Diamonds: Hungwe’s incredible ruling

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A partial view of the High Court in Harare.

LAST week we carried a summary of High Court judge Justice Charles Hungwe’s ruling on the court battle between government and African Consolidated Resources plc (ACR, now Vast Resources), a London Stock Exchange-listed local firm which owned the Chiadzwa diamond claims after South African global mining giant, the De Beers Group — the world’s leading diamond company — had moved out following the expiry of its exploration permit. This is part of our investigative series on the Marange diamond mining activities which were characterised by shady dealings and looting. The Chiadzwa diamonds investigation story will be running for months, having begun in December last year.

— Legal Correspondent.

A partial view of the High Court in Harare.

A partial view of the High Court in Harare.

On September 6 2010, Justice Hungwe handed down a judgment in which he set aside his ruling dated September 24 2009 in HC6411/07. In the order he issued on September 25 2009, he ruled, inter alia, that the ACR claims (hereinafter referred to as “ACR” and “ACR claims”) issued to four of its subsidiary companies within the area previously covered by Exclusive Prospecting Order (EPO) 1513, are valid and have remained valid since the date they were originally pegged.

The then Minister of Mines Obert Mpofu, the Minerals Marketing Corporation of Zimbabwe and the Zimbabwe Mining Development Corporation noted an appeal against the judgment. The appeal has since been withdrawn.

On April 28 2010 the minister, through his legal practitioners, wrote to the registrar of the court seeking directions in terms of Rule 4C of the High Court Rules. In his judgment, Hungwe set out what he considered to be the relevant portions of that letter. The following is a summary of the correspondence as appears in the judgment:
“The court held that the application for the extension of EPO1523 did not have the effect of reserving the ACR claims area. Therefore the area was open for prospecting and pegging when ACR pegged and registered their claims.

However, in arriving at those decisions the ACR group concealed certain fundamental facts which completely disentitle the ACR group to the relief the court granted.

“They fraudulently concealed the facts in order to gain an unfair advantage and for the purpose of procuring a favourable judgment. Therefore it is our humble request that the court, having regard to the fraud committed by the ACR group, give directions on the proper course of action and procedure to be taken at law in order to procure the rescission of the judgment procured by fraud.

“There are two classes of facts that were fraudulently concealed by the ACR group. Firstly, that the four subsidiary companies in whose names the companies were registered, did not exist at the time of the prospecting, pegging and registration of the claims. Only a natural person or a corporate body can be granted a prospecting licence. When the certificates of registration of the claims were issued, there were no such persons to whom the certificates could be granted.

“Secondly, and more importantly, when the ACR group pegged their claims, the Marange area was reserved against prospecting and pegging by virtue of Reservation Notice 1518, (“RA1518”) that had been issued on 19 February 2004. It is incompetent to acquire mining title through pegging claims in an area which has been reserved against prospecting and pegging (“a Reserved Area”). The ACR group fraudulently concealed the fact of the existence of RA1518 and procured the registration of their claims by fraud.”

The Judge directed the registrar to seek the other parties’ response to the request. According to the judgment, ACR responded on May 19 2010 and the following is a summary of the ACR response as appears in the judgment:
“As the judge has handed down his judgment and an appeal been noted, he is functus officio (which means that he is no longer in office to handle the case). Therefore he can no longer deal with the matter — it is not before him as contemplated in Rule 4C.

“ACR denies that they fraudulently concealed that their subsidiary companies did not exist at the time the ACR claims were registered. They had purchased shelf companies for the purpose and were assured that the companies had been duly registered and accordingly they utilised the names of the shelf companies to obtain registration of the claims. There was no benefit to them in using unregistered companies.

“The minister was a party to HC6411/07 and he never mentioned any of the ‘new’ and supposedly fraudulent issues in the papers he filed. The fact that the subsidiary companies were not registered at the time did not cause any prejudice to the public interest — see the Rajah & Rajah case.

“Section 58 of the Mining Act bars the impeachment of title where a mining location has been registered for two years. ACR denies that when the ACR claims were registered the Marange area fell within the boundaries of RA1518. Moreover, the Mining Commissioner Harare purported to exercise her powers outside her area of jurisdiction; the notice was not advertised in the Gazette as required by Section 35; in 2006 the Mining Commissioner Harare and the Mining Commissioner Mutare recommended that the Reserved Area mentioned in RA1518 ‘be extended’ to include the Marange area; it was extended long after the ACR claims were registered.”

The judge declared that, after careful consideration of the matters raised in the papers and having due regard to, and mindful of the need for finality to litigation, he decided that it would not be in the interests of justice to ignore a party’s effort “to draw the court to a possible fraud (sic)”. He therefore directed that the minister file a court application in terms of Rule 449 of the High Court Rules. In his letter to the parties advising them of the judge’s decision, the registrar said that Hungwe advised as follows:

“Although the matter is strictly speaking not before me, it however appears to me to be just and expedient that the minister file an appropriate court application in terms of Rule 449 … the other parties shall respond … As the application is directed at my judgment, I direct that the matter be placed before me once all the pleadings have been completed.”

The judge clearly accepted that the matter was not before him. Therefore, legally he could not issue directions in terms of Rule 4C and he should have refused to do so. However, he proceeded to issue a direction, which in effect amounted to an instruction to the minister as to the route he had to follow to obtain the rescission he wanted. If the minister did not comply with the direction, he would be guilty of contempt of court. As the matter was not before him, in order to ensure that the papers were filed with him so that he heard the matter, the judge also had to direct the registrar to ensure that the matter was placed before him when the pleadings were completed.
Papers were duly filed in which the minister sought rescission of judgment on the basis that ACR had fraudulently obtained a judgment favourable to its cause, by allegedly suppressing certain information which would have disentitled it to the order it got in its favour.

Fraud has been defined as the wilful perversion of the truth, with intent to defraud, and with actual or potential prejudice. Nowhere in his judgment does the judge make any mention of the details given by the minister as to any wilful perversion of the truth or what he alleged constituted the actual or potential prejudice and who suffered the prejudice. Moreover, the issuing of the directions would hardly satisfy the need for finality of litigation.

Had the judge refused to give any directions, because he could not lawfully give them in terms of Rule 4C, the minister would have had to proceed by way of action. The giving of the directions led to the hearing of an additional application, which has inevitably been followed by an appeal to the Supreme Court. So much for the finality of litigation.

The interests of justice would have been met if the judge had refused to give directions and left the minister to seek advice from his legal practitioners as to the route to follow. Instead, the judge decided “in the interests of justice”, not only to give legal advice and as it turns out, incorrect advice to the minister, but also to issue a direction that he should file an application in terms of Rule 449 of the High Court Rules, failing which he would be in contempt of court.

In his judgment, Hungwe said that the ACR group strenuously opposed the application for rescission on various grounds. Firstly, that the minister and the ZMDC had come to court with “dirty hands” because they were in flagrant contempt of the order of the Chief Justice that all mining operations on the ACR claims should cease.

Secondly, the court had given judgment in the matter and so was functus officio. Thirdly, the matter was under appeal to the Supreme Court. Fourthly, there was another case pending where ACR was challenging a decision of the minister. Finally, since the application is premised on fraud, the minister adopted the wrong procedure. He ought to have realised that there would be a serious dispute of fact requiring proper testing of the evidence through action rather than motion proceedings.

The judge said that the first matter to be resolved was whether the court was properly seized with the matter. The allegation of fraud was directed at a judgment given by him and it is a serious matter for one party to make such an allegation against another, especially where both parties are represented by counsel. He accepted that it is well established that once a court has duly pronounced a final judgment, it becomes functus officio; its jurisdiction in the case having been fully and finally exercised, its authority over the subject matter ceases. He pointed out that the minister’s legal practitioner urged the court to find that there is ample basis under common law permitting the court to exercise its inherent jurisdiction in addition to the High Court Rules.

Rule 449 specifically states that the court or a judge may, in addition to any other power it or he may have, correct or rescind a judgment which was erroneously granted, or where there is an ambiguity or patent error or omission or that was granted by common mistake. After reviewing a number of cases, the judge concluded that the position regarding rescission of final judgments is that it can only be permissible in circumstances where a party could establish a ground such as fraud. He then went on to find that the matter was properly before him. He said that a judgment that was obtained “by fraud or some such malfeasance cannot qualify to be treated as having been fairly obtained.”

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