Brief Summary

Mineral Rights — Validity of mining permit — Second Appellant held a mining permit under the Mineral and Petroleum Resources Development Act, No. 28 of 2002, but failed to renew it before its expiry on 11 July 2004 — Court found that the permit had lapsed and that the Second Appellant could not conduct mining operations on the property thereafter — Appeal by First Appellant successful to the extent that it was not involved in the mining activities.

Comprehensive Summary

Summary of Judgment

Introduction

This was an appeal to the High Court (Northern Cape Division, Kimberley) against an order granted in motion proceedings. The dispute concerned whether certain activities conducted on land amounted to “mining” under the Mineral and Petroleum Resources Development Act 28 of 2002 (the MPRDA), whether those activities were authorised under a pre-existing permit regime, and whether an interdict should issue to restrain continued operations.

The appellants were Idada Trading (Edms) Beperk (first appellant) and Poort Beton (Edms) Beperk (second appellant). The respondent was Top Coat Property Investment 23 (Edms) Beperk, the owner of the relevant property. In the court a quo, the Minister of Minerals and Energy and the Regional Manager, Northern Cape had also been joined and were subjected to a costs order, but the appeal (as reported) proceeded between the appellants and the respondent.

The procedural history was that the respondent brought an application in May 2006 seeking declaratory relief and an interdict. On 8 June 2007, the court a quo granted declarations that the activities constituted mining under the MPRDA and were unlawful, interdicted Poort Beton from extracting minerals or conducting mining operations on the property, and made a split costs order. With leave of the court a quo, the appellants appealed against the whole order.

The general subject-matter of the dispute was the continued exploitation and processing of sand and stone on the farm after the introduction of the MPRDA and after expiry of an earlier permit issued under the Mineral Act 50 of 1991.

Material Facts

A mining permit was issued on 12 July 2002 by the then Director: Mineral Development, Kimberley, to Poort Beton (Edms) Bpk. The permit authorised Poort Beton to mine for “sand and stone” on the property described as the Remaining Extent of the Farm Droogehout No 442 (noting an immaterial discrepancy in the stated district). The permit was issued under section 9(1) read with section 9(3)(d) of the Mineral Act 50 of 1991, and its stated duration was from the date of issue to 11 July 2004.

It was common cause that, prior to the commencement of the MPRDA, Poort Beton operated a crushing plant on the property, processing material (sand and stone) loosened from the land pursuant to the mining permit. It was also common cause that Poort Beton did not apply at any stage (before or after 11 July 2004) for renewal of its mining permit, nor did it apply for a prospecting right or mining right under the MPRDA. It was further common cause that sand and stone constitute “minerals” under both the MPRDA and the 1991 Act.

The respondent, as the current owner of the property, launched the application on 25 May 2006 seeking declarations that activities conducted since September 2004 on Portion 4 of the farm constituted mining as contemplated in the MPRDA, were contrary to the MPRDA, and should be interdicted.

A material disputed aspect (as it emerged on appeal) related to the involvement of Idada Trading. The papers had consistently denied that Idada Trading conducted mining operations on the property, and alleged that only Poort Beton performed the relevant activities. The appeal court noted that the court a quo’s order nonetheless referred to Idada Trading in paragraph 1, despite an indication in the court a quo’s reasons that Idada Trading should effectively be “exonerated”.

A further factual contention advanced by Poort Beton was that, after September 2004, it was not “mining” because it was not loosening material from the earth, but rather processing stockpiled material previously extracted (it asserted that the loosening/extraction process had been completed by about September 2003, with later activity limited to processing and that certain “ripping” activity had ceased by winter 2005). The appeal court treated the matter on the basis of the answering affidavits and undisputed allegations in the founding papers, due to how the proceedings were argued and decided in motion.

Legal Issues

The appeal required determination of two central legal questions.

The first question was one of statutory interpretation and the application of law to largely common-cause facts: whether Poort Beton’s “old order” mining permit remained valid after 11 July 2004 by operation of item 7(1) of Schedule II (Transitional Arrangements) to the MPRDA, which provides for continued force of an old order mining right “for a period not exceeding five years” from the MPRDA’s commencement date, subject to subitems (2) and (8) and “subject to the terms and conditions” of the old right.

The second question was primarily one of application of a statutory definition to the accepted version of the facts in motion proceedings: whether Poort Beton’s activities (including stockpiling and crushing/screening of sand and stone) fell within the MPRDA definition of “mine” (used as a verb), including the phrase that it “includes any operation or activity incidental thereto”, and related statutory provisions concerning “processing”.

A further, narrower issue concerned the correctness of including Idada Trading in the declaratory order and the consequential costs implications of partially succeeding on appeal.

Court’s Reasoning

The appeal court first addressed preliminary matters affecting how the issues should be approached.

It held that the order of the court a quo was internally inconsistent insofar as it referred to Idada Trading in paragraph 1 despite the court a quo’s expressed view that Idada Trading should be mentioned only where unavoidable. The appeal court accepted (and it was conceded) that Idada Trading’s appeal had to succeed to the limited extent that the order incorrectly referred to it.

The appeal court also dealt with the basis on which the facts should be assessed in motion proceedings. It accepted that the matter should be approached on the basis of the allegations in the answering affidavits together with the undisputed allegations in the founding papers, and that the replying affidavit should not be relied upon in deciding the dispute. It applied the motion-proceedings approach articulated in Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984(3) SA 623(A).

Validity of the mining permit under the MPRDA transitional regime

On the first substantive issue, the appeal court considered item 7(1) of Schedule II, read with items 7(2) and 7(8) and the definition of an “old order mining right”. It was common cause that Poort Beton’s permit fell within that definition.

Poort Beton contended that item 7(1) meant that its permit continued in force for five years from 1 May 2004 (the commencement date of the MPRDA), regardless of the permit’s own expiry date of 11 July 2004. The appeal court rejected that construction.

The appeal court reasoned that the wording “for a period not exceeding five years” did not indicate an automatic extension up to five years for every old order mining right. Instead, it indicated a maximum cap on continued validity after commencement of the MPRDA. The court considered that the transitional regime was intended to limit the lifespan of old order rights rather than to extend them beyond their pre-existing terms.

Central to this conclusion was the phrase that continued force is “subject to the terms and conditions under which [the right] was granted or issued”. The appeal court treated the duration/expiry date of the permit as a fundamental term or condition. Because Poort Beton’s permit was issued for a fixed term and would expire on 11 July 2004, the appeal court held that it in fact expired on that date, and Poort Beton could not lawfully mine under it thereafter.

In support of this approach, the appeal court referred to McGregor & Another v City of Johannesburg 2008(1) SA 308 (SCA) as a comparative authority on the significance of statutory wording and the status of rights in a changed legislative environment.

The appeal court also addressed arguments based on the wording of item 6(1) of Schedule II, which governs old order prospecting rights and states they “continues in force for a period of two years” from commencement. It did not accept that the similarity between the provisions demonstrated a legislative intention to extend old order mining permits for five years regardless of their original expiry. The court emphasised the textual difference between “continues in force for a period of two years” (item 6(1)) and “for a period not exceeding five years” (item 7(1)) as indicative that item 7(1) was framed as a maximum limitation rather than an automatic extension. The appeal court noted, in this context, the pre-existing statutory position under section 6(4) of the Mineral Act 50 of 1991 relating to prospecting authorisations.

The appeal court further dealt with reliance on CA Visser Delwerye (Edms) Bpk v Du Plooy [2006] 2 All SA 614 (NC), where a view had been expressed (in relation to item 8(1)) that an old order right would remain valid for the “not exceeding” period regardless of the period for which it was originally issued. The appeal court characterised that statement as obiter in the context in which it was made, and stated that, to the extent it conflicted with the conclusion reached in the present case, the court respectfully disagreed.

On this basis, the appeal court concluded that the court a quo was correct in finding that the permit expired on 11 July 2004, and that Poort Beton was not authorised to conduct mining activities on the property under that permit after that date.

Whether Poort Beton’s activities constituted “mining” under the MPRDA

The appeal court then addressed Poort Beton’s alternative contention that, even if its permit had lapsed, it was not “mining” because it was merely crushing and processing material already extracted earlier.

The court applied the MPRDA definition of “mine” (used as a verb), which includes any operation or activity for the purpose of winning a mineral and “includes any operation or activity incidental thereto”. The appeal court held that Poort Beton’s attempt to separate the activities into discrete stages—loosening/extraction on the one hand, and stockpiling/crushing on the other—did not give proper effect to the inclusionary wording of the definition. On the facts as described by Poort Beton itself, the loosening, stockpiling, and crushing were treated as sufficiently interwoven as part of the same overall process such that the processing was incidental to mining.

In dealing with the authorities relied upon by Poort Beton, the appeal court distinguished Albertonse Stadsraad v Briti BK 2003(5) SA 157 (SCA) on the basis that it concerned the definition of “mine” under the Mineral Act 50 of 1991, whose English text (as quoted in the judgment) did not contain the MPRDA’s explicit phrase including incidental operations or activities. The appeal court also noted R v Blom 1951(1) SA 708 (T), where it had been observed that a distinction might in some cases be drawn between extraction/quarrying and subsequent processing; the appeal court considered that the legislature addressed that potential distinction by inserting the “incidental” wording into the MPRDA definition.

The appeal court additionally referred to internal indicators in the MPRDA supporting the inclusion of processing-related activity within the regulatory conception of mining. It referred to section 28 of the MPRDA and to the statutory definition of “processing”, which includes, among other activities, “crushing” and “screening”. This supported the conclusion that Poort Beton’s crushing operations fell within the statutory scheme relevant to mining activities.

Having found that Poort Beton’s activities constituted mining as defined, and that it was common cause Poort Beton did not have authorisation under the MPRDA to mine on the property, the appeal court concluded that Poort Beton was unlawfully mining and that the appeal could not succeed on the merits.

Costs and the position of Idada Trading

On costs, the appeal court accepted that if the appeal failed on the merits, Poort Beton should pay the respondent’s costs.

Although Idada Trading succeeded to the limited extent of removing its name from part of the order, the appeal court declined to order the respondent to pay Idada Trading’s costs. The court reasoned that the respondent had not acted unreasonably in joining Idada Trading, given the background facts (including Idada Trading’s application during May 2005 for a mining permit on the property, overlap in directors between the appellants, and correspondence that had conveyed an impression of involvement). The court further considered that any failure by the respondent to abandon relief against Idada Trading before the appeal did not justify a costs order, particularly as the appeal would have proceeded in the ordinary way and the time spent on that aspect was minimal. The court considered that justice would be served by making no special costs order in that regard.

Outcome and Relief

The appeal was upheld only to a limited extent. The appeal court amended the court a quo’s order by deleting the words “Idada Trading as” and “or both these respondents” from the first paragraph (and the associated reference in the declaration), thereby removing Idada Trading from that part of the order.

In all other respects, the appeal was dismissed. The interdict restraining Poort Beton from extracting minerals or carrying out any form of mining operations on the property remained in place, and the declaratory findings that the activities constituted mining under the MPRDA and were unlawful were effectively confirmed as against Poort Beton.

As to costs on appeal, the appeal court ordered that, save for the limited amendment, the appeal was dismissed with costs, which (on the approach recorded) fell to be paid by the second appellant.

Cases Cited

Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984(3) SA 623(A).

McGregor & Another v City of Johannesburg 2008(1) SA 308 (SCA).

CA Visser Delwerye (Edms) Bpk v Du Plooy [2006] 2 All SA 614 (NC).

Albertonse Stadsraad v Briti BK 2003(5) SA 157 (SCA).

R v Blom 1951(1) SA 708 (T).

Legislation Cited

Mineral and Petroleum Resources Development Act 28 of 2002, including Schedule II (Transitional Arrangements) item 6 and item 7, the definition of “mine”, the definition of “processing”, and section 28.

Mineral Act 50 of 1991, including section 9(1), section 9(3)(d), and section 6(4).

Rules of Court Cited

No specific rule of court was cited in the judgment; the approach to factual disputes in motion proceedings was addressed through case law.

Held

The court held that Poort Beton’s old order mining permit did not remain valid beyond its stated expiry date of 11 July 2004 merely because item 7(1) of Schedule II to the MPRDA permits continued force for a period “not exceeding five years”. The continued force of such a right remains subject to its original terms and conditions, including its duration.

The court held that Poort Beton’s activities on the property, including the stockpiling and crushing of sand and stone previously loosened from the earth, fell within the MPRDA definition of “mine” because the definition includes activities incidental to winning a mineral and because the statutory scheme contemplates “processing” (including crushing and screening) as part of regulated mining activity.

The court held that the reference to Idada Trading in the first paragraph of the court a quo’s order was incorrect on the papers, and it amended the order accordingly; however, it declined to make a costs order in Idada Trading’s favour because the respondent had not acted unreasonably in joining it.

LEGAL PRINCIPLES

The interpretation of transitional provisions in Schedule II to the MPRDA depends closely on the statutory text. Where an old order mining right “continues in force” for a period “not exceeding” a stated duration and “subject to the terms and conditions” under which it was issued, the transitional regime operates as a maximum limitation and does not, without more, extend a right beyond its pre-existing expiry date where expiry formed part of its conditions.

In applying statutory definitions in the MPRDA, the definition of “mine” (as a verb) expressly includes not only the winning of minerals but also “any operation or activity incidental thereto”. On the facts, activities such as stockpiling and crushing of mineral material can be treated as incidental to mining and thus fall within “mining” for purposes of the MPRDA, particularly when supported by the Act’s treatment of processing activities (including crushing and screening) in its definitional and regulatory provisions.

In motion proceedings involving factual disputes, where the matter is to be decided without reliance on replying affidavits, the court applies the established approach that the respondent’s version (together with the applicant’s admitted allegations) forms the factual basis for decision, consistent with Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984(3) SA 623(A).

Idada Trading (Edms) Beperk and Another v Top Coat Property Investment 23 (Edms) Beperk (646/2006) [2009] ZANCHC 4 (13 March 2009)