There is a vast scope of legislation pertaining to environmental and mining affairs. We will however only focus on the main acts, which specifically deal with the liability resulting from a breach of a company’s environmental obligations.

The National Environmental Management Act No. 107 of 1998, as amended (“NEMA”), provide as follows:

  • Any manager, agent or employee who does/omits to do an act on behalf of the employer and which would be an offence for the employer in terms of NEMA, shall be liable to be convicted and sentenced in respect thereof as if he or she were the employer;
  • Any person who is or was a director of a firm at the time that the firm committed an offence under any provision of NEMA, shall be guilty of the offence and liable on conviction to the penalty, including an order for an award of damages to the extent that the person benefitted from the consequences of the offence, if the offence in question 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;
  • Any manager, agent, employee or director may be convicted and sentenced in addition to the employer or firm;
  • The Minister responsible for mineral resources or MEC concerned, may direct inter alia, the person contravening NEMA, to:
  • contain or prevent the movement of pollution or degradation of the environment;
  • eliminate any source of pollution or degradation;
  • compile a report containing an assessment of the consequences for or impacts on the environment of the activity, including the cumulative effects, a description of mitigation measures undertaken or to be undertaken, a description of the public participation process followed and an environmental management programme;
  • rehabilitate the environment; or
  • take any other steps necessary under the circumstances;
    • The Minister may by regulation provide that infringements of certain regulations constitute criminal offences and prescribe penalties for such offences.
    • A person convicted of an offence in terms of NEMA is liable to a fine of up to R10 million or to imprisonment for a period from 1 year and not exceeding 10 years, or to both such fine or such imprisonment; and
    • Notwithstanding the Companies Act No. 71 of 2008 or the Close Corporations Act No. 69 of 1984,  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,

The Mineral and Petroleum Resources Development Act No. 28 of 2002, as amended (“MPRDA”) provide as follows:

  • Any person convicted of a offence in terms of the MPRDA is liable to a fine up to R500 000 for each day that such person persists in contravention or to imprisonment for a period up to 10 years or to both such fine and such imprisonment

National water Act No. 36 of 1998, as amended (“NWA”) provide as follows:

  • Any person who contravenes the provisions of the NWA is guilty of an offence and liable:
  • on the first conviction, to a fine or imprisonment for a period not exceeding 5 years, or to both a fine and such imprisonment, and
  • in the case of a second or subsequent conviction, to a fine or imprisonment for a period not exceeding 10 years or to both a fine and such imprisonment;
    • Where any person is convicted of an offence under the NWA the court may award damages for the loss or harm suffered by the any person as a result of such offence and order the accused to pay for the cost of any remedial measures implemented or to be implemented; and
    • Whenever an act or omission by an employee or agent constitutes an offence in terms of the NWA, and takes place with the express or implied permission of the employer or principal, as the case may be, that employee or agent will in addition to that employer or principal be liable to conviction for that offence.

Conclusion:

  • Criminal and/or civil proceedings may be instituted against a director/employee/agent/manager of a company for the recovery of costs and/or damages incurred for the rehabilitation of the environment or for failing to prevent environmental degradation.
  • Recent judgment shows that as there is an increased willingness on the part of the courts to hold company directors personally liable.
  • Due to the principle in company law of separate legal personality, this director’s liability and obligation don’t ordinarily extend to the company’s shareholders. However, the legislation as drafted, could allow a claim against a person who benefited from the environmental degradation activity which could include a shareholder.
  • Delictual liability could accordingly be assigned to shareholders in certain limited circumstances, such as for operations, plans, policies, transactions or procedures they enforced or omissions they caused a company to make, subject to all the elements of delictual liability being present.
  • Lastly, if shareholders (and of course directors) abused the corporate personality of a company and it resulted in environmental degradation, there is a risk that the court may pierce the corporate veil and attribute liability to the shareholders themselves.