Hem Granite Industries (Pvt) Ltd v Keeley Granite (Pvt) Ltd

On 4 December 1994, the respondent (then known as Boma Granite (Pvt) Ltd) entered into a tribute agreement with the appellant for a three-year period (1 March 1995 to 28 February 1998). Under the agreement, the respondent was granted rights to mine, extract, process, and remove granite blocks from the appellant's mining location for its own account, subject to paying 10% royalty on the "at quarry" value of minerals won. The respondent extracted granite blocks of poor quality which became difficult to sell at prescribed prices. In October 1997, the respondent gave notice of termination effective 28 February 1998 due to uneconomic operations, which the appellant accepted. At termination, 188 granite blocks won by the respondent remained at the mining location. The respondent's officials regularly visited to check on security and show potential buyers. In 2005, market conditions improved and the respondent attempted to remove the blocks in December 2005, but the appellant prevented removal, claiming ownership.

• Whether ownership of granite blocks won under a tribute agreement vested in the tributor or remained with the grantor until payment of royalty
• Whether the respondent had abandoned the granite blocks by leaving them at the mining location after termination of the tribute agreement
• Whether termination of the tribute agreement extinguished accrued rights of ownership in granite blocks already won by the tributor
• Whether a new agreement on royalty was required before the respondent could remove blocks after termination of the original tribute agreement

The appeal was dismissed with costs. The Court also ordered the appellant to pay costs relating to a withdrawn application for leave to lead further evidence.

Termination of a contract operates ex nunc (prospectively) and affects only the executory portion of the contract, leaving intact rights which were accrued, due and enforceable before termination. In the context of a tribute agreement, ownership of minerals won by the tributor vests in the tributor at the time they are won, subject to payment of agreed royalty. Where granite blocks have been won and are in the tributor's possession at the time of contract termination, the right to remove those blocks and the obligation to pay royalty calculated according to the original agreement terms are accrued rights and obligations that survive termination of the agreement and remain enforceable independent of the executory portion of the contract.

The Court noted the nature of tribute agreements as contracts sui generis, being neither a lease nor a sale at common law, citing with approval the dictum in Durma (Pvt) Ltd v Siziba that a tribute agreement is a concession by the mine owner to the tributor of a portion of the owner's incorporeal right in respect of minerals. The Court also observed that the obligation to pay royalty was a subtraction from the respondent's dominium in the granite blocks, representing consideration for the particular rights already acquired by the respondent.

This case establishes important principles regarding tribute agreements in mining law and the effect of contract termination on accrued rights in Zimbabwean (and by extension South African) law. It clarifies that: (1) ownership of minerals won under a tribute agreement vests in the tributor, not the grantor of the mining location; (2) termination of a contract does not extinguish rights that have accrued, become due and are enforceable prior to termination; and (3) the general rule that contract termination operates prospectively (ex nunc) rather than retrospectively applies to tribute agreements. The case provides guidance on the sui generis nature of tribute agreements and reinforces principles of fairness in balancing contractual performance and prestation.