Environmental Duty Of Care

 

Operators in the real estate sector routinely deal with a slew of challenges, relating but not limited to construction defects or delays, injuries Enviroto tenants, and liability claims due to property damage.

However, landlords, landowners, and property managers typically overlook their environmental duty of care (DoC) obligations in this respect, which attracts liability risks arising from environmental pollution or non-compliance events at their owned and or managed properties.

What is a DoC?

The environmental Duty of Care (DoC) obligation is a statutory obligation imposed on all persons (both natural and juristic) to take reasonable measures to prevent environmental pollution or degradation from occurring, continuing or recurring. Property owners carry a legal duty to discharge this DoC in relation to their properties, irrespective of whether the property is occupied by a tenant, and must take reasonable measures to prevent, stop or rectify environmental harm, even where such harm arises due to the business or other activities of a tenant.

The environmental DoC obligations are applicable in terms of the National Environmental Management Act 107 of 1998 (NEMA) and the National Water Act 36 of 1998 (NWA). A common misconception is that the statutory DoC obligations, applicable in terms of both the NationalEnvironmental Management Act 107of 1998 and the National Water Act 36of 1998, do not extend to landowners, landlords, and property managers, given that none of these parties is typically involved in the day-to-day running of their tenants’ businesses and are naturally not involved in the management of potential and actual environmental pollution or noncompliance. However, the reality is that each of these actors carries a degree of legal responsibility, despite the arms-length relationship with tenants, due to the notoriously wide scope of the DoC statutory framework.

NEMA

The National Environmental Management Act establishes the statutory framework to enforce the right to a healthy environment enshrined in section 24 of the Constitution. NEMA, therefore, provides the overarching legislative framework for environmental governance in South Africa and several Strategic Environmental Management Acts (SEMAs) exist under this umbrella which governs waste management, air quality, and biodiversity, amongst other aspects.

NEMA and the respective SEMAs promote common environmental management principles and stipulate the procedures which all persons, including property owners, 58 OCT 2021 SA Real Estate Investor Magazine OCT 2021 59 must observe to ensure that business or other activities are conducted in an environmentally sound manner.

Regulators frequently issue enforcement action, most commonly in the form of directives, to landowners, landlords, and property managers for breach of DoC obligations, following an environmental contravention committed by a tenant. Failure to comply with a directive is a criminal offense, in which case regulators may elect to remediate the environmental harm and claim the related costs proportionally from the relevant party/ies.

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The material risk of (personal) director liability in this context presents a particularly strong case for landowners, landlords and property managers to comply with their respective DoC obligations, not to mention the associated reputational impacts, among other considerations.

Common Breaches

Environmental contraventions typically arise where a tenant fails to obtain the necessary environmental permit/s (e.g. environmental authorisation in terms of NEMA or a water use licence in terms of the NWA), fails to comply with the conditions of a permit, or undertakes high-risk business activities which result in the occurrence of environmental degradation or pollution.

Landowners and property managers are usually not involved in these activities, however, enforcement action may be issued to these parties on application of the DoC principles. Landowners and property managers must therefore implement reasonable and practical measures, often in collaboration with tenants, to either minimise the risk of environmental pollution/degradation or to adequately rectify such environmental harm. It is therefore advisable to define each party’s obligations in his respect, in terms of lease agreement which includes specific clauses which relate to environmental matters.

Landowners, landlords, and property managers must therefore take reasonable steps to discharge their respective DoC obligations and even more so in instances where tenants conduct high-risk business activities. These could include the production and or storage of hazardous substances, activities resulting in the generation of noxious discharges or atmospheric emissions, or the use of large quantities of harmful agrichemicals or fertilisers (in the case of agricultural tenants), all of which typically carry significant environmental pollution risks.

The manner and extent of the measures which must be employed by landowners, landlords and property managers in this context must be determined on a case-by-case basis. In each instance, they should consider the nature of the relationship between each of these parties (and the tenant), as well as the manner of the business activities conducted at the relevant property.

This requires taking a balanced approach, combining both practical and contractual measures which are tailored to ensure that each party navigates and adequately complies with the relevant DoC landscape while avoiding the associated and inherently significant environmental liability risks.

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