THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT

Case No: 479/15

In the matter between

Reportable

PALALA RESOURCES (PTY) LTD

APPELLANT

and

MINISTER OF MINERAL RESOURCES AND
ENERGY

FIRST RESPONDENT

REGIONAL MANAGER: LIMPOPO REGION        SECOND RESPONDENT

HECTOCORP (PTY) LTD

THIRD RESPONDENT

Neutral citation:  Palala Resources v Minister of Mineral Resources and
Energy (479/15) [2016] ZASCA 80 (30 May 2016)

Coram:
Maya DP, Tshiqi, Majiedt, Wallis and Zondi JJA

Heard:
12 May 2016

Delivered:
30 May 2016

Summary:
Mining and minerals – Companies – interpretation and
application of s 56(c) of the Mineral and Petroleum Resources Development
Act 28 of 2002 and s 73(6A) of the Companies Act 61 of 1973 – deregistration
of a company which is the holder of a mineral prospecting right does not result
in that company irretrievably losing that right – subsequent restoration of
company’s registration having the legal effect of retrospectively reviving the
lapsed prospecting right.

______________________________________________________________

ORDER
______________________________________________________________

On appeal from: Gauteng Division of the High Court, Pretoria (Keightley AJ,
sitting as court of first instance)

(a)
The appeal is upheld with costs.
(b)
The order of the court a quo is set aside and substituted with the
following:
‘1
The first respondent’s decision on 30 April 2014, upholding the third
respondent’s appeal, is reviewed and set aside;
It is declared that the prospecting right (registered under the number
LP1488) granted to the applicant was retrospectively restored to it by
virtue of the restoration of the applicant’s registration as a company on
13 September 2010;
The first and second respondents are directed to take the necessary
and reasonable steps to give effect to the order in paragraph 2;
The third respondent is to pay the applicant’s costs of the application.’
______________________________________________________________

JUDGMENT
______________________________________________________________

Majiedt JA (Maya DP and Tshiqi, Wallis and Zondi JJA concurring):

[1] This appeal turns on the interpretation and the application of s 56(c) of
the Mineral and Petroleum Resources Development Act 28 of 2002 (the
MPRDA) and s 73(6A) of the previous Companies Act 61 of 1973 (the
Companies Act), which was in force at all material times. The appellant,
Palala Resources (Pty) Ltd (Palala), appeals against an order of the Gauteng
Division of the High Court, Pretoria, that Palala’s mineral prospecting right had
irretrievably lapsed upon Palala’s deregistration as a company and that the
subsequent restoration of its registration did not retrospectively revive the

lapsed right. The judgment of the court a quo is reported sub nom Palala
Resources (Pty) Ltd v Minister of Mineral Resources and Energy & others
2014 (6) SA 403 (GP). This appeal is with the leave of the court a quo.

[2] Prior to the hearing the parties’ attention was drawn to this court’s
judgment in Newlands Surgical Clinic (Pty) Ltd v Peninsula Eye Clinic (Pty)
Ltd [2015] ZASCA 25; 2015 (4) SA 34 (SCA). At our request they filed
supplementary heads of argument on the question ‘whether the appeal has
not become moot due to the expiry of the right despite the restoration
exercise’. I shall deal with that aspect presently.

[3] The common cause material facts are as follows. Palala was granted a
mineral prospecting permit on 20 May 2009 in terms of s 17 of the MPRDA. It
was thereby permitted to prospect for gold and pyrite on a designated
prospecting area on a portion of the farm Malamulele 234 LT in Limpopo (the
prospecting area). The mineral prospecting right was stipulated to endure for
a period of two years, ie until 19 May 2011. As a consequence of its failure to
timeously file its company returns, Palala’s company registration was
cancelled in terms of s 73(5) of the Companies Act with effect from 16 July
2010, when a notice to that effect was published in the Government Gazette
and on the website portal of the Companies and Intellectual Property
Registration Office (CIPRO). During 2010 (the exact date is not apparent from
the papers), the third respondent, Hectocorp (Pty) Ltd (Hectocorp), had
lodged with the Department of Mineral Resources (the Department) its first
application for the same prospecting rights previously granted to Palala. This
application was rejected by the Department’s regional manager on 31 August
2010 by reason of the fact that the ‘rights have already been issued to another
entity for the same minerals on the same area under application’.

[4] Palala’s company registration was restored on 13 September 2010 in
terms of s 73(6A) of the Companies Act. In the interim (again the exact date
cannot be discerned from the papers), Hectocorp had submitted a second
application to the Department for prospecting rights over the same property.
Despite Palala’s objection in this regard, Hectocorp was notified by the

Department’s regional manager that its second application to prospect for
gold on the prospecting area had been accepted. On 27 October 2010 Palala
submitted an application to the Department for the renewal of its prospecting
right. In reply, the Department advised Palala on 16 November 2010 that
Palala’s prospecting right had lapsed due to Palala’s deregistration. Palala
lodged an appeal against this decision with the Department on 27 June 2011.
The Acting Director-General upheld the appeal on 24 October 2011 on the
following basis: ‘. . . there was no sufficient proof that the Appellant was finally
deregistered, the deregistration process having been cancelled and thus it
has not been proven that Appellant’s prospecting rights have lapsed in terms
of section 56(c) of the Act’. Hectocorp successfully appealed in terms of
s 96(b) of the MPRDA against the Acting Director-General’s decision to the
first respondent, the Minister of Mineral Resources and Energy (the Minister).
In upholding the appeal, the Minister concluded that the Acting Director-
General’s findings that the deregistration process was not finalised and that
Palala’s right had been restored upon its reinstatement as a company was
‘clearly misguided and misleading’. Palala sought a review and setting aside
of the Minister’s decision. Keightley AJ dismissed the application with costs on
the basis that Palala’s prospecting right had lapsed upon its deregistration
and that its subsequent restoration did not retrospectively revive the lapsed
right.

[5] Section 56 of the MPRDA provides as follows:
‘Any right, permit, permission or licence granted or issued in terms of this Act shall
lapse, whenever . . . a company or close corporation is deregistered in terms of the
relevant Acts and no application has been made or was made to the Minister for the
consent in terms of section 11 or such permission has been refused.’
This court has held that deregistration has the effect of putting an end to a
company’s existence and that ‘its corporate personality ends in the same way
that a natural person ceases to exist on death’ (per Cloete JA in Miller &
others v Nafcoc Investment Holding Company Ltd & others [2010] ZASCA 25,
[2010] 4 All SA 44 (SCA), 2010 (6) SA 390 (SCA) para 11). In the same vein
Keightley AJ described the rights that have lapsed due to deregistration as
‘legally dead’ and incapable of being revived retrospectively by restoration.

The key question before us is whether the learned judge was correct in her
finding that restoration does not constitute a Biblical Lazarus moment for a
lapsed mining right.

[6] Section 73(6A) of the Companies Act reads:
‘Notwithstanding subsection (6), the Registrar may, if a company has been
deregistered due to its failure to lodge an annual return in terms of section 173, on
application by the company concerned and on payment of the prescribed fee, restore
the registration of the company, and thereupon the company shall be deemed to
have continued in existence as if it had not been deregistered: Provided that the
Registrar may only so restore the registration of the company after it has lodged the
outstanding annual return and paid the outstanding prescribed fee in respect thereof.’

[7] In Newlands Surgical Clinic, which had not been decided when the
court a quo was dealing with this application, this court had to consider the
effect of company reinstatement in terms of s 82(4) of the present Companies
Act 71 of 2008. That subsection reads as follows:
‘If the Commission deregisters a company as contemplated in subsection (3), any
interested person may apply in the prescribed manner and form to the Commission,
to reinstate the registration of the company.’
Brand JA, writing for a unanimous court, referred to the various conflicting
decisions in the respective divisions of the high court on this aspect. Those
decisions ranged from findings of no retrospectivity at all, to partial
retrospectivity and to full retrospectivity. One of the cases he alluded to was
Bright Bay Property Service (Pty) Ltd v Moravian Church in South Africa 2013
(3) SA 78 (WCC) in which it was held that the section has no retrospective
effect at all. Keightley AJ found support for her finding in that judgment. In
overruling Bright Bay and the Western Cape Division’s decision before it
(which had held that the section has only partial retrospectivity) this court held
that s 82(4) had full retrospective effect. Brand JA held as follows:
‘As I see it, the wording of the section leaves no room for the pragmatic approach
adopted by the court a quo. The only meaning available on that wording, as I see it,
is that s 82(4) has automatic retrospective effect, not only in revesting the company
with its property but also in validating its corporate activities during the period of its

deregistration.  In short, there is no textual basis to distinguish between revesting of
property and revesting the company with the capacity to continue operating’ (own
emphasis).

[8] It was contended with some force on behalf of Hectocorp that the
potential grave prejudice to bona fide third parties militates against full
retrospectivity. One of the main reasons why the Western Cape Division in
Newlands Surgical Clinic had baulked at unqualified full retrospectivity was
the potentially prejudicial effect on third parties. In addressing that concern,
Brand JA pointed out that this court has held in a number of decisions that
notwithstanding ‘these potentially prejudicial consequences resulting from
automatic retrospective validation . . . this construction of s 73(6) and s 73
(6A) could not be avoided’. Reference was made to: Insamcor (Pty) Ltd v
Dorbyl Light & General Engineering (Pty) Ltd; Dorbyl Light & General
Engineering (Pty) Ltd v Insamcor (Pty) Ltd [2007] ZASCA 6; 2007 (4) SA 467
(SCA) para 23; CA Focus CC v Village Freezer t/a Ashmel Spar [2013]
ZASCA 136; 2013 (6) SA 549 (SCA) paras 10-21; Kadoma Trading 15 (Pty)
Ltd v Noble Crest CC [2013] ZASCA 52; 2013 (3) SA 338 (SCA) paras 13 and
14. These cases concerned s 73(6) and s 73(6A) of the Companies Act and
the virtually identically worded s 26(7) of the Close Corporations Act 69 of
1984. Those provisions all include a deeming clause as set out in para 6
above, a feature which, as Brand JA correctly observed in Newlands Surgical
Clinic (para 19), ‘compelled this conclusion’.

[9] It is axiomatic that the retrospective validation of a company’s
corporate activities during its period of deregistration holds inherent risk to
third parties, as was recognised in Newlands Surgical Clinic. Deregistered
companies often continue carrying on business as if the deregistration had
never occurred and while third parties are completely unaware of the
deregistration. In this sense therefore, as was correctly observed in Newlands
Surgical Clinic, it is not strictly correct to compare the effect of deregistration
of a company to that following upon the death of a natural person. One must
also be mindful that a refusal to validate a company’s corporate activities

during the period of its deregistration can be just as severely prejudicial to
third parties.

[10] Both Keightley AJ as well as counsel for Hectocorp had approached
the matter on the basis that there was tension between s 56(c) and s 73(6A).
In addition, the learned judge stated that s 56(c), and not s 73(6A), must be
the point of departure. On the basis of this approach the court a quo found
that the deeming provision in s 73(6A) only revived legal personality but not
lapsed rights. The court a quo also considered the effect of the maxim lex
posterior priori derogat (a later statute takes away the effect of a prior one)
inasmuch as s 73(6A) had been enacted later than s 56(c). This approach is
unsound. As I see it, there is no reason why the two sections cannot
harmoniously co-exist. They concern two different situations at two different
points in time. Section 56(c) concerns the legal situation at deregistration,
while s 73(6A) deals with the legal scenario that prevails when a company’s
registration is restored. In the latter instance the deeming provision is
conclusive – upon restoration of the company’s registration all the company’s
corporate activities are retrospectively validated as if the company was never
deregistered. It is a complete restoration of the status quo ante. All its assets
and rights revest in the company. It was faintly suggested on behalf of
Hectocorp that mineral rights under the MPRDA should be treated differently
than other rights as far as this retrospective validation was concerned. The
contention lacked both conviction and motivation and can be dismissed
without more. The court a quo’s construction of s 73(6A) would lead to an
anomalous situation in that while it permits a deregistered company to regain
its legal personality upon restoration, it does not allow it to regain the assets it
lost following deregistration.

[11] There is nothing in the scheme of the MPRDA which, as the court a
quo found, buttresses the conclusion that s 73(6A) does not retrospectively
revive rights which had lapsed in terms of s 56(c). The court a quo reasoned
that a retrospective revival of rights would undermine the purpose and
objectives of the MPRDA, since ‘the Department would be compelled in every
case where a company is deregistered to treat its MPRDA rights as frozen’. I

disagree. As stated, third parties are at risk in their dealings with a
deregistered company, even where they have no knowledge of such
deregistration. Restoration of registration operates retrospectively and ex post
facto validates all the company’s corporate activities (including its mineral
prospecting rights), even to the detriment of third parties. The legislature is
presumed to know the law and when it enacted s 56(c) of the MPRDA it must
have been aware that companies and close corporations that had been
deregistered could be restored to the register with automatic retrospective
effect. Yet it did not qualify its reference to ‘whenever a company or close
corporation is deregistered’ as a trigger for the lapsing of mineral rights, by
saying that the right would not be restored if the company or close corporation
was restored to the register. Had it wished to ensure the finality of the lapsing
of a mineral right on deregistration, it could easily have done so. The
legislature could have excluded mineral rights from the rights restored to a
company or close corporation on being restored to the register.

[12] On the facts of this case a relatively short period had elapsed between
Palala’s deregistration and its restoration (16 July 2010 to 13 September
2010). The inference is irresistible that the deregistration was as a result of an
administrative oversight. No sound reason exists why in such circumstances
Palala should lose a potentially valuable mineral prospecting right, even
though its other assets and other rights are revested upon restoration. In the
circumstances and for the reasons set out above, the court a quo erred in its
finding that Palala’s restoration had not retrospectively restored its mineral
prospecting right. The appeal must consequently succeed.

[13] Mootness does not arise. As stated, Palala had on 27 October 2010
applied to the Department for the renewal of its mineral prospecting right. That
application was never finalised, instead a decision was taken that the right
had lapsed. Appeals to the Acting Director-General and the Minister followed
and the review application in the court a quo ensued thereafter. Palala’s
pending renewal application must be finalised by the Minister in accordance
with the outcome of this appeal. In considering that renewal application there

are a number of factors to be considered by the Minister in terms of s 18 of
the MPRDA.

[14] The following order is issued:

(a)
The appeal is upheld with costs.
(b)
The order of the court a quo is set aside and substituted with the
following:
‘1
The first respondent’s decision on 30 April 2014, upholding the third
respondent’s appeal, is reviewed and set aside;
It is declared that the prospecting right (registered under the number
LP1488) granted to the applicant was retrospectively restored to it by
virtue of the restoration of the applicant’s registration as a company on
13 September 2010;
The first and second respondents are directed to take the necessary
and reasonable steps to give effect to the order in paragraph 2;
The third respondent is to pay the applicant’s costs of the application.’

________________________

S A MAJIEDT

JUDGE OF APPEAL

APPEARANCES

For Appellant:

A I S Redding SC
Instructed by:

Seleka Attorneys, Pretoria
Gerber Junius Attorneys,
Bloemfontein

For First and Second Respondents:
No appearance

For Third Respondent:

A F Arnoldi SC
Instructed by:

Couzyn Hertzog & Horak

Spangenberg Zietsman Attorneys,

Bloemfontein

THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE
SUPREME COURT OF APPEAL
MEDIA SUMMARY – JUDGMENT DELIVERED IN COURT OF
APPEAL
30 May 2016

STATUS: Immediate

PALALA RESOURCES (PTY) LTD V MINISTER OF MINERAL RESOURCES AND
ENERGY AND OTHERS (479/15)

Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal

The Supreme Court of Appeal (the SCA) today upheld an appeal against an order of
the Gauteng Division of the High Court Pretoria. The court a quo had granted a
review application brought by Hectocorp (Pty) Ltd, the third respondent, to set aside
the decision of the Minister of Mineral Resources and Energy, the first respondent,
who had upheld an appeal against a decision of the Acting Director-General in her
department. The Acting Director-General had overruled the decision of the regional
manager who had refused to accept the appellant’s (Palala Resources (Pty) Ltd)
application for the renewal of its prospecting right for gold and pyrite on a designated
prospecting area on the farm Malamulele 234 LT in Limpopo. The basis for the
regional manager’s decision was that Palala’s prospecting right had lapsed due to
Palala’s deregistration as a company. Palala’s deregistration on 16 July 2010 and its
restoration to the company register on 13 September 2010 was common cause.

The crisp issue for determination was whether a mineral right which has lapsed due
to the deregistration of a company which holds that right is revived when that
company is restored to the register. Related to this question was the relationship
between the provisions of section 56(c) of the Mineral and Petroleum Resources
Development Act 28 of 2002 and section 73(6A) of the old Companies Act 61 of
1973, which was in force at that time. In referring to its decision in Newlands
Surgical Clinic (Pty) Ltd v Peninsula Eye Clinic (Pty) Ltd 2015 (4) SA 34 (SCA), the
SCA held that such a lapsed right is revived upon restoration, by virtue of section
73(6A). The SCA held further that there is no tension between section 56(c) and

section 73(6A) and that the two sections can co-exist as they refer to two different
situations at two different points in time.

The appeal was accordingly upheld and the matter was remitted to the Minister for
her decision on Palala’s application to renew its prospecting right.

-- ends --