Brief Summary

Environmental Law — Mining licences — Right to be heard — Interested parties opposing mining licence application entitled to raise environmental objections — Director of Mineral Development's refusal to grant a hearing to objectors deemed unlawful — Appeal against review decision dismissed. Respondents, concerned about the environmental impact of Sasol Mining's proposed open-cast coal mining near the Vaal River, sought to oppose the mining licence application but were denied a hearing by the Director. The court held that the Director was obliged to consider the objections and provide an opportunity for the respondents to be heard, as their rights to a healthy environment were at stake.

Comprehensive Summary

Summary of Judgment

1. Introduction

The matter concerned an appeal to the Supreme Court of Appeal arising from an opposed application in the Witwatersrand Local Division, in which the respondents had successfully reviewed the decision-making process of a senior official in the minerals regulatory framework. The appeal was directed against the judgment of Cassim AJ, who had granted review relief against the refusal of the first appellant to afford objectors an opportunity to be heard.

The parties were, on the one hand, the Director: Mineral Development, Gauteng Region (the first appellant), the designated official empowered to grant or refuse a mining licence under the Minerals Act 50 of 1991, and Sasol Mining (Pty) Ltd (the second appellant), the applicant for the mining licence. On the other hand were Save the Vaal Environment (the first respondent), an unincorporated association representing members living and owning property along the Vaal River, together with other respondents who were either members of the association or property owners in the affected area.

The procedural history was that Sasol Mining applied for a mining licence under section 9 of the Minerals Act. During the processing of that application, Save sought to oppose it on primarily environmental grounds and demanded a hearing. The Director refused, considering environmental objections premature at that stage. After the Director ultimately granted the mining licence, the respondents instituted review proceedings and succeeded in the court a quo. The present appeal was aimed at overturning that review outcome.

The general subject-matter of the dispute was whether interested and affected parties who wished to oppose an application for a mining licence under section 9 of the Minerals Act were entitled to raise environmental objections and be afforded a hearing by the Director, in accordance with the audi alteram partem principle of administrative law.

2. Material Facts

Sasol Mining was the holder of extensive mineral rights, including rights over an area comprising three farms in the Sasolburg district, which fronted on the Vaal River. In May 1996 Sasol Mining urgently needed to extend coal mining operations to that area, and it was established (for purposes of the proceedings) that the only feasible manner of mining in that area was open-cast mining. The proposed mining site was in the north-west portion of the area, close to the southern bank of the Vaal River.

Sasol Mining accordingly applied to the Director for a mining licence under section 9 of the Minerals Act. While that application was still under consideration, Save’s attorney asserted that Save was entitled to be heard in opposition. The Director responded, both in February 1997 and again in March 1997, that he was not obliged to hear Save at that stage and that he was not prepared to do so. On 22 May 1997, the Director issued the mining licence to Sasol Mining for the proposed open-cast mine.

The respondents’ opposition was primarily founded on environmental concerns linked to the proposed open-cast operations near the Vaal River. The court recorded concerns relating to, among other matters, the likely destruction or partial destruction of the Rietspruit wetland, risks associated with rehabilitation after the replacement of overburden, and the potential for acid-related impacts where seepage water interacts with exposed coal seams. The court also recorded concerns regarding threats to fauna and flora, pollution impacts (noise, light, dust, and water), possible degradation of water quality affecting recreational uses of the Vaal Barrage, and a further concern about potential diminution in nearby property values.

A disputed point arose in the appeal only to the extent that Sasol Mining raised a preliminary legal objection based on the property-value concern: it contended that Save was an illegal association because it had more than 20 members and was not registered as a company, relying on section 30(1) of the Companies Act 61 of 1973. The court treated the material facts relevant to this point as the association’s nature and objects, and whether it was in substance conducting business with the object of acquisition of gain.

3. Legal Issues

The central legal questions were whether the audi alteram partem rule applied at the section 9 mining licence stage, and specifically whether the Director was obliged to notify and hear interested parties who wished to raise environmental objections before deciding whether to grant a mining licence. This entailed determining whether the statute excluded audi expressly or by necessary implication, and whether the nature of the section 9 decision (as alleged by the appellants to be preliminary and non-prejudicial) meant that no hearing was required.

A further issue, raised as a point in limine, was whether Save the Vaal Environment was rendered unlawful by section 30(1) of the Companies Act 61 of 1973, on the basis that it allegedly constituted an unregistered association of more than twenty persons formed for the purpose of carrying on business with the object of acquisition of gain.

The dispute was primarily one of law, involving statutory interpretation and the application of established administrative-law principles. It also involved the application of law to facts, particularly in assessing whether environmental issues were implicated within the statutory criteria in section 9(3), and whether a section 9 decision was sufficiently prejudicial in effect to trigger procedural fairness obligations.

4. Court’s Reasoning

On the preliminary objection under section 30(1) of the Companies Act, the court construed the statutory prohibition as directed at preventing mischief associated with large, fluctuating trading bodies in which persons dealing with them cannot identify with whom they contract. Drawing on the purpose of the prohibition, the court considered whether Save existed to carry on a business with the object of acquisition of gain by the association or its members. On the record, the court held that Save could not be characterised as a trading undertaking or a business venture aimed at gain; its constitution and objects were directed to environmental protection of the Vaal River and its environs. The objection was therefore rejected.

Turning to the audi alteram partem issue, the respondents’ position (as recorded by the court) was that audi applies whenever a statute empowers a public official to take a decision prejudicially affecting rights, interests, liberty, or property, or where a legitimate expectation of a hearing arises, unless excluded expressly or by necessary implication or justified by exceptional circumstances. The respondents located their substantive interests in the constitutional environmental right referred to in the judgment as section 24 of the Constitution, and contended that the Minerals Act did not exclude audi at the section 9 stage.

The appellants contended that audi was excluded by necessary implication. One strand of that argument relied on the structure of section 9(3) of the Minerals Act, which provides that the Director “shall” issue the mining authorisation if satisfied of specified matters. The Director’s counsel accepted that audi could operate within paragraphs (a) to (e) of section 9(3), but argued that those listed factors constituted an exhaustive set of “jurisdictional facts” and, on that basis, environmental objections falling outside them could not trigger a hearing. Sasol Mining went further and argued that the enumeration itself implied a total exclusion of audi.

The court rejected the attempt to treat the enumerated section 9(3) considerations as excluding procedural fairness. It reasoned that such an approach would imply that audi is excluded whenever legislation lists factors for decision-making, which would substantially erode natural justice in administrative processes. The court also held, as a matter of interpretation, that at least some section 9(3) considerations inherently implicated environmental issues. In particular, section 9(3)(b) requires the Director to be satisfied with the manner in which the applicant intends to rehabilitate surface disturbances caused by mining operations. The court reasoned that an inquiry into rehabilitation necessarily entails considering the nature and extent of terrain disturbance, its effects, and the feasibility and adequacy of rehabilitation measures. On the facts, this necessarily engaged concerns such as the potential damage to the wetland and whether it could be rehabilitated. The respondents therefore had legitimate environmental concerns relevant to the statutory inquiry.

Another strand of the appellants’ argument was that no rights could be said to be affected by granting a section 9 licence because the licence itself had no immediate tangible physical effect on the environment; mining could only commence after approval of an environmental management programme under section 39. The court rejected this characterisation, holding that the section 9 licence enabled the holder to proceed to the next steps and set in motion a chain of events likely to lead to mining. Relying on authority recognising that procedural fairness may be required even at a preliminary stage where a decision lays the foundation for a later decision with grave consequences, the court held that this was such a case: the section 9 licence “opens the door” and is not a neutral decision with no prejudicial potential.

The appellants further submitted that audi should only be applied at the section 39 stage, and that applying it at both stages would produce unnecessary duplication and cost. The court considered this argument to rest on a confusion of the respective purposes of section 9 and section 39. It held that section 9 concerns whether a mining licence should be granted at all, whereas section 39 concerns the environmental management programme. The court also highlighted that a section 9 licence enables an applicant to seek exemption from submitting an environmental management programme under section 39(2)(a) and allows for temporary authorisation for mining to commence pending approval under section 39(4). On the court’s reasoning, these features reinforced that interested parties could face jeopardy from the section 9 decision and that a later hearing at section 39 stage might not address the fundamental objection to the granting of a licence, might not occur, or might occur only after mining had begun.

In concluding that audi applied, the court stressed that a hearing at the section 9 stage need not be formal. At a minimum, it required that interested parties be notified and given the opportunity to raise objections in writing, with a more formal process if necessary. The court held that nothing in section 9 or elsewhere in the Minerals Act expressly or by necessary implication excluded audi, and that there were no public policy considerations militating against its application. It further indicated that the constitutional recognition of environmental rights required that environmental considerations receive appropriate recognition in South African administrative processes, given the potential severity of environmental harm from mining.

5. Outcome and Relief

The Supreme Court of Appeal dismissed the appeal. The effect was that the review outcome in the court a quo, which had been favourable to the respondents and founded on the Director’s failure to afford a hearing, was not disturbed.

The court ordered the appellants to pay costs, including the costs of two counsel.

Cases Cited

Smith v Anderson (1880) 15 Ch D 247 (Court of Appeal)

Mitchell’s Plain Town Centre Merchants Association v McLeod [1996] ZASCA 67; 1996 (4) SA 159 (A)

Du Preez and Another v Truth and Reconciliation Commission [1997] ZASCA 2; 1997 (3) SA 204 (A)

Van Wyk N O v Van der Merwe 1957 (1) SA 181 (A)

Legislation Cited

Minerals Act 50 of 1991, section 9 and section 39

Companies Act 61 of 1973, section 30(1)

Constitution of the Republic of South Africa, 1996, section 24

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The court held that Save the Vaal Environment was not an unlawful association under section 30(1) of the Companies Act 61 of 1973, because it was not formed to carry on business with the object of acquisition of gain.

The court further held that the audi alteram partem rule applies to the Director’s consideration of an application for a mining licence under section 9 of the Minerals Act 50 of 1991, and that interested parties with environmental objections are entitled to be notified and afforded an opportunity to present objections. The court held that the Minerals Act did not exclude audi expressly or by necessary implication, and that deferring procedural fairness to the section 39 environmental management programme stage was not an adequate answer given the consequences and enabling effect of the section 9 licence.

LEGAL PRINCIPLES

A statutory enumeration of factors relevant to an administrative decision does not, without more, justify an inference that the audi alteram partem rule is excluded. Exclusion of procedural fairness must appear expressly or by necessary implication, and courts are slow to infer exclusion where doing so would undermine fundamental natural justice.

A decision that is preliminary in a regulatory sequence can nonetheless trigger procedural fairness duties where it lays the foundation for later decisions that may have serious or irreversible consequences. The formal absence of immediate physical effects does not necessarily prevent a decision from being prejudicial in its practical and legal consequences.

Where statutory decision-making criteria include matters such as rehabilitation of surface disturbance, environmental impacts may be integral to the inquiry. Interested and affected parties raising environmental concerns may therefore have a legitimate basis to be heard as part of the statutory evaluation.

Administrative processes in South Africa must give appropriate recognition to environmental rights protected in the Constitution, which supports the application of procedural fairness where decisions may affect environmental integrity and related interests.

Director: Mineral Development, Gauteng Region and Another v Save the Vaal Environment and Others (133/98) [1999] ZASCA 9; [1999] 2 All SA 381 (A) (12 March 1999)