Introduction

The constitutional mandate relating to the environment gives every person a fundamental right to an environment that is not harmful to his or her well-being, and requires the environment to be protected for the benefit of the present and future generations.

Directors, as much as the companies they govern, are responsible to fulfil that mandate. This article focuses on the obligations relating to contaminated land as well as the liability this imposes on directors of companies.

Environmental legislation

The National Environmental Management Act No. 107 of 1998 (NEMA) provides the structure for all environmental decision-making of individuals, institutions and the government.

Section 28(1) of NEMA provides that every person who causes significant pollution or degradation of the environment must take reasonable measures to prevent the pollution or degradation from occurring, or, if the harm to the environment cannot be avoided or stopped, to reduce and rectify the pollution or degradation. This applies to significant pollution or degradation that:

  • occurred before NEMA commenced;
  • arises at a different time from the actual activity that caused the contamination; or 
  • arises through an act or activity that results in a change to pre-existing contamination.

Waste legislation

The National Environmental Management: Waste Act No. 59 of 2008 (NEMWA) was developed under NEMA and regulates the management of waste in order to protect the health of people as well as the environment (plants, animals, land, air and water).

"Contaminated" is defined in NEMWA as the presence in or under any land, site, buildings or structures of a substance or microorganism above the normal concentration, which directly or indirectly affects the quality of soil or the environment adversely.

Section 36(5) of NEMWA provides that an owner of land that is significantly contaminated, or a person who undertakes an activity that causes land to be significantly contaminated, must notify the Minister of Environmental Affairs and the MEC of Environmental Affairs for that province of that contamination as soon as that person becomes aware of that contamination.

NEMWA provides that it is an offence to contravene or fail to comply with these notification requirements, and that a person who is convicted of an offence under section 67(1)(b) is liable to a fine of up to R5 million or to imprisonment for up to five years, or to both a fine and imprisonment, in addition to any other penalty imposed in terms of NEMA.

NEMWA also provides that the Minister or the MEC may direct that a site assessment is to be conducted and, should the Minister or the MEC decide that an investigation area is contaminated and requires remediation, the land must be declared a remediation site and the Minister or the MEC must make a remediation order to neutralise that risk. The remediation order must address the following:

  1. the person who is responsible for undertaking the remediation;
  2. the land to which the order applies;
  3. the nature of the contamination;
  4. the measures that must be taken to remediate the land or the standards that must be complied with when remediating the land;
  5. the period within which the order must be complied with;
  6. whether any limitations in respect of the use of the land are imposed;
  7. the measures that must be taken to monitor or manage the risk; and
  8. any other prescribed matter.

Transfer of contaminated land

With regards to the transfer of remediation sites, section 40 of NEMWA provides that:

"(1) No person may transfer contaminated land without informing the person to whom that land is to be transferred that the land is contaminated and, in the case of a remediation site, without notifying the Minister or MEC and complying with any conditions that are specified by the Minister or MEC, as the case may be.
(2)(a) For the purposes of ensuring compliance with this section, the Minister must notify the relevant Registrar of Deeds appointed in terms of the Deeds Registries Act of any land that has been declared as a remediation site.
(b)The notification contemplated in paragraph (a) must identify the land sufficiently to enable the Registrar of Deeds to enter the necessary information in or on registers and documents kept by his or her Office."

Directors' liability

Section 24N(8) of NEMA provides that: "notwithstanding the Companies Act or the Close Corporations Act, the directors of a company or members of a close corporation are jointly and severally liable for any negative impact on the environment, whether advertently or inadvertently caused by the company or close corporation which they represent, including damage, degradation or pollution."

Section 34(7) of NEMA relates to criminal proceedings and stipulates that any person who is or was a director of a firm at the time of the offence shall be guilty of the said offence and liable on conviction to a fine or imprisonment, if the offence resulted from the failure of the director to take all reasonable steps that were necessary under the circumstances to prevent the commission of the offence. Proof of the offence by the firm constitutes prima facie evidence that the director is guilty.

Schedule 3 of NEMA lists various pieces of national and provincial legislation, where an offence triggers the provisions of section 34(7) of NEMA, including NEMA itself and related environmental legislation (such as NEMWA, the National Water Act No. 36 of 1998, the National Environmental Management: Air Quality Act No. 39 of 2004, and the National Forests Act 84 of 1998).

A person convicted of an offence in terms of NEMA could be liable to a fine not exceeding R10 million or to imprisonment for a period not exceeding 10 years, or to both such fine and such imprisonment.

Directors of companies must therefore be mindful of undertaking any business activities that can cause land to be significantly contaminated. Should contamination take place, the Minister and the MEC of Environmental Affairs must be made aware of that contamination as soon as possible or those directors may face severe penalties, potentially in their personal capacities.

Dentons would like to thank Joel Pandaro, Associate at Dentons in Johannesburg for his contribution to this month's newsletter.

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