THIS is a continuation of an article we began serialising last week. A veteran lawyer with a wealth of experience gives a legal perspective 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.
— Legal Correspondent.
The position then is that Justice Charles Hungwe, having received the letter from the Mines minister then, Obert Mpofu, seeking directions in terms of Rule 4C, admitted that “strictly speaking” the matter was not properly before him, which is a necessary element before he could give directions, but nevertheless gave directions.
The directions amounted, not only to legal advice that the minister should proceed by way of making an application in terms of Rule 449 of the High Court Rules for the judge to rescind his earlier judgment, but was also an instruction to do so.
Although Rule 449 merely provides for three circumstances in which a judge can rescind his judgment, in addition to any other power that the judge may have, the judge decided that the common law provides that a judge can rescind a judgment obtained by fraud. He was satisfied that the minister had discharged the onus of establishing that fraud on the part of the ACR group was a good ground for rescinding his judgment, even though the application had been made in terms of Rule 449, which does not provide for rescission on the ground of fraud and even though ACR had provided a detailed rebuttal of the alleged fraud.
Moreover, while the minister had, in his letter of request, alleged fraud numerous times, nowhere did he indicate what the fraud was and give particulars. He merely made bald allegations of fraud and fraudulent concealment, which by no stretch of the imagination can be said to have been proved.
After finding that the matter was “properly” before him, and that he was “properly” seized with the matter, the judge said that the next issue to decide was whether, by reason of contempt, the minister should not be heard. After analysing a number of cases, the judge concluded that the minister had not disqualified himself from seeking the assistance of the court in asserting his rights because he was not a party to the order given by then Chief Justice Godfrey Chidyausiku and he was not a fugitive from justice.
Chidyausiku had made an order that all mining operations on the ACR claims should cease, pending the determination of the appeal. That order was issued to, and binding on, all the parties to HC6411/07, which included the minister. He was fully aware of the order of the chief justice that all mining operations must cease.
As he is the minister responsible for the administration of the Zimbabwe Mining Development Corporation (ZMDC) Act, he has the authority to give the ZMDC orders in relation to matters of policy. Just as he gave the ZMDC instructions to enter into agreements with the Reclam Group and Core Mining to establish their joint ventures, Mbada Diamonds and Canadile Miners, to mine diamonds at Marange, he could have given ZMDC instructions to stop mining.
Having decided to decline to uphold the points raised in limine by ACR, the judge said that the question remaining for decision by him was whether, on the basis of the papers before him, a case had been made for the rescission of his judgment on account of it having been obtained or procured by fraud. He said that ACR had urged him to refuse to hear the minister because an action was more suited for proof of fraud than motion proceedings.
In his view, however, any matter that can be brought by action can be brought by motion and that is particularly so in the present case because the initial proceedings were commenced by motion proceedings. Somewhat surprisingly, the judge reasoned that since the initial proceedings were very straightforward and could easily be decided on the papers, motion proceedings were appropriate. He failed to appreciate that when fraud has to be proved, then proceedings by way of motion are not appropriate and they should be instituted by way of an action, because invariably, there will be a dispute of fact which can only be decided by evidence.
In any event, as the matters before the court in the initial proceedings were completely different to those in the application for rescission, it is difficult to accept that the use of motion proceedings in the former justified use of the same proceedings in the latter.
Hungwe said that his initial judgment proceeded on the basis and assumption that the ACR subsidiaries, when they obtained the registration of their claims, were duly incorporated and that when they pegged their claims there was no Reservation Order (RA) in force. It was the cancellation of the registration of the claims by the minister which prompted the application in HC6411/07. The case was so straightforward, he said, that counsel appearing for the minister conceded in his heads of argument that the cancellations were unlawful. However, the judge then went on to say: “Although now with hindsight I am able to question the aptitude of the officers of the Civil Division of the Attorney-General, at the time of the previous hearing I had no reason to question their probity. It seems to me now quite a lot of information was kept away from the court in order to ensure a certain outcome. The judgment of 25 September was quite clearly a desirable outcome for ACR although I am not sure who else desired it.”
It is incredible that Hungwe should question the probity of officials in the Civil Division of the Attorney-General’s Office merely because of the concession in their heads of argument that there were no grounds for challenging the cancellation of the claims. As he himself found that the cancellations could not be upheld, the concession was properly made, as would be expected of a senior law officer in the Civil Division of the Attorney-General’s Office.
Hungwe then stated that as one of the parties had brought it to his attention that the judgment may have been procured by fraud, in the exercise of his powers at common law (not those conferred by Rule 449) and having been “seeped (sic) in the facts on which he based his judgment”, it appeared that in all the circumstances, the “ends of justice will be served, taking into account the convenience of the parties and to avoid a multiplicity of judgments and at the same time ensuring finality to litigation, that I hear the minister’s application”.
It is difficult to believe that the judge thought that his decision to rescind his judgment would bring about finality. It is most unlikely that ACR would meekly accept his judgment and not file an appeal. His decision that the matter was properly before him could only lead to further litigation.
Two judgments were handed out by the registrar. One is a transcript from the tape recording of the judgment read by Hungwe in open court. It contains many typographical and grammatical errors. The other is a refined version of the judgment which corrects most, but not all, the typographical errors.
However, the refined version of the judgment also contains a substantial amount of material that is not contained in the transcript version. In the refined version, Sections 2, 20 and 35 of the Mining Act are reproduced with submissions concerning each section, but they do not appear in the transcript version of the judgment; so obviously, they were not part of the judgment that was read out in open court.
The judge said that ACR sought to downplay the consequences of non-incorporation since no one was prejudiced, therefore no finding of fraud could possibly arise, but he disagreed. In the transcript version of his judgment, he merely said: “I disagree”, without any elaboration. However, in the revised version, he set out the provisions of Section 2 of the Mining Act, which provides that the dominium in and the right of searching and mining for and disposing of, all minerals is vested in the president, and then went on to make the following astounding conclusions:
“The president holds these rights in trust and on behalf of the citizens. The public therefore has a vested interest in who is registered to extract this national resource; how transparent was the registration of such rights conducted; who stands to benefit from the manner the rights in question are dealt with and so on. The list of such points of interest is not exhaustive.
“Suffice it to say that whatever the intention of the ACR may have been, the court is entitled to draw any reasonable inference that is supported by facts. If therefore ACR choses to rely on a method of registration that fell foul of the law they only have themselves to blame. It is difficult to appreciate how the submission that public interest was not prejudiced is made. Fair competition by investors requires that they all follow the same rules regarding registration of rights.”
Hungwe did not say that this submission was made by the minister and it is not contained in the transcript version of his judgment. Clearly, the judge felt that he had to find an answer to the submission that no one had been prejudiced. Therefore, he came up with Section 2 of the Mining Act.
His conclusions, based on that section, are novel. The conclusion that the public has a vested interest in who is registered and how transparent the registration conducted was is difficult to accept, but, even accepting that there is such a vested interest, how was the public prejudiced by the fact that the subsidiary companies were incorporated a few weeks after the registration and not before?
What is the “reasonable inference” that is supported by facts? What are the facts? He does not say what inferences he drew. Could fraud be inferred when there was no logical reason for ACR to register the claims in the names of unregistered companies?