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IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG LOCAL DIVISION, JOHANNESBURG

CASE NO: 17/29163

In the matter between:

DIESEL POWER OPENCAST MINING (PTY) LTD                                             Applicant

and

MBALI COAL (PTY) LTD                                                                                         Respondent

 

J U D G M E N T

 

MAIER-FRAWLEY AJ:

 

Introduction

1. Diesel Power Opencast Mining (Pty) Ltd (‘the applicant’) is a mining contractor who was appointed by Mbali Coal (Pty) Ltd (‘the respondent’) to mine minerals (coal) at the Mbali Mine. The mine is located on property[1] over which the respondent (through its holding company) holds mining rights. The respondent is a wholly owned subsidiary of HCI Coal (Pty) Ltd (‘HCI’). HCI was granted a mining right by the Department of Mineral Resources over the property.

2. The provision of mining services was regulated by means of a written ‘Mining of Minerals Agreement,’ which the parties entered into on 19 November 2013 (‘the agreement’). The applicant was appointed to extract coal from the property through an opencast mining operation. It is common cause that the agreement terminated either on 12 or 13 April 2019.[2]

3. On Wednesday the 18^th April 2019 the applicant launched an urgent application for spoliatory and ancillary relief. The applicant seeks an order directing the respondent ‘to restore the applicant’s possession’ of :

3.1. the respondent’s coal stockpile on the property;

3.2. the workshop contained on the mine;

3.3. the applicant’s property contained in the workshop and site office on the mine, set out in a list in annexure ‘X’ to the notice of Motion.

4. Further orders sought include ‘authorising the applicant to enclose the coal stockpile at the mine with a fence, or such other practicable means, to prevent unlawful access to the coal stockpile by any third party’ as well as costs of the application.

5. The application was launched on an extremely urgent basis, such that the respondent was afforded less than 24 hours in which to file an answering affidavit before the appointed time for the hearing of the matter at 14h00 on Thursday the 18^th April 2019. The application became opposed. The respondent delivered its answering affidavit sometime after the appointed time but before the matter was heard at approximately 3h15 on 18 April 2019.

6. The applicant elected not to file a replying affidavit.[3] As such, the facts and allegations alleged in support of the respondent’s version in the answering affidavit stood undisputed and unrefuted.

7. The matter was opposed on the basis that the applicant had failed to establish its entitlement to relief under the Mandament Van Spolie by reason of the fact that the applicant had failed to establish on its papers that it had been in free and undisturbed possession of the respondent’s coal stockpile. The respondent submitted that not only was no express allegation to that effect to be found in the applicant’s affidavit, no factual basis was either provided in the founding affidavit to ground such a conclusion.

8. It bears mentioning that the respondent denied that the applicant had ever been in free and undisturbed possession of its coal stockpile or that the applicant was unlawfully dispossessed of its equipment and workshop.

9. On the respondent’s version, the applicant did not ever enjoy possession of any stockpile situated on the mine and in any event, the applicant had removed the bulk of its essential working equipment from the mine area by Tuesday the 16^th April 2019, i.e., prior to the launch of the application. The applicant had also been afforded access to any remaining equipment[4] left on-site and its workshop prior to the launch of the application.

10. As final relief under the mandament van spolie is sought in these proceedings, the test applicable in the determination of final interdicts finds application. See: Nienaber v Stuckey 1946 AD 1049 at 1053-1054.  The evidence is to be approached on the basis of the Plascon-Evans rule.[5] This means that absent a finding that the averments in the answering papers are so palpably far-fetched or so clearly untenable that they warrant rejection merely on the papers, the matter has to be decided on the common cause facts and on the respondent’s version.[6]

11. The applicant’s founding affidavit was deposed to by Mr Justin Colling (“Colling’), the chief executive officer of the applicant, while the respondent’s answering affidavit was deposed to by Mr Pieter Andries Terblanche (‘Terblanche’), the chief operating officer of HCI.

 

Background Factual Matrix

12. According to the respondent, it does not conduct all aspects of mining activities at the Mbali Coal Mine itself. It procures the performance of some of those functions through third party contractors, such as the applicant, which it did in terms of the parties’ agreement.

13. The mining work which the applicant executed under the agreement involved extracting the coal ore from the ground by removing the overburden and topsoil (i.e., those layers of soil and rocks overlaying the coal seams), carrying out blasting work and removing the coal from its in situ seams, and delivering the raw (‘run-of-mine’, colloquially ‘ROM’) coal to the respondent at a specified ‘Tip area’[7] where it is aggregated into a stockpile. The tipping area is in excess of 1,2 kilometres away from the applicant’s working areas at the mine.

14. All mining activities that precede delivery of the coal to the Tip area are carried out by the applicant. After delivery, mining activities, which include the so-called ‘Re-handling’ of the ROM coal, are performed exclusively by the respondent and the applicant has no obligation, right or duty in respect thereof.[8] The physical delivery of the ROM coal to the stockpile at the Tip area constitutes delivery of the product by the applicant to the respondent. It is common cause in these proceedings that the applicant duly delivered the ROM coal to the respondent as required.

15. It was not in dispute that the applicant had established a site office[9] and mechanical workshop at the mine in order to carry out its work, or that it brought all the equipment listed in annexure ‘X’ to the notice of motion onto the mining site. According to the applicant, it employed shift workers that operated its machinery and equipment. The workers are managed by supervisors and managers. Any equipment that was not physically in use was parked and remained on site. This cumulatively ensured that the applicant maintained a presence on site 24 hours per day, 7 days per week.

16. A dispute arose between the parties as to how the agreement terminated[10] and further in respect of the respondent’s communication, on 16 April 2019, of its decision not to make payment to the applicant in respect of its invoices for March 2019 or those yet to be rendered in April 2019.[11] Further disputes relate to a claim for damages which the respondent has asserted apropos the applicant’s alleged non-performance under the agreement.[12]  It is common cause that the disputes arising between the parties under the agreement are to be dealt with at arbitration in accordance with the provisions of clause 19 of the agreement.

17. In a letter addressed by its attorney of record to the applicant’s attorneys of record on Friday the 12th April 2019[13] (dealing with the reasons for the respondent’s cancellation of the agreement on account of a breach by the applicant of its obligations under the agreement, alternatively, the respondent’s acceptance of the applicant’s repudiation of its performance obligations under the agreement), the respondent asserted that it was entitled to employ a third party contractor to carry out the applicant’s obligations on site in order to ensure the proper production of coal from its operations,[14] which it advised the applicant that it intended to do, for which purpose the applicant was instructed to move its equipment to a safe area on the mining premises (which area would be communicated by the respondent to the applicant’s operators on Monday the 15^th April 2019).[15]

18. On Saturday the 13th April 2019, the applicant’s attorneys responded to the aforementioned letter advising, inter alia, that the applicant ‘has instructed its staff to cease working immediately and to commence moving its equipment to an area which it considers safe. Our client will commence demobilisation[16] at 07:00 on Monday, 15 April 2019.’

19. According to the deponent to the founding affidavit, the applicant was orally informed on 16 April 2019 of the respondent’s decision not to pay its invoices rendered for work performed in April 2019. In a letter addressed by its attorneys to the respondent’s attorneys on the same day, i.e., Tuesday the 16^th April 2019,[17] the applicant laid claim to a right of retention over the respondent’s coal stockpile on account of the value of the coal which it (applicant) had increased by the mining of the coal and threatened inter alia, to seek urgent relief to confirm the professed right of retention.

20. On the same day, being 16 April 2019, the applicant caused 3 trucks to be parked in front of the only 3 entrance gates to the mine, thereby blocking access to and egress from the mine. The blockage prevented any access to the mine for the respondent’s employees and third parties. The respondent states that its plant is located on the mine, and that the respondent employs 90 employees that operate the plant on a daily basis. This action prompted a letter to be sent by the respondent’s attorney to the applicant’s attorney on 17 April 2019 in which the applicant was inter alia, warned that its ‘behaviour’ was unlawful and in criminal breach of South African mining legislation and that the respondent was therefore compelled to remove the trucks in order to restore access to the mining area.

21. According to Colling (deponent to the founding affidavit), he had instructed the applicant’s employees on the mine ‘to exercise the applicant’s common law right of retention and to retain possession of the coal that the applicant had mined and which had been stockpiled at the designated area on the mine’. He states that the ‘only manner in which this could be achieved, given the size of the mine, was to blockade the entrances to the mine.’ He had also instructed the applicant’s employees ‘to retain possession of the applicant’s equipment, workshop and offices on the mine’ due to an (unconfirmed) report which he had received to the effect that the respondent was intent on disturbing the applicant’s possession and causing damage to the applicant’s property, i.e., its equipment, workshop and offices on the mine.

22. According to the respondent, despite requests to the applicant to remove the trucks from the entrance gates, it failed to do so. The respondent avers that it was without its consent and forcibly denied access to its property and it therefore had no choice but to remove one truck from the main entrance.[18] In addition, the blockage of access to and egress from the mine was in contravention of the relevant mining, health and safety legislation. The remaining two trucks were left stagnant in front of the other entrances. [19]

23. On 17 April 2019, the applicant caused a letter of demand[20] to be sent by its attorneys to the respondent’s attorneys in which it recorded, inter alia, the following:

‘ We are instructed that during the course of yesterday evening your client …disturbed our client’s possession of the property over which it is entitled to exercise a right of retention and is refusing our client access to the property of the mine in order to enable our client to restore its possession of the property over which it is entitled to exercise a right of retention.

In addition, your client’s refusal to allow our client access to the property is unlawfully interfering with our client’s rights of ownership of its equipment that is presently situated at the workshop established by our client on the property of the mine, possession of which our client has exercised throughout the duration of the agreement…’

The letter concluded with a demand for the restoration of the applicant’s ‘right of retention and possession’ and access to the mine by 12h00, failing which an application to court for urgent relief would be brought. It is clear from what is alleged in paragraph 61 of the founding affidavit that the property, over which the right of retention was asserted in this letter, was the respondent’s coal stockpile.

24. The applicant avers that the respondent’s unilateral action in locking it out of the premises and denuding it of its efforts to preserve its lien is what triggered the launch of this urgent application, warranting the intervention of the court to protect its rights.

25. In oral argument tendered at the hearing of the application, the applicant’s counsel submitted that what is sought by means of these proceedings is the restoration of applicant’s possession (of the coal stockpile and the applicant’s equipment) in confirmation of the applicant’s lien.  Juxtaposed against that case, is the respondent’s version that it ‘alone is and has from inception been in charge and in possession of the stockpile and dealt therewith in its absolute discretion and that the applicant does not, nor did it ever, exercise any control over or had possession of the stockpile.’ The respondent submits that the applicant has failed to prove its possession of the stockpile and has therefore failed to make out a proper case to meet the first requirement of the mandament van spolie.

 

Applicable Legal Principles

Mandament Van Spolie

26. In order to succeed with the mandament van spolie an applicant must allege and prove the following two requirements:

26.1. that he was in peaceful and undistubed possession of the property; and

26.2. that he was deprived of possession unlawfully.

See: Yeko v Qana 1973 (4) SA 735 (AD) at 739 E;

27. In Ngqukumba v Minister of Safety and Security 2014 (5) SA 112 (CC) at paras [10], [12] & [13], the Constitutional Court summarised the applicable principles pertaining to the mandament van spolie as follows:

“[10] The essence of the mandament van spolie is the restoration before all else of unlawfully deprived possession to the possessor. It finds expression in the maxim spoliatus ante omnia restituendus est (the despoiled person must be restored to possession before all else). The spoliation order is meant to prevent the taking of possession otherwise than in accordance with the law. Its underlying philosophy is that no one should resort to self-help to obtain or regain possession. The main purpose of the mandament van spolie is to preserve public order by restraining persons from taking the law into their own hands and by inducing them to follow due process.

[12] A spoliation order is available even against government entities for the simple reason that unfortunately excesses by those entities do occur. Those excesses, like acts of self-help by individuals, may lead to breaches of the peace: that is what the spoliation order, which is deeply rooted in the rule of law, seeks to avert. The likely consequences aside, the rule of law must be vindicated. The spoliation order serves exactly that purpose.

[13] All that the despoiled person need prove is that—

(a) she was in possession of the object; and

(b) she was deprived of possession unlawfully. ”

 

Improvement Lien

28. A lien (right of retention, ius retentionis) is the right to retain possession of another’s property, whether movable or immovable, to secure payment of an amount due to the person retaining possession. It is a means of securing payment of a claim relating to the expenditure of money or something of monetary value by the possessor (termed ‘retentor’ or ‘lien holder’), while exercising his or her lien on that property, until the claim has been satisfied. See: Brooklyn House Furnishers (Pty) Ltd v Knoetze and Sons 1970 (3) SA 264 (AD) at 270. It is apparent that a lien does not entitle the possessor the use of the object: he or she is entitled to hold it as security only.

29. A person who has spent money or done work on another person’s property generally has a right of retention over that property, operating against the entire world. This right may be either a real lien, a salvage and improvement lien, or an enrichment lien. The lien enables the retentor to retain possession of the property in question until the expenditure on the property has been compensated. See: Syfrets Participation Bond Managers Ltd v Estate and Co-operative Wine Distributors (Pty) Ltd 1989 (1) SA 106 (W) at 109H.

30. A lien for the recovery of useful expenses is termed an improvement lien. If successfully raised, the owner may not recover possession of the property from a person who is lawfully in possession and who has an underlying valid enrichment claim, unless and until the defendant has been compensated. See: Singh v Santam Insurance Ltd [1996] ZASCA 92; 1997 (1) SA 291 (SCA).

31. In practical terms, as continued physical possession is a prerequisite for the exercise of a lien, a party exercising the lien will ordinarily not be required to institute legal proceedings to establish and enforce the lien. If such party is wrongfully deprived of possession, its remedy would be to claim a spoliation and pursue a mandament van spolie.[21] Incidentally, one of the requirements for establishing a lien is the possession of the property which is sought to be retained. See: Brooklyn House Furnishers supra.

 

Evaluation

32. It is common cause between the parties that the respondent is the owner of the coal stockpile in question and that the applicant duly delivered the raw coal in question to the respondent. On the undisputed evidence of the respondent, the applicant mined the coal and then immediately delivered the coal to the respondent where after it enoyed no further control or possession of the coal. Delivery was effected at the Tip area by aggregating the coal into a stockpile. The respondent is and was at all times in sole, permanent control of the Tipping area, the stockpile and the plant (where Re-handling occurs). Once delivery takes place, the respondent acquires exclusive possession and control of the coal that has been stockpiled.  Moreover, the undisputed evidence of the respondent is that the stockpile consists of a mere 1500 tonnes of unprocessed coal with a market value ‘as is’ of approximately R275 000.00.

33. Salient aspects of the factual averments made in support of the respondent’s version are quoted below for ease of reference:

“ [14] The physical delivery of the ROM coal to the stockpile at the Tip area, constitutes delivery of the product by Diesel Power to the respondent.

 [15] Forthwith upon the ROM coal so being delivered, the respondent takes possession and control of that material for so-called ‘Re-handling’. Re-handling entails crushing the ROM coal to the size stipulated by the end-buyer and thereafter washing (and blending, if necessary) the coal to achieve the required chemical, mostly calorific profile stipulated by [the] end-buyer.

 [16] This re-handling is performed exclusively by the respondent. Diesel Power has no obligation, right or duty in respect thereof. It has no involvement with or right to the ROM coal once it is delivered to the stockpile at the Tip area.

 [17] …when the agreement was negotiated, all the parties envisaged that, at any given moment, a sizeable stockpile would exist. Indeed, if diesel Power were to have complied with its production obligations, such would have been the case. However, given its persistent production shortfalls, no stockpile of any meaningful reserves was ever accumulated. Simply put, whatever ROM coal was delivered by Diesel Power was taken up and processed as soon as possible by the respondent, in order to minimise, as far as possible, its own delivery shortfalls to the end-buyers.

 [18] …the respondent, at all times without exception, received delivery of the ROM material as it was placed on the (mini) stockpile at the Tip area, hence it “Re-handled’ the material, to the complete exclusion of Diesel Power.

 [19] The Tipping area is on average in excess of 1,2 kilometres away from the Diesel Power working areas. Diesel Power has, and had, no presence of any kind at the Tipping area. Its sole activity at the Tipping area was that its vehicles arrived for the sole purpose of tipping the ROM coal onto the stockpile and then immediately to return to the Diesel Power working area.

 [20] The respondent is, and was at all times, in sole, permanent control of the Tipping area, the stockpile and the plant (where Re-handling) occurs.

 [21] The respondent does not and did not report to or seek any permission from Diesel Power to deal with the stockpile. In short, the respondent alone is and has from inception been in charge and in possession of the stockpile and dealt therewith in its absolute discretion. Diesel Power does not, nor did it ever, exercise any control over or ha[ve] possession of the stockpile.  ”

34. The applicant elected not to engage with the substantive allegations made by the respondent in the answering affidavit. The allegations in the answering affidavit (quoted above) may therefore be taken as established facts.[22]

35. The founding affidavit contains a glaring absence of any description or evidence concerning the stockpile located on the mine or of any control and possession as may have factually been exercised by the applicant in relation thereto. Save for a few bald assertions as to the applicant’s possession in the correspondence of the applicant’s attorneys (for which no factual basis is provided) and one single allegation made without substantiating particularity in para 21 of the founding affidavit, to wit, that the respondent ‘…had thus unlawfully disturbed the applicant’s possession of the stockpile’, no-where is it alleged that the applicant was in free and undisturbed possession of the stockpile, supported by factual evidence to ground such conclusion.  Even assuming in favour of the applicant, namely, that the issue of its possession was sufficiently pleaded in the founding affidavit[23] (a matter of which I am not convinced),[24] the respondent made factual allegations that effectively belied such allegation in the answering affidavit. Insofar as the respondent’s allegations thereby raised a real dispute of fact on the papers (and I cannot find otherwise), by virtue of an application of the Plascon-Evans rule, the applicant would not be entitled to relief upon a consideration of the common cause facts[25] and the respondent’s version, which cannot be rejected out of hand.

36. During oral argument presented in court, the applicant’s counsel submitted that by virtue of the provisions in the agreement, in particular, the definition of ‘the property’[26] (at p. 60 of the papers) as read with clauses 2.4 and 3.1 of the agreement,[27] if the applicant was entitled to possession of the greater (i.e., the whole property - the whole mine), why would it not be entitled to possession of the lesser (i.e., the coal stockpile located on the property)? The argument, however, loses sight of the respondent’s undisputed evidence pointing to the facto position which is that it alone had and retained possession of the coal stockpile pursuant to delivery of the ROM coal. The applicant has therefore failed to prove that it was in free and undisturbed possession of the stockpile, notwithstanding its perceived entitlement to possession under the agreement.

37. During oral argument, the applicant’s counsel relied on the unreported decision of Close-up Mining (Pty) Ltd v Canyon Resources (Pty) Ltd (77941/2014) [2014] ZAGPPHC 981 (13 November 2014), a judgment of Bertelsmann J in the Gauteng Division,[28] For ease of reference, this case is referred to hereinafter as ‘the Bertelsmann judgment.’.[29] There Bertelsmann J stated that the work conducted upon the mining site by the mining contractor was by its very nature such that the mining operator had exclusive possession of the mining site (and shared possession of the yard) in order to fulfil its statutory functions and to carry out the work it contracted to perform, namely, the removal of coal from the opencast mine. The facts in that case demonstrated that the contractor was the primary user of the Yard, that its machines to the value of millions were stored there and that it had never relinquished possession thereof.

38. It should be noted that the conclusion reached by the learned judge in the Bertelsmann judgment (in relation to the contractor’s possession of the mining site and Yard) was supported on the peculiar facts of that matter. I agree with the respondent’s counsel that the Bertelsmann judgment is distinguishable on the facts of the present matter and as such, is not binding upon me. [30] Firstly, in the present matter the applicant is not seeking to exercise or preserve a retention right over the entire mine, as was the case in the Bertelsmann judgment. Secondly, the facts in the Bertelsmann judgment supported the conclusion that the applicant had possession of the mining are. Thirdly, the issue of the possession and control of the tipping area or any coal stockpile thereat did not arise for consideration, as is the case in the present matter.

39. The question of whether or not a party is in free and undisturbed possession of property such as to entitle it to relief ounder the mandament van spolie is required to be proven by means of evidence presented in its affidavits. At the risk of sounding repetitive, in the present matter, no substantiating factual evidence was presented by the applicant in support of its professed ‘possession’ of the respondent’s coal stockpile or in refutation of the respondent’s version that it (respondent) was in sole and exclusive possession thereof at all times. Moreover, on the respondent’s version, the stockpile has a minimal monetary value and even if the stockpile were to be have been held capable of being subject to a lien, it would not have served the purpose of securing payment to the applicant of its unpaid invoices, which aggregate in total an amount in excess of R16 million.

40. Given that (i) the applicant had already commenced demobilisation operations of its equipment two or three days before it sought to assert a lien over the coal stockpile (which property, on a consideration of the respondent’s undisputed version and other common cause facts, cannot be found in these proceedings to have been in the applicant’s free and undisturbed possession, whether at the time that the lien was sought to be asserted or when the respondent removed the applicant’s truck from the main entrance to the mine or at any other time prior thereto; and (ii) that the applicant had, on the respondent’s version, already removed most of its equipment from the mine by Tuesday the 16^th April 2019 and had been afforded access to the balance of the equipment that remained behind, it is axiomatic that the second requirement for relief under the mandament van spolie  has not been met.  The relief sought in paragraph 3 of the notice of motion accordingly cannot be granted.

41. It follows from the aforegoing that the application falls to be dismissed.

42. Mr Badenhorst SC who appeared for the respondent, submitted that the application was ill-conceived and brought in respect of a coal stockpile having a value that is so unsubstantial as to justify the invocation of the maxim ‘de minimis non curat lex.’[31] Moreover, the application was launched as a matter of extreme urgency, the day before the public holiday that heralded the start of the Easter long weekend, in circumstances where the respondent was afforded less than 24 hours in which to note its opposition and to file its answering affidavit and where the application was based on a lack of factual evidence or evidence that was insufficient for making out a proper case in order to meet the essential elements or requirements of the mandament van spolie. By virtue of the inordinately curtailed time constraints imposed upon it, the respondent was subjected to extreme inconvenience and hardship and moreover had to suffer the attendant expense of having to defend an unsustainable or unmeritorious claim. All these circumstances, so it was submitted, warrant the imposition of a punitive costs order.

43. Mr. Vetten who appeared for the applicant, persisted in seeking relief in terms of the notice of motion, together with costs.

44. Although the allegations in the founding affidavit were advanced without a proper factual basis, as indicated above (at least as regards the issue of its possession of the respondent’s stockpile), the litigation appears to have been pursued in the genuine albeit mistaken belief that a factual[32] and legal basis[33] existed for the relief sought therein. The fact that the stockpile itself holds nominal value,[34] all things considered, is not of its own definitive of the debate. The application was indeed brought as a matter of extreme urgency. I cannot however conclude that this in itself, together with the severely curtailed time constraints imposed for the filing of papers, amounted to an abuse of the process in the light of the respondent’s election, at the hearing of the matter, not to persist with its opposition in regard to urgency and did in fact file a succinct yet sufficiently detailed affidavit in opposition to the matter within the time available.

45. For these reasons, I am inclined to exercise my discretion in awarding costs on the ordinary scale in keeping with the general rule pertaining to costs.

46. I accordingly make the following order:

 

ORDER:

1. The application is dismissed.

2. The applicant is to pay the costs of the application on the scale as between party and party.

 

 

_________________

MAIER-FRAWLEY AJ

 

Date of hearing:                                  18 April 2019

Judgment delivered                            23 April 2019

 

APPEARANCES:

Counsel for Applicant:                        Adv. D. Vetten

Attorneys for Applicant:                     Edward S Classen & Kaka

                                                            Ref: E. S. Classen

Counsel for Respondent:                     Adv. C. Badenhorst SC

Attorneys for Respondent:                  Mervyn Taback Incorporated

                                                            Ref: L. Van Staden

 

[1] The property  in respect of which a mining right was granted to the respondent and in respect of which the respondent appointed the applicant to perform mining or mining services, includes portions 16, 17, 20, 31 and the remaining extent of portion 9 of the Farm Klippoortjie 32 I.S, measuring 204,779 hectares, on which the Mbali Coal Mine is located.

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