Thurston v Manawatu-Wanganui Regional Council HC Palmerston North CRI 2009-454-24
[2010] NZHC 1498
•27 August 2010
IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY
CRI 2009-454-24
CRI 2009-454-25
CRI 2009-454-27
BETWEEN KENNETH WILLIAM THURSTON First Appellant
ANDTAWERA LAND COMPANY LIMITED Second Appellant
ANDMANAWATU-WANGANUI REGIONAL COUNCIL
Respondent
Hearing: 26 July 2010
(Heard at Wellington)
Counsel: A Isac for Appellants
B Vanderkolk for Respondent
Judgment: 27 August 2010
JUDGMENT OF MILLER J
The narrative......................................................................................................... [ 5] The Longburn charges ........................................................................................ [ 6] The dairy effluent charges .................................................................................. [17] The sentencings ..................................................................................................... [22] The dairy effluent sentencing .............................................................................. [23] The Longburn sentencing.................................................................................... [28] The appeal ............................................................................................................. [36] Pollution sentencing under the Resource Management Act ............................. [39] Comparable cases: the Longburn offending ...................................................... [52] Discounts for remedial works and previous good character ............................ [66] The Longburn offending: conclusion .................................................................. [71] The totality principle ............................................................................................ [75] Decision .................................................................................................................. [79]
KENNETH WILLIAM THURSTON V TAWERA LAND COMPANY LIMITED HC PMN CRI 2009-454-24
27 August 2010
[1] The appellants were convicted of discharging contaminants onto land, and thence into river systems, in the Manawatu. There were two sets of charges, each the subject of a separate defended hearing and sentencing before Judge Dwyer, although the sentences were passed on the same day. One set concerned contaminated waste water discharged at the former Longburn meat works near Palmerston North. The other concerned dairy effluent discharged onto a farm at Boness Road, Feilding.
[2] Some of the offending was deliberately calculated to avoid the costs of having waste water treated, and some of it was reckless or careless. In both cases Mr Thurston not only permitted the pollution but also failed to comply with abatement notices.
[3] The Judge ordered the appellants to pay in aggregate $187,545.16, comprising fines of $174,250 with expenses of $22,835.16 and court costs of $2,210. I am told that these are the largest penalties yet imposed under s 338 of the Resource Management Act 1991; indeed, the Longburn penalties and court costs alone (at
$134,790.16 in aggregate) are said to enjoy that distinction.
[4] In this appeal against sentence the appellants maintain that the fines were manifestly excessive.
The narrative
[5] I preface the narrative by noting that both counsel focused on Mr Thurston rather than Tawera Land Company Limited, which owns the farm at Boness Rd. That is sensible because Mr Thurston, a businessman of substantial means, is the principal actor in both fault and economic substance. He owns and controls Tawera and the charges against the two of them were identical. He also owns and controls Aotearoa Coolstores Limited, which in turn owns the former Longburn plant.
The Longburn charges
[6] These offences were committed between 23 May and 28 November 2006. The charges and sentences are set out in the following table.
Offence Section Sentence imposed Intermittently
discharged, or permitted to be discharged, a contaminant onto land between 23 May and 8
June 2006
ss 15(1)(b) +
338(1)(a), Resource
Management Act
1991Fine of $40,000; order to pay Council’s costs and expenses of $7,500, $845 and $535.16; order to pay Court costs of
$130.
Discharged, or permitted
to be discharged, a contaminant onto land on
9 June 2006
ss 15(1)(b) +
338(1)(a), Resource
Management Act
1991Fine of $40,000; order to pay
$7,500 of Council’s costs;
order to pay Court costs of
$130.Discharged, or permitted
to be discharged, a contaminant onto land on
21 August 2006
ss 15(1)(b) +
338(1)(a), Resource
Management Act
1991Fine of $7,500; order to pay
Court costs of $130.
Discharged, or permitted
to be discharged, a contaminant onto land on
16 November 2006
ss 15(1)(b) +
338(1)(a), Resource
Management Act
1991Fine of $2,500; order to pay
Court costs of $130.
Discharged, or permitted
to be discharged, a contaminant onto land on
28 November 2006
ss 15(1)(b) +
338(1)(a), Resource
Management Act
1991Fine of $2,500; order to pay
Court costs of $130.
Contravened, or
permitted a contravention of, an abatement notice on 16 November 2006
s 338(1)(c), Resource
Management Act
1991Fine of $12,500; order to pay
Court costs of $130.
Contravened, or
permitted a contravention of, an abatement notice on 28 November 2006
s 338(1)(c), Resource
Management Act
1991Fine of $12,500; order to pay
Court costs of $130.
[7] The waste water was generated by a subsidiary of Goodman Fielder, which leased part of the plant on terms requiring that the lessor take responsibility for
effluent disposal. It makes continental smallgoods, and it generates waste water from cooking and cooling meat products and washing down vehicles and equipment. The waste water is a contaminant; it contains BOD (biological oxygen demand), solids, ammoniacal nitrogen, nitrate and nitrite nitrogen.
[8] The offending all related to discharges from a save-all or waste storage tank, which the Judge described:
Waste water from Longburn Meats is directed from its processing areas into a large storage tank on site known as a save-all. The save-all is a series of four concrete above ground tanks each with approximate dimensions, length
27.5 metres, width 6.1 metres, depth varying from 2.65 metres to 1.5 metres and a capacity calculated by Regional Council staff as 348m3. Only one of the tanks was in use at the time of the alleged offending being tank number
3.
Prior to entering the save-all, waste from Longburn Meats goes through a contrashear which is a device designed to remove large solids from the waste with the liquid waste and finer remnants going to the save-all. In the past, resource consents had been held authorising the discharge of waste from the save-all into a drain known as the AFFCO drain (AFFCO being the former operator of the Longburn Freezing Works) which in turn entered into the Manawatu River. However at the times of the alleged offending the Regional Council contended that any resource consents allowing discharge to the river from the AFFCO drain had expired.
[9] Until March 2006 one of Mr Thurston’s companies carried waste water by tanker from the save-all to a treatment plant run by the Palmerston North City Council. He incurred trucking costs which, he told Council staff, amounted to about
$1500 per day, five days a week. (In a subsequent interview he claimed that his costs of waste disposal were only $20,000-30,000 a month.) The Council had processed the water without charge, but it then imposed charges for using the treatment plant. The charges were substantial; $22 per cubic metre of wastewater. According to the Council’s evidence he processed on average 106m3 per day through its facility.
[10] Mr Thurston tried to pass these costs to the lessee, but it pointed out that under the lease they were the lessor’s responsibility. The lease will not expire until
2035, and the monthly rent is $12,321. On 23 May he stopped using the Council’s treatment plant and had a hose installed to divert waste water from the save-all into the AFFCO drain. It is not now in dispute that he did so because he wanted to avoid
the new charges. The Judge characterised his actions as deliberate and cynical, a conclusion which Mr Isac sensibly chose not to dispute on appeal.
[11] The City Council soon wondered where the waste water was going. A consents officer checked the AFFCO drain on 9 June and found it carrying waste water from the save-all. A truck was also seen being washed down, with the waste water going into the drain. That led to the respondent investigating. Mr Thurston was evasive. He also pointed out that until for many years the waste had simply been discharged into the river and complained that the costs of dealing with waste water exceeded the rent he received from the plant.
[12] The evidence established that at normal production levels the plant generated about 120m3 of waste water per day, but the volume rose to as much as 300-400m3 per day, approximately as much as the capacity of the save-all, during the May- August period. The Judge inferred that there were discharges from the save-all between 23 May and 9 June. Accordingly, the overall discharges were very substantial. It appears that deliveries of waste water to the Council plant resumed on
12 June.
[13] When Council officers visited again on 21 August the discharges were still occurring, although the water now left the save-all via an overflow ditch which carried it to the AFFCO drain. The Judge did not calculate how much waste water was being discharged; I assume that most of it was again being trucked to the treatment plant. He characterised the discharges after this time as careless or reckless.
[14] On 17 October the Regional Council served abatement notices requiring that the discharges cease by 19 October. On 16 and 28 November the site was visited and waste water was seen to discharge from the save-all.
[15] Mr Thurston conducted his own defence, contending that the AFFCO drain did not exist, that there might be other drains, that the Council had not eliminated other sources of discharges to the AFFCO drain, that the site visits were not lawful, and that the discharges were permitted under a resource consent. The Judge rejected
all of these defences. He did dismiss the charge involving water that was being used to wash the truck, because that water had not been shown to contain contaminants.
[16] At a cost of some $2.6m Mr Thurston has since had constructed a pipeline from the plant to the City Council treatment facility, which is about 5km away. It effectively eliminates the risk of further discharges via the save-all. The pipeline has been vested in the City Council. The record does not disclose why, but I am told that it was done at the Council’s insistence.
The dairy effluent charges
[17] These offences were committed a year after the Longburn charges, between
22 November 2007 and 10 January 2008. The charges and sentences are as follows:
Offence Section Sentence imposed Discharged, or permitted to be discharged, a contaminant onto land between 22 and 29
November 2007
ss 15(1)(b) +
338(1)(a), Resource Management Act
1991
Fine of $7,500 each; order to pay Court costs of $130 each; order to pay Council’s costs of $6,455 (Mr Thurston). Discharged, or permitted to be
discharged, a contaminant onto land on 20 December 2007
ss 15(1)(b) +
338(1)(a), Resource Management Act
1991
Fine of $2,500 each; order to pay Court costs of $130 each. Failed to comply with
abatement notice on 20
December 2007
s 338(1)(c), Resource Management Act
1991
Fine of $5,000 each; order to pay Court costs of $130 each. Failed to comply with
abatement notice on 10 January
2008
s 338(1)(c), Resource Management Act
1991
Fine of $5,000 each; order to pay Court costs of $130 each. Discharged, or permitted to be
discharged, a contaminant onto land on or about 10 January
2008
ss 15(1)(b) +
338(1)(a), Resource Management Act
1991
Fine of $2,500 each; order to pay Court costs of $130 each.
[18] The offending was detected when a senior environmental officer employed by the respondent was visiting the neighbouring Feilding waste water plant on 29
November and noticed effluent ponding on the Tawera farm. He found that the milking shed was serviced by an effluent sump which had overflowed and that a pipe extended from the sump into the paddocks, about 3000m2 of which were covered by ponding effluent.
[19] At one time a resource consent had been held to discharge effluent but it had been surrendered in 2005. Mr Thurston’s evidence was that he had forgotten that the earlier permit had been surrendered, dairy operations having ceased in 2004 after a flood. Production resumed on 16 September 2007. Between that date and the 29
November inspection some 236,000 litres of milk were produced. Mr Thurston explained that the discharge had been undertaken deliberately in an attempt to rehabilitate the soil. He conceded that it had been going on for about three weeks before the first visit. On the basis of that concession, the Judge amended the relevant charge so that it was representative of the period 22 to 29 November.
[20] Mr Thurston agreed to stop the discharge when the respondent approached him. An abatement notice was served on 5 December, requiring that the discharge cease by 7 December. On 20 December the Council found that effluent was going to a large effluent pond, but there had been an overflow onto adjoining land. On 10
January 2008 the sump and effluent pond were overflowing with effluent, which was running for a considerable distance along a race. A discharge permit was eventually obtained on 9 May 2008.
[21] Mr Thurston denied that any effluent would have made its way into the water table, but the Judge found that it would have done. The farm lies on the flood plain of the Oroua River and the effluent collected in the old river bed channels. Topsoils are between 0.3m and 1m in depth over gravels, and the water table is commonly found 1-3m below ground level.
The sentencings
[22] The defended hearing for the dairy effluent discharges at Boness Rd was held on 29-30 January 2009, while that for the Longburn discharges was held on 16-18
February 2009. Both sets of offences were sentenced on 20 May 2009, in separate hearings. The Boness Rd set were sentenced first.
The dairy effluent sentencing
[23] The Judge began by referring to s 79 of the Sentencing Act and criteria identified in Machinery Movers Limited v Auckland Regional Council.[1] He characterised the case as a discharge of limited duration making some indefinable contribution to an already polluted waterway, which did not mean that it was minor. The effluent was spread as a pasture rehabilitation measure, but it should have been readily apparent that it would inevitably leach into the comparatively shallow ground
water. A very high degree of carelessness in farm management led to the offending in the period 22-29 November 2007. The December 2007 and January 2008 offences involved poor management of effluent, but they were of lesser magnitude than the deliberate discharge in November. Careless farm management rather than deliberate action also led to the abatement notice offences, and Mr Thurston had belatedly taken steps to comply with effluent control obligations.
[1] Machinery Movers Limited v Auckland Regional Council [1994] 1 NZLR 492
[24] The Judge accepted that the penalty for the Boness Rd offences should be assessed on a totality basis, recognising that there was one continuing period of poor management over several months.
[25] He did not treat the Longburn offending as an aggravating factor. He observed that there was a history of previous warnings, abatement and infringement notices for the farm, but the last of these was in December 2001. It was a matter of particular concern that two of the Boness Rd charges involved breach of an abatement notice, which allow local authorities to force compliance with environmental obligations. They cannot be ignored with impunity. The starting
point for the penalty on the abatement notice offences, treating them together, was
$20,000.
[26] Turning to the discharge offences, the Judge referred to Waikato Regional Council v GA and BG Chick Limited, which reviewed sentences for dairy effluent offending and identified three bands of seriousness.[2] He characterised Chick as a summary or analysis of sentencing trends rather than a guideline judgment. He fitted this case at the higher end of the second band identified in Chick. The first offence was quite serious, so the overall penalty for the three discharge offences was
$25,000. Had specific environmental damage been more clearly identified he would have considered a substantially higher figure.
[2] Waikato Regional Council v GA and BG Chick Limited (2007) 14 ELRNZ 291
[27] The total penalty was $45,000. The Judge thought it appropriate although it was higher than that initially sought by the Council; it reflected the seriousness with which the Court must approach abatement notice offences. Each defendant was fined $22,500. Mr Thurston was also required to pay Council investigation costs of
$6,455, and both defendants were ordered to pay Court costs of $130.
The Longburn sentencing
[28] The Judge again referred to the Machinery Movers principles and emphasised the importance of general and specific deterrence for those who deliberately discharge waste. He accepted that the Manawatu River may be far from pristine. Further, there was no evidence of lasting environmental harm, but that is commonly so with short-term discharges. The combined effect of such discharges cumulatively degrades the quality of waterways. The May to June discharges were deliberate and cynical and substantial, and there was little or no cooperation with the Council; Mr Thurston submitted to interviews but tried to mislead Council officers.
[29] There was a history of unsatisfactory waste management from the property. Against that, Mr Thurston had no previous conviction for environmental offending at the time of the offending, and he had spent an enormous sum of money building the
waste pipeline from Longburn to Palmerston North to ensure that waste is appropriately disposed of in the future. The Judge recognised that as a substantial mitigating factor.
[30] The Judge did not apply the totality principle to the Longburn and Boness Road offending collectively, but he did apply it to the Longburn sentencing. However, he noted that the charges involved quite separate sets of offending, beginning with the deliberate discharge in May and June. The offending on 9 June was simply a continuation of the offending which must have occurred between 23
May and 8 June. Those offences were followed by the poor management offences in
August and November 2006 and the related abatement notice offences in November
2006.
[31] The Judge referred to comparable cases.[3] He noted that by reference to these cases the Council had suggested an all-up penalty of $120,000 or thereabouts, while Mr Isac had suggested $80,000 for all of the offences.
[3] Auckland Regional Council v Nuplex Industries Ltd DC Auckland CRN 2004-66321, 18 March
2003; Wallace Corporation Ltd v Waikato Regional Council [2007] NZRMA 78; Auckland Regional Council v Westgate Properties Ltd & Anor [2000] DCR 649; Waikato Regional Council v Open Cheese Company Ltd DC Morrinsville CRI 2007-039-158, 4 October 2007.
[32] The Judge concluded that the overall appropriate penalty for the May to June offences was $80,000. He would have imposed a higher figure had a greater level of environmental damage been proved. Eighty thousand dollars reflected the deliberate nature of the offending and had a “level of consistency” with the cases cited. It also reflected Mr Thurston’s strong financial position and his commercial motivation for the offending.
[33] With respect to the subsequent offences, the Judge repeated that they arose out of poor management and the discharge on 21 August was relatively minor. The August offence accordingly attracted a penalty of $7,500. The Council had suggested conviction and discharge for the 2 November discharges, but the Judge thought that that minimised the lack of care and fined Mr Thurston $2,500 for each of those.
[34] Again, the Judge treated the breaches of abatement notices seriously. A starting point of $20,000 for each abatement offence would be appropriate, but as they occurred in close proximity to one another, and recognising that the discharges were at the lower end of the scale, he adopted an overall penalty of $25,000 for the two offences.
[35] In addition to the fines, Mr Thurston was required to contribute $15,000 to Council investigation costs for the May to June offending together with the scientific testing costs of $845.00 and witnesses expenses of $535.16. He was also ordered to pay solicitor/client costs calculated in accordance with the Costs in Criminal Cases Regulations, together with Court costs of $130 in each case.
The appeal
[36] Mr Isac, who did not appear at the defended hearings but represented the appellants at sentencing, contended that the sentences are manifestly excessive; the total is the largest monetary penalty imposed on any defendant in the 19 years since the Resource Management Act came into force but it is far from the worst case of corporate offending to come before the Courts, and the District Court failed to apply the totality principle to all offences but rather treated them as two discrete sentencings. Further, I should approach sentencing afresh, for the Judge failed to adopt established sentencing methodology, which requires that a starting point be fixed before assessment of aggravating and mitigating factors, and he gave no discount for previous good character as first offenders or the costs of remedial works undertaken post-offending.
[37] The focus of Mr Isac’s submissions was on the Longburn offending; counsel accepted that, if it stood alone, the dairy effluent sentencing would be stern but within range. There is no suggestion that the fines were unreasonable having regard to Mr Thurston’s means.
[38] In response principally to the assertion of previous good character, Mr Vanderkolk sought to file an affidavit of Gregory Robert Bevin, an investigator with the respondent. Mr Isac objected on the ground that the evidence was not fresh,
and he observed further that insofar as it sought to establish an aggravating factor it was not admitted for purposes of s 24 of the Sentencing Act. I declined to read the affidavit. Mr Isac accepted that I might refer to the submissions made in the District Court, which did refer to a previous history of non-compliance with regulatory requirements.
Pollution sentencing under the Resource Management Act
[39] The Act provides that no person may discharge any contaminant into water, or onto land in circumstances which may result in it entering water, unless the discharge is expressly allowed under a regulation or rule or resource consent.[4] It is an offence against the Act to contravene or permit a contravention of these prohibitions.[5] At the time of these offences, the maximum fine for a natural person was $200,000 and, if the offence was a continuing one, a further sum not exceeding
$10,000 per day. A sentence of up to two years imprisonment may also be imposed. From 30 September 2009 the maximum fine was increased to $300,000 for a natural person and for a corporation, $600,000.
[4] Section 15(1)(a) and (b).
[5] Section 338(1)(a).
[40] Resource Management Act offences are sentenced under the Sentencing Act
2002. All of the purposes and principles of sentencing under the Sentencing Act may be relevant insofar as the particular case engages them.[6] There is no tariff case. The Court must also recognise that the purpose of the Resource Management Act, which creates the offences, is to promote the sustainable management of natural and physical resources.[7] Sustainable management means using natural resources while avoiding or remedying or mitigating adverse environmental effects. Matters of national importance are specified; they include preserving the natural character of rivers and their margins.
[6] R v Conway [2005] NZRMA 274 at [63], Selwyn Mews v Auckland City Council HC Auckland CRI 2003-404-159-161, 30 April 2004 at [43].
[7] Section 4.
[41] The cases highlight considerations that frequently assume relevance in pollution sentencing:
a) the offender’s culpability. Deliberate or reckless conduct is an important aggravating feature of the offence.[8] Inadvertence may earn leniency if appropriate efforts have been made to comply.[9]
[8] Yates v Taranaki Regional Council HC New Plymouth CRI-2010-443-8, 14 May 2010 at [13]; Calford Holdings Limited v Waikato Regional Council HC Hamilton CRI-2008-419-94, 26 May 2009 at [40]; Sandstone Dairy Limited v Southland Regional Council HC Invercargill CRI-2007-425-1, 15 May 2007 at [30]-[32], [55]; Plateau Farms Limited v Waikato Regional Council HC Rotorua CRI 2007-463-000016, 17 September 2007; Ling v Christchurch City Council HC Christchurch CRI-2004-409-212, 2 December 2004.
[9] Wallace Corporation Ltd v Waikato Regional Council [2007] NZRMA 78 at [5].
b) any infrastructural or other precautions taken to prevent discharges.[10]
[10] Calford Holdings Ltd v Waikato Regional Council at [40].
c) the vulnerability or ecological importance of the affected environment.[11]
[11] Yates v Taranaki Regional Council.
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.[12] 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.[13]
[12] Burns v Bay of Plenty Regional Council HC Tauranga CRI-2009-470-16, 16 June 2009 at [23];
Wallace Corporation Limited v Waikato Regional Council.
[13] Plateau Farms Limited v Waikato Regional Council at [56], [63].
e) deterrence. Penalties should ensure that it is unattractive to take the risk of offending on economic grounds.[14]
[14] R v Conway at [76].
f) the offender’s capacity to pay a fine.[15]
[15] Plateau Farms Limited v Waikato Regional Council at [48].
g) disregard for abatement notices or Council requirements.[16]
[16] Waitakere City Council v Hertzke [1997] NZRMA 222; R v Kiwi Drilling Copmany Ltd (1997) 4 ELRNZ 23 at 29.
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.
h) co-operation with enforcement authorities, and guilty pleas.[17]
[17] Waikato Regional Council v Open Cheese Company Ltd DC Morrinsville CRI 2007-039-158, 4
October 2007; Northland Regional Council v Pendre Farms Ltd DC Whangarei CRN
7011500129/132, CRN 7011500122/127, CRN 7011500118, 15 October 2008.
[42] Remedial steps taken to mitigate the offending or prevent future offending may or may not be treated as a mitigating factor. Where remedial action was taken quickly and the offender cooperated with the informant, the work may be seen as evidence that the offender has taken full responsibility, which may be a powerful mitigating factor under the Sentencing Act. In other cases, the Court has reasoned that the offender should not receive credit for remedial action that ought to have been
taken in the first place.[18] I return to this issue below.
[18] Yates v Taranaki Regional Council at [16].
[43] The offender is often ordered to pay the informant’s expenses and costs, although these should be taken into account when setting the overall penalty.[19]
[19] Burns v Bay of Plenty Regional Council.
[44] The objects of the Resource Management Act were discussed in the first appeal to reach the High Court under the Act, Machinery Movers Limited v Auckland Regional Council.[20] A Full Court (Barker and Williams JJ) found that a distinctive range of factors are relevant in sentencing under the Act, which seeks not only to punish offenders but also to achieve economic and educational goals. Economic considerations are relevant because pollution is an externality; that is, its costs are born not by the polluter but by others. Accordingly, a purpose of sentencing is to impose financial costs or penalties which cause the polluter to internalise the
environmental cost. Sentences should also foster the principle of environmentally responsible corporate citizenship and reflect general deterrence. Relevant considerations were the nature of the environment affected, the extent of the damage, the deliberateness of the offence, the attitude of the defendant, its size and wealth and the nature of its operations, the extent of efforts to comply with its obligations, remorse, profits realised and any previous relevant offending or evidence of good character.
[20] Machinery Movers Limited v Auckland [1994] 1 NZLR 492.
[45] The criteria in Machinery Movers have been overtaken by the Sentencing Act
2002, which establishes a sentencing methodology and replicates or places a different emphasis on the criteria; for instance, remorse is normally reflected in a discount for a guilty plea. The case remains relevant principally because it focuses attention on the objects of the Resource Management Act and emphasises that polluters should be forced to internalise the costs of pollution. That remains an important object of sentencing. The costs, which for the most part are borne by the community at large, may include remedial work and regulatory costs of monitoring and enforcement, which are a social cost of pollution. Remedial work may be treated, at least initially, as reparation and the fine quantified independently, with the
sentencer then checking that the overall sentence is not disproportionate.[21]
[21] Canterbury Regional Council v Steelbro HC Hamilton CRI-2008-41926, 8 August 2008 at [26].
[46] However, environmental costs are not easily catalogued and quantified. For that reason the Court may feel constrained to take a conservative approach to the assessment of harm, as the Judge did here. The Court may prefer to focus on deterrence by eliminating the offender’s gains, which are more easily quantified, before considering whether any further penalty is warranted to reflect environmental harm.
[47] The offender’s gains, as this case illustrates, include the avoided costs of preventing pollution. Polluters may also gamble, as Mr Thurston did, on regulators failing to identify and successfully prosecute them. In such cases deterrence may justify fines that exceed any gains that the offender hoped to make from any one incident. In an environmental context, it has been suggested, using the example of a postponed investment in water-cleaning equipment, that:[22]
Criminal law is the only legal instrument available to force a potential polluter to make this investment, he will only do so (and thus avoid the crime) if the fine that will eventually be imposed multiplied by the probability of detection and conviction is higher than the money he can save by not investing in the equipment.
[22] Michael Faure and Marjolein Visser “Law and economics of environmental crime” in H Sjögren and Göran Skogh (eds) New Perspectives on Economic Crime (Edward Elgar Publishing, 2004) 57 at 61; See generally Commerce Commission v New Zealand Bus (No 2) HC Wellington CIV-2006-485-585, 29 September 2006 at [25].
[48] Of course penalties are not the only source of deterrence; corporate defendants may be risk-averse and employees may be unwilling to risk imprisonment, while convictions may result in substantial loss of reputation. It also bears repeating that deterrence is not the only relevant consideration under the Sentencing Act.
[49] The same principles apply to dairy effluent sentencings, but they have become sufficiently numerous to form an identifiable category of their own. Judges usually adopt a starting point based on the three bands set out in Waikato Regional Council v GA and BG Chick Limited, a decision of Judge Whiting.[23] The Judge accepted that there are no tariffs for environmental offending and referred to Machinery Movers. He noted that there had been a substantial number of sentences passed in dairy effluent cases. A survey of the cases suggested that offences and starting points fell into three categories:
[23] Waikato Regional Council v GA and BG Chick Limited (2007) 14 ELRNZ 291.
[23] From an analysis of the cases a clear pattern generally emerges as to a range of starting points that reflect identifiable and distinct levels of seriousness. I group the levels of seriousness into three:
Level 1 — least serious — $0 - $15,000
Level 2 — moderately serious — $15,000 - $30,000
Level 3 — more than moderately serious — $30,000 plus
Level 1 — least serious — $0 - $15,000
[24] This range of offending reflects unintentional one off incidents occurring as a result of a system failure. The range of penalty reflects thespectrum from the rarely used but wide discretion to discharge without conviction, to offending which encompasses some failure to adequately maintain the system, or failure to take timely restorative action. It also reflects little or no effect on the environment.
Level 2 — moderately serious — $15,000 - $30,000
[25] This range of offending reflects unintentional but careless discharges usually of a recurring nature over a period of time, or of incidents arising from the malfunction of different parts of the system. The offending is often manifested by a reluctance to address the need for a safe system of effluent disposal, resulting in delays in taking restorative action. It also reflects little or at the most a moderate effect on the environment.
Level 3 — more than moderately serious — $30,000 plus
[26] This range of offending reflects the more serious offending. Offending that is deliberate, or if not deliberate, is occasioned by a real want of care. It is often associated with large plural discharges over time or one large one off event. It often exposes a disregard for the effects on the environment.
[50] As the Judge noted, the categories he identified were no more than a guide developed in pursuit of consistency. I observe that such survey judgments facilitate consistency by causing sentences to cluster around the bands. Because they are simply a snapshot of final sentences imposed to a given date, they may inhibit the Court’s response to both developing trends in offending and evolving community norms. The latter have recently been reflected in an increase in the maximum fine,
of which the Court must in future cases take judicial notice.[24]
[24] Halls Sentencing at SA81.3(a), Machinery Movers at 500-501.
[51] In support of an argument that the Chick bands are outdated, Mr Vanderkolk cited West Coast Regional Council v Potae and Van der Poel Limited as an exemplar for dairy effluent sentencing.[25] There were eight charges of unlawfully discharging contaminants on several farms and three of failing to comply with abatement notices. Judge Borthwick referred to the Machinery Movers principles and the relevant considerations under the Sentencing Act, including deterrence. Starting points were
adopted, the Judge noting that there is considerable variation in culpability and seriousness in offending under the Resource Management Act. Judge Borthwick assessed the defendants’ culpability and reviewed comparable cases, noting that fines had risen since Chick. While harm to the environment cannot be quantified in any empirical way, the effects of dairy pollutants on watercourses are insidious, cumulative and serious. The Judge noted the substantial financial position of the defendants and observed that three of the farms involved lacked the disposal infrastructure necessary to comply with the Regional Plan. Credit was given for guilty pleas and previous good character. The aggregate fine imposed after considering totality was $120,000.
Comparable cases: the Longburn offending
[25] West Coast Regional Council v Potae & Van der Poel Ltd DC Greymouth CRI-2009-9-17910, 20 April 2010.
[52] Mr Isac’s argument that the penalties are excessive when measured against comparable cases focused on the Longburn offences. He referred to Waikato Regional Council v Open Country Cheese Company Limited,[26] Auckland Regional Council v Nuplex Industries Limited,[27] Wallace Corporation Limited v Waikato
Regional Council,[28] Auckland Regional Council v Westgate Properties Limited and
Cato Construction Limited,[29] and Waikato Regional Council v Wallace Corporation and Others.[30]
[26] Waikato Regional Council v Open Cheese Company Ltd DC Morrinsville CRI 2007-039-158, 4 October 2007.
[27] Auckland Regional Council v Nuplex Industries Ltd DC Auckland CRN 2004-66321, 18 March 2003.
[28] Wallace Corporation Ltd v Waikato Regional Council [2007] NZRMA 78.
[29] Auckland Regional Council v Westgate Properties Ltd & Anor [2000] DCR 649.
[30] Waikato Regional Council v Wallace Corporation and Others DC Auckland CRI-2005-039-1086,
17 November 2008.
[53] I begin by noting that comparisons are not entirely straightforward. The cases commonly fail to follow orthodox sentencing practice, which locates a starting point by reference to characteristics of the offence before identifying aggravating features of the offender and mitigating features. The Judge took a similar approach in this case; he paid attention to aggravating and mitigating factors but did not identify starting points.
[54] Open Country Cheese involved 11 charges about discharging contaminants to air or land or water in 2006. The lead offence was the dumping of 250 litres of unusable milk into a pit on a nearby farm, from which it was later removed. The other offences concerned over-irrigation of paddocks with waste water for 46 days, one-off spillages of waste water and whey, and use of waste water to irrigate a farm without resource consent. The charges had their genesis in rapid production growth which exceeded the capacity of the firm’s infrastructure. Mr Isac argued that the case is very similar to the Longburn offending in that it was profit-driven. However, the Judge found that specific deterrence was not needed, for the firm had made a contingency plan by buying further farmland on which waste water could be disposed through irrigation and it had relied on bad technical advice about the quantity of waste from a processing plant. Its officers had cooperated throughout,
and it had taken remedial action. The Judge accepted that no profits were directly realised from the offending. The Judge adopted a starting point for the totality of the offending of $80,000. That was reduced for an early guilty plea and remedial action. The total penalties imposed were $55,000.
[55] I accept Mr Vanderkolk’s submission that the culpability of the defendant in that case was materially less than that of Mr Thurston, whose offending was fairly described as cynical; his were not the mistakes of a young and rapidly growing firm but a calculated attempt to avoid the costs of disposal. He did not cooperate with enforcement agencies. It cannot be said that specific deterrence was unnecessary.
[56] Nuplex Industries, a 2003 decision, involved one charge of discharging a contaminant into air. Nuplex is a large public company which manufacture resins and emulsions in a complex at Penrose. There had been a long history of complaints about discharges to air, and three previous convictions. The discharge on this occasion, over a single day, resulted from three failures; a cooling system for a condenser had become blocked, a dump tank condenser was also blocked, and the firm lacked any failure warning system. The adverse effects of the resulting odours were significant. Complainants suffered headaches and nausea. Although the offending was not deliberate and no profits derived, remedial expense had been avoided and there was a high degree of negligence; the firm had failed to maintain equipment since it was installed eight years before. Although it minimised the offending it had pleaded guilty and had taken steps to prevent any repetition. The Judge gave some credit for the expenditure but noted that it was money that should have been spent before. Previous convictions had to be taken into account and the firm was of substantial means, which might increase the fine under s 40 of the Sentencing Act. The Judge imposed a fine of $55,000 together with expenses of the informant in the sum of $10,872 and costs.
[57] I observe that Nuplex Industries involved a substantial defendant with a bad previous history, but the particular discharge was not deliberate, or committed for gain, or lengthy.
[58] Westgate concerned a major construction project. The principal defendant was the developer and owner of the land. There were charges of failing to comply with sediment control measures imposed as a condition of the resource consent for the development, and two breaches of abatement notices. Inadequate erosion and sediment control measures had resulted in sediment-laden water entering a storm water system, which in turn discharged into a stream of high ecological value. There was no evidence of any actual environmental impact, although large quantities of sediment had escaped over time. The Judge held that the defendants had displayed complete indifference to the resource consent and the interests of the environment. They had not responded to the informant’s requests that they comply. The Judge imposed total fines of $87,800 plus prosecution costs of $16,000, noting that the continuing offence provisions of the Resource Management Act applied.
[59] Westgate has certain similarities to this case. In particular, it seems likely that the defendants wanted to avoid the costs of environment protection. But the decision is dated; the offending occurred in 1998 and sentence was passed in 2000. And there was no evidence of actual environmental harm, while the nature of the pollutants in this case warrant the inference that damage was done.
[60] Wallace Corporation v Waikato Regional Council involved discharges to air from a meat rendering works, causing very offensive odours. There was a single charge covering 10 incidents over 12 days between April and November 2004, attributable to poor systems and deliberate decisions to take on extra work. For that reason, and doubting the company’s remorse and commitment to meet its obligations, the unimpressed District Court Judge fined the appellant $80,000. On appeal, Simon France J inclined to the view that fining the company for lacking robust discharge control systems was a little harsh; generally, it seemed to have met industry standards, although it liked to comply on its own terms. No other breaches of its resource consent systems were alleged. The District Court had given weight to an extended history of complaints but the processes that led to complaints being recorded were not robust. There were four previous convictions for consent breaches of a different type. Other cases were reviewed. Simon France J accepted that there had been an upward shift in the level of some fines, but the fine in this case was for a first offence of its type and the emissions were unintended. The
appellant’s culpability seemed less than in Nuplex where the machinery had not been maintained at all. An appropriate starting point would be around $55,000. With some allowance for a guilty plea, a fine of $47,000 was substituted.
[61] That case is much less serious than this one. Simon France J emphasised that the breaches were transitory and inadvertent, and the firm’s systems were generally adequate. He considered that it was not a case of polluting for profit; the firm increased production with the unintended consequence that its systems failed.
[62] By contrast, a later case involving the same firm, Waikato Regional Council v Wallace Corporation and Others, is one of the most serious yet. It involved the deliberate burial in 1998 of disused electrical capacitors containing a hazardous and banned contaminant known as PCBs in the form of an oil. The Judge did not refer in sentencing to the quantity of oil that had been buried. The capacitors ought to have been sent to France, at considerable expense, for destruction in a special facility. To avoid those costs, and knowing of their dangerous nature, one of the offenders, an employee called Mr Dew, arranged to bury the capacitors on site, under a concrete slab on which the firm was building a waste water processing facility. Mr Dew was the electrical services manager. Before the new facility was completed he told the general manager of the rendering division, Mr Cross, what he had done, but Wallace Corporation’s managing director was not told about it for some seven years. The capacitors remained in situ at sentencing because two attempts to locate them by digging through the slab had failed. There was extensive evidence about the environmental effects. The Judge found that the potential damage to the environment was enormous and it might not become apparent for many years. (He appears to have accepted that the PCBs would all leak out of the capacitors at some point.) Although the concrete slab inhibited contamination, the soil would have been contaminated already and there was a low but real risk of the PCBs reaching ground water.
[63] The Judge found that the culpability of Mr Dew and Mr Cross was very high, but that of Wallace Corporation was merely significant; its previous history demonstrated a lack of seriousness about environmental compliance generally. The company did cooperate with the informant once the matter came to light in 2005, and
belated attempts had been made to find the capacitors, albeit without seriously disrupting the waste water facility.
[64] Wallace Corporation was a substantial firm, but Mr Dew was merely comfortably off. He and Mr Cross were first offenders, as was Wallace Corporation at the time of the offending. The Judge accordingly adopted starting points of
$65,000 and $55,000 for Mr Dew and Mr Cross. Having regard to Wallace Corporation’s low but significant culpability, a starting point of $40,000 was appropriate. The aggregate fines for the three defendants were $120,000. Wallace Corporation was ordered to locate and remove the capacitors and all contaminated material. That would involve substantial cost, but it was a cost of complying with legal obligations rather than a penalty. All defendants were ordered to pay costs totalling a little more than $30,000. I note that the judgment is under appeal as to both conviction and sentence.
[65] While the offending in that case was found to be extremely serious and culpable, the Judge did not attribute Mr Dew’s knowledge and intention to Wallace Corporation. (There is a case to be made for doing so on agency grounds, since the firm has a strong incentive to control its employees if held accountable for their conduct, but in a case such as Wallace Corporation the resulting penalties may be out of proportion to the culpability of its management or shareholders.) Rather, he recognised that the defendants were not one and the same for penalty purposes. That is an important distinction in this case.
Discounts for remedial works and previous good character
[66] The pipeline constructed at Longburn entailed major expenditure. The question is what allowance, if any, should be made for it in sentencing.
[67] The Court must begin with the proposition that the defendant must comply with his environmental obligations and gets no credit for having belatedly done so. Credit has been given in some cases, notably those where culpability was low and the expenditure both remedied environmental harm and evidenced full acceptance of responsibility. This case falls into a different category, of those where culpability
was high and the expenditure did not make good environmental harm but was merely a compliance cost that the defendant had tried to avoid. Detection and conviction having forced the expenditure on the defendant, it is not a mitigating factor.
[68] It does not follow that the expenditure is entirely irrelevant. Had it not been undertaken the need for specific deterrence might have assumed even greater importance. It should also be taken into account at the final stage, when the sentencer checks that the sentencing response is not wholly disproportionate to the offending.
[69] It follows that I differ from Judge Dwyer’s view that Mr Thurston’s compliance work is a mitigating factor in this case. Nor do I attach significance to the form that it took. The capital expenditure on the pipeline was large, but Mr Thurston chose to incur it instead of trucking the waste. He must have calculated that the pipeline will be more cost-effective than trucking in the long run. The lease expires in 2035 and the pipeline cost may be recouped in a little over seven years, assuming that that he would otherwise spend $1500 five days per week for 48 weeks per year. (If he incurred trucking costs of $20,000 per month, the cost would be recouped in about ten years.)
[70] Discounts are commonly given for previous good character, as evidenced by absence of convictions, but I am not persuaded that a discount was appropriate in this case, for three reasons. First, the offending was calculated and sustained, and it was aggravated by the breach of abatement notices. Second, I accept Mr Vanderkolk’s submission that a history of unsatisfactory waste management can be taken into account.[31] It offsets the claim to previous good character for both sets of offending. Third, the Longburn offences might have been treated as an aggravating factor; they preceded the Boness Rd offences by a year, although he had
not been convicted of the former when he committed the latter.
The Longburn offending: conclusion
[31] Department of Labour v Hanham & Philp Contractors Ltd (2008) 6 NZELR 79 at [61].
[71] Having reviewed the leading cases, I am not persuaded that the Longburn penalties are anomalous. In reaching that view, I have treated the two calculated discharges, which spanned a single period, as one offence that earned a fine of
$80,000. The deliberate discharges were very substantial but of limited duration and there is nothing to suggest that they caused serious environmental harm. However, I draw the inference that they would have continued indefinitely but for the City Council’s vigilance; there is no evidence that Mr Thurston was in the process of building the pipeline or intended to resume trucking the waste. He seems rather to have calculated that he would escape detection, and he ran his defence accordingly.
[72] The case displays a combination of serious aggravating features: the calculated nature of the offending, the explicit profit motive, the attempt to evade accountability by misleading Council staff, the extent of the discharges, and the breach of abatement notices. It is an unusually clear case of polluting for profit. I also draw the inference that there was an indefinable contribution to waterway pollution. Mr Thurston is both the principal beneficiary of the offending and the person at fault.
[73] For these reasons specific and general deterrence assume considerable importance in this case. That remains so notwithstanding that Mr Thurston has paid the compliance costs he tried to avoid. Deterrence would be insufficiently achieved if, having been found out, he could escape a substantial penalty merely by paying up. Rather, the fines should reflect his intended gains. I have mentioned that he avoided trucking costs of perhaps $1500 per working day. His anticipated gain from pollution was greater than that, however; he also sought to avoid the substantial charges for using the Council’s treatment facility. I will assume that over the course of a year the average was 106m3 per working day, that being the quantity previously processed by the Council, so the avoided charges were $2332 ($22/m3 x 106m3) per day. It cannot possibly be said that the fines of $80,000 for the deliberate offences are disproportionate to his intended gains; they amount to only 21 working days worth of trucking costs and Council charges. Substantially higher penalties might
have been warranted had the discharges continued for longer or had he not put his house in order.
[74] The Judge was also right to impose cumulative fines for the other offences, and there are no mitigating factors. (There was no remorse and Mr Isac properly did not suggest that Mr Thurston’s conduct was justified by the Council’s decision to impose the charges.) Taken together, these considerations amply justify the overall fines of $117,500. The expenses of $16,380.16 are properly regarded, as I have said, as a cost of pollution that the offender should also pay, albeit that the total must be taken into account when checking the sentence for proportionality. Having done so, I do not think that any adjustment is required.
The totality principle
[75] There was no dispute that the totality principle applies to this case, but counsel joined issue over whether it applied to the overall offending and whether a larger deduction ought to have been made for totality.
[76] The totality principle finds expression in s 85 of the Sentencing Act, which addresses imprisonment but applies by analogy to non-custodial sentences. It provides that individual sentences that are imposed must not result in a total sentence that is wholly out of proportion to the gravity of the overall offending. It must be read with s 84, which provides that concurrent sentences are generally appropriate if the offences are both similar in kind and part of a connected series; otherwise, cumulative sentences are generally appropriate. When deciding whether offences are a connected series, the Court may consider any relationship between them, including the time at which they occurred and the overall nature of the offending. The totality principle also applies when the Court is sentencing an offender who is
already serving a sentence for separate offending.[32] Accordingly, I accept Mr Isac’s
submission that it applies to the overall offending.
[32] See for example Wilson v R [2010] NZCA 17 at [9]-[10]; R v Tate CA28/06, 16 September 2006.
[77] However, it does not follow that the Judge erred by failing to make an additional deduction for totality as between the Longburn and Boness Rd offending. Although both involve pollution, they were separated substantially in time and circumstance. Cumulative sentences were therefore appropriate. The Judge was also correct, for the reasons he gave, to impose cumulative fines for the abatement notice offences.
[78] The ultimate question is whether the combined penalties of $187,545.16 are out of proportion to the gravity of the overall offending. For the reasons I have already given I am satisfied that they are not. I bear in mind that the Judge did make allowances for totality in each case and that some $22,800 comprises enforcement expenses.
Decision
[79] I am not persuaded that the penalties are manifestly excessive. The appeal is dismissed.
Miller J
Solicitors:
Fitzherbert Rowe, Palmerston North for Appellants
Ben Vanderkolk and Associates, Palmerston North for Respondent
0
0
0