Swissborough Diamond Mines (Pty) Ltd and Another Lesotho Highlands Development Authority (C. OF A. (CIV.) NO. 9 OF 1999)

Media Neutral Citation: 
[2000] LSHC 119
Judgment Date: 
1 January, 2000

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C. OF A. (CIV.) NO. 9 OF 1999

IN THE LESOTHO COURT OF APPEAL


Swissborough Diamond Mines (Pty) Ltd First Appellant

Rampai Diamonds (Pty) Ltd Second Appellant

V

Lesotho Highlands Development Authority Respondent


Coram: Beck A.J.A.

Ramodibedi J.A.

TebbuttA.J.A.

Zietsman A.J.A.

van

Deventer A.J.A.


Counsel for Appellants: M.Wallis S.C., with him Kemp J.Kemp S.C. Attorneys for Appellants: J.A.Redelinghuys and Co.


Counsel for Respondent: HP. Viljoen S.C, with him R.W.A. Macwilliam and

E.N.Keeton


Attorneys for Respondent: Webber Newdigate


Judgment


Beck A.J.A


In conformity with the nomenclature that has been adopted throughout the course of these proceedings, the first appellant will in this judgment be referred to simply as SDM, the fifth respondent as LHDA, and the Government of Lesotho as GOL.


In August 1988 a written mining lease agreement was concluded between SDM and the GOL in respect of an area in Lesotho Known as Rampai. This lease was registered in the Deeds Registry's Register of Mining Leases on 26 October 1988. In terms of the lease SDM was given the exclusive right to mine for precious stones in the Rampai area for a period of ten years from the date of registration of the lease in the Deeds Registry, with an option for SDM to renew the lease for a further five years.


The LHDA is a corporation created by statute in 1986 for the purpose of implementing a project designed to dam water in Lesotho and feed it to South Africa. One of the dams to be constructed was the Katse dam and it was to be built in the Rampai area. It was intended that this dam would be in place by November 1991, which meant that within a few years after the commencement of the Rampai mining lease a portion of the mining lease area would be flooded and impossible to be mined. This happened and SDM contends that it is entitled to claim compensation from the GOL and/or the LHDA amounting to many millions of moloti, for the loss of profit it says it would have made had it not been prevented from recovering considerable quantities of diamonds which, according to SDM, lie beyond its reach beneath the waters of the Katse dam.


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Before dealing with the litigation that has given rise to this appeal it is, I think, necessary to give very briefly a history of what occurred in Lesotho prior to 1991. Lesotho became independent from Britain in I966 and was then governed in terms of the Lesotho Independence Order, I966, as a constitutional monarchy under a King and a constitution to which I shall for convenience refer as the 1966 Constitution. The King was advised by a Cabinet, save in regard to certain functions and duties where he could act "in accordance with his own deliberate judgment" and "in his absolute discretion". In January 1970 the then Prime Minister Chief Leabua Jonathan, led a bloodless coup d'etat against the Monarchy and Order 1 of 1970, known as the Lesotho Order 1970, was passed which suspended the Lesotho Independence Order and consequentially the I966 Constitution. The Cabinet was replaced by a Council of Ministers. In1986 the Lesotho armed forces under Major General Lekhanya effected another coup d'etat ousting the Jonathan Government. Lesotho Order No. 1 of1986 and Lesotho (No. 2) Order (Order 3 of 1986) were passed providing for a Military Council upon whose advice the King had to act. A Council of Ministers was however retained to carry out administrative functions and to act as an advisory body to the Military Council. In 1990 the Lekhanya Government was displaced in yet another coup d'etat led by General Ramaema.


The events involved in the present litigation occured during the period in office of the Lekhanya Government. That litigation, which has now reached this court on appeal, originated in 1991 when the GOL had unilaterally cancelled the Rampai and other leases with SDM. Thereupon SDM, together with five of its subsidiary companies, brought an application to set aside the cancellation by the GOL of the Rampai lease as well as four other mining leases in other parts of Lesotho which the GOL had also concluded with SDM. In each of these five lease areas SDM had sub-contracted the mining work to a.


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subsidiary company. With regard to the Rampai lease area no substantive relief was sought against the LHDA by SDM, but the LHDA was nevertheless cited as a respondent. The application was granted and all five cancellations by the GOL of the mining leases it had concluded with SDM were set aside. However, in the same proceedings LHDA brought a counter-application to set aside as null and void the mining lease which the GOL had concluded with SDM in the Rampai area, and to expunge it from the Register of Mining Leases.


It must also be recorded that the GOL in1992 made a further attempt to have the leases set aside by passing the Revocation of Specified Mining Leases Order No. 7 of 1992, which refers to the SDM leases. This Order was set aside by both the High Court and, on appeal, by this Court as being ultra vires and void and of no force and effect in law.


The abovementioned counter-application, which was filed in March 1995, was opposed by SDM and by the second appellant herein, Rampai Diamonds (Pty) Ltd, which is the subsidiary company of SDM to which SDM sub-contracted the mining work in the Rampai lease area. Because of material disputes of fact which could not be resolved on the papers alone the counter-application was referred for the hearing of oral evidence, which hearing commenced on 20 May 1996 before the learned Chief Justice, Mr. Justice Kheola. The hearing was interrupted by a number of postponements for various reasons and it was not until 11 May 1998 that SDM and Rampai Diamonds (Pty) Ltd, the respondents in the counter-application, closed their case, by which time 54 court days had been taken up by the hearing. Thereafter a further 10 court days were taken up in August and October I998 by argument, and on 28 April 1999 the learned Chief Justice handed down his judgment. The relief that the LHDA had sought in the counter-.


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application was granted and the Rampai mining lease was declared null and void. Costs orders, to which reference will later be made, were in addition granted in favour of the LHDA.


The grounds on which LHDA had sought the setting aside of the Rampai mining lease as a nullity were that it had allegedly been concluded without a recommendation by the Mining Board that it be approved, and without prior consultation with and approval of the Principal Chiefs within whose areas of jurisdiction the mining lease area fell. It was submitted that such recommendation and prior consultation and approval were peremptorily enjoined by section 6 of the Mining Rights Act No. 43 of 1967, so that non­compliance with both, or with either, of these requirements invalidated the granting of the mining lease by the GOL to SDM and rendered it a nullity.


The learned Chief Justice upheld these submissions and found on the facts that LHDA had successfully discharged the onus of proving that neither of the abovementioned requirements had been complied with before the lease was concluded. The tactual finding that the prior consultation with and approval of the Chiefs was not obtained was not challenged on behalf of the appellants in this Court, but the finding that the recommendation of the Mining Board was not obtained was challenged. It was submitted however that, in any event, neither of these requirements continued to be peremptory requirements of the Mining Rights Act after the coup d'etat by Leabua Jonathan in 1970, and still less so were they peremptorily required after the military coup led by General Lekhanya in 1986.


Before turning to a consideration of these rival contentions it is necessary to refer to the,


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relevant statutory provisions which bear upon the issue.


Section 93 of the 1966 Constitution of Lesotho vested in the King in trust for the Basotho Nation the power to make grants of interests or rights in or over land, and provided that this power "shall be exercised by him and, on his behalf, by the Chiefs in accordance with the provisions of this Constitution and any other law". These rights of the Chiefs were derived from the customary law when traditionally they exercised powers over the areas under their jurisdiction.

With regard to the exercise "in accordance with the provisions of this Constitution" of the King's powers relating to land, he was enabled by section 76 (2) (h) of the Constitution to "act in accordance with his own deliberate judgment" and ''in his absolute discretion", this being one of the traditional powers as referred to above.


With regard however, to the exercise "in accordance with the provisions of..........any

other law" of the powers of the King and, on his behalf, of the Chiefs to make grants of interests or rights in or over land, one must turn to the Mining Rights Act and specifically to section 6 thereof, which stipulates how applications for the grant of mineral titles are to be made to the King and how they are to be processed and disposed of.


The first four sub-sections of section 6 are relevant for present purposes and they read as follows:


" 6. (1) The King and the Chiefs on his behalf, may in accordance with the terms of a recommendation of the Mining Board, and in the manner prescribed in this Act, but not


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otherwise, grant mineral titles.....but........nothing in this section shall be construed as

fettering the discretion of the King and the Chiefs on his behalf to refuse any grant recommended by the Mining Board.


(2) Any person may apply to the King for a grant of a mineral title......... The application shall be in writing and shall be made in the first instance to the Minister by whom it shall be referred to the Mining Board in order that the latter may make its recommendation.


  1. The Mining Board shall consider every application so forwarded, and may either decline to make any recommendation thereon, in which event it shall so inform the applicant, or may determine to recommend the grant of a mineral title of the kind applied for in respect of the land and on the conditions stated in the recommendation which may include conditions of the type referred to in sub-section (3) of section 8 and sub-section (3) of section 14. The recommendation shall be in writing and shall be forwarded to the Principal Chief or Ward Chief within whose jurisdiction the land in question falls accompanied (in the case of a recommendation for the grant of a prospecting lease or mining lease) by a written statement of the Mining Board's reasons for the recommendation, provided that no recommendation for the grant of a prospecting lease or mining lease shall be so forwarded unless the Mining Board shall have received from the applicant written approval of the terms of the lease which the recommendation purposes shall be granted.


  1. (a) Upon receipt of the application and the recommendation of the Mining Board thereon the Principal Chief or Ward Chief concerned shall consider them and.


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shall consult with all those Chiefs within the area of jurisdiction of each of whom any part of the land in question falls. If upon such consultation it shall appear to the Principal Chief or Ward Chief that a majority of those consulted approve of the grant of the application in terms of the recommendation he shall grant it accordingly; but if it shall appear to him that such majority, disapprove the grant he shall then, in his discretion.......


(i) grant the application in terms of the recommendation, or


(ii) refuse the application, or


(iii) refer the matter back to the Mining Board for its recommendation upon any alterations which that Chief may propose.


  1. If the application is granted in terms of item (i) of paragraph (a), the Principal Chief or Ward Chief concerned shall declare accordingly to the Mining Board, which shall inform the applicant and shall forthwith cause the relevant mineral title to be prepared. Upon the provision by the applicant of any guarantees or other instruments which the terms of the mineral title may require, it shall be signed by or on behalf of the King and the applicant in manner prescribed by paragraph (b) of sub-section (6) of section 24 and registered as so prescribed.


  1. If the aplication is refused in terms of item (ii) of paragraph (a), the Principal Chief or Ward Chief concerned shall declare accordingly to the Mining Board which shall inform the applicant.


  1. If the matter is referred back in terms of item (iii) of paragraph (a), the Mining Board shall consider the reference and, after consultation with the applicant, either withdraw the recommendation (which shall then lapse) or submit a revised recommendation in respect of which the provisions of sub-section (3) and paragraphs (a), (b) and (c) of this sub-section excluding sub-paragraph (iii) of paragraph (a) shall again mutatis mutandis apply."


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Section 5 of the Mining Rights Act provided for the establishment of a Mining Board and further provided that until such Board was established, its functions would be performed by the Cabinet. It is common cause that a Mining Board was not established. The parties were furthermore ad idem that during the Lekhanya Government the Council of Ministers was regarded as the Mining Board:


Mr. Wallis, who appeared on behalf of SDM in this Court, accepted that, while the 1966 Constitution remained in force, the requirements under section 6 of the Mining Rights Act that the Mining Board recommend the grant and that the relevant Chiefs consider the application and the Mining Board's recommendation, were peremptory requirements. However, as has already been mentioned, he submitted that the peremptory nature of these requirements was nullified under the constitutional dispensations ushered in by the coups of 1970 and 1986. Indeed, he contended that the whole of section 6 was set at nought under those dispensations.


The attack on section 6 of the Mining Rights Act rests first of all on the suspension of the 1966 Constitution by the Government under Chief Jonathan that successfully usurped power in 1970. That suspension did away with the grant to the King, under section 76(2)(h) of the Constitution, of an unfettered power in relation to land to "act in accordance with his own deliberate judgment" and "in his absolute discretion". Mr. Wallis submits that the whole purpose of section 6 of the Mining Rights Act was to control and direct the manner in which the King could exercise his constitutional power to act in relation to land, "in accordance with his own deliberate judgment" and "in his absolute discretion". It follows, so Mr. Waltis argued, that, the King's unfettered constitutional,


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power having been terminated by the suspension of the 1966 Constitution, the provisions of section 6 of the Mining Rights Act, which were designed to control and direct the manner in which that power could be exercised, must necessarily also have been terminated.


It is, of course, correct that the suspension of the 1966 Constitution put an end to the unfettered powers that were conferred on the King by section 76(2)(h) in relation to land, but it does not seem that it necessarily follows that this termination also put an end to section 6 of the Mining Rights Act. As Mr. Viljoen, who appeared for LHDA, pointed out, the preamble to the Mining Rights Act states that it is "to provide for rights to prospect and mine for Minerals in Lesotho", and section 6 deals with how applicants for such rights are to make their applications to the Minister, and how the Mining Board is to deal with such applications when they are referred to it by the Minister. No different statutory provision was ever made in 1970, or thereafter, to regulate the procedure for the making and consideration of such applications.


On the contrary, the Mining Rights Act was given continued validity from the time of the 1970 coup up to and beyond the time when the Rampai lease was concluded in 1988. Lesotho Order 1970, the Lesotho Order 1973, Lesotho Order No. 1 of1986 and Lesotho (No. 2) Order (Order No. 3 of1986), all contained a section 3 in the following terms:


"3 (1) Subject to this Order, all laws which were enforceable in Lesotho immediately before the coming into operation of this Order shall continue in full force and effect.


  1. Any existing law which is inconsistent with this Order shall, to the extent of such inconsistency, be void.

  2. This section is without prejudice to any powers to make provision for any,


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matter, including the amendment or repeal of any existing law.


  1. The existing laws shall, from the coming into operation of this Order, be construed with such modification, adaptations, qualifications and exceptions as may be necessary to bring them into conformity with this Order."


At pages 38 and 39 of the judgment in the case of Makenete v Lekhanya and Others C. of A. (Civ) 17 of 90, this Court quoted with approval the following passage taken from page 117 of the I943 translation by Anders Wedberg of Professor Hans Kelsen's work "General Theory of Law and State":


"Usually, the new men whom a revolution brings to power annul only the constitution and certain laws of paramount political significance, putting other norms in their place. A great part of the old order remains valid also within the frame of the new order. But the phrase "they remain valid" does not give an adequate description of the phenomenon. It is only the contents of these norms that remain the same, not the reason of their validity. They are no longer valid by virtue of having been created in the way the old constitution prescribed. That constitution is no longer in force; it is replaced by a new constitution which is not the result of a constitutional alteration of the former. If laws which were introduced under the old constitution "continue to be valid" under the new constitution, this is possible only because validity has expressly or tacitly been vested in them by the new constitution. The phenomenon is a case of reception (similar to the reception of Roman law)".


In accordance with this accepted principle the above quoted provisions of section 3 of the various Lesotho Orders effectively re-enacted the Mining Rights Act No. 43 of 1967, except for any possible inconsistencies therein with the new constitutional dispensation.


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Furthermore, as pointed out by Mr Viljoen, the Jonathan Government enacted the Law Revision Order, No. 11 of 1971, section 7 (1) of which provided that "Each of the volumes specified in section 2 shall....... be deemed to be and shall be without any

question whatsoever in all Courts of Justice and for all purposes whatsoever, the sole and only proper statute book of the laws of the year to which that volume relates, in respect of the laws in force on the 1st day of January, 1971".


The volume specified in section 2 of this Law Revision Order included the annual volume for the year I967 and the Mining Rights Act, I967, appears in full therein without any amendments.


In addition, the Jonathan Government promulgated the Law (General Amendments) Order No. 6 of I972 which amended section 7(10) of the Mining Rights Act by providing a right of further appeal to the Court of Appeal from any decision given by the High Court in an appeal to it in terms of section 7(6) or 7(8) of the Mining Rights Act. Section 7(6) deals with appeals to the High Court from decisions of the Mining Board, and section 7(8) with appeals to the High Court from decisions of the King made on appeal to him from decisions of a Principal or Ward Chief.


In the light of what is set out above the submission that the whole of section 6 of the Mining Rights Act was set at nought when the Constitution of I966 was suspended must be rejected.


Mr. Wallis' more forceful argument was that, if section 6, as it stands, was still in force at


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the time when the Rampai lease was concluded, then, by reason of the restricted nature of the King's executive authority under the successive coup governments, the provisions of section 6 relating to recommendation by the Mining Board and to approval by the Chiefs concerned, acting on behalf of the King, can no longer be held to be peremptory statutory requirements but must be construed as having directory force only.


Between 1970 and 1990, when a third, or Ramaema, coup successfully unseated the Lekhanya Government, the King's executive authority was limited to acting on the advice of the person or body in whom real executive power resided. In the Makenete case {supra) Ackermann JA describes, at pages 14 to 20 and 30 to 33 of the jugment, the nature and extent of the King's executive authority as it was affected by the Lesotho Order 1970, the Lesotho Order I973, the Parliament Act I983, Lesotho Order No. 1 of1986 and finally Lesotho (No. 2) Order (No. 3 of1986). Throughout those years executive authority was vested in the King acting firstly on the advice of the Cabinet, then after the 1970 coup on the advice of the Prime Minister, and finally - from (986 to1990 -on the advice of the Military Council.


In parenthesis, it should be said that in the first of these enactments - the Lesotho Order 1970 (Order No. 1 of 1970) - executive authority was vested, not in the King, but in the Regent. At the foot of page 30 and the top of page 31 of the Makenete case (supra) Ackermann J.A. said that 'The effect of the 1970 Constitution Suspension Order read with Order No. 1 of 1970, was to make a radical break with the past and in truth to abolish the Monarchy. The office of King was only re-established in the Office of King Order No. 51 of 1970." It seems however, that it was never the intention of Leabua Jonathan's Government to abolish the Monarchy, because on 7 April 1970, months


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before the Office of King Order No. 51 of 1970, which was promulgated on 20 November 1970, the Regent (Assumption of Office) Notice 1970 was gazetted. That Notice reads "Whereas the present holder of the Office of King, Moshoeshoe II, is to be absent from Lesotho and will for that reason be unable to exercise the functions of that office during the period of that absence: Now therefore, I Leabua Jonathan, Tona-Kholo, hereby notify for general information the assumption of office by Queen Mamohato Seeiso as Regent from the time of the departure from Lesotho of King Moshoeshoe II for the duration of that absence". (Emphasis added).


Be that as it may, Mr. Wallis correctly emphasised that the issue is not so much whether the Office of the King fell away and was reinstated subsequently, or whether it had what Mr. Wallis called "a tenuous insignificant existence" until reinstated, but what the effect of the coups was on the powers of the King.


As already stated, the unfettered power of the King in relation to land that was contained in section 76(2)(h) of the 1966 Constitution disappeared when that Constitution was suspended in 1970. When the Rampai lease was concluded in 1988 the constitutional position was governed by Lesotho (No. 2) Order 1986 (Order No. 3 of 1986). At pages 22 and 23 of the Makenete case (supra) the following was said of the King's powers at that time:


"In terms of Lesotho (No. 2) Order 1986:


  1. Executive and legislative authority in Lesotho was (by virtue of section 9 (1) vested in the King;


  1. The King, acting on the advice of the Chairman of the Military Council, was empowered to appoint the other members of the Military Council (Section 4 (2) (b)); and,


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  1. The King, acting on the advice of the Military Council, was likewise empowered to appoint the other members of the Council of Ministers.


  1. By virtue of section 10 the King, acting on the advice of the Military Council, could make laws for the peace, order and good government of Lesotho and could amend or repeal any law so made.


  1. The King was obliged, in consequence of section 9(2), to exercise his functions under the Order or any other taw (my emphasis) in accordance with the advice of the Military Council.


The aforegoing were the only powers and authority vested in the King after the1986 coup d'etat save that, in terms of the Office of the King Order No. 51 of 1970, the King was still Head of State, entitled to a civil list and had the right to be consulted and kept fully informed concerning matters of government No other prerogatives of the King survived."


Mr. Viljoen contended that these observations are not part of the ratio decidendi in deciding upon the effect of the 1990 coup on the King's powers, which was the issue that fell for decision in the Makenete case, and are therefore obiter. Whether or not they are obiter however, I am in respectful agreement with them.

Section 9 (2) of Lesotho (No. 2) Order 1986 reads: "In the exercise of his powers under this Order or any other law, the King shall act in accordance with the advice of the Military Council". The words I have emphasised subject the exercise of the King's functions under section 6 of the Mining Rights Act to being in accordance with the advice of the Military Council.


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It must be emphasised that the relevant powers had to be exercised by the King acting in accordance with the advice of the Military Council. It was not the Military Council on its own that exercised such powers or, as argued by Mr. Wallace, whose decisions "were the Law". It was only after the 1990 coup that the Military Council took full control of all executive powers (see the Makenete case, supra). However, while it is correct that Section 9(2) of the Order precludes the King from acting contrary to the advice of the Military Council in the exercise of his functions under section 6 of the Mining Rights Act, it does not necessarily follow that the requirements that the relevant Chiefs must approve or reject an application referred to them with the approval of the Mining Board are to be denuded of the peremptory force with which the wording of the section clothes them, so as to leave the Military Council free to grant mineral titles without those processes having been followed.


Although section 9 (2) of the Order entitled the Military Council to be the final arbiter as to whether or not, or on what conditions, a mineral rights title should be granted, the dictates of both common sense and of deeply rooted tradition enshrined in customary law concerning grants related to land point to prior consultation with, and agreement of, the relevant Chiefs being an absolute necessity. The peremptory requirement of section 6 of the Mining Rights Act that "the King and the Chiefs on his behalf, may in accordance with the terms of a recommendation of the Mining Board and in the manner prescribed in this Act, but not otherwise, grant mineral titles" is not inconsistent with section 9(2) of the Lesotho (No. 2) Order 1986. To be validly granted, an application for a mining lease must be dealt with by the King and the Chiefs in the manner prescribed by section 6 of the Mining Rights Act and the power vested in the Military Council to overturn such a


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grant, should it not agree with it, does not render the compulsory procedures that are enjoined by section 6 of the Mining Rights Act for validly obtaining the grant inconsistent with the provisions of section 9 (2) of the Order.


If these section 6 procedures had become mere directory procedures the Military Council would have been free to grant a mining lease without the application ever having been considered by the Mining Board or by the Chiefs. Not only is such a conclusion impractical, as well as being contrary to the long established tradition that rights pertaining to land fall to be dealt with by the Chiefs, but nowhere in the evidence was it ever suggested that this is how matters were understood at the time. On the contrary, General Lekhanya himself, who was called as a witness by SDM, said that "Without the Council of Minister's recommendations the Military Council would not approve any application". (The Council of Ministers, as set out above, was regarded by the Military Council as the body which was tasked with the functions of the Mining Board). Documents were also produced which emanated , in 1988 and 1989, from the Minister of Water, Energy and Mining, addressed to the Mining Board, in which the Minister wrote "The Mining Board may wish to note that in terms of section 6 of the Mining Rights Act No. 43 of 1967, His Majesty the King and the Chiefs on his behalf may, in accordance with the advice of the Mining Board, grant mineral titles. Therefore, consultations with Principal Chiefs is mandatory." And in a Brief addressed by the Attorney-General to the Minister of Law, Constitutional and Parliamentary Affairs in 1988 the Attorney-General wrote "the Mining Rights Act 1967 lays down the conditions and procedures for mining".


It must be concluded therefore that it was not merely a directory provision of the Mining Rights Act that an application for a mining lease be put before the relevant Chiefs, with.


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the recommendation of the Mining Board, for their approval on behalf of the King, but that these still were peremptory requirements, compliance with which was necessary for a grant of the application to be valid. It being common cause that no SDM application with a Mining Board recommendation was ever put before the Chiefs concerned for their approval it follows that there was no valid grant of the application and that there was nothing before the Military Council upon which that body could legally and properly advise the King. The Rampai lease was accordingly not validly granted and the Court a quo was correct in declaring it null and void.


In view of this conclusion it is unnecessary to decide whether or not the LHDA also succeeded in discharging its onus of proving that the Mining Board, in the form of the Council of Ministers, never gave its approval to the SDM application for a 15 year mining lease at Rampai.


It is necessary to turn next to Mr. Wallis' submission that the LHDA had no locus standi to bring the counter-application. He submitted that because LHDA had no direct interest in the agreement between the GOL and SDM, in terms of which the mineral lease in respect of the Rampai area was granted to SDM, it lacked locus standi to contest the validity of that agreement. In developing his argument Mr. Wallis relied upon such decisions as Ntai and Others vs Vereeniging Town Council and Another 1963 (4) S.A. 579 (A). United Watch and Diamond Co. (Pty) Ltd. and Others vs Disa Hotels Ltd. and Another I972 (4) SA 409 (C) and Wistyn Enterprises (Pty) Ltd. vs Levi Strauss & Co. and Another 1986 (4) S.A. 796 (T).


The cases of Ntai and United Watch deal with the question whether a sub-lessee has


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the necessary locus standi to contest the validity of the lease entered into between the landlord and the lessee. It was decided in these cases that the fact that the sub-lessee derives his rights from the lessee does not give him locus standi to intervene in the action between the landlord and the lessee. His rights being merely derivative he has no greater right than the lessee has and he therefore has no right to intervene in the action between the landlord and the lessee.

A case to similar effect quoted by Mr. Wallis is the Wistyn Enterprises case (supra). It was there decided that the right that a registered user of a trade mark has is also a derivative right. It is merely the right to use the proprietor's trade mark. The user therefore has no greater rights than the proprietor possesses. He therefore has no legal interest and no right to intervene in proceedings for the expungement of the trade mark.


In the United Watch case (supra) Corbett J. (as he then was) states that the right to intervene in legal proceedings is closely linked to the matter of joinder, and that where an applicant applies to set aside a court judgment he must show that he has an interest in the subject matter of the judgment sufficienly direct and substantial to have entitled him to intervene in the original application upon which the judgment was given. A sub­tenant, because he has no direct legal interest in proceedings between the landlord and the tenant, cannot claim the right to be joined in an action between the landlord and the tenant concerning the validity of the tenant's lease, even though the result of that action could directly affect the sub-tenant's sub-lease.


Relying upon the principles set out in these cases Mr. Wallis submitted that because LHDA has no direct interest in the mining lease granted by the GOL to SDM it has no,


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locus standi to contest the validity of that lease, even though the lease affects LHDA's rights to build the dam and to flood part of the area included in SDM's mining lease. In developing his argument Mr. Wallis drew a distinction between the procedure followed in granting SDM its lease and the result flowing from the grant of the lease. He submitted that the illegality, if any, complained of by LHDA stemmed only from the failure by the • GOL to observe the procedure prescribed for the granting of the lease. He submitted that LHDA had no direct interest in the procedure that was followed and that it therefore lacked locus standi to contest the validity of the lease.


The cases relied upon by Mr. Wallis are clearly distinguishable from the present case. LHDA's rights are not dependent upon any rights granted by the GOL to SDM. LHDA's rights are not derivative. They stem directly from a contract which LHDA concluded with the GOL. LHDA's case is that a separate contract, entered into between the GOL and SDM purporting to give SDM rights that are in conflict with the rights of LHDA, is void, and it claims that it has the necessary locus standi to have that contract declared void.


The present case is analogous to that of BEF (Pty) Ltd. vs Cape Town Municipality and Others 1983 (2) SA 387 (C). In that case it was held that the owner of a property had the necessary locus standi to bring an application to set aside a decision by the Cape Town Municipality which had approved the building plans of the owner of an adjoining property, which plans did not comply with restrictions contained in the titie deeds of the property.


In the earlier case of Patz vs Green & Co. 1907 TS 426 it was held specifically that a trader had the necessary locus standi to apply to court to prevent the trading of a


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competitor who was trading illegally.


In the present case it is clear that the contracts entered into by LHDA and SDM with the GOL created competing rights in respect of the relevant portion of the Rampai lease area. The validity of LHDA's contract is not contested. It alleges that SDM's competing rights were illegally granted, and under these circumstances it clearly has the necessary locus standi to apply to have SDM's contract set aside as being null and void. The point taken by Mr. Wallis in respect of LHDA's locus standi must therefore fail.


A further argument of Mr. Wallis was that the provisions of section 30 of the Interpretation Act No. 19 of 1977 had the effect of making unassailable the legality of the mining lease in question, no matter how many peremptory requirements had been disregarded in granting it. Section 30 of the Interpretation Act reads as follows: "30. Where an Act confers powers upon a person to -


  1. make any subsidiary legislation; or


  1. exercise any power, and the Act conferring the power prescribes conditions subject to the observance, performance or existence of which the power conferred may be exercised, those conditions shall be deemed to have been fulfilled if in the subsidiary legislation or instrument exercising the power there is a statement to the effect that the subsidiary legislation is made, or the power exercised, subject to the conditions prescibed by the Act".


That section, so the argument went, precluded any attack upon the validity of the mining lease in question as long as the lease contained a statement to the effect that there had


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been compliance with the provisions of section 6 of the Mining Rights Act. There is, so Mr. Wallis contended, such a statement.


The section is, to say the least of it, unusual and no corresponding or similar provision is, for example, to be found in any South African legislation. It can serve as a form of certification that the relevant requisite statutory conditions have been complied with - an administrative confirmation as it were, of the maxim omnia praesumuntur rite esse acta. However, it is also manifest that the functionary concerned with the matters referred to in the section could by an erroneous statement clothe with legality subordinate legislation or regulations or other administrative acts although the mandatory statutory requirements for their legality have been totally ignored. This is a far reaching concept. Moreover, the opportunities for corruption arising therefrom are obvious. The statement required by the section would, therefore, have to be in the clearest terms and couched in unambiguous language.


The express statement which the section requires is in the present case, according to Mr. Wallis, to be found in the heading of the lease in question which reads: "Mining Lease entered into in terms of sections 6 and 15 of the Mining Rights Act, 1967 (Act 43 of 1967)".


This merely states under which legislative provision the lease was entered into. The words are contained in a stereotyped mining tease annexed to a schedule to the Mining Rights Act which was promulgated almost ten years before section 30 of the Interpretation Act was inserted. They can by no stretch of the imagination be construed as stating, or intended to state (by the signatories), that the peremptory requirements of


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section 6 of the Mining Rights Act have been complied with.


Mr. Wallis also referred to section 24 (6) (d) of the Mining Rights Act and clause 16 of the lease. The former requires the signatory of the lease on behalf of the Government to satisfy himself that the grant of the lease "was made by the Principal Chief or Ward Chief concerned or, on appeal, by the King or the Court". The latter deals with registration of the lease. From neither of these could it be inferred that the peremptory requirements of section 6 had been complied with. This ground of appeal must accordingly also fail.


In the appellants' Heads of Argument a number of other issues were raised which allegedly precluded LHDA from obtaining the relief which it sought in its counter application. Those issues were: Estoppel; waiver; that the relief sought had to be considered in the context of the contract and in this context was precluded by the operation of the so-called "Turquand Rule"; and that, in any event, even if the provisions of the Mining Rights Act relating to the Mining Board and the Chiefs were mandatory, there had been a sufficiently substantial compliance with them. At the hearing of the appeal Mr. Wallis did not pursue any of these submissions and no more need therefore be said about them.


I turn finally to the question of costs. This involves a consideration of the costs of the appeal in this Court as well as a consideration of the costs order made by the learned Chief Justice in the Court a quo, there being a substantive appeal against that order.


It is convenient to deal with the latter first. As stated at the start of this judgment, the


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hearing in the Court a quo commenced on 20 May 1996. On the second day of the hearing Mr. Edeling who was counsel for SDM and Rampai Diamonds stated, in cross-examination of the first witness called on behalf of LHDA, Mr. T. Putsoane, that his clients' case was that "LHDA has consistently acted in contempt of the law"; that "LHDA and you (the witness) are being used as puppets...."; that "our case is further that there is a conspiracy against our clients to deprive them of their lawful rights. The conspiracy is one which has no regard for the statutes or the courts of this country, does not

hesitate to mislead this court, the LHDA is part of it.....". He went on to add "it is part of the conspiracy where there are common interests between the South African Government, the Government of Lesotho, the LHDA in the conspiracy to get rid of our clients' rights and with the willingness to mislead the Court witnesses are told what to say.....".


This alleged conspiracy was an issue throughout the hearing. A reading of the record shows, furthermore, that it was one which Mr. Edeling, on behalf of his clients, particularly SDM, pursued with a recklessness and an irresponsibility which can only be described as breathtaking, and with a total disregard of the proprieties expected of counsel in the conduct of his clients' case. Wide-ranging and scurrilous attacks were made on LHDA's witnesses, on the South African and Lesotho Governments, and on LHDA, all of which proved in the result to be baseless. Uncalled for and unwarranted attacks couched in the most intemperate language were also made by Mr. Edeling on counsel for LHDA.


In pursuance of the conspiracy issue there was also placed before the court on behalf of SDM on 21 May 1996 six lever arch files containing between I500 and 2000 pages of


24


documents most of which were not alluded to during the hearing. SDM moreover subpoenaed more than 109 witnesses, including the previous State President of South Africa, Mr F. W. de Klerk, the previous South African Minister of Foreign Affairs, Mr. R. F. (Pik) Botha, the then Minister of Water Affairs in South Africa, Professor Kader Asmal, and the Minister of Finance, Mr. Trevor Manuel. Of all these witnesses subpoenaed SDM only called three viz General J.M. Lekhanya, who was Chairman of the Military Council from January 1986 to May 1990, Mr. T. Makhakhe, who in I988 was the Principal Secretary in the Department of Water, Energy and Mining, and Mr. W.A. Labuschagne of the South African Directorate of Legal Services who was involved in the legal issues concerned in the Lesotho Highlands Water Project. All three denied that there was any conspiracy as alleged by SDM.


Mr. Labuschagne's evidence was marked by some extraordinary events. It was contended by Mr. Edeling that Mr. Labuschagne would be able to give evidence about the conspiracy and that it was he, and not LHDA, who was in fact instructing Mr. Viljoen, the counsel for LHDA. Mr. Edeling argued that although SDM had subpoenaed Mr. Labuschagne he was reluctant to call him as his witness as he wished to cross-examine him. This, of course, was objected to by Mr. Viljoen. Other counsel was then briefed for one day on behalf of Rampai Diamonds (Pty) Ltd. to lead Mr. Labuschagne in chief so as to allow Mr. Edeling to cross-examine him. This course was, however, abandoned and Mr. Edeling then called Mr. Labuschagne and almost immediately applied to have him declared a hostile witness. This was opposed and was quite rightly dismissed by the learned Chief Justice. Mr. Edeling nevertheless attempted to cross-examine Mr. Labuschagne. Objection was once more taken to this and Mr. Edeling then said: "We are going to show through this witness that exactly what we've said we are going to


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show, that the litigation decisions by LHDA is decided by that man sitting in the witness box (i.e. Mr. Labuschagne).... But it is now in the closing stages when we are going to prove these things which we said from day one".


In cross-examination Mr. Labuschagne denied these allegations and Mr. Edeling then suggested that Mr. Labuschagne had told "a pack of lies" and had perjured himself. Once again no justification for this can be found in the papers. However, to try and show that Mr. Labuschagne had lied an application was brought by SDM for further discovery of documents in South Africa. That application ran to nearly 1,000 pages of which only a minute portion was relevant and argument on the application lasted six days. The application was refused.


As a result of the allegations of conspiracy LHDA called Professor J.J. Gumey, Professor of Geochemistry at the University of Cape Town, and Mr. R. Van der Vlugt, a consultant engineering geologist, to counter SDM's allegations that there was no bona fide defence to SDM's claim (by leading evidence that there were no commercially viable diamond deposits in the Rampai area) and that LHDA's counter-application was to defeat that claim. Both Professor Gumey and Mr Van der Vlugt were vigorously cross-examined by Mr. Edeling, during the course of which it was suggested to Mr. Van der Vlugt that he was a dishonest geologist. This gratuitous suggestion had no basis and no evidence was led by Mr. Edeling to justify it.


Apart from the contentions put to the witnesses that a conspiracy as alleged existed (which, as stated, were all denied) no evidence was led on behalf of SDM, despite assertions that it would be, to substantiate any conspiracy. The Court a quo accordingly found that the allegations of a conspiracy had not been proved and that the existence of


26


a conspiracy had not been established by SDM. It was correct in so doing.


In deciding on his order as to costs, the learned Chief Justice divided the time taken up by the hearing between the time spent on the conspiracy issue and the time spent on the issue of whether the approval of the Chiefs and the Council of Ministers was necessary (the validity issue). On both issues as set out above he found against SDM. He also had regard to the fact that during the hearing he had been obliged to carry out certain of his other functions as Chief Justice for which he arbitrarily allocated four days which he divided equally between the two issues. Considering that the manner in which the conspiracy issue had been pursued by SDM was worthy of censure and deserving of a punitive costs order, the learned Chief Justice made the following order as to costs: "Although the issue of conspiracy was relevant I am of the view that the manner in which the case was conducted the issue of conspiracy became vexatious in the objective sense as the trial went on. I order that on the issue of conspiracy which was allocated 36 days I shall deduct two days and then order SDM to pay LHDA costs on the scale as between attorney and own client for 34 days such costs to include costs of two counsel.


On the issue of whether the approval of Chiefs and Council of Ministers was necessary I order SDM to pay costs to LHDA for 12 days on the scale as between party and party and such costs to include costs of two counsel"


In its challenge of that order in this Court SDM contended that the Court a quo had erred in awarding costs on the attorney and own client scale on the conspiracy issue and, in any event, had miscalculated the time of the hearing taken up by that issue. For the,


27


benefit of this Court Mr. Wallis re-calculated the time of the hearing, including the time spent on the argument at the end of the evidence, and submitted that 28 days should be allocated to the conspiracy issue and 28 days to the validity issue. We accept that division and the costs order in respect of the Court a quo wilt be framed on that basis.


As to whether a punitive costs order was warranted Mr. Wallis submitted that SDM's perception that a conspiracy was afoot was justified in the light of the following facts: (a) SDM's application for a mining lease in the Rampai area was granted by the GOL and, pursuant to an enquiry as to whether all necessary procedures had been followed, was assured that they had been. It had also been provided with a copy of the authorisation entitling the Mining Commissioner to sign the lease on behalf of the GOL. (b) The aforegoing notwithstanding, the GOL had tried to cancel the lease as it created problems for the LHDA and when such cancellation attempt was contested it had not been proceeded with, (c) Instead, the GOL had passed the Revocation of Specified Mining Leases Order No. 7 of 1992 which both the High Court and the Court of Appeal found to be void and had struck down, (d) LHDA had then applied to have the lease declared invalid, something which the GOL was not able to do. Against this background the perception that LHDA and the GOL were making common purpose was, so Mr. Wallis submitted, not an unreasonable one.


There is much substance in Mr. Wallis' submission but it is the manner in which the conspiracy issue was approached and pursued by SDM that, in this Court's view, is deserving of censure. Such conduct has been the subject of special costs awards in the courts of South Africa. The considerations in those cases are equally applicable in this country. In In Re Alluvial Creek Ltd. 1922 CPD 532 at 555 the Court said "an order is.


28


asked for that he pays the costs as between attorney and client. Now sometimes such an order is given because of something in the conduct of a party which the Court considers should be punished, such as malice, misleading the Court and things like that, but I think the order may also be granted without any reflection upon the party where the proceedings are vexatious, and by vexatious I mean where they have the effect of being vexatious,, although the intent may not have been that they should be vexatious. There are people who enter into litigation with the most upright purpose and the most firm belief in the justice of their cause, and yet whose proceedings may be regarded as vexatious when they put the other side to unnecessary trouble and expense which the other side ought not to bear. That I think is the position in the present case".


In Protea Assurance Co. Ltd. vs Jannszkiewicz 1989 (4) S.A. 292 (W) at 298 D - 299 B. Goldstone J. (as he then was), in reference to an attack on a fellow practitioner by an attorney and on the former's client, said the following: "In my opinion these attacks made upon Jordaan, on the evidence placed before the Court in Mr. Eiser's affidavit, are scurrilous. It is unjustified by anything stated or done by Mr. Jordaan. If attorneys, as officers of the Court, behave in such a fashion towards each other such conduct can only reflect upon the dignity of the whole legal profession. Furthermore, such conduct brings not only the profession into contempt but indeed the whole system of justice and the Court. In my view it is at least highly arguable that Mr. Eiser apart from having acted unfairly and in an excessive fashion towards both the plaintiff and his attorney, has committed contempt of court......... In my view however having regard to the seriousness of the attack which Mr. Eiser made upon the plaintiff, who is a professional man, and against Mr. Jordaan, an officer of this court, it is proper that, as a mark of the court's extreme displeasure at this conduct, an award of attorney and client costs should-


29


be made. Insofar as this might be unfair upon the insurance company for whom Mr. Eiser acts, that is a matter to be settled between Mr. Eiser and his client."


As pointed out above the whole conspiracy issue was pursued in the most immoderate, irresponsible and scurrilous manner and fully deserved the description of it by the learned Chief Justice as "vexatious". It involved unjustified and baseless attacks upon LHDA, the Governments of South Africa and Lesotho and LHDA's witnesses, notably Mr.Putsoane and Mr Van der Vlugt, as well as SDM's witness Mr. Labuschagne. It also consisted of intemperate and baseless allegations against LHDA's legal representatives and, in particular, LHDA's counsel, Mr. Viljoen. On the considerations just mentioned a special order as to costs was merited. Additionally the Court a quo, as stated above, was subjected to an avalanche of irrelevant and unnecessary documentation. In Swissbourgh Diamond Mines vs Government of R.S.A. 1999 (2) S.A. 279 CD at 339 E - 1 the Court said: "Applying the principles laid down in decisions such as Nel vs Waterberg Landbouers Ko-operatiewe Vereeniging 1946 AD 597 at 607. it would appear that the applications to strike out are of such a nature that it would work an injustice were a special order as to costs not be made. The "document complaint" and its annexures were put together without any regard to the rules of practice and procedure and the laws of evidence. The plaintiffs simply endeavoured to overwhelm both the first defendant and this Court. They sowed as widely as they could in the hope of reaping sufficient to establish a case. In so doing they relied on speculative matter and then raised argument based on the speculation. They inundated both the first defendant and this Court with irrelevant material. This conduct merits censure. Notwithstanding being faced with the striking-out application in respect of the founding affidavit and the "document complaint", which should have indicated that restraint on the part of the plaintiffs was called for when.


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deposing to the replying affidavit, the replying affidavit is even more replete with offensive matter. Plaintiffs thereby indicate complete disdain with the rules aforementioned." These remarks apply a fortiori to the present case.


For all the aforegoing reasons the Court a quo was justified in making a special order as to costs on the conspiracy issue. Should it have been one on the attorney and own client scale though? This is the severest form of special costs order as between litigating parties. In the light of what this Court feels was a not wholly unjustified perception by SDM that some form of conspiracy was afoot to deprive it of its rights, this Court is of the opinion that an order of costs on an attorney and client (not own client) scale would have been a sufficiently severe censure of SDM's extravagant and vexatious pursuit of the issue.


It must be added that the conduct of Mr. Edeling is deserving of this Court's disapproval in the most stringent terms.


One turns to the costs of the appeal. The appeal having failed, save on a portion of the costs order of the Court a quo which in the overall picture does not detract from the substantial success of LHDA, the costs of appeal should follow the result.


Mr. Viljoen submitted that should the appeal not succeed the appellants should be ordered to pay costs on the attorney and client scale. His grounds for this submission are (a) that the appellants persisted in the conspiracy issue - it was a ground of appeal and was only abandoned on 12 May of this year; (b) that the appellants again overwhelmed both this Court and the respondents with an excess of documentation,,


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most of which was not relevant to the appeal; and (c) appellants persisted in challenging the costs order of the Court a quo.


As to (a) and (c) this Court finds that the appeal on the conspiracy issue was not abandoned unduly late and that on the costs question appellants have enjoyed a measure of success on appeal. No reason therefore exists for a special order on these two grounds.


The record lodged with this Court contained a total of some 5478 pages which should, as appellants counsel conceded, not have been included. The South African Court of Appeal has on more than one occasion expressed its displeasure at the practice of placing unnecessary documents before it and has on this ground, on occasion, made punitive costs orders. As appellants have not succeeded in their appeal, disallowing them the costs incurred by this documentation would serve no purpose and the time and effort, if any, spent by LHDA's legal representatives on them can adequately be compensated by allowing LHDA the costs of three counsel. Mr. Viljoen requested such an order; Mr. Wallis opposed it. The relevant portions of the record run to well over 6,000 pages, the issues are complex and the answers to them difficult to determine. In this Court's view the employment of three counsel was warranted.


In the result therefore the following order is made:


  1. The appeal is dismissed with costs, such costs to include the costs of three counsel.


  1. The order of the court a quo is confirmed save as to the order as to costs which is amended to read as follows: LHDA's costs of the counter-application are to be paid as follows: (a) SDM is ordered to pay the costs of 28 days of the hearing on the scale as.


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between attorney and client; (b) The balance of the costs of the counter-application are to be paid by SDM on the scale as between party and party: (c) The costs in (a) and (b) are to include the costs of two counsel.



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Back A.J.A.


I agree


Ramodibedi J.A


I agree


Tabbutt A.J.A


I agree


Zietsman A.J.A


I agree


W. Van Deventer A.J.A.