HARMONY GOLD v REGIONAL DIRECTOR, FREE STATE DEPARTMENT OF WATER AFFAIRS & OTHERS (NORTH GAUTENG HIGH COURT, CASE No /2008, 26 JUNE 2012)

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1 HARMONY GOLD v REGIONAL DIRECTOR, FREE STATE DEPARTMENT OF WATER AFFAIRS & OTHERS (NORTH GAUTENG HIGH COURT, CASE No /2008, 26 JUNE 2012) Importance Parties This is an extremely important case adding to our understanding of s 19 of the National Water Act, 36 of 1998 (NWA). The main issue in this case was whether a directive issued to a landholder in terms of s 19(3), to take reasonable measures to remedy the pollution of a water resource, remained valid once such landholder had severed its ties with the land in question. Landholder in this instance should be understood to include the owner or occupier of such land or any person who has control over such land (with Harmony Gold, the applicant in this case, falling into the latter category). The precedent established by the case is that a directive, issued to a person whilst they were a landholder, remains valid even after such landholder has severed its ties to the land. All the arguments raised by the applicant on the basis of perpetuity liabilities and unreasonableness, amongst others, were rejected. However, out of this case an important distinction emerges between the regulator s power (i) where they have issued a s 19(3) directive to a landholder to take reasonable measures at the time that person was a landholder; and (ii) where they wish to issue a s 19(3) directive to a person who has caused pollution in the past but is not a landholder at present. There is an obiter statement in this judgment to the effect that in the latter case, the regulator can still issue a s 19(3) directive. However in that case, the court held, the Minister s power would be limited to recovering costs (see para. 41). What is clear in terms of s 19(4) is that the Minister s power to take reasonable measures to remedy the pollution of water resources hinges on there being a directive in place. However, it is not clear then in the case of persons who were landholders in the past why the remedy should be restricted from the start to the recovery of costs. This would only apply where the landholder no longer exists. This obiter statement therefore has important implications for the remediation of ownerless and derelict mines. Applicant: Harmony Gold First respondent: Regional Director, Free State Department of Water Affairs Second respondent: National Manager, Compliance, Monitoring and Enforcement Unit of the Department of Water Affairs Third respondent: Minister of Water and Environment Affairs Fourth respondent: Anglo Gold Ashanti Limited Fifth respondent: Simmer and Jack Mines Limited Sixth respondent: Simmer and Jack Investments (Pty) Ltd Seventh respondent: Stilfontein Gold Mining Company Limited (in liquidation)

2 Facts This case relates to a series of directives issued in terms of s 19(3) of the NWA in 2005, to a number of mines operative in the KOSH basin. Some of these directives had already been the subject of previous litigation in Harmony Gold Mining Company Limited v Free State Department of Water Affairs and Forestry 2005 JDR 0465 (SCA), Minister of Water Affairs and Forestry v Stilfontein Gold Mining Company Limited & others 2006 (5) SA 333 (W), and Kebble v Minister of Water Affairs (2007) JDR 0872 (SCA). In the earlier Harmony Gold case, it was established that the obligation to take reasonable measures to prevent pollution in terms of s 19(1) of the NWA is not confined to reasonable measures that can be effected on one s own land, but extends to land owned, controlled or used by another. The directive in dispute had been issued on 1 November 2005 and was to operate until Harmony Gold and the other mining houses operative in the area (Anglo Gold Ashanti, Simmer & Jack, and Stilfontein) had reached agreement on how to deal with the long-term management of water impacted by mining activities in the KOSH basin. Pending the implementation of such an agreement, the mines were required to collect, treat, use or dispose of water that might affect the current and future operation of mines in the area, and to share the costs of doing so equally. The agreement was supposed to have been submitted to the Department of Water Affairs (the Department) within 21 days of the directive being issued, but it was common cause that no agreement was ever concluded. The land on which the pollution occurs was owned by African Rainbow Minerals Gold Ltd (Armgold). In September 2003, Harmony Gold acquired all the shares in Armgold, It thereafter managed Armgold s mining operations and exercised control over the land in doing so. On 29 August 2007, Armgold sold the mine, including the land, to Pamodzi Gold Orkney, with the sale becoming effective in February From that time on, Harmony Gold ceased to manage the mine and no longer exercised control over the land on which the mine is based. Armgold transferred the land to Pamodzi on 6 January However, in March 2009, Pamodzi was placed in provisional liquidation. On 25 May 2009 Harmony Gold wrote a letter to the Department expressing the view that as of February 2008, the directive was no longer valid against it, but rather against Pamodzi, as it was no longer in control of the land. It further gave notice of its intention to cease to contribute to the costs of pumping water effective 30 June Both the Department and the other mines disagreed with this interpretation and efforts to resolve this impasse failed. On 28 August 2009 Harmony Gold formally requested the Department to withdraw the directive against it, but the Department refused to do so. Harmony Gold accordingly approached the court for relief.

3 Relief Sought Legal Issues & Judgment An order setting aside the directive issued to Harmony Gold in terms of s 19(3) the NWA, alternately a review of the NWA s decision not to withdraw the directive and an order declaring the directive invalid as of 6 January The court framed its deliberations in this matter by referring to the preamble and purpose of the NWA, s 24 of the Constitution, s 28 of NEMA and the NEMA principles. The court stated that there is no debate that the NWA is a law envisaged by s 2(1)(e) of the NEMA; i.e. as a law the interpretation, administration and implementation of which must be guided by the NEMA principles (paras 14 19). Issue 1: The primary issue raised in this case was whether a directive issued in terms of s 19(3) of the NWA becomes invalid when a person ceases to be a landholder (para. 19). Harmony Gold argued that a s 19(3) directive becomes invalid by operation of the law when the person against whom it is issued ceases to be a landholder (para. 23). (The court uses the term landholder in the sense of the owner of land, or a person in control of, or who uses or occupies such land.) While this seems not to have been a contested issued in the case, the judge agreed (without giving reasons) to decide this issue in terms of the principle of legality (based on s 172(b) of the Constitution), and not in terms of the Promotion of Administrative Justice Act 3 of 2000 (PAJA). The import of this decision was that on this issue Harmony Gold did not need to prove the exhaustion of internal remedies or that the application had been instituted without reasonable delay (para. 9). In dealing with this issue, the court considered the following six arguments advanced by Harmony Gold: Argument 1: The directive is not sourced in law as it imposes liability in perpetuity Harmony Gold argued that because the directive imposed liability irrespective of its causal contribution to the pollution or consideration of the consequences imposing reasonable measures would have on the mine, it was unreasonable and constitutionally impermissible (para. 25). Judge Makgoka replied that the reasons for the issuance of the directive in the first place were failure by the mines to comply with previous directives, or to reach agreement amongst themselves as to how the mine water problem would be managed. The perpetuity that Harmony Gold complained of was thus of the mines own making and remained only to the extent that Harmony Gold and the other mining houses failed to reach agreement (paras. 26 7). Argument 2: The directive breaches the principle of cessante ratione legis cessat ipsa lex This Latin maxim stands for the principle that where the reason for a rule falls away, the rule falls way as well. Applied to the facts of the case, when Harmony Gold ceased to be a landholder, the directive had to follow suit (para. 28). The court held that the rationale of s 19 was

4 the preservation of the environment and that the Minister, acting in terms of s 19(1), was empowered to direct a landholder to take reasonable measures for as long as it takes to address the risk of pollution (para. 29). Argument 3: A restrictive interpretation limiting liability to current landholders is consistent with the NEMA principles Harmony Gold argued that the NEMA principles do not authorize the use of any means to protect the environment and therefore, by implication, an unrestricted State power to require the implementation of particular means. There were indications of constraints in the NEMA principles, one of which was that only persons in a position to actively implement measures could be held responsible for preventing or remedying the effects of pollution (para. 31). The court responded by saying that where a directive is issued against a person while he is in control to take reasonable measures, his obligations do not become discharged or nullified once he ceases to be in control. If a person severs ties with the land knowing full well that his validly imposed obligations have not been fulfilled, he cannot complain if it is insisted that he comply with these obligations before being discharged from them. Section 28(6) of NEMA could be used, the court added, if Harmony needed to obtain access to the land in order to implement reasonable measures (para. 32). Argument 4: The directive is unreasonable if applicable to persons who are no longer in control of land or derive no benefit there from Harmony Gold argued that the directive was unreasonable on a number of grounds. If there was no longer any causal connection between the person against whom the directive applied and the land, then such person could not derive a benefit from the land and others did so at his expense; his causal and moral contribution to the pollution could not be determined; and because he has no control over the land he cannot be regarded as someone responsible to take reasonable measures at the same time he would be exposed to criminal sanctions for failing to take measures (para. 35). In responding to this argument the court once again turned to the fact that the directive had been issued to Harmony while it was still a landholder, and that it had disposed of its entire issued share capital to Pamodzi before fully complying with its obligations (paras 36 7). Argument 5: The word fails in s 19(3) indicates that this section only applies to current landholders and restricts penalties to this category Harmony Gold argued that the word fails in s 19(3) of the NWA restricts the category of persons against whom directives can be issued and maintained to those who are in a position to fail; i.e. those who still have control over the land. In this way it ensures that the severe penalties that may be imposed for non-compliance are limited to those with active control (para. 38). The court noted that if a landholder had failed to comply with his duties while still a landholder,

5 he does not erase these duties by simply walking away from the failure. It was common cause, the judge said, that the initial issue of the directive could only be directed at someone who is an existing landholder. But once those obligations had been imposed they remained until fulfilled (para. 39). Argument 6: The solution lies in recovery of costs rather than maintaining the obligations of the directive Harmony Gold argued that the proper solution against former owners of property on which water pollution is occurring is for the Minister to take measures herself and to then recover costs from the affected parties. The court disputed this, saying that this argument would only be correct with reference to a directive issued after a former owner had terminated connection with the land. In those circumstances, the court added, the Minister s power would be limited to the recovery of costs. This did not apply in the present case however as the directive had been issued whilst Harmony Gold was still a landholder (para. 41). In addition to dispensing with these arguments, the court added the following observations: There is nothing in s 19(3) to suggest that once an owner, occupier or user of affected land ceases to be such, that unfulfilled obligations imposed in terms of a s 19(3) directive lapse (para. 42). If s 19(3) of the NWA were to be interpreted restrictively as applicable only to current landholders, it would undermine its effectiveness in that persons bound to the directive s obligations could simply sever their ties with the land (para. 45). A restrictive interpretation of s 19(3) would not be in line with the purpose of the NWA, and s 1(3) of the NWA requires that any reasonable interpretation that is consistent with the purpose of the NWA should be preferred over any interpretation that is inconsistent with that purpose (para. 46). Issue 2: The directive was invalid because there had been no proper delegation of powers between the Minister and the Chief Director This was an issue that fell to be decided in terms of the PAJA (para. 50). As there is no catchment management agency for the KOSH basin, the powers in s 19(3) vested in the Minister. The directive, however, had been issued by the Director of Water Affairs of the Free State on the basis of an undated and unsigned delegation of power (para. 50). It was on this basis that Harmony Gold attacked the validity of the directive. Against this application the other mining companies applied the jurisdictional requirements of the PAJA, arguing that this issue was brought out of time and without having exhausted internal remedies. The court accepted these arguments, holding that the effective date for launching a PAJA attack on the validity of the directive was the

6 Outcome date on which the directive had been issued; i.e. 1 November 2005 (para 52). The application was thus more than 4 years out of time. As the applicant also failed to exercise its right to appeal against the directive in terms of s 148(1)(a) of the NWA, it had also failed to exhaust internal remedies (para. 55). There were further no exceptional circumstances from departing from the requirement that internal remedies must be exhausted (para. 57). The application was dismissed and the court ordered that the directive remained valid.