Aokautere Land Holdings Limited v The King
[2024] NZHC 1926
•12 July 2024
IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY
I TE KŌTI MATUA O AOTEAROA TE PAPAIOEA ROHE
CRI-2024-454-8
[2024] NZHC 1926
BETWEEN AOKAUTERE LAND HOLDINGS LIMITED
Appellant
AND
THE KING
Respondent
CRI-2024-454-10 BETWEEN
LESLIE WILLIAM FUGLE
AppellantAND
THE KING
Respondent
Hearing: 11 June 2024 Appearances:
S L Baigent for Appellants
B D Vanderkolk for Respondent
Judgment:
12 July 2024
JUDGMENT OF BOLDT J
(Appeal against sentence and refusal to grant name suppression.)
Introduction
[1] This case concerns Woodgate Heights, a residential subdivision in Aokautere, on the outskirts of Palmerston North. The appellants, who were actively involved in the Woodgate Heights development, are Mr Leslie Fugle and Aokautere Land Holdings Ltd (ALHL). Mr Fugle is ALHL’s sole director and shareholder.
AOKAUTERE LAND HOLDINGS LIMITED v R [2024] NZHC 1926 [12 July 2024]
[2] On 9 June 2023 each appellant pleaded guilty to a representative charge under s 338 of the Resource Management Act 1991 (RMA). Mr Fugle pleaded guilty to conducting earthworks contrary to a regional rule between 1 December 2019 and 29 January 2021,1 and ALHL pleaded guilty to a charge of contravening two abatement notices between 19 December 2019 and 29 January 2021.2
[3] On 23 February 2024, Judge D A Kirkpatrick convicted and sentenced the appellants.3 He fined Mr Fugle $72,000, and ALHL $28,000. In a second decision, issued on 3 April 2024, the Judge made an enforcement order under ss 314 and 339(5)(a) of the RMA.4 The order prohibits Mr Fugle, apparently for life, from conducting or directing any land disturbance activities in the Manawatū-Whanganui Region. The Judge also declined Mr Fugle’s application for name suppression; Mr Fugle sought suppression for a period of 18 months while he obtains funding for a new (and separate) development project.
[4] The appellants appeal against their fines, arguing they are manifestly excessive. Mr Fugle also appeals against the enforcement order, and against the Judge’s refusal to suppress his name and names associated with his new development.
Background
[5] On 17 February 2014, the Manawatū-Whanganui Regional Council (Horizons) granted resource consents over two adjoining parcels of land in Woodgate Heights. Mr Fugle was involved with both consents — he was a director of the company developing one parcel, and a representative of the company developing the other. The consents expired on 1 December 2019. Once the consents expired, Mr Fugle’s work on the site was governed by Horizons’ Regional Plan, known as the One Plan. The One Plan limited earthworks on the site to 2,500 square metres annually.
1 Resource Management Act 1991, s 338(1)(a) and s 9(2): maximum penalty of two years’ imprisonment or a fine not exceeding $300,000.
2 Section 338(1)(c): maximum penalty of a $600,000 fine.
3 R v Fugle [2024] NZDC 3674 [Sentencing decision].
4 R v Fugle [2024] NZDC 7270 [Enforcement order and name suppression decision].
[6] On 28 November 2019, a Horizons inspector visited Woodgate Heights and noted that earthworks on both parcels would produce unauthorised discharges of sediment. By then, ALHL was the owner and developer of both parcels of land. On 17 December 2019, Horizons served ALHL with two abatement notices, requiring it to cease unauthorised earthworks and sediment discharge, and to stabilise the earthworks it had already performed.
[7] On 14 January 2020, another inspection revealed the unauthorised earthworks were continuing, including a large area which had been cut from the surface of the land. The site had not been stabilised as directed.
[8] A further inspection, on 29 January 2021, revealed the unauthorised earthworks had been continuing. The inspection also revealed an ongoing absence of sufficient erosion and sediment controls. Though there was no evidence of immediate environmental damage, there was no dispute the displaced sediment would ultimately end up in the already-distressed Manawatū River.
[9] The inspections revealed the development was in ongoing breach of the One Plan. The land disturbed well exceeded the 2,500 square metre annual limit.
[10] The appellants did not plead guilty immediately; they elected trial by jury and entered their pleas only a week before the trial was due to begin. There were a number of reasons for the delay, including pre-trial hearings.5 In addition, the appellants initially faced multiple charges, which, following a plea arrangement, were replaced by the two representative charges to which they pleaded guilty.
Fresh evidence
[11] The summary of facts estimated the extent of the unauthorised earth disturbance at more than 30,000 square metres, and the Judge referred to that figure in his sentencing remarks. Mr Fugle disputed that assessment, submitting that 30,000 square metres exceeded the size of the development as a whole.
5 The abatement notices were ultimately set aside. Among other things, ALHL argued the notices had been invalid ab initio, meaning it had not been obliged to comply with them while they were in force. That argument was unsuccessful.
[12] Counsel agreed that that issue had been resolved before sentencing; the Judge told the parties he did not regard the extent of the breach as material, as long as the earthworks exceeded the annual 2,500 square metre limit. Nonetheless, the Judge referred to the 30,000 square metre figure in his sentencing remarks. That reference prompted Mr Fugle to seek leave to file an affidavit in this Court addressing the issue. In addition, Mr Fugle sought to adduce further evidence in opposition to the enforcement order and in support of his application for name suppression.
[13] On behalf of the Crown, Mr Vanderkolk accepted the prosecution did not rely on the extent of the unauthorised earthworks either in the District Court or on appeal. It is also apparent that the Judge’s assessment of the appropriate fines was not significantly influenced by the scale of the unauthorised works, but rather by the appellants’ disregard of their legal obligations and the lengthy period of non-compliance. It follows there is no need to consider any additional evidence on the point.
[14] The remainder of the affidavit — the parts dealing with the enforcement order and name suppression — repeated material squarely before the sentencing Judge. None of it is fresh. While I have no reason to doubt that it is credible, none of it affects the analysis of either issue.6 I decline Mr Fugle’s application for leave to tender his affidavit.
Mr Fugle
[15] Mr Fugle is a land developer with around 30 years’ experience and has worked extensively in the Manawatū throughout that time. He and his companies have encountered difficulties with the RMA before. For example, in 2011 and 2013 Horizons obtained enforcement orders as a result of difficulties with erosion and sediment control at another of his developments in Aokautere. In 2015, his former company pleaded guilty to undertaking unauthorised earthworks and failing to install proper erosion and sediment controls.
6 See Lundy v R [2013] UKPC 28, [2014] 2 NZLR 277 at [120]; and Mark v R [2019] NZCA 121
at [16].
[16] Mr Fugle himself was successfully prosecuted by the Palmerston North City Council in 2017 for carrying out waterworks without authorisation.7 He was also successfully prosecuted for wilful damage to a Horizons vehicle during the 28 November 2020 inspection referred to above.8 It is fair to say he has not always welcomed regulatory oversight.
[17] On the other hand, inspections in the years since the present offending have not identified any ongoing issues. New consents were issued in 2022, and after an inspection on 1 June 2023, Horizons issued a report indicating Mr Fugle was fully compliant, with no recommended action. That point assumed particular importance in the context of Ms Baigent’s submission, on behalf of Mr Fugle, that the enforcement order represented an excessive and inappropriate response.
District Court sentencing
[18] While the Crown had not produced evidence of actual environmental damage arising from the offending, the Judge noted that actual harm is not an element of an offence under s 338 of the RMA. Rather, the Judge observed that controls on earthworks seek to manage an activity which can have adverse effects, and that breaches create an otherwise avoidable risk of harm. He described the environmental effects in the present case as “generic and unidentifiable”.9
[19] The Judge found there was an element of wilful blindness in Mr Fugle’s offending.10 His resource consents had expired, but he continued working the site, in contravention of the One Plan, without seeking to extend the consents. Mr Fugle suggested he had neglected to obtain fresh consents because the work was nearly complete, but the Judge noted that the work continued for more than a year after the expiry of the consents. The Judge observed:
[30] … Failing to extend the terms of the consents he had obtained or apply for fresh consents shows intentional non-compliance with the consenting system. This threatens its integrity, reducing the extent to which the Council can exercise integrated management of the resource. In these circumstances,
7 Palmerston North City Council v Fugle [2017] NZDC 8996, [2017] NZHC 2030.
8 Fugle v R [2022] NZCA 124.
9 Sentencing decision, above n 3, at [29].
10 At [30].
breaching the One Plan rules and operating without a resource consent are serious aggravating factors.
[20] Mr Fugle sought to explain his offending by saying he had been given incorrect advice by his surveyor. The Judge rejected that explanation, noting Mr Fugle had been advised of the requirements of the One Plan on multiple occasions, and the operation had been the subject of several abatement notices. The Judge observed that Mr Fugle had been told his development lacked sufficient sediment and erosion controls, but chose to ignore those warnings. As an experienced developer, the Judge said, Mr Fugle should have known better and shown a higher level of care.11
[21] In assessing the appropriate fine, the Judge adopted a starting point of $90,000, indicating he had fixed that level with reference to Gisborne District Council v AF Thompson Contracting Ltd.12 The Judge applied a discount of 20 per cent in recognition of Mr Fugle’s “early, but not the earliest, guilty plea”,13 meaning Mr Fugle was fined $72,000.
[22] Turning to ALHL, the Judge considered the key aggravating feature was the fact no efforts were made to comply with the abatement notices for over a year. Failing to comply with an abatement notice, the Judge said, “is in itself a challenge to the regulatory framework under the RMA” requiring a deterrent sentence.14 The Judge adopted a starting point of $40,000, which he fixed with reference to Gisborne District Council v Lane.15 He gave ALHL credit of 25 per cent in recognition of its early guilty plea, and a further five per cent to recognise the fact the company had no previous convictions, leading to a fine of $28,000.16
[23] Horizons sought a permanent enforcement order against Mr Fugle under ss 314 and 339(5)(a) of the RMA. It sought to ban Mr Fugle, either personally or through any company, from undertaking or directing any further land disturbance activity in the Manawatū-Whanganui Region. Under s 314(1)(a)(i), an order may prohibit a person from doing anything “likely to contravene the Act”. Before imposing
11 At [32].
12 Gisborne District Council v AF Thompson Contracting Ltd [2021] NZDC 5533
13 Sentencing decision, above n 3, at [34].
14 At [35].
15 Gisborne District Council v Lane [2022] NZDC 10666.
16 Sentencing decision, above n 3, at [37].
the order, the Judge had to be satisfied that, unless prohibited from ongoing involvement in earthworks, Mr Fugle was likely to continue breaching the RMA.
[24] In his 3 April 2024 decision, the Judge observed that the purpose of an enforcement order is to protect against future offending.17 He concluded, in light of Mr Fugle’s “history of non-compliance with applicable rules in the district and regional plans and consequent environmental damage”, that Mr Fugle met the threshold of “likelihood of contravention”.18 The Judge issued an order prohibiting Mr Fugle from:19
a)Personally undertaking land disturbance;
b)Directing others how to undertake land disturbance;
c)Being involved in the administration, management or execution of, or decision-making about, land disturbance activities related to compliance with:
i)Any condition of a resource consent;
ii)Any rule of the Manawatū-Whanganui Regional Plan (commonly known as the One Plan), including any subsequent amendment to the Plan;
iii)Any duty or obligation under any provision of Part 3 (Duties and restrictions under this Act) of the Resource Management Act 1991 or any National Environmental Standard.
[25] Finally, in seeking an order for name suppression, Mr Fugle told the Judge he was working on a new development project. He contended that publication of his name in connection with convictions at Woodgate Heights would adversely affect his ability to obtain finance his new project, and would “create a perceived negative environmental and development competency in the capital venture market”.20 He also submitted that publication of his name may cause suspicion of poor environmental management to fall on others involved in the project. He sought suppression only for 18 months, by which time the risks to the new development would have passed.
17 Enforcement order and name suppression decision, above n 4, at [6].
18 At [12].
19 R v Fugle [2024] NZEnvC 60 at [5].20 Enforcement order and name suppression decision, above n 4, at [20(d)]. I infer that that this means investors might think Mr Fugle was not competent, either as a developer or in meeting his RMA obligations.
[26] Judge Kirkpatrick held Mr Fugle had not demonstrated that publication of his name would cause either extreme hardship to him, or cast suspicion on any other person in a way that may cause undue hardship.21 The Judge observed that Mr Fugle had been the subject of multiple enforcement orders and criminal prosecutions over the years, and that anyone who entered his name into a legal database would come upon a lengthy list of proceedings. The Judge held that suppression of Mr Fugle’s name would be contrary to the principle of open justice and declined the application.
The appeal
[27] Ms Baigent submitted the fines were manifestly excessive, particularly in the absence of evidence of actual environmental harm. She submitted the $90,000 starting point for Mr Fugle, and the $40,000 starting point for ALHL, were clearly out of line with other sentences for breaches of the RMA. Ms Baigent carefully distinguished Mr Fugle’s offending from the offending in AF Thompson Contracting Ltd, and ALHL’s offending from that recorded in Lane. She argued both were far more serious cases than the present, involving actual environmental harm, deliberate wrongdoing and, in the case of Lane, particularly vulnerable land.
[28] She also noted the anomaly in the credit the Judge extended for the appellants’ respective guilty pleas. Although their pleas tracked one another exactly, Mr Fugle received a discount of 20 per cent, while ALHL received a discount of 25 per cent.
[29] Ms Baigent submitted the Judge had treated Mr Fugle’s breach of the One Plan and the absence of consents as serious aggravating features, when in fact they simply describe the offence. She also submitted the Judge’s reference to the abatement notices when sentencing Mr Fugle risked double-counting ALHL’s offending.
[30] With respect to ALHL, Ms Baigent submitted the Judge should have taken account of the fact Mr Fugle had responded to the abatement notices by challenging them; he had not simply ignored them.22
21 Criminal Procedure Act 2011, s 200(2)(a) and para (b).
22 See n 5 above. The orders were ultimately withdrawn, but that did not absolve ALHL from having to comply with them while they were in force.
[31] As to the enforcement order, Ms Baigent submitted that a lifetime, region-wide ban on further earthworks is an extreme sanction, especially as Mr Fugle’s new development has not experienced any compliance issues. Ms Baigent described it as a “restraint of trade clause without end”. She also noted the novel nature of the order. As Mr Vanderkolk acknowledged, a wide-ranging lifelong prohibition order of this kind has never been imposed before. Ms Baigent argued the order should be quashed or, failing that, the lifelong additional punishment should be reflected in a further reduction to Mr Fugle’s fine.
[32] Finally, Ms Baigent challenged the Judge’s decision to refuse Mr Fugle’s application for name suppression. Her principal submission was that Mr Fugle may struggle, if his name is published, to attract funding for his new development. She argued investors will see him and the development as too great a risk. This submission was somewhat undercut by Ms Baigent’s acknowledgement that Mr Fugle was not seeking to conceal his offending from investors.
[33] Mr Vanderkolk made a number of concessions which have helped narrow the scope of the appeal. First, he accepted he could not defend the disparity between the guilty plea discounts. He acknowledged that the procedural history for the two appellants was identical, and that there was no basis for ALHL to receive a greater discount than Mr Fugle. While noting the guilty pleas were not immediate, and a smaller reduction would have been sustainable, Mr Vanderkolk accepted that if ALHL’s plea warrants a 25 per cent discount then Mr Fugle’s discount should be the same.
[34] Second, Mr Vanderkolk agreed that the starting points selected by the Judge were significantly out of line with prevailing sentences for similar offending. I asked Mr Vanderkolk whether he seeks a general reconsideration of sentencing levels for RMA offending, given the prevailing sentencing levels are all found in District Court decisions, and are not binding on this Court. He said he did not.
[35] While he did not attempt to defend the starting points chosen by the Judge, Mr Vanderkolk emphasised the distressed state of the Manawatū River and Mr Fugle’s history of non-compliance. He argued that the appellants’ sentences need to be large
enough to deter developers or enterprises that might regard compliance with the RMA as a costly inconvenience.
[36] Mr Vanderkolk accepted the enforcement order was “too prohibitive” and “just too broad”. He also accepted that the focus for the enforcement order had to be on the likelihood of future non-compliance. In that regard, he accepted that Mr Fugle’s recent good record of compliance was highly relevant. He agreed that Horizons’ most recent inspection reports, giving Mr Fugle’s developments a clean bill of health, should have been drawn to the Judge’s attention, but were not.23
Discussion
Fines
[37] The approach to an appeal against sentence is well settled. Under s 250 of the Criminal Procedure Act 2011, I must dismiss the appeal unless satisfied, for any reason, there was an error in the sentence, and that a different sentence should be imposed. In accordance with orthodox principle, an appeal can be allowed only if the sentence was manifestly excessive, represented a material error of principle, or in the presence of exceptional circumstances.24
[38] Thurston and Tawera Land Company Ltd v Manawatū-Wanganui Regional Council,25 was a case which concerned multiple charges of unauthorised discharge of wastewater and dairy effluent onto farmland. There were also numerous breaches of abatement notices. Justice Miller listed factors that may be relevant to sentences for offending against s 338 of the RMA:26
[41] The cases highlight considerations that frequently assume relevance in pollution sentencing:
23 The Judge was generally aware that the new development is progressing smoothly – he acknowledged that the company responsible for the new development, in which Mr Fugle’s children and step-children play a significant role, is a good corporate and environmental citizen (enforcement order and name suppression decision, n 4 above at [10](c)).
24 Tutakangahau v R [2014] NZCA 279, [2014] 3 NZLR 482 at [33]–[39].
25 Thurston v Manawatū-Wanganui Regional Council Palmerston North HC CRI 2009-454-24, 27 August 2010.
26 Footnotes omitted.
(a)the offender’s culpability. Deliberate or reckless conduct is an important aggravating feature of the offence. Inadvertence may earn leniency if appropriate efforts have been made to comply.
(b)any infrastructural or other precautions taken to prevent discharges.
(c)the vulnerability or ecological importance of the affected environment.
(d)the extent of the environmental damage, including any lasting or irreversible harm, and whether it was of a continuing nature or occurred over an extended period of time. Where no specific lasting harm can be identified, an allowance for harm may be made on the assumption that any given offence contributes to the cumulative effect of pollution generally.
(e)deterrence. Penalties should ensure that it is unattractive to take the risk of offending on economic grounds.
(f)the offender’s capacity to pay a fine.
(g)disregard for abatement notices or Council requirements. Abatement notices are designed to allow a Council to put a stop immediately to unlawful discharges. If they are to work as intended the Court must treat non-compliance as inherently serious.
[39] The present case engaged a number of the Thurston factors, but it is clear it is not in the most serious category.
[40] I accept that Mr Fugle’s conduct was careless or reckless; indeed, I may have gone further than Judge Kirkpatrick — an experienced developer like Mr Fugle could have been under no illusion as to the nature of his obligations. Mr Fugle’s acknowledgement that he knew the consents had expired but that the development was nearly complete points to deliberate non-compliance. Moreover, the Judge was right to reject Mr Fugle’s attempt to place responsibility for the breach on his surveyor. I have no doubt Mr Fugle was aware he was in breach.
[41] Next, it appears clear Mr Fugle had been on notice for many years that the development lacked sufficient sediment control. The lack of an adequate erosion sediment control plan meant that all work at the site technically breached the consents even while they were in force. While Mr Fugle did not face charges arising from his work on the development prior to the expiry of the consents in 2019, it is fair to describe the infrastructural precautions he took to ensure compliance as inadequate.
[42] On the other hand, the land in Aokautere is not especially vulnerable or ecologically sensitive, nor did the offending lead to any identifiable environmental harm. At worst, it is fair to infer the appellants’ offending has contributed, in a cumulative sense, to the ongoing stress on the Manawatū River.
[43] Ms Baigent is right to note that Mr Fugle’s non-compliance with the abatement notices is not an aggravating factor — it gave rise to the separate charges faced by ALHL, and should not be counted as an aggravating feature of Mr Fugle’s offending as well.
[44] Mr Fugle was not especially co-operative with the enforcement authorities. As noted, on one occasion he damaged a Horizons vehicle while staff were seeking to conduct an inspection. He was sentenced for that offending separately. It is therefore not a discrete aggravating factor, though of course Mr Fugle cannot claim credit for co-operation either.
[45] I agree with the Judge that the most significant aggravating factor in this case is the duration of the offending. Both appellants’ offending continued for more than a year. I also agree it is important that sentences in this area act as an effective deterrent. RMA compliance is expensive and time-consuming. It is important that fines, even when no immediate damage can be established, are set at a level that dissuades developers and other potential polluters from taking their chances with non-compliance.
[46] Other cases which have attracted starting points at the level selected by the Judge concerned offending appreciably more serious than the appellants’, though I agree with Miller J’s comment in Thurston that it is often difficult to make meaningful comparisons between cases.27
[47] In AF Thompson, on which the Judge relied, the four defendants — two companies and two individuals — pleaded guilty to a series of charges involving unauthorised earthworks, breaches of abatement notices and discharging sediment
27 At [53].
onto land where it may enter a waterway.28 The defendants were developing a lifestyle block with a view, among other things, to establishing building platforms for houses. The offending included the unauthorised formation of access tracks, the construction of two building platforms, the levelling of an area for stables, and 10,750 cubic metres of earthworks as opposed to the 3,700 authorised by the consent.
[48] The defendants received abatement notices requiring the immediate cessation of sediment discharge onto land which might enter a waterway. Nonetheless, soon afterwards large amounts of sediment-laden water flowed through the property and onto neighbouring land, into a neighbouring stream and into a roadside drain. On another occasion sediment-laden water was discharged into a neighbouring pond. The earthworks themselves were vulnerable to collapse. There was clear damage to the surrounding waterways as a result.
[49] The Judge adopted total starting points of $48,000 for one individual defendant and $24,000 for the other.29 After a 25 per cent discount for guilty pleas (and in one case, a further five per cent for prior good character), the individual defendants received fines of $36,000 and $16,800 respectively.30
[50] Ms Baigent is right to submit that AF Thompson involved offending that was considerably more serious than in the present case. Among other things there was a range of unconsented activity and clear damage to surrounding waterways. Even so, the more culpable individual defendant was fined only $36,000.
[51] Similarly Lane, on which the Judge relied in setting ALHL’s starting point, was a case involving offending appreciably more serious than in the present case.31 Mr Lane was involved in constructing an unconsented 2.7 kilometre access track. He told Council inspectors he knew he was required to obtain a resource consent, but would lose half a million dollars if he had to stop work to obtain one. The land was highly vulnerable to erosion, and the unauthorised earthworks were unstable and caused extensive discharge of sediment into surrounding streams. Sampling of water
28 Gisborne District Council v A F Thompson Contracting Ltd, above n 12.
29 At [35] and [36].
30 The corporate defendants were fined $37,500 and $33,600 respectively.
31 Gisborne District Council v Lane, above n 15.
affected by the discharges indicated a degraded state. The defendant disregarded abatement notices despite damage to the surrounding waterways already being evident.
[52] In Lane the Judge adopted a global starting point of $120,000 for the illegal earthworks and $40,000 for the defendant’s disregard of two abatement notices.32 All fines were reduced by 25 per cent to reflect his early guilty pleas and five per cent to reflect his prior good character, resulting in a fine of $112,000.33 Ms Baigent is right that the present case is in a different league.
[53] The Judge did not set out to revisit the prevailing sentencing levels for cases involving unauthorised earthworks; rather he sought to assess the appellants’ culpability with reference to similar cases. I am satisfied that in using AF Thompson as a benchmark for Mr Fugle’s offending, and Lane as the benchmark for ALHL, the Judge made an error. Both cases involved offending that was significantly more complex and damaging than the offending in the present case.
[54] I have reviewed sentences in cases which combine unauthorised earthworks with inadequate erosion and sediment control. Starting points for breaches which do not cause identifiable or immediate environmental harm are generally much lower than the starting points selected by Judge Kirkpatrick.
[55] Judge Dickey’s decision in Auckland Council v Brett Wallen Contracting Ltd is helpful.34 That case also involved a failure to install and maintain proper sediment control. The Court noted the inevitability that sediment-laden water would be discharged into the environment, with all the danger discharge of that kind inevitably entails. Helpfully, Judge Dickey set out an analysis of sentences imposed in cases involving earthworks leading to the discharge of sediment into waterways.35 Starting points where no immediate damage is identified tend to fall in the range of $30,000–
$40,000. As Judge Dickey emphasised, uncontrolled sediment will find its way into waterways eventually, and cause cumulative damage over time. But there is still an
32 At [34]–[35].
33 At [36]–[37].
34 Auckland Council v Brett Wallen Contracting Ltd [2020] NZDC 13655.
35 At [49]–[57].
appreciable difference between cases involving “generic and unidentifiable” harm and cases, like AF Thompson and Lane, where damage is immediate and acute.
[56] As to ALHL, the company’s breach of the abatement notices reflected Mr Fugle’s general disdain for the regulatory regime. He fought the notices instead of complying. The only real aggravating factor was the duration over which the breaches continued.
[57] It follows I am satisfied that the Judge’s starting point, in both cases, was manifestly excessive. Accordingly, I have considered the appellants’ sentences afresh.
[58] Although Mr Vanderkolk did not invite me to consider a general uplift in starting points for cases of this kind, penalties for RMA breaches by commercial operators must always be kept under review, especially as compliance costs escalate. It is important sentencing levels continue to provide a meaningful deterrent, and a clear financial disincentive for developers who might be tempted to disregard their obligations.
[59] There is room for overall penalties to increase from the levels discussed in Brett Wallen Contracting Ltd. Many of the cases discussed by Judge Dickey are now more than seven years old; overall costs have escalated sharply since then, and it is important that sentences keep pace.
[60] I consider a starting point of $65,000 to be appropriate for Mr Fugle. His offending is significantly aggravated by the fact the unauthorised earthworks continued for over a year; but for that, I would have selected a starting point of around
$50,000. Obviously, cases where there is evidence of actual environmental harm, including serious erosion or discharge of sediment into neighbouring waterways, will warrant higher sentences, as Lane demonstrates. Similarly, deliberate and cynical non- compliance for commercial gain is a serious aggravating factor. In a case like Lane, which involved contemptuous disregard of the RMA, along with significant environmental harm, a starting point in the realm of $200,000 would not be excessive.
[61] Like the Judge, I do not impose any uplift to reflect Mr Fugle’s untidy compliance history and his conviction in 2017. If he offends again, he can expect a substantial uplift.
[62] As to ALHL, I agree the starting point of $40,000 was manifestly excessive and led to a manifestly excessive final sentence. There is no comparison between ALHL’s offending and the abatement notice breaches in Lane. That said, significant fines will often be appropriate, whether identifiable damage arises or not, given the vital role abatement notices play in the overall regime. In the present case the only real aggravating feature was the duration of ALHL’s breach. Noting the need for deterrence, the importance of abatement notices in the wider RMA regime and the escalating costs of compliance, I have settled on a starting point of $30,000.
[63] I reduce both fines by 25 per cent to reflect the appellants’ guilty pleas. I also retain Judge Kirkpatrick’s (rather generous) additional discount of 5 per cent to reflect the fact ALHL is a first offender.
[64]It follows that Mr Fugle’s fine will be reduced to $48,750, and ALHL’s fine to
$21,000.
Enforcement order
[65] The enforcement order serves a different purpose to the rest of the sentence. While s 339(5)(a) of the RMA permits an enforcement order to be imposed as part of a sentence, enforcement orders look forward, and are directed to the likelihood of future non-compliance. In addition, and as Mr Vanderkolk accepted, an order which compromises a defendant’s livelihood must be tightly targeted. It must be no broader, and last no longer, than is necessary to address the likelihood of future breaches.
[66]The relevant part of s 314 provides:
314 Scope of enforcement order
(1)An enforcement order is an order made under section 319 by the Environment Court that may do any 1 or more of the following:
(a)require a person to cease, or prohibit a person from commencing, anything done or to be done by or on behalf of that person, that, in the opinion of the court,—
(i)contravenes or is likely to contravene this Act, any regulations, a rule in a plan, a rule in a proposed plan, a requirement for a designation or for a heritage order, or a resource consent, section 10 (certain existing uses protected), or section 20A (certain existing lawful activities allowed) …
[67] The Judge found, in effect, that if Mr Fugle is not prohibited from undertaking earthworks by an enforcement order, he is “likely” to contravene the RMA or the One Plan by engaging in further unlawful activity.
[68] Enforcement orders are usually directed to specific instances of actual or apprehended non-compliance. Here the order was not directed at any specific project, nor did it require Mr Fugle to take, or refrain from taking, any particular steps. Instead, it prohibited Mr Fugle from engaging in any earthworks, of any kind. An indefinite and generalised ban of that nature should be exceptionally rare and reserved only for the clearest of cases.
[69] Mr Vanderkolk accepted that the focus of the application should have been on the risk of future non-compliance, as assessed on the date the application was determined. That required an examination of Mr Fugle’s history, but also the events since the offending. Mr Vanderkolk agreed that Horizons’ most recent inspection reports should have been before the Judge. More importantly, he agreed that Mr Fugle’s good record of compliance throughout 2022 and 2023 means the Crown can no longer say it is likely there will be a breach unless an enforcement order is made. Of course, future breaches remain possible, but Mr Fugle’s recent history gives cause for optimism.
[70] Mr Vanderkolk submitted, and I agree, that if there are further instances of non-compliance, Mr Fugle is likely to face a very stern sentence, which may not be limited to a monetary penalty. A broad enforcement order prohibiting him from engaging in earthworks would also be highly likely. But, as Mr Vanderkolk accepted, by 3 April 2024 (the date of the enforcement order) the evidence did not disclose an ongoing likelihood of non-compliance. It is therefore unnecessary to determine
whether the order was too broadly drawn, and whether it should have been time-limited, though it is likely I would have ruled in Mr Fugle’s favour on those issues as well.
Name suppression
[71] This aspect of the appeal can be disposed of in short order. Mr Fugle sought name suppression because he was concerned that if his name is published he may struggle to obtain finance for his new development.
[72] Ms Baigent accepted that financial consequences often follow a criminal conviction, especially where the offending occurs in the course of the offender’s business. Those consequences are normal; nothing about Mr Fugle’s position comes close to meeting the threshold of extreme hardship.
[73] In addition, and as noted above, Ms Baigent accepted that Mr Fugle is not seeking to conceal his offending from potential investors (nor, needless to say, would the Court countenance or assist concealment). In light of Ms Baigent’s acknowledgement, it is difficult to see what purpose an order for name suppression might serve. When asked, she did not press the point, nor did she pursue her submission that suspicion might somehow be cast on other participants in the development.
[74] It follows there is no basis to disturb the Judge’s decision declining Mr Fugle’s application for suppression.
Result
[75]I make the following orders:
(a)The application to adduce further evidence on appeal is declined.
(b)Mr Fugle’s appeal against sentence is allowed. His fine of $72,000 is quashed and a fine of $48,750 is imposed. The enforcement order made against Mr Fugle is quashed.
(c)The appeal against ALHL’s sentence is allowed. Its fine of $28,000 is quashed a fine of $21,000 is imposed.
(d)Mr Fugle’s appeal against the Judge’s refusal to make an order for name suppression is dismissed.
Boldt J
Solicitors:
Crown Solicitor, Palmerston North for Respondent
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