ARC et al v Minister of Mines et al Hungwe J judgment ...



HIGH COURT OF ZIMBABWE

HARARE 24 September 2009 .

AFRICAN CONSOLIDATED RESOURCES 1st APPLICANT

And

CANAPF INVESTMENT (PRIVATE) LIMITED 2nd APPLICANT

And

DASHLOO INVESTMENT (PRIVATE) LIMITED 3rd APPLICANT

And

POSSESSION INVESTMENT (PRIVATE) LIMITED 4th APPLICANT

And

HEAVY STUFF INVESTMENT (PRIVATE) LIMITED 5th APPLICANT

And

OLEBILE INVESTMENT (PRIVATE) LIMITED 6TH APPLICANT

Versus

MINISTER OF MINES AND MINING DEVELOPMENT 1ST RESPONDENT

and

MINERALS MARKETING CORPORATION OF ZIMBABWE 2ND RESPONDENT

AND

ZIMBABWE MINING DEVELOPMENT CORPORATION 3RD RESPONDENT

COMMISSIONER OF POLICE 4TH RESPONDENT

HIGH COURT OF ZIMBABWE

HUNGWE J

HARARE 24 September 2009 .

Mr J Samkange for the Applicant

Mr S Maposa for the 1st and 4th Respondent

Mr Muchada for the 2nd Respondent

Mr JR Tsivama for the 3rd Respondent

HUNGWE J: This matter was initially launched as an urgent chamber application in HC 1390/07. The judge who was seized with the matter ruled that the matter was not urgent and declined to deal with it on that basis.

The papers demonstrate that an attempt was made thereafter to file it as an ordinary Court Application but somewhere along the lines it was not persisted with leading to the application being withdrawn when the present application was filed.

In this application the applicants claim the following relief:

1. That the ACR Claim issued to third, fourth, fifth and sixth applicants within the area previously covered by EPO 1523 are valid and that they have been valid since originally pegged.

2. That the rights granted to the third respondent by virtue of the Special Grant shall not apply in respect of the ACR Claims area and the third respondent cease its prospecting and diamond mining activities in the ACR Claims area.

3. That the second respondent return to the applicants the diamonds seized from the applicants together with all the other diamonds acquired by second respondent from the ACR Claims area or, alternatively, accounts for the proceeds of such diamonds which it had sold.

4. That fourth respondent order the Police to cease interfering with the applicants prospecting and mining activities and to restore law and order in the ACR Claims area.

5. That the first, second, third, and fourth respondents pay the applicants' costs on the legal practitioner and client scale, the one paying the other to be absolved.

It is appropriate to identify the parties in this application.

The first applicant is African Consolidated Resources Plc, a private company registered in the United Kingdom and with the London Stock Exchange.

The second to sixth applicants are local companies which in fact are wholly owned subsidiaries of first applicant.

Second applicant is the foreign investment arm of the first applicant.

The first respondent is the Minister of Mines and Mining Development for the Republic of Zimbabwe .

He is responsible for the administration of the Mines & Minerals Act [Cap 21:05] and mining affairs generally in Zimbabwe .

Second respondent is a Statutory body incorporated in terms of s 3 of the Minerals Marketing Corporation of Zimbabwe Act [Cap 21:04].

Third respondent is also a Statutory body incorporated in terms of the Zimbabwe Mining Development Corporation Act [Cap 21:08].

Fourth respondent is Commissioner of Police charged with the duty and responsibility for maintenance of the law and order in Zimbabwe .

The facts relevant for the determination of this matter have their roots in the events which occurred in the first quarter of 2006.

Prior to 2006 Kimberlitic Searches (Pvt) Limited, a subsidiary of De Beers, renowned international diamond prospecting mining and trading company held exclusive prospecting orders (EPOs) in respect of an area in Marange Communal Lands in Manicaland Province of Zimbabwe.

It is common cause that the EPO held by Kimberlitic were set to expire on or about 28 March 2006.

African Consolidated Resources (Pvt) Ltd ("first applicant") applied for authority to prospect for diamonds in the shaded area on annexure "B" to its founding affidavit. This is a portion of the diamond field area in Marange and is referred hereinafter as "the ACR Claims Area". The first applicant's applications were approved and it proceeded to peg claims in the area and applied for registration of numerous blocks of claims in the names of second, third, fourth, fifth and sixth applicants. As soon as the ACR Claims were granted the applicant proceeded to prepare for prospecting operations within its claims area, the ACR Claims area. This, preparation included substantial capital outlay for fencing off the area putting up buildings, recruiting staff etc.

It is common cause that the Assistant Mining Commissioner, Mutare, wrote on 21 July 2006 advising applicants that the claims they had registered that fell within the area of EPO 1523 had been invalidated because Kimberlitic Searches (Pvt) Ltd had already submitted an application for extension of their grants.

Further, it is agreed that the Mining Commissioner, Harare then wrote to the applicants on 15 September 2006 advising that the letter written to the applicants rescinding their claims was incorrect and, at the same time, assuring the applicants that their claims as stamped and signed were valid as at the date of issue.

However the Mining Commissioner, Harare later wrote back to the applicants.

Annexure "D" stating that his earlier letter was incorrect.

Thereafter the following occurred.

1. August 2006. First respondent acting in terms of s 35 of the Mining Act, reserved an area which included the ACR Claims Area against prospecting and pegging.

2. 11 September 2006. First respondent wrote to second respondent advising second respondent of the reservation stating that he had reserved the area to facilitate control over the area from possible illegal activities. He also asked second respondent to offer protection of the area and facilitate possible investment opportunities with local and foreign players for the exploration of the diamonds. Applicants contended that second respondent instead applied for special grants in the Reserved Area for the purposes of open cast mining.

3. 28 September 2006. First respondent visited the area with second respondent's officials.

The applicants allege that first respondent then addressed a large group of illegal miners telling them that second respondent was the only authority that was lawfully permitted on site and that it was the only authority that was permitted to collect or buy the diamonds being mined by the illegal miners.

4. 2 October 2006 Police warn the applicants to cease all clearing and fencing activities and to desist from all exploration and sampling activities on ACR Claims area.

The Provincial Governor for Manicaland together with first respondent's deputy arrive and address a large group of illegal miners.

They announce that the buying of diamonds was to commence immediately. Officials of second respondent begin to buy diamonds from illegal miners.

5. 27 November 2006 The Assistant Mining Commissioner Mutare writes to applicants stating that he had been instructed by Head Office to cancel ACR claims in terms of s 50 of the Mines & Minerals Act, [Cap 21:05] and gives notice to applicants that they had 30 days to appeal the decision to first respondent ("Annexure F").

The reason for cancellation is given as that the EPO 1523 was still current.

6. 15 January 2007 Andrew Cranswick, a director of the applicants, is summoned to Borrowdale Police Station by members of the Gold Squad who demand to be taken to applicants offices.

At the offices the Police details seize three sealed boxes containing 129-400 carats of diamonds.

They claim that they were acting on first respondent's instructions.

They do not leave a receipt for this haul. Applicants file a complaint with fourth respondent but gets no response.

7. On 23 January 2007 Cranswick is requested to appear at the Gold Squad offices to sign a warned and cautioned statement in respect of charges which the Police were now preferring against ACR of illegal possession of diamonds.

Applicants say they did all in their power to bring the authorities attention to their Plight without any favourable response.

They now seek the Order declaring their right as already set out above.

On the other hand the first respondent, "The Minister" maintains that the application has no merit at all.

The Minister bases his claim on the allegation that when applicants applied for and pegged claims in the disputed area, Kimberlitic Searches (Pvt) Ltd had applied for an extension to their EPO 1520 & 1523. These had already been processed notwithstanding that the Mining Affairs/Board sat after the expiry of both EPOs.

The Minister then goes on to argue that even if the EPO I 523 had expired, there are various other reasons why applicants claims are invalid.

He gives examples such as claims that covering land under cultivation or with permanent structures such as villages or school or failure to obtain written consent from a Rural District Council before pegging and so on.

In such an event, the Minister argues that since such irregularities contravene certain sections of the Mines & Minerals Act, the claims are therefore invalid.

As for the three conflicting letters emanating from his Ministry he says this was a result of communication breakdown.

He confirms visiting the area and does not deny the words imputed to him encouraging illegal miners to sell diamonds to second respondent.

He avers that due to the problems in Marange second respondent was tasked to "mop up" all diamonds in the area as a measure to prevent them from going in the illegal parallel market.

He concedes that second respondent is not mandated to buy diamonds.

Second respondent for its part contends that applicants have no title to the claims in question and therefore cannot be granted the order sought.

Second respondent averred in its founding affidavit that they were requested by first respondent to ''mop up" diamonds in the area.

It admits that there was a diamond rush in Marange resulting in illegal mining and illegal purchasing of the same by foreigners who smuggled it out of the country.

The country faced international sanctions if it did not do something.

In order to avert these sanctions, so says the second respondent, "with the full mandate of government, embarked on the cash in exchange for diamonds returned process."

This was not buying illegally obtained diamonds by illegal miners.

Elsewhere in its founding affidavit (para 14) the following appears

"Ad para 18

The entire contents of this paragraph are denied’. I restate that second respondent has not purchased a single diamond in the Marange area.

It reclaimed those diamonds and offered cash for them as an incentive, to ensure that the people in this area did not sell these diamonds to third parties in clear breach of the law and to the detriment of the country.

This was a solution identified as practical and workable in order to mop up the diamonds and prevent unlawful smuggling of the diamonds outside the country".

Third respondent associates himself with first and second respondents position in respect of lack of right by the applicants.

Their reasoning is that because the applicants claims were granted before the Kimberlitic Searches extension had been refused, then the applicants grants are invalid.

It further associates with the role second respondent is playing as a move to control the illegal activities in the area.

Third respondent is also of the view that the best way to stem illegal activities in the area is for second respondent to engage in what they both say is a process of rewarding those who surrender diamonds to second respondent.

They both say this is not buying of diamonds.

The third respondent disputes that the applicant is entitled to the relief sought.

It seems to me that the issue for determination in this case is whether the applicants acquired any right in respect of those claims pegged in the area previously covered by EPO 1523.

If they never acquired any rights that is the end of the inquiry. The application ought to be dismissed.

If however they did then the next stage of the inquiry would be whether the applicants would be entitled to the order it seeks in its present form.

Counsel for the State in his heads of argument concede quite rightly in my view, that in terms of the Act it is not permissible to extend an EPO which has expired.

In Prospecting Ventures Ltd Minister of Mines, Environment & Tourism & 2 Ors HH 125/99 CHATIKOBO J stated at p 8 :-

"... this letter (of 16 July 1997) purported to reverse a decision to extend EPOs 800 and 801. I say "purported" because the EPOs had run their full life and could not be further extended. The extensions were a nullity as they were not permissible in terms of s 94 of the Act......... The EPOs which had expired on 6 May 1997 could not be further extended".

See also Munamato v the. Mining Commissioner & 2 Others SC 31/00

It seems to me that the same reasoning applies to the facts in this case. EPO 1523 expired on 28 March 2006.

By that date the EPO had not been extended.

The reason for non extension of the EPO is immaterial because the effect of that non extension by that date is that the EPO expired.

Once it expired the applicants' claims could be lawfully registered over that land.

1 therefore find that ACR's claims were lawfully registered upon due application.

The first respondent relies on other "various" grounds for invalidating the applicants' claims.

He urges the court to find that some of the blocks are located on ground that is not open to prospecting.

These are claims which cover grounds under cultivation and land with permanent structures that include villages and a school.

Applicant claims should be held invalid on the ground that they, in such instances, contravene s 31 of the Act Sandawana Mines Ltd v Chingachura Exploration Ltd 1964 (1) RLR 21 sets out the approach to be adopted when interpreting the provision of the Act at p 31 D LEWIS J says:

"Prima facie, para (a) ... would appear to relate to a situation where the whole of the block has been located on ground not open to prospecting, and the Mining Commissioner then has a duty to cancel registration of the whole block, in the same way as it would have been his duty to refuse registration of the block as a whole if he had known the true facts at the time when registration was applied for.

The Act has to be benevolently construed, and if the Legislature had intended that the registration of the whole block must be cancelled merely because, a portion of it encroached on the ground not open to prospecting, it could easily have made this clear by referring to a block, "or any portion thereof' in the first part of the provision."

But this ground for invalidating the applicant's claims is not open to the first respondent for the simple reason that the notice for cancelling the claims relied on one ground i.e. currency of EPO 1523. It is not open to the respondents to now seek to rely on another ground.

Section 50 is quite explicit on this point.

In any event when pressed upon this point of whether s 50 provided the authorities to cite another ground for cancellation, I did not hear counsel for the second respondent or third respondent to persist with this argument.

Not all of the applicants' claims can be impugned by the irregularities set out in the first respondent's affidavit.

Those that are can be saved by severing the offending portion of the block from the rest of the block.

This is the approach taken in Falcon Gold Zimbabwe Ltd v Mining Commission & Ors HB 1/99. I associate myself with that approach which protects the miner's rights.

Argument was presented by respondents on the question whether, without having first exhausted their domestic remedies provided by S 50 (2) of the Act, the applicants could be properly before this court.

Before a court can decline to entertain an application for review on this ground, the court has to take into account a number of factors which include the subject matter of the statute, the manner in which such jurisdiction i.e. appellants is exercised including the power to redress or cure the wrongs.

Subsection 50 (2) provides that at least thirty days before cancelling a certificate of registration under subs (I), the Mining Commissioner shall give notice to the holder of the block or site of his intention to cancel such a certificate and the grounds for such cancellation and of the proposed date of such cancellation, and shall at the same time inform the holder that he may at any time before that date, appeal in writing to the Minister against such cancellation.

The facts of the matter are that the Assistant Mining Commissioner was instructed by the Chief Mining Commissioner to write to the applicants advising them that their claims have been cancelled on the ground that they had pegged within an EPO which was current. (Affidavit of Ruswa para 5.7)

Yet when the Mining Commissioner was approached by an officer over this letter invalidating or cancelling the claim soon afterwards, the Mining Commissioner professed ignorance of the issue.

He took the issue to his superior the Chief Mining Commissioner who also professed ignorance over the letter.

This led Shumba lo write back to the applicants stating, that the letter cancelling the claims was a mistake. (Mining Commissioner's affidavit p 5).

Shumba, to his utter shock, learnt at a social gathering that the Ministry had taken a position to cancel the ACR claims.

It is clear that the applicants' right to be heard was trampled in the most atrocious manner by the highest officials in the responsible Ministry and in all probability by the first respondent himself.

His behaviour in addressing a gathering encouraging lawlessness at the site is consistent with the inference any reasonable person can make.

What chance did an appeal to such a Minister stand? Probably that of an ice block in hell fire!!!

Therefore to insist that the applicants ought to have exhausted their domestic remedy is to be unrealistic.

To expect that his case can be heard afresh by a person who believes that sending a parastatal to practice the most rudimentary method of diamond mining and who openly encouraged the breakdown of law and order is to expect one to find a needle in a haystack.

The respondents were hell bent to evict the applicants.

In my view there is no merit in that argument.

The case for the applicants is established in the affidavits filed by the Assistant Mining Commissioner, the Mining Commissioner as well as by the first respondent’s heads of argument.

Once it is established that the applicants claims were lawfully registered it follows that they are entitled to the diamonds which they extracted from their claims.

As they were legally entitled to prospect, it can hardly be argued that they could not lawfully possess diamonds. In my view the applicants are entitled to the diamonds which they found on their claims. I say so for the following reasons.

Serious allegations were levelled against the police by the applicants in respect of both their role at the Marange diamond area generally and more specifically in respect of the eviction of the applicants from their claim in the ACR claims area.

In Harare the applicants claim that the police took 129 400 carats diamond from its offices without giving a receipt for it and claimed they were acting on the instructions of the first respondent.

This averment was not disputed by the fourth respondent. In fact the whole attitude of the police was to indicate that they will abide by the decision of this court.

The police have no business acting outside the law. To do so would be to abdicate their constitutional duty. Yet this is precisely what they did. To charge a person days later after dispossessing that person of valuables can only be conduct which should be condemned in the strongest terms. Such conduct confirms perceptions, which abound of influential members of society who use the security establishment to further not the national interest, but personal interest. The courts cannot but speak loudly against such an abdication of responsibility for the duty to protect rights to property. The papers before me paint a gloomy picture for the duty to protect our national heritage by those constitutionally charged with that responsibility.

I say this because the courts cannot accept that the whole State machinery cannot be said to have failed to restore order in Marange to the extent that a Cabinet Minister finds that the solution to lawlessness is to bring in parastatals to join a free for all with the police selecting who goes in and who does not.

This in essence is the effect of the affidavit filed by the second respondent when he states at para 9.2 that:

"It was therefore imperative that the second respondent begins its mandate by mopping up what diamonds it could in the area.

I must state that this process did not seek to overrun the effects by the police, who were conducting their own simultaneous operations but it was clear that people had devised means of evading the police as each sought some form of gain for their illegal efforts.

In order to avert imminent sanctions, second respondent with the full mandate of the government, embarked on the cash in exchange for diamonds returned".

Thereafter the respondents have the temerity to deny that they were not buying diamonds from illegal miners!!

In my respectful view, the government has the capacity to enforce law and order in Marange.

This matter demonstrates that either it is unwilling to do so for reasons best known to itself or it just will not do it!!

The courts will be failing in their duty if they did not pronounce themselves clearly in such situations.

The applicants’ rights have been contravened. They are entitled to a declaration of those rights.

I therefore issue the following order:

1. The African Consolidated Resources P/L claims issued to the third, fourth, fifth and sixth applicants within the area previously covered by Extension Prospecting Order 1523 held by Kimberlitic Searches P/L are valid and have remained valid since the date they were originally pegged

2. The right granted to the third responded by virtue of the Special Grant shall not apply in respect of the African Consolidated Resources P/L claims area as indicated on annexure "B" to the papers. In that regard it is hereby ordered that third respondent cease its prospecting and diamond mining activities in the said area.

IT IS FURTHER ORDERED AS FOLLOWS:

3. That second respondent return to the applicants possession the 129 400 carats of diamonds seized from applicants offices in Harare on 15 January 2007.

4. The second respondent return to the applicants all diamond acquired by second respondent from the African Consolidated claims area using the register kept by the second respondent in compliance with the Kimberley Process Certification Scheme.

5. That fourth respondent be and is hereby ordered to direct Police to cease interfering with the applicants prospecting and mining activities.

6. That first, second and third respondents pays applicants cost on a legal practitioner and client scale, the one paying the other to be absolved.

7. Any appeal noted against this order shall not suspend the operation of the order.

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