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IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG NORTH DIVISION, PRETORIA

Case No: 80542/12

Date: 23 December 2013

Not Reportable

Not of interest to other judges

In the matter between:

COALTOLL (PTY) LTD...........................................................................Applicant

and

BLACK WATTLE COLLIERY (PTY) LTD........................................Respondent

JUPGMENT

1. The applicant is Coaltoll (Pty) Ltd, a company duly registered and incorporated in accordance with the company laws of the Republic of South Africa with registered address at 33 Georgian Crescent East, Georgian Court, Bryanston, Gauteng. The applicant does business manufacturing and constructing steel components and tolling and processing of raw coal and discard reprocessing.

2. The respondent is Black Wattle Colliery (Pty) Ltd, a company duly registered and incorporated in accordance with the company laws of South Africa with principal place of business at Fontein Street, Bethal Road, Middelburg. Respondent does business in mining and washing of coal.

3. It is common cause that the respondent was at all relevant times in possession of a property known as Remaining Extent of Portion 27 of the farm Middelburg Town and Townlands 287, Registration Division JS, Transvaal. The parties referred to this property as the “mining property”.

4. The owner of the farm Middelburg Town and Townlands is, and was at all relevant times, the Middelburg Municipality from whom the respondent rents the property.

5. The respondent mined coal on the mining property in an underground operation. A shaft sunk on the property gives access to the deposits that were originally mined on Portion 27, but also allows access underground to deposits on neighbouring properties. It also provides access for rehabilitative activities on the mining property.

6. The respondent has mined coal on the mining property since the early nineties of the previous century. The applicant is controlled by a Mr Harrison, who was also the guiding spirit of a corporate entity known as Jim Harrison Design Associates (Pty) Ltd, which washed and processed raw coal for the respondent in terms of an agreement between the two companies entered into in 1994.

7. This agreement was in time superseded by a contract known as the 2003 Tolling Agreement between the applicant and the respondent. When this contract was entered into, the applicant company stepped into the shoes of Jim Harrison Design Associates (Pty) Ltd and undertook to attend to the washing of the raw coal mined by the respondent. Applicant was the owner of a washing plant that was upgraded and expanded over the years in order to be able to serve the respondent’s requirements. This washing plant was situated on a smaller piece of land identified as “the leased property”, about 200 meters by 65 meters, situated immediately adjacent to the mining property on portion 14 of the farm Vaalbank. Portion 14 originally belonged to a farmer, Mr Grobler, from whom the leased property was leased in 2003 by the applicant.

8. When Grobler passed away in 2004, respondent became owner of the entire portion 14 of the farm Vaalbank and with it also owner of the leased property. Respondent took transfer of portion 14 in 2008, but let the leased property to the applicant in terms of a written lease in 2006 already. This lease was to endure until 2011.

9. During July 2006 the respondent was faced with the fact that the coal deposits on the mining property were declining and close to exhaustion. The tolling agreement required the respondent to deliver certain minimum quantities of raw coal to the applicant for processing, which quantities became harder to produce. Respondent consequently approached the applicant with the proposal to acquire applicant’s washing plant and thereby assume responsibility itself for the processing of raw coal it produced. The parties agreed on terms and respondent purchased applicant’s entire plant and equipment in terms of a written agreement dated 6 July 2006. This agreement was referred to by the parties as the Equipment Purchase Agreement.

10. Applicant had erected offices, a workshop and a factory on the leased premises and continued to conduct business from the leased property after the coal processing equipment was sold to respondent in terms of the existing lease. As it was interested in securing its future tenure of the leased property beyond 2011, an option was included in the equipment sale agreement, equipment sale agreement, granting the applicant the right to acquire the leased property on the happening of certain events. The option clause reads as follows:

8.1 For the purposes of this clause, the following expressions shall bear the meanings assigned to them below:

8.1.1 the exercise date” means the date upon which the option is exercised by the seller (the applicant), in writing, in terms of this clause 8;

8.1.2 “this option” means the option granted by the purchaser (the respondent) to the seller in terms of clause 8.1;

8.1.3 “the option property” means the property which is the subject of the option set out in clause 8 hereof, being, the Remaining Extent of Portion 14 (a portion of portion 11) of the farm Vaalbank 289, 1.5, measuring 27,5998 hectares.

8.2 The purchaser hereby grants to the seller the option (which is not hereby exercised) to purchase the option property for an amount of R 650 000,00 (six hundred and fifty thousand rand)(“the option price”).

8.3 The option price shall be payable by the seller to the purchaser within 60 (sixty) days of the exercise date, in cash, failing which, the option will be deemed to have been declined and shall accordingly lapse and be of no further force and effect.

8.4 Should the seller elect to exercise the option and pay the option price in accordance with the provisions of 8.3, the sale which results therefrom shall be:

8.4.1 on the basis that the purchaser does not warrant the property in respect of suitability of purposes; and

8.4.2 voetstoots.

8.5 The seller shall not be entitled to exercise the option until the date of a material breach of this agreement by the purchaser or the date on which the purchaser ceases to mine at Black Wattle Colliery, whichever is the earlier and notice of the exercise of the option must be given to the purchaser, in writing. ’

11. The option, if exercised, would give the applicant ownership of the portion which includes the leased premises.

12. It is the applicant’s case that the respondent ceased to mine the mining property during 2010, when the underground coal deposits on this portion gave out. Respondent, the applicant alleges, mined some coal on the mining property by way of open cast operations until that deposit was also worked out. Since then the respondent has used the property to trade in coal sourced from other areas which coal is brought on to the mining property to be washed in the washing plant upon the leased property before being transported to further destinations. The applicant therefore concluded that it was entitled to exercise the option, which it purported to do in February 2011 for the first time. This purported exercise of the option was rejected by the respondent.

Another purported exercise of the option with the assistance of the applicant’s attorneys in November of the same year suffered a similar fate. The applicant then proceeded to launch this application for a declaratory that the option was properly exercised, alternatively that the applicant is still entitled to exercise the option the leased property.

13. It is common cause that there are no further underground mining operations conducted upon the mining property. It is not in dispute that respondent is statutorily obliged to maintain the mining works and to rehabilitate the area in which it mined the coal deposits. This activity requires a continued,presence of workers and equipment on the mining property. It also compels the respondent to use the existing shaft for that purpose. But respondent adds that it also uses the shaft to gain access to the underground works on the adjacent properties of Vaalbank and Uitkyk. The right to mine these deposits it acquired while the last of the original deposits on the mining property were removed. It lists a comprehensive catalogue of activities being conducted on the mining property on an ongoing basis apart from the mining activity on the neighbouring properties, ranging from pumping water, processing and crushing coal to transporting the product, maintaining slime dumps and stockpiles. It also conducts all its administrative activities on this property. None of these facts are seriously in dispute.

14. The applicant alleges that there is no colliery known as the ‘Black Wattle Colliery’ and that that description has no bearing on the mining property. Consequently, its argument runs, the phrase in clause 8.5 of the equipment sale agreement1... the purchasers ceases to mine at Black Wattle Colliery must be interpreted to mean '... ceases to conduct underground mining operations on the mining property.' It advances the further consideration that the equipment sale contract and the option were agreed upon against the background that the respondent’s underground mining activity were drawing to a close upon the mining property. There would have been no logical reason to grant the option other than the imminent termination of mining activities on the latter property.

15. Respondent agrees that it was, at the time the contract was concluded, sourcing coal deposits at other localities - which it had done since 2001 already - and that it did contemplate the possibility of relocating its operations at some stage. However, it never abandoned its operations on the mining property. Its business was, in addition, regularly referred to as ‘Black Wattle Colliery1. Respondent underlines that it did in fact refer to its operation and the extension thereof as ‘Black Wattle Colliery in correspondence between the parties in 2001 already.

16. The words ‘mine' and ‘colliery are interpreted according to Thesaurus on the internet as

coal mine, coal pit - a mine where coal is dug from the ground

colliery, pit - a workplace consisting of a coal mine plus all the buildings and

equipment connected with it.

It is therefore of significance that the option clause in the Equipment Purchase Agreement does not refer to the termination of mining activities on the ‘mining property' but at the colliery. Applicant contends that these two terms must be interpreted as having been used interchangeably and that the event that renders the option exercisable has therefore occurred. This argument does not take into account the history of the commercial activities on both the mining property and the leased property. The respondent’s actions are entirely inconsistent with any intention of abandoning the mining property in the foreseeable future, and were so inconsistent at the time the option was granted.

17. In addition words used in documents such as agreements must be given their ordinary and usual meaning which the parties attached thereto when the contract was concluded. Seen in the light of this principle the use of the description ‘Black Wattle Colliery is anything but accidental. There is an indisputable difference in meaning between the descriptions the ‘mining property' and the 'Colliery'.

18. The applicant’s contention that the option was properly exercised, or is still open to be exercised, is misplaced and cannot be accepted. The application must therefore be dismissed.

19. It is common cause that the lease in terms of which the applicant occupied the leased premises was terminated by the lease period coming to an end in 2011. The applicant has sought to renew the same, but the parties were unable to agree on terms that were acceptable to the lessee. The applicant has remained in occupation of the leased property on the grounds of its contention that the option was properly exercised. The respondent has brought a counter application to have the applicant evicted from the leased premises. The parties were agreed that the counter application has to succeed if the principal application is dismissed.

The following order is therefore made:

1. The application is dismissed with costs;

2. Prayers 1 and 2 of the counter application are granted with costs;

3. The costs are to be taxed on the basis that the employment of senior counsel and senior junior counsel respectively was justified.

Signed at Pretoria on this 23 day of December 2013.

E BERTELSMANN

Judge of the High Court

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