Agri SA v Minister for Minerals and Energy

• Jurisdiction: South Africa
• Judge: Mogoeng CJ, Moseneke DCJ, Cameron J, Froneman J, Jafta J, Nkabinde J, Skweyiya J, Van der westhuizen J, Yacoob J and Zondo J
• Judgment Date: 18 April 2013
• Citation: 2013 (4) SA 1 (CC)
• Docket Number: CCT 51/12 [2013] ZACC 9
• Hearing Date: 08 November 2012
• Counsel: G Grobler SC (with J Gildenhuys) for the applicant. C Badenhorst SC (with M Wesley) for the respondent. M Brassey SC (with M Engelbrecht) for the first and second amici curiae. M du Plessis (with J Brickhill) for the third amicus curiae. D Ribbens for the fourth amicus curiae.
• Court: Constitutional Court

Mogoeng CJ (Moseneke DCJ, Cameron J (except [58], [59], [67] and [68]), Jafta J, Nkabinde J, Skweyiya J, Yacoob J and Zondo J G concurring):

Introduction

[1] South Africa is not only a beauty to behold but also a geographically sizeable country and very rich in minerals. Regrettably, the architecture H of the apartheid system placed about 87% of the land and the mineral resources that lie in its belly in the hands of 13% of the population. Consequently, white South Africans wield real economic power while the overwhelming majority of black South Africans are still identified with unemployment and abject poverty. For they were unable to benefit I directly from the exploitation of our mineral resources by reason of their landlessness, exclusion and poverty. To address this gross economic inequality, legislative measures were taken to facilitate equitable access to opportunities in the mining industry. J

Mogoeng CJ (Moseneke DCJ, Cameron J (Except [58], [59], [67] and [68]), Jafta J, Nkabinde J, Skweyiya J, Yacoob J and Zondo J concurring)

A [2] That legislative intervention was in the form of the Mineral and Petroleum Resources Development Act [1] (MPRDA). Its commencement had the effect of freezing the ability to sell, lease or cede unused old order rights until they were converted into prospecting or mining rights with the written consent of the Minister for Minerals and Energy [2] (Minister). B It also had the deliberate and immediate effect of abolishing the entitlement to sterilise mineral rights, otherwise known as the entitlement not to sell or exploit minerals. This ought to come as no surprise in a country with a progressive Constitution, a high unemployment rate and a yawning gap between the rich and the poor which could be addressed partly through the optimal exploitation of its rich mineral and C petroleum resources, to boost economic growth.

[3] The inability of mineral rights holders to sterilise those rights, sell, lease or cede them whenever they wanted to, as before, and the extinction, after the prescribed periods, of the hitherto permanent and D exclusive rights to determine who would exploit the minerals, [3] caused grave dissatisfaction, particularly among major landowners like the applicant's members. They believed that the commencement of the MPRDA had the immediate effect of expropriating mineral rights. Hence this application.

Parties E

[4] The applicant is Agri South Africa [4] (Agri SA), whose objects include the making of representations to Parliament on legislation that might affect commercial farming, the institution of legal proceedings to challenge legislation in the interest of farming and generally the protection of F the rights and interests of the commercial farming community.

[5] The respondent is the Minister, the Cabinet member responsible for the administration of the MPRDA, including the granting of various rights. [5]

[6] Four amici curiae were admitted. The first and second amici are G Afrikaanse Forum vir Burgerregte [6] and Afrisake. [7] The third amicus is the Centre for Applied Legal Studies (CALS), based at the University of the Witwatersrand. The fourth amicus is Mr Floris Johannes Pool, a farmer who has approached this court in his individual capacity.

Mogoeng CJ (Moseneke DCJ, Cameron J (Except [58], [59], [67] and [68]), Jafta J, Nkabinde J, Skweyiya J, Yacoob J and Zondo J concurring)

Background A

[7] Under common law a landowner owns everything above and below the land, including minerals. [8] One of the incidents of landownership was the entitlement to search for, mine and dispose of minerals, for own account. [9] As with most rights in property, it was exclusive and could not be appropriated by third parties for their use, benefit or enjoyment B without the owner's consent.

[8] Due in part to commercial expediency, the law developed to allow for severance or separation of landownership from any rights to minerals found in the land. [10] Severance could be effected in a number of ways including a notarial deed of cession in terms of which the owner C transferred mineral rights to a third party. [11] The conclusion of a cession bestowed on the holder an exclusive right to enter the property to which the rights relate, to search for minerals, and if found, sever and carry them away. [12] Although the landowner would still be the owner of the minerals whilst they remained in the ground unceded, [13] once separated from the land, the minerals became distinct movables with ownership D vesting in the holder of mineral rights. [14]

[9] The conclusion of a cession created a personal right in favour of the cessionary, enforceable only against the cedent but not against the E

Mogoeng CJ (Moseneke DCJ, Cameron J (Except [58], [59], [67] and [68]), Jafta J, Nkabinde J, Skweyiya J, Yacoob J and Zondo J concurring)

A 'whole world'. [15] A massive capital injection was required for the infrastructural development necessary to exploit minerals, but the inadequacy of the protection afforded by the personal right was a source of great concern. This necessitated further development of the law to enable holders of mineral rights to register their deeds of cession with the B Deeds Registry. [16] The mineral right was then recognised as a limited real right in land, enforceable against the world at large. [17]

[10] A holder of mineral rights could alienate the rights by cession, a grant of a prospecting or mining lease or encumber them by granting a further limited real right, such as a mortgage bond or a usufruct. These C rights were in practice and in law treated as assets that could be sold, leased or used as security. They formed part of the holder's estate and could be bequeathed to an heir. [18]

[11] A substantially similar position was adopted in the Mining Rights Act [19] of 1967 and the Minerals Act. This appears from s 1 of the D Minerals Act which defines a 'holder' of mineral rights, in relevant part, as —

'the owner of such land: (p)rovided that —

(i)

if the right to such mineral or an undivided share therein has been severed from the ownership of the land concerned, the person in E whose name such right or an undivided share therein is registered in the deeds office concerned, either by means of a separate deed or by means of a reservation in the title deed of the land concerned'. [20]

[12] It follows from this definition that mineral rights could still be held by a landowner under the Minerals Act. Since this right was capable of F being severed from landownership, mineral rights or an undivided share therein would, in circumstances where severance had taken place, be registered in the Deeds Office, in the name of the holder. The significance and benefits of being a holder of mineral rights under the Minerals Act were —

G 'the right to enter upon such land or the land on which such tailings are situated, as the case may be, together with such persons, plant or equipment as may be required for purposes of prospecting or mining

Mogoeng CJ (Moseneke DCJ, Cameron J (Except [58], [59], [67] and [68]), Jafta J, Nkabinde J, Skweyiya J, Yacoob J and Zondo J concurring)

and to prospect and mine for such mineral on or in such land or A tailings, as the case may be, and to dispose thereof.' [21]

The exercise of the right to prospect for or mine minerals was conditional upon the grant of the authorisation or permit. [22]

[13] Sebenza (Pty) Ltd (Sebenza) bought coal rights from the liquidators B of Kwa-Zulu Collieries (Pty) Ltd for R1 048 800 on 2 October 2001 and registered them in its name. Sebenza was not the owner of the land on which the coal was located.

[14] On 1 May 2004 the MPRDA came into effect. Sebenza became the holder of an unused old order right on that date. This happened in terms of item 8 of sch II to the MPRDA. Unused old order rights were in force C for a period of one year after commencement. [23] As the holder of an unused old order right, Sebenza had the exclusive right to apply for a prospecting or mining right under the MPRDA within a year.

[15] Because of an internal dispute which resulted in the dissolution of the shareholding, Sebenza was not in a position to pay the fees required D to apply for and secure the authorisation to prospect for, [24] or a permit to mine [25] the coal in terms of the Minerals Act. The same situation persisted even under the MPRDA. Liquidation proved to be the only viable option Sebenza had. And that is the route it took. Its liquidators attempted to sell its coal rights to Metsu Trading (Pty) Ltd (Metsu) for R750 000, but the sale was cancelled after the parties were advised that E the rights had ceased to exist under the MPRDA. [26]

[16] Sebenza eventually lodged a claim for compensation in terms of sch II to the MPRDA, on the grounds that the MPRDA had expropriated its mineral rights. This lodgment coincided with Agri SA's decision to seek F clarity from a court of law on its view that the commencement of the MPRDA had the effect of expropriating mineral rights conferred on holders by the Minerals Act. In pursuit of this objective, it identified Sebenza's claim as the ideal test case for the vindication of the rights of its members which it believed the MPRDA had extinguished. Agri SA procured Sebenza's claim for compensation against the payment of R250 000. That claim was later rejected by the state. G

[17] The rejection presented Agri SA with the opportunity to get certainty on the status of potential claims for compensation by its

Mogoeng CJ (Moseneke DCJ, Cameron J (Except [58], [59], [67] and [68]), Jafta J, Nkabinde J, Skweyiya J, Yacoob J and Zondo J concurring)

A members. As a result, litigation commenced in the North Gauteng High Court, Pretoria (High Court).

[18] The High Court held that Sebenza's mineral rights had been 'legislated out of...