(HC-MD-CIV-MOT-REV-2023/00188 [2023] NAHCMD (27 June 2023) – whether the establishment of prima facie evidence of fraud on the part of Xinfeng entitled the minister to himself to revoke the mining licence?
Xinfeng Investments (Pty) Ltd applied for and was issued a mining licence by the Minister of Mines and Energy on 6 September 2022. Between 26 October 2022 and 29 March 2023, the Minister invited and received representations from Xinfeng on at least three occasions, on why the Minister should not, at first, cancel, and later, revoke, the licence.
The Minister extended the invitations because it appeared to him that Xinfeng had acted fraudulently during the application process by deliberately including
misleading, untrue and incorrect information in the documents Xinfeng supplied to the Minister, with the intention to mislead the Minister in his consideration of Xinfeng’s mining licence application.
Xinfeng disputed that it had committed fraud, and asserted that even if it did, the Minister did not have the power to revoke the licence; the Minister would have to approach a court to decide on the fate of the licence.
The Minister concluded that Xinfeng’s written and oral representations did not dispel his concerns, and confirmed his view of the fraudulent nature of Xinfeng’s conduct. On 29 April 2023, the Minister revoked the licence, and instructed Xinfeng to cease all operations on site, and hand over the licence by 31 May 2023.
On 8 May 2023, Xinfeng launched its application for review, coupled with an urgent application for an interim interdict, which was opposed by the Minister. The urgent application was heard on 23 May 2023.
MAASDORP AJ set out to determine the following issues:
Urgency: The degree of urgency with which Xinfeng launched and prosecuted the application for interim relief; whether Xinfeng had an adequate alternative remedy; whether the
balance of convenience favoured Xinfeng; and how the court should exercise its discretion in the circumstances.
Did the first respondent (the Minister) prove prima facie that the applicant (Xinfeng) had committed fraud?
Did the first respondent have the
power to revoke the decision in the presence of fraud, without express or implied authority to do so under the governing legislation, without having to approach a court for appropriate relief?
If the court finds that the first respondent proved fraud on a prima facie basis but did not have the power to revoke the decision without approaching a court for appropriate relief, should the
court still grant an interim interdict, provided the applicant met all other requirements for interim relief?
In arriving at his findings, MAASDORP AJ set out the law on each issue as far as necessary, and then applied the law to the facts, as follows:
In respect of urgency, to succeed with an urgent application for an interim interdict, Xinfeng must prove that it met the requirements of High Court rule 73. The key issue in this case was the degree with which Xinfeng brought its application for interim relief. The test on the appropriate degree was set in Luna Meubel Vervaardigers (Edms) Bpk v Makin and Another (t/a Makin’s Furniture Manufacturers) 1977 (4) SA 135 (W) at 137E-F, that:
‘Practitioners should carefully analyse the facts of each case to determine, for the purpose of setting the case down for hearing, whether a greater or lesser degree of relaxation of the Rules and of the ordinary practice of the Court is required. The
degree of relaxation should not be greater than the exigency of the case demands. It must be commensurate therewith.’
On the facts, the court agreed that the shortened timelines chosen by Xinfeng in which to prosecute the urgent application were commensurate with the exigencies of the matter, and it could not be faulted for its choice. Given the history of the matter, the Minister ought reasonably to have known, since 28 April 2023, that Xinfeng would be launching an urgent application and would have known the facts and legal contentions to be relied on, thus putting him in a fair position to answer such challenge. Thus, the court found that Xinfeng made out a case for the degree of urgency with which it approached the court for interim relief.
In respect of prima facie right, in terms of Hix Networking Technologies v System Publishers (Pty) Ltd 1997 (1) SA 391 (A) at 398-399 (as approved in Nakanyala v Inspector-General Namibia and Others 2012 (1) NR 200 (HC), the requisites for interim interdicts are:
a prima facie right,
a well-grounded apprehension of irreparable harm if the relief is not granted,
that the balance of convenience favours the granting of an interim interdict; and
that Xinfeng has no other satisfactory remedy.
To these must be added the fact that the remedy is a discretionary remedy, and that the court has a wide discretion.
Having set out the test and on who the onus lay, being on the Minister to prove that Xinfeng committed fraud in the process of applying for the licence, the court analysed the allegations of fraud by the Minister and the evidenced annexed to his affidavit, and found that such evidence supported his factual allegations of fraud. On the other hand, Xinfeng failed to furnish a convincing explanation in contradiction to the Minister’s case on fraud. As demonstrated by the court, its explanation was unnecessarily vague in many respects.
In respect of the Minister’s power to himself revoke a mining licence if the holder committed fraud without having to approach a court for appropriate remedy, and, even if he does not have the power, can the court grant an interim interdict to a beneficiary of an administrative decision where the court has found on a prima facie basis that the beneficiary’s fraud played a role in securing the benefit in the first place?, the court discussed the relevant legal principles of and authorities on administrative law, and concluded that the Minister succeeded in proving fraud on a prima facie basis, but he did not have power to revoke the licence without approaching a court.
The court found that Xinfeng made out at least a prima facie right to interim interdictory relief.
In respect of the balance of convenience, the court has to weigh the prejudice the applicant will suffer if the interim interdict is not granted against the prejudice the respondent will suffer if it is granted (LTC Harms LAWSA 2nd Ed LexisNexis 2008 Vol 11 par 406. On the facts, the balance of convenience was found to be in favour of Xinfeng – the prejudice Xinfeng would suffer was that it would have to stop all activities at the mining site, not carry out its environmental protection obligations, dismiss its employees, remove all equipment, while the Minister’s main prejudice was that it will likely not be able to make the mining claim available for new applicants.
In respect of adequate alternative remedies, Xifeng argued that it will have none, but the damages claim against the minister as it would stop all operations and leave the site. With regards to the option of the review application, such can turn out to be a drawn-out affair. As such, Xifeng had no adequate alternative remedy.
In respect of the court’s discretion, it was stated that:
‘[232] I do not agree that the decision to revoke is a policy-laden decision…the Minister’s case is that he found fraud, and that fraud unravels all. Both fall squarely within the domain of court,s unless a statute determines otherwise.
[233] This is not an application to stop the Minister from executing statutory powers… The Minister does not have power under the Minerals Act to revoke ML243 for the reasons he provided. Granting an interim interdict will not amount to undue interference by the Judiciary with the statutory functions of the Executive. It also will not undermine the authority of the legislature who passed the Minerals Act, or the member of the Executive who must administer the Minerals Act. [234] It is correct that turpitude is an established reason for denying an application for interim relief (CB Pres The Law and Practice of Interdicts 9th Impression Juta 2014 at 246). But it always depends on the facts. I am not convinced that it is necessary or appropriate to deny Xinfeng relief. The legal issues at stake, the rule of law considerations discussed earlier, and the balance of convenience that favours Xinfeng, inform my discretion to grant the interim interdict, despite the finding of fraud on a prima facie basis.In the premises, it was found that:
The first respondent proved prima facie that the applicant committed fraud in the process of applying for the mining licence.
The first respondent did not have the power to revoke the mining licence without express or implied authority to do so under the governing legislation, but was required to approach a court for appropriate relief.
Despite finding fraud proven prima facie, the absence of authority for the first respondent to revoke the mining licence himself meant that the applicant had established a prima facie right.
As the applicant satisfied all the other requirements for an interim interdict, the court granted the interim interdict.
As a result, the matter was heard as an urgent one, and the respondents were interdicted and restrained from implementing in any manner the first respondent’s decision taken on or about 28 April 2023 to revoke his decision to grant the applicant the mining licence. The first respondent was directed to pay the applicant’s costs of suit in respect of the urgent application for interim interdict, including the costs of one instructing and two instructed legal practitioners.
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