The State’s Role as Public Trustee

An examination of the content of the state’s position as custodian over the

mineral resources of South Africa

Introduction

The Mineral and Petroleum Resources Development Act (MPRDA) came into force on 1 May 2004.

This act had the effect of drastically altering the common law position regarding mineral and petroleum rights.

Old Order

Governed by private lawOwnership of unsevered minerals vested in

land owner.Right to prospect and mine was part and

parcel of land ownership

MPRDA

Section 3(1):Mineral and petroleum resources are

the common heritage of all the people of South Africa and the State is the custodian thereof for the benefit of all South Africans.

Content of the State’s Roles as Custodian over Mineral Resources?

What steps must be taken

to achieve these goals?

To whom are they owed?

What

duties?

Relevance?

Specific Focus

The private law concept

of trusteeship

The concept of the state

as custodian over the nation’s mineral

resources

Comparison

Fiduciary Duties owed by:trustees to trust beneficiaries in the administration of trust property

Fiduciary duties owed by:the stateto the people of SA in the administration of the mineral resources of the country.

The Law of Trusts

The Concept of Trusteeship

Fiduciary Duties of Trustees

Part One

The General Fiduciary Duty of Trustees

The duty of care

The duty of impartiality

The duty of independence

The duty of accountability

The Duty of Care

Duty to manage and administer the trust property in a prudent manner, as a reasonable person would.

Trustee must exercise more care in administering the trust than he would in dealing with his own property.

The Duty of Impartiality

Two components: a duty to avoid a conflict of interest between

the personal interests of the trustee and his official obligations and

a duty to treat all trust beneficiaries impartially.

The Duty of Independence

Trustees must exercise rigorous and independent judgment when performing their duties as trustees. Thus a trustee may not simply act under the orders of the trust founder.

The Duty of Accountability

The trustee is obliged to provide regular accounts regarding the administration of the trust, to the trust beneficiaries.

Duties are context dependent

Environment Trust property Beneficiaries Trustee

Duties under the MPRDAEnvironmental Management Plan

Enable Transformation

Etc

Ensure optimal mining

Environmental Management Plan

Aim: ensure development of Mineral Resources in and orderly and ecologically sustainable way, while ensuring the advancement of social and economic development.

Optimal Mining of Mineral Resources

Minister is empowered to direct that the holder of mineral rights take corrective measures if not mining optimally and to cancel/suspend such rights if holder does not comply.

Transformation

Provision made by the MPRDA to empower previously disadvantaged communities and persons, by giving them preferential treatment in the application for mineral rights, provided certain criteria are met.

Structure of MPRDA

Obligations and powers of the

state in MPRDA

Mining takes place in for the benefit

of the public

Analogous System of Duties

Fiduciary Duties of Trustees

Duties in terms of

the MPRDA

Part Two: Problems regarding comparison

Private

Public

Main Issue: System of Co-operative Government NATIONAL

GOVERNMENT

Provincial Government

Local Government

Tension

Potential tension between decisions made at national level that may impact upon provincial or local government’s exclusive areas of competence.

Swartland Municipality v Hugo Wiehahn Louw N.O and others 2009 13703/09 (C)

Bibliography

1. Badenhorst and Mostert Mineral and Petroleum Law of South Africa (2004) Lexis Nexis Butterworths.

2. Badenhorst, Pienaar and Mostert The Law of Property 5ed. (2006) Lexis Nexis Butterworths.

3. Cameron, De Waal, Wunsh Honore’s South African Law of Trusts 5ed (2002) Juta.

4. Du Toit South African Trust Law: Principles and Practice (2002) Lexis Nexis Butterworths.

5. Du Toit ‘The Fiduciary Office of Trustee and the Protection of Contingent Trust Beneficiaries’ Stell LR (2007) vol 3 469.

6. Swartland Municipality v Hugo Wiehahn Louw N.O and others 2009 13703/09 (C)