Zincede Ngokwakho Housing (Pty) Ltd and Another v Matatiele Local Municipality

The Matatiele Local Municipality (respondent) owns property at Erf 1, Matatiele Commonage, known as Postershoek Quarry. On 22 May 2012, the Minister for Mineral Resources granted Zincede Ngokwakho Housing (Pty) Ltd (first appellant) a converted mining right over the property for 10 years to mine gravel under the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA). In August 2016, the Municipality and Zincede settled pending litigation, which resulted in a lease agreement concluded on 10 August 2016. The lease was to endure for the currency of the mining right plus any extension by exercising an option to renew. On 4 December 2020, Zincede ceded its mining right to Stonewell Quarry (Pty) Ltd (second appellant) with Ministerial consent. On 15 November 2022, Stonewell gave written notice to exercise the option to renew the lease. The Municipal Council resolved not to ratify the renewal but instead to sell the property. Stonewell applied for renewal of the mining right, which remained in force pending determination under s 24(5) of MPRDA. On 17 August 2022, the Municipality gave notice to vacate. The Municipality launched an application seeking a declaratory order that there was no valid lease, eviction of the appellants, and rehabilitation of the property.

• Whether the holder of a mining right is entitled to access property to exploit the mining right without the landowner's consent in the absence of a valid lease agreement
• Whether a mining right can be ceded without the consent of the landowner
• Whether the cession of a mining right from Zincede to Stonewell terminated the lease agreement between Zincede and the Municipality
• Whether the rights under the lease agreement were delectus personae (personal to the lessee)
• Whether compliance with s 54 of the MPRDA was required
• Whether compliance with regulation 34 of the Municipal Asset Transfer Regulations was necessary for the renewal of the lease
• Whether it is competent for counsel to abandon relief sought in the notice of motion through heads of argument without formal notice of abandonment

1. The appeal is upheld with costs. 2. The order of the High Court is set aside and replaced with: 'The application is dismissed with costs.'

The binding legal principles established are: (1) Section 5(3) of the MPRDA grants the holder of a mining right a statutory entitlement to enter and occupy land to which the right relates, subject to the provisions of the MPRDA. (2) A mining right confers limited real rights in respect of minerals and land, allowing the holder to access the property for mining purposes. (3) The cession of a mining right requires only Ministerial consent under s 11(1) of the MPRDA, not the landowner's consent. (4) The cession of a mining right does not automatically terminate associated lease agreements unless the rights under the lease are delectus personae (personal to the original lessee). (5) Rights under a lease agreement are not delectus personae where the lease is linked to a mining right, the cessionary intends to use the property for the same purpose (mining), and nothing in the lease suggests the rights were intended to be personal to the original lessee. (6) Both landowners and mining right holders are required by common law principles (reflected in s 5(3) of the MPRDA) to exercise their respective rights civiliter modo (reasonably) to allow co-existence. (7) Section 54 of the MPRDA applies where a holder of a mining right is prevented from commencing or conducting mining operations, not to situations where mining operations are ongoing. (8) A lease clause requiring Municipal Council ratification 'if required' by law does not grant the council unfettered discretion to refuse ratification but requires compliance with applicable law. (9) Counsel may abandon relief sought in pleadings through heads of argument without formal notice of abandonment, and such abandonment is generally binding on the party.

Makgoka ADP made several non-binding observations: (1) He noted that the three companies involved (Dorning Group, Zincede and Stonewell) were related companies controlled by the same shareholders, and that the cession was 'clearly a matter of convenience for the related companies, to enable them to manage their affairs in line with their commercial objectives.' (2) He observed that the High Court's approach that counsel cannot abandon relief in heads of argument without formal notice was incorrect, noting 'it is not infrequent in our courts for counsel to abandon the relief originally sought or to make concessions during argument... courts often accept counsel's authority to make these decisions on behalf of their clients, without requiring formal notice.' (3) He commented that the Municipality's failure to dispute Stonewell's right to renew the lease in pre-litigation correspondence was significant: 'the Municipality appreciated that the mining right and the lease agreement were inextricably linked.' (4) He noted that even without clause 15.4, 'if any law required the council's ratification, the option could not be validly exercised without it.' (5) Regarding the municipality's argument based on regulation 34, he stated: 'Having failed to authorise it, it is not open to the Municipality to argue that, because of a lack of public participation, there was no authorisation for the lease extension. Instead of embracing this self-serving argument, the High Court should have summarily dismissed it.' (6) He observed that Maccsand was 'of little relevance to the present case and thus of no assistance to the Municipality.'

This judgment is significant for clarifying the interaction between mining rights under the MPRDA and property ownership rights in South Africa. It establishes that: (1) A valid mining right confers on the holder a statutory entitlement to access and occupy the land for mining purposes, subject to cooperation with the landowner. (2) Mining rights may be ceded with Ministerial consent under s 11 of the MPRDA without requiring the landowner's consent. (3) The cession of a mining right does not automatically terminate associated lease agreements unless the rights are delectus personae. (4) The principle of civiliter modo requires both landowners and mining right holders to exercise their respective rights reasonably to allow co-existence. (5) Section 54 of the MPRDA applies where a mining right holder is prevented from commencing or conducting mining operations, not to ongoing mining arrangements. (6) Municipal Asset Transfer Regulations do not provide municipalities with unfettered discretion to refuse to extend mining-related leases. The judgment reinforces that mining rights create limited real rights that must be respected by landowners, while also requiring mining right holders to act reasonably. It provides important guidance on the relationship between national mining legislation and local government authority.