More incarceration will not make us safer, a new report by the Vera Institute of Justice concludes, because increased incarceration rates have no demonstrated effect on violent crime and in some instances may increase crime.
The Prison Paradox summarizes research about the relationship between incarceration rates and crime rates, finding that since 2000, the increased use of jails and prisons accounted for nearly zero percent of the overall reduction in crime…
Incarceration is not only “an expensive way to achieve less public safety,” but it may actually increase crime by breaking down the social and family bonds that guide individuals away from crime, removing adults who would otherwise nurture children, depriving communities of income, reducing future income potential, and engendering a deep resentment toward the legal system…
The report concludes that “policymakers can reduce crime without continuing to increase the social, cultural, and political costs of mass incarceration by investing in more effective and efficient crime reduction strategies that seek to engage the community, provide needed services to those who are criminally involved, and begin to address the underlying causes of crime.”Equal Justice Initiative
In the Royal Bafokeng Nation “a king is a king by virtue of the people” (Kgosi ke Kgosi ka Morafe). This was endorsed by the South African High Court in a decision extending the principle of direct democracy in the Royal Bafokeng Nation’s (RBN) customary law.
The court had to decide if the RBN could institute significant legal proceedings without consulting the community. These proceedings were of great public concern because it would impact the registration of community land, and impact a long running community dispute regarding the rightful ownership of property.
After analysing RBN’s customary practices, and considering the contentious nature of the legal matter, the court held that the Supreme Council of the RBN couldn’t unilaterally decide to institute litigation of this magnitude – there was a legal duty to consult widely with the community beforehand.
Because there was no wide consultation with the community, the court found that the RBN had no authority to institute the legal proceedings, and that RBN’s attorneys had no authority to act in the legal proceedings.
The nature of the legal dispute
The Minister of Land Affairs was reflected as the registered owner who held over 60 properties “in trust for” the Royal Bafokeng Nation. The RBN disputed the existence of any trust or trust relationship between the Minister and the RBN, and asked the court to declare the RBN as the owner of these properties, and to direct the Registrar of Deeds to register the properties its name.
The Bafokeng Land Buyer Association (the Association) is a group of RBN community members who claim that they are the rightful owners of some of the properties because these properties were originally bought by their ancestors. The Association intervened in RBN’s case as an interested party.
Consultation structures in the Royal Bafokeng Nation
The Royal Bafokeng Nation is a traditional community of approximately 300,000 people, recognised in terms of the Traditional Leadership and Governance Framework Act, No 41 of 2003. The RBN has three levels in its governance structure.
The Supreme Council (L1) is the upper most structure. It is a joint sitting of the RBN’s executive council and the Council of Dikgosana (L3). The Supreme Council meets four times a year, and has historically taken important decisions relating to the community. It ultimately takes few decisions, however, and serves chiefly as a forum for discussion and information sharing.
The Kgotha Kgothe (L2) is a broader community level. It is a general meeting of all of the community members. The Kgotha Kgothe meets two times a year. It is generally not a decision making body, but it serves as a forum for the RBN administration to report back to community members, and for community members to raise matters for discussion. All important matters go before the Kgotha Kgothe (L2) for debate and input, and the members at the meeting can overturn any decision.
The Makgotla (L3) operates at a local level. The community has 29 villages divided into 72 Dikgoro (wards). Each Dikgoro (ward) is led by a hereditary Dikgosana, and meets monthly in its local Kgotla. The Dikgosana also sit as part of the Supreme Council (L1). Community members may ask their Dikgosana to take any local matter up to the Supreme Council (L1). The monthly Kgotla (L3) meetings play a vital governance role, and all disputes are mediated and resolved at this level.
In this structure democracy works from the bottom upwards. The members of the community participate directly in the Makgotla (L3) and the Kgotha Kgothe (L2). They are also represented by their Dikgosana (L2) at the meetings of the Supreme Council (L1).
The Associations legal challenge to the Supreme Council’s decision
During September 2005 the Royal Bafokeng Nation’s Supreme Council passed a resolution authorising the institution of legal proceedings. The Association directly challenged this resolution because the Supreme Council “does not have the power to make a decision of this sort, at least not alone. Insofar as the Council does have decision-making powers on such matters, it has to consult very broadly within the traditional community before doing so, and act on the community’s wishes”.
It was common cause that the resolution was passed by the Supreme Council without any discussion within the Makgotla (L3) or Kgotha Kgothe (L2). There was also no report back to the community after the resolution was passed.
The court accordingly had to determine if the Supreme Council had a legal obligation to consult broadly with the community before taking this decision.
The court analysed the decision making structures, the values publically pronounced by the Kgosi (King), and past practice. The court found that it was part of the RBN’s customary law that all matters of a “public concern” had to be referred to broad consultation for the community to debate. The court, however, disagreed with the argument that the Kgosi (King) had the sole right to determine which matters were of a “public concern” and needed to be referred to broader consultation.
The court emphasised that customary law must be interpreted in light of the South African Constitution and its values, finding that public consultation and participation in decision making is a key component in promoting and strengthening democracy, and protecting rights and freedoms. Without a duty to consult the community, the community wouldn’t have any ability to participate in the management of their assets.
The court accordingly held that there is a duty under RBN’s customary law to consult with the community on matters of public importance. The Supreme Council’s failure to consult with the community regarding the legal proceedings meant that there was no valid decision to proceed with the court case.
Public officials’ decisions aren’t always flawless when applying the Mineral and Petroleum Resources Development Act, No 28 of 2002 (MPRDA), and there are often situations where the Minister of Mineral Resources makes an incorrect decision. In these circumstances a person is not without any legal remedies. It is possible to bring a court application to set aside the incorrect decision, and refer the matter back to the minister for reconsideration.
As a more expedient alternative to referring a matter back to the minister, it became common to ask the court to take the decision directly, and grant the application. The court is asked to step into the shoes of the minister and make the decision itself. This is known as “substitutionary relief”.
The recent decision of the Supreme Court of Appeal in the case of Pan African Mineral Development Company (Pty) Ltd and others v Aquila Steel (S Africa) (Pty) Ltd may, however, put an end to substitutionary relief when it comes to the grant of applications for prospecting and mining rights.
The courts general power to grant substitutionary relief
Any state decision must be lawful, reasonable, and procedurally fair. If not a court may be approached to “review” the infringing action in terms of the Promotion of Administrative Justice Act 3 of 2000 (PAJA).
Courts are rightly hesitant to grant substitutionary relief, being careful not to overstep its role and perform acts that fall into the realm the state. Generally, there are four situations where a court will be prepared to grant substitutionary relief without referring the matter back for reconsideration, namely when:
- the end result is a forgone conclusion;
- the court is as well qualified as the original authority to make the decision;
- any further delay will cause unjustifiable prejudice; or
- the original decision maker has exhibited bias or incompetence.
Re-examination of substitutionary relief for certain decision in terms of the MPRDA
It became common to ask for substitutionary relief when challenging a decision on the grant of prospecting or mining rights. Without substitutionary relief, the court sets aside the incorrect decision, and then refers the matter back to the minister for fresh determination. This increases the time that it takes to resolve the matter and be granted the application.
It has been argued that a court is entitled to grant substitutionary relief and grant a prospecting or mining right because the minister is compelled to grant these applications if they meet the set requirements. If the application “ticks all the boxes”, then the result is a foregone conclusion because the minister must grant the application, and the court is as well placed as the minister to determine if the application is compliant.
The Supreme Court of Appeal’s recent decision challenges this argument. Here there were two overlapping applications. Aquila Steel brought a High Court application to set aside both the minister’s decision to accept Ziza’s prospecting application and the decision to grant Ziza a prospecting right.
The High Court accepted the argument that Ziza’s application was defective, and that Aquila Steel’s application was the sole application that could be considered and granted. The High Court granted substitutionary relief:
- setting aside the minister’s decisions regarding the various applications; and
- substituting the minister’s decision with the court’s decision to grant Aquila Steel a mining right, on terms to be decided by the minister within 3 months.
On appeal this decision to grant of substitutionary relief was criticised, and it was held that the court didn’t have the power to grant substitutionary relief in respect of the decision to grant Aquila Steel a mining right for two reasons.
First, the minister’s power to grant a mining right, and the minister’s power to impose conditions on the mining right, are inextricably linked. It is impossible to separate these two decisions – a grant of the mining right without considering what conditions should be imposed is an invalid exercise of power. The High Court, however, attempted to separate these decisions when it left the imposition of any conditions up to the minister. This meant that the High Court’s order was misconceived and susceptible to attack on this basis.
Secondly, the information in the mining right application was 7 years old, and possibly outdated. This meant that the grant of the mining right was not a foregone conclusion.
The end of substitutionary relief
The courts argument in respect of substitutionary relief for the grant of a mining right would apply equally to the grant of a prospecting right.
The Supreme Court of Appeal has held that the decision to grant a right in terms of the MPRDA is inextricably linked to the conditions that the minister may impose on the right. A court can’t make a decision to grant the right, and then order the minister to impose conditions as the minister deems fit.
A person would be hard pressed to think of a set of facts where it could be confidently argued that the conditions that should be imposed on a prospecting or mining right is a foregone conclusion, and that the court is as well placed as the minister to impose a set of conditions.
It may well be that the Aquila Steel case has put an end to the grant of substitutionary relief when it comes to the grant of prospecting and mining rights in terms of the MPRDA. If not, the Aquila Steel case has drastically limited the cases where the granting of this relief by a court would be appropriate.
- Prospecting Right Applications: The Queuing Conundrum – A detailed look at the High Court’s original decision in the Aquila case
- Strict Compliance isn’t Strictly Required by the MPRDA – A discussion on the SCA’s decision in the Aquila case relating to non-compliance with the MPRDA’s application procedures
- When the Minister of Mineral Resources Ignores You – A detailed review of the MPRDA’s internal appeal and review proceedings, and the application of the Promotion of Administrate Justice Act
In South Africa only one person can hold a valid prospecting or mining right for a particular mineral on land in terms of the governing Mineral and Petroleum Resources Development Act, No 28 of 2002 (MPRDA).
To ensure that no conflicting rights are granted, an application system akin to queuing is used. The first person to lodge a prospecting right application for a particular mineral is first in queue, and no prospecting right applications submitted afterwards can be considered or granted until the first application has been rejected (section 16(2)). In addition, a person that is granted a prospecting right over land for a particular mineral has the sole and exclusive right to apply for, and be granted, the relevant mining right (section 19(1)).
Unfortunately, it’s possible for the system not to work as intended, and for the Department of Mineral Resources (DMR) to issue overlapping prospecting and mining rights for the same mineral. In these circumstances an aggrieved person can use the MPRDA’s internal appeal process to review the DMR’s administrative decision to issue the conflicting right, and have the conflicting right set aside (section 96(1)). The after the initial internal appeal an unsuccessful party may have the option to approach the High Court for relief in terms of the Promotion of Administrative Justice Act 3 of 2000 (PAJA).
This is where complex legal arguments often start, with both parties contending to convince the court that their application was the first valid application that was submitted to the DMR, and that the other parties prospecting or mining right is the right that should be set aside as being invalidly granted. The importance of being the first valid application that was submitted to the DMR was demonstrated in the case of Pan African Mineral Development Company (Pty) Ltd and others v Aquila Steel (S Africa) (Pty) Ltd .
In this case the Supreme Court of Appeal’s decision hinged on whether the first prospecting right application in the queue was fatally defective because it didn’t strictly comply with the requirements of the MPRDA, and whether the DMR was entitled to consider the next conflicting application in the queue because of the first applications non-compliance.
It was not disputed that the first application was non-compliant with the MPRDA, but the Supreme Court ultimately found that even though there was non-compliance, the non-compliance did not render the first application fatally defective. Because the first application in queue was not fatally defective and had not been refused by the DMR, the Supreme Court held that the DMR’s decision to grant the second conflicting right was the invalid decision, and that the second conflicting right was the right that should be set aside.
The original decision of the High Court
This case was first heard in the Gauteng High Court as Aquila Steel (South Africa) Limited v the Minister of Mineral Resources and others, which I discussed here previously. The timeline relating to the two overlapping applications is as follows:
- On 19 April 2005 Ziza Limited (Ziza) submitted a prospecting right application.
- A year later, on 18 April 2006, Aquila Steel (South Africa) Limited (Aquila) submitted prospecting right application. Aquila’s application was granted on 11 October 2006.
- On 26 February 2008 Ziza’s prospecting right application was granted. There were now two prospecting rights granted over the same land for the same mineral.
- On 14 December 2010 Aquila applied for a mining right. This application was, however, now refused by the DMR because the DMR alleged that of Ziza’s prior application was in queue before Aquila’s, and that Aquila’s right shouldn’t have been granted originally.
It was common cause that Ziza’s application didn’t strictly comply with the requirements of the MPRDA because it didn’t include the prescribed coordinated map showing the land that the application extended over.
The wording of the section 16(3) of the MPRDA when the applications were submitted and decided was the following:
If the application does not comply with the requirements of this section, the Regional Manager must notify the applicant in writing of the fact within 14 days of receipt of the application and return the application to the applicant.
Aquila argued that because Ziza’s application was not complete, the application could not be accepted by the regional manager and it would have to have been “returned” to Ziza. It argued that because the act required return of the application, when Aquila submitted its application there would have been no prior pending application for a prospecting right. Aquila’s application would have been the only valid application, and consequentially the only valid prospecting right, over the contested area.
Ziza counter argued that the defect in its application didn’t mean that its application automatically failed and had to be rejected by the DMR. It argued that a defective application can be amended after submission to remedy defects.
The High Court accepted that the application was defective, and turned its analysis to what the required notifying and “returning the application to the applicant” meant in terms of the then section 16(3) of the MPRDA. Did this mean the application was rejected, or did it mean that the process was merely suspended to allow the applicant to amend its application?
The court considered the objective of the MPRDA to prevent sterilisation of mineral resources. This would be hindered if the return of the application allowed the applicant to amend a defective application. The act didn’t specify any timelines that the amendment must be done, meaning that an applicant could delay the entire procedure by not amending the application (or taking years to amend as in the present case), effectively sterilising the minerals by preventing other companies from applying for prospecting rights over the land.
The court also considered the practicalities of “returning the application”. This means the DMR has no record of the application other than the day that it was received and returned. Crucially the DMR wouldn’t have records of the minerals or land that the application related to.
The court concluded that a “return” of a non-compliant application to allow an applicant to remedy defects amounts to a rejection of the application.
The high court held that:
- Ziza’s prospecting right application was fatally defective because it failed to strictly comply with the requirements of the MPRDA – Ziza had failed to include the prescribed coordinated map showing the land that the application extended over;
- the DMR was required to “return” a non-compliant application in terms of section 16(3) of the MPRDA;
- the “return” of Ziza’s application would mean that the application had been rejected;
- if Ziza subsequently amended its application, then the amended application would have to be treated as a new application; and
- it was therefore not competent for the DMR to accept and grant Ziza’s application for a prospecting right.
The court accordingly set aside both the DMR’s decision to accept Ziza’s prospecting application and the decision to grant Ziza a prospecting right.
The reversal of the High Court’s decision on appeal
Ziza appealed the decision to the Supreme Court of Appeal, which reversed the High Court’s decision and found in Ziza’s favour.
The Supreme Court first considered a question overlooked by the High Court – was Ziza’s application fatally defective because it didn’t strictly comply with the requirements of the MPRDA by not including the prescribed coordinated map? (See the courts full discussion in paragraph 19 to 22.)
Statutory requirements, such as the requirements that a prospecting application must comply with, are generally either:
- mandatory (peremptory) requirements, which needs exact compliance and where purported compliance that falls short of the requirements is a nullity; or
- directory requirements, which although desirable to comply with will have no legal consequences if not complied with (footnote 22).
The requirements of the MPRDA in relation to applications for prospecting rights are framed as mandatory requirements that require strict compliance. The applicable section states that “[a]ny person who wishes to apply to the Minister for a prospecting right … must lodge the application … in the prescribed manner” (section 16(1)(b)). Aquila argued that because Ziza didn’t comply with the mandatory requirements set out in the regulations, its application was a nullity.
The Supreme Court, however, recognised that a third category of statutory requirements had been developed that lay between mandatory and directory requirements. These are statutory requirements that are framed as mandatory requirements but that only require substantial compliance in order to be legally effective.
The Supreme Court endorsed its previously held view that not every deviation from the literal prescription of an act should be fatal. The question that should be asked is “whether, in spite of the defects, the objective of the statutory provision had been achieved” (paragraph 20).
The Supreme Court held that even though Ziza’s application did not strictly comply with the requirements of the MPRDA by including the prescribed coordinated map showing the land that the application extended over, Ziza had substantially complied and had given the DMR sufficient information in order for the DMR to identify the relevant properties and log them onto the application system. The additional information included in Ziza’s application included:
- hand drawn plans that identified the co-ordinates;
- the registered descriptions of the farms;
- the co-ordinates of the total area; and
- the description of the old order rights in respect of which the application was made, which included the farm details, area size and grid reference.
The Supreme Court held that Ziza had substantially complied with the requirements of the MPRDA and that it could not be suggested that the DMR was unaware of the properties that formed part of Ziza’s application.
On the question of whether a return of the application, as required by the MPRDA at the time, constituted a refusal by the DMR, the Supreme Court held that there is an important distinction between the “return” and the “refusal” of an application – a return is exercised by the regional manager of the DMR and gives the applicant with an opportunity to supplement its application, while a refusal is exercised by the Minister, not the regional manager.
The Aquila judgement doesn’t eliminate the need for applicants to comply with the requirements of the MPRDA in order to ensure that the DMR can’t reject their application.
The judgement does, however, clarify that the statutory requirements in the MPRDA should not be viewed as mandatory (peremptory) requirements that need to be strictly complied with in order to ensure that an application is valid.
This may ensure that an application for a prospecting right will not fail merely if a single statutory requirement was not met, or if a single document was omitted from the application.
The important consideration is if there was sufficient compliance with the requirements in order for the objectives of the MPRDA to be achieved. An application may still be rejected by the DMR, or a prospecting right or mining right may still be set aside, if it can be shown that the level of compliance was insufficient.
- Prospecting Right Applications: The Queuing Conundrum – A detailed look at the High Court’s original decision in the Aquila case
- Removing the Court’s Power to Decide for the Minister of Mineral Resources – A discussion on the SCA’s decision in the Aquila case relating to the courts power to grant substitutionary relief
The launch of the first Bitcoin future for trade in the United States of America during December 2017 has brought significant public attention to both the Bitcoin crypto currency, and the underlying bitcoin network (blockchain technology protocol that the crypto currency is built on).
When looking at the future of Bitcoin and blockchains, and the potential impact that these can have in the various African markets, an area to keep an eye on is various governments’ possible approaches to the regulation of crypto currencies. Various attempts at regulation have already been seen in other parts of the world, and it is still to be seen what the reaction of some African governments, and regulators, will be.
From a government regulatory perspective, the desire to regulate crypto currencies like Bitcoin arises primarily from their ability to be used as an untraceable digital cash system.
Even though Bitcoin transactions happen publicly on the blockchain, and it’s possible to view all transactions that happen and see the exact details of all amounts transferred between addresses on the blockchain, it’s not possible to easily link these transactions with a person’s real identity. The Bitcoin crypto currency offers pseudonymity when transacting, meaning that it is an almost-untraceable digital cash.
Untraceable digital cash poses various problems to governments.
One problem is the enforcement of capital controls. Bitcoin makes it trivial to bypass laws restricting to limit of the flow of capital into or out of a country. This is done by liquidating assets in one country, buying Bitcoin, and then transferring those Bitcoins into or out of a country.
This “problem” is, however, also the source of one of Bitcoins advantages to people adopting it. In this context Bitcoin makes remittances of money by migrant workers back to their family in their home country quick, cheap, and easy.
Another problem is difficulties surrounding money-laundering. This is because it may not be possible to identify or authenticate the real identity behind each transfer of Bitcoin.
The difficulties with, and sometimes dangers of, untraceable digital cash can be illustrated by the “Silk Road” website that was operated over the internet as a TOR hidden service. The Silk Road was an anonymous marketplace that offered various goods, including illegal drugs, in exchange for Bitcoin. The untraceable Bitcoin system allowed people to exchange value in the form of untraceable digital cash (Bitcoin) without ever having to reveal their real identities. This website was able to operate from February 2011 to October 2013, before being shut down. When shut down law enforcement was able to seize 170,000 Bitcoins (which would have a value of more than $2,550,000,000.00 at the peak December 2017 prices).
Governments could use to try to address these problems is by strictly regulating Bitcoin exchanges, making it difficult for a person to turn large amounts of local currency into Bitcoin, or to buy large amounts of Bitcoin with local currency.
Existing, and potentially new, anti money-laundering laws could also be applied businesses and to Bitcoin transactions. These could include “know your customer” requirements, and mandatory reporting requirements that require businesses to identify and authenticate their customers, and to report transactions over a certain monetary threshold.
Another, more draconian, method to address these problems is the outright banning of the use of Bitcoins by businesses.
It is impossible to predict what steps countries in Africa will take in the future to regulate Bitcoin and other crypto currencies. Each country will no doubt adopt the approach that they think best given the particular countries unique economic and cultural circumstances.
What is important, however, is to understand to what extent existing laws in each market could extend to Bitcoin transactions, and properly adapt to any new laws that are adopted in the future.
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.
Was there an an unlawful deprivation of property?
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.
Was there an infringement on the right to trade?
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 court’s finding
The 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.
During March 2017 the High Court of South Africa in Pretoria, handed down a decision that has been hailed in some quarters as a victory in the fight against dirty energy and global warming. The court’s decision in isolation isn’t a decisive victory for the proponents of clean energy, but it does add an important tool that can be used in future fights, not only against coal fired power stations, but also in broader environmental challenges against the dirty energy and extractive sectors.
Earthlife Africa Johannesburg asked the court to set aside the Department of Environmental Affairs’ decision to grant an environmental authorisation to the preferred bidder, Thabametsi Power, that was selected to build a 1,200 MW coal fired power station near Lephalale in the Limpopo Province. If set aside, construction would be delayed until a new environmental authorisation could be applied for and granted.
Earthlife argued that the environmental authorisation should be set aside because a climate change impact assessment had not been conducted, meaning firstly that all the relevant environmental factors had not been considered before the environmental authorisation was granted, and secondly that the decision to grant an environmental authorisation without considering a climate change impact assessment rendered the decision irrational and unreasonable.
The court decided in Earthlife’s favour, setting aside the environmental authorisation. The matter was referred back to the minister’s internal appeal process, giving the minister the opportunity to consider the climate change impact assessment report that had been prepared by Thabametsi Power after its initial environmental authorisation was granted.
The court didn’t, however, prohibit the construction of coal-fired power stations, and didn’t make any decision on whether the construction of additional coal-fired power stations should be permitted or restricted in the future. This allows the minister to decide to grant an environmental authorisation after weighing up all the relevant factors, which now includes the potential global warming impacts and South Africa’s international commitments on climate change.
The narrow questions that the court considered was if the minister had a legal obligation to consider global warming impacts of the project, and if so, did the minister have sufficient information when taking the decision to properly consider global warming as a relevant factor.
Earthlife argued that before the minister grants an environmental authorisation, all criteria set out in the National Environmental Management Act, No 107 of 1998 (NEMA) must be considered. The act requires the minister to “take into account all relevant factors, which may include …” going on to list various factors including pollution, environmental impacts and environmental degradation (section 24O). Earthlife argued that even though the section doesn’t specifically list climate or global warming impacts as a factor, these impacts fall into the non-exhaustive list of “relevant factors” and must be considered.
The department argued that there was no South African law requiring the preparation of a climate change impact assessment. It also argued that South Africa’s international obligations to reduce greenhouse gas emissions were broadly framed and in the discretion of the government, which must take into account the government’s over-riding priority to address poverty and inequality. Thabametsi Power added the arguement that to introduce a mandatory assessment the entire legal regime governing environmental impact assessments must be challenged.
The court agreed with Earthlife; NEMA’s list of “relevant factors” is non-exhaustive, meaning that the minister must consider any relevant factor even if it is not specifically listed.
The court examined the legislative and legal framework that governs South Africa’s climate change and energy policies to determine if climate change impacts are “relevant”. It considered domestic policies such as the National Climate Change Response White Paper of 2012, the Integrated Resource Plan for Electricity 2010-2030 (“IRP”) adopted by the South African cabinet, the Department of Energy’s binding determination on the mix of energy generation technologies that was adopted in terms of the Electricity Regulation Act No 4 of 2006, and South Africa’s international obligations. The legal framework overwhelmingly supports the argument that the assessment of climate change impacts and mitigation measures are relevant factors that must be considered as part of the environmental authorisation process.
After finding that the minister must consider climate change impacts, the court turned to the question of if the minister had enough information at the time to properly consider this factor.
When the minister granted the environmental authorisation, only an environmental impact assessment reports (EIR) was considered. The EIR didn’t quantify the greenhouse gas emissions, stating only that “while quantification of the relevant contribution … is difficult, the contribution is to be considered to be relatively small in the national and global context”. It also didn’t consider the impact that the coal fired power station could have on global warming, and the effects that global warming would have on water scarcity in the region. The EIR was also directly in conflict with a later climate impact report that found that the emissions from the power station could constitute up 3.9% South Africa’s total emissions after 2025.
The court found that the minister didn’t have all the legally required information when making the decision to grant the environmental authorisation, and was unable to weigh up the competing factors before making the decision.
The court didn’t prohibit the building of the coal powered power station, but only ordered that the decision to grant the environmental authorisation was to be remitted back to the minister so that the minister could consider the climate change impact assessment report and comments on the report submitted by any interested and affected parties.
The decision in this case should serve as a call for all parties to fully consider potential impact that projects may have on South Africa’s commitments to curtail global warming.
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.Froneman J
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.
In March 2017 the Supreme Court of Appeal of South Africa handed down a decision ensuring the continued environmental protection of the Makhonjwa Mountains in Mpumalanga (also known as the Barberton Greenstone Belt). This was necessary despite the area being placed on South Africa’s tentative list of world heritage sites in 2008, and despite the provincial government taking three separate actions in 1985, 1996 and 2014 to ensure that the area was protected.
In the case of Mpumalanga Tourism and Parks Agency v Barberton Mines (Pty) Limited ((216/2016)  ZASCA 9 (14 March 2017)) the court was asked to decide if the Makhonjwa Mountains had legal protection from mining activities, or if a single flawed government notice meant that the government’s ongoing efforts to protect the area was for nothing.
Barberton Mines was granted a prospecting right in terms of the Minerals and Petroleum Resources Development Act, No 28 of 2002 (MPRDA). When the company wanted to start their prospecting operations they were denied access to the area by the Parks Agency. The Parks Agency alleged that the company’s prospecting right was invalid and fell to be set aside because it was granted over land that formed part of a protected area in terms of the National Environmental Management: Protected Areas Act, No 57 of 2003 (NEMPAA).
The Parks Agency appealed the Minister of Mineral Resource’s decision to grant the prospecting right using the department’s internal process, but the minister rejected this appeal. Barberton Mines then launched a court application in the North Gauteng High Court. The court held that the Makhonjwa Mountains were not protected under NEMPAA, granted Barberton Mines a court order affirming the company’s rights to prospect in the area, and ordered the Parks Agency not to prevent or interfere with the company’s prospecting activities.
Appeal to the Supreme Court
The Parks Agency took the High Court decision on appeal. It argued that the Makhonjwa Mountains is protected under NEMPAA because it is a declared, or designated, protected area. This protection prohibits anyone from conducting commercial prospecting, mining, exploration or production within its boundaries (see section 48).
Barberton Mines counter argued that the actions taken by the provincial government in 1985, 1996 and 2014 were insufficient to declare the Makhonjwa Mountains a protected area in terms of NEMPAA. It argued that the 1985 resolution was invalid because was not issued by the correct authority or published as required, and that the 1996 proclamation was void because it did not adequately describe the area – the resolution only identified the area as “Barberton Nature Reserve”, without any accompanying map or detailed area description.
The Supreme Court of Appeal affirmed that NEMPAA binds the state and trumps any other legislation if there is a conflict on the management or development of protected areas – if an area is validly declared or designated protected area then prospecting operations in the area is prohibited.
The only question that the court had to decide was whether the Makhonjwa Mountains was validly declared as a “protected area” as contemplated by NEMPAA. For this, the court placed emphasis on the 1996 proclamation, finding that it was sufficient to be considered a “declaration” or “designation” required by NEMPAA, albeit that this declaration took place before NEMPAA came into force. The court then turned its attention to Barberton Mines’ argument, and the High Court’s finding, that this proclamation must be found to be void because its description of the area was vague.
The court considered previous cases that dealt with actions to declare laws void for vagueness, including a 1955 Appellate Division case of R v Pretoria Timber Co (Pty) Limited (1950 (3) 163 (A)) that held that “[t]he degree of certainty, clarity or precision that must be present … depends on the circumstances. … The law requires reasonable and not perfect lucidity …”, and a 2006 Constitutional Court case of Affordable Medicines Trust v Minister of Health (2006 (3) SA 247 (CC)) that added that “[t]he doctrine of vagueness must recognise the role of the Government to further legitimate social and economic objectives [a]nd should not be used unduly to impede or prevent the furtherance of such objectives”.
The court stated that common sense must prevail, finding that the 1996 proclamation did not need a “faultless description couched in meticulously accurate terms in order to be valid”, only that the area should be indicated with sufficient certainty.
The court noted that the provincial government had given a particular meaning to the “Barberton Nature Reserve” since 1985. Because the 1996 proclamation is related to the detailed 1985 resolution it couldn’t be argued that people wouldn’t know what area the 1996 proclamation refers to. It is therefore valid for the 1996 proclamation to refer to the area only by name without detailing the exact area description.
The common sense approach adopted by the court is ultimately correct because minor errors in a government declaration shouldn’t prevent the government bodies from performing their important constitutional duties and achieving their social and economic objectives. The Nature of the error is, however, an important consideration. In this case the error had no real effect on the public’s ability to understand the declaration, but this doesn’t mean that in the future the court would turn a blind eye an error that truly introduces uncertainty.
The Parks Agency’s appeal was ultimately successful, effectively preventing Barberton Mines from conducting prospecting in the area which, if not certain before, is now a confirmed “protected area” under NEMPAA.
On a side note, the Supreme Court of Appeal appears to endorse the view that mining operations in a protected area might be permitted in under the MPRDA if the activities are in the national interest (section 48). The court wasn’t asked to decide this issue, but this may be an area of the law open for future debate.
The laws governing mining rights in South Africa is founded on three principles: (i) the State is the custodian of all minerals; (ii) any person may apply for a right to prospect on a first come first served basis; and (iii) a use it or lose principle applies to rights. These principles ensure a system that encourages active prospecting and prevents people from holding onto rights without using them to prevent others from actively prospecting.
The application procedure is a system of queuing – the first to submit an application is in the front of the queue, and all subsequent applications form a queue behind the first which can only be considered once the first application has been rejected.
An unresolved legal question was whether a company can submit a non-compliant application as a placeholder in the queue, and then later amend the application to make sure it is compliant.
The recent Gauteng High Court decision in Aquila Steel (South Africa) Limited v the Minister of Mineral Resources and others (72248/15) promised guidance on the proper application of the principles governing the application procedure, which it indeed gave, but an important aspect of the decision mustn’t be overlooked. The laws that the court applied to come to its decision have been amended.
In this note I’ll consider if the court’s decision, and if the amendment of the the Mineral and Petroleum Resources Development Act, No 28 of 2002 (MPRDA) will affect its application.
This decision has, however, been successfully appealed, which I discuss here.
The courts reasoning in the Aquila Steel judgement
This case dealt with two conflicting prospecting rights granted over the same land for the same mineral.
On 19 April 2005 Ziza Limited (Ziza) submitted a prospecting right application. The application was, however, incomplete because it didn’t comply with the prescribed requirements – it omitted the prescribed plan showing the land over which the application applied.
On 18 April 2006 Aquila submitted prospecting right application, which was granted on 11 October 2006.
On 26 February 2008 Ziza’s prospecting right application was granted. There were now two rights granted over the same land for the same minerals.
On 14 December 2010 Aquila applied for a mining right. This application was, however, now refused by the Department of Mineral Resources (DMR) because of Ziza’s prior application that the DMR said was in queue before Aquila’s.
The court had to decide which application was first in queue and should be considered.
Aquila argued that Ziza’s application was not complete and that the defects meant it had to be rejected by the DMR – this rejection would result in the application falling out of the queue and leave Aquila’s application as next in line. Ziza counter argued that a defect in an application doesn’t mean that the application automatically fails and has to be rejected by the DMR, but that a defective application can be amended to remedy defects without losing its place in the queue.
Does a prospecting right applicant lose their place at the front of the queue if their application doesn’t comply with the formal requirements of the MPRDA? To answer this question the court applied the wording of section 16(3) of the MPRDA as it read at the time when the applications were submitted and decided:
“If the application does not comply with the requirements of this section, the Regional Manager must notify the applicant in writing of the fact within 14 days of receipt of the application and return the application to the applicant.” (own emphasis).Previous section 16(3) of the MPRDA
The crux was to determine what notifying and “returning the application to the applicant” meant. Did this mean the application was rejected, or that the process was merely suspended to allow the applicant to amend the application without losing its place in the queue?
The court considered the objective of the act to prevent sterilisation of minerals. This would be hindered if the return of the application allowed the applicant to amend a defective application – the act didn’t specify any timelines that the amendment must be done, meaning that an applicant could delay the entire procedure by not amending the application (or taking years to amend as in the present case), effectively sterilising the minerals by preventing other companies from applying for prospecting rights over the land.
The court also considered the practicalities of “returning the application”. This means the DMR has no record of the application other than the day that it was received and returned. Crucially the DMR wouldn’t have records of the minerals or land that the application related to.
The court concluded that a “return” was a rejection meaning the application fell out of the queue. An applicant could amend the application but the resubmitted application must be treated as a new application and fall behind any other applications in the queue.
Ziza’s non-compliance meant that its application fell out of the queue. Aquila’s application would accordingly have to be considered because it was the next application in the queue.
Current position under the MPRDA
The Aquila case applied the provisions of the MPRDA as they read between 2005 and 2013, the years when the decisions were taken. This means that the court’s reasoning may not apply to decisions taken after the amendment of the act.
The MPRDA was amended on 13 June 2013, and the amended provisions must be applied to any decisions taken by the DMR after this date. Section 16(3) now reads:
“If the application does not comply with the requirements of this section, the Regional Manager must notify the applicant in writing of the fact within 14 days of receipt of the application.” (own emphasis).Section 16(3) of the MPRDA
The amendment removes the requirement to return a non-compliant application – the very requirement that the court considered when deciding the Aquila case.
Under the amended section the DMR must only notify the applicant that its application is non-compliant. The DMR still can’t accept non-compliant applications, but it now doesn’t have an obligation to return them. Does the non-return of the application change the application of the Aquila judgement and mean that there is no rejection of the application? Does this now give an applicant an opportunity to remedy its applications non-compliance without losing its place in the queue?
In my opinion the amended section 16 of the MPRDA does not change the application of the Aquila decision. The amended section doesn’t alleviate the concerns in the Aquila judgement around the sterilisation of minerals if the applicant possibly has an unlimited period to remedy its applications non-compliance.
In terms of the amended section the applicant is still notified of the non-compliance. This notification itself would be an administrative action taken by the DMR, and would be a rejection of the application in line with the Aquila judgement. The non-return of the application merely alleviates the DMR’s burden and costs associated with returning voluminous applications.
The Aquila judgement highlights the need for prospecting right applicants to make sure that their application complies with all the formal requirements of the MPRDA before submission.
If an application is non-compliant the DMR must reject the application. The applicant can remedy the defects, but the resubmitted application will be regarded as a new application, and fall last in the application queue.
There have been amendments to the MPRDA removing the DMR’s obligation to return the non-compliant application, but this amendment would not alter the application of the legal principles decided in the Aquila judgement.
- Strict Compliance isn’t Strictly Required by the MPRDA – A discussion on the SCA’s decision in the Aquila case relating to non-compliance with the MPRDA’s application procedures
- Removing the Court’s Power to Decide for the Minister of Mineral Resources – A discussion on the SCA’s decision in the Aquila case relating to the courts power to grant substitutionary relief
If an inspector has reason to believe that there is an occurrence, practice or condition on a mine that endangers any person, then section 54 of the Mine Health and Safety Act, No 29 of 1996 (MHSA) allows the inspector to issue any safety instruction necessary to protect the health and safety of persons at a mine.
These safety instructions can have severe consequences because inspectors are empowered to halt operations at the entire or part of the mine, halt any act or practice at the mine, or require the employer to take acts to rectify the occurrence, practice or condition (section 54(1)).
Unfortunately a practice developed where inspectors issued broad instructions going beyond what is needed to protect the health and safety of persons, often halting the operations of entire mines for very minor or isolated infractions.
This practice has now been scrutinised and severely criticised by the Labour Court in the case of Anglo Gold Ashanti Limited v Xolole Mbobambi and others, where the court granted an order to partly suspend the safety instructions pending an appeal. This order allowed the mine to restart operations after being closed for a time.
I hope that the court’s criticism will curb overbroad safety instructions and undue production stoppages, but even if it doesn’t, the decision clarifies the grounds that can be relied on to have the safety instructions suspended pending an appeal.
Facts of the case
An inspector observed two safety infractions on a single level of the mine that employed 2% of the mine’s workforce. The infractions were:
- 43 explosive charges had not been placed in an explosive box; and
- 4 rail switches didn’t have rail switching devices.
The inspector issued a safety instruction that prohibited the use of explosives throughout the whole mine and halted all tramming operations. This effectively closed the entire mine.
The mine launched an urgent application to suspend safety instructions pending a full appeal. The mine argued that the safety instructions were erroneously issued, contending that:
- the non-compliance connected with the explosive charges was an isolated incident;
- no circumstances existed on 44 level that rendered the whole level unsafe;
- no circumstances existed that rendered the entire mine unsafe; and
- the absence of rail switches doesn’t constitute a danger.
The court’s decision to set aside the safety instructions
The court applied two separate, but connected, lines of questioning in its analysis.
First, did the inspector comply with the requirements of section 54(1) when he issued the safety instructions?
Secondly, was the safety instruction itself an administrative action regulated by the Promotion of Administrative Justice Act 3 of 2000 (PAJA)? If so, then did the safety instructions comply with the legal requirements of (i) lawfulness; (ii) reasonableness; and (ii) procedural fairness?
The court said that there are two requirements in section 54(1) for the issuing safety instructions:
- an inspector must objectively to establish a state of affairs which would lead a reasonable person to believe that there is a danger to the health or safety of any person at the mine; and
- the instruction must be limited to the extent that it is necessary to protect the health and safety (paragraph 24).
The standard applied in these enquiries is the standard of reasonable practicality required in section 2 of the MHSA.
The court considered the safety instruction issued because of the absence of rail switches, holding that the inspectors didn’t satisfy the legal requirements; there were no objective facts that would lead a reasonable person to believe that the absence of rail switches poses any danger to any person at the mine (paragraph 19 and 32).
The court’s enquiry into the safety instruction that prohibited the use of explosives went further. Here the court accepted that there were objective facts that could lead a reasonable person to believe that the safety infraction posed a danger to persons at the mine, but that was not the end of the enquiry.
The court confirmed that a safety instruction issued by an inspector is an administrative action, and as an administrative action must, in terms of PAJA, be exercised (i) lawfully; (ii) reasonably; and (ii) in a procedurally fair manner (paragraph 57).
The court emphasised the requirement of reasonableness and applied the principle of legal proportionality (paragraph 27 to 33). This principle holds that if an action is not proportional to what it seeks to achieve, then the action is unreasonable and subject to review under PAJA.
A court looks at three elements to determine if an action is proportional, and consequentially reasonable:
- was the measure suitable for achieving the desired aim (the suitability element);
- was the measure necessary, or was there a lesser measure that could achieve the same desired aim (the necessity element); and
- does the measure place an excessive burden on the individual that is disproportionate to the public interest that is protected (the balance element); (see de Ville, JR. 2003. Judicial Review of Administrative Action in South Africa. Durban: LexisNexis Butterworths, at pg. 203).
Accordingly, all safety instructions must be proportional and reasonable based on the objective facts. If not, then the affected company can approach a court for appropriate relief.
The court held that the safety infraction involving the explosives was an isolated incident that occurred on a single level of the mine employing a small fraction of the workforce. There was no objective fact that could be relied on by the inspector to infer that the entire level, and further the entire mine, was unsafe (paragraph 16 and 33).
Applying the principle of legal proportionality, the court held that the safety instructions were not proportional to the issues that the inspector identified, and went further than was necessary to protect the health and safety of persons at the mine (paragraph 32 – 33).
The court accordingly suspended the safety instructions issued in terms of section 54, with the exception of level 44 where the infraction had occurred (paragraph 34).
The court’s criticism of the safety instructions and the inspectors conduct
The court criticised the inspectors belief that they are empowered to close entire mines based only on a safety infraction in a single section or level of the mine, where the objective facts do not show that these infractions will render the entire mine unsafe (paragraph 36).
The court went as far as warning the inspectors that it would have seriously considered holding them personally liable for the mines legal costs if the mine had asked (paragraph 37).
The courts criticism is a stern warning to inspectors to exercise their powers in terms of the MHSA lawfully, reasonably and fairly.
The take away from this judgement is that safety instructions issued by an inspector in terms of section 54 of the MHSA must be reasonable, proportional, and limited by the extent to which it is necessary to protect the health and safety of persons at the mine.
An inspector does not have the power to close entire mines or sections of mines unless the objective facts show that the entire mine is unsafe, and total closure is proportional and indeed necessary to protect the health and safety of people on the mine.
Companies should evaluate any instructions issued in terms of section 54 and determine if they are to broad or go further than necessary. If so, urgent action can be brought in court to suspend the operation of the instructions pending an appeal in terms of the MHSA.
An owner of land automatically has certain legal rights in the property that stem directly from the ownership – the right to use and enjoy the property, modify the property, sell the property, and, if so inclined, to destroy the property. That is, unless the structure is older than 60 years. At this age an owner’s right to modify or demolish his own buildings is automatically restricted by the National Heritage Act, No 25 of 1999 (National Heritage Act).
The National Heritage Act automatically applies to structures older than 60 years irrespective of whether the structure or property has been formally recognised and granted any heritage status. This means that if a development or project is being planned that involves the modification or demolition of a building older than 60 years, then the required permits must be acquired for before modifying or demolishing the structures. It is not a foregone conclusion that the permit will be granted, and even if the permit is granted the permit can contain restrictions limiting the right to develop the property in the future.
The application of the Heritage Act to buildings was demonstrated in the recent case of Peter Gees v the Provincial Minister of Cultural Affairs and Sport ((974/2015)  ZASCA 136 (29 September 2016)) where a property owner applied for a permit to demolish a building. The building didn’t have any formal heritage status, but it was more than 60 years old. A demolition permit was granted, but as part of the permit the minister imposed restrictions on the future development of the property that included the requirement to have the future building plans approved by Heritage Western Cape before starting construction.
The landowner, unhappy with the restrictions in the permit, approached the court and argued that the minister did not have the power to restrict future development of a property when granting a permit to demolish a building. The Supreme Court of Appeal had to decide two questions, (i) whether the minister may place restrictions on the future development of property when deciding an application to modify or demolish a building, and (ii) if so, whether this curtailment of a property owners rights to use and enjoy the property is constitutional.
To decide these questions the court did a detailed analysis of the interaction between the formal and general protection mechanisms in the Heritage Act.
Formal and general protections under the National Heritage Act
The National Heritage Act introduced an integrated system for the management of national heritage resources. The act includes a system of formal and general protection methods.
For the formal protection measures to apply, a formal procedure is followed to identify the place, consult with owners, and then declare the place as protected by publishing a government notice or registering it in the heritage register. Formal protection measures can apply to heritage sites, protected areas around heritage sites, identified heritage objects, or whole heritage areas (section 27 to 32).
The formal protection measures stand in contrast to the general protections that apply automatically, irrespective of whether the place has been identified as culturally significant. The general protections apply automatically to all structures older than 60 years, archaeology sites, palaeontology sites, meteorite sites, burial grounds, graves, and public monuments and memorials (sections 33 to 38).
There is no need to identify one of these sites and consult with the owners before the general protections apply to them.
General protection for buildings older than 60 years
The Heritage Act automatically protects all structures older than 60 years. The provincial resources authority must grant a permit before these buildings, or any part of them, can be altered or demolished (section 34(1)).
The permit procedure and appeal process is set out in the Heritage Act (sections 48 and 49). When a permit is applied for the heritage resources authority may issue the permit subject to conditions, which may include the conditions that security is given for the completion of the proposed work, providing for the recycling or depositing of materials into a materials bank for historical building materials, stipulating that design proposals be revised, or stipulating the qualifications and expertise required to perform the actions (sections 48(2)(a) to (d)).
If a permit is refused, then the authority must consider if the structure should be protected formally in terms of one of the formal protection measures (section 34(2)).
Objection raised by the landowner in the current case
In the Gees case the a demolition permit for a building older than 60 years was granted, but the minister imposed restrictions on the future development of the property as part of the permit.
The City of Cape Town regarded the area that the building was located in as a significant “well-preserved art deco streetscape”, and thought that the character of the area should be conserved. The particular building itself was not deemed worthy of protection – the building was classified by the city as an “IIIC heritage resource” that only derives its significance from its contribution to the character of the surrounding area.
The building was not protected by any of the formal protection methods. It was not part of any declared national or provincial heritage site (section 27), in a heritage area (section 31), under provisional protection (section 29), listed in any heritage register (section 30), or declared a national heritage object (section 32). The only protections in the Heritage Act that applied to the building in this case were the general protection measures that apply automatically to all buildings older than 60 years.
The landowner argued that the act did not authorise the heritage authority to place conditions on the future development of a property when it was considering an application to demolish a structure that had no formal heritage status.
This argument was rejected by the court. The court held that if the imposition of permit conditions was limited only to areas that were formally protected, then the ambit for the protection of heritage resources would be reduced to small declared areas only, leaving large areas open for possible abuse.
The court evaluated the objectives of the Heritage Act, finding that the conditions imposed were designed to enable the heritage authority to fulfil its duties. The imposition of the conditions on the future development of a property when it was considering an application to demolish a structure that had no formal heritage status was found to be lawful.
The court briefly considered the landowner’s second argument that the curtailment of his rights to use and enjoy the property was unconstitutional. The court found that the conditions imposed in the demolition permit was a curtailment of property rights amounting to a deprivation of property, but that the deprivation was in the interests of the community, and constitutional.
This case illustrates the importance of considering and applying for all necessary approvals before undertaking any project or development.
If a project or development involves the alteration or demolishing of any structure or part of a structure that is older than 60 years then a permit must first be obtained in terms of the Heritage Act.
It must be borne in mind that if a permit is granted to alter or demolish a structure, the heritage authority does have the power to impose conditions on the future development of a property, limiting the landowner’s right to fully use and enjoy their ownership rights.
“It’s easier to ask forgiveness than it is to get permission” is the often quoted adage coined by Grace Hopper. But, it is also important to keep another adage in mind – there is often “an exception that proves a rule”.
The dangers of not getting necessary permissions before starting construction activities in a buffer zone of an environmentally protected area was illustrated in a recent court case where two homeowners were ordered to demolish all buildings and rehabilitate the land to its pristine state. This judgement was handed down on 19 August 2016 in the case of iSimangaliso Wetland Park Authority and Another v Feasey Property Group Holdings (Pty) Ltd and others  JOL 36485 (KZP).
The homeowners’ defence was twofold. First they argued that their activities were not in fact harming the environment, meaning that no action could be taken against them. Second, they asked the court to grant them an indulgence and give them time to get the necessary permissions. These defences were rejected outright by the court.
The homeowners’ activities were taking place in a so-called “buffer zone” bordering the iSimangaliso Wetland Park. This park is a world heritage site protected by the South Africa’s World Heritage Convention Act (No 49 of 1999) and international conventions.
An environmental buffer zone is an area that is outside of the boundaries of a park that is protected to ensure that activities outside of the park can’t have a negative impact, and so that the park can integrate into its surrounding areas. Buffer zones are created by the National Environmental Management Protected Areas Act No 57 of 2003 (Protected Areas Act).
The sites where the homeowners’ activities were taking place are owned by the Government of KwaZulu Natal and the Republic of South Africa. The land hasn’t been transferred to the Ingonyama Trust, but it is still to be administered by the Ingonyama Trust in terms of the KwaZulu-Natal Ingonyama Trust (Act 3KZ of 1994). In addition, being inside the iSimangaliso Wetland Park’s buffer zone, the land falls under the jurisdiction of the iSimangaliso Wetland Park Authority.
It appears that the homeowners did attempt to get permission to occupy the sites and construct houses – they had entered into a lease agreement, albeit not with the registered owners of the land, and there was consent from the Mbila Traditional Counsel. Even so, they had not applied for any of the required environmental authorisations that were required because the sites were in a buffer zone.
The outright failure to apply for, or obtain, the required environmental authorisations was not, however, even considered by the court. The decision of the court focused exclusively on the fact that there was no valid lease agreement for the site and that the homeowners had no other right to occupy the land.
The homeowners conceded that they didn’t have a valid lease agreement or any other right to occupy or build on the sites. Their defense was whittled down to a request to the court to be granted an indulgence so that they could enter into the required agreements and apply for any environmental authorisations that were needed.
The court took a dim view of the request for an indulgence, equating it to a request for it to condone illegal actions.
The court applied an earlier decision of the Supreme Court of Appeal (Lester v Ndlambe Municipality and Another 2015 (6) SA 283 SCA) where it was said that a court does not have the discretion to give a person an indulgence to enable them to legalise an illegal use of land – the court must uphold the rule of law and prevent any on-going contravention of the law.
The court doesn’t have the power to forgive, even if forgiveness is only sought temporarily.
The result – the homeowners were ordered to vacate the sites and rehabilitate the land restoring it to a pristine state, requiring that they demolish all buildings.
The take away from this judgement is that it is important to obtain all necessary approvals before undertaking any project or development. In this case the failure to acquire a valid consent to occupy the land was the decisive factor applied by the court, but one must also be careful not to overlook any environmental authorisations that might be required taking into account the nature and location of the development.
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  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  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.
- Land Use Planning Ordinance 15 of 1985 (of the former Cape Province);
- Ciskei Land Use Regulation Act 15 of 1987.
- Northern Cape Town Planning and Development Act 7 of 1998;
- Spatial Planning and Land Use Management Act 16 of 2013.
- Land Use Planning Ordinance 1985 (Western Cape);
- Western Cape Land Use Planning Act 3 of 2014.
- Township Ordinance 9 of 1969 (as amended by the Township Ordinance Amendment Act 10 of 1998).
- 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 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.
- 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.
- Town Planning and Townships Ordinance 15 of 1986 (Transvaal);
- KwaNdebele Town Planning Act 10 of 1992.
- 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
To prospect or mine for minerals, or to explore for or produce petroleum resources, a person must have have a licence granted in terms of the MPRDA (the principle act governing mining and production rights) and an environmental authorisation granted in terms of National Environmental Management Act, No 107 of 1998 (NEMA) (the principle act governing environmental management). To get these a guarantee, termed a “financial provision”, must be given to cover the possible cost associated with the management, rehabilitation and remediation of environmental impacts that result from the operations. The financial provision ensures that there is enough funds available to rehabilitate the environmental impacts that the operations may have had once the operations end.
The financial provisions were regulated by the MPRDA, but in the last few years the laws have been amended to bring the regulation of financial provisions under the ambit of NEMA. The new 2015 Financial Provision Regulations published under NEMA came into effect on 20 November 2015.
Some companies are now in a position where they have given the required financial provision, but under the old MPRDA regulations that are not applicable any more. The question is, what steps must now be taken to comply with the new regulations?
The short answer is that the current financial provision is regarded as being issued and approved in terms of the regulations (regulation 17(4)), but steps must be taken in the very near future to review the financial provision and align it with the new requirements (regulation 17(4)).
Methods used to provide the financial provision under the regulations
The three vehicles that were used under the Mineral and Petroleum Resources Development Act, No 28 of 2002 (MPRDA) to give the financial provision are all still available under the 2015 Financial Provision Regulations (GN R1147 in GG 39425 of 20 November 2015) (the regulation). These are:
- financial guarantee issued by a registered bank, insurer or underwriter;
- cash deposited into an account administered by the Minister of Mineral Resources (Minister); or
- a contribution to a trust fund established specifically for this purpose (MPRDA regulation 53(1) and regulation 8(1)).
Even though the available vehicles haven’t changed, the format of the financial guarantee and trust deed are now prescribed in the regulations (see appendix 1 and 2), and the permissible uses of trusts has been changed by the new regulations. A full discussion of these falls outside the scope of this note.
Time frame to conduct the review
A holder of a right that was issued before 20 November 2015 (a holder) must conduct a review, assessment and adjustment of its financial provision to ensure that it complies with the new regulations (regulation 17(5)):
- within 3 months of the end of its first financial year after November 2015; or
- within 15 months after November 2015 (regulation 17(5)(a) and (b)).
The time frame must be regarded as either/or, so for the first review the holder can choose the most suitable time frame that fits its purposes. The financial provision must then be reviewed annually after the first review (regulation 17(5)(b)).
Procedure to conduct the review
The review, assessment and adjustment of a financial provisions approved under the MPRDA is largely the same as the procedure that is applicable to new financial provisions approved in terms of the regulations (in terms of regulation 17(5) regulation 11 must be applied).
The procedure can be broken down into the following steps.
Step 1: Preparation of the prescribed reports and plans. The holder must prepare the following reports and plans:
- an annual rehabilitation plan setting out the annual requirements for rehabilitation and remediation;
- a final rehabilitation, decommissioning and mine closure plan setting out the requirements for the decommissioning and closure of the at the end of life of the operations; and
- an environmental risk assessment report setting out the requirements for the remediation of latent and residual environmental impacts, including the pumping and treatment of polluted or extraneous water (regulation 11(1)(a), (b) and (c)).
The minimum contents of these plans and reports are prescribed in the regulations (see appendix 3, 4, and 5), so a holder must ensure that the plans and reports are compliant, and that they contain the prescribed minimum information (regulation 12(1), (2), and (3)).
Step 2: Assessment of the adequacy of the current financial provisions. The holder must do an assessment of adequacy in light of the reports and plans, and identify any necessary adjustments that must be made to the financial provisions (regulation 11(2)).
Step 3: Independent audit. The reports, plans and assessment of adequacy must be audited by an independent auditor (regulation 11(3)(a)).
Step 4: Inclusion of the assessment into the environmental audit report. The assessment of adequacy must be included in the environmental audit report that is required in terms of the Environmental Impact Assessment Regulations 2014 (regulation 11(3)(b)).
Step 5: Submission. A holder must submit the following to the Minister:
- the independent auditor’s report that sets out the results of the assessment of adequacy;
- proof of payment or proof of arrangements to make any adjustments to the financial provision; and
- the prescribed environmental and rehabilitation plans and reports (regulation 11(3)(c)).
Approval of the updated financial provision by the Minister
After receiving the updated financial provision, the Minister has 30 days to:
- approve the financial provision;
- refer the provision back to the holder for revision; or
- refuse to approve the financial provision (regulation 17(10)).
If the Minister refuses to approve the updated financial provision he must provide reasons for the refusal, and he may appoint an independent assessor to review the assessment at the cost of the holder (regulation 17(15)(b) and (c)).
If the Minister refuses to approve the updated financial provision the holder is regarded as being non-compliant with section 24P of NEMA (regulation 17(15)(a)).
Procedure to top up a shortfall in the financial provision
If the review and assessment procedure shows that there is a shortfall in the financial provision, the holder must:
- increase the financial provision within 90 days from the date of the audit report (regulation 17(16)(a)); and
- submit proof of payment, or proof of arrangements, to make any adjustments to the financial provision (regulation 17(5) and 11(3)(c)).
The transitional arrangements provide relief to holders if they are unable to increase their financial provision to cover a shortfall. If a holder is not able to increase its financial provision the holder and the Minister may enter into a payment agreement where the holder agrees to increase the financial provision over a period of 5 years or less (regulation 17(7)). The payment agreement must be reviewed annually by the Minister (regulation 17(7)).
Procedure if there is an excess in the financial provision
If the review and assessment procedure shows that the financial provision has an excess of funds, the holder can’t reduce the financial provision, but must defer that excess against future assessments (regulation 17(16)(b)).
Procedure to withdraw a financial guarantees provided under the MPRDA
The regulations that apply to the withdrawal of new financial guarantees approved in terms of the new regulations apply equally to the withdrawal of financial guarantees previously approved under the MPRDA (regulation 17(17)).
If a financial institution wants to withdraw a guarantee:
- the financial institution must give the Minister at least four months written notice of its intention by registered mail (regulation 8(3)(a)); and
- the Minister must then give the holder 60 days to provide an alternate arrangement for the financial provision (regulation 8(4)).
If the holder can’t provide an alternate arrangement within the 60 day period, the Minister must call on the financial guarantee. This money is then held by the Minister until an alternate arrangement can be provided for the financial provision (regulation 8(5)).
If the holder does provide an alternate arrangement then the Minister must release the first guarantee within 7 days of receiving the alternate financial provision (regulation 8(6)).
The public’s right of access to information
The holder must make any approved amendment to its environmental management programme available to the public (regulation 17(19)). This may must be:
- published on the holders public website, if the holder has one;
- available at the site office of the operations; and
- accessible to the public on request (regulation 13(1)).
A large part of my daily activities involves drafting legal contracts, and recently I have been looking for resources on the best ways to construct contracts and phrase clauses.
One resource that has really caught my attention is A Manual of Style for Contract Drafting, Third Edition, by Kenneth A Adams.
When it comes to constructing clauses for a contract Adams goes much further than other contract drafting books I have read. Where most books give handy guidelines and lists of words to use or avoid using, Adams takes the entire process one step back.
Adams suggests a process where each clause is analysed, and the language used in the clause is determined by the legal outcomes that the parties intend to flow from the clause. He suggests that each clause in a contract has a function, and the language that a clause uses will be determined by this function. For example, a clause that functions to impose an obligation will be distinguished from one that imposes a prohibition or one that provides one party with discretion.
Each type of contractual language must be used consistently throughout a contract.
Adams breaks contractual language into eleven different categories, with each category serving a different function in a contract. These categories are:
- Language of Agreement
- Language of Performance
- Language of Obligation
- Language of Discretion
- Language of Prohibition
- Language of Policy
- Language of Declaration
- Language of Belief
- Language of Intention
- Language of Recommendation
- Expressing Conditions
When drafting a clause you must determine what the clause needs to accomplish and find what the function of the clause is. Once you have determined this then the most appropriate category of language can be used to achieve that function.
The process is not as easy as it seems at first because many clauses can be incorrectly phrased in more than one different contract language. This is illustrated throughout the book in numerous examples. For instance, an obligation to purchase shares can be expressed in various ways:
- The Purchaser shall purchase the Shares…
- The Purchaser must purchase the Shares …
- The Purchaser will purchase the Shares …
- The Purchaser agrees to purchase the Shares …
- The Purchaser undertakes to purchase the Shares …
- The Purchaser shall be obligated to purchase the Shares …
- The Purchaser is obligated to purchase the Shares … (Adams table 2).
By following the approach suggested by Adams a contract becomes more internally consistent in the language used and easier to read and interpret.
Language of Agreement
“The parties agree as follows.”
The language of agreement expresses the parties’ state of mind. This language should only be used once in each contract; in the lead in to a contract (Adams Para 3.16).
It is common to see language of agreement used throughout a contract, often coupled with a statement of fact or an obligation. For example “the parties agree that the material is free from defects… ” or “the parties agree that the seller will deliver the material on 1 January 2016”.
The use of “the parties agree” is redundant in these examples. These clauses are recorded in a contract, which is an agreement by its very nature.
These examples can also be expressed better using other, more appropriate, language. For example, if one party is supposed to be warranting that the material is free from defects then it should be expressed adequately as a warranty. On the other hand, if “agreed” statement is intended to limit one party’s liability if the statement turns out to be true, then again the limitation of liability can be expressed better using other language.
Language of Performance
“The Seller hereby sells the shares to the Purchaser.”
The language of performance expresses actions that are accomplished by signing the contract (Adams Para 3.19).
The word “hereby” could be omitted from the language, but for certainty sake it is recommended that the word is kept because it is both grammatically correct, and it eliminates a possible interpretation that another sale of shares is being referred to (Adams Para 3.21).
Language of Obligation
“The Indemnified Party shall notify the Indemnifying Party of any claim.”
The language of obligation expresses obligations that are imposed on a party (Adams Para 3.44). It is recommended that the word “shall” should be used as the language of obligation (Adams Para 3.44).
In order to check if you have used the word “shall” correctly and consistently throughout a contract, replace the word “shall” with the words “has [or have] a duty to”, and if the sentence still makes sense then chances are that it the word has been correctly used as part of the language of obligation (Adams Para 3.48 and 3.78).
An example of a clause that fails the suggested test is “This agreement shall be interpreted in accordance with the laws of the Republic of South Africa.” It doesn’t pass the “has a duty to” test because it isn’t imposing an obligation on a party. The correct language to use for this particular clause would the language of policy.
Some consideration must be given to whether “shall” is the appropriate word that should be used for obligations, where other alternatives such as “must” and “will” might suffice. It is suggested that “shall” is the most appropriate word to express an obligation (Adams Para 3.62 – 3.72 and 3.108 – 3.111).
Language of Discretion
“The indemnified party may at its expense retain its own co-counsel.”
The language of discretion is used to convey that a party has the discretion to take a specified action (Adams Para 3.141).
When using the language of discretion, it is important to consider if the discretion is limited. If “the Seller may sell the Shares to Bob”, does this preclude the Seller from selling the Shares to anyone else? Care must be taken to avoid possible ambiguity (Adams Para 3.144 – 3.148).
Another consideration is if the discretion given to a party must be exercised in good faith. When considering this, it must be determined if the duty of good faith applies, and if so, if the legal jurisdiction allows this duty to be waived at all (Adams Para 3.169 – 3.183). The use of the term “in its sole and absolute discretion” when is an attempt to waive the duty of good faith that one part owes to another.
The timing of the exercise to the right must also be considered. When can the right be exercised? Can the right only be exercised once, or can it be exercised “on one or more occasions”? (See Adams 3.197 – 3.204)
Language of Prohibition
“The Customer shall not modify the Equipment without the Lessor’s prior written consent.”
The language of prohibition specifies what a party is prohibited from doing (Adams Para 3.223).
Language of Policy
“The laws of the Republic of South Africa govern all matters arising out of this agreement.”
The language of policy is used for rules that the parties must observe, but that don’t need any express action or inaction by a party (Adams Para 3.240).
Verbs in the language of policy must still be expressed in the present tense.
Language of Declaration
“The Seller states that the Equipment is listed in schedule A.”
The language of declaration is used to state facts. There are two different kinds of declarations:
- the statement of a fact that is known by one of the parties; and
- the acknowledgement of a fact by one of the parties (Adams Para 3.271).
It is suggested that only the words “states” or “acknowledges” should be used in the language of declaration, not the often used phrase “represents and warrants” (Adams Para 3.273).
Some thought must, however, be given to the phrase “represents and warrants”. In practice this phrase is used to cover different bases. This is because the breach of a representation and the breach of a warranty give rise to two different legal actions.
In both cases the remedy that is available to a party if the other breaches the contract are:
- rescission (cancellation) of the contract; and/or
- a damages claim to compensate for losses.
The difference between the two lies in the legal basis that the remedies stem from. The breach of a representation gives rise to a delictual remedy based on a misrepresentation, while a breach of a warranty gives rise to a claim based on the breach of contract.
Even though there is a legal difference between a representation and a warranty, both of these statements are a statement of fact. There is a strong argument that the verb that introduces the statement of fact (for example represents or warrants) will not alter whether the statement of fact is a representation or warranty, or both (Adams Para 3.278).
It is recommended that the term “represents and warrants” is not used to introduce a statement of fact, but that the general “the Party states that …” is used.
Language of Belief
“The parties believe that this agreement complies with the requirements of the National Credit Act.”
The language of belief is used to state an opinion that the parties to a contract have about the legal implications of an agreement or clause. This is because it is not up to the parties to decide if the agreement complies with the law, but this will later be determined by a court (Adams Para 3.319).
It has, however been suggested that the language of belief shouldn’t be used, but instead the statement should be stated in the language of declaration, namely to state a fact. This may, however, give rise to a cause of action if the statement of fact proves to be incorrect.
Language of Intention
“The parties intend that the Consultant will be an independent contractor.”
The language of intention is used for aspects of a relationship that can’t be established by the parties and is not in their control, but must be interpreted and determined by the court (Adams Para 3.322).
It may, however, still be useful to record the parties’ intention because a court might take into account the parties stated intention when interpreting the contract (Adams Para 3.330).
Language of Recommendation
“The Company recommends that the Participant consult with their personal legal advisor if …”
This language is used in a situation where a party with greater bargaining power wants to draw the other parties attention to a particular clause or legal consequences (Adams Para 3.332).
“If the Company receives a Notice of Transfer, it shall transfer the Shares.”
A condition refers to a future event that is uncertain (Adams Para 3.260). It should be expressed as an if/then statement. If [the uncertain event occurs], then [a party shall perform a specific obligation].
On the 13th May 2016 the High Court of South Africa (Gauteng Local Division) handed down its judgement in the class action certification case of Nkala and Others v Harmony Gold Mining Company Limited and Others.
This case certified the classes that will participate in the class action law suit that will be brought against thirty two different mining companies.
In the intended class action the applicant representatives want to institute action on behalf of all current and former underground mine workers who have contracted silicosis or pulmonary tuberculosis (TB), and on behalf of the dependents of these mineworkers who have died of these diseases, after 12 March 1965 (paragraph 40). The court was told that the number of potential class members could be between 17,000 and 500,000 people (paragraph 7).
The claim is based on the mining companies’ alleged breach of duties that they owed to their employees (paragraph 58). These alleged duties include the common law duty to provide a safe and healthy work environment, the duty to comply with the Mine Works Act No 12 of 1911 and the Mine Health and Safety Act No 29 of 1996, and the breach of certain constitutional obligations and rights (paragraph 58).
The court’s judgement will allow the class action to proceed, provided that the judgment is not successfully appealed.
The potential effect of this judgment does, however, extend beyond class action suits and has the potential to impact other cases where damages are claimed in the future. This is because the court’s decision develops the South African common law on the transmissibility of claims for non-patrimonial (general) damages.
The courts development of the common law on the transmissibility of claims for non-patrimonial (general) damages
In its judgment the court took the opportunity to develop the South African common law that regulates the transmissibility of claims for non-patrimonial (general) damages. In other words, the court developed the right that the estate of a deceased person has to sue, or be sued, for non-patrimonial (general) damages after the death of the person who suffered or caused them.
This relevant paragraph of the court’s decision outlining the common law development is:
In conclusion, we hold that the common law should be developed as follows:
A plaintiff who had commenced suing for general damages but who has died whether arising from harm caused by a wrongful act or omission of a person or otherwise, and whose claim has yet to reach the stage of litis contestatio, and who would but for his/her death be entitled to maintain the action and recover the general damages in respect thereof, will be entitled to continue with such action notwithstanding his/her death; and
The person who would have been liable for the general damages if the death of a plaintiff had not ensued remains liable for the said general damages notwithstanding the death of the plaintiff so harmed;
Such action shall be for the benefit of the estate of the person whose death had been so caused;
A defendant who dies while an action against him has commenced for general damages arising from harm caused by his wrongful act or omission and whose case has yet to reach the stage of litis contestatio remains liable for the said general damages notwithstanding his death, and the estate of the defendant shall continue to bear the liability despite the death of the defendant.Paragraph 220.
But what is the practical effect of this finding? To understand this, it is necessary to look at the distinction in that is drawn between patrimonial and non-patrimonial (general) damages in South African law.
The distinction between patrimonial and non-patrimonial losses
A patrimonial loss is a loss that causes a reduction in the value of a person’s estate, often through the decrease in the value of an asset that is owned (Visser and Potgieter Damages Second Edition 45). One method that can be used to determine the size of a patrimonial loss is by comparing the current value of a person’s estate after a damage causing event, with the value of the person’s estate before the event. The difference in these values would be the patrimonial loss that was suffered.
An example of a patrimonial loss is the damage suffered when a motor car is involved in an accident. The size of this loss can generally be determined based on a comparison of the value of the car before and after the accident.
Non-patrimonial (general) damages on the other hand don’t necessarily directly impact the value of a person’s estate. Non-patrimonial loss includes claims for money that results from:
- infringement of a person’s physical or mental interests, such as
- physical and mental pain and suffering;
- loss of amenities of life; and
- shortened life expectancy;
- defamation; and
- infringement of a person’s dignity (Visser and Potgieter 99 – 115).
Non-patrimonial losses are losses that are suffered that are highly personal in nature, and aren’t as easily quantifiable as patrimonial losses.
The two types of damages aren’t, however, mutually exclusive, and both types of damages can arise from the same action. For example, if a person is physically assaulted they might have to pay for medical attention (a patrimonial loss), but they might also suffer pain and suffering (a non-patrimonial loss). The person who was assaulted would be able to claim compensation for both of these losses that arose from the same action.
The previous common law legal position on the transmissibility of claims
Previously the common law only allowed claims for patrimonial losses to be transmitted. This means that if a patrimonial loss is suffered by a person who later dies, that deceased person’s estate may institute action to recover the patrimonial damages.
The common law did not, however, generally allow the estate of a deceased person to sue a wrongdoer for non-patrimonial losses that was suffered by the deceased. The exception to this rule is that if the deceased had already commenced the required legal action, and if the legal action had reached a stage referred to as “litis contestatio” before death, then the claim is transmitted to the deceased persons estate and it can be pursued (paragraphs 187 to 188).
In a court case the stage of litis contestatio is usually reached when the court pleadings have closed, namely once the issues in dispute have been identified by the parties through the exchange of the required court documents.
The court stated that due to the various court procedures the time between commencing the legal action and the legal action reaching the stage of litis contestatio can be long. If the person commencing the claim for non-patrimonial (general) damages dies during this period, then the claim falls away on death and his estate can’t continue with the legal action. However, if the stage of litis contestatio is reached before death then the deceased person’s estate will be able to proceed with the claim and claim the non-patrimonial (general) damages.
The court considered various foreign legal positions, and held that the South African common law had failed to keep up pace with the procedural development in the law.
The court accordingly decided to develop and alter the South African common law as it applies to the transmissibility of claims for non-patrimonial (general) damages, altering the law to make it so that a claim for non-patrimonial (general) damages it transmissible to a deceased person’s estate provided that the deceased person had merely commenced with the legal action. The court therefore removed the requirement that the court proceedings must have reached a stage of “litis contestatio“.
The practical effect of this development of the common law
The practical effect of this judgement is that claims for non-patrimonial (general) damages are now transmissible once legal action has been commenced.
This means that the estate of a deceased person can now continue with a claim non-patrimonial (general) damages that was suffered by the deceased, provided that the legal action has been instituted before death.
If a claimant dies after instituting legal action but before the issues in dispute have been fully identified by the parties through the exchange of the required court documents, otherwise known as the close of pleadings or litis contestatio, the claim is no longer extinguished and the claimants estate may proceed to recover both the patrimonial and non-patrimonial (general) damages that was suffered.
Note, however, that the parties have stated their intention to appeal the High Court’s judgment, so this might not be the final position on the transmissibility of claims.
The recent high court decision on an application to remove ten milkwood trees from a property in the case of Nanaga Property Trust v Director-General of the Department of Agriculture, Forestry and Fisheries and others ((4689/2014)  ZAECGHC 18 (16 February 2016)), is legally unremarkable yet at the same time highly informative.
The case is unremarkable in the way that court applied the principles of the Promotion of Administrative Justice Act No 3 of 2000 (PAJA) when setting aside a decision taken by the Department of Agriculture, Forestry and Fisheries (DAFF) to refuse an application to remove trees because the decision maker lacked the required authority.
The court, however, went a bit further in its judgement, and Hartle J took the opportunity to express an opinion on how the National Forests Act, No 84 of 1998 (National Forests Act) should be interpreted and applied in the future by DAFF. This was only an opinion (an obiter dictum) and is not binding on the department or on any court in the future, but the opinion could still be useful when assessing similar situations that could arise in the future.
The Nanaga Property Trust (trust) owned property at Kempton on Sea that was zoned for single residential use. The trust wanted to develop the property further and extend the modest residence that was situated on the property.
The trust submitted building plans to the local municipality, which approved the plans subject to the trust complying with the applicable provisions of the National Forests Act, expressed as follows:
[P]lease note, the National Forests Act (NFA) / Environmental Conservation Act (ECA) applies – it is up to each property owner to ensure that they familiarise themselves and comply with the provisions of the act prior to the clearing of any indigenous vegetation / tress (milkwoods etc.) The necessary permits can be obtained by filing in an application form at our Department … “.
The trust, assisted by its architect, contacted DAFF and was assisted by Ms Layini, a forester, who sent them what was believed to be the correct application form. The application form that was submitted by the trust was, however, incorrect because it was an application for a licence involving trees in a natural forest in terms of section 7 of the National Forests Act, and not the required application for a licence involving protected trees in terms of section 15.
A site inspection of the property was conducted by DAFF, and afterwards the application was refused. The refusal was conveyed through a letter received from Ms Layini. The reason given for the refusal was that:
… [e]xtending the building in any manner that will destroy natural forest cannot be allowed. … Section 3(3) of the National Forest Act states that natural forests must not be destroyed saved (sic) in exceptional circumstances, where, in the opinion of the Minister, a new land use is preferable in terms of its economic, social and environmental benefits. … [E]xceptional circumstances referred to in Section 3 are limited to development of national and provincial strategic importance, which excludes residential development”.Paragraph 13.
Eight months after the trust addressed a letter of complaint to Ms Layini at DAFF asking for the full record of her decision, the trust launched an application in terms of section 6 of PAJA to review and set aside DAFF’s decision to refuse the application.
The Court’s Decision to Set Aside the Department’s Refusal to Grant a Licence
The National Forests Act gives the minister the power to grant the licences needed in terms of section 7 or section 15 (section 7(1)(b)(i) and 15(1)(b)(i) respectively), but the act also gives the minister wide powers to delegate this power to a named official in the department, the holder of an office in the department, an organ of state, or any person who or which is not an organ of state (section 48(1)).
The questions that the court had to determine were:
- who made the decision; and
- was the person who made the decision, whether premised on section 7 or 15 of the National Forests Act, authorised to make the decision by the act itself or any applicable delegation.
DAFF’s answering affidavit in the case was deposed to by Ms Dzivhani, the Deputy Director General for Forestry Regulation and Oversight. Ms Dzivhani did not, however, clarify which official with the delegated authority was expected to consider the trusts application for a licence (paragraph 35 and 38). Later during the proceedings it was alleged that the decision on the trusts application was taken by Ms Sqwabe, the Deputy Director: Forestry Regulation and Support at the regional office (paragraph 30).
The court stated that it was a question of fact whether the decision to refuse the trusts application for a licence was taken by Ms Layini who was the forester that the trust was corresponding with and who had sent the rejection letter, or Ms Sqwabe who was a Deputy Director at the regional office (paragraph 30).
It was alleged by DAFF that the decision was taken by Ms Sqwabe who then instructed Ms Layini to convey the decision, and that Ms Layini was merely acted as a conduit for communication with the trust (paragraph 30 and 44)
The court looked at the facts surrounding the decision that was taken, including that:
- Ms Sqwabe was only identified as the decision maker once the authority of Ms Layini, the forester, was challenged (paragraph 45 and 49);
- Ms Sqwabe did not state what day she made her decision (paragraph 46);
- Ms Sqwabe did not visit the property and did not explain how she could have reached the decision (paragraph 47); and
- Ms Sqwabe did not state what input she received when making her decision, and what documentation or submissions she relied on (paragraph 47).
When considering the allegations the court found that the decision not to grant the licence application was, in fact, made by Ms Layini (paragraph 49 and 51).
The next question to be determined by the court was whether Ms Layini, the decision maker, was authorised to make the decision to grant or refuse the trusts application.
By considering the act and the written delegations of the minister’s powers, the court found that Ms Layini, a forester, was not authorised in terms of the National Forest Act or any applicable delegation to make the decision (paragraph 51). This lack of authority was also conceded by DAFF during the proceedings (paragraph 30).
It was this lack of authority by Ms Layini that lead to the court deciding to set aside DAFF’s decision to refuse the trusts application for a licence to remove the ten milkwood trees.
When setting aside DAFF’s decision the court declined to substitute its own decision for that of DAFF, leaving it up to the trust to submit a new application, and for DAFF to consider this new application afresh.
The court’s opinion on the proper application of the National Forests Act
After setting aside DAFF’s decision the court expressed an opinion on some of the other arguments that the parties presented in the hope of avoiding litigation between the parties in the future (paragraph 53).
The trust had alleged that its application to remove the ten milkwood trees was misconstrued by DAFF, and that is application was:
- treated as a request for permission for destruction of a forest (paragraph 73);
- equated to an application for the change of land use (paragraph 74); and
- viewed as an application for permission to build (paragraph 75).
When rejecting the trusts application DAFF relied on section 3(3) of the National Forests Act, stating that “natural forests must not be destroyed saved (sic) in exceptional circumstances … which excludes residential development” (paragraph 13).
The court, however, held that the application was not an application for either the destruction of a forest, the change of land use or for permission to build (paragraph 73, 74 and 75), but that all DAFF had to decide was whether it was permissible for the trust to remove the trees when taking into account the acts founding principles (paragraph 76).
The court highlighted that the National Forest Act does not have an absolute prohibition of the removal of trees, and the removal of trees in a forest is permitted in terms of the act (paragraph 83).
The court stated that because DAFF misconstrued the application as the trust alleged, it failed to apply the founding principles in a balanced way (paragraph 81 and 83).
The court then went on to consider what the position would have been if the trusts application would have resulted in the destruction of a forest. The court stated that even in this situation the minister would still have to consider the application, considering whether the change is preferable in terms of its economic, social and environmental benefits as required in terms of section 3(3) of the National Forests Act (paragraph 84).
The court stated that the principles laid out by the Constitutional Court in the decision of Fuel Retailers Association of South Africa v General-Director Environmental Management, Department of Agriculture, Conservation and Environment, Mpumalanga Province and others (2007 (6) SA 4 (CC)) would be applicable when DAFF considers an application that falls in the ambit of section 3 of the National Forests Act (paragraph 84). This includes the principle that:
- “sustainable development” does not mean the end of socio-economic development, but only regulates the methods used when development takes place;
- people and their needs must be placed at the forefront of environmental management;
- that the social, economic and environmental impact of a development must be considered, assessed and evaluated, and a decision must be in light of this assessment and consideration; and
- a decision must take into account the interests, needs and values of all interested and affected parties (paragraph 86).
By considering the provisions of section 3 of the National Forest Act against the principles laid out by the Constitutional Court, the court laid out 11 factors that may be relevant for DAFF to apply when considering an application that falls under section 3:
- the nature and degree of vulnerability of the forest type;
- the forests purpose and place in the grand scheme of things, namely does the forest serve an important function or provide an important habitat that contributes to biodiversity;
- the constitutional imperative to protect the environment generally;
- the objects of the National Forest Act as they are relevant to the particular forest and set of facts being considered;
- the fact that the National Forest Act does make provision for permits to be granted to remove protected trees;
- the vested development rights that the land owner has in its property;
- the fact that the plans for the extension of the property was validly approved by the municipality;
- the actual and projected effect of the removal of the trees;
- the owners right not be deprived of the use of his property;
- the social, economic and environmental impact if the permit is granted; and
- the social, economic and environmental impact if the permit is refused (paragraph 87).
The court stated that from the court papers filed by DAFF it was apparent that there was no consideration, assessment or evaluation of the social, economic and environmental impact of the particular application.
The final decision of the court to set aside the refusal of DAFF to grant the trusts application did not hinge on the departments failure to consider the application properly. From the court’s judgement it is, however, clear that Hartle J held the opinion that each application must be considered, assessed and evaluated against the applicable constitutional principles, and the failure to do so could be fatal to a decision taken by DAFF.
On 20 November 2015 the Financial Provisioning Regulations 2015 was published and became effective (GN R1147 in GG 39425 of 20 November 2015).
The regulations intend to regulate the financial provisions that holders of rights and permits must give in terms of the National Environmental Management Act, No 107 of 1998 (NEMA) for the cost associated with the management, rehabilitation and remediation of environmental impacts that result from prospecting, exploration, mining or production operations that are undertaken in South Africa (regulation 2 and 3).
This note highlights some of the regulations that holders of rights and permits should be aware of. A note setting out the transitional arrangements for financial provisions can be found here.
The requirement to provide a financial provision
Before conducting any prospecting or mining for minerals, or exploration or production of petroleum resources, a person must be grant granted an environmental authorisation in terms of NEMA (section 5A(a) of the Mineral and Petroleum Resources Development Act, No 28 of 2002 (MPRDA).
One requirement of being granted the environmental authorisation is that the applicant must provide the prescribed financial provision (section 24P(1) of NEMA). This financial provision is intended to cater for the rehabilitation, closure and on-going post decommissioning management of negative environmental impacts that may arise from the operations.
No prospecting or mining for minerals, or exploration or production of petroleum resources can take place unless the financial provision is in place and an environmental authorisation has been granted.
Methods that can be used to provide the financial provision
There are three financial vehicles that can be used to give the necessary financial provision. These vehicles can be used individually or as a combination. They are (regulation 8(1)):
- financial guarantee issued by a registered bank, insurer or underwriter;
- cash that must be deposited into an account administered by the Minister of Mineral Resources (“Minister“); or
- a contribution to a trust fund established specifically for this purpose, provided that:
- the trust fund can’t be used for annual rehabilitation, or for the final rehabilitation, decommissioning and closure at the end of life of the operations (regulation 8(1)(c)(i)); and
- the trust is established in terms of a trust deed that complies with the prescribed format (regulation 8(7)).
Quantum of the financial provision
The financial provision must be equal to the actual costs for implementing the following plans and reports for a period of at least 10 years (regulation 7):
- rehabilitation and remediation, as reflected in the “annual rehabilitation plan” (regulation 5(a) and 6(a));
- decommissioning and closure at the end of life of the operations, as reflected in the “final rehabilitation, decommissioning and mine closure plan” (regulation 5(b) and 6(b)); and
- remediation of latent and residual environmental impacts, including the pumping and treatment of polluted or extraneous water, as reflected in the “environmental risk assessment report” (regulation 5(c) and 6(c)).
These plans and reports are prescribed in the regulations (appendix 3, 4 and 5), so care must be taken to make sure that the plans and reports are compliant, and that they contain the prescribed minimum information (regulation 12(1), (2), and (3)).
The quantum must be determined by a specialist (regulation 9(1)), and in the determination the liability can’t be deferred against any assets at mine closure, or mine infrastructure salvage value (regulation 9(2)).
If the Minister is not satisfied with the determination, the Minister may request that the determination or assessment be:
- adjusted to a satisfactory amount;
- reviewed externally by another specialist; or
- confirmed by an independent assessor (regulation 14(2)(c)).
The holder of the right or permit is responsible for all costs related to the determination or assessment of the financial provision (regulation 14(3)).
Compulsory annual review and adjustment
An annual review of the adequacy of the financial provision must be done (regulation 11(2)), and must be submitted within 3 months of the end of the company’s financial year (regulation 11(3)(c)(ii)). This period can be extended by a maximum of 3 months if an application for extension, with reasons, is submitted to the Minister (regulation 12(7) and (8)).
The results of the assessment must:
- be audited and signed by an independent auditor;
- be included in the “environmental audit report” prepared according to the Environmental Impact Assessment Regulations 2014;
- be signed off by the chief executive officer, or person appointed in a similar position, and
- be submitted to the Minister (regulation 11(3) and 13(3)).
The independent auditor’s declaration must reconcile the financial provision with the estimates of rehabilitation exposure and liabilities (regulation 12(5)), and must include any contingent liabilities and restricted cash that may be associated with the financial provision liability (regulation 12(6)).
If there is a shortfall in the quantum of the financial provision, the financial provision must be increased within 90 days from the signature of the auditor’s report (regulation 11(4)(a)).
Any excess in the quantum of the financial provision can only be deferred against future assessments (regulation 11(4)(b)).
The public’s right of access to information
The holder of a right or permit must make its environmental management programme available to the public (regulation 13(1)).
The environmental management programme must:
- be published on the holders public website, if the holder has one;
- be available at the site office of the operations; and
- be accessible to the public on request.
Placing operations under care and maintenance
A holder of a right or permit must lodge an application with the Minister if they want to place their operations under care and maintenance (regulation 16(1)). No operation may be placed under care and maintenance without the Ministers approval (regulation 16(6)).
The application to place operations under care and maintenance must include:
- an explanation of the merits of placing the operation under care and maintenance; and
- a “care and maintenance plan“, that contains the minimum prescribed information (regulation 16(2) and appendix 6).
Permission to place an operation under care and maintenance can be granted for a maximum of 5 years, with or without conditions, and at the end of this period the approval will be reviewed by the Minister (regulation 16(4)).
The care and maintenance plan must be audited and updated annually (regulation 16(5)(b)).
The withdrawal of the financial guarantee by financial institutions
If a financial institution wants to withdraw the guarantee that it has provided for the financial provision:
- the financial institution must give the Minister at least four months written notice of its intention by registered mail (regulation 8(3)(a)); and
- the Minister must then give the holder of the right or permit 60 days to provide an alternate arrangement for the required financial provision (regulation 8(4)).
If the holder of the right or permit can’t provide an alternate arrangement within the 60 day period, the Minister must call on the financial guarantee. This money is then held by the Minister until an alternate arrangement can be provided for the financial provision (regulation 8(5)).
If the holder of the right or permit does provide an alternate arrangement then the Minister must release the first guarantee within 7 days of receiving the alternate financial provision.