Cando Fishing Limited v Southland Regional Council

[2013] NZHC 3444

IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

CRI-2013-425-000036 [2013] NZHC 3444

CANDO FISHING LIMITED

v

SOUTHLAND REGIONAL COUNCIL

Hearing:                   17 December 2013

Counsel:                  M D Morris for the Appellant

B J Slowley for Respondent

Judgment:                17 December 2013

JUDGMENT OF PANCKHURST J

Introduction

[1]      This is an appeal against a sentence imposed in relation to 17 charges of discharging a contaminant.

[2]      Cando Fishing Limited is a fishing company which also processed kina at a processing facility being part of the previous Ocean Beach Freezing Works near Bluff.  The gist of the charges was that Cando, for a period of almost 12 months, systematically discharged waste from the processing plant into raceways which resulted in that contaminant going into the sea, into Foveaux Strait.

[3]      The prosecutions were brought by the Southland Regional Council pursuant to relevant offence provisions in the Resource Management Act 1991.  The charges were defended before Judge Dwyer in July of this year.   He dismissed two of the

charges but entered convictions in relation to the remaining 17.

CANDO FISHING LIMITED v SOUTHLAND REGIONAL COUNCIL [2013] NZHC 3444 [17 December

2013]

[4]      In sentencing the Company on 27 August, the Judge concluded that a global penalty of $90,000 was appropriate.  He imposed individual fines of $5,290 on each of the 17 charges, together with solicitor’s costs of $1,130 and an order that the Company pay a moderate amount by way of Court costs as well.  He directed that 90 percent of the fine be paid to the Regional Council.

Grounds of appeal

[5]      The grounds of appeal are four in number.  The first is that the Judge wrongly treated two convictions entered in 2012 as previous convictions and therefore an aggravating factor of the offending, when in reality the convictions post-dated the offending which is the subject of this appeal.

[6]      Secondly, Mr Morris contended that the Judge gave insufficient weight to the absence of adverse environmental effects from this particular contaminant.  Thirdly, counsel submitted that the Judge gave undue weight to the deliberate and prolonged nature of the offending.  The fourth ground was that the Judge failed to sufficiently recognise remedial expenditure of about $100,000 undertaken by Cando, when this was positive evidence of remorse and an acceptance of responsibility for environmental safety.

The facts

[7]      Cando is a small company.  Its business is the catching of kina, its processing and sale in the main to overseas markets. At the relevant time it was processing kina from a facility at Ocean Beach, which it then leased, but which it now owns.

[8]      In December 2010 the Regional Council received a complaint about smell emanating from the processing plant area.   Inspectors went to the plant and found that the cause of the smell was the discharge of raw kina waste into a old drainage system previously used by the freezing works.   Once within that system the raw waste was discharged into the sea.

[9]      The Council responded by issuing an abatement notice and also informing the

Company that it required a resource consent in relation to the activity.

[10]     The dates within which the present offending falls were from January 2011 to December 2011.  During that time span the Company had a 9,000 litre holding tank for the collection of waste.   It had also engaged a contractor who was to take the waste from the tank to waste ponds operated by the Invercargill City Council.   In fact, however, the old practices continued.   Infrequently the contractor did collect waste product and take it to the City Council ponds, but more often than not the tap to the 9,000 litre tank was opened and waste was discharged into the old raceway and from there into the sea.

[11]     The 17 charges typically covered two day periods during which kina was processed.   There was no evidence of an ongoing smell problem, nor indeed of environmental damage, during 2011.  However, in September of that year Council inspectors went to the premises and discovered two problems to which I will refer in a moment.

[12]     In relation to the discharge of the contaminant, Judge Dwyer accepted that it was “a natural product”.   It comprised in essence kina gut and shell together with water which had been used to wash down product and plant in the course of the process.   The Judge found it difficult to calculate the maximum volume of waste generated during the processing days.  He considered it may have been as much as

20,000 or 30,000 litres in each two day period, but expressly found in the course of his sentencing remarks that there were a number of variables, such that he could not be sure about the actual volume of wastage.

[13]     The Judge noted that the maximum penalty for each offence was a fine of

$600,000 for a Company, albeit he referred to this Company as a ‘one man band’, rather than a major corporate entity.   I propose to consider the various grounds of appeal under three headings namely, previous convictions, the nature and consequences of the offending and mitigating factors.

Previous convictions

[14]     In the course of his sentencing remarks the Judge referred to $60,000 as a starting point which he had been inclined to adopt.  He continued:

[28]     However,  that  is  counter  balanced  by  the  prolonged,  deliberate nature of the offending which took place over a period of one year in this instance, and that is a considerably aggravating factor. Additionally, the need to deter deliberate breaches of this kind comes into play.

[29]    Also, the defendant has two previous convictions for discharge offending, both of which apparently occurred during the period of this  current  offending.    Those  offences  were  considerably  less serious than these offences, and attracted penalties of $7000 and

$2000 respectively, so were clearly at the lower end of the scale of seriousness.   It is, however, appropriate for me to consider those previous convictions as an aggravating factor in this case.

[15]     The Judge then said:

[30]     All of those foregoing factors justify a 50 percent increase from the

$60,000 I would otherwise have arrived at, and lead to a penalty in the order of $90,000.

[16]     Mr  Morris  submitted  that  in  relying  upon  previous  convictions  as  an aggravating factor in the case the Judge had erred.   Cando was charged with two offences committed in September 2011.  It entered pleas of guilty to the charges and was indeed fined a total of $9000 in relation to those offences.  The more serious offence which attracted the higher penalty was a deliberate release of kina contaminant as in the charges which are the subject of appeal.  The second offence was a negligent release of human sewerage and hence a one-off event, as least as I understand it.

[17]     Importantly for present purposes, these two charges were not dealt with until June of 2012 when Judge Thompson sentenced Cando to the total fine of $9,000, following entry of pleas of guilty.

[18]     In my view, Mr Morris is right in submitting that the Judge erred in treating the two September 2011 offences as previous convictions, an aggravating feature and as warranting an uplift.  I do not accept that it was appropriate to do this when the convictions were not entered until mid-2012 and therefore after the offending which is the subject of the appeal.

[19]     The Judge could have legitimately had regard to these two further offences as part of the pattern of offending during 2011 and hence as adding to the prolonged

and deliberate nature of the offending, but he could not elevate convictions entered in 2012 into previous convictions with reference to the index offending.  This creates a problem from my perspective because the 50 percent uplift which was applied by the Judge was to reflect not only the “previous convictions” but also what the Judge termed the prolonged and deliberate nature of the offending.

[20]     I agree with his assessment in that regard.  The 2011 offending was preceded by the issue of an abatement notice following a visit by inspectors to the plant when the very problem was identified and brought to the attention of the Company.  Yet through  2011  deliberate  releases  of  the  contaminant  occurred  and  there  was, therefore, overwhelming evidence to support the Judge’s finding.

[21]     What is unclear, however,  is how much of the 50 percent uplift is attributable to the previous convictions and how much to the prolonged and deliberate nature of the offending.   Had a conventional approach to fixing a starting point been used, there would have been no problem.   The deliberate and prolonged nature of the offending was intrinsic to the assessment of its seriousness.  Hence, that should not have been isolated as a aggravating feature, but rather factored in to fixing an initial starting point before the Judge turned his attention to individual aggravating and mitigating factors, being those that applied to this particular Company.  In any event I will return to this issue in a moment.

The nature and consequences of the offending

[22]     I have already recorded that I agree with the Judge’s finding that this was prolonged and deliberate offending.  Not only that, in September 2012, the Company was caught in the act of releasing contaminant in an inappropriate way, yet the offending continued until December 2011.

[23]     However, the real focus of Mr Morris’s submission under this heading was that the Judge overstated the consequences of the offending given the particular nature of this contaminant.  I am not persuaded that this is the case.  The Judge at various points in his sentencing remarks referred to this issue.   He said of the contaminant, that it had “no discernible effects”.  He noted that what he termed “tidal flushing” occurred once the contaminant found its way into the sea given the tidal

characteristics in Foveaux Strait.  At another point, he referred to the contaminant as being “considerably more benign” than that in some of the other contaminant cases to which he referred.

[24]     It  follows,  I  am  not  persuaded  that  the  Judge  wrongly  overstated  the seriousness of the contaminant release.   To the contrary it seems to me he duly considered and took an appropriate approach to this aspect.

Mitigating factors

[25]     The thrust of Mr Morris’s submission in this regard was that the remedial expenditure of $100,000 incurred soon after these charges were laid should have been viewed by the Judge as positive and practical evidence of remorse, and of the Company’s resolve to be a good environmental citizen.

[26]     Mr Slowley, on the other hand, said that this was a case of only doing what was required in the first place, not a case where the Company should receive credit for actions taken after the event.

[27]     The Judge dealt with the aspect in these words:

[31]     I do not make any allowance for the funds expended by Cando in connecting its waste system to the Bluff waste water system, even though it cost $100,000.  That was simply putting in a system which should have been in place originally.   I note that in the Thurston1 case, the defendant had spent some $2.6 million in piping waste after the  offending  and  the  High  Court  declined  to  treat  that  as  a mitigating factor.

[32]     I do not see any particular degree of remorse or co-operation which justify any further reduction.

[28]     Again I am unpersuaded that this ground of appeal is made out.  Judge Dwyer presided over the defended hearing.  He heard all of the evidence which was relevant to the assessment to be made concerning remorse and co-operation.    He acknowledged the difficulty in establishing the exact volume of waste which was

generated during a processing period, and it is not open for me to differ from the

1      Manawatu Wanganui District Council v Thurston (No 2) (DC Palmerston North CRI-2007-054-

2550, 20 May 2009);  Thurston v Manawatu Wanganui District Council (HC Palmerston North
CRI-2009-454-24, 27 August 2010).

assessment he reached that this was expenditure which should have been undertaken in the first place.  Indeed, it seems to me that the facts are supportive of this finding. Cando during 2011 was reliant upon a 9,000 litre tank to receive waste, whereas after the event it installed one with far greater capacity than that.  It uses the 9,000 litre tank as an overflow facility.  This, to my mind, rather supports the view reached by the Judge.

Conclusions

[29]     For  these  reasons  I  find  there  is  only  one  ground  of  appeal  which  has substance, namely that relating to the previous convictions.  That brings me back to the  problem  I identified  earlier:    to  what  degree  did  the  ‘previous  convictions’ influence the 50 percent uplift from a notional $60,000 starting point to an end sentence point of $90,000.

[30]     Sitting on appeal  I can  only deal  with the extent to which  the previous convictions influenced the uplift as a matter of impression.   Ideally it would have been better had the deliberate and prolonged nature of the offending be brought to account as intrinsic to the charges.   This would have ensured that the uplift for individual factors, peculiar to this offender, would have been identifiable.

[31]     I propose to moderate the global penalty from $90,000 back to $70,000 in recognition  of  this  concern  which  may  be  a  little  generous  to  the  appellant. However, I feel that is the best I can do in the circumstances.  Accordingly, I allow the appeal to the extent that the individual fines of $5,290 are reduced to $4,100 in relation to each of the 17 charges.  In the end result, therefore Cando will face a total penalty of almost $70,000 plus the costs ordered by the Judge as opposed to the total penalty of about $90,000 previously imposed.

Solicitors:

Preston Russell Law, Queenstown

B J Slowley, Invercargill