HARMONY GOLD MINING COMPANY LTD v REGIONAL DIRECTOR: FREE STATE DEPARTMENT OF WATER AFFAIRS & OTHERS [2012] ZAGPPHC 127 (29 June 2012).
HARMONY GOLD MINING COMPANY LTD v REGIONAL DIRECTOR: FREE STATE DEPARTMENT OF WATER AFFAIRS & OTHERS 2014 (3) SA 149 (SCA)
Importance / Like the Harmony Gold case of 2006, the Harmony Gold cases set out in this fact sheet are amongst our most valuable precedents on s 19 of the National Water Act, 1998 (NWA). They establish the rule that the Minister’s powers under s 19(3) of the NWA are not temporally limited; i.e. that the Minister is only empowered to use a power to direct a landholder to take specific measures to prevent, mitigate or remedy the pollution of a water resource while such person remains a landholder. Provided the directive is issued whilst such person still has a connection to the land, the obligations imposed by the directive remain until they are fulfilled, even where the person subsequently severs their relation with the land in question.Parties / Applicant/Appellant: Harmony Gold Mining Company Limited
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)
Facts / The first judgment in this matter was decided on 29 June 2012 in the Gauteng North High Court (henceforth referred to as Harmony GoldGNP); the second was decided on 4 December 2013 in the Supreme Court of Appeal (henceforth referred to as Harmony GoldSCA)
The facts common to these cases were as follows:
In 2005 a series of directives were issued in terms of s 19(3) of the National Water Act, 1998 to a number of mines operative in the KOSH basin (Klerksdorp-Orkney-Stilfontein-Hartbeesfontein). In Harmony Gold Mining Company Limited v Free State Department of Water Affairs and Forestry 2005 JDR 0465 (SCA), Harmony Gold, challenged one of these directives on the basis that the reasonable measures it was required to take could only be effected on its own land, and not on land owned, controlled or used by another.They were unsuccessful, with the court holding that the duty to take reasonable measures to uphold the duty of care in s 19(1) was not territorially limited to land where the activity generating the pollution was taking place. Thus although the initial duty of care in relation to water resources was established by a relationship to a specific and thus spatially-delimited piece of land, the obligation to effect reasonable measures to control the pollution emanating from the activities on such land could be required to be undertaken on land owned, controlled, or used by another.
While the first Harmony Gold case centred on the spatial delimitations of the s 19 duty of care, the cases reported on in this factsheet focus on its temporal dimension. 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 be 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 owner of the land on which the pollution-generating activity was taking place was African Rainbow Minerals Gold Ltd (Armgold). In September 2003, Harmony Gold acquired all the shares in Armgold, and 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 2008. 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 2009. 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 2009. 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.
The outcome of each of the cases in the series is as follows:
- Harmony Gold (GNP): The court dismissed the application, finding that the Minister’s powers to issue a directive under s 19(3) of the NWA were not limited to the period during which a landholder maintained ties to the land held at the time the directive was issued.
- Harmony Gold (SCA): The court dismissed the appeal, finding that the court a quo had correctly decided the case.
Relief Sought / An order reviewing and setting aside the 2005 directive; alternately, an order reviewing and setting aside the Department of Water Affairs’ decision not to withdraw the directive.
Legal Issues & Judgment in Harmony Gold (GNP) / Issue 1: Should the review be based on the provisions of the Promotion of Administrative Justice Act 3 of 2000 (PAJA) or the constitutional principle of “legality”?
Judgment: The request to conduct the review on the basis of the principle of legality rather than PAJA was made at the behest of the applicant and had largely procedural implications (institution of the application without reasonable delay and exhaustion of internal remedies). Makgoka J accepted the invitation to conduct the review on this basis (para 9).
Issue 2: May the Minister direct a landholder to take reasonable measures under s 19(3) of the NWA only for so long as they remain a landholder?
Judgment:Harmony Gold presented a raft of arguments to the court (summarized in para 23), justifying why its duty to take reasonable measures had ceased mining operations in February 2008. The arguments presented, and the judge’s response, were as follows:
- The directive is not sourced in law as it imposes liability in perpetuity: The perpetuity argument was that the directive imposed liability irrespective of the applicant’s link to the land, the causal connection between the application and the pollution, and the costs and benefits of the measures carried out. It was argued that this constituted too extreme an interference with Harmony Gold’s property to be constitutionally permissible (para 25). Makgoka J noted that the directive in question was issued after the mining houses concerned had failed to comply with previous directives and failed to submit the information necessary to determine liability (para 26). Further, the directive was issued pending the conclusion of an agreement amongst the mining houses as to how they were going to manage the acid mine water. “The perpetuity referred to by the applicant remains only to the extent that the applicant and other mining houses fail to reach and implement the envisaged agreement” the judge concluded (para 27).
- The directive breaches the principle of cessante ratione legis cessante ipsa lex (a law ceases to operate if the reason for it falls away):The applicant argued that the legal rationale for issuing the directive to Harmony Gold was their relationship to the land. Hence when Harmony Gold ceased to be a landholder in the sense contemplated in s 19(3), the directive had to follow suit (para 28). Makgoka J remarked that this interpretation ignored the “plain provisions” of s 19(3) which made it clear that the rationale for the provision was the preservation of the environment. As such, the Minister was empowered to direct a landholder to take preventative measures for as long as it took to address the risk of pollution. The rationale for the directive, accordingly, did not fall away when Harmony Gold ceased to be a landholder (paras 28–29).
- A restrictive interpretation of s 19(3) of the NWA is consistent with the NEMA principles: Harmony Gold argued that the NEMA principles did not authorize the use of any means to ensure protection of the environment. There were indications of constraints in the NEMA principles, which tempered the means to be used and thereby the public power that could be directed towards such means. The concept of “responsibility” (connoting an active intervention) laid down in the NEMA was an example of such a constraint, for it suggested that only those in lawful control vis-à-vis the pollution or state of affairs should be burdened with the legal duty of care (paras 30 – 31). Makgoka J noted that this argument overlooked the fact that the directive was issued while Harmony Gold was in control to take preventive measures. Unfulfilled obligations do not become discharged or nullified once a landholder ceases to be in control. If a landholder severs ties with the land, “fully knowing that his validly imposed obligations” remain unfulfilled, “he can hardly complain if it is insisted that he should comply with those before he is discharged from them” (para 32).
- The directive is unreasonable: The basis of reasonableness was built upon a number of related arguments, for example, that Harmony Gold no longer derived any benefit from the land but others did so at its expense, that Harmony Gold’s contribution to the pollution and not yet been causally and morally quantified; that the applicant remained exposed to criminal sanctions as well as a continuing and unjustified infringement of his right to property; etc (para 35). Makgoka J countered these arguments by once again pointing to the fact that the directive was issued while Harmony Gold was a landholder, and that it had derived benefits from its pollution activities. It was therefore incorrect to state that the applicant was being obliged to take responsibility for pollution caused by others (para 36). The directive had also been clear on the nature and extent of Harmony Gold’s responsibilities and there was thus a clear causal and moral connection between the pollution and the applicant (para 37).
- A restrictive interpretation follows from the ordinary and grammatical meaning of the word “fails” as used in s 19(3) of the NWA:Harmony Gold’s counsel made much of the fact that use of the term “fails” in s 19(3) limits the scope of persons to whom a directive can be issued: If a person is no longer a member of the circumscribed class of landholders, he can no longer be said to have failed to comply with any legal duty (para 38). Makgoka J dismissed this argument, noting again that legal obligations imposed while Harmony Gold belonged to the class of landholders remain until fulfilled (para 39).
- The Minister’s proper remedy is in the recovery of costs: Finally, the applicant argued that the legislature’s solution to the imposition of liability on former owners lies not in s 19(3) but in the recovery of costs. The judge held, however, that this argument would only be correct in respect of a directive issued after a former owner had terminated connection with the land (paras 41–42).
Issue 3: Was the directive invalid by virtue of an improper delegation of power from the Minister to the Regional Director?
Judgment:On this point, the judge noted that he was considering the matter on the basis of PAJA. The applicant argued that as there was no catchment management agency in the KOSH region, the power to issue s 19(3) directives vested in the Minister. In order for the Regional Director to issue a directive a valid delegation of power needed to have been in place (para 49). In response, the Department of Water Affairs had produced an undated and unsigned delegation, which the applicant argued was invalid and unlawful (para 50). The judge did not decide this question directly but rather determined whether the jurisdictional factors necessary to apply PAJA were in place (unreasonable delay and exhaustion of internal remedies) (see paras 51–57). On the facts the court decided that it was not in the interests of justice to condone Harmony Gold’s unreasonable delay (para 54), and it had also failed to exhaust internal remedies (para 55).
Legal Issues & Judgment in Harmony Gold (SCA) / After traversing the facts of the case, the legal and conceptual frame for consideration of the issue, and the decision of the court a quo, the court (per Meyer AJA) addressed the following issues:
Issue 1:May the Minister direct a landholder to take reasonable measures under s 19(3) of the NWA only for so long as they remain a landholder?
Judgment: Meyer AJA noted that the limitation to s 19(3) Harmony Gold was contending for would have to be read in by implication to the section. On this point he emphasized the principle of interpretation that “words cannot be read into a statute by implication unless the implication is a necessary one in the sense that without it effect cannot be given to the statute as it stands” (para 22). The court, however, was of the opinion that effect can be given to the NWA without the limitation suggested by the applicant (paras 22, 26), for the following reasons:
- There was nothing in the wording of s 19(3) which warranted the conclusion that the Minister’s powers were intended to be limited, rather the wording made it plain that the legislature intended to vest the Minister with “wide discretionary powers” (para 23). The “specific measures” the Minister may impose under s 19(3) may well be more burdensome than the “reasonable measures” contemplated by s 19(1).
- The rationale of s 19(3) is indeed to direct the landholder to address the pollution or risk of pollution however long it may take to do so. This rationale does not fall away when the landholder ceases to own, occupy, use or control the land. The limitation contended for by Harmony Gold was not only unnecessary to give effect to s 19(3), but defeated its purpose and rendered it ineffective. The restrictive interpretation would result in absurdity: Allowing a polluter to walk away from the pollution it had caused with impunity, notwithstanding the principle that it must pay the costs of preventing, controlling or minimising and remedying the pollution (para 24).
- An interpretation that does not include the limitation contended for by Harmony is in line with the purposes of the NWA and the NEMA principles and gives effect to s 24 of the Constitution (para 25).