Anglo Operations Ltd v Sandhurst Estates (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Howie P, Mthiyane JA, Brand JA, Mlambo JA and Theron AJA
• Judgment Date: 29 November 2006
• Citation: 2007 (2) SA 363 (SCA)
• Docket Number: 634/05
• Hearing Date: 13 November 2006
• Counsel: C D A Loxton SC (with P Lazarus) for the appellant. S J du Plessis SC (with J L Gildenhuys) for the respondent.
• Court: Supreme Court of Appeal

Brand JA: A

[1] This is a case about mineral rights. The respondent is the owner of a farm, described as the remainder of Brakfontein 117, about 850 hectares in extent, near Bethal in the Mpumalanga Province (the property). The appellant holds all rights to coal in respect of the property by virtue of a notarial cession of mineral rights which B was duly registered during July 2001. The present proceedings started when the appellant brought an application in the Pretoria High Court. The relief sought was for an order, firstly, allowing the appellant to conduct open-cast or strip mining - as opposed to underground mining - on approximately 60 hectares of the property and, secondly, permitting the diversion of an existing stream C on the property in order to facilitate these open-cast mining operations. The respondent raised various objections to both aspects of the relief sought. In a judgment which has since been reported sub-nom Anglo Operations Ltd v Sandhurst Estates (Pty) Ltd2006 (1) SA 350 (T) (2006 (4) BCLR 492), most of these objections were upheld by the Court a quo (De Villiers D J). Consequently the appellant's application was dismissed with costs. The appeal against that order is with the leave of the Court a quo.

[2] The appellant's mineral title arises from a notarial cession in its favour by African and European Investment Co Ltd ('AEIC') during 2001. AEIC in turn acquired these rights by virtue of E two separate cessions, that were concluded on 18 March 1968, with the then owners of the property and the mineral rights involved. They were Mr Arthur Sulski, who owned both the property and a five-sixths share in the mineral rights, and Mr Morris Sulski, who held the remaining one-sixth share in the mineral rights. Subsequent to these F cessions to AEIC, the respondent took transfer of the property from Arthur Sulski. This was in 1972.

[3] The cession by AEIC to the appellant did not relate to the property only. It also provided for the transfer of the rights to coal in respect of a number of adjoining properties. It appears that these G properties are situated in what is known as the Kriel South Coal Field where coal mining had taken place for many years, both by way of strip mining and underground mining activities. The appellant's case is that it had entered into an agreement with Sasol Mining (Pty) Ltd in terms of which it undertook to make coal available to the latter. In order to H give effect to this agreement, the appellant explained, it decided to establish open-cast mining operations on the south-western portion of the Kriel South Coal Field, consisting of the property and those adjacent to it, which together formed the subject-matter of the AEIC cession. I

[4] With regard to the two aspects of the relief sought by the appellant, I shall first deal with the dispute that arose from its desire to conduct open-cast mining on part of the property. This dispute gave rise to issues of both law and fact. The issue of law turns on the content of the appellant's title as the holder of mineral rights. This title originally derived, as I have said, from two cessions by Arthur and Morris Sulski in J

Brand JA

favour of AEIC during 1968. These two cessions were quoted in full by the Court a quo A (at 355H - 357C). As appears from the quotation, the terms of the cession by Arthur are substantially more detailed than the one by Morris. The reason for this, the Court a quo inferred (at 357G), was that Arthur remained the owner of the surface rights while Morris no longer retained any interest in the property at all. Whatever the reason for the difference, both parties in argument before us B followed the Court a quo's example by concentrating their focus on the more detailed provisions of Arthur's cession. Since I do not believe it makes much difference, I propose to do the same.Brand JA

[5] In terms of clause 1 of Arthur's cession, AEIC and its successors were afforded 'all such rights as may be needed for proper C mining and exploiting the coal in, on and under all of the said property'. In spite of this wide wording it is apparent, in my view, that neither clause 1, nor any of the other clauses of the cession, expressly authorises open-cast mining. The converse is equally apparent. Open-cast mining is not expressly excluded by any term of the D cession. Despite arguments to the contrary in the Court a quo (which were considered at 391D - 394D) both parties conceded in this Court - rightly in my view - that neither of them can rely on any tacit term of the cessions which can be said to determine the question of open-cast mining either way. The issue of law that therefore arises turns on the following question: what is the default position in common law where open-cast mining is E not expressly regulated by the grant of mineral rights? The position contended for by the appellant is, broadly stated, that unless it is expressly or tacitly excluded by the grant of mineral rights, the holder is entitled, by virtue of a term implied by law, to conduct open-cast mining when it is reasonably necessary to remove the F minerals, provided that it is done in a manner least injurious to the interests of the surface owner. The respondent's contention, on the other hand, is that unless the grant expressly or tacitly allows open-cast mining, it is excluded by virtue of a term implied by law. In referring to 'implied' and 'tacit' terms of the grant, I, of course, have the distinction in mind that is explained by Corbett AJA G in Alfred McAlpine & Son (Pty) Ltd v Transvaal Provincial Administration1974 (3) SA 506 (A) at 531 - 2. Accordingly, an implied term must be understood as a provision of the grant imposed by law, ie as a reference to a naturalium of the grant. The description 'tacit term', on the other hand, is used to denote unexpressed terms read into the contract that are based on the H unarticulated but nevertheless inferred or imputed intention of the parties.

[6] The factual issues resulted from the appellant's allegations which were built on its contentions regarding the law. In the first place it alleged that the open-cast mining method it intends to employ is reasonably necessary for the effective exploitation of its I right to remove the coal from the property. Its second allegation was that it planned to conduct these operations with due respect for the respondent's rights as the surface owner and that the activities it intended to embark upon would constitute no more than reasonable interference with the farming J

Brand JA

operations on the property. These allegations of fact were denied by the respondent in a number of A material respects. It is apparent, however, that the factual disputes are secondary to the legal dispute, in that they will only require determination if the legal issue is decided in favour of the appellant. I therefore propose to consider the question of law first before I turn to a more detailed account of the facts. B

[7] The appellant's case is essentially based on the following exposition of the law by Malan J in Hudson v Mann and Another1950 (4) SA 485 (T) at 488B - H:

'I have been referred to a number of decisions from which the rights of the holder of mineral rights appear reasonably well defined. Such a holder . . . is entitled to go upon the property, search for C minerals and if he finds any to remove them. In the course of his operations he is entitled to exercise all such subsidiary or ancillary rights, without which he will not be able effectively to carry on his prospecting and/or mining operations.

When the owners are able reasonably to enjoy their respective rights without any clashing of interests no dispute is, as a rule, likely to D arise. The difficulty arises, as has happened in the present case, when the respective claims enter into competition and there is no room for the exercise of the rights of both parties simultaneously.

The principles underlying the decisions appear to be that the grantee of mineral rights may resist interference with a reasonable exercise of those rights either by the grantor or by those who derive title through him. In case of irreconcilable conflict the use of the surface rights E must be subordinated to mineral exploration. The solution of a dispute in such a case appears to me to resolve itself into a determination of a question of fact, viz, whether or not the holder of the mineral rights acts bona fide and reasonably in the course of exercising his rights. He must exercise his rights in a manner least onerous or injurious to the owner of the surface rights, but he is not obliged to forego ordinary and reasonable enjoyment merely because his F operations or activities are detrimental to the interests of the surface owner.'

(See also West Witwatersrand Areas Ltd v Roos1936 AD 62 at 72; Trojan Exploration Co (Pty) Ltd and Another v Rustenburg Platinum Mines Ltd and Others1996 (4) SA 499 (A) at 520C - E.) G

[8] The respondent has no quarrel, in principle, with Malan J's exposition of the essential content of mineral rights. Its contention is, however, that it must be read subject to the surface owner's inherent right to what is described as subjacent or lateral support. The starting point of its argument in support of this contention is the judgment of De Villiers CJ - with Smith H J and Buchanan J concurring - in London and SA Exploration Company v Rouliot (1890 - 1) 8 SC 74. The gravamen of the decision in this case was that a rule, similar in content to the English rule of lateral support, which provides landowners, as an intrinsic element of their ownership, with the right of adjacent I support of their land, should be incorporated into our law. Though this rule never formed part of Roman-Dutch law, De Villiers CJ stated (at 91), our courts may

'(i)n the absence of direct authority . . . be...