Mofschaap Diamonds (Pty) Ltd v The Minister for Minerals and Energy and Others (3117/2006) [2007] ZAFSHC 51 (14 June 2007)

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[2007] ZAFSHC 51
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Mofschaap Diamonds (Pty) Ltd v The Minister for Minerals and Energy and Others (3117/2006) [2007] ZAFSHC 51 (14 June 2007)

IN THE HIGH COURT
OF SOUTH AFRICA
(ORANGE FREE STATE
PROVINCIAL DIVISION)
Case No: 3117/2006
In the matter between:
MOFSCHAAP DIAMONDS
(PTY) LTD
Applicant
and
THE MINISTER FOR
MINERALS AND
ENERGY
1
st
Respondent
THE REGIONAL
MANAGER: MINERALS
AND ENERGY FREE
STATE REGION
2
nd
Respondent
THE DEPUTY DIRECTOR
GENERAL:
MINIRALS AND ENERGY
3
rd
Respondent
_____________________________________________________
JUDGMENT:
KRUGER
et
VAN DER MERWE, JJ
_____________________________________________________
HEARD ON:
21 MAY 2007
_____________________________________________________
DELIVERED ON:
14 JUNE 2007
_____________________________________________________
[1] In July 2006
applicant launched an application seeking a rule
nisi
calling
upon the respondents to show cause why the 1
st
respondent
should not be interdicted from granting a prospecting right, mining
permit or mining right in terms of the Mineral and
Petroleum
Resources Development Act 28 of 2002, (“the Act”) to any third
party in respect of the farms Mofschaap and Adullam
(“the
property”) pending the review of respondents’ decision to refuse
applicant’s application for a prospecting right in
respect of the
property.
[2] On 27 July 2006 a
court order was granted by agreement calling upon the respondents to
provide full reasons for their refusal
of the application under
section 17 of the Act for a prospecting right by 27 August 2006, and
to file same together with a record
of the proceedings.
[3] On 5 October 2006
applicant filed a Supplementary Founding Affidavit.
[4] An Opposing Affidavit
on behalf of all three respondents made by Jacinto Ferreira Dos
Santos Rocha was filed on 6 November 2006.
He is the Deputy
Director: Mineral Regulation: Department of Minerals and Energy of
the Republic of South Africa.
[5] Applicant’s
Replying Affidavit was filed on 1 December 2006.
[6] The following appears
from the Founding Affidavit:
(a) On 18 November 2005
applicant applied for a prospecting right under section 17 of the Act
in respect of the property.
(b) On 1 December 2005
the 2
nd
respondent wrote to applicant that its application
for a prospecting right in terms of section 16 of the Act had been
accepted and
listed certain requirements in terms of section 16(4) of
the Act.
(c) The applicant says it
duly complied with all the provisions of the Act relevant to its
application for a prospecting right.
(d) On 14 July 2006
applicant received a letter, apparently signed by the 2
nd
respondent on behalf of 3
rd
respondent refusing the
application:
“
REGISTERED
MAIL
The Directors
Aquarella
Investments 241 (Pty) Ltd
C/O
Dr J H Coetzer
P
O Box 60859
Pierre
van Ryneveld
CENTURION
0045
Messrs
REFUSAL OF AN APPLICATION FOR A
PROSPECTING RIGHT FOR DIAMONDS (GENERAL AND IN KIMBERLITE) AND ALL
MINERALS ON THE FARMS MOFSCHAAP
1269 AND ADULLAM 1292, SITUATED IN
THE MAGISTERIAL DISTRICT OF KROONSTAD.
Kindly
be informed that after careful consideration of your application for
a prospecting right, I, the Deputy Director-General:
Mineral
Regulation, have, by virtue of powers delegated to me in terms of
section 103(1) of the Mineral and Petroleum Resources Development
Act, 2002 (Act 28 of 2002), and in terms of section 17(2) thereof,
decided to refuse to grant a prospecting right in respect of the
abovementioned property for the following reason, namely:-
Failure to meet the requirements of
section 17(1)(a) and (b) of the abovementioned Act, read with
Regulation 7.
Regards
(signed)
JF ROCHA
DEPUTY
DIRECTOR-GENERAL:
MINERAL
REGULATION
DATE:
2006/07/06”
(e) Applicant’s
attorney requested reasons for the decision in a letter dated 17 July
2006, and upon receiving no response, went
to court. Hence the court
order on 27 July 2006 and this application.
[7] Section 17(1)(a), (b)
and (c) of the Act reads as follows:
“
(1) Subject to
subsection (4), the Minister must grant a prospecting right if-
(a) the applicant has access to
financial resources and has the technical ability to conduct the
proposed prospecting operation
optimally in accordance with the
prospecting work programme;
(b) the
estimated expenditure is compatible with the proposed prospecting
operation and duration of the prospecting work programme;
(c) the
prospecting will not result in unacceptable pollution, ecological
degradation or damage to the environment;
Paragraphs (a) and (b),
upon which the refusal was based, refer to financial resources and
estimated expenditure.
[8]
INTERNAL
REMEDIES – SECTIONS 96 AND 103
On behalf of the
respondents it was argued that the application should be dismissed
without consideration of the merits thereof for
failure by the
applicant to exhaust internal remedies available to it. Relying in
this regard in the first place on the provisions
of section 96 of the
Act, it was specifically argued that the remedy of appeal to the
first respondent is available to the applicant.
[9] According to its
heading, section 96 of the Act deals with internal appeal process and
access to courts. This section provides
as follows:
“
96 Internal
appeal process and access to courts
(1) Any person whose rights or
legitimate expectations have been materially and adversely affected
or who is aggrieved by any administrative
decision in terms of this
Act may appeal in the prescribed manner to-
(a) the Director-General, if it is an
administrative decision by a Regional Manager or an officer; or
(b) the
Minister, if it is an administrative decision by the Director-General
or the designated agency.
(2) An appeal in terms of subsection
(1) does not suspend the administrative decision, unless it is
suspended by the Director-General
or the Minister, as the case may
be.
(3) No
person may apply to the court for the review of an administrative
decision contemplated in subsection (1) until that person
has
exhausted his or her remedies in terms of that subsection.
(4) Sections
6, 7 (1) and 8 of the Promotion of Administrative Justice Act, 2000
(Act 3 of 2000), apply to any court proceedings contemplated
in this
section.”
[10] The question then is
whether the remedy of appeal to the first respondent in terms of
section 96 of the Act is available to the
applicant in the
circumstances of this case. For the reasons that follow, we think
that it is not.
[11] In his well-known
work on administrative law,
Administratiefreg
, p. 52 – 57,
Prof. Marinus Wiechers distinguishes in the field of delegation of
public power
inter alia
between what he terms deconcentration
and decentralisation. Delegation of power in the form of
decentralisation takes place when
powers are transferred to an
independent organ or body which carries out these powers and
functions entirely in its own name. As
a rule the
delegans
(that is the delegating authority) has no authority to act on behalf
of the delegate and has no control over the independent body
other
than appointment of the members thereof and/or some form of appeal
against the decisions of that body. Deconcentration on
the other
hand, is applicable where the functions are performed by the delegate
in the name or on behalf of the
delegans
, in other words the
delegans
acts by means of the delegate. An essential feature
of the deconcentration of administrative power is that the
delegans
may withdraw the delegation at any time and perform the function
himself or herself. Also, the
delegans
may exercise various
forms of control over the delegate. These principles were expressly
adopted in
NAIDOO AND OTHERS v JOHANNESBURG CITY COUNCIL AND
OTHERS
1979 (4) SA 893
(W) at 896 E – 898 E and
SA
FREIGHT CONSOLIDATORS (PTY) LTD v CHAIRMAN, NATIONAL TRANSPORT
COMMISSION, AND ANOTHER
1987 (4) SA 155
(W) at 164 F – 169
D. We respectfully believe that these decisions are correct. See
also Baxter,
Administrative Law
, p. 436 footnote 317 and p.
441, 442 as well as
LAWSA
, 2
nd
Edition, Volume 1,
para 101, p. 81 – 82. This principle is also illustrated in the
judgment of
BARTLETT v MUNISIPALITEIT VAN KIMBERLEY
1966 (2) SA 95
(GW) at 100 E – 102 F, where it was decided that
where the exercise by a town clerk of a power delegated to him by the
municipal
council is attacked, the proper body to sue is the
municipal council or municipality as the town clerk acted on its
behalf under
the delegated authority. The judgment in the case of
ADMINISTRATOR, CAPE v ASSOCIATED BUILDINGS LTD
1957 (2)
SA 317
(A) at 323 H, referred to on behalf of the respondents, does
not support the respondents’ argument, as it in fact provides an
example
of administrative deconcentration.
[12] In this case section
103(4) and (5) of the Act specifically provides as follows:
“
(4) The
Minister, Director-General, Regional Manager or officer may at any
time-
(a) withdraw a delegation or
assignment made in terms of subsection (1), (2) or (3), as the case
may be; and
(b) withdraw
or amend any decision made by a person exercising a power or
performing a duty delegated or assigned in terms of subsection
(1),
(2) or (3), as the case may be.
(5) The Minister, Director-General,
Regional Manager or officer is not divested of any power or exempted
from any duty delegated or
assigned by him or her.”
Furthermore, in the
written delegation document,
inter alia
the following
conditions of the delegation in question are stated:
“
(a) Any power must be exercised
judiciously with the necessary discretion and with due regard to the
applicable Regulations, as well
as other instructions and control
measures determined in terms of the Act.
.....
(f) Should any doubt exist for any
reason as to which decision should be taken regarding any matter,
such matter should be referred
to me for finality.
(g) The
aforesaid powers may nonetheless be exercised by myself
notwithstanding the fact that it has been delegated.
(h) I
should be consulted should there be any reason to move away from or
revise established policy guidelines.”
[13] It is clear
therefore that the first respondent has both the power to revoke the
delegation to the third respondent in question
and to exercise the
power delegated herself and the power to exercise control over the
exercise of the delegated power. In our view
the delegation to the
third respondent in question took place in a scheme of
deconcentration of public power. It follows that when
the third
respondent refused to grant a prospecting right to the applicant, the
third respondent acted on behalf of the first respondent,
that the
first respondent acted through the third respondent and that the
decision to refuse must be regarded as the decision of
the first
respondent. On this basis no appeal in terms of section 96 of the
Act is available to the applicant.
[14] There is a further
indication that this conclusion must be correct. In terms of the Act
“Director-General” means the Director-General
of the Department.
“Department” means the Department of Minerals and Energy. The
Act also contains a definition of a designated
agency referred to in
section 96(1)(b) thereof, which is not relevant here. Importantly
however, an officer as referred to in section
96(1)(a) of the Act, is
defined as any officer of the Department appointed under the Public
Service Act, 1994. It follows that the
third respondent is an
officer as defined. It also follows that if the decision in question
must in law be regarded as the decision
of the third respondent,
then, in terms of section 96 of the Act, an appeal would lie not to
the first respondent, but to the Director-General.
It could not have
been intended that the exercise of a power granted to the first
respondent (the Minister) could be appealed against
to a lower
ranking official, to wit the Director-General. This anomaly does not
arise if the decision in question is regarded as
the decision of the
first respondent, as we do.
[15] Secondly it was
argued, albeit with little enthusiasm, that section 103(4)(b) of the
Act also provides an internal remedy to
the applicant. We cannot
agree. An internal remedy in this context is one that an aggrieved
person may exercise as of right. To
seek an indulgence, which at
best is what the request to act in terms of section 103(4)(b) would
amount to, is not a remedy.
[16] In the light of this
conclusion it is not necessary to deal with the prayer by the
applicant for exemption in terms of section
7(2)(c) of the Promotion
of Administrative Justice Act, No. 3 of 2000 (“PAJA”). It is
worthy of note in passing however, that
it would appear that in terms
of the Act an absolute duty to exhaust the remedies in terms of
section 96 thereof is intended. That
is the import of section 96(3)
and in section 96(4) section 7(2) of PAJA is not made applicable to
the proceedings contemplated in
terms of section 96.
GROUNDS FOR REVIEW
[17] In its heads of
argument applicant relies on section 6 of the Minerals and Petroleum
Resources Development Act 28 of 2002, which
reads as follows:
“
6.
(1) Subject
to the Promotion of Administrative Justice Act, 2000 (Act No. 3 of
2000), any administrative process conducted or decision
taken in
terms of this Act must be conducted or taken, as the case may be,
within a reasonable time and in accordance with the principles
of
lawfulness, reasonableness and procedural fairness.
(2) Any
decision contemplated in subsection (1) must be in writing and
accompanied by written reasons for such decision.”
[18] Applicant says that
respondents are in violation of several provisions of the
Promotion
of Administrative Justice Act 3 of 2000
. The applicant followed an
approach which was justifiably described as a shotgun approach.
Several of the grounds relied on were
baseless, and deserve no
further consideration. These include: Bias, ulterior purpose or
motive, taking into account irrelevant
considerations or failing to
consider relevant considerations; taking into account unauthorised or
unwarranted dictates of another
person or body; bad faith; decision
taken arbitrarily or capriciously. The main impetus of applicant’s
attack is in relation to
(1) delegated powers, (2) error of law and
(3) procedural fairness.
1.
Section 6(2)(a):
(i)
The administrator who took the decision was not
authorised to do so by the empowering provision and (ii) acted under
improper delegation.
Mr. Van Heerden, for
applicant, contends that because the delegation by the minister in
respect of
section 17(1)
to (4) is to the “Deputy Director-General:
Mineral Development”, and the 3
rd
respondent, who took
the decision, is the “Deputy Director-General: Mineral
Regulation”, the 3
rd
respondent did not have the power
to take the decision herein. The point is not taken in the
applicant’s papers (also not in reply)
that the 3
rd
respondent was not empowered. In the Answering Affidavit 3
rd
respondent says: “I attach the delegation to myself, marked
annexure “R3””. In response to this pertinent allegation, the
applicant’s deponent says in the Replying Affidavit: “Save to
state that there is no indication that Mr Oberholzer signed on
behalf
of the Third Respondent. The content is noted.”
There was a proper
delegation. There is no substance in applicant’s contention.
2.
Section 6(2)(d):
The action was materially influenced by an error of law.
Mnr. Van Heerden contends
that the 2
nd
and 3
rd
respondents misconstrued
the meaning of the Act and regulations regarding geological
description, the reference to mining, geological
maps and other
aspects.
The
regulations promulgated under Act 28 of 2002 (GN R526, Government
Gazette 26275 of 23 April 2004) contain detailed provision regarding
applications for prospecting rights.
There
are a number of aspects upon which the application does not comply.
Mr. Claasen referred in particular to regulation 5(1)(g),
(j) and
(k). The main objection relates to non-compliance with regulation
7(1)(j) and (k). The most glaring non-compliance is in
respect of
regulation 7(1)(k) which expressly states that the expenditure must
be broken down. That has not been done. It is not
the respondent
who has made an error of law, it is the applicant. The respondent
applied the Act and Regulations correctly.
3.
Section 6(2)(c):
The Administrative decision was procedurally unfair
.
The main thrust of Mr.
Van Heerden’s argument was that of procedural unfairness.
In support of this
submission applicant says:
(1) In terms of section 9
of the Act applications are processed in the order of receipt, and a
competing application should not be
processed before an application
has been disposed of.
(2) Because
the legislation is new the applicant should be treated more
leniently, and more guidance given by respondent.
(3) It was procedurally
unfair not to point out errors in the application and to allow it an
opportunity to rectify those errors,
so as not to lose priority.
We deal with these points
seriatim:
The
processing of competing applications
Applicant states that
section 9 of the Act provides for the order of processing of
applications, and says that applications must be
dealt with in order
of receipt. The respondents have acted contrary to section 9 by
processing another application together with
applicant’s
application. Mr. Van Heerden says the process of consultation with
interested and affected parties contemplated in
regulation 3, and
publication in the Government Gazette referred to in regulation 3(3),
should not be done simultaneously in respect
of two applications. He
contents that is procedurally unfair.
In answer to the
allegation that it is “ultra vires” to process an application
simultaneously with the one lodged by the applicant,
3
rd
respondent says “It stands to reason that no competing application
can ever be decided upon unless finality has been reached on
the
first application.” (page 251 paragraph 4.15, see also paragraph
4.14).
It is not entirely clear
what is meant by “dealt with” in section 9(1)(b). Certain
preliminary steps can possibly be taken simultaneously
– e.g.
consultation with interested or affected parties and publication.
The 3
rd
respondent makes it clear that there has to be
finality on the first application before a decision on a further
application is taken.
Section 9 does not say that nothing can be
done in respect of later applications. The crucial point is that
applicant does not
say how any alleged steps taken in relation to any
later application prejudiced it. This contention by applicant must
fail.
The short answer to this
submission in respect of priority is that an applicant, whose papers
are in order, must succeed. Section
17(1) of the Act, which came
into operation on 1 May 2004, states that the minister must (not may)
grant a prospecting right if the
provisions of section 17 have been
complied with. The regulations spell out the requirements in detail.
New
legislation: No guidelines
Regarding new legislation
applicant contends that this is new legislation in respect whereof no
guidelines exists. This contention
is without merit. The
regulations contain detailed provisions which should be followed.
This is a tenuous type of argument, and
inevitably the question
arises, “When is the legislation no longer new?” This Act has
been in operation for more than three
years (since 1 May 2004); two
years at the time of lodging the application. This is no basis to
infer procedural unfairness from.
Opportunity to rectify
errors: retaining priority
The
applicant contends that if errors are not pointed out to an applicant
so as to afford the applicant an opportunity to rectify
them, the
applicant loses priority. The consequences of refusal of this type
of licence are more severe and irreversible than in
the case of e.g.
a liquor licence, where the applicant can simply lodge a new
application. In this case, the applicant loses priority.
With
regard to being afforded an opportunity to rectify defects in the
application the third respondent says the following:
“
4.5
AD
9.6:
It is standard practice in the
offices of the Second Respondent not to divulge any information
regarding the progress and where the
application is at that present
moment or who is at the present moment evaluating the application.
The correct and standard answer
to all Applicants, regarding their
enquiries after the application has been accepted, is that the
application is in the process.
There is nothing untoward such
answers. Once the application passed muster at the information desk
regarding completeness, only
then does the evaluation regarding the
merits of the applications starts. The Act and Regulations are clear
and it would be an impossible
task for each and every desk and expert
or for the First, Second or Third Respondent to report and advise any
Applicant through the
whole process in such a way that each and every
application is successful. The whole application procedure will come
to a standstill.
Thousands of applications are received right over
the country. Approximately seven hundred applications were submitted
to the Free
State office alone since 1 May 2004.
…
4.7
AD 9.8:
I
respectfully refer to the Court to what was said to paragraph 9.6
above. It would lead to absolute administrative chaos if each
and
every application in any Department of the State’s administration,
such as applications for fire-arms, business licenses, transport
permits, liquor licenses, etc, etc, are to be processed by the
administrating body as suggested by Applicant. It is, as aforesaid,
a practical impossibility to revert back to an Applicant right
through the evaluating process to enable an Applicant in any
application
to rectify any errors in its application. In most of the
matters Applicants are usually assisted by experts in the different
fields.
Again, the logical conclusion to Applicant’s viewpoint is
that each and every Applicant should at the end be successful.
…
4.10
AD 9.11
… Assistance is given to Applicants
regarding the formal requirements of the application, but it is
impossible for each and every
desk and each and every expert to
revert back to an Applicant in informing an Applicant of the
deficiencies of its application and
to allow an Applicant to rectify
such deficiencies until each and every desk and each and every expert
could submit a positive recommendation.”
In
BEL PORTO SCHOOL
GOVERNING BODY AND OTHERS v PREMIER, WESTERN CAPE AND ANOTHER
[2002] ZACC 2
;
2002 (3) SA 265
(CC) paragraphs 103 and 104 it appears that the
appellants in that case argued that they were not involved in
negotiations, and that
their representations were not given
sufficient attention. The Constitutional Court held that the
requirements of procedural fairness
depend on the circumstances of
each case. It that case, the Constitutional Court held, it could not
be expected that negotiations
with each of the 1750 educational
institutions be held.
In the circumstances this
case procedural fairness did not require the respondents to give the
applicant an opportunity to rectify
errors or inform it of any
shortcomings in the application.
[19] No procedural
unfairness has been shown.
[20] The application is
dismissed with costs, including the costs of 27 July 2006.
________________ _________________________
A.
KRUGER, J C. H. G. VAN DER MERWE, J
On behalf of the
applicant: Adv. C. N. van Heerden
And Adv. N. Smit
Instructed
by:
State
Attorney
BLOEMFONTEIN
On behalf of the
respondents: Adv. J. Y. Claasen
Instructed by:
Hill,
McHardy & Herbst
BLOEMFONTEIN
/em