Northlake Investments Limited v Otago Regional Council
[2020] NZCA 567
•18 November 2020 at 9.00 am
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA331/2020 [2020] NZCA 567 |
| BETWEEN | NORTHLAKE INVESTMENTS LIMITED |
| AND | OTAGO REGIONAL COUNCIL |
| Hearing: | 30 September 2020 |
Court: | Collins, Mallon and Ellis JJ |
Counsel: | A F Pilditch for Applicant |
Judgment: | 18 November 2020 at 9.00 am |
JUDGMENT OF THE COURT
The application for leave to appeal is granted.
____________________________________________________________________
REASONS OF THE COURT
(Given by Mallon J)
Introduction
The applicant (Northlake), a property development company, was convicted in the District Court of discharging a contaminant in contravention of s 15(1)(b) of the Resource Management Act 1991 (the RMA), which is an offence under s 338 of the RMA.[1] It was fined $42,500 and ordered to pay legal costs and disbursements.[2]
[1]Otago Regional Council v Northlake Investments Limited [2019] NZDC 11710 [District Court decision].
[2]Otago Regional Council v Northlake Investments Limited [2019] NZDC 17582 [Sentencing notes].
Northlake appealed the conviction on the grounds that:
(a)The charge should have been brought on the basis that any liability for the discharge was vicarious. Pursuant to s 340 of the RMA, this would have meant that Northlake had a defence if it established that it could not reasonably be expected to have known the offence was to be or was being committed, or that it had taken all reasonable steps to prevent the offence.
(b)The Judge erred in finding the charge proven on the basis that Northlake had not taken the precautions of a prudent developer to prevent the discharge.
The High Court dismissed the appeal.[3]
[3]Northlake Investments Limited v Otago Regional Council [2020] NZHC 1144 [High Court judgment]. The Court also dismissed an appeal against the sentence.
Northlake applies for leave to bring a second appeal. This Court may grant leave only if satisfied that the appeal involves a matter of general or public importance or that a miscarriage of justice may have occurred, or may occur, unless the appeal is heard.[4] Northlake contends the question of when primary liability under s 15 or derivative liability under s 340 applies is a question of general or public importance. It also contends there was a miscarriage of justice because the Courts below relied on expert evidence of a prudent developer rather than on the basis of the information and advice available to Northlake at the time.
The legal issue
[4]Criminal Procedure Act 2011, s 237(2).
Northlake submits that there are a range of permutations by which liability for a discharge offence may arise:
(a)as a person who is a primary or active discharger of the contaminant (s 15);
(b)as a person who is a passive discharger of the contaminant (s 15);
(c)as a person who has permitted the discharge (s 338(1)); or
(d)as a principal with vicarious liability for the acts of its agent (s 340).
The possibility of two permutations under s 15 (active and passive discharger) arises from this Court’s decision in McKnight v NZ Biogas.[5]
[5]McKnight v NZ Biogas Industries Ltd [1994] 2 NZLR 664 (CA).
In this case the charge was framed as follows:
Northlake Investments Limited together with Civil Construction Limited discharged contaminants (silts and sediments) onto land in circumstances which might have resulted in those contaminants (or any other contaminants emanating as a result of natural processes from those contaminants) entering water, namely water in the Clutha River, when the discharge was not expressly allowed by a National Environmental Standard or other regulations, a rule in a Regional Plan as well as a rule in a Proposed Regional Plan for the same region (if there is one), or a resource consent.
Legislative reference: Sections 15(l)(b), 338(l)(a) and 339 of the Resource Management Act 1991 and Section 66 of the Crimes Act 1961.
Northlake submitted that its liability under s 15 could only be for allowing the escape (that is, as a passive discharger) in terms of Biogas.[6] The District Court Judge found Northlake liable as both an active and a passive discharger under s 15.[7]
[6]It did not give notice of an intent to rely on either of the defences to s 15 provided for in s 341. Difficulties for Northlake would appear to be proving the “necessary for the purposes of saving or protecting life or health” component of s 341(2)(a)(i) and the event could not reasonably have been “provided against” limb of s 341(2)(b)(i).
[7]District Court decision, above n 1.
Civil Construction Ltd (CCL), Northlake’s contractor, pleaded guilty before trial. It seems that the inclusion of s 66 of the Crimes Act 1961 may have caused confusion. Northlake says it understood that it was a party to CCL’s offending. In finding Northlake liable, the Judge amended the charge to remove the reference to s 66. The Judge did so because he had determined they had played different roles in the chain of causation and contributed to the discharge in different ways and were independently liable.[8]
[8]At [77].
Northlake maintained before and during the trial that it ought to have been charged under s 340 and that it would not be liable if it could establish the statutory defence under s 340(2)(a)(ii). The District Court Judge rejected this because Northlake had played an active role in the discharge irrespective of CCL’s failings. This meant s 15 was available and the Judge determined it had been proven. In any event, the Judge considered a defence under s 340 would not have been established.[9]
[9]At [79].
In the High Court Clark J did not consider whether Northlake was liable as an active discharger (as found by the District Court relying on Biogas).[10] The Judge focussed on Northlake’s defence that it had taken all reasonable care. She considered the formulation of the charge (as between ss 15 and 340) had little bearing because both required Northlake to have taken all reasonable care.[11] This meant the appeal turned on the Judge’s evaluation of the evidence as to the steps Northlake took to prevent a discharge and the sufficiency of those steps.[12]
[10]High Court judgment, above n 3.
[11]At [27].
[12]At [30].
Both the District and High Courts considered, therefore, that on the evidence it would have made no difference whether the charge was formulated as principal liability under s 15 or vicarious liability under s 340. Unless there is an error in their assessment of the evidence, the legal issue Northlake raises will not result in the quashing of its conviction if leave is granted. We turn to consider the miscarriage ground for leave.
The miscarriage issue
As to the miscarriage ground, the key point as it was advanced at the hearing was whether the lower Courts properly took into account that Northlake had expert advice that differed from that adduced at the trial and whether Northlake was entitled to rely upon it.
The Courts below relied on the expert evidence of Mr Dent called by Northlake about silt and sediment controls. He is a civil engineer rather than an expert developer. Northlake’s expert had communicated to the Queenstown Lakes District Council on 28 July 2017 that “the stormwater control measures currently in place at Northlake [are] fundamentally working as designed”.
The District Court Judge accepted that Northlake took a responsible and structured approach to the project and sought to avoid environmental problems.[13] However, “[h]aving regard to Mr Dent’s evidence”, a reasonably prudent developer would have initiated a full review of the SMP after the July discharge. The High Court Judge similarly concluded:
[48] It is the failure of Northlake to insist on a stronger sediment control system, in accordance with the expectations of expert opinion at the time (albeit Northlake says it was not informed of this by its own expert), that prevents Northlake from demonstrating that a miscarriage of justice has occurred.
[13]District Court decision, above n 1, at [67].
The Court in Biogas did not need to address whether a defendant is liable under s 15 if they reasonably rely on expert advice. The present case, unlike Biogas, involves a case where the defendant engaged expert advice. The issue is whether a defendant is liable under s 15, whether as an active or passive discharger, if it acted reasonably in engaging expert advice and in relying on it. As this issue was not squarely addressed in the lower courts, we consider leave should be granted. A further issue is whether liability potentially arises under ss 15 or 340 or both.
Conclusion and result
We consider leave to appeal should be granted. The issues for the appeal are:
(a)Is a developer liable under s 15, as an active or passive discharger, if it acted reasonably in engaging expert advice and in relying on it?
(b)If a developer is relying on expert advice to address the risk of discharge, does the developer’s liability potentially arise under ss 15 or 340 or both?
(c)Did Northlake act reasonably in engaging expert advice and in relying on it?
Solicitors:
Justin Hollows, Winton Group, Auckland for Applicant
Ross Dowling Marquet Griffin, Dunedin for Respondent
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