Case CCT157/18 
[2019] ZACC 36

 Date of Hearing:  07 March 2019
Judgement Date: 09 October 2019

Post Judgment Media Summary  

The following explanatory note is provided to assist the media in reporting this case and is not binding on the Constitutional Court or any member of the Court.

On Wednesday, 9 October 2019 at 10h00, the Constitutional Court handed down judgment in an application for leave to appeal against a judgment of the Supreme Court of Appeal. This matter concerned whether the right to a decision in respect of an application for a prospecting right is transmissible upon the death of the right-holder to the applicant’s heir, and, if so, whether the heir had to take legal action to assert such right in light of an invalid administrative action that granted a competing right to another party.

The late Mr Nicolaas Gouws (deceased) owned Driefontein Farm (property) in the district of Middelburg, Mpumalanga. There is a large coal deposit on the said property. Before the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA) took effect on 1 May 2004, the deceased was not involved in any mining. When the MPRDA took effect, unexploited mineral rights like those of the deceased became known as “unused old order rights”. The MPRDA afforded holders of unused old order rights an exclusive right, for a period of a year, to apply for a prospecting right under the MPRDA. If the holder made the application, the MPRDA extended the existence of the unused old order right until the application had been decided.

The deceased applied to the Department of Mineral Resources (Department) for a prospecting right over his property on 29 April 2005. On 3 May 2005, after the period of exclusivity had expired, the applicant, Magnificent Mile Trading 30 (Pty) Limited (Magnificent Mile), applied for a prospecting right over the same property. Both applications were accepted by the Department.

The deceased passed away in November 2005 while a decision in respect of his application was still pending. On 13 December 2005, the Department granted a prospecting right in favour of the deceased over another farm he had not applied for, being the Driefontein farm in the Wakkestroom district of Mpumalanga and, at the same time, granted Magnificent Mile a prospecting right over the deceased’s property. When Magnificent Mile sought to enter the property to commence prospecting, the deceased’s family refused entry, leading to a stand-off. The Department’s subsequent attempts to rectify their error and resolve the stand-off were unsuccessful.

Magnificent Mile brought a review application at the High Court contending that the right that the deceased enjoyed terminated when he died, with the result that no other right could have been granted to any other person pursuant to the application for a prospecting right he had lodged. Mrs Gouws, the deceased’s heir, opposed the application on the basis that the deceased’s right was transmissible first to the executor and ultimately to her as the sole heir. She also brought a counter-application seeking a declaratory order that the award of a prospecting right to Magnificent Mile was unlawful as Mr Gouws’ application enjoyed exclusivity until it was decided. The High Court held in Magnificent Mile’s favour. By this time, Mrs Gouws had also died and the executor of her estate was later substituted for her in the litigation. It is this decision that the Supreme Court of Appeal overturned. Magnificent Mile appealed to the Constitutional Court.

In the Constitutional Court, Magnificent Mile advanced two arguments: first, that the deceased was merely entitled to the right to a decision, which was not transmissible upon his death; and second, that the deceased’s heir ought timeously to have instituted legal proceedings to review and set aside the decision granting Magnificent Mile a prospecting right over the deceased’s property and not after nine years as was the case. Magnificent Mile submitted that if it succeeds on either of these arguments, its application must be granted.

Of the respondents, only the executor of the late Mrs Gouws’ estate had filed submissions before the Constitutional Court. She contended that the deceased enjoyed more than a right to a decision and that the right he enjoyed was transmissible. The executor also argued that Mrs Gouws, as the deceased’s heir, did not have to institute proceedings for the review of the award of a prospecting right to Magnificent Mile and that she was entitled, instead, to raise the question of the invalidity of the Magnificent Mile award as a collateral challenge in her counter-application.

In a judgment penned by Madlanga J (with Cameron J, Froneman J, Khampepe J, Ledwaba AJ, Mhlantla J, Nicholls AJ and Theron J concurring), the Constitutional Court held that, contrary to Magnificent Mile’s contention, the deceased held more than just a right to a decision. The MPRDA preserved a limited real right for the deceased. That was in addition to the right to apply to have, in respect of that preserved right, a prospecting right under the MPRDA. That preserved limited real right had value and because of that value, it was an asset in the deceased’s estate.

The Court also reasoned that the unlawful award of a prospecting right to Magnificent Mile over the deceased’s property did not wipe out the pre-existing right the deceased enjoyed. This was so because the validity of the deceased’s right neither hinged on nor was affected by the award to Magnificent Mile. This case was held to be different from cases where consequences owe, or would owe, their existence to an initially unlawful administrative action. The unlawful award granted to Magnificent Mile by the Department did not have the effect of obliterating the deceased’s unused, pre-existing old order right whose validity was not dependent on the unlawful award. Neither the deceased nor his heir, therefore, had to take legal steps to assert their right as contended by Magnificent Mile.

The Court declared that the old order right of the deceased remained valid, his application for a prospecting right was yet to be decided, and that the award of a prospecting right to Magnificent Mile was unlawful. The Court also ordered the Department to pay the costs of the appeal.

A separate concurring judgment by Jafta J agrees that the old order right in respect of which the deceased applied for a prospecting right on the property was transmitted into his estate upon his death. The concurring judgment also embraced the order in the first judgment. The concurring judgment added that administrative actions, just like laws, are presumed to be valid until declared otherwise by a court of law and in a case like the present where facts established that the administrative action in question was illegal, it must be taken that the presumption has been rebutted. Therefore, where the presumption is rebutted, it is not competent for a court to insist that an illegal action be followed only on the basis that the action concerned has not been set aside in appropriate review proceedings.

Lastly, the concurring judgment held that concluding that the prospecting right awarded to Magnificent Mile was unenforceable does not mean that an illegal decision may never be enforced. Exercising its just and equitable remedial powers, a court may order that an invalid decision shall continue to operate until the defect is remedied by a competent authority. However, there were no reasons compelling that the unlawful prospecting right be treated as if it were valid in this case.

 

The Full judgment  here