shall in
due course make more detailed reference to this provision.
3
The
Minister is cited as the Minister of Minerals and Energy, The name
of the Department has since been changed.
4
Section 25(3).
5
Item
12 of Schedule II to the MPRDA.
6
While
counsel for the defendant accepted that the MPRDA destroyed common
law mineral rights, he argued that such destruction was
of a
regulatory nature and that the rights were replaced by functional
equivalent rights. Hence, the destruction did not amount
to a
deprivation under section 25(1).
7
It
follows from the provisions of section 25(1) and (2) of the
Constitution that there can be no expropriation if there was no

deprivation of property. See
also
First
National Bank of SA Ltd t/a Wesbank v Commissioner, South African
Re-venue Service and Another; First National Bank of SA
Ltd t/a
Wesbank v Minister of Finance 2002 (4} SA 768 (CC)
at
para. 58-59.
8
The
MPRDA repealed the Minerals Act.
9
See
sections 349 and 351 of the Companies Act.
10
It
will be recalled that the commencement date was 1 May 2004.
11
Dr
Cox later gave expert evidence for the plaintiff, expressing his
opinion as to the value of Sebenza's coal rights before the
MPRDA
took effect.
12
The
claim was lodged under item 12 of Schedule II to the MPRDA read with
regulation 82A{1) of the Regulations promulgated under
the MPRD
13
Agri
SA's chief executive
14
In
what follows concerning the legal position before the advent of the
MPRDA, I have made free use of
Franklin
and Kaplan: The Mining and Mineral Laws of South Africa
(Chapter
1, paragraph II),
Van
der Merwe: Sakereg
(2
nd
ed., Chapter 12);
Wille's
Principles of South African Law
(8
lh
ed.
by
Hutchisen
eta!,
p.
277 and onwards);
Silberberg
and Schoeman's the Law of Property in South Africa
(4
m
ed. by
Badenhorst,
Pienaarand Mostert
Chapter
16,.)
15
Union
Government v Marais and Others 1920 AD 240
at
246;
Anglo
Operations Ltd
v
Sandhurst
Estates (Pty) Ltd 2007 (2) SA 363 (SCA)
at
para.16.
16
Reed
v De Beers Consolidated Mines (1892) 9 SC 335
at
350
17
Coronation
Collieries v Malan 1911 TPD 577
at
591.
Van
der Merwe: Sakereg
notes
that sectional title is a statutory exception to this rule.
18
Van
der
Merwe
op.
cit.
p.
553-4.
19
Silberberg
op.
cit.
p.
331.
20
See
section 70 and 71 of the
Deeds
Registries Act, 47 of 1937.
21
Silbergerg
ibid.;
Van
der Merwe
op.
cit.
p.556-7.
22
Silberberg
op.
cit.
p.
331-2.
23
I
might add that, from the text books I have referred to it is
apparent that academic writers prefer to refer to minera! rights
a
sui generis
real rights.
24
At
page 528J to 529A.
25
While
mineral rights were in the
Trojan
-case
separated from the land before that, 1966 is the year in which
rights to minerals were split between two holders: Rights
to
precious metals were transferred to one entity while the right to
base metals and minerals were retained by another. The legal

relationship between the different right holders was at issue.
26
The
Trojan
-case,
p. 534F to I.
27
During cross examination, counsel for the plaintiff illustrated this
when he put the hypothetical case of Mr Khumalo to the Director-g

General of the DMR.
28
C
ompare
the useful summary in
Badenhorst
and Mostert: Mineral and Petroleum Law of
SA,
3-11,
3-12.
29
Before
the enactment of the
Minerals
Act, 50 of 1991
the
right to prospect for natural oil and to mine for and dispose of
precious metals, natural oil and precious stones vested in
the State
(Silberberg
p.
329). The contingent ownership of these minerals, however, remained
that of the holder of mineral rights.
30
By
whomsoever.
31
Agri
SA v Minister of Minerals and Energy 2010 (1) SA104(GNP)
at
111, para. 9.
32
Silberberg
op.
cit
329,
footnote 9.
33
Schedule
I to the MPRDA.
34
See
the definition of "holder" in section 1 of the Minerals
Act.
35
The
introductory part of section 5 rendered the rights "subject to
the provisions of the Minerals Act.
36
Section
6.
37
Section
9. Temporary authorizations under section 10 of the Minerals Act are
not now relevant.
38
See
section 6(1), 6(2)(a), 9(1} and 9(5)(a). Section 17 provided for
exceptions that are not relevant now.
39
Section
9(1 )(b).
40
See
also section 2(d).
41
Section
9(2) of the Constitution ensures substantive equality. See for
instance
Minister
of Finance and Another v Van Heerden 2004 (6) SA 121 (CC)
at
para. 25 to 31.
42
2011
(3) BCLR 229 (CCC)
at
para. 3.
43
Section
2(a). Prof. Barton, who gave expert evidence for the defendant
confirmed that this is internationally accepted
44
Section
2(b). Prof. Barton was not familiar with this concept.
45
Mining
permits are dealt with in section 27. They do not confer real rights
and are issued where the minerals can be exploited
within 2 years.
46
These
are rights and permits created by the MPRDA. I shall deal with each
one in due course. I have included only those that are
now relevant.
47
Section
17(6).
48
Section
18.
49
Section
I9(1}(a)and (b).
50
Sections
19(1)(
c
)
and 20.
51
Section
19(2)(f)and (g).
52
Section
19(2)(a) and the definition of "Mining Titles Office" in
section 1.
53
Section
19(2)(b).
54
Section
32(1 )(b), (c)and (6).
55
Section
33.
56
Section
32(2).
57
Section
35(1).
58
Section
34.
59
See
also sections 22 and 23.
60
Sections
24(1) and 25(1).
61
25(2)(g).
62
Section
11(3).
63
Section
11(4).
64
Badenhorst
and Mostert,
op.
cit.
13-3
to 13-8;
Dale:
South African Mineral and Petroleum Law,
MPRDA-125
and onwards.
65
Agri
SA v Minister of Minerals and Energy; Van Rooyen v Minister of
Minerals and Energy 2010 (1) SA 104 (NGP)
at
para. 11.
Holcum
(South Africa) (Pty) Ltd v Prudent Investors (Pty) Ltd and Others
(641/09) [2010] ZASCA
at
para 25.
66
Section
9.
67
See
the
Holcum
-judgment
at para. 21.
68
it
must be borne in mind that the holder of a prospecting right has an
exclusive right to apply for a mining right.
69
See
the
Holcum
judgment.
Para. 26I;
Dale,
op.
cit.,
Sch
11-212.
70
Different
considerations as to the content of the unused old order right might
apply where, for instance, a prospecting permit
or a mining
authorisation had been issued. I need not deal therewith.
71
Chaskalson
and Lewis
as
quoted in
First
National Bank of SA Ltd t/a Wesbank v Commissioner, South African
Revenue Service and Another; First National Bank of SA
Ltd t/a
Wesbank v Minister of Finance 2002 (4) SA 768 (CC) First National
Bank of SA Ltd t/a Wesbank v Commissioner, South African
Revenue
Service and Another; First National Bank of SA Ltd t/a Wesbank v
Minister of Finance 2002 (4) SA 768 (CC)
at
para. 57. See also paras. 58 to 60
72
See
section 25(4)(b) quoted above.
73
The
First
National Bank
case
referred to above is an example of deprivation by legislative act.
74
Footnotes 7, 70 and 71.
75
Para.
57.
76
See
in addition to the
FNB
and
Mkontwana
judgments,
also
Reflect-All
1025 CC v MEC for Pubfic Transport, Roads and Works, Gauteng
Provincial Government 2009 (6) SA 391 (CC)
at
para. 35 and 36;
Offit
Enterprises (Pty) Ltd v Coega Development Corporation (Pty) Ltd 2011
(1) SA 233 (CC)
paras.
38 and 39.
77
Mkontwana
v Nelson Mandela Metropolitan Municipality and Another; Bisset and
Others v Buffalo City Municipality and Other; Transfer
Rights Action
Campaign and Others v MEC, Local Government and Housing, Gauteng and
Others (Kwazulu-Natal Law Society and Msunduzi
Municipality as
Amid
Curiae)
2005
(1) SA 530 (CC)
78
Para.
32.
79
Para. 90
80
In
FNB
the
Constitutional Court referred to this case in footnote 136 (para.
88) under the reference "56 BVerfGE 300". Mr Badenhorst

referred to a translation in
Alexander,
The Global Debate over Constitutional Property,
University
of Chicago Press, 2006 at p. 139.
81
Section
2
82
Para.
23.
83
Agri
SA v Minister of Minerals and Energy; Van Rooyen v Minister of
Minerals and Energy 2010 (1) SA 104 (NGP)
at
para. 17.
84
The
expert evidence of Dr Cox as to the cost of these applications and
the evidence of the liquidator, Mr Pellow, that Sebenza
could not
afford it, is not in issue.
85
Section
56(d) of the MPRDA.
86
This
appears from the evidence of Prof. Barton. The witness was, however,
unable to give an expert opinion on the constitutional
context of
the international practices.
87
2002
(4) SA 768 (CC)
at
para. 61 and onwards.
88
2005
(1) SA 530 (CC)
para.
34 and onwards,. See paras. 35 and 36 in particular.
89
Beckenstrater
v Sand River Irrigation Board 1964 (4) SA 510 (T)
as
quoted in
Harksen
v Lane NO and Others 1998 (1) SA 300 (CC)
at
para. 32.
90
Reflect-All
1025 CC v MEC for Public Transport, Roads and Works, Gauteng
Provincial Government 2009 (6) SA 391 (CC)
at
para. 64
91
Stelfenbosch Divisional Council v Shapiro
1
953
{3) SA 418 (C)
at
423G to H.
92
Gildenhuys: Onteieningsreg
(2
nd
ed.) p. 11;
Carey
Miller: The Acquisition and Protection of Ownership
(1986)
110.
93
Such
an argument would offend against the property law principle that in
order to confer rights, the entity conferring must have
the rights.
94
In
the sense of section 25(4)(a) of the Constitution
95
Southwood:
The Compulsory Acquisition of Rights,
19-24;
Budlender:
Juta's New Land Law,
Chapter
1, 1-48 to 1-50; 1-7 to 1-8.
96
There
are circumstances under which the State may not grant rights to
exploit minerals, for instance for environmental reasons.
97
Onteieningsreg
(2
nd
ed.) p. 8.
98
See also
Badenhorst:
Property and the Bill of Rights in Bill of Rights Compendium
3FB-29;
Badenhorst:
Die Vereistes vir 'n Geldige Onteieningskennisgewing, 1989 THRHR
<52)
p.
130
and onwards.
99
Dormehl
v Gemeenskapsontwikkelirtgsraad 1979 (1) SA 900 (T).
100
Du
Toit v Minister of Transport 2006 (1) SA 297 (CC)
at
para 26
to
33.
101
Ex
parte Former Highland Residents: In re Ash and Others v Department
of Land Affairs [2000] All SA 26 (LCC)
paras.
25 and onwards;
Khumalo
and Others v Potgieter and Others [2000] 2 AH SA 436 (LCC)
at
para. 23.
102
The head of the DMR's legal department.
103
Such notices subsequently proved
to be unnecessary.