C. OF A.
(CIV.) NO. 9 OF 1999

IN THE
LESOTHO COURT OF APPEAL

Swissborough
Diamond Mines (Pty) Ltd First Appellant

Rampai
Diamonds (Pty) Ltd Second Appellant

V

Lesotho
Highlands Development Authority Respondent

Coram:
Beck A.J.A.

Ramodibedi J.A.

TebbuttA.J.A.

Zietsman A.J.A.

van

Deventer A.J.A.

Counsel
for Appellants: M.Wallis S.C., with him Kemp J.Kemp S.C. Attorneys
for Appellants: J.A.Redelinghuys and Co.

Counsel
for Respondent: HP. Viljoen S.C, with him R.W.A. Macwilliam and

E.N.Keeton

Attorneys
for Respondent: Webber Newdigate

Judgment

Beck
A.J.A

In
conformity with the nomenclature that has been adopted throughout the
course of these proceedings, the first appellant will in
this
judgment be referred to simply as SDM, the fifth respondent as LHDA,
and the Government of Lesotho as GOL.

In August
1988 a written mining lease agreement was concluded between SDM and
the GOL in respect of an area in Lesotho Known as
Rampai. This lease
was registered in the Deeds Registry's Register of Mining Leases on
26 October 1988. In terms of the lease SDM
was given the exclusive
right to mine for precious stones in the Rampai area for a period of
ten years from the date of registration
of the lease in the Deeds
Registry, with an option for SDM to renew the lease for a further
five years.

The LHDA
is a corporation created by statute in 1986 for the purpose of
implementing a project designed to dam water in Lesotho
and feed it
to South Africa. One of the dams to be constructed was the Katse dam
and it was to be built in the Rampai area. It
was intended that this
dam would be in place by November 1991, which meant that within a few
years after the commencement of the
Rampai mining lease a portion of
the mining lease area would be flooded and impossible to be mined.
This happened and SDM contends
that it is entitled to claim
compensation from the GOL and/or the LHDA amounting to many millions
of moloti, for the loss of profit
it says it would have made had it
not been prevented from recovering considerable quantities of
diamonds which, according to SDM,
lie beyond its reach beneath the
waters of the Katse dam.

2

Before
dealing with the litigation that has given rise to this appeal it is,
I think, necessary to give very briefly a history of
what occurred in
Lesotho prior to 1991. Lesotho became independent from Britain in
I966 and was then governed in terms of the Lesotho
Independence
Order, I966, as a constitutional monarchy under a King and a
constitution to which I shall for convenience refer as
the 1966
Constitution. The King was advised by a Cabinet, save in regard to
certain functions and duties where he could act "in
accordance
with his own deliberate judgment" and "in his absolute
discretion". In January 1970 the then Prime Minister
Chief
Leabua Jonathan, led a bloodless coup d'etat against the Monarchy and
Order 1 of 1970, known as the Lesotho Order 1970, was
passed which
suspended the Lesotho Independence Order and consequentially the I966
Constitution. The Cabinet was replaced by a
Council of Ministers.
In1986 the Lesotho armed forces under Major General Lekhanya effected
another coup d'etat ousting the Jonathan
Government. Lesotho Order
No. 1 of1986 and Lesotho (No. 2) Order (Order 3 of 1986) were passed
providing for a Military Council
upon whose advice the King had to
act. A Council of Ministers was however retained to carry out
administrative functions and to
act as an advisory body to the
Military Council. In 1990 the Lekhanya Government was displaced in
yet another coup d'etat led by
General Ramaema.

The
events involved in the present litigation occured during the period
in office of the Lekhanya Government. That litigation, which
has now
reached this court on appeal, originated in 1991 when the GOL had
unilaterally cancelled the Rampai and other leases with
SDM.
Thereupon SDM, together with five of its subsidiary companies,
brought an application to set aside the cancellation by the
GOL of
the Rampai lease as well as four other mining leases in other parts
of Lesotho which the GOL had also concluded with SDM.
In each of
these five lease areas SDM had sub-contracted the mining work to a.

3

subsidiary
company. With regard to the Rampai lease area no substantive relief
was sought against the LHDA by SDM, but the LHDA
was nevertheless
cited as a respondent. The application was granted and all five
cancellations by the GOL of the mining leases
it had concluded with
SDM were set aside. However, in the same proceedings LHDA brought a
counter-application to set aside as null
and void the mining lease
which the GOL had concluded with SDM in the Rampai area, and to
expunge it from the Register of Mining
Leases.

It must
also be recorded that the GOL in1992 made a further attempt to have
the leases set aside by passing the Revocation of Specified
Mining
Leases Order No. 7 of 1992, which refers to the SDM leases. This
Order was set aside by both the High Court and, on appeal,
by this
Court as being ultra vires and void and of no force and effect in
law.

The
abovementioned counter-application, which was filed in March 1995,
was opposed by SDM and by the second appellant herein, Rampai

Diamonds (Pty) Ltd, which is the subsidiary company of SDM to which
SDM sub-contracted the mining work in the Rampai lease area.
Because
of material disputes of fact which could not be resolved on the
papers alone the counter-application was referred for the
hearing of
oral evidence, which hearing commenced on 20 May 1996 before the
learned Chief Justice, Mr. Justice Kheola. The hearing
was
interrupted by a number of postponements for various reasons and it
was not until 11 May 1998 that SDM and Rampai Diamonds
(Pty) Ltd, the
respondents in the counter-application, closed their case, by which
time 54 court days had been taken up by the
hearing. Thereafter a
further 10 court days were taken up in August and October I998 by
argument, and on 28 April 1999 the learned
Chief Justice handed down
his judgment. The relief that the LHDA had sought in the counter-.

4

application
was granted and the Rampai mining lease was declared null and void.
Costs orders, to which reference will later be made,
were in addition
granted in favour of the LHDA.

The
grounds on which LHDA had sought the setting aside of the Rampai
mining lease as a nullity were that it had allegedly been concluded

without a recommendation by the Mining Board that it be approved, and
without prior consultation with and approval of the Principal
Chiefs
within whose areas of jurisdiction the mining lease area fell. It was
submitted that such recommendation and prior consultation
and
approval were peremptorily enjoined by section 6 of the Mining Rights
Act No. 43 of 1967, so that non­compliance with both,
or with
either, of these requirements invalidated the granting of the mining
lease by the GOL to SDM and rendered it a nullity.

The
learned Chief Justice upheld these submissions and found on the facts
that LHDA had successfully discharged the onus of proving
that
neither of the abovementioned requirements had been complied with
before the lease was concluded. The tactual finding that
the prior
consultation with and approval of the Chiefs was not obtained was not
challenged on behalf of the appellants in this
Court, but the finding
that the recommendation of the Mining Board was not obtained was
challenged. It was submitted however that,
in any event, neither of
these requirements continued to be peremptory requirements of the
Mining Rights Act after the coup d'etat
by Leabua Jonathan in 1970,
and still less so were they peremptorily required after the military
coup led by General Lekhanya in
1986.

Before
turning to a consideration of these rival contentions it is necessary
to refer to the,

5

relevant
statutory provisions which bear upon the issue.

Section
93 of the 1966 Constitution of Lesotho vested in the King in trust
for the Basotho Nation the power to make grants of interests
or
rights in or over land, and provided that this power "shall be
exercised by him and, on his behalf, by the Chiefs in accordance
with
the provisions of this Constitution and any other law". These
rights of the Chiefs were derived from the customary law
when
traditionally they exercised powers over the areas under their
jurisdiction.

With
regard to the exercise "in accordance with the provisions of
this Constitution" of the King's powers relating to
land, he was
enabled by section 76 (2) (h) of the Constitution to "act in
accordance with his own deliberate judgment"
and ''in his
absolute discretion", this being one of the traditional powers
as referred to above.

With
regard however, to the exercise "in accordance with the
provisions of..........any

other
law" of the powers of the King and, on his behalf, of the Chiefs
to make grants of interests or rights in or over land,
one must turn
to the Mining Rights Act and specifically to section 6 thereof, which
stipulates how applications for the grant of
mineral titles are to be
made to the King and how they are to be processed and disposed of.

The first
four sub-sections of section 6 are relevant for present purposes and
they read as follows:

" 6. (1) The King and the Chiefs on his behalf, may in
accordance with the terms of a recommendation of the Mining Board,

and in the manner prescribed in this Act, but not

6

otherwise, grant mineral titles.....but........nothing in this
section shall be construed as

fettering the discretion of the King and the Chiefs on his behalf to
refuse any grant recommended by the Mining Board.

(2) Any
person may apply to the King for a grant of a mineral title.........
The application shall be in writing and shall be made
in the first
instance to the Minister by whom it shall be referred to the Mining
Board in order that the latter may make its recommendation.

3. The
   Mining Board shall consider every application so forwarded, and may
   either decline to make any recommendation thereon, in
   which event it
   shall so inform the applicant, or may determine to recommend the
   grant of a mineral title of the kind applied
   for in respect of the
   land and on the conditions stated in the recommendation which may
   include conditions of the type referred
   to in sub-section (3) of
   section 8 and sub-section (3) of section 14. The recommendation
   shall be in writing and shall be forwarded
   to the Principal Chief or
   Ward Chief within whose jurisdiction the land in question falls
   accompanied (in the case of a recommendation
   for the grant of a
   prospecting lease or mining lease) by a written statement of the
   Mining Board's reasons for the recommendation,
   provided that no
   recommendation for the grant of a prospecting lease or mining lease
   shall be so forwarded unless the Mining
   Board shall have received
   from the applicant written approval of the terms of the lease which
   the recommendation purposes shall
   be granted.

   
   

3. (a)
   Upon receipt of the application and the recommendation of the Mining
   Board thereon the Principal Chief or Ward Chief concerned
   shall
   consider them and.

   
   

7

shall
consult with all those Chiefs within the area of jurisdiction of each
of whom any part of the land in question falls. If upon
such
consultation it shall appear to the Principal Chief or Ward Chief
that a majority of those consulted approve of the grant
of the
application in terms of the recommendation he shall grant it
accordingly; but if it shall appear to him that such majority,

disapprove the grant he shall then, in his discretion.......

(i) grant the application in terms of the recommendation, or

(ii) refuse the application, or

(iii) refer the matter back to the Mining Board for its
recommendation upon any alterations which that Chief may propose.

2. If
   the application is granted in terms of item (i) of paragraph (a),
   the Principal Chief or Ward Chief concerned shall declare

   accordingly to the Mining Board, which shall inform the applicant
   and shall forthwith cause the relevant mineral title to be
   prepared.
   Upon the provision by the applicant of any guarantees or other
   instruments which the terms of the mineral title may
   require, it
   shall be signed by or on behalf of the King and the applicant in
   manner prescribed by paragraph (b) of sub-section
   (6) of section 24
   and registered as so prescribed.

   
   

2. If
   the aplication is refused in terms of item (ii) of paragraph (a),
   the Principal Chief or Ward Chief concerned shall declare

   accordingly to the Mining Board which shall inform the applicant.

   
   

2. If
   the matter is referred back in terms of item (iii) of paragraph (a),
   the Mining Board shall consider the reference and, after

   consultation with the applicant, either withdraw the recommendation
   (which shall then lapse) or submit a revised recommendation
   in
   respect of which the provisions of sub-section (3) and paragraphs
   (a), (b) and (c) of this sub-section excluding sub-paragraph
   (iii)
   of paragraph (a) shall again mutatis mutandis apply."

   
   

8

Section 5
of the Mining Rights Act provided for the establishment of a Mining
Board and further provided that until such Board was
established, its
functions would be performed by the Cabinet. It is common cause that
a Mining Board was not established. The parties
were furthermore ad
idem that during the Lekhanya Government the Council of Ministers was
regarded as the Mining Board:

Mr.
Wallis, who appeared on behalf of SDM in this Court, accepted that,
while the 1966 Constitution remained in force, the requirements
under
section 6 of the Mining Rights Act that the Mining Board recommend
the grant and that the relevant Chiefs consider the application
and
the Mining Board's recommendation, were peremptory requirements.
However, as has already been mentioned, he submitted that
the
peremptory nature of these requirements was nullified under the
constitutional dispensations ushered in by the coups of 1970
and
1986. Indeed, he contended that the whole of section 6 was set at
nought under those dispensations.

The
attack on section 6 of the Mining Rights Act rests first of all on
the suspension of the 1966 Constitution by the Government
under Chief
Jonathan that successfully usurped power in 1970. That suspension did
away with the grant to the King, under section
76(2)(h) of the
Constitution, of an unfettered power in relation to land to "act
in accordance with his own deliberate judgment"
and "in his
absolute discretion". Mr. Wallis submits that the whole purpose
of section 6 of the Mining Rights Act was
to control and direct the
manner in which the King could exercise his constitutional power to
act in relation to land, "in
accordance with his own deliberate
judgment" and "in his absolute discretion". It
follows, so Mr. Waltis argued,
that, the King's unfettered
constitutional,

9

power
having been terminated by the suspension of the 1966 Constitution,
the provisions of section 6 of the Mining Rights Act, which
were
designed to control and direct the manner in which that power could
be exercised, must necessarily also have been terminated.

It is, of
course, correct that the suspension of the 1966 Constitution put an
end to the unfettered powers that were conferred on
the King by
section 76(2)(h) in relation to land, but it does not seem that it
necessarily follows that this termination also put
an end to section
6 of the Mining Rights Act. As Mr. Viljoen, who appeared for LHDA,
pointed out, the preamble to the Mining Rights
Act states that it is
"to provide for rights to prospect and mine for Minerals in
Lesotho", and section 6 deals with
how applicants for such
rights are to make their applications to the Minister, and how the
Mining Board is to deal with such applications
when they are referred
to it by the Minister. No different statutory provision was ever made
in 1970, or thereafter, to regulate
the procedure for the making and
consideration of such applications.

On the
contrary, the Mining Rights Act was given continued validity from the
time of the 1970 coup up to and beyond the time when
the Rampai lease
was concluded in 1988. Lesotho Order 1970, the Lesotho Order 1973,
Lesotho Order No. 1 of1986 and Lesotho (No.
2) Order (Order No. 3
of1986), all contained a section 3 in the following terms:

"3 (1) Subject to this Order, all laws which were enforceable in
Lesotho immediately before the coming into operation of this
Order
shall continue in full force and effect.

2. Any
   existing law which is inconsistent with this Order shall, to the
   extent of such inconsistency, be void.

   
   

3. This
   section is without prejudice to any powers to make provision for
   any,

   
   

10

matter, including the amendment or repeal of any existing law.

2. The
   existing laws shall, from the coming into operation of this Order,
   be construed with such modification, adaptations, qualifications
   and
   exceptions as may be necessary to bring them into conformity with
   this Order."

   
   

At pages
38 and 39 of the judgment in the case of Makenete v Lekhanya and
Others C. of A. (Civ) 17 of 90, this Court quoted with
approval the
following passage taken from page 117 of the I943 translation by
Anders Wedberg of Professor Hans Kelsen's work "General
Theory
of Law and State":

"Usually, the new men whom a revolution brings to power annul
only the constitution and certain laws of paramount political

significance, putting other norms in their place. A great part of the
old order remains valid also within the frame of the new
order. But
the phrase "they remain valid" does not give an adequate
description of the phenomenon. It is only the contents
of these norms
that remain the same, not the reason of their validity. They are no
longer valid by virtue of having been created
in the way the old
constitution prescribed. That constitution is no longer in force; it
is replaced by a new constitution which
is not the result of a
constitutional alteration of the former. If laws which were
introduced under the old constitution "continue
to be valid"
under the new constitution, this is possible only because validity
has expressly or tacitly been vested in them
by the new constitution.
The phenomenon is a case of reception (similar to the reception of
Roman law)".

In
accordance with this accepted principle the above quoted provisions
of section 3 of the various Lesotho Orders effectively re-enacted
the
Mining Rights Act No. 43 of 1967, except for any possible
inconsistencies therein with the new constitutional dispensation.

11

Furthermore,
as pointed out by Mr Viljoen, the Jonathan Government enacted the Law
Revision Order, No. 11 of 1971, section 7 (1)
of which provided that
"Each of the volumes specified in section 2 shall....... be
deemed to be and shall be without any

question
whatsoever in all Courts of Justice and for all purposes whatsoever,
the sole and only proper statute book of the laws
of the year to
which that volume relates, in respect of the laws in force on the 1st
day of January, 1971".

The
volume specified in section 2 of this Law Revision Order included the
annual volume for the year I967 and the Mining Rights
Act, I967,
appears in full therein without any amendments.

In
addition, the Jonathan Government promulgated the Law (General
Amendments) Order No. 6 of I972 which amended section 7(10) of
the
Mining Rights Act by providing a right of further appeal to the Court
of Appeal from any decision given by the High Court in
an appeal to
it in terms of section 7(6) or 7(8) of the Mining Rights Act. Section
7(6) deals with appeals to the High Court from
decisions of the
Mining Board, and section 7(8) with appeals to the High Court from
decisions of the King made on appeal to him
from decisions of a
Principal or Ward Chief.

In the
light of what is set out above the submission that the whole of
section 6 of the Mining Rights Act was set at nought when
the
Constitution of I966 was suspended must be rejected.

Mr.
Wallis' more forceful argument was that, if section 6, as it stands,
was still in force at

12

the time
when the Rampai lease was concluded, then, by reason of the
restricted nature of the King's executive authority under the

successive coup governments, the provisions of section 6 relating to
recommendation by the Mining Board and to approval by the
Chiefs
concerned, acting on behalf of the King, can no longer be held to be
peremptory statutory requirements but must be construed
as having
directory force only.

Between
1970 and 1990, when a third, or Ramaema, coup successfully unseated
the Lekhanya Government, the King's executive authority
was limited
to acting on the advice of the person or body in whom real executive
power resided. In the Makenete case {supra) Ackermann
JA describes,
at pages 14 to 20 and 30 to 33 of the jugment, the nature and extent
of the King's executive authority as it was
affected by the Lesotho
Order 1970, the Lesotho Order I973, the Parliament Act I983, Lesotho
Order No. 1 of1986 and finally Lesotho
(No. 2) Order (No. 3 of1986).
Throughout those years executive authority was vested in the King
acting firstly on the advice of
the Cabinet, then after the 1970 coup
on the advice of the Prime Minister, and finally - from (986 to1990
-on the advice of the
Military Council.

In
parenthesis, it should be said that in the first of these enactments
- the Lesotho Order 1970 (Order No. 1 of 1970) - executive
authority
was vested, not in the King, but in the Regent. At the foot of page
30 and the top of page 31 of the Makenete case (supra)
Ackermann J.A.
said that 'The effect of the 1970 Constitution Suspension Order read
with Order No. 1 of 1970, was to make a radical
break with the past
and in truth to abolish the Monarchy. The office of King was only
re-established in the Office of King Order
No. 51 of 1970." It
seems however, that it was never the intention of Leabua Jonathan's
Government to abolish the Monarchy,
because on 7 April 1970, months

13

before
the Office of King Order No. 51 of 1970, which was promulgated on 20
November 1970, the Regent (Assumption of Office) Notice
1970 was
gazetted. That Notice reads "Whereas the present holder of the
Office of King, Moshoeshoe II, is to be absent from
Lesotho and will
for that reason be unable to exercise the functions of that office
during the period of that absence: Now therefore,
I Leabua Jonathan,
Tona-Kholo, hereby notify for general information the assumption of
office by Queen Mamohato Seeiso as Regent
from the time of the
departure from Lesotho of King Moshoeshoe II for the duration of that
absence". (Emphasis added).

Be that
as it may, Mr. Wallis correctly emphasised that the issue is not so
much whether the Office of the King fell away and was
reinstated
subsequently, or whether it had what Mr. Wallis called "a
tenuous insignificant existence" until reinstated,
but what the
effect of the coups was on the powers of the King.

As
already stated, the unfettered power of the King in relation to land
that was contained in section 76(2)(h) of the 1966 Constitution

disappeared when that Constitution was suspended in 1970. When the
Rampai lease was concluded in 1988 the constitutional position
was
governed by Lesotho (No. 2) Order 1986 (Order No. 3 of 1986). At
pages 22 and 23 of the Makenete case (supra) the following
was said
of the King's powers at that time:

"In terms of Lesotho (No. 2) Order 1986:

1. Executive
   and legislative authority in Lesotho was (by virtue of section 9 (1)
   vested in the King;

   
   

2. The
   King, acting on the advice of the Chairman of the Military Council,
   was empowered to appoint the other members of the Military
   Council
   (Section 4 (2) (b)); and,

   
   

14

3. The
   King, acting on the advice of the Military Council, was likewise
   empowered to appoint the other members of the Council of
   Ministers.

   
   

4. By
   virtue of section 10 the King, acting on the advice of the Military
   Council, could make laws for the peace, order and good
   government of
   Lesotho and could amend or repeal any law so made.

   
   

5. The
   King was obliged, in consequence of section 9(2), to exercise his
   functions under the Order or any other taw (my emphasis)
   in
   accordance with the advice of the Military Council.

   
   

The
aforegoing were the only powers and authority vested in the King
after the1986 coup d'etat save that, in terms of the Office
of the
King Order No. 51 of 1970, the King was still Head of State, entitled
to a civil list and had the right to be consulted
and kept fully
informed concerning matters of government No other prerogatives of
the King survived."

Mr.
Viljoen contended that these observations are not part of the ratio
decidendi in deciding upon the effect of the 1990 coup on
the King's
powers, which was the issue that fell for decision in the Makenete
case, and are therefore obiter. Whether or not they
are obiter
however, I am in respectful agreement with them.

Section 9
(2) of Lesotho (No. 2) Order 1986 reads: "In the exercise of his
powers under this Order or any other law, the King
shall act in
accordance with the advice of the Military Council". The words I
have emphasised subject the exercise of the
King's functions under
section 6 of the Mining Rights Act to being in accordance with the
advice of the Military Council.

15

It must
be emphasised that the relevant powers had to be exercised by the
King acting in accordance with the advice of the Military
Council. It
was not the Military Council on its own that exercised such powers
or, as argued by Mr. Wallace, whose decisions "were
the Law".
It was only after the 1990 coup that the Military Council took full
control of all executive powers (see the Makenete
case, supra).
However, while it is correct that Section 9(2) of the Order precludes
the King from acting contrary to the advice
of the Military Council
in the exercise of his functions under section 6 of the Mining Rights
Act, it does not necessarily follow
that the requirements that the
relevant Chiefs must approve or reject an application referred to
them with the approval of the
Mining Board are to be denuded of the
peremptory force with which the wording of the section clothes them,
so as to leave the Military
Council free to grant mineral titles
without those processes having been followed.

Although
section 9 (2) of the Order entitled the Military Council to be the
final arbiter as to whether or not, or on what conditions,
a mineral
rights title should be granted, the dictates of both common sense and
of deeply rooted tradition enshrined in customary
law concerning
grants related to land point to prior consultation with, and
agreement of, the relevant Chiefs being an absolute
necessity. The
peremptory requirement of section 6 of the Mining Rights Act that
"the King and the Chiefs on his behalf, may
in accordance with
the terms of a recommendation of the Mining Board and in the manner
prescribed in this Act, but not otherwise,
grant mineral titles"
is not inconsistent with section 9(2) of the Lesotho (No. 2) Order
1986. To be validly granted, an application
for a mining lease must
be dealt with by the King and the Chiefs in the manner prescribed by
section 6 of the Mining Rights Act
and the power vested in the
Military Council to overturn such a

16

grant,
should it not agree with it, does not render the compulsory
procedures that are enjoined by section 6 of the Mining Rights
Act
for validly obtaining the grant inconsistent with the provisions of
section 9 (2) of the Order.

If these
section 6 procedures had become mere directory procedures the
Military Council would have been free to grant a mining lease
without
the application ever having been considered by the Mining Board or by
the Chiefs. Not only is such a conclusion impractical,
as well as
being contrary to the long established tradition that rights
pertaining to land fall to be dealt with by the Chiefs,
but nowhere
in the evidence was it ever suggested that this is how matters were
understood at the time. On the contrary, General
Lekhanya himself,
who was called as a witness by SDM, said that "Without the
Council of Minister's recommendations the Military
Council would not
approve any application". (The Council of Ministers, as set out
above, was regarded by the Military Council
as the body which was
tasked with the functions of the Mining Board). Documents were also
produced which emanated , in 1988 and
1989, from the Minister of
Water, Energy and Mining, addressed to the Mining Board, in which the
Minister wrote "The Mining
Board may wish to note that in terms
of section 6 of the Mining Rights Act No. 43 of 1967, His Majesty the
King and the Chiefs
on his behalf may, in accordance with the advice
of the Mining Board, grant mineral titles. Therefore, consultations
with Principal
Chiefs is mandatory." And in a Brief addressed by
the Attorney-General to the Minister of Law, Constitutional and
Parliamentary
Affairs in 1988 the Attorney-General wrote "the
Mining Rights Act 1967 lays down the conditions and procedures for
mining".

It must
be concluded therefore that it was not merely a directory provision
of the Mining Rights Act that an application for a mining
lease be
put before the relevant Chiefs, with.

17

the
recommendation of the Mining Board, for their approval on behalf of
the King, but that these still were peremptory requirements,

compliance with which was necessary for a grant of the application to
be valid. It being common cause that no SDM application with
a Mining
Board recommendation was ever put before the Chiefs concerned for
their approval it follows that there was no valid grant
of the
application and that there was nothing before the Military Council
upon which that body could legally and properly advise
the King. The
Rampai lease was accordingly not validly granted and the Court a quo
was correct in declaring it null and void.

In view
of this conclusion it is unnecessary to decide whether or not the
LHDA also succeeded in discharging its onus of proving
that the
Mining Board, in the form of the Council of Ministers, never gave its
approval to the SDM application for a 15 year mining
lease at Rampai.

It is
necessary to turn next to Mr. Wallis' submission that the LHDA had no
locus standi to bring the counter-application. He submitted
that
because LHDA had no direct interest in the agreement between the GOL
and SDM, in terms of which the mineral lease in respect
of the Rampai
area was granted to SDM, it lacked locus standi to contest the
validity of that agreement. In developing his argument
Mr. Wallis
relied upon such decisions as Ntai and Others vs Vereeniging Town
Council and Another 1963 (4) S.A. 579 (A). United
Watch and Diamond
Co. (Pty) Ltd. and Others vs Disa Hotels Ltd. and Another I972 (4) SA
409 (C) and Wistyn Enterprises (Pty) Ltd.
vs Levi Strauss & Co.
and Another 1986 (4) S.A. 796 (T).

The cases
of Ntai and United Watch deal with the question whether a sub-lessee
has

18

the
necessary locus standi to contest the validity of the lease entered
into between the landlord and the lessee. It was decided
in these
cases that the fact that the sub-lessee derives his rights from the
lessee does not give him locus standi to intervene
in the action
between the landlord and the lessee. His rights being merely
derivative he has no greater right than the lessee has
and he
therefore has no right to intervene in the action between the
landlord and the lessee.

A case to
similar effect quoted by Mr. Wallis is the Wistyn Enterprises case
(supra). It was there decided that the right that a
registered user
of a trade mark has is also a derivative right. It is merely the
right to use the proprietor's trade mark. The
user therefore has no
greater rights than the proprietor possesses. He therefore has no
legal interest and no right to intervene
in proceedings for the
expungement of the trade mark.

In the
United Watch case (supra) Corbett J. (as he then was) states that the
right to intervene in legal proceedings is closely
linked to the
matter of joinder, and that where an applicant applies to set aside a
court judgment he must show that he has an
interest in the subject
matter of the judgment sufficienly direct and substantial to have
entitled him to intervene in the original
application upon which the
judgment was given. A sub­tenant, because he has no direct legal
interest in proceedings between
the landlord and the tenant, cannot
claim the right to be joined in an action between the landlord and
the tenant concerning the
validity of the tenant's lease, even though
the result of that action could directly affect the sub-tenant's
sub-lease.

Relying
upon the principles set out in these cases Mr. Wallis submitted that
because LHDA has no direct interest in the mining lease
granted by
the GOL to SDM it has no,

19

locus
standi to contest the validity of that lease, even though the lease
affects LHDA's rights to build the dam and to flood part
of the area
included in SDM's mining lease. In developing his argument Mr. Wallis
drew a distinction between the procedure followed
in granting SDM its
lease and the result flowing from the grant of the lease. He
submitted that the illegality, if any, complained
of by LHDA stemmed
only from the failure by the • GOL to observe the procedure
prescribed for the granting of the lease. He
submitted that LHDA had
no direct interest in the procedure that was followed and that it
therefore lacked locus standi to contest
the validity of the lease.

The cases
relied upon by Mr. Wallis are clearly distinguishable from the
present case. LHDA's rights are not dependent upon any
rights granted
by the GOL to SDM. LHDA's rights are not derivative. They stem
directly from a contract which LHDA concluded with
the GOL. LHDA's
case is that a separate contract, entered into between the GOL and
SDM purporting to give SDM rights that are in
conflict with the
rights of LHDA, is void, and it claims that it has the necessary
locus standi to have that contract declared
void.

The
present case is analogous to that of BEF (Pty) Ltd. vs Cape Town
Municipality and Others 1983 (2) SA 387 (C). In that case it
was held
that the owner of a property had the necessary locus standi to bring
an application to set aside a decision by the Cape
Town Municipality
which had approved the building plans of the owner of an adjoining
property, which plans did not comply with
restrictions contained in
the titie deeds of the property.

In the
earlier case of Patz vs Green & Co. 1907 TS 426 it was held
specifically that a trader had the necessary locus standi
to apply to
court to prevent the trading of a

20

competitor
who was trading illegally.

In the
present case it is clear that the contracts entered into by LHDA and
SDM with the GOL created competing rights in respect
of the relevant
portion of the Rampai lease area. The validity of LHDA's contract is
not contested. It alleges that SDM's competing
rights were illegally
granted, and under these circumstances it clearly has the necessary
locus standi to apply to have SDM's contract
set aside as being null
and void. The point taken by Mr. Wallis in respect of LHDA's locus
standi must therefore fail.

A further
argument of Mr. Wallis was that the provisions of section 30 of the
Interpretation Act No. 19 of 1977 had the effect of
making
unassailable the legality of the mining lease in question, no matter
how many peremptory requirements had been disregarded
in granting it.
Section 30 of the Interpretation Act reads as follows: "30.
Where an Act confers powers upon a person to -

1. make
   any subsidiary legislation; or

   
   

2. exercise
   any power, and the Act conferring the power prescribes conditions
   subject to the observance, performance or existence
   of which the
   power conferred may be exercised, those conditions shall be deemed
   to have been fulfilled if in the subsidiary legislation
   or
   instrument exercising the power there is a statement to the effect
   that the subsidiary legislation is made, or the power exercised,

   subject to the conditions prescibed by the Act".

   
   

That
section, so the argument went, precluded any attack upon the validity
of the mining lease in question as long as the lease
contained a
statement to the effect that there had

21

been
compliance with the provisions of section 6 of the Mining Rights Act.
There is, so Mr. Wallis contended, such a statement.

The
section is, to say the least of it, unusual and no corresponding or
similar provision is, for example, to be found in any South
African
legislation. It can serve as a form of certification that the
relevant requisite statutory conditions have been complied
with - an
administrative confirmation as it were, of the maxim omnia
praesumuntur rite esse acta. However, it is also manifest
that the
functionary concerned with the matters referred to in the section
could by an erroneous statement clothe with legality
subordinate
legislation or regulations or other administrative acts although the
mandatory statutory requirements for their legality
have been totally
ignored. This is a far reaching concept. Moreover, the opportunities
for corruption arising therefrom are obvious.
The statement required
by the section would, therefore, have to be in the clearest terms and
couched in unambiguous language.

The
express statement which the section requires is in the present case,
according to Mr. Wallis, to be found in the heading of
the lease in
question which reads: "Mining Lease entered into in terms of
sections 6 and 15 of the Mining Rights Act, 1967
(Act 43 of 1967)".

This
merely states under which legislative provision the lease was entered
into. The words are contained in a stereotyped mining
tease annexed
to a schedule to the Mining Rights Act which was promulgated almost
ten years before section 30 of the Interpretation
Act was inserted.
They can by no stretch of the imagination be construed as stating, or
intended to state (by the signatories),
that the peremptory
requirements of

22

section 6
of the Mining Rights Act have been complied with.

Mr.
Wallis also referred to section 24 (6) (d) of the Mining Rights Act
and clause 16 of the lease. The former requires the signatory
of the
lease on behalf of the Government to satisfy himself that the grant
of the lease "was made by the Principal Chief or
Ward Chief
concerned or, on appeal, by the King or the Court". The latter
deals with registration of the lease. From neither
of these could it
be inferred that the peremptory requirements of section 6 had been
complied with. This ground of appeal must
accordingly also fail.

In the
appellants' Heads of Argument a number of other issues were raised
which allegedly precluded LHDA from obtaining the relief
which it
sought in its counter application. Those issues were: Estoppel;
waiver; that the relief sought had to be considered in
the context of
the contract and in this context was precluded by the operation of
the so-called "Turquand Rule"; and
that, in any event, even
if the provisions of the Mining Rights Act relating to the Mining
Board and the Chiefs were mandatory,
there had been a sufficiently
substantial compliance with them. At the hearing of the appeal Mr.
Wallis did not pursue any of these
submissions and no more need
therefore be said about them.

I turn
finally to the question of costs. This involves a consideration of
the costs of the appeal in this Court as well as a consideration
of
the costs order made by the learned Chief Justice in the Court a quo,
there being a substantive appeal against that order.

It is
convenient to deal with the latter first. As stated at the start of
this judgment, the

23

hearing
in the Court a quo commenced on 20 May 1996. On the second day of the
hearing Mr. Edeling who was counsel for SDM and Rampai
Diamonds
stated, in cross-examination of the first witness called on behalf of
LHDA, Mr. T. Putsoane, that his clients' case was
that "LHDA has
consistently acted in contempt of the law"; that "LHDA and
you (the witness) are being used as puppets....";
that "our
case is further that there is a conspiracy against our clients to
deprive them of their lawful rights. The conspiracy
is one which has
no regard for the statutes or the courts of this country, does not

hesitate
to mislead this court, the LHDA is part of it.....". He went on
to add "it is part of the conspiracy where there
are common
interests between the South African Government, the Government of
Lesotho, the LHDA in the conspiracy to get rid of
our clients' rights
and with the willingness to mislead the Court witnesses are told what
to say.....".

This
alleged conspiracy was an issue throughout the hearing. A reading of
the record shows, furthermore, that it was one which Mr.
Edeling, on
behalf of his clients, particularly SDM, pursued with a recklessness
and an irresponsibility which can only be described
as breathtaking,
and with a total disregard of the proprieties expected of counsel in
the conduct of his clients' case. Wide-ranging
and scurrilous attacks
were made on LHDA's witnesses, on the South African and Lesotho
Governments, and on LHDA, all of which proved
in the result to be
baseless. Uncalled for and unwarranted attacks couched in the most
intemperate language were also made by Mr.
Edeling on counsel for
LHDA.

In
pursuance of the conspiracy issue there was also placed before the
court on behalf of SDM on 21 May 1996 six lever arch files
containing
between I500 and 2000 pages of

24

documents
most of which were not alluded to during the hearing. SDM moreover
subpoenaed more than 109 witnesses, including the previous
State
President of South Africa, Mr F. W. de Klerk, the previous South
African Minister of Foreign Affairs, Mr. R. F. (Pik) Botha,
the then
Minister of Water Affairs in South Africa, Professor Kader Asmal, and
the Minister of Finance, Mr. Trevor Manuel. Of all
these witnesses
subpoenaed SDM only called three viz General J.M. Lekhanya, who was
Chairman of the Military Council from January
1986 to May 1990, Mr.
T. Makhakhe, who in I988 was the Principal Secretary in the
Department of Water, Energy and Mining, and Mr.
W.A. Labuschagne of
the South African Directorate of Legal Services who was involved in
the legal issues concerned in the Lesotho
Highlands Water Project.
All three denied that there was any conspiracy as alleged by SDM.

Mr.
Labuschagne's evidence was marked by some extraordinary events. It
was contended by Mr. Edeling that Mr. Labuschagne would be
able to
give evidence about the conspiracy and that it was he, and not LHDA,
who was in fact instructing Mr. Viljoen, the counsel
for LHDA. Mr.
Edeling argued that although SDM had subpoenaed Mr. Labuschagne he
was reluctant to call him as his witness as he
wished to
cross-examine him. This, of course, was objected to by Mr. Viljoen.
Other counsel was then briefed for one day on behalf
of Rampai
Diamonds (Pty) Ltd. to lead Mr. Labuschagne in chief so as to allow
Mr. Edeling to cross-examine him. This course was,
however, abandoned
and Mr. Edeling then called Mr. Labuschagne and almost immediately
applied to have him declared a hostile witness.
This was opposed and
was quite rightly dismissed by the learned Chief Justice. Mr. Edeling
nevertheless attempted to cross-examine
Mr. Labuschagne. Objection
was once more taken to this and Mr. Edeling then said: "We are
going to show through this witness
that exactly what we've said we
are going to

25

show,
that the litigation decisions by LHDA is decided by that man sitting
in the witness box (i.e. Mr. Labuschagne).... But it
is now in the
closing stages when we are going to prove these things which we said
from day one".

In
cross-examination Mr. Labuschagne denied these allegations and Mr.
Edeling then suggested that Mr. Labuschagne had told "a
pack of
lies" and had perjured himself. Once again no justification for
this can be found in the papers. However, to try and
show that Mr.
Labuschagne had lied an application was brought by SDM for further
discovery of documents in South Africa. That application
ran to
nearly 1,000 pages of which only a minute portion was relevant and
argument on the application lasted six days. The application
was
refused.

As a
result of the allegations of conspiracy LHDA called Professor J.J.
Gumey, Professor of Geochemistry at the University of Cape
Town, and
Mr. R. Van der Vlugt, a consultant engineering geologist, to counter
SDM's allegations that there was no bona fide defence
to SDM's claim
(by leading evidence that there were no commercially viable diamond
deposits in the Rampai area) and that LHDA's
counter-application was
to defeat that claim. Both Professor Gumey and Mr Van der Vlugt were
vigorously cross-examined by Mr. Edeling,
during the course of which
it was suggested to Mr. Van der Vlugt that he was a dishonest
geologist. This gratuitous suggestion
had no basis and no evidence
was led by Mr. Edeling to justify it.

Apart
from the contentions put to the witnesses that a conspiracy as
alleged existed (which, as stated, were all denied) no evidence
was
led on behalf of SDM, despite assertions that it would be, to
substantiate any conspiracy. The Court a quo accordingly found
that
the allegations of a conspiracy had not been proved and that the
existence of

26

a
conspiracy had not been established by SDM. It was correct in so
doing.

In
deciding on his order as to costs, the learned Chief Justice divided
the time taken up by the hearing between the time spent
on the
conspiracy issue and the time spent on the issue of whether the
approval of the Chiefs and the Council of Ministers was
necessary
(the validity issue). On both issues as set out above he found
against SDM. He also had regard to the fact that during
the hearing
he had been obliged to carry out certain of his other functions as
Chief Justice for which he arbitrarily allocated
four days which he
divided equally between the two issues. Considering that the manner
in which the conspiracy issue had been pursued
by SDM was worthy of
censure and deserving of a punitive costs order, the learned Chief
Justice made the following order as to
costs: "Although the
issue of conspiracy was relevant I am of the view that the manner in
which the case was conducted the
issue of conspiracy became vexatious
in the objective sense as the trial went on. I order that on the
issue of conspiracy which
was allocated 36 days I shall deduct two
days and then order SDM to pay LHDA costs on the scale as between
attorney and own client
for 34 days such costs to include costs of
two counsel.

On the
issue of whether the approval of Chiefs and Council of Ministers was
necessary I order SDM to pay costs to LHDA for 12 days
on the scale
as between party and party and such costs to include costs of two
counsel"

In its
challenge of that order in this Court SDM contended that the Court a
quo had erred in awarding costs on the attorney and
own client scale
on the conspiracy issue and, in any event, had miscalculated the time
of the hearing taken up by that issue. For
the,

27

benefit
of this Court Mr. Wallis re-calculated the time of the hearing,
including the time spent on the argument at the end of the
evidence,
and submitted that 28 days should be allocated to the conspiracy
issue and 28 days to the validity issue. We accept that
division and
the costs order in respect of the Court a quo wilt be framed on that
basis.

As to
whether a punitive costs order was warranted Mr. Wallis submitted
that SDM's perception that a conspiracy was afoot was justified
in
the light of the following facts: (a) SDM's application for a mining
lease in the Rampai area was granted by the GOL and, pursuant
to an
enquiry as to whether all necessary procedures had been followed, was
assured that they had been. It had also been provided
with a copy of
the authorisation entitling the Mining Commissioner to sign the lease
on behalf of the GOL. (b) The aforegoing notwithstanding,
the GOL had
tried to cancel the lease as it created problems for the LHDA and
when such cancellation attempt was contested it had
not been
proceeded with, (c) Instead, the GOL had passed the Revocation of
Specified Mining Leases Order No. 7 of 1992 which both
the High Court
and the Court of Appeal found to be void and had struck down, (d)
LHDA had then applied to have the lease declared
invalid, something
which the GOL was not able to do. Against this background the
perception that LHDA and the GOL were making common
purpose was, so
Mr. Wallis submitted, not an unreasonable one.

There is
much substance in Mr. Wallis' submission but it is the manner in
which the conspiracy issue was approached and pursued
by SDM that, in
this Court's view, is deserving of censure. Such conduct has been the
subject of special costs awards in the courts
of South Africa. The
considerations in those cases are equally applicable in this country.
In In Re Alluvial Creek Ltd. 1922 CPD
532 at 555 the Court said "an
order is.

28

asked for
that he pays the costs as between attorney and client. Now sometimes
such an order is given because of something in the
conduct of a party
which the Court considers should be punished, such as malice,
misleading the Court and things like that, but
I think the order may
also be granted without any reflection upon the party where the
proceedings are vexatious, and by vexatious
I mean where they have
the effect of being vexatious,, although the intent may not have been
that they should be vexatious. There
are people who enter into
litigation with the most upright purpose and the most firm belief in
the justice of their cause, and
yet whose proceedings may be regarded
as vexatious when they put the other side to unnecessary trouble and
expense which the other
side ought not to bear. That I think is the
position in the present case".

In Protea
Assurance Co. Ltd. vs Jannszkiewicz 1989 (4) S.A. 292 (W) at 298 D -
299 B. Goldstone J. (as he then was), in reference
to an attack on a
fellow practitioner by an attorney and on the former's client, said
the following: "In my opinion these
attacks made upon Jordaan,
on the evidence placed before the Court in Mr. Eiser's affidavit, are
scurrilous. It is unjustified
by anything stated or done by Mr.
Jordaan. If attorneys, as officers of the Court, behave in such a
fashion towards each other
such conduct can only reflect upon the
dignity of the whole legal profession. Furthermore, such conduct
brings not only the profession
into contempt but indeed the whole
system of justice and the Court. In my view it is at least highly
arguable that Mr. Eiser apart
from having acted unfairly and in an
excessive fashion towards both the plaintiff and his attorney, has
committed contempt of court.........
In my view however having regard
to the seriousness of the attack which Mr. Eiser made upon the
plaintiff, who is a professional
man, and against Mr. Jordaan, an
officer of this court, it is proper that, as a mark of the court's
extreme displeasure at this
conduct, an award of attorney and client
costs should-

29

be made.
Insofar as this might be unfair upon the insurance company for whom
Mr. Eiser acts, that is a matter to be settled between
Mr. Eiser and
his client."

As
pointed out above the whole conspiracy issue was pursued in the most
immoderate, irresponsible and scurrilous manner and fully
deserved
the description of it by the learned Chief Justice as "vexatious".
It involved unjustified and baseless attacks
upon LHDA, the
Governments of South Africa and Lesotho and LHDA's witnesses, notably
Mr.Putsoane and Mr Van der Vlugt, as well
as SDM's witness Mr.
Labuschagne. It also consisted of intemperate and baseless
allegations against LHDA's legal representatives
and, in particular,
LHDA's counsel, Mr. Viljoen. On the considerations just mentioned a
special order as to costs was merited.
Additionally the Court a quo,
as stated above, was subjected to an avalanche of irrelevant and
unnecessary documentation. In Swissbourgh
Diamond Mines vs Government
of R.S.A. 1999 (2) S.A. 279 CD at 339 E - 1 the Court said: "Applying
the principles laid down
in decisions such as Nel vs Waterberg
Landbouers Ko-operatiewe Vereeniging 1946 AD 597 at 607. it would
appear that the applications
to strike out are of such a nature that
it would work an injustice were a special order as to costs not be
made. The "document
complaint" and its annexures were put
together without any regard to the rules of practice and procedure
and the laws of evidence.
The plaintiffs simply endeavoured to
overwhelm both the first defendant and this Court. They sowed as
widely as they could in the
hope of reaping sufficient to establish a
case. In so doing they relied on speculative matter and then raised
argument based on
the speculation. They inundated both the first
defendant and this Court with irrelevant material. This conduct
merits censure.
Notwithstanding being faced with the striking-out
application in respect of the founding affidavit and the "document
complaint",
which should have indicated that restraint on the
part of the plaintiffs was called for when.

30

deposing
to the replying affidavit, the replying affidavit is even more
replete with offensive matter. Plaintiffs thereby indicate
complete
disdain with the rules aforementioned." These remarks apply a
fortiori to the present case.

For all
the aforegoing reasons the Court a quo was justified in making a
special order as to costs on the conspiracy issue. Should
it have
been one on the attorney and own client scale though? This is the
severest form of special costs order as between litigating
parties.
In the light of what this Court feels was a not wholly unjustified
perception by SDM that some form of conspiracy was
afoot to deprive
it of its rights, this Court is of the opinion that an order of costs
on an attorney and client (not own client)
scale would have been a
sufficiently severe censure of SDM's extravagant and vexatious
pursuit of the issue.

It must
be added that the conduct of Mr. Edeling is deserving of this Court's
disapproval in the most stringent terms.

One turns
to the costs of the appeal. The appeal having failed, save on a
portion of the costs order of the Court a quo which in
the overall
picture does not detract from the substantial success of LHDA, the
costs of appeal should follow the result.

Mr.
Viljoen submitted that should the appeal not succeed the appellants
should be ordered to pay costs on the attorney and client
scale. His
grounds for this submission are (a) that the appellants persisted in
the conspiracy issue - it was a ground of appeal
and was only
abandoned on 12 May of this year; (b) that the appellants again
overwhelmed both this Court and the respondents with
an excess of
documentation,,

31

most of
which was not relevant to the appeal; and (c) appellants persisted in
challenging the costs order of the Court a quo.

As to (a)
and (c) this Court finds that the appeal on the conspiracy issue was
not abandoned unduly late and that on the costs question
appellants
have enjoyed a measure of success on appeal. No reason therefore
exists for a special order on these two grounds.

The
record lodged with this Court contained a total of some 5478 pages
which should, as appellants counsel conceded, not have been
included.
The South African Court of Appeal has on more than one occasion
expressed its displeasure at the practice of placing
unnecessary
documents before it and has on this ground, on occasion, made
punitive costs orders. As appellants have not succeeded
in their
appeal, disallowing them the costs incurred by this documentation
would serve no purpose and the time and effort, if any,
spent by
LHDA's legal representatives on them can adequately be compensated by
allowing LHDA the costs of three counsel. Mr. Viljoen
requested such
an order; Mr. Wallis opposed it. The relevant portions of the record
run to well over 6,000 pages, the issues are
complex and the answers
to them difficult to determine. In this Court's view the employment
of three counsel was warranted.

In the
result therefore the following order is made:

1. The
   appeal is dismissed with costs, such costs to include the costs of
   three counsel.

   
   

2. The
   order of the court a quo is confirmed save as to the order as to
   costs which is amended to read as follows: LHDA's costs of
   the
   counter-application are to be paid as follows: (a) SDM is ordered to
   pay the costs of 28 days of the hearing on the scale
   as.

   
   

32

between attorney and client; (b) The balance of the costs of the
counter-application are to be paid by SDM on the scale as between

party and party: (c) The costs in (a) and (b) are to include the
costs of two counsel.

33

Back
A.J.A.

I agree

Ramodibedi
J.A

I agree

Tabbutt
A.J.A

I agree

Zietsman
A.J.A

I agree

W. Van
Deventer A.J.A.