Reduced Profits is not Expropriation

The South African Constitutional Court has held that property owner doesn’t have a legal right to value property using a particular method, or to get a specific value when selling the property. In South African Diamond Producers Organisation v Minister of Minerals and Energy the court found that a change to the way a market is regulated isn’t unlawful deprivation of property by the state, and isn’t unconstitutional.

The court was asked to consider the changes to the market practice commonly used by diamond producers when selling diamonds, which is regulated in terms of the Diamonds Act (No 56 of 1986). Previously, diamond producers could use so-called “tender houses”, where non-licenced foreign experts, representing foreign buyers, would assist licenced purchasers with their purchase of parcels of unpolished diamonds.

The Diamond Act was amended to prohibit unlicensed experts from assisting licenced purchasers, effectively outlawing the common business practice used in tender houses. Two constitutional questions were raised against the legal amendments. First, does the prohibition of the market practice result in an unlawful deprivation of property? Secondly, does the prohibition of the market practice infringe on a person’s right to choose a trade?

The court held that the amendments to the Diamonds Act were constitutional; confirming government’s right to regulate markets and change regulations, even when changes decrease the market value that could be realised when selling goods.

*****

On the first constitutional question – unlawful deprivation of property – the South African Diamond Producers Organisation (SADPO) argued that outlawing of the tender house practice deprived diamond producers of the right to receive full market value for their property when selling diamonds because they could now only market to local licence holders. They argued that a key part of the markets price-forming mechanism was being prohibited, leading to a 30% reduction in the market value that diamond producers could realise. This, they argued, was an interference with the right to alienate property at the highest possible price.

The test the Constitutional Court applies a three stage test to determine if there has been an unconstitutional deprivation of property by the state, (i) is the thing being considered “property”; (ii) is there a “deprivation” of that property; and (iii) is the deprivation arbitrary. If all three questions are answered affirmatively, then the deprivation of the property by the state is unlawful.

The Constitutional Court has held in previous cases that property doesn’t need to be physically taken in order for there to be deprivation. To be classified as a deprivation of property there must, however, be some form of substantial interference going beyond normal restrictions that an open and democratic society would place on property.

The court recognised that a diamond producer has a clear constitutional property right in the physical diamonds themselves, but it was not convinced that these property rights were deprived by merely changing the regulations governing the methods that may be used to sell the property.

The producers still had a right to sell their property, albeit now using different methods. Even if a 30% loss in market value could be proved, this isn’t depravation of the producer’s property rights because they could still sell their diamonds and receive full market value. The only effect was in the methods that could be used to sell the diamonds and the market conditions that determine the highest price – the right to sell was not impacted by the legal amendments.

The court held that markets are inherently regulated, and that an owner of property doesn’t have a legal right to value his goods using a particular method, or to obtain a specific value for his goods – there is no protectable interest to conduct a sale using a particular practice.

On the first constitutional question, the court accordingly held that there was no deprivation of property by the state through the amendments to the Diamonds Act that outlawed the business practice used in tender houses.

*****

On the second constitutional question – the infringement of the right to trade – SADPO alleged that that outlawing the tender house practice infringed its members right to conduct their business as they deemed fit, breaching their freedom of trade, and their right to conduct an occupation or profession.

The court held that this constitutional right had two distinct elements.

The first element was if the right to choose a trade, occupation or profession was limited. The court held that the amendments didn’t place any hard legal barrier to choosing a trade. It also considered if the amendments placed an effective limit on the trade by effectively barring the entry to the trade by making the practice of the trade so undesirable or unprofitable. The court held that there was no effective limit either – the producer was still able to get assistance through either a licenced person outside of a diamond exchange and export centre (DEEC), or by an unlicensed person at a DEEC.

The second element was if the regulation of the trade was rational and related to a legitimate governmental purpose. The test for rationality is important; it is not a test of whether the regulation reasonable or effective, or whether the objectives can be achieved in better ways. The court ultimately held that the amendments to the Diamonds Act were rationally connected to the promotion of local beneficiations and the monitoring of the movement of unpolished diamonds.

*****

The accordingly court rejected all suggestions that the outlawing the tender houses were unconstitutional, holding that the reduction of a producers profits resulting from a change in the regulation of a market is not unlawful deprivation of property because no property was in fact deprived, and doesn’t infringe the right to conduct a trade if the regulation has a rational purpose.


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It’s Time to Reappraise Our Concept of Property

For South Africans to make substantial and lasting progress in making the ideals of the Constitution a reality, it’s necessary to recognise past injustice, reappraise the conception of ownership and property, and accept the consequences of constitutional change. These were the words of the Constitutional Court of South Africa in a judgement delivered by Froneman J in case of Daniels v Scribante and Another (2017 ZACC 13).

In this case Mrs Daniels occupied a dwelling on the landowner’s property in terms of the Extension of Security of Tenure Act No 62 of 1997 (ESTA). The landowner accepted that the state of the dwelling was degrading and not fit for a human, but the landowner nonetheless wanted to stop Mrs Daniels from the leveling the floors, paving an outside area, and installing running water, a wash basin, a second window and a ceiling. All the improvements were going to be done by Mrs Daniels at her own cost.

The court had to decide if the landowner could stop Mrs Daniels from making improvements to the dwelling to make it habitable.

The Court’s Main Judgement

The court rejected the landowner’s argument that even though Mrs Daniels had the right to live in the dwelling on their property, she did not have the right to improve the property to make it fit for human habitation. In the courts main judgement Madlanga J said that the landowner placed an overly narrow interpretation the wording of the law, ignoring the laws purpose. He said that the law is about more than just a roof over your head, and that the right to occupy a dwelling can’t be separated from other fundamental human rights, like the right to human dignity. Mrs Daniels right to occupy the dwelling (her security of tenure) includes habitability. Habitability includes the right to make improvements. If there was no right to make the improvements, then the dwellings habitability is removed, destroying an occupier’s security of tenure.

The court also rejected the landowner’s second argument that if Mrs Daniels was allowed to improve the property, then the landowner might be forced to repay these costs if she was ever evicted, in effect meaning that the landowner was being forced to fund the improvements. The landowner argued that this would be a positive obligation, but that the Bill of Rights doesn’t impose a positive duty on a landowner to ensure that an occupier lives in conditions fit for human habitation.

Importantly, the court dismissed this second argument saying that the Bill of Rights can’t be interpreted as never being able to impose positive duties on private persons. ESTA already imposes a positive duty – a duty to accommodate another person on your land. What’s needed is a weighing of all the relevant factors, and the positive nature of the obligation is only one factor considered.

Mrs Daniels’ right to human dignity and security of tenure must be weighed against the potential that a landowner may have to compensate her if she was ever evicted. The court noted that under our common law a landowner already may have to compensate tenants or occupiers on their departure under certain circumstances.

Madlanga J ordered that Mrs Daniels has the right to improve the dwelling after consulting with the landowner regarding the times that her contractors will need access to the farm.

The Court’s Rejection of Property Absolutism

The landowner’s defense was based on the concept of property absolutism, which places the property rights of an owner above all else. In a separate concurring judgement Froneman J said that it is time for South Africans to reappraise the concept of property, and to reject property absolutism.

Froneman J said that this concept arose in Europe at a time when they underwent a real socio-political struggle against feudal oppression. In the European struggle property absolutism played an important role to ensure individual freedom, but just because the concept played an important role in developing western capitalism, it doesn’t mean that the concept should continue to exist under the South African constitutional dispensation.

The concept of property absolutism didn’t play a role in determining the current land distribution in South Africa. On the contrary, land distribution was determined by a series of laws that were calculated to deprive black people of land and to create a population of wage slaves – people who couldn’t be self-sufficient and who would have to depend on employment at white owned farms and mines for survival.

Froneman J dismissed the argument that absolute protection of property rights is necessary because of modern market benefits, pointing out that this argument is an attempt to slow down or frustrate constitutional change. He said that these extra-judicial arguments, based on economic efficiency, hide their theoretical assumptions and then leap to a conclusion that the economy will suffer from any change that upsets the existing protection and distribution of property. He warned against being blind to the limits of market based exchanges.

Froneman J rejected the argument that the protection of existing property is currently needed in South Africa in order to ensure personal and economic freedom.

This judgement doesn’t in itself alter the legal dispensation, but going forward it should be used to re-evaluate the strict concept of property, and the commonly held assumption that the rights of landowners will always trump the rights of other people in our democratic society.

Indeed, it is time to accept the consequences of constitutional change.


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The Effect of Local Zoning Laws when Applying for a Mining Right

When a person is applying for a prospecting or mining right in South Africa, emphasis is placed on ensuring compliance with the provisions of the Mineral and Petroleum Resources Development Act, No 28 of 2002 (MPRDA) and other applicable national legislation that regulates environmental management.

An area of legal compliance that is sometimes overlooked is the need to comply with provincial and local land use and zoning restrictions. These can prevent mining operations even if a mining right has been granted in terms of the MPRDA. If there is a town planning ordinance that restricts the right to mine unless the land is appropriately zoned for mining, then the holder of a mining right or permit must get land use planning authorisation before starting with operations.

The failure to consider land zoning could therefore have dire consequences on a project.

To understand the interaction of national, provincial and local legislation in South Africa, some background on the different spheres of government is useful.

The Interaction between National, Provincial and Local Legislation

In South Africa the power to pass laws is divided into three government spheres – national, provincial and local (section 43 of the Constitution). Each sphere is allowed to pass legislation governing the areas that it exercises control over. The control might be exclusive or concurrent control that is exercised jointly.

The national legislature has the power to pass laws that govern any matter as long as the matter is not in the exclusive control of the provincial government (section 44(1)(a) of the Constitution). The provincial government has more limited powers – it exercises concurrent power with the national legislature in some areas, but it also has exclusive powers in other areas (section 44(1)(b) of the Constitution).

Areas of concurrent national and provincial competence include the administration of indigenous forests, the environment, regional planning and development, and urban and rural development (schedule 4 of the Constitution). The areas where the provincial government exercises exclusive legislative competence, and where the national legislature has no power to govern, include provincial planning, and provincial roads and traffic regulation (schedule 5 of the Constitution). A full list of the different functional areas is included at the end of this note.

When applying national and provincial legislation you have to ask, if an activity is permitted by national legislation can that activity then be restricted by provincial legislation or local by-laws? In the context of mining, if a person is permitted to mine in terms of the MPRDA, which is national legislation applicable throughout the entire Republic, can they then be prevented from mining if provincial legislation places additional requirements that must be met before starting with the mining activities?

A Conflict between Land Use and Zoning Restrictions, and the Right to Mine

The question whether local land use and zoning restrictions can restrict a person’s right to mine in terms of a mining permit was considered in 2012 by the South African Constitutional Court in the Maccsand case (CCT 103/11 [2012] ZACC 7).

Maccsand was granted two mining permits. One to mine the “Rocklands dunes” in a residential area zoned as public open space, and the second to mine the “Westridge dunes”, also in a residential area but situated on three erven zoned as public open space and rural areas. The City of Cape Town brought legal action against Maccsand to stop all mining activities on the dunes until the land was rezoned to allow for mining.

The legal action to stop the mining activities was brought because Maccsand had not complied with the provincial Land Use Planning Ordinance 15 of 1985 (LUPO), which prohibits the use of land for purposes that are not permitted in the zoning scheme or regulations. LUPO provides that if a person wants to undertake mining activities, these activities can only be undertaken if the land zoning scheme permits it or if a departure is granted.

It was argued in support of Maccsand that a right to mine can’t be limited by local land use and zoning restrictions because the regulation of mining fell in the national sphere of government. It was argued that the permit granted in terms of the national legislation authorising mining could not be limited by local land use and zoning restrictions because the limitation would be an intrusion by the local sphere of government into an area falling in the national sphere.

The court recognised that there is a natural overlap between land use and mining because mining will always take place on land, but stated that overlaps in the competencies of national and local government may be permitted. LUPO governs the use of all land in the Western Cape Province, which is a function of the local sphere of government in terms of the Constitution – it doesn’t regulate mining.

Because of the overlap of competencies between the MPRDA and LUPO, the granting of a mining right doesn’t automatically exclude the application of LUPO, and it doesn’t mean that the MPRDA trumps the provisions of LUPO – indeed the MPRDA itself states clearly that a mining right is subject to any other applicable law, such as LUPO (section 23(6) of the MPRDA).

The court found against Maccsand, holding that there is no conflict between the MPRDA and LUPO, and that it is permissible under the Constitution if mining can’t take place in terms of the MPRDA until the land is rezoned in terms of applicable land use and zoning restrictions.

The Need to Assess Restrictions According to the Operations Location and Time of Commencement

The Maccsand case dealt with a provincial ordinance enacted by the Provincial Counsel of the former Cape of Good Hope, but it illustrates an important legal principle applicable in all of South Africa’s provinces – the right to conduct mining activities in terms of the MPRDA can be restricted by provincial and local land use and zoning restrictions.

The different provinces in South Africa have different land use and zoning restrictions. This means that a mining right holder must look at the provincial legislation applicable in the province where operations are intended in order to determine if there are provincial restrictions restrict mining operations. If so, then it is necessary to determine what approvals are needed from the local authority before starting operations.

Over and above determining if there are land use and zoning restrictions, it is also necessary to determine what provincial legislation that was applicable at the time that operations commenced because the present legislation might not always be applicable.

This was illustrated in the Mtunzini Conservancy v Tronox KZN Sands (Pty) Ltd case (Mtunzini Conservancy v Tronox KZN Sands (Pty) Ltd and another [2013] 2 All SA 69 (KZD)). The facts of this case were strikingly similar to the Maccsand case, but the court distinguished the two cases and held that in the Mtunzini Conservancy case the current provincial legislation could not be used to prevent Tronox from continuing with its mining operations.

In 1988 Tronox was granted a single right to mine mineralised sand dunes over two discontinuous areas of land, referred to as the Hillendale and Fairbreeze properties. When the right was granted in terms of the old Minerals Act, No 50 of 1991, Tronox planned to mine the Hillendale property first and then later mine the Fairbreeze property. This was reflected in the company’s mining authorisations.

In 2012 when the company started to plan its mining activities on the Fairbreeze property the Mtunzini Conservancy objected, and brought legal action against Tronox to stop all mining activities on the dunes. The Mtunzini Conservancy relied directly on the Maccsand case and argued that Tronox couldn’t start with any construction activities on the Fairbreeze property until it was granted development approval in terms of the provincial KwaZulu-Natal Planning and Development Act No. 6 of 2008 (the PDA).

The court distinguished the Mtunzini Conservancy case from the Maccsand case based on when the mining operations started and the applicable provincial legislation that was applicable at the relevant time. When the company started with its mining operations in the Maccsand case, unauthorised mining was already prohibited by the provincial legislation (LUPO). This was not the case in the Mtunzini Conservancy case.

In the Mtunzini Conservancy case, when the company started its mining operations in 1988 there was no provincial legislation in place that restricted the intended operations without requiring additional provincial authorisations – the restriction that were being relied on by the Mtunzini Conservancy were only introduced after Tronox had already started its mining operations.

The court held that the application of PDA is not retrospective, and the law that was applicable when the right to mine was granted in 1988 continued to apply. When Tronox was granted the right to mine the Fairbreeze property in 1988 it had complied with all legislation and had been granted all of the necessary authorisations in terms of the then applicable legislation. The court accordingly held that the KwaZulu-Natal Planning and Development Act did not restrict mining operations that had commenced before the act became effective, and that the company’s right to mine the Fairbreeze property is not restricted by the provisions of the PDA which came into effect after the start of the mining operations.

An Approach When Considering Local Land Use and Zoning Restrictions

The following approach has been suggested when considering zoning restrictions:

  • is there a town planning scheme promulgated over the land;
  • if so, has the land been zoned for a particular use;
  • if so, does the zoning permit mining;
  • if not, does the town planning scheme have a general exemption for mining;
  • if not, does the town planning scheme make provision for existing land uses, and is the mining activities covered by these provisions;
  • if not, could it be argued that the town planning scheme legally invalid (Dale et al South African Mineral and Petroleum Law Issue 17 app-248).

If the outcome of this line of questioning shows that mining activities on the intended land are restricted, then the holder of a right will have to ensure that the land is rezoned to permit mining before any mining activities take place on the property.

Don’t Overlook Local Zoning Laws

Because provincial and local land use and zoning restrictions can prevent mining operations, it is important to consider these early in project planning process in order to ensure that prospecting and mining operations are not halted before they have even had the chance to start.


Provincial Legislation to Consider

I have included a list of provincial legislation that might become applicable below for the sake of completeness.

Eastern Cape

  • Land Use Planning Ordinance 15 of 1985 (of the former Cape Province);
  • Ciskei Land Use Regulation Act 15 of 1987.

Northern Cape

  • Northern Cape Town Planning and Development Act 7 of 1998;
  • Spatial Planning and Land Use Management Act 16 of 2013.

Western Cape

  • Land Use Planning Ordinance 1985 (Western Cape);
  • Western Cape Land Use Planning Act 3 of 2014.

Free State

  • Township Ordinance 9 of 1969 (as amended by the Township Ordinance Amendment Act 10 of 1998).

Gauteng

  • Gauteng Planning and Development Act 3 of 2003;
  • Town Planning and Townships Ordinance 15 of 1986 (Transvaal);
  • Division of Land Ordinance 20 of 1986;
  • Transvaal Board for the Development of Peri-Urban Areas Ordinance 20 of 1943.

KwaZulu Natal

  • KwaZulu-Natal Planning and Development Act 6 of 2008;
  • KwaZulu Land Affairs Act 11 of 1992;
  • KwaZulu Ingonyama Trust Act 3 of 1994;
  • KwaZulu Amakhosi and Iziphakonyiswa Act 9 of 1990.

Limpopo

  • Town Planning and Townships Ordinance 15 of 1986 (Transvaal);
  • Transvaal Board for the Development of Peri-Urban Areas Ordinance 20 of 1943;
  • Venda Proclomation 45 of 1990.

Mpumalanga

  • Town Planning and Townships Ordinance 15 of 1986 (Transvaal);
  • KwaNdebele Town Planning Act 10 of 1992.

North West

  • Town Planning and Townships Ordinance 15 of 1985 (Transvaal);
  • Town Planning and Townships Ordinance 15 of 1986 (Transvaal);
  • Transvaal Board for the Development of Peri-Urban Areas Ordinance 20 of 1943;
  • Bophuthatswana Land Control Act 39 of 1979

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When the Minister of Mineral Resources Ignores You

If a commercial transaction is concluded with a person that holds a right issued by the Department of Mineral Resources (“the department”) care must be exercised to ensure that the required regulatory approvals needed for the implementation of the transaction has been granted.

Examples of commercial transactions that need ministerial approval in terms of the Mineral and Petroleum Resources Development Act No 28 of 2002 (MPRDA) before they can be implemented include agreements that would result in:

  • a transfer a prospecting right or mining right, for example a sale, cession or donation of the right;
  • a transfer any interest in prospecting right or mining right, for example the transfer of an undivided share in a right; and
  • a transfer a controlling interest in a company holds a prospecting right or mining right, for example a sale of shares agreement or an issue and allotment of new shares resulting in a change of control (section 11(1) of the MPRDA).

To get consent to implement these transactions a formal application must be submitted to the department. Unfortunately, the legislation does not provide any maximum time limits that are applicable when considering the application. In most cases an application submitted to the department is approved without too much delay, but in some cases months, if not years, may pass without the application for consent being considered.

Delays in the approval process can have drastic consequences on commercial transactions because without the required consent they can’t become effective and can’t be implemented by the parties.

What can a person do if there is a significant delay in the approval process after the application for ministerial consent has been submitted?

The most common answer is for a person to bring an application to court, and ask the court to grant an order forcing the department to perform its duty. This court relief is referred to as a mandatory interdict, or a mandamus.

In many situations this relief would be a sufficient; the matter is referred back to the department for consideration within a court specified time line.

The purpose of this article is, however, to explore alternate legal remedies that could be used if there is a significant delay in the approval process. Particularly:

  • Can a person bring a court application for a court order granting an application that was submitted in terms of the MPRDA, without the need to refer the matter back to the minister for consideration?

The General Right to Just Administrative Action

Any action taken by an organ of state must be (i) lawful; (ii) reasonable; and (iii) procedurally fair. If an action does not meet with these requirements a person who has been affected by the action has the right to approach a court to “review” the infringing action, and ask the court for appropriate relief.

This right of judicial review stems from the Constitution of the Republic of South Africa 1996 (the Constitution), and is given effect by the Promotion of Administrative Justice Act 3 of 2000 (PAJA) (in particular see section 33 of the Constitution).

Both actions and inactions of the government can be reviewed by a court. This is because an “administrative action” is defined to include any decision taken, or the failure or refusal to take a decision, by an organ of state when exercising a public power or performing a public function in terms of legislation (the definition of “administrative action” as read with the definition of “failure” contained in section 1).

A court has wide powers when reviewing an administrative decision (see section 8 of PAJA). In cases where the government’s administrative action amounts to the failure or refusal to take a decision, then the court may grant any order that it just and equitable, including an order:

  • directing the taking of a decision; or
  • declaring the rights of the parties in relation to the taking of a decision.

Accordingly, if the minister fails to consider an application that has been submitted by a person in terms of the MPRDA, the ministers inaction will be “an administrative action”, and falls within the ambit of PAJA. Under these circumstances a person should be able to approach the court for appropriate relief.

The right to approach a court directly for relief in terms of PAJA is, however, curtailed if the applicable legislation, such as the MPRDA, contains an internal appeal procedure (section 6(2)(g) and 7(2)(a) of PAJA).

Court Action Versus the Department’s Internal Appeal Process

A person’s right to approach the court to review an administrative decision in terms of PAJA is not unlimited. A person can’t approach a court until any internal appeal process in the applicable law, such as the MPRDA, has been exhausted (section 7(2)(a) of PAJA).

It is intended that a person’s first port of call should be the legislated internal appeal procedure. A person can only approach a court if the applicable act doesn’t have an appeal procedure, or after the appeal procedure has been followed.

Exceptions to this rule do, however, exist, and a person is entitled to approach the court directly without first exhausting the internal appeal procedure is there are “exceptional circumstances” (section 7(2)(c) of PAJA).

To phrase these requirements differently, a court can be approached to review an administrative action if:

  • an internal appeal was submitted but it was unsuccessful (section 7(2)(a) of PAJA); or
  • the particular law has no internal appeal procedure that is applicable; or
  • the particular law has an internal appeal procedure, but there are exceptional circumstances that are applicable, the court exempts the applicant from having to follow the internal appeal procedure (section 7(2)(c) of PAJA).

What is the correct legal process if the minister fails to consider an application that has been submitted by a person in terms of the MPRDA?

This will depend on whether the MPRDA contains an internal remedy that can be relied on when the minister fails to take any action.

Can the MPRDA’s Internal Appeal Procedure be used when the Minister Fails to Take a Decision?

Is there an internal appeal in situations where the minister fails to take a decision, or does the internal appeal procedure in the MPRDA only apply to decisions that have actually been taken? Is it correct to argue that the internal appeal procedure must be followed in a situation where the minister fails to make a decision in terms of the MPRDA?

If the internal appeal procedure doesn’t apply to a failure to take a decision then there will be no requirement to institute an internal appeal. In these circumstances a person will be entitled to approach the court immediately without having to prove that there are exceptional circumstances that allow the court to exempt the person from the internal appeal requirements.

In order to answer this question the internal appeal procedure that is set out in the MPRDA must be examined.

The Internal Appeal Procedure in terms of the Mineral and Petroleum Resources Development Act

The MPRDA has an internal appeal process that can be relied on in some circumstances (section 96). This internal appeal process can be summarised as follows:

  • A person is prohibited from applying to court for the review of an “administrative decision” of the department until they have exhausted the remedies set out in the MPRDA (section 96(3)).
  • A person whose rights or legitimate expectations have been materially and adversely affected, or who is aggrieved by any “administrative decision”, may appeal within 30 days of becoming aware of such administrative decision (section 96(1)), setting out:
    • the actions appealed against; and
    • the grounds on which the appeal is based (regulation 74(2)).
  • A copy of the appeal will be dispatched by the department to:
    • the person in the department responsible for the administrative decision, who must then within 21 days submit written reasons for the administrative decision appealed against (regulations 74(5)(a) and 74(6)); and
    • any other person, whose rights may be affected by the outcome of the appeal, who must then within 21 days submit a replying submission indicating the extent and nature of his or her rights, and how they will be affected by the appeal (regulations 74(5)(a) and 74(7)).
  • The department will then dispatch the written reasons and any replying submissions that it received to the appellant, and the appellant is then afforded 21 days to reply to these reasons and submissions (regulation 74(8)).
  • Within 30 days from the receipt of the appellant’s response, the minister or director-general must either:
    • confirm the administrative decision concerned;
    • set aside the administrative decision concerned;
    • amend the administrative decision concerned; or
    • substitute any other administrative decision for the administrative decision concerned (regulation 74(9).
  • The lodging of an appeal does not suspend the administrative decision, unless it is suspended by the director-general or the minister (section 96(2)(a)).

Does this Procedure Apply when the Minister Fails to Take a Decision?

As discussed, a person does not have the right to approach a court to review any administrative action unless any internal appeal procedure in the MPRDA has been exhausted or unless there are exceptional circumstances that allow the court to exempt the person from the internal appeal requirements.

The MPRDA does have an internal appeal process (section 96), but does the MPRDA’s internal appeal procedure apply in situations where the minister fails to take a decision?

An “administrative action” is defined in PAJA to include the failure to take a decision, but the MPRDA’s appeal procedure doesn’t use this term. The MPRDA’s internal appeal procedure states that it applies to “administrative decisions”, a term that is not defined.

The wording and context of the internal appeal procedure supports a conclusion that the term “administrative decision” can only relate to decisions that have actually been taken, and doesn’t apply to a failure to take a decision:

  • The MPRDA requires that any “decision taken” must be taken within a reasonable time, must be in writing, and must be accompanied by written reasons for the decision (sections 6(1) and (2)). In a situation where the minister has failed to consider an application there will be no “decision” taken. This non-decision is not capable of being reduced to writing, and similarly it will not be possible to give any reasons for the non-decision.
  • An internal appeal must be lodged within 30 days of becoming aware of the administrative decision (section 96(1)). It is impossible to comply with this requirement if no positive action is taken, especially when the MPRDA does not prescribe a fixed duration during which the decision must be taken. If the minister has an indeterminable amount of time to consider the application, when must this 30 day period be calculated from?
  • The internal appeal procedure is worded to apply to an administrative decision that “was taken” (section 96(1)(b)). The language of the section clearly implies that there must have been some form of act by the minister, not just a failure to take a decision.
  • The internal appeal procedure does not automatically suspend the decision that is appeal against (section 96(2)(a)). In a situation where there has been no decision at all, this provision can’t be applied because there is nothing to suspend.
  • As part of the internal appeal procedure, a person must be provided with written reason by the person who took the decision that is appealed against (regulations 74(5) and 74(6)). In a case where no decision has been taken at all, it is not possible for the department to comply with the regulation and give “written reasons for the administrative decision”.

The conclusion that the term “administrative decision” can only relate to decisions that have actually been taken, and not to a failure to take a decision, can also be demonstrated by considering what the final appeal procedure could be if the term “administrative decision” did include the failure to take an action.

  • What would the legal situation then be if the minister either failed or refused to consider the appeal in the required time lines?
  • An internal appeal would be submitted, and it would request that the minister either (i) amends the department’s failure to take a decision; or (ii) substitutes the failure to take a decision with a positive decision to grant the application (regulations 74(9)(c) and (d)).
  • What would the legal situation then be if the minister ignored an application that was submitted an internal appeal would have to be lodged with the department against this failure to take a decision.
    • Would this failure to consider the appeal fall also under the definition of an “administrative decision” in terms of the MPRDA? Would a person be prevented from applying to a court to review the failure to consider the appeal until the internal remedies in the MPRDA have been exhausted, requiring the appellant to lodge a second internal appeal against the ministers failure to determine the first appeal (section 96(3))?
    • Must the person now bring an application to court, and ask the court to grant an order forcing the minister to perform their duty and determine the first appeal (ie a mandamus)? If so, then the person has now expended considerable time and resources to bring a court action just to place it in the same position where it was immediately after lodging the appeal, namely its appeal has been lodged and the minister is now compelled (in terms of the court order this time) to comply with the required time lines.
  • When the minister considers the appeal, the minister may decide that the appeal fails, and to substitute the failure to take a decision with a decision to refuse the application.
    • In this case the person will then have to lodge an internal appeal against the ministers decision to refuse the application.
    • Once the internal appeal procedure has been exhausted, the applicant would then only be entitled to approach a court to review the administrative action.

This process is a far cry away from that an internal appeal process should achieve; a quick and cost effective method to resolve irregularities before instituting legal action.

I would submit that the term “administrative decision” in terms of the MPRDA has a narrower definition than “administrative action” under PAJA, and that this term should not be interpreted to include situations where there has been a failure to take a decision, but only to include situations where a decision has indeed been taken which is prejudicial.

The Alternative: Reliance on Exceptional Circumstances to Bypass an Internal Appeal Process

Even if the above argument is rejected, PAJA allows a person to bypass any applicable internal appeal process if there are exceptional circumstances that would allow the court to exempt the non-compliance with the internal appeal procedure (section 7(2)(c)).

It would be prudent for any person who wants to bring a court action without first lodging an internal appeal to ask the court to grant an exemption from having to lodge in internal appeal, as an alternative to the argument that there is no internal appeal.

The “exceptional circumstances” that are typically accepted by the courts when granting an exemption from complying with internal appeal procedures are discussed in the next section.

Appropriate Legal Action and Possible Relief

If the minister ignores an application that has been submitted and does not consider it at all, an affected person will be able to approach the court in terms of PAJA directly without first exhausting the internal appeal procedure because the internal appeal procedure will not be applicable in these circumstances. As an alternative, an affected person can ask the court for an exemption from the internal appeal process if there are exceptional circumstances that are applicable.

An affected person can approach the court as soon as there has been an unreasonable delay in taking a decision (sections 6(2)(g) and 6(3)(a) of PAJA). It is possible to ask the court to grant any order that it just and equitable (section 8(2) of PAJA), including an order:

  • substituting or varying an administrative action (section 8(1)(c)(ii)(aa));
  • directing the taking of a decision (section 8(2)(a)); or
  • declaring the rights of the affected person (section 8(2)(b). (It might be noted that the legal action listed has relief in terms of both sections 8(1) and 8(2) of PAJA, even though the failure to take an administrative action falls in the ambit of section 8(2). I submit that the wording of section 8(2), permitting the grant of any order that is just and equitable, would not preclude the court from substituting its decision where the minister has failed to act. See the discussion by C Hoexter (Hoexter, C. 2012. Administrative Law in South Africa. Cape Town: Juta, at pg. 557) for further argument in support of this submission).

There has been a lot of recent discussion about the legal doctrine of the separation of powers; how the courts (judiciary) should not overstep its role and perform acts that fall into the realm that should be occupied ministers (the executive). PAJA does, however, directly empower the court to come to the aid of a person when the executive acts unlawfully, and allows the court to effectively make a decision on behalf of the minister when the minister fails to take a decision in a reasonable time (see sections 8(1)(c)(ii)(aa) and 8(2)(a) of PAJA; de Ville, JR. 2003. Judicial Review of Administrative Action in South Africa. Durban: LexisNexis Butterworths, at pg. 370; Hoexter, C. 2012. Administrative Law in South Africa. Cape Town: Juta, at pg. 552).

There are four situations where a court will be prepared to substitute its decision with the decision of the minister, without referring the matter back to the minister for decision. These are:

  • when the end result is a forgone conclusion;
  • when any further delay will cause unjustifiable prejudice;
  • when the original decision maker has exhibited bias or incompetence; or
  • where the court is as well qualified as the original authority to make the decision (Hoexter, 2012, pgs. 552 – 557).

For many applications the MPRDA doesn’t allow the minister to use any discretion when considering the application. The power granted to the minister is not a discretionary power; the minister must grant consent if the requirements for transfer are complied with. If the requirements are met the result is a forgone conclusion; the minister must grant the application.

Applications where the minister is compelled to grant a compliant application include applications for consent to transfer a right (section 11(2)), applications for prospecting rights (section 17(1)) and applications for mining rights (section 23(1)).

For these categories of applications it can be argued that, (i) the court is as qualified as the minister to make the decision, and (ii) that the end result of the application is a foregone conclusion. Once the court has had the opportunity to review and consider the application that was submitted, the court will be as well qualified as the minister to determine if the application placed before it meets the objective criteria the applicable section, and grant the application if all the requirements are met.

In addition to meeting these two requirements for substitution of a decision by the court, a person may also be able to advance reasons to show the court that further delay will cause unjustifiable prejudice.

Based on these considerations I submit that a person would be entitled to approach a court for direct relief and ask the court to substitute its decision with the minister’s decision.

Conclusion (Too Long; Didn’t Read)

What should be done if an application has been submitted to the Department of Mineral Resources, and the department has failed to take any action or consider the application?

  • If time is not of the essence in the underlying commercial transaction, a court application can be brought asking for an order to force the department to perform its duty. The matter would then be referred back to the department for consideration within a court specified time line.
  • If time is of the essence, a person can approach a court for direct relief and ask the court to grant the application, effectively substituting its decision with the minister’s decision. In order to be successful it must be argued that:
    • the MPRDA’s internal appeal process does not apply to situations where the minister fails to take a decision, alternatively that there are exceptional circumstances that would allow the court to exempt the non-compliance with the internal appeal procedure; and
    • the end result is a forgone conclusion; or
    • when any further delay will cause unjustifiable prejudice; or
    • when the original decision maker has exhibited bias or incompetence; or
    • where the court is as well qualified as the original authority to make the decision.

This work by Clinton Pavlovic is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Overview of the South African Protection of Information Bill

The methods used to collect and store information and data have evolved over time.

In the past personal information was collected primarily through direct means by companies that people did business with. The collected information would be stored to enable the company to provide a service to the customer and to bill the customer after service delivery. The high cost of storing information typically meant that a company would only store information that was strictly necessary for these purposes and that the information would be stored for a limited time once it was no longer needed.

In the last two decades new technologies, including the internet and mobile devices, have dramatically changed the way in which people interact with each other and with companies, leading to an increase of the number of ways which companies can collect personal information about data subjects; a cell phone application which has access to your precise GPS coordinates, phone book and text messages; an internet website tracking its visitors; an in-store loyalty card which tracks shopping habits; an internet search engine which logs and stores each of your search queries; a social network application for your tablet computer which redirects your personal and business email to its own servers.

In many cases people are either unaware that data collection is happening or are unaware of the scope of the data collection. The falling cost to store information electronically now means that this personal information which is collected can be stored for longer periods of time, perhaps indefinitely.

Once this personal information has been collected, which could include individual’s names, gender, phone numbers, home address, email addresses, or shopping and internet browsing habits, the question has often been whether this information still belongs to the private individual or whether the information now belongs the company collecting the information? What can a company use the collected information for after collection?

In South Africa a person’s right to privacy has been entrenched in section 14 of the South African Constitution 1996, which provides that “[e]veryone has the right to privacy”, before going further to cater for specific circumstances. The South African Protection of Personal Information Bill, or POPI, which may become law soon takes further steps to entrench the right to privacy and to protect personal information which is collected and stored.

The Protection of Personal Information Bill draws on years of research and contains many broad principles which were developed and incorporated into the European Union’s Data Protection Rules. It seeks to introduce measures to ensure that personal information is protected, but aims to balance this objective against the right to access to information and the principle of free flow of information.

The bill accomplishes its objectives by codifying the rights that persons have in their own personal information and specifying eight conditions, or principles, that must be complied with by persons when collecting, storing and processing the personal information.

The Protection of Personal Information Bill may have far reaching consequences on some businesses operating in South Africa. Businesses should evaluate the information which is currently being collected to determine whether the bill will apply to the activities of the business. If the bill does apply a business will have to evaluate and determine what technical and organisational measures need to be taken to ensure that the legislation can be complied with once it is enacted.

Application of the Protection of Personal Information Bill

In terms of section 3, the Protection of Personal Information Bill applies to any activity concerning personal information which is either conducted in South Africa, or which is conducted outside South Africa by a responsible party which is domiciled (a resident) in South Africa.

The bill binds both public and private bodies, extending to any South African state department or administration, state functionary, state institution, private companies, private partnerships, sole proprietors and any other individual.

The activities relating to personal information which are regulated in terms of the bill include:

  • collection;
  • receipt;
  • recording;
  • storage;
  • retrieval;
  • dissemination; and
  • use.

The definition given to “personal information” ensures that the legislation will have a wide application.

Personal information is defined as any information relating to an identifiable, living natural person or existing juristic person, including a person’s:

  • name;
  • gender;
  • sexual orientation;
  • religion;
  • education;
  • identifying number;
  • e-mail address;
  • telephone number
  • personal opinions; and
  • correspondence.

There are, however, some exclusions, such as the exclusion of data relating to a purely personal or household activity, data which has been de-identified and data collected by a public body involving national security and the investigation or proof of criminal offences.

Rights Granted in Terms of the Protection of Personal Information Bill

The section 5 of the Protection of Personal Information Bill briefly sets out the rights granted in terms of the bill which are elaborated and expanded on in further chapters. The rights granted in terms of the bill include:

  • the right to be notified that personal information is being collected;
  • the right to be notified if there has been any security compromises and if personal information has been unlawfully accessed;
  • the right to establish if a person or entity holds any personal information and if so request access to the personal information;
  • the right to know the identity of third parties who have had access to the personal information;
  • the right to request the correction, destruction or deletion of personal information;
  • the right to object to the processing of personal information;
  • the right to submit a complaint to the Information Regulator, which is to be established in terms of the bill; and
  • the right to institute civil law suits to claim damages suffered as a result of a contravention of the bill.

Conditions for the Lawful Processing of Personal Information

Chapter 3 of the Protection of Personal Information Bill sets out eight conditions, or principles, which must be complied with when processing personal information.

Failure to comply with these conditions when collecting and processing information protected by the bill would constitute an interference with the rights of the individual in terms of section 73 and may result in civil liability in terms of section 93 for damages suffered by the individual.

Contravention of other chapters of the bill can also result in administrative penalties or a criminal conviction punishable by fines or imprisonment of up to ten years for some offences.

These conditions for the lawful processing of personal information are:

Condition 1: Accountability

The first condition provides that the responsible party, namely the public or private body which determines the purposes and means for processing personal information, must ensure that personal information is processed lawfully and that the conditions are complied with at the time when the purposes and means of data processing is determined and during the processing itself.

Condition 2: Processing Limitation

The second condition sets limits on the methods which may be used when collecting personal information and on the scope of processing the information. Focus is placed on the protection of privacy and prevention of excessive collection and processing.

This condition provides that personal information may generally only be collected directly from the individual and not from other third party sources.

It also provides that personal information may only be collected and processed if:

  • the individual has consented;
  • it is necessary to perform in terms of a contract concluded directly with the individual;
  • it protects a legitimate interest of the individual or the person collecting or processing the information; or
  • it is necessary for the proper performance of a public law duty by a public body.

Data subjects are also granted the right to object to the collection and processing of personal information, including the specific right to object to direct marketing from companies which they are not already an existing customer of.

Condition 3: Purpose Specification

The third condition sets limits on the reasons for the collection of personal information and limits the duration that the records may be retained.

This condition specifies that personal information may only be collected for specific and explicitly defined purposes and that data subjects must be informed of the purpose for collecting the information.

Once the personal information has been collected it may not be retained any longer than what is necessary for achieving the defined purpose. After the personal information is no longer required it must be either destroyed or “de-identified” in a manner which would make identification of the individual impossible either on its own or if combined with other information.

Condition 4: Further Processing Limitation

The fourth condition limits the use of personal information once collected, providing that all processing must only be in accordance with, or compatible with, the purpose for which the information was originally collected.

Condition 5: Information Quality

The fifth condition ensures that reasonable steps must be taken by the responsible person to ensure that all personal information which is collected or processed is complete, accurate, not misleading and updated where necessary.

Condition 6: Openness

The sixth condition ensures openness of records relating to the processing of personal information by requiring responsible persons who collect and process personal information to retain records of the processing operations in terms of the Promotion of Access to Information Act.

This condition also requires that data subjects are notified of their rights in terms of the bill. Steps must be taken before the actual collection of personal information to ensure that an individual is aware of:

  • what information is being collected;
  • the name and address of the responsible party collecting or processing the information;
  • the purpose of collecting the information;
  • the consequences of not providing access to the personal information; and
  • if the information is to be transferred to another country, the level of protection afforded to the information in that country.

Condition 7: Security Safeguards

The seventh condition introduces safeguards to protect the integrity and confidentiality of personal information once it has been collected.

In terms of this condition any person collecting or processing personal information must take appropriate and reasonable technical and organisational measures to ensure that personal information is not lost, damaged or unlawfully accessed or processed. This requires the responsible party to take measures to identify internal and external risks, establish and maintain safeguards and continually update procedures and safeguards in response to new risks or deficiencies.

Data subjects must also be informed of any security breaches as soon as reasonably possible.

Condition 8: Data Subject Participation

The final condition applicable to the lawful processing of personal information provides data subjects with the right to participate in the collection and processing of their personal information.

This condition provides data subjects with the right to:

  • request whether or not a person is in possession of personal information belonging to the data subject;
  • request a record of the personal information held;
  • request information regarding all third parties who have had access to the personal information;
  • request the correction or deletion of inaccurate personal information; and
  • request the deletion or destruction of personal information.

This work by Clinton Pavlovic is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.