Director-General, Department of Environment and Climate Change v Jack & Bill Issa Pty Ltd (No 5) - [2009] NSWLEC 232

No judgment structure available for this case.

Reported Decision: 172 LGERA 225

Land and Environment Court

of New South Wales

CITATION: Director-General, Department of Environment and Climate Change v Jack & Bill Issa Pty Ltd (No 5) [2009] NSWLEC 232

PARTIES:
PROSECUTOR:
Director-General, Department of Environment and Climate Change
DEFENDANT:
Jack & Bill Issa Pty Ltd

FILE NUMBER(S): 50030 of 2009

CORAM: Biscoe J

KEY ISSUES: ENVIRONMENTAL OFFENCES :- clearing of native vegetation - offence against s 12 Native Vegetation Act 2003 - deemed liability of landholder under s 44 - clearing occurred on land owned by defendant company - whether conduct of director of defendant company in clearing native vegetation was attributable to defendant company

LEGISLATION CITED: Environmental Planning and Assessment Act 1979, s 126
Interpretation Act 1987, s 21(1)
Land Tax Management Act 1956, s 10AA
Local Government Act 1993, s 515
Native Vegetation Act 2003, ss 3, 4, 6, 12, 44, 45
Native Vegetation Conservation Act 1997

CASES CITED: ABC Developmental Learning Centres Pty Ltd v Wallace [2006] VSC 171, (2006) 161 A Crim R 250
ABC Developmental Learning Centres Pty Ltd v Wallace [2007] VSCA 138, (2007) 172 A Crim R 269
Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd [1931] HCA 53, (1931) 46 CLR 41
Director General, Department of Education and Training v MT [2006] NSWCA 270, (2006) 67 NSWLR 237
Director of Public Prosecutions Reference (No 1 of 1996) (Vic) [1998] 3 VR 352, 96 A Crim R 513
Director-General of Department of Land and Water Conservation v Greentree [2003] NSWCCA 31, 131 LGERA 234
Entwells Pty Ltd v National & General Insurance Co Ltd (1991) 5 ACSR 424
Environment Protection Authority v Multiplex Constructions Pty Ltd [2000] NSWLEC 6, (2000) 112 LGERA 1
H L Bolton (Engineering) Co Ltd v T J Graham & Sons Ltd [1957] 1 QB 159
Hamilton v Whitehead [1988] HCA 65, (1988) 166 CLR 121
Hardt v Environment Protection Authority [2007] NSWCCA 338, (2007) 156 LGERA 337
Lennard’s Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705
Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500
Nationwide News Pty Ltd v Naidu [2007] NSWCA 377, (2007) NSWLR 471
North Sydney Council v Roman [2007] NSWCA 27, (2007) 150 LGERA 419
Presidential Security Services of Australia Pty Ltd v Brilley [2008] NSWCA 204, (2008) 73 NSWLR 241
R v Jasper [2003] NSWCCA 186, (2003) 139 A Crim R 329
Tesco Supermarkets Ltd v Nattrass [1972] AC 153
The King v Australasian Films Ltd [1921] HCA 11, (1921) 29 CLR 195
The Lady Gwendolen [1965] P 294

DATES OF HEARING: 15-18 December 2009

DATE OF JUDGMENT:
31 December 2009

LEGAL REPRESENTATIVES: PROSECUTOR:
Mr T. Howard
SOLICITORS
Department of Environment, Climate Change and Water

DEFENDANT:
Mr B. Vasic
SOLICITORS
Agostino & Co

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

BISCOE J

31 December 2009

50030 of 2009

DIRECTOR-GENERAL, DEPARTMENT OF ENVIRONMENT AND CLIMATE CHANGE v JACK & BILL ISSA PTY LTD

JUDGMENT

1 HIS HONOUR: The defendant company, Jack & Bill Issa Pty Ltd, has pleaded not guilty to an offence against s 12 of the Native Vegetation Act 2003 of carrying out the clearing of native vegetation otherwise than in accordance with a development consent granted in accordance with the Act or a property vegetation plan.

2 The following agreed key facts set the scene. Clearing of native vegetation occurred on about 12 of 40 hectares of rural land owned by the defendant known as 106 Q7 Lane, Quorrobolong (the Land) in the local government area of Cessnock between about 1 April 2007 and 24 May 2007. The native vegetation was not cleared in accordance with a development consent or a property vegetation plan. The clearing was carried out by a contractor. Mr Mario Mura instructed the contractor to carry out the clearing and paid him from the bank account of a company with which Mr Mura was associated but which was unrelated to the defendant. At all relevant times Mr Mura was one of the two directors and two equal shareholders of the defendant company, the other being Mr Jack Issa.

3 The critical issue is whether the conduct of Mr Mura in instructing the contractor to clear the native vegetation is to be attributed to the defendant company.

4 The objects of the Act are set out in s 3 and include:

“ 3 Objects of Act

The objects of this Act are:

(a) to provide for, encourage and promote the management of native vegetation on a regional basis in the social, economic and environmental interests of the State, and
(b) to prevent broadscale clearing unless it improves or maintains environmental outcomes, and
(c) to protect native vegetation of high conservation value having regard to its contribution to such matters as water quality, biodiversity, or the prevention of salinity or land degradation
…

5 Sections 12 and 44 provide:

“ 12 Clearing requiring approval

(2) A person who carries out or authorises the carrying out of clearing in contravention of this section is guilty of an offence and is liable to the maximum penalty provided for under section 126 of the EPA Act for a contravention of that Act.
(3) It is a defence in any proceedings for an offence against this section if it is established that the clearing was permitted under Division 2 or 3 or was excluded from this Act by Division 4.

44 Evidentiary provision

6 “Landholder” means “a person who owns land or who, whether by reason of ownership or otherwise, is in lawful occupation or possession, or has lawful management or control, of land”: s 4(1).

7 The word “person” in these provisions includes a corporation: s 21(1) Interpretation Act 1987. This is also apparent from s 45 of the Native Vegetation Act 2003, which relevantly provides:

“ 45 Offences by corporations

8 In the case of a landholder, s 44 reverses the onus of proof by deeming that a landholder has committed the s 12 offence of clearing land unless the landholder establishes the two matters referred to in its two subsections. In terms of s 44, the agreed facts establish that the defendant was the landholder, the clearing was carried out by another person (the contractor), and the defendant’s director Mr Mura caused or permitted the contractor to carry out the clearing.

9 The only issue under s 44 is whether the defendant has established the matter in s 44(b), namely that the defendant did not cause or permit the contractor to carry out the clearing.

10 That issue turns on whether the conduct of Mr Mura in causing or permitting the contractor to carry out the clearing is attributable to the defendant.

11 The prosecutor’s alternative, affirmative s 12(1) case, where the prosecutor bears the onus, turns on the same question.

12 There is a distinction between “cause” and “permit” in s 44(b): Environment Protection Authority v Multiplex Constructions Pty Ltd [2000] NSWLEC 6, 112 LGERA 1 at [238] (Lloyd J); R v Jasper [2003] NSWCCA 186, 139 A Crim R 329 at [32] – [34]; Hardt v Environment Protection Authority [2007] NSWCCA 338, 156 LGERA 337 at [26]. It is unnecessary to explore the distinction in the present case, nor the relative meaning of the word “authorises” in s 12(2), because, on any view (and this is not in issue), Mr Mura caused or permitted and authorised the carrying out of the clearing.

The VENTURE

13 In 2008 Mr Mura, who is now aged 79, was in great financial difficulty. His life savings were imperilled. For more than a decade he had been the accountant for Mr Jack Issa and for the defendant company, in which Jack Issa and his brother Bill Issa were the equal shareholders and directors. The defendant had operated a fruit and vegetable business. Mr Mura was friendly with Jack Issa. Mr Mura knew that Jack Issa had about $600,000 from the sale of a property. Mr Mura had experience in grazing. He approached Jack Issa, confirmed he was in financial difficulty and put a proposition that they should purchase a rural property 50-50, which could eventually be sold for a capital gain, with Jack Issa providing half the funds and in the meantime helping Mr Mura to meet his financial difficulty by earning income grazing cattle on the property. Jack Issa knew nothing about rural properties and was not interested in grazing but was interested in the prospect of a long term capital gain and was willing to help his friend in his financial difficulty by agreeing to him grazing cattle on the property in the meantime for his own benefit. Jack Issa has never visited the Land.

14 For this purpose, Mr Mura located the Land and he and Jack Issa agreed to purchase it.

15 Mr Mura knew that Jack Issa and Bill Issa had ceased carrying on the fruit and vegetable business in Orange and intended to wind up the defendant company, through which they had operated the business. The defendant company had no assets or liabilities and was dormant. Mr Mura proposed to Jack Issa, and he agreed, that the defendant company should be retained as an investment vehicle for Jack Issa and Mr Mura to purchase the Land, particularly as this would facilitate third party financing which Mr Mura required. Consequently;

on 5 November 2005, Bill Issa ceased to be a director or office holder of the company and relinquished his shares in it, thus terminating his involvement with the company;

Jack lssa remained a director and secretary of the company and retained two of the four issued shares in the company; and

on 10 November 2005 Mario Mura was appointed as a director and secretary of the company and purchased (or was allocated) two of the four issued shares in the company.

16 Mr Mura remained a director and secretary of the defendant company. until 18 May 2008 when he was declared bankrupt. During that period, he was also one of two shareholders in the company, owning two of the four issued shares. During that period, Jack Issa was the other director and secretary and the other shareholder, owning the other two of the four issued shares.

17 After Mr Mura became a director, the board of directors never had a formal meeting.

18 On 15 November 2005 the defendant contracted to purchase the Land from Mr David Sternbeck for $490,000. The sale settled on 10 July 2006. The Land was, and remains, the defendant’s only asset. Mr Mura negotiated the purchase of the Land with Mr Sternbeck and instructed the purchaser’s solicitors on the transactions. Mr Sternbeck retained ownership of the adjoining lot to the north of the Land.

19 The purchase was financed by Mr Issa lending the company $255,000 or thereabouts and by the company borrowing $250,000, representing Mr Mura’s contribution, from a third party secured by a mortgage over the Land. Mr Issa and Mr Mura guaranteed the company’s obligations to the mortgagee.

20 Mr Issa agreed in evidence, and indicated to investigators prior to trial, that because he had paid some extra funds towards the purchase, he and Mr Mura agreed that Mr Mura would open a bank account in the defendant’s name and pay money to (in effect) even the ledger, from which rates could be paid. I accept that evidence notwithstanding that Mr Issa later appeared to deny in evidence that there was any such agreement. His record of interview indicates, and I accept, that Mr Mura later told him he had spent money on land clearing and that they treated this as being in lieu of the bank account arrangement.

21 As regards the purpose of the purchase, (a) a letter written by the defendant’s solicitors to the vendor’s solicitors on 15 November 2005 stating: “We confirm our clients’ instruction that the land supplied is farmland for farming, which is exempt from GST”; (b) the contract for the sale under the heading of “GST information”, which gave an affirmative answer to the question “Farm land supplied for farming”; and (c) a declaration of purpose signed by Mr Mura and Mr Jack Issa on 7 July 2006 in relation to mortgage financing for the land which said that the credit to be provided “is to be applied wholly or predominantly for business or investment purposes (or for both purposes)”.

22 On 3 November 2005, prior to the exchange of contracts, Mr Mura wrote to Cessnock City Council inquiring in relation to his intention to carry out clearing works on the Land, as follows:

“I have recently inspected the above mentioned property with intention to purchase.

The property consists of a total of 40 ha. Approximately 25 ha cleared and posture [sic] improved. The remaining 15 ha are bush with nice growing trees, but there are a lot of fallen old trees and scrubs which I intend to clear all the old trees and other rubbish regrowth and hereby seek your comment.

The purpose to clean the property is firstly to avoid an excessive burn in case of fire; secondly, once the property has been cleaned, it will of course help to carry out cattle grazing.

23 On 1 December 2005, after the exchange of contracts, Cessnock City Council wrote to Mr Mura in response to his letter, stating:

“Under Clause 20 of the Cessnock Local Environmental Plan 1989, rural land clearing for the purpose of agriculture and bushfire hazard reduction does not require the consent of Council. Please be advised, however, that approval from the local Catchment Management Authority may be required under the Native Vegetation Act 2003. The Hunter-Central Rivers Catchment Management Authority should be contacted on [phone number inserted] for further advice prior to any clearing being undertaken.”

24 Much later, on 29 May 2008, Mr Mura wrote a letter to the Department of Environment and Climate Change providing them with certain information in which he referred to that correspondence with the council and, significantly, said that the inquiry to the council was made by “representatives” of the defendant:

“As you know a representatives of Jack & Bill Issa Pty Ltd prior to purchase the land made a written enquiry to Cessnock council requesting information to clean or clear the land better say to remove any re-growth, dead tree, rotten tree, and other rubbish in order the land can be used for the grazing of cattle, the council advised that no permit was required. The representative also called your office by telephone and received the same answer or similar to the answer of the Cessnock Council. We proceeded with the work and removed excess rubbish in the property to avoid fire hazards and other inconveniences. A member of your department held a meeting at Mr Mura & Co’s office and they were given all the information available, we presumed would have been the end of it. We have no other information to give you and we are at loss to understand why this is becoming a big problem…”

25 Mr Mura was called as a witness by the prosecutor. He said in evidence that if the council had said he could not do the clearing, he would not have bought the Land.

26 Mr Mura, told Jack Issa that he had received a letter from the council saying that the clearing could be done without any problems.

27 On or around 9 March 2006, Mr Mura contacted the Hunter-Central Rivers Catchment Management Authority and spoke with Mr David Russell, a Catchment Officer employed by the Authority. Mr Mura told Mr Russell, “I want to clean up the rubbish”.

CLEARING

28 At some time before March 2006, Mr Mura asked Mr Sternbeck if he would carry out some works to clear dead timber on the Land to reduce the fire hazard. Mr Sternbeck asked Mr Mura if he had permission for the works. Mr Mura told Mr Sternbeck that he had written to Cessnock City Council which had given him permission to clean up the dead timber to reduce the fire hazard. Mr Sternbeck agreed to carry out those works.

29 At their first meeting, Mr Mura told Mr Sternbeck that he had a “partner” who was overseas travelling. Mr Sternbeck understood this to mean a business partner in a joint venture or something like that. The evidence establishes that Mr Mura did not have a girlfriend to whom he would have referred as his partner. Mr Mura told Mr Sternbeck that he wanted to run some cattle on the Land and put a little weekender on it. The name of the defendant company meant nothing to Mr Sternbeck except that it was the purchaser on the contract for sale. He did not meet Mr Jack Issa until the trial. Mr Mura did not mention Mr Jack Issa’s name to Mr Sternbeck.

30 Mr Sternbeck had an excavator. When asked by Mr Mura to clean up the dead vegetation, Mr Sternbeck explained that it was pretty hard to clean it up without knocking some green vegetation down using a machine that was three metres wide.

31 Mr Sternbeck carried out a small amount of clearing work near the gates at the north eastern boundary to the Land on Q7 Lane. After this small amount of work had been carried out, Mr Mura asked Mr Sternbeck how long the job would take. Mr Sternbeck told Mr Mura the job would take him (Sternbeck) months to complete. Mr Sternbeck also indicated that due to personal circumstances he could no longer carry out the job. Mr Sternbeck told Mr Mura that Mr Glen Jones, the owner of the property adjoining the Land to the south, might be able to carry out the work.

32 Mr Sternbeck then contacted Mr Jones by phone and informed him that Mr Mura wanted the Land tidied up and that Mr Mura had a letter from the Council giving permission to do that. Mr Sternbeck asked whether Mr Jones would be interested in doing the job and Mr Jones indicated that he would be.

33 In early 2007, Mr Mura phoned Mr Jones and said that he had a letter from the Council saying that he could carry out some clean up to reduce fire risk. Mr Jones confirmed that he knew the block and they then arranged to meet on the Land.

34 In about March 2007 Mr Mura met with Mr Jones on the Land to discuss the works to be carried out by Mr Jones. Mr Mura said that he didn't want too many trees to be knocked down, he wanted all the dead wood and rubbish cleared because it was a fire hazard.

35 Mr Mura asked Mr Jones how he would carry out the job. Mr Jones said he had a bulldozer which he would use. Mr Mura said: “I only want it tidied up so it is not a risk”. Mr Jones said “Well, I'll do my best to save what trees I can.”

36 Mr Mura and Mr Jones then agreed that Mr Jones would carry out the works on the Land using his bulldozer for an hourly rate of $110.

37 Intermittently, during the period between about 1 April 2007 and 24 May 2007, Mr Jones operated a TD15 D6 bulldozer with a blade 10 foot 3 inches or so wide to carry out these works. He spent about 107 hours carrying out these works. The works ceased following an inspection of the Land by officers of Cessnock City Council on 25 May 2007.

38 Mr Jones' father in law, Keith 0'Hearn, helped Mr Jones carry out the works by pushing up the felled trees, understorey and ground cover into stacks and burning them.

39 Mr Jones has marked with blue diagonal lines on an aerial photograph of the land the area over which he carried out the works. The photograph is in evidence. Mr Jones testified that the lines he made on it indicated under scrubbing for fire reduction. The circle he made on it indicates an area in which there were a lot of big stumps that had been logged and which Mr Mura said there was no need to remove because they were not a fire hazard.

40 In carrying out the clearing works with his bulldozer, Mr Jones removed dead timber. He also removed understorey vegetation and ground cover. Additionally, although Mr Jones attempted to minimise clearing of, and damage tom, live canopy trees, the process of using the bulldozer with a blade caused some canopy trees to be pushed over and removed. The cleared vegetation was pushed into stacks roughly about 2.5 metres high and six metres long using a bulldozer and then burned.

41 Mr Jones additionally carried out clearing works to clear a proposed site for a dwelling which Mr Mura had intended to build on the Land. The site included trees. The way in which Mr Jones cleared this area was different to the way in which he cleared the other timbered areas on the Land. In a recorded interview with departmental investigators on 2 June 2008, Mr Jones identified the area he cleared for the purpose of a house site by a solid square on the aerial photograph which is in evidence.

42 Mr Jones was shown photographs of the area cleared on the Land, which he identified as indicative of the type of clearing he carried out and of the stacks he had pushed up using the bulldozer. The photographs are in evidence.

43 Mr Jones issued three invoices, which his wife prepared, addressed to Mario Mura for the carrying out of the clearing works on the Land:

44 Mr Mura paid Mr Jones a total of $8,590 for the work by way of three cheques. In each case, the cheque butt nominated the payment as being for “land clearing”. Each cheque was paid from the bank account of Mario Mura Service Pty Ltd, which had no association with the defendant. At the time and until 13 May 2008, Mr Mura was a director and secretary of Mario Mura Service Pty Ltd.

45 According to Mr Mura’s evidence, he had intended to pay Mr Jones in cash on what appears to have been the first occasion but, when he got there, found he did not have enough cash and therefore paid by cheque.

46 Each invoice also bore an ACN (Australian Company Number) under Mr Mura’s name. Mr Jones was asked about it. He said his wife got the number. Whether it was the ACN for Mario Mura Service Pty Ltd was not explored in evidence.

47 On the back of each cheque butt Mr Mura wrote the following or similar words: “This is a loan to Jack & Bill Issa P/L used to pay Glen Jones to clear land at Quorrobolong”. He wrote this information about the time he was declared bankrupt in May 2008 because he wanted to make sure his records were clear for his trustee in bankruptcy.

48 In evidence Mr Mura said that he did not pay Mr Jones on behalf of the defendant, that it was his job, and that Mr Jones was clearing the land for him to graze. This was inconsistent with agreed statements that he had made in other proceedings and to investigators that the payments were on behalf of the defendant. In evidence Mr Mura also said that it was not a loan to the defendant. That was inconsistent with information that he had given to investigators prior to trial that the payments were a loan to the defendant and with what he wrote on the back of the cheque butts. I consider the inconsistencies further below.

49 Mr Mura gave evidence, which I accept, that what he wrote on the back of the cheque butts was for accounting purposes because one day they would sell the Land and make a profit and would be able to claim the payment by a capital expenditure deduction.

50 He testified that if he had expected the company to reimburse him “at that time” he would have lodged a BAS for the company claiming the GST component but did not do so.

51 In addition to the initial meeting between Mr Mura and Mr Jones on the Land prior to the works commencing, Mr Mura also met Mr Jones on the Land on three separate occasions during the period the clearing works were being carried out:

The first meeting on the Land during the period the works were being carried out was on 8 April 2007. This meeting occurred after Mr Jones had issued his first invoice (dated 6 April 2007). Mr Mura looked at the works which Mr Jones had carried out and instructed Mr Jones to “do a bit more”.

The second meeting on the Land during the period the works were being carried out was on 29 April 2007. This meeting occurred after Mr Jones had issued his second invoice (dated 25 April 2007). Mr Mura instructed Mr Jones on this occasion to continue with the works.

The third meeting on the Land during the period the clearing works were being carried out was on 20 May 2007.

52 Mr Mura told Mr Issa that the clearing work had been carried out. He asked Mr Mura the reason and Mr Mura said, “a lot of undergrowth, a lot of fire hazards and for me to graze cattle I needed to do that”. This indicates that a dual purpose of the clearing was communicated to Mr Issa: first, management of the Land though reduction of fire hazards; secondly, enhancement of the grazing capability of the Land. This was consistent with what Mr Mura indicated in his November 2005 letter to the council: see [22] above. According to Mr Issa, this discussion was about a month after the clearing had occurred. Mr Issa testified that there was no discussion about payment for the clearing or about a loan.

53 Mr Mura said in evidence in chief that he told Mr Jones that he wanted to build a weekender on the Land and wanted to make sure that it was fire safe so he would like to clear a piece of the Land. He agreed in evidence that there were trees on this land exceeding two foot in growth. In cross-examination, he agreed he did not tell Mr Issa that he wanted to build the house until after he directed Mr Jones to clear a block. Later he said in evidence that he mentioned to Mr Issa that he intended to build a weekender but whether it was before or after he gave instructions to Mr Jones, he could not remember. Mr Jack Issa was called as a witness by the defendant. In evidence Mr Issa appeared to deny that he had any discussion with Mr Mura about building anything on the Land. That is inconsistent with answers that Mr Issa gave in a pre-trial interview with investigators:

“Q92 Well, there’s been – well, our understanding is that he intended putting a house on the property, and there’s a large area that’s been just totally cleared, probably 80 by 100 metres, that’s just got absolutely no vegetation on it at all. So you weren’t aware that there was going to be a house put on?
A. He said something about a shed or a house, but I didn’t see no plans or any details.

54 I conclude that Mr Mura told Mr Issa that he intended to build a house on the Land, most likely after the clearing had occurred.

55 Mr Mura testified that he had no express authority to bind the defendant to anything other than negotiations and entering into the contract to purchase the Land.

56 Although it appears that Mr Issa and Mr Mura never discussed the latter consulting with the former about the Land before making decisions, Mr Issa’s evidence as to his subjective state of mind (if it is relevant) was that he understood decisions relating to the Land would be made jointly and that he needed to know about anything major that could affect him apart from Mr Issa’s cattle grazing business. Mr Issa agreed in evidence that the extent of his involvement in running the defendant company was simply to invest his money as a medium or long term investment unless there was something he needed to know.

57 On 23 May 2007 a neighbour complained to Cessnock City Council.

INVESTIGATIONS

58 On 24 May 2007 Council officer Christopher Lear attended the north eastern entrance gate to the Land at the private access road Q7 Lane. He did not go onto the Land because of the unsuitability of his Ford sedan for the terrain. From the private road entry Mr Lear saw a large amount of selected clearing and approximately six simmering stock piles of knocked down trees.

59 On 25 May 2007 Mr Lear returned to the Land with the Council's Development Surveillance Officer, Stephen Ryan. Both Mr Lear and Mr Ryan saw selected clearing throughout the property and knocked down trees in several piles. Mr Ryan observed clearing being carried out on the Land. He also saw that some of the cleared trees had been stacked in several piles and were still on fire, a bulldozer was working on the smouldering trees on the property.

60 Mr Lear then contacted Mr Mura on 25 May 2007 and was told that the works were authorised by the Council and the Catchment Management Authority. On 25 May 2007 the alleged breach was reported to the Department of Natural Resources Hunter Region.

61 On 12 July 2007 Department of Environment, Climate Change investigator, Leah Gaye Kelly, and Natural Resource Project Officer, Mr Robert Gibson, inspected the Land. They observed that the Land had been recently cleared. Ms Kelly used a hand-held Magellan GPS device to determine the boundaries of the cleared areas by reference to easting and northing grid reference points (GPS waypoints). Ms Kelly also took 53 photographs of the Land.

62 While on the Land on 12 July 2007, Mr Gibson identified and marked out two quadrats each being 20 metres by 20 metres which he has identified respectively as Quadrat 1 and Quadrat 2. The location of each quadrat was identified by Ms Kelly by GPS waypoints using her hand-held Magellan GPS device.

63 The clearing works undertaken by Mr Jones on the Land were carried out over an area of about 12 hectares.

64 Quadrat 1 was located on the Land within part of the area which had been the subject of the clearing works carried out by Mr Jones. Quadrat 2 was located in an area in the near vicinity of Quadrat 1, but in an area of remnant native vegetation which had not been the subject of clearing works carried out by Mr Jones.

65 In relation to each of Quadrat 1 and Quadrat 2, Mr Gibson entered data by hand on a DECC Vegetation Field Survey Recording Form.

66 Subsequently, the vegetation samples taken by Mr Gibson, respectively in Quadrat 1 and Quadrat 2 were analysed for the purpose of genus and species identification; both by Mr Gibson and also by botanists employed within the Plant Identification Service of the National Herbarium of the Royal Botanic Gardens.

67 On 8 July 2008, Mr Gibson again attended the Land and collected vegetation samples and data from a third Quadrat, which he identified as Quadrat 3.

68 Seventy species of plants were recorded from the three Quadrats, of which 49 species were identified to species level and were native plants to New South Wales. A further 13 samples were identified to genus level only and were identified to be in genera that include native species. Eight species from the three quadrats were exotic species. These were seen in low abundance and were comprised primarily of short-lived herbs with wind-dispersed seeds.

69 In carrying out the clearing works on the Land, Mr Jones cleared native vegetation as defined in s 6 of the Native Vegetation Act 2003.

70 No development consent has been granted in accordance with the NativeVegetation Act 2003 permitting the clearing of native vegetation on the Land.

71 No development application has been made seeking consent to clear native vegetation on the Land.

72 At the time the clearing was carried out there was no property vegetation plan in existence relating to the Land.

73 Prior to the clearing works being carried out, the Land formed part of an area which was the subject of vegetation classification survey and mapping for the Cessnock-Kurri region carried out by Stephen Bell and Colin Driscoll, botanists, of Eastcoast Flora Survey pursuant to retainer from DECC.

74 The Land was one of the many properties attended by Mr Bell and Mr Driscoll for the purpose of carrying out the vegetation survey. Mr Bell and Mr Driscoll attended the Land in 2006 (before it was cleared) with the consent of the previous owners (the Sternbecks) and surveyed the vegetation on parts of the Land for the purpose of completing their survey of vegetation in the Cessnock-Kurri region. Photographs taken of the Land in 2006, prior to the clearing being carried out, including areas of the Land which were the subject of the clearing works, are in evidence.

75 According to the vegetation mapping of the area carried out by Mr Bell and Mr Driscoll, the vegetation in the area of the Land the subject of the clearing works carried out by Mr Jones included vegetation forming part of the following three endangered ecological communities:

The Quorrobolong Scribbly Gum Forest (Ellalong variant); and

The Lower Hunter Grey Box Grassy Forest; and

The Lower Hunter Spotted Gum - Red lronbark Forest (main variant).

76 The final report of the vegetation survey was submitted to DECC in November 2007 and is entitled “Vegetation of the Cessnock-Kurri region, Cessnock LGA, New South Wales, Survey, Classification & Mapping, November 2007, Stephen Bell & Colin Driscoll, Eastcoast Flora Survey”.

77 Mr John Palmer, a Resources Information Officer with DECC in the Scientific Services Section at Newcastle, has provided a report on the historical management of vegetation on the Land with reference to six aerial photographs and three spot images of the Land between 1984 and 2008.

PRINCIPLES OF ATTRIBUTION

78 I turn to the legal principles that are applicable in determining whether the conduct of the defendant’s director, Mr Mura, in instructing the contractor to clear the Land is to be regarded as the conduct of the defendant itself.

79 A company can only act through living persons. In determining whether criminal liability should be attributed to a company for the conduct of a person, a distinction has been drawn between, on the one hand, a person who is the embodiment of the company because, often, he is its relevant “directing mind and will” and, on the other hand, an agent or servant for whom the company is vicariously liable. The former represents an organic theory of liability, the latter an agency theory of liability. The distinction is particularly significant for offences in which mens rea is an element where prima facie (absent a contrary legislative intention) a principal is not vicariously responsible for the acts of agents: The King v Australasian Films Ltd [1921] HCA 11, 29 CLR 195 at 214-215. That inhibition is absent in strict liability offences because mens rea is not an element: Presidential Security Services Pty Ltd v Brilley [2008] NSWCA 204, 73 NSWLR 241 at [150].

80 Consistently with the objects of the Native Vegetation Act 2003, an offence against s 12 is one of strict liability and attracts the principles of vicarious liability: Director-General of Department of Land and Water Conservation v Greentree [2003] NSWCCA 31, 131 LGERA 234 at [74], [81], [84]. That case was decided in the context of the predecessor legislation, the Native Vegetation Conservation Act 1997, but applies equally to the current Act.

81 Three classic cases on the organic theory of liability are Lennard’s Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705 (HL), H L Bolton (Engineering) Co Ltd v T J Graham & Sons Ltd [1957] 1 QB 159 (CA) and Tesco Supermarkets Ltd v Nattrass [1972] AC 153 at 170 (HL). All were cited with approval by the High Court in Hamilton v Whitehead [1988] HCA 65, 166 CLR 121 at 127.

82 Although the formula “directing mind and will” is often the most appropriate description of the person designated by the relevant rule attributing personal conduct to a company, that is not so in all cases. The real question is, on the proper construction of the statute, whose act is intended to count as the act of the company? see Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500 at 511 per Lord Hoffman delivering the judgment of the Privy Council.

83 The act of a high-level employee or director may count as the act of the company because they represent the company’s directing mind and will. But even the act of a low-level employee may count if that is required by the terms of the offence and the achievement of the policy objectives of the statute: ABC Developmental Learning Centres Pty Ltd v Wallace [2006] VSC 171, 161 A Crim R 250 at [10] - [14]; affirmed on appeal [2007] VSCA 138, 172 A Crim R 269. Conduct of low-level employees, who did not represent the company’s directing mind and will, has repeatedly been held to be sufficient in cases concerning regulatory offences where legislation regulated a sphere of social or economic activity in the public interest (see the cases reviewed in the ABC Developmental Learning Centres case at first instance at [10] – [14]). They are analogous with the present case.

84 In Lennard’s, the acts of Mr Lennard, who was a director of the appellant company and managing director of the company that acted as the ship manager for the appellant company, were held to be the acts of the appellant company itself. Viscount Haldane L.C, in a celebrated speech, summoned the spectre of the “directing mind and will” of a corporation, which requires a search for those people with such a high degree of responsibility for the corporation’s management that they can be said to be acting as the corporation rather than for the corporation, at 713:

“…a corporation is an abstraction. It has no mind of its own any more than it has a body of its own; its active and directing will must consequently be sought in the person of somebody who for some purpose may be called an agent, but who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation. That person may be under the direction of the shareholders in general meeting; that person may be the board of directors itself, or it may be, and in some companies it is so, that that person has an authority co-ordinate with the board of directors given to him under the articles of association, and is appointed by the general meeting of the company, and can only be removed by the general meeting of the company.”

85 In Bolton, the directors of the company only met once a year, they left the management of the business to others, and it was the intention of those managers which was imputed to the company. Likening a company to the human body, Denning LJ (Hodson and Morris LJJ agreeing) at 172-173 worked “the directing mind and will” concept into his simile:

“A company may in many ways be likened to a human body. It has a brain and nerve centre which controls what it does. It also has hands which hold the tools and act in accordance with directions from the centre. Some of the people in the company are mere servants and agents who are nothing more than hands to do the work and cannot be said to represent the mind or will. Others are directors and managers who represent the directing mind and will of the company, and control what it does. The state of mind of these managers is the state of mind of the company and is treated by the law as such…in the criminal law, in cases where the law requires a guilty mind as a condition of a criminal offence, the guilty mind of the directors or the managers will render the company itself guilty. That is shown by Rex v I.C.R. Haulage Ltd , to which we were referred, and in which the court said: ‘Whether in any particular case there is evidence to go to a jury that the criminal act of an agent, including his state of mind, intention, knowledge or belief is the act of the company…must depend on the nature of the charge, the relative position of the officer or agent, and the other relevant facts and circumstances of the case’.

So here, the intention of the company can be derived from the intention of its officers and agents. Whether their intention is the company's intention depends on the nature of the matter under consideration, the relative position of the officer or agent and the other relevant facts and circumstances of the case."

86 The decision in Bolton was approved in Tesco at 170 where Lord Reid said:

“I must start by considering the nature of the personality which by a fiction the law attributes to a corporation. A living person has a mind which can have knowledge or intention or be negligent and he has hands to carry out his intentions. A corporation has none of these: it must act through living persons, though not always one or the same person. Then the person who acts is not speaking or acting for the company. He is acting as the company and his mind which directs his acts is the mind of the company. There is no question of the company being vicariously liable. He is not acting as a servant, representative, agent or delegate. He is an embodiment of the company or, one could say, he hears and speaks through the persona of the company, within his appropriate sphere, and his mind is the mind of the company. If it is a guilty mind then that guilt is the guilt of the company. It must be a question of law whether, once the facts have been ascertained, a person in doing particular things is to be regarded as the company or merely as the company's servant or agent. In that case any liability of the company can only be a statutory or vicarious liability.”

87 Nothing in these judgments required that only the acts of a director could be considered the acts of the company: Nationwide News Pty Ltd v Naidu [2007] NSWCA 377, NSWLR 471 at [231]; The Lady Gwendolen [1965] P 294 at 343. In The Lady Gwendolen the conduct of the head of the company’s traffic department, which assumed responsibility for running the company’s ships, although he was not a director, was held to be the conduct of the company itself so far as concerned anything to do with the company’s ships. In Nationwide News Pty Ltd v Naidu the appellant company’s Fire and Safety Officer, who was in charge of all its security requirements, was found to be its “mind and will” so far as the management of its security requirements were concerned.

88 The defendant is a small, private company. The application of the “directing mind and will” concept to a small, private company is illustrated by Entwells Pty Ltd v National & General Insurance Co Ltd (1991) 5 ACSR 424. In that case Ipp J, in the Supreme Court of Western Australia, considered the circumstances in which the acts of directors of a small family company were to be identified with the company. The plaintiff was a family company, the directors and shareholders of which were Mr Nikolic, his wife and their son Sasha. The plaintiff owned a supermarket where a fire had broken out destroying a considerable portion of the contents. The defendant had insured the plaintiff against fire damage. The court found that either Mrs Nikolic or Sasha connived at the burning down of the store and that they were joint managing directors with the approval of the plaintiff. The plaintiff could not recover for a loss caused by its own deliberate act. His Honour held that the conduct of Mrs Nikolic or Sasha was to be regarded as the conduct of the plaintiff. Accordingly, the plaintiff’s claim for indemnity against the insurer failed. After reviewing the authorities, Ipp J held at 429:

“The ‘active and directing’ will of a company may be constituted by the minds of several persons, each acting separately and independently of the others. In such event, the acts and mind of one of such persons, when so acting, may be the acts and mind of the company itself.

Mrs Nikolic and Sasha were each, separately, entrusted with the exercise of the powers of the plaintiff. Each was in actual control of part of the operations of the plaintiff and was not responsible to another person in the company for the manner in which she or he discharged his duties. Neither Mrs Nikolic nor Sasha was under the orders of anyone else. In assisting some outside person to set fire to the store, Mrs Nikolic or Sasha was acting with the intention of enabling the plaintiff to claim under its policy with the defendant. In the circumstances, I consider that in giving that assistance, the acts of either Mrs Nikolic or Sash are to be identified with the plaintiff itself.

89 In Meridian, the topic was illuminated by an analysis of the “rules of attribution” for determining when, in the criminal law, the actions of persons associated with a company can be attributed to the company. The rules of attribution comprise “primary rules of attribution” which are generally found in the company’s constitution or implied by company law; “general rules of attribution” which include the principles of agency and vicarious liability; and “special rules of attribution” which are always a matter of the proper interpretation of the legislation, having regard to its scope and purpose. Lord Hofmann said at 506-507:

“Any proposition about a company necessarily involves a reference to a set of rules. A company exists because there is a rule (usually in a statute) which says that a persona ficta shall be deemed to exist and to have certain of the powers, rights and duties of a natural person. But there would be little sense in deeming such a persona ficta to exist unless there were also rules to tell one what acts were to count as acts of the company. It is therefore a necessary part of corporate personality that there should be rules by which acts are attributed to the company. These may be called ’the rules of attribution.’

primary rules of attribution

Multinational Gas and Petrochemical Co. v. Multinational Gas and Petrochemical Services Ltd.

These primary rules of attribution are obviously not enough to enable a company to go out into the world and do business. Not every act on behalf of the company could be expected to be the subject of a resolution of the board or a unanimous decision of the shareholders. The company therefore builds upon the primary rules of attribution by using general rules of attribution which are equally available to natural persons, namely, the principles of agency. It will appoint servants and agents whose acts, by a combination of the general principles of agency and the company's primary rules of attribution, count as the acts of the company. And having done so, it will also make itself subject to the general rules by which liability for the acts of others can be attributed to natural persons, such as estoppel or ostensible authority in contract and vicarious liability in tort.

It is worth pausing at this stage to make what may seem an obvious point. Any statement about what a company has or has not done, or can or cannot do, is necessarily a reference to the rules of attribution (primary and general) as they apply to that company. Judges sometimes say that a company ’as such‘ cannot do anything; it must act by servants or agents. This may seem an unexceptionable, even banal remark. And of course the meaning is usually perfectly clear. But a reference to a company ’as such‘ might suggest that there is something out there called the company of which one can meaningfully say that it can or cannot do something. There is in fact no such thing as the company as such, no ding an sich, only the applicable rules. To say that a company cannot do something means only that there is no one whose doing of that act would, under the applicable rules of attribution, count as an act of the company.

The company's primary rules of attribution together with the general principles of agency, vicarious liability and so forth are usually sufficient to enable one to determine its rights and obligations. In exceptional cases, however, they will not provide an answer. This will be the case when a rule of law, either expressly or by implication, excludes attribution on the basis of the general principles of agency or vicarious liability. For example, a rule may be stated in language primarily applicable to a natural person and require some act or state of mind on the part of that person ‘himself’, as opposed to his servants or agents. This is generally true of rules of the criminal law, which ordinarily impose liability only for the actus reus and mens rea of the defendant himself. How is such a rule to be applied to a company?

90 The Meridian rules of attribution provide a framework for analysis. The decision has frequently been followed or approved in various contexts: see the cases listed in ABC Developmental Learning Centres Pty Ltd v Wallace [2006] VSC 171, 161 A Crim R 250 at [6], affirmed [2007] VSCA 138, 172 A Crim R 269; North Sydney Council v Roman [2007] NSWCA 27, 150 LGERA 419 at [28] – [39].

91 It is necessary to identify, in each statutory context, the rules of attribution to determine the persons whose acts are to be attributed, or which acts of persons are to be attributed, to the company or other organisation for the purposes of the legislative scheme: Director General, Department of Education and Training v MT [2006] NSWCA 270, 67 NSWLR 237 at [17]. In that case Spigelman CJ (Ipp JA and Hunt AJA agreeing) said:

“16 The law of agency is not an adequate or complete basis for institutional law. When determining whether conduct or knowledge or mental state of an individual employee or agent should be attributed to a corporation, an organic approach has been developed, which approach goes beyond the individualistic inclinations of the law of agency. (See e.g. Smorgon v Australia and New Zealand Banking Group Ltd (1976) 134 CLR 475 at 482-483; Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146 at 159-160, 201-202; Ross Grantham ‘"Attributing Responsibility to Corporate Entities: A Doctrinal Approach’ (2001) 19 C&SLJ 168.) In many cases, the conduct of persons in actual control of particular operations of the company will constitute the company for particular statutory purposes. (See e.g. The Lady Gwendolen [1965] P 294 at 343-344; AAPT Ltd v Cable and Wireless Optus Ltd (1999) 32 ACSR 63 at [91]-[92]...)

17 It is necessary to identify, in each specific statutory context, what Lord Hoffmann has felicitously called "the rules of attribution" ( Meridian Global Funds Management Asia Limited v Securities Commission [1995] 2 AC 500 at 506C.) These are rules adopted to determine which acts, knowledge or mental states of persons, through whom an organisation necessarily acts, are to be attributed to the organisation for the purposes of the legislative scheme.

18 In a particular context it may be appropriate to apply to an institution a rule of general applicability, such as the law of agency (called a ‘general rule’ by his Lordship). Determining such issues often turns on the interpretation of the constituent documents of an institution, whether contractual or statutory (called a ‘primary rule’ by his Lordship). However, in a case such as the present, determining when a person's conduct or knowledge should be attributed to an institution turns on the proper interpretation of the regulatory legislative scheme, having regard to the scope and purpose of the scheme (called a ‘special rule’ by his Lordship).

19 As Lord Hoffmann's judgment in the Meridian Global Funds ManagementAsia Ltd case makes clear, identifying the relevant rules of attribution is a process that must be separately conducted in each particular context. For example, the rule will not be the same when a court is considering vicarious liability for a tort committed by a person associated with a corporation, as the rule that establishes criminal liability of a corporation for the conduct of a person. The policy issues that must be considered in every such context differ considerably. (C/f Hollis v Vabu Pty Ltd (2001) 207 CLR 21 at 40 [42].) Similarly the context of different criminal or regulatory provisions may suggest quite different rules of attribution.

for this purpose

21 Lord Hoffmann went on to contrast two earlier cases in order to establish the proposition that the rule of attribution depends on the interpretation of the relevant substantive rule: Tesco Supermarkets Limited v Nattrass [1972] AC 153 and Re Supply of Ready Mix Concrete (No 2) [1995] 1 AC 456. In each case the Court considered the legislative scheme when deciding, in the first, that the acts of a manager were not to be attributed to the company and, in the second case, to come to the opposite conclusion.

Linework Limited v Department of Labour

R v Commercial Industrial Construction Group Pty Ltd

ABC Developmental Learning Centres Pty Ltd v Wallace

Meridian Global Funds Management Asia Ltd

92 The process of attribution of criminal responsibility was addressed in Presidential Security Services of Australia Pty Ltd v Brilley [2008] NSWCA 204, 73 NSWLR 241 per Allsop P:

Meridian Global Funds Management Asia Ltd v Securities Commission

Director of Public Prosecutions v Gomez

Attorney-General’s Reference (No 2 of 1982)

R v Philippou

Attorney-General’s Reference (No 1 of 1985)

Durovic v R

Rowe v Transport Workers Union of Australia

R v Rozeik

Canadian Dredge & Dock Co v R

R v Roffell

93 Ipp JA (Allsop P and Beazley JA agreeing) held:

“144 The fact that a company is capable of committing a crime and may be indicted for an offence does not, however, mean that the inherent characteristics of an artificial person are not relevant to whether a company may be found guilty of certain offences, particularly those offences of which mens rea is an element.

145 Generally speaking, once a company is capable of committing a particular offence, it may be found guilty of that offence on one of two bases, namely, on the grounds of vicarious responsibility or on the basis that the person who committed the actus reus and had the requisite mens rea was the directing mind and embodiment of the company in the Tesco Supermarkets Ltd v Nattrass [1972] AC 153 sense.

146 Whether the company may be found guilty on one or other of these bases depends on the legislation applicable, the nature of the offence in question, and the status and position within the company of the person who performs the acts said to constitute the offence.

147 Generally, a company will not be found guilty, on the basis of vicarious liability, for a criminal offence having mens rea as an element.
…

mens rea

94 In Director of Public Prosecutions Reference (No 1 of 1996) (Vic) [1998] 3 VR 352 at 355, 96 A Crim R 513 at 516 Callaway JA said:

“Sometimes only the board of directors acting as such or a person near the top of the corporation’s organisation will be identified with the corporation itself. On other occasions someone lower, and perhaps much lower in the hierarchy will suffice.”

95 In considering whether there is a special rule of attribution, it is necessary to interpret the statute applying the usual canons of interpretation, taking into account the nature of the offence and the language and policy of the statute. In cases concerned with a protective regulatory regime, the conduct of officers or employees involved in the actus reus of the offence has been attributed to the company: Director-General v MT (above) at [17]. Some of those cases were analysed in ABC Developmental Learning Centres Pty Ltd v Wallace [2006] VSC 171, 161 A Crim R 250 at [11] – [14] per Bell J as follows:

“11 The need to ascertain the nature of the offence and the policy of the statute comes through strongly in the decided cases. For example, in Meridian itself, officers of the company acquired substantial securities in a public company without making disclosure to the market. Their actions were taken to be the actions of the company, which was prosecuted, in the words of Lord Hoffmann, because the policy of the statute was ‘to compel, in fast-moving markets, the immediate disclosure of the identity of persons who become substantial security holders’ in public companies [1995] 2 AC 500 at 511C. In McNicholas Construction Co Ltd v Customs and Excise Commissioners [2000] STC 553 at 574g, the actions of all of the employees involved in the making and receiving of supplies were counted as the actions of the company in a tax prosecution because the policy of the statute was to discourage the dishonest evasion of tax. In Linework Ltd v Department of Labour [2001] 2 NZLR 639 at 645, the omissions of the foreman in charge of a work site counted as the omissions of the company in an occupational health and safety prosecution because the statute was concerned with the safety of employees at work and required the employer to provide on-the-job supervision of safety practices.

12 These cases all have an important feature in common with the present case -- the offences concerned were regulatory in nature. Such offences are typically created in legislation regulating a sphere of social or economic activity in the public interest. The legislation may, in that sphere, lay down a standard of action or behaviour for everybody bound by the legislation, companies and natural persons, to follow. If the person does not follow the standard, the legislation may allow he, she or it to be prosecuted for an offence.

13 Thus in Meridian , the legislation was designed to ensure full and frank disclosure in the securities trading market. In McNicholas , the legislation was designed to prevent tax avoidance. In Linework , the legislation was designed to prevent workers being injured at work. In the present case, as we shall see, the legislation was designed to ensure that children were properly cared for in children's services.

96 In the present case, the question is whose act is intended to count as the act of the defendant under s 44(b) and under s 12(2) of the Native Vegetation Act 2003? That is a question of statutory construction. The policy of the statute is the protection of native vegetation in accordance with the principles of ecologically sustainable development. The offence created by s 12 is one of strict liability. A landholder of land on which native vegetation is cleared is deemed to have committed an offence against s 12 (unless it proves two prescribed matters). The seriousness with which the legislature regards the offence is reflected in the maximum penalty of $1.1 million and a continuing maximum penalty of $110,000 per day: s 12(2) Native Vegetation Act 2003 and s 126 Environmental Planning and Assessment Act 1979.

97 Having regard to those matters, I would derive a special attribution rule that under s 44(b) the conduct of a director of a landholder private company in causing or permitting another person to carry out clearing is to be attributed to the company, and that under s 12(2) the conduct of such a director in carrying out or authorising the carrying out of clearing in contravention of that section is attributable to the company, at least where such conduct is in furtherance of the company’s interests or not against them.

98 That is not to say that there is no wider special rule or rules of attribution under this statute. It is, however, as far as I need go for the purposes of this case.

99 Whether or not I am correct, the alternative rules of attribution under which the defendant company may be found guilty are, first, that it is vicariously liable for Mr Mura’s conduct, or, secondly, that Mr Mura was relevantly its directing mind and will.

100 The prosecutor submits that criminal liability attaches to the defendant company on one or more of the following bases:

101 The prosecutor also submits that:

102 The defendant submits that it is not liable on any of the bases upon which the prosecutor relies. The defendant submits that it is not liable for Mr Mura’s actions having regard to the following evidence:

(i) a bank account would be opened in its name and funds debited; (ii) there should be evidence in the BAS of GST paid or whether losses were made, but there is no such evidence; (iii) there should have been some sort of discussion concerning wages; (iv) Mr Issa would have ensured he had some knowledge of the business; (v) there should have been some discussion of how they were going to make money; and (vi) if Mr Mura had suggested this was a company business, Mr Issa’s evidence was that he would not have agreed.

DISCUSSION

103 The heart of the present matter is a crime that occurred on the Land by the conduct of one of only two directors and equal shareholders of a company that had no employees and only one asset, the Land.

104 So far as they go, I generally accept the factual propositions put in the defendant’s submissions although I am satisfied on the evidence that Mr Issa put a little more money into the defendant company than Mr Mura.

105 The prosecutor argues that the business of grazing cattle should be regarded as the defendant’s business because (a) of the words in the contractual documents referred to at [21] above and (b) because the defendant stood to benefit from the grazing of cattle by gaining exemption from land tax (s 10AA Land Tax Management Act 1956) and by obtaining a favourable rating (s 515 Local Government Act 1993). The benefits are uncontroversial but I do not accept the submission. The said documents are not conclusive as to whose farming business it was intended to be. I accept the evidence of Mr Jack Issa and Mr Mura that the defendant company’s only interest in the Land was as an investment from which a medium to long term capital gain was expected, and that the cattle grazing business was entirely Mr Mura’s venture arising from Mr Jack Issa’s sympathy for his friend Mr Mura’s financial predicament.

106 I am satisfied that the clearing furthered the defendant’s interests and that the payments by Mr Mura to the clearing contractor were made on behalf of, and were loans to, the defendant. They were loans which Mr Mura did not expect to be repaid until the Land was eventually sold. My reasons are as follows.

107 First, Mr Mura’s letter to the Department of 29 May 2008 said that his written land clearing inquiries (of 3 November 2005) to the council were by “representatives of” the defendant: see [22] – [24] above. That is readily understandable in light of the analysis in the next paragraph.

108 Secondly, a purpose of the clearing concerned the management of the Land by way of fire hazard reduction, in which the defendant had an interest as landholder. Mr Mura’s letter of 3 November 2005 to the council indicated that the first purpose of the clearing was “to avoid an excessive burn in case of fire” and that the second and consequential purpose was “to help to carry out cattle grazing”. The second purpose was referable to Mr Mura’s personal grazing business, but the first purpose was referable to the defendant’s ownership of the Land. In other words clearing was not done merely to improve grazing capability, which was Mr Mura’s immediate interest, but as part of the management of the Land, which was the defendant’s interest. The clearing was also likely to enhance the capital value of the Land in which the defendant obviously had an interest. The letter indicates that Mr Mura pursued the matter of clearing wearing two hats: one on behalf of the defendant for the purpose of fire clearing; the second on behalf of himself for the purpose of cattle grazing. The purpose of reducing the fire hazard is also apparent from the agreed statement of facts, which state:

“23. …on or around 9 March 2006, Mr Mura contacted the Hunter Central Rivers Catchment [Management] Authority (HCRCA) and spoke with David Alan Russell, a Catchment Officer employed by the HCRCA. Mr Mura told Mr Russell “I want to clean up the rubbish”.

109 Thirdly, on the back of each of the butts of the three cheques on the account of Mario Mura Service Pty Ltd with which Mr Mura paid the clearing contractor, Mr Mura wrote the following (or equivalent):

“This cheque is a loan to Jack & Bill Issa P/L used to pay Glen Jones to clear land at Quorrobolong”.

110 Fourthly, the information Mr Mura wrote on the back of the cheque butts is particularly cogent because not only was he the defendant’s accountant but he wrote the information in circumstances where he had particular reason for it to be accurate. He wrote it about the time he was declared bankrupt in May 2008 because he wanted to make sure his records were clear for his trustee in bankruptcy.

111 Fifthly, as Mr Mura said in evidence, he wrote the information on the back of the cheque butts because one day they would sell the Land and make a capital profit which would be taxable and he wanted a record of deductions therefrom and there would then be an opportunity for him to get the money back, and he always intended to claim the expenses on behalf of the defendant because the Land was owned by the defendant. This evidence is consistent with the payments being payments on behalf of, and a loan to, the defendant.

112 Sixthly, in other proceedings Mr Mura agreed the following facts:

113 Seventhly, Mr Mura was interviewed by investigators and confirmed that the money he paid to Mr Jones was a loan to the defendant. He gave the following answers to questions:

“Q550 So why did you pay it through the cheque account of Mario Mura Services Pty Ltd?
A. Here – it wasn’t – see, I had that cheque book with me for – I don’t know why. It was in the back of my car for years, and never used.

Q551 This is a Mario Mura Service Pty Ltd?
A. Yes, and he want a cheque the day – first was cash, but I said, “I want an invoice. Whether it’s cash or not, I still want an invoice because I don’t want to do – there’s the job, I have to keep my books”, so he said, “Can you give me a cheque?” I didn’t have a cheque. I had the cash, but I didn’t have a cheque, so I said, “Look, I’ll give you a cheque, don’t bank it today, I’ll give you a cheque from this one, there’s no money in there, I’ll put the money in”, and I give him that cheque, so the cheque was mine anyhow. It was just a matter of – facilitated by (inaudible) not because was any commitment or anything.

Q552 And that was your company, was it not – Mario Mura Services Pty Ltd?
A. the cheque was.

Q553 So why did the funds come out of your company then?
A. I just said there’s loan.

Q554 I beg your pardon?
A. There’s a loan.

Q555 A loan. A loan to –
A. If you read the – you know, the thing says --

Q556 I’ll get to that. It was a loan to Jack & Bill Issa?
A. Yes .

Q557 Was Mr Issa aware of how much you paid for the clearing of the land?
A. No, not at that time. I told him later, but not at the moment.

Q558 So was he aware that you made the payments out of your company?
A. Yes, yes.

Q559 and were you also – was he aware that it was a loan to Jack & Bill Issa?
A. Yes

Q560 So was it your intention then to obtain any funds in relation to the clearing of that land from Mr Issa?
A. Not from the company, when was fund, when --

Q561 Beg your pardon, “not from the company”?
A. Not from him, but from the company, when the company had the money . It still hadn’t got --

Q562 So when was your expectation that the company would have money?
A. Look, I didn’t even think about it, when. Some time, but whenever it was.

Q563 So it was your intention that the funds would – funds should have been paid out of Jack & bill Issa –
A. Definitely .

Q564 -- Pty Ltd. It was a loan?
A. Yes .”

114 In evidence, Mr Mura said that the loan he was referring to in his answers to investigators was a loan to him from his company Mario Mura Service Pty Ltd, that he answered questions as he did to investigators because he had serious health problems at the time and was put under pressure by the investigators; and that their questions were unclear and he thought he was being asked about a loan to him from Mario Mura Service Pty Ltd. I accept that Mr Mura had serious health problems at the time. I do not accept that he was put under undue pressure by the investigators nor that he thought he was referring to a loan to him from Mario Mura Service Pty Ltd. He clearly indicated to the investigators that the loan was to the defendant and I do not think that he was under any misunderstanding in that respect. Critical questions, such as question 556, were clear.

115 Eighthly, Mr Jack Issa, understood that the clearing payments were on behalf of the defendant. Mr Mura told Mr Issa about the letter he had received from the council concerning the proposed land clearing and, at least after the clearing, told Mr Issa that he had paid for the land clearing and that he intended to put a house on the Land: see [26], [52] - [53] above When questioned by investigators, Mr Issa indicated that Mr Mura had told him about the payments and that they were in lieu of money they had initially agreed Mr Mura would deposit in a bank account which Mr Mura was to open for the defendant, representing the shortfall between Mr Mura’s contribution to the purchase price of the Land and Mr Issa’s contribution to the purchase price. In that regard, Mr Issa gave the following answers to questions by investigators:

“Q41 Just to clarify, you didn’t know about the clearing prior to it happening?
A. No.

Q42 When did you find – after –
A. Yes, he said “I’ve been up there, I’ve done a bit of clearing on it, but this was the amount”, but he paid him because I think when we were doing – changing over the contracts, I paid a little bit extra just for solicitors, so he actually owed the company a bit of money, so I am not sure exactly what he paid for the clearing, but he said, “Look, I’ll just fix that up .

Q43 Have you got any documentation in respect of that?

A. Nothing.

Q44 Did you have to pay any money –
A. No.

Q45 -- in respect of the clearing?
A. No. Like I just explained, because I paid a bit extra towards stamp duty, whatever it was, so then when he cleared the land, he just cleared it and paid for it himself, because him and I are good friends too, so we don’t sort of worry about $100 here or – he paid an extra $100, or I paid $1,000.

Q46 Well, the clearing probably cost approximately $7,000 –8,000, so is that an amount you’d say is good between friends, or is that an amount you’d expect to know, of if that’s how much was gong to be spent. Do you understand what I mean by that?
A. Yes, I think I spent an extra $10,000-$15,000 than him on the deal – like the purchase, on the stamp duty. Whatever it was, he didn’t ask me for any money, you know.

Q47 So to understand that, so is it fair to say then that you’d put in extra to start off with this, say, 10 –
A. Whatever, something like that.

Q48 Whatever it was, and was that if there were going to be any works or anything undertaken?
A. No, he was actually going to open a bank account for Jack & Bill Issa Pty Ltd, and deposit whatever the difference was, but then he told me he spent it doing something with the land, or clearing land or something, so I didn’t worry about it because he and I are good friends , so whatever it is we sort of – yes.

Q49 So there was supposed to be a bank account opened?
A. He was going to open a bank account. ”

116 Ninthly, Mr Sternbeck gave evidence that when he was approached by Mr Mura about the possibility of doing some clearing work in March 2006, Mr Mura said he had a “partner” who was overseas. Mr Sternbeck understood that he was referring to a partner in a joint venture and the evidence excludes any suggestion that he was referring to a girlfriend. It is not conclusive evidence of itself, but it tends to support the conclusion that the clearing job was, in substance, was intended by Mr Mura to be for his “partner”, Mr Issa, and himself. They were, of course, operating through the defendant company.

117 Finally, I was unimpressed by Mr Mura’s inconsistent denials and explanations when giving evidence in these proceedings.

118 In my opinion, Mr Mura was the mind and will of the defendant so far as concerns the management of the Land and it was within his implied or apparent authority to manage the Land. Mr Issa was purely a passive investor with no interest at all in the Land other than as a long term investment. Mr Mura was the only active director and the company had put him in possession and control of the Land. From start to finish, Mr Issa left everything to Mr Mura. Mr Issa may well have assumed, as he says, that Mr Mura would consult him in relation to major matters not involving Mr Mura’s cattle grazing business, but I do not accept that that included clearing of land which served the interests not only of that business but of the defendant.

119 In my opinion, Mr Mura’s conduct in causing the clearing of the Land is attributable to the defendant on the basis of one or more of three alternative rules of attribution.

120 First, Mr Mura’s conduct is attributable to the defendant on the basis that Mr Mura was the mind and will of the defendant so far as concerns a management operation such as clearing of the Land.

121 Secondly and alternatively, the company is vicariously liable for Mr Mura’s conduct. Clearing of the Land was within his implied or apparent authority. It was not necessary that the clearing should have been expressly authorised by Mr Issa. It is enough that the company put Mr Mura in a position to clear the Land: Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd [1931] HCA 53, 46 CLR 41.

122 Thirdly and alternatively, Mr Mura’s conduct is attributable to the defendant on the basis of the special rule of attribution proposed at [97] above, namely, he was a director of a two director private company which owned the Land, on which the offence occurred, at least as the clearing furthered the defendant’s interests or was not against them.

123 Consequently, the defendant has failed to discharge its onus under s 44(b) of the Act. Alternatively, the prosecutor has proved its case under s 12(2). It follows that the defendant is guilty as charged.

CONCLUSION

124 The defendant is convicted of the offence as charged in the summons.

125 The Court makes the following directions for a sentencing hearing:

(a) the prosecutor is to file and serve any additional evidence on or before 29 January 2010;
(b) the defendant is to file and serve any additional evidence on or before 15 February 2010;
(c) the parties are to approach the registry on or before 1 February 2010 to obtain a date for a sentencing hearing before me after 21 February 2010;
(d) liberty to apply on three days’ notice.

Citations

Director-General, Department of Environment and Climate Change v Jack & Bill Issa Pty Ltd (No 5) [2009] NSWLEC 232

Most Recent Citation

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15

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Environment Protection Authority v Foxman Environmental Development Services; Environment Protection Authority v Botany Building Recyclers Pty Ltd; Environment Protection Authority v Foxman (No 2) [2016] NSWLEC 120

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Environment Protection Authority v Multiplex Constructions Pty Ltd [2000] NSWLEC 6

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CITATION:	Director-General, Department of Environment and Climate Change v Jack & Bill Issa Pty Ltd (No 5) [2009] NSWLEC 232
PARTIES:	PROSECUTOR: Director-General, Department of Environment and Climate Change DEFENDANT: Jack & Bill Issa Pty Ltd
FILE NUMBER(S):	50030 of 2009
CORAM:	Biscoe J
KEY ISSUES:	ENVIRONMENTAL OFFENCES :- clearing of native vegetation - offence against s 12 Native Vegetation Act 2003 - deemed liability of landholder under s 44 - clearing occurred on land owned by defendant company - whether conduct of director of defendant company in clearing native vegetation was attributable to defendant company
LEGISLATION CITED:	Environmental Planning and Assessment Act 1979, s 126 Interpretation Act 1987, s 21(1) Land Tax Management Act 1956, s 10AA Local Government Act 1993, s 515 Native Vegetation Act 2003, ss 3, 4, 6, 12, 44, 45 Native Vegetation Conservation Act 1997
CASES CITED:	ABC Developmental Learning Centres Pty Ltd v Wallace [2006] VSC 171, (2006) 161 A Crim R 250 ABC Developmental Learning Centres Pty Ltd v Wallace [2007] VSCA 138, (2007) 172 A Crim R 269 Colonial Mutual Life Assurance Society Ltd v Producers and Citizens Co-operative Assurance Co of Australia Ltd [1931] HCA 53, (1931) 46 CLR 41 Director General, Department of Education and Training v MT [2006] NSWCA 270, (2006) 67 NSWLR 237 Director of Public Prosecutions Reference (No 1 of 1996) (Vic) [1998] 3 VR 352, 96 A Crim R 513 Director-General of Department of Land and Water Conservation v Greentree [2003] NSWCCA 31, 131 LGERA 234 Entwells Pty Ltd v National & General Insurance Co Ltd (1991) 5 ACSR 424 Environment Protection Authority v Multiplex Constructions Pty Ltd [2000] NSWLEC 6, (2000) 112 LGERA 1 H L Bolton (Engineering) Co Ltd v T J Graham & Sons Ltd [1957] 1 QB 159 Hamilton v Whitehead [1988] HCA 65, (1988) 166 CLR 121 Hardt v Environment Protection Authority [2007] NSWCCA 338, (2007) 156 LGERA 337 Lennard’s Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705 Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500 Nationwide News Pty Ltd v Naidu [2007] NSWCA 377, (2007) NSWLR 471 North Sydney Council v Roman [2007] NSWCA 27, (2007) 150 LGERA 419 Presidential Security Services of Australia Pty Ltd v Brilley [2008] NSWCA 204, (2008) 73 NSWLR 241 R v Jasper [2003] NSWCCA 186, (2003) 139 A Crim R 329 Tesco Supermarkets Ltd v Nattrass [1972] AC 153 The King v Australasian Films Ltd [1921] HCA 11, (1921) 29 CLR 195 The Lady Gwendolen [1965] P 294
DATES OF HEARING:	15-18 December 2009
DATE OF JUDGMENT:	31 December 2009
LEGAL REPRESENTATIVES:	PROSECUTOR: Mr T. Howard SOLICITORS Department of Environment, Climate Change and Water DEFENDANT: Mr B. Vasic SOLICITORS Agostino & Co