REREWHAKAAITU FARM LIMITED v BAY OF PLENTY REGIONAL COUNCIL [2021] NZHC 3004 [8 November 2021]

REREWHAKAAITU FARM LIMITED v BAY OF PLENTY REGIONAL COUNCIL [2021] NZHC 3004[8 November 2021]IN THE HIGH COURT OF NEW ZEALANDROTORUA REGISTRYI TE KŌTI MATUA O AOTEAROATE ROTORUA-NUI-A-KAHUMATAMOMOE ROHECRI-2021-463-000040[2021] NZHC 3004BETWEEN REREWHAKAAITU FARM LIMITEDAppellantAND BAY OF PLENTY REGIONAL COUNCILRespondentHearing: 28 June 2021Counsel: A F Pilditch QC and P Hardie for appellantA Hopkinson and V Brewer for respondentJudgment: 8 November 2021JUDGMENT OF KATZ JThis judgment was delivered by me on 8 November 2021 at 2:30 pmPursuant to Rule 11.5 High Court RulesRegistrar/Deputy RegistrarSolicitors: CooneyLeesMorgan, TaurangaJones Howden, MatamataCounsel: A F Pilditch QC, Richmond Chambers, AucklandIntroduction[1] On 4 October 2018, Graeme Willacy, a worker on a dairy farm owned byRerewhakaaitu Farms Ltd ("RFL") set up a travelling effluent irrigator. Although hehad previously set up the irrigator over 200 times without incident, on this occasionhe set it up on a run which would bring it too close to a fenced off riparian area, throughwhich flowed a small stream. As a result, some effluent was dispersed close to thestream and flowed into it. RFL, as the farm owner, holds the resource consent thatauthorises discharges of dairy effluent at the farm.[2] The farm manager, Andrew Truscott, was away at the time. Mr Willacy wastherefore under the supervision of Lance Wright, the senior farm worker. The Bay ofPlenty Regional Council ("the Council") charged Mr Willacy, Mr Wright and RFLunder the Resource Management Act 1991 ("RMA") with discharging a contaminantonto land where it may enter water.1[3] Mr Willacy acknowledged from the outset that he had "screwed up" andpromptly pleaded guilty. The charge against Mr Wright was dismissed at the end ofthe prosecution case. Following the conclusion of the trial, RFL was found guilty byJudge J J M Hassan in the District Court at Rotorua, on the basis that it was vicariouslyliable for Mr Willacy's offending, pursuant to s 340 of the RMA.2 His Honour heldthat RFL had failed to establish either of the statutory defences in s 340, namely that:(a) neither the directors nor any person involved in RFL's managementknew, or could reasonably be expected to have known, that the offencewas to be or was being committed ("the lack of knowledge defence");or(b) that RFL took all reasonable steps to prevent the commission of theoffence ("the reasonable steps defence").1 Resource Management Act 1991, ss 15 and 338.2 Bay of Plenty Regional Council v Rerewhakaaitu Farm Ltd [2020] NZDC 22184.[4] RFL now appeals its conviction. The key issues on appeal are:(a) Was the charging document defective because it did not expressly referto s 340 of the RMA?(b) If not, was RFL otherwise fully and fairly informed of the case it hadto meet (including that it faced an allegation of vicarious liability)?(c) Did the trial Judge err procedurally, by dismissing RFL's reasonablesteps defence on a basis that was not put to RFL's witnesses at trial? Ifso, has this created a real risk that the outcome of the trial was affected?(d) Did the Judge err in finding that RFL had failed to establish either thereasonable steps defence or the lack of knowledge defence?Approach to appeal[5] The Court must allow the appeal if satisfied that the trial judge erred in his orher assessment of the evidence to such an extent that a miscarriage of justice hasoccurred, or a miscarriage of justice has occurred for any reason.3 A miscarriage ofjustice is any error, irregularity, or occurrence in or in relation to or affecting the trialthat:4(a) has created a real risk that the outcome of the trial was affected; or(b) has resulted in an unfair trial or a trial that was a nullity.[6] In Sena v Police, the Supreme Court stated that appeals against convictionfrom a Judge alone trial are to be approached as a rehearing in accordance with theprinciples set out in Austin, Nichols & Co Inc v Stichting Lodestar.5 If the appellatecourt comes to a different view on the evidence, the trial judge will have necessarilyerred and the appeal must be allowed.63 Criminal Procedure Act 2011, s 232(2).4 Section 232(4).5 Sena v Police [2019] NZSC 55, [2019] 1 NZLR 575 at [32] citing Austin, Nichols & Co Inc vStichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141.6 At [38].[7] The Supreme Court in Sena made it clear, however, that the matter is notapproached on a de novo basis.7 An appellant will still need to point to some error inthe trial judge's decision.8 The appellate court must also have regard to any advantagesthe trial court may have had – in particular, the ability to assess competing oralevidence first hand over the entirety of a trial.9 The adequacy of reasons given for thetrial judge's conclusions will also be relevant.Relevant law[8] The legislative purpose of the RMA is to promote the sustainable managementof natural and physical resources.10 One of the ways the Act promotes this purpose isby enacting a strict liability regime in order:11 to ensure, so far as is possible, that contamination is avoided by enactingcriminal sanctions for those who ought, as a matter of public policy, to takesteps to ensure that contamination does not occur.[9] Section 15(1) relevantly provides that no person may discharge anycontaminant onto land in circumstances which may result in that contaminant enteringwater. Every person who contravenes or permits a contravention of s 15 commits anoffence.12 The definition of discharge includes "emit, deposit and allow to escape".13[10] Section 15 is a strict liability offence.14 In McKnight v NZ Biogas IndustriesLtd the Court of Appeal described the s 15 offence in the context of the RMAregulatory offence regime as follows:15The statutory structure enacts strict liability subject to the statutory defenceswhich reflect the absence of fault defence evolved in the cases already citedIt is entirely consistent with the importance attached to protection of thenation's natural and physical resources in the Resource Management Act.7 At [38].8 At [38].9 At [38]-[40].10 Resource Management Act 1991, s 5.11 Sullivan v Taranaki Regional Council [2013] NZHC 1301 at [23].12 Section 338(1)(a).13 Section 2 definition of "discharge".14 Sections 338(1)(a) and 341(1).15 McKnight v NZ Biogas Industries Ltd [1994] 2 NZLR 664 (CA) at 672.[11] The Court of Appeal in McKnight v New Zealand Biogas Industries Ltd heldthat the term "discharge" in this context goes beyond direct action by a person,and also encompasses passive lack of interference.16 As Harrison J explained inURS New Zealand Ltd v District Court at Auckland:17[44] The statutory meaning of "discharge" extends to engaging in anactivity which results in the emission or discharge of a contaminant,consistently with the policy of preventing contamination of waterways[46] the phrase "allow to escape", which is the alternative of "passivecontamination", is satisfied where a person fails to take reasonable precautionsnecessary to prevent an escape[47] Biogas recognises the distinction between the alternatives ofpositive acts or passive omissions in breach of s 15. In the former or activecategory, the word "discharge" embraces the concept of causing to discharge,thereby bringing into the net of liability a party whose acts or omissions arean operative or effective factor in the chain of causation leading to a physicaldischarge. In the latter or passive category, the phrase "allows to escape"within the meaning of "discharge" allows a limited relaxation of the statutoryprinciple of strict liability, by measuring liability against reasonable standardsof care.[12] In addition to being directly liable for a discharge (in either the active or thepassive sense) a defendant may be vicariously liable for an offence committed by theiragent or employee pursuant to s 340, which relevantly provides:340 Liability of principal for acts of agents(1) Where an offence is committed against this Act—(a) by any person acting as the agent (including any contractor)or employee of another person, that other person shall,without prejudice to the liability of the first-mentionedperson, be liable under this Act in the same manner and to thesame extent as if he, she, or it had personally committed theoffence(2) Despite anything in subsection (1), if proceedings are brought underthat subsection, it is a good defence if—(a) the defendant proves,—16 At 669 and 670.17 URS New Zealand Ltd v District Court at Auckland [2009] NZRMA 529.(ii) in the case of a person other than a natural person,—(A) that neither the directors (if any) nor anyperson involved in the management of thedefendant knew, or could reasonably beexpected to have known, that the offence wasto be or was being committed; or(B) that the defendant took all reasonable steps toprevent the commission of the offence; and(b) the defendant proves that the defendant took all reasonablesteps to remedy any effects of the act or omission giving riseto the offence.[13] Hence, an employer will be liable in respect of an RMA offence committed bytheir employee unless they can prove either of the defences in s 340.Factual background[14] The key facts are not in dispute. RFL is the owner of the dairy farm. Itemployed Mr Truscott as the farm manager and three farm workers, includingMr Wright and Mr Willacy. On the morning of 4 October 2018, Mr Truscott was awayfrom the farm and Mr Wright was in charge.[15] RFL's resource consent allows for the discharge of dairy wash water (effluent)to irrigate pastures on the farm, subject to a number of conditions. The conditionsinclude that effluent is not to reach surface waters by overland flow, effluent is not tobe discharged onto land within 20 metres of any water body, and the rate of effluentapplication is not to result in the ponding of effluent.[16] Effluent from the farm's holding pond is distributed via a network of pipes andhydrants to a travelling irrigator. When activated, the travelling irrigator sprayseffluent as it moves in a straight line being pulled automatically on a cable that isanchored by the operator in a paddock on a fence post. The irrigator will run for oneto three hours depending how long its timer is set for.[17] Mr Willacy was responsible for setting up the travelling irrigator on themorning of 4 October 2018. This routinely occurred after milking had finished. Atthe time Mr Wright was busy attending to a down cow (a recumbent cow that cannotget up) and the other farm worker was assisting him with this.[18] At about 10 am, Mr Willacy set up the irrigator in paddock 69. Paddock 69 isundulating in places and has an irregular boundary with a riparian area. Mr Willacymade the mistake of setting up the irrigator on a direction of travel that, during its run,would cause it to come too close to the fenced off riparian area on the western edge ofpaddock 69. A tributary stream of the Awaroa stream ran through the fenced off area.[19] After he had set up the irrigator, Mr Willacy returned to the cowshed andswitched the irrigator on. The farm had a policy (although it was not in writing) thatrequired the person setting up the irrigator to go back and check on it once the pumphad been turned on. Mr Willacy failed to do this and therefore missed an opportunityto realise he had made a mistake when setting up the irrigator. Mr Willacy worked forthe rest of the morning on other tasks elsewhere on the farm. Neither Mr Wright northe other farm worker checked the irrigator that morning.[20] At about 1.30 pm a Bay of Plenty Regional Council officer arrived at the farmto carry out a routine compliance inspection. When he inspected the irrigator inpaddock 69 he found that it had completed its timed run and come to a stop about eightmetres from the riparian fence (14 metres from the middle of the stream). The irrigatorhad discharged effluent within 20 metres of the stream, in breach of RFL's resourceconsent. Effluent had flowed into the tributary stream running through the riparianarea.[21] The Council officer alerted Mr Wright to the problem and directed him to stopthe flow of effluent into the stream by digging some small bunds with a spade.Mr Willacy and Mr Wright immediately attended to this.District Court judgment[22] As noted above, Mr Willacy pleaded guilty to contravening s 15(1)(b). TheJudge found RFL vicariously liable for this breach pursuant to s 340(1)(a). As a result,RFL would be found guilty of contravening s 15(1)(b) in the same manner and to thesame extent as if it had personally committed the offence, unless it could prove on thebalance of probabilities that one of the defences in s 340(2) applied.[23] Although the Judge was satisfied that RFL had proved the second limb of bothof those defences, namely that it had taken all reasonable steps to remedy any effectsof the discharge,18 he found that RFL had not proved either of the first two alternativelimbs of the s 340(2) defences. RFL was therefore found guilty on a vicarious basis.The Judge accordingly did not consider whether RFL was also directly liable for abreach of s 15(1)(b) as a principal.[24] RFL was convicted and fined $24,000.19Was the charging document defective or a nullity because it did not expresslyrefer to s 340?The charging document[25] The charging document relevantly states:Offence description: [RFL] contravened or permitted a contravention ofsection 15(1)(b) of the Resource Management Act 1991 by discharging acontaminant, namely dairy effluent, onto or into land in circumstances whichmay result in that contaminant entering water, when that discharge was notexpressly allowed by a resource consent.Legislative reference: Sections 338(1)(a) and 15(1)(b) of the [RMA][26] Particulars were requested, but not provided. RFL did not pursue the matterfurther.The Judge's ruling on vicarious liability[27] On 5 June 2020, the Friday before trial, the prosecution filed and served itsopening legal submissions. They summarised the basis on which the prosecutionalleged that RFL was liable, as follows:RFL51. The prosecutor's case against RFL is that it had a causative role in thedischarge because:(a) RFL is the farm owner and consent holder;18 Section 340(2)(b).19 Bay of Plenty Regional Council v Rerewhakaaitu Farm Limited [2021] NZDC 4217.(b) RFL failed to ensure that Mr Willacy received appropriatetraining on the consent conditions and how to safely operatethe farm's effluent management system;(c) RFL failed to ensure that there were adequate systems in placeto protect against accidental effluent discharges, for exampleit had not implemented an effluent management planrequiring the irrigator be checked during use to ensure itwas operating correctly and not discharging effluent incontravention of the consent conditions;(d) RFL was aware of facts from which a reasonable personwould recognise that escape of a contaminant could occur. Itis self-evident that if a travelling irrigator malfunctions and/oris left operating in one location for too long effluent canpond and flow overland to a nearby watercourse. The risksassociated with effluent irrigators had been reinforced to RFLin a letter from the Council dated 14 August 2018. RFL hadidentified the area within paddock 69 where the irrigator waslocated as an area that was unsafe for irrigation in a documentthat RFL called its "traffic light map". Having identified thisrisk, it failed to ensure its employees were aware of the trafficlight map and were complying with it.52. Alternatively, the prosecutor submits that RFL is vicariously liable forthe acts of its employee, Mr Willacy, under section 340(1)(a) of theRMA.[28] Hence, the prosecution alleged that RFL was primarily liable under s 15(1)(b)on three bases – that it failed to ensure Mr Willacy received appropriate training onthe farm's effluent management system; that it had not included in its effluentmanagement plan a requirement that the irrigator be checked during use; and that itfailed to ensure that its employees were aware of the traffic light map (a map kept inthe milking shed which showed the level of risk in each area of the farm for effluentirrigation purposes). In the alternative, the prosecution alleged that RFL wasvicariously liable for Mr Willacy's offending.[29] RFL says that this was the first time that it became aware that the Council wasadvancing its case (in the alternative) on the basis of vicarious liability. RFL promptlyobjected. Its objection was heard at the outset of the hearing. Counsel for Mr Wrightraised a similar objection.[30] The Judge ruled that the charging notice was not defective. He followed thedecision of Osborne J in Fulton Hogan Ltd v Canterbury Regional Council which heldthat a charging document under the RMA was not required to specifically refer tos 340.20 The Judge found that the relevant offence provisions were ss 15 and 338,which were both referred to in the charging notice. Section 340 simply extendedvicarious liability to an employer for an offence committed by their employee or agent,unless one of the defences in ss 340 or 341 is made out. (Section 341 is not relevantin this case.)[31] The charging document was therefore not defective. Further, because thecharging document used the words "contravened" or "permitted a contravention" iteffectively disclosed that the prosecutor sought to cover the full gamut of all offendingfor the described incident. This is in the context where the offending is alleged to haveoccurred on land owned by RFL as a result of farming operations, for which RFL canbe imputed to be responsible on the basis that its two co-defendants were both RFLemployees.Was Fulton Hogan wrongly decided?[32] Judge Hassan was bound by Fulton Hogan. On appeal, however,Mr Pilditch QC (counsel for RFL) submitted that Fulton Hogan is wrongly decided,and that I should decline to follow it.[33] The relevant question before the High Court in Fulton Hogan was as follows:21Was the Judge correct to conclude that it was not necessary for the chargingdocuments to reference s 340(1) in order for vicarious liability to be reliedupon or for the defences under s 340(2) to be available?[34] Osborne J first summarised the reasoning of Judge Hassan at first instance,including that:22(a) Only s 338 of the RMA specifies RMA offences, as indicated by thecross-referencing solely to s 338 in ss 338(4), 339, 339B, 339C, 341and 342.20 Fulton Hogan Ltd v Canterbury Regional Council [2019] NZHC 1767.21 At [38].22 At [30](b) Section 340 is not a self-contained offence or vicarious liabilityprovision. The role of s 340 of the RMA is to operate in tandem withs 338, to some extent supplementing the offences specific in s 338.(c) Section 340(1)(a) operates to impute liability to a principal or employerfor the contravening acts of their agent (including a contractor oremployee).(d) The reference in s 340(2) to "proceedings brought under [subs (1)]"is that the s 340(2) defences apply whenever vicarious liability isimputed simply by operation of s 340(1) and the defences are notlimited to circumstances in which vicarious liability is explicitlyalleged in the charging documents.(e) Both primary offenders and vicarious co-defendants may be charged inthe same terms for the same contraventions.[35] After setting out the submissions of both parties, Osborne J concluded that:[57] The single, reasonable interpretation of part 12 [of the RMA] isthat the relevant offence is created under s 338 s 340 [of the] RMA is not aself-contained offence [I]t is the provisions of s 339 alone which providepenalties for offences under part 12 of the RMA. Those provisions do notidentify any penalty in relation to s 340. There is no reason to believe thatParliament intended to create a stand-alone offence under s 340 but thenoverlooked the need to provide a correlative penalty. One should examine theorganisation and format of part 12, including the heading of s 338 itself.Examined thus, the penalty provisions in s 339, accounting for each of theoffences created by s 338, are reasonably to be taken as covering each situationof liability under part 12.[58] This interpretation of ss 338 to 340 is not undermined by the s 340(2)words "if proceedings are brought under that subsection [340(1)]"[62] The wording of s 340(2) RMA does not directly describe thecreation of an offence. The words used in s 340(2), standing alone, might bethere as one possible interpretation a recognition that an offence is createdunder s 340(1), but such an interpretation cannot stand when the provisions inthe Act are interpreted in their full context, including the surroundingprovisions.[36] Osborne J held that Judge Hassan had correctly concluded that s 340 of theRMA does not created a distinct offence provision. Section 338(1)(a) had thereforebeen correctly identified in the charging documents as the offence-creating provision.[37] The reasoning in Fulton Hogan, in my view, is compelling. Section 338 of theRMA is explicitly a provision that creates offences. The penalties specified in s 339of the RMA are only available in respect of offences against s 338. There are noseparate penalties relating to s 340, because that provision does not expressly createany offence. Instead, s 340(1)(a) sets out a rule of vicarious liability which applieswhere an offence is committed against the RMA by any person acting as the agent oremployee of another person. If this rule applies (because an employee has committedan offence), then the principal becomes liable for the offence as if they had personallycommitted it under s 338, unless they can establish one of the statutory defences.[38] Mr Pilditch submitted that the reasoning in Fulton Hogan offends against thepresumption of innocence in s 25(c) of the New Zealand Bill of Rights Act 1990("NZBORA"). Because strict liability offences shift the onus of exculpation to thedefendant, they clearly do encroach on the presumption of innocence. However,because they operate within the limited "public welfare regulatory" sphere, strictliability offences are regarded, under s 5 of the NZBORA, as a justified limit on thepresumption of innocence.23 As the Court of Appeal explained in Civil AviationDepartment v MacKenzie:24 the defendant will ordinarily know far better than the prosecution how thebreach occurred and what he had done to avoid it. In so far as the emphasis inpublic welfare regulations is on the protection of the interests of society as awhole, it is not unreasonable to require a defendant to bear the burden that thebreach occurred without fault on his part a high standard of care is properlyexpected of a defendant in such a case and he must prove that he did what areasonable man would have done.[39] Mr Pilditch further submitted that Fulton Hogan is wrong because s 340(2)uses the words "proceedings are brought". This argument was addressed in both theDistrict Court and High Court in Fulton Hogan. As set out in the quote at [35] above,Osborne J found that although this was one possible interpretation, such an23 Law Commission Pecuniary Penalties (NZLC R133, 2014) at [5.16].24 Civil Aviation Department v MacKenzie [1983] NZLR 78 (CA) at 85.interpretation could not stand when the relevant statutory provisions are interpreted intheir full context, including the surrounding provisions. I agree.Conclusion[40] In my view Fulton Hogan was correctly decided. The charging document wasnot therefore defective or a nullity because it failed to expressly refer to s 340.Was RFL fully and fairly informed of the case it had to meet?[41] Although there was no legal requirement that the charging document expresslyrefer to s 340, the charge was nevertheless required to contain sufficient particulars tofully and fairly inform RFL of the substance of the offence it was alleged to havecommitted.25 Further, a person charged with an offence must be informed promptlyand in detail of the nature and cause of the charge.26 Exactly what is required willvary from case to case.[42] In this case, Judge Hassan struck out the charge against Mr Wright at thecommencement of the trial on the basis that there had not been full and fair disclosureof the fact that Mr Wright was alleged to be vicariously liable for Mr Willacy'sconduct. His Honour observed that it was unusual, and not a matter of obviousinference, that one employee of a company could be said to be an agent of anotheremployee. This proposed basis of liability should therefore have been expresslydisclosed. Given that RFL was a body corporate, however, the Judge found that itssituation was different. RFL should have realised that it would be argued that it wasvicariously liable for the actions of its employees.[43] Mr Pilditch submitted that Ruki v Bay of Plenty Regional Council is broadlyanalogous.27 In that case Mr Johnstone was found guilty on the basis of vicariousliability, despite the prosecution not advancing their case on that basis at trial.28 Nordid the trial Judge inform Mr Johnston that his liability would be considered on that25 Criminal Procedure Act 2011, s 17(4).26 New Zealand Bill of Rights Act 1990, s 24(a).27 Ruki v Bay of Plenty Regional Council [2020] NZHC 669.28 At [70]-[72].basis. Mr Johnstone only learned that s 340 was being applied when he received theverdict decision.[44] Fitzgerald J quashed Mr Johnstone's conviction, observing that it was "trite"that a defendant must have fair notice of the allegations.29 What was required was aquestion of fact and degree.30 Because Mr Johnstone did not know the basis of hisliability until he received the verdict decision, he was denied the ability to present adefence he could otherwise have presented, and a miscarriage of justice hadoccurred.31[45] This case obviously differs from Ruki in that RFL found out shortly before trial(not after trial) that the prosecution intended to advance its case, in the alternative, onthe basis of vicarious liability.[46] Mr Hopkinson, for the Council, submitted that the Judge was correct to findthat RFL should have appreciated that vicarious liability would be in issue. RFLowned the relevant farm and held the relevant consent. It carried out the dairy farmingoperation and exercised the rights under its consent through the actions of itsemployees and contractors. Mr Hopkinson submitted that any offence committed bythose employees and contractors under the RMA was therefore going to involve RFLand raise the issue of vicarious liability. Vicarious liability is raised as a matter ofobvious inference in such circumstances, even if not expressly notified to thedefendant.[47] Mr Pilditch challenged this assertion and submitted that it is not a foregoneconclusion that just because a defendant is a company, vicarious liability will be raised.A company can also be primarily liable under s 15. He submitted that it was reasonablefor RFL to assume from the wording of the charging document that it was chargedsolely as a primary offender (either active or passive).[48] In my view the disclosure to RFL prior to trial of the specific allegationsagainst it, and the fact that vicarious liability was alleged, fell well short of best29 At [76].30 At [76].31 At [77]-[78].practice. I accept that RFL did not realise that vicarious liability was in issue untilFriday 5 June 2021. In the overall circumstances of this case, however, this latedisclosure has not given rise to a miscarriage of justice. There is no real risk that thefailure to specifically alert RFL to the fact that vicarious liability would be relied onaffected the outcome of the trial.[49] First, although not ideal, it is certainly not unusual for aspects of theprosecution case to be clarified in opening submissions. In Fulton Hogan, Osborne Jreferred to examples of two recent Court of Appeal cases where the Court held that alack of particulars had been cured by the prosecutor's opening submissions at trial:32(a) Wiley v R, where the Court rejected a submission as to the insufficiencyof particulars of the substance of the offence under s 17(4) of theCriminal Procedure Act 2011 on the basis that the prosecutor had madeclear, at trial before the jury was empanelled, the basis on which theCrown proposed to proceed.33(b) Nattrass-Bergquist v R, where the Court, in rejecting a ground of appealby which it was asserted that a charging document did not containsufficient particulars to comply with s 17(4) of the Criminal ProcedureAct 2011 (in relation to the form of murderous intent relied on by theCrown), found that the Crown's intention to rely on s 167 of the CrimesAct 1961 was clear from the prosecutor's opening to the jury at trial.34[50] Here, RFL was given notice that vicarious liability was raised the Friday beforethe trial commenced. Then, after the Judge gave his ruling on s 340, RFL was giventhe opportunity to seek any additional trial directions. It could, at that stage, havesought an adjournment of the trial if it believed that it would be seriously prejudicedby proceeding. It did not do so.[51] In any event, the initial three days allocated for the trial (8 to 10 June 2020)were occupied with legal argument about vicarious liability, the delivery of the ruling,and then the prosecution evidence. At the close of the Council's case the trial was32 Fulton Hogan Ltd v Canterbury Regional Council [2019] NZHC 1767 at [97].33 Wiley v R [2016] NZCA 28, [2016] 3 NZLR 1 at [97]-[98].34 Nattrass-Bergquist v R [2017] NZCA 552 at [64].adjourned part heard until 1 September 2020. RFL therefore had almost three monthsto prepare any additional evidence and undertake any further research. I am not awareif RFL did so, but Mr Pilditch did not point to any further evidence RFL could havegiven (for example in support of its s 340(2) defence), or further submissions it couldhave made, if it had had more time.[52] I also accept Mr Hopkinson's submission that there is a close similaritybetween the "took all reasonable steps" element of the s 340(2) defence, and the "failedto take reasonably prudent precautions" element of the prosecutor's case that RFL wasdirectly liable under s 15(1)(b). For example, in Otago Regional Council v NorthlakeInvestments Ltd, Judge Dwyer held that his findings in relation to NorthlakeInvestments' direct liability under s 15(1)(b) of the RMA meant that the defence ins 340(2) could not be proved by Northlake Investments.35 Hence, in practical terms,RFL presumably prepared for trial on the basis that it would need to address this issue,even if it did not appreciate that vicarious liability would be in issue.[53] In conclusion, even if RFL did not realise that vicarious liability was in issueuntil Friday 5 June 2020, this has not resulted in a miscarriage of justice.Did the Judge err in dismissing RFL's reasonable steps defence without puttinga key ground for his decision to RFL's witnesses during the trial?[54] Mr Pilditch submitted that the trial Judge dismissed RFL's reasonable stepsdefence without putting a key element of his reasoning to RFL's witnesses during thetrial.[55] The Judge acknowledged that RFL had taken a number of steps with theintention of preventing the commission of effluent discharge offending. He alsofound, however, that "the evidence also reveals some notable omissions, given whatwas known concerning the risks in operating the irrigator." In summary, the Judgefound that:(a) RFL's regime for monitoring the operation of the irrigator wasinadequate. In particular, RFL should have had in place a system that35 Otago Regional Council v Northlake Investments Ltd [2019] NZDC 11710 at [79].would have included assigning to the manager or, through a roster,another staff member (in addition to the staff member who set up theirrigator) responsibility to check on how the irrigator was operating.(b) There was no direction given to the rostered farm worker on how longthe irrigator would be timed to run for.(c) There was no system of proactive enquiry and scrutiny by RFL'sdirector of the farm manager's systems for staff supervision andmonitoring of effluent discharge operations.[56] Mr Pilditch submitted that the Judge's key finding was that set out in [55](a)above (the "second person check" requirement), but that this finding was made inbreach of natural justice because RFL's witnesses were not given an opportunity tocomment on this matter.[57] Mr Hopkinson, on the other hand, submitted that the Judge was entitled to findRFL liable on the basis that it had not proved that it had taken all reasonable steps toprevent the commission of the offence. He was not required to air his proposedfindings on liability at the trial so that RFL could respond to them before those findingswere confirmed in the judgment. The onus was on RFL as the defendant to satisfy theCourt that it had taken all reasonable steps to avoid the commission of the offence toavoid liability under s 340(1).[58] The difficulty, however, is that the failure to have a system in place for a secondperson to check the operation irrigator was not part of the prosecution case. RFLdid not therefore anticipate that this was a "reasonable step" that it needed to address.The prosecution case was that RFL did not have a policy at all for checking theirrigator once it was operating. RFL established at trial, however, that it did have apolicy or practice that the person who set up the irrigator must subsequently checkit (although this policy was not formally documented). Mr Willacy, who was aprosecution witness, confirmed that he was aware of this requirement but had failedto follow it on this one occasion. The Judge accepted that RFL had this (unwritten)policy.[59] As for Mr Willacy's level of experience and expertise, the Judge found that,as an experienced ISO trained farm hand, Mr Willacy was familiar with how to operatea travelling irrigator and had done so on the farm some 200 times, including at leastthree times in paddock 69. He knew the importance of keeping effluent out ofwatercourses. He frankly admitted that he had made a mistake in putting the irrigatortoo close to the riparian area, saying "I admit that day I screwed up". Mr Willacyacknowledged that checking how the irrigator was operating was part of his job, andthat he had slipped up and failed to do it on the day of the offence. The Judgeconcluded that:[81] In essence, the evidence overwhelmingly presents Mr Willacy as afarm worker who was properly competent and experienced in the operation ofa travelling irrigator, but who made uncharacteristic mistakes on 4 October2018 that resulted in the offending discharge.[60] The proposition that a "second person check" would have been a reasonablefurther step for RFL to take to prevent an unauthorised effluent discharge was neverput to RFL's witnesses by either the prosecution or the Judge. Mr Pilditch advised,however, that both Mr Hamilton and Mr Truscott would have been in a position toaddress this proposition if questioned about it. They could have apparently explainedwhy, in their view, such a policy would have been entirely impractical. Further, they(or possibly an expert witness) would likely have been able to give evidence that theywere not aware of any farm in New Zealand that had adopted such a policy.[61] In Nominal Defendant v Saleh, the Court of Appeal of New South Walesobserved that procedural fairness extends to the Court's duty to give "a fair opportunityto those who are parties in the controversy for correcting or contradicting any relevantstatement prejudicial to their view."36 This requires a party to be:37 given the opportunity to respond to matters prejudicial to its interests thatare known only to the court and which might be taken into account in thedetermination of issues that may affect the party's property, rights orlegitimate expectations.36 Nominal Defendant v Saleh [2011] NSWCA 16 at [23].37 At [23].[62] The Court further observed that where a denial of natural justice affects theentitlement of a party to make submission on a fact, it is difficult for an appellate courtto conclude that compliance with natural justice could have made no difference.38[63] Such observations, in my view, are uncontroversial and reflect well establishedlaw. I therefore accept Mr Pilditch's submission that the failure to give RFL'switnesses an opportunity to comment on the "second person check" reasonable stepwas procedurally unfair. As a consequence, the finding that a further reasonable stepthat RFL could have taken to prevent an effluent discharge was to have a second personcheck the irrigator must be put to one side.Did the Judge err in finding that RFL had not established the lack of knowledgedefence?[64] In order not to be held vicariously liable for Mr Willacy's offending, RFL hadto establish either the lack of knowledge defence or the reasonable steps defence.[65] The lack of knowledge defence required RFL to establish that neither thedirectors nor any person involved in the management of RFL knew, or couldreasonably be expected to have known, that the offence was to be (or was being)committed.The Judge's findings in respect of the lack of knowledge defence[66] The Judge found that the lack of knowledge defence had not been establishedfor the following reasons:(a) Mr Wright was involved in the management of RFL.(b) RFL did not have in place proper systems for keeping its manager(s)properly informed.(c) RFL's systems for checking on the irrigator were deficient in that theyplaced undue reliance on the competence of the farm worker assigned38 At [16].to set it up rather than having an appropriate back up in case ofmistakes, such as having a second staff member assigned to monitoring.(d) It would have been readily evident, on proper checking, that theirrigator would have run too close to the riparian area.(e) There was a significant period of time that elapsed before the irrigatorstarted spraying effluent into the riparian area during which a managercould have become informed of the impending offence.[67] Overall, the Judge concluded that a lack of proper monitoring of the irrigatoron the morning of 4 October 2018 significantly impeded the capacity of Mr Wright tohave been alerted to the prospect of the offence. If a second staff member had beenassigned to monitor the irrigator as a backup in case of mistakes, Mr Wright wouldhave discovered Mr Willacy's error. It follows, the Judge reasoned, that Mr Wrightcould reasonably have been expected to have known that the offence was to becommitted. The lack of knowledge defence had therefore not been established.Submissions[68] The Council submitted that the Judge's approach to the lack of knowledgedefence was realistic and appropriate. The possibility of human error existed, as wasaccepted by RFL. Accordingly, in the absence of a two person system for monitoringand checking the operation of the irrigator, RFL could reasonably be expected to haveknown that in the event of a mistake such as that which occurred on 4 October 2018,the offence was to be committed.[69] Mr Pilditch, on the other hand, submitted that the Judge's approach wasunrealistic. The opportunity for RFL to know of the offending was non-existent giventhat Mr Willacy's offending was an isolated, uncharacteristic and short-lived event.Further, the offence was solely attributable to Mr Willacy's failure to follow RFL'seffluent management systems and policies (which required that he return to check theirrigator). RFL could not have reasonably apprehended that Mr Willacy wouldinexplicably place the irrigator on a run that would bring it too close to the riparianarea, and then fail to check on it, given that he had previously operated the irrigatoron more than 200 occasions without incident. Mr Pilditch submitted that there wassimply no evidence to put RFL on notice of the risk that Mr Willacy would make thisuncharacteristic mistake.Discussion[70] The Judge's reasoning on the lack of knowledge defence again turns on theproposition that RFL should have implemented a "two person check" on the operationof the irrigator, as a fall-back against the possibility of a mistake by the person whoset up the irrigator. As noted above, however, that proposition was not put to RFL'switnesses. It is possible that if it had been, they would have been able to persuade theJudge that a two person check was neither realistic nor appropriate. I have thereforeheld that that particular finding should be put to one side.[71] The Council's case at trial was not that a second person should have beenassigned to also monitor the irrigator, but rather that RFL, as the farm owner andconsent holder:(a) failed to ensure that Mr Willacy received appropriate training on theconsent conditions and how to safely operate the farm's effluentmanagement system;(b) failed to ensure that there were adequate systems in place to protectagainst accidental effluent discharges, for example it had notimplemented an effluent management plan requiring the irrigator bechecked (at all) during use to ensure it was operating correctly and notdischarging effluent in contravention of the consent conditions; and(c) failed to ensure its employees were aware of the traffic light map andwere complying with it.[72] RFL's evidence focussed to a significant degree on these issues, given that theywere the issues in respect of which RFL was said to have fallen short.[73] In respect of the first and third issues, there was a direct conflict between theevidence of Mr Willacy (a prosecution witness) and Mr Truscott (a defence witness).If Mr Truscott's evidence is accepted, then Mr Willacy received appropriate trainingon the consent conditions, was carefully instructed on how to safely operate the farm'seffluent management system and was shown the traffic light map. If Mr Willacy'sevidence is accepted, he did not receive appropriate training on the effluentmanagement system and was not shown the traffic light map.[74] The reliability of both witnesses was challenged. The Judge found theevidence of both witnesses "sufficiently reliably on all matters on which I must makefindings". He did not make an adverse credibility finding against either witness. Itappears, however, that on the issue of Mr Willacy's training (which Mr Truscott saidincluded showing Mr Willacy the traffic light map) the Judge preferred Mr Truscott'sevidence to that of Mr Willacy. He stated that:I find force in Mr Truscott's observation that Mr Willacy's previous cleanrecord in the operation of the irrigator, some 200 times, tended to suggest hewas effectively trained and inducted in doing so.[75] I see no reason to depart from that view, which is supported by the evidence.[76] The remaining prosecution allegation (at [71](b) above) was that RFL hadfailed to ensure that there were adequate systems in place to protect against accidentaleffluent discharges. Specifically, it had not implemented an effluent management planrequiring the irrigator be checked (at all) during use to ensure it was operatingcorrectly. As noted above, RFL also rebutted this allegation at trial.[77] Accordingly, at trial, RFL successfully rebutted the prosecution's three primaryallegations. The lack of knowledge defence failed because the Judge found that RFLshould have had a policy requiring a second person to check the operation ofthe irrigator. On appeal, the Council supported the Judge's reasoning on this issue(that a second person check should have been part of RFL's effluent managementpolicy) and did not advance any alternative basis for concluding that RFL had failedto prove the lack of knowledge defence.[78] It follows, in my view, that the Judge erred in finding that the lack ofknowledge defence had not been proved, because his reasoning was underpinned by aproposition (the second person check requirement) that RFL's witnesses did not havean opportunity to comment on and which therefore must be put to one side. As notedabove, RFL successfully refuted the three specific allegations advanced by the Crown(summarised at [71] above) and one or more of those allegations cannot thereforeprovide a reasonable alternative basis for finding that the lack of knowledge defencewas not proved. It therefore follows, in my view, that the appeal should be allowed.[79] As it is only necessary for RFL to establish one of the two alternative defencesin s 340(2)(a)(ii) it is not necessary to also consider whether RFL has also proved thereasonable steps defence.Should there be a retrial?[80] The Council submitted that if RFL's appeal is successful the prosecution shouldbe remitted to the District Court for a retrial, because the trial Judge did not considerthe prosecutor's argument that RFL was directly liable as a principal for contravenings 15(1)(b) of the RMA. Rather, he took the view that because s 340 applied and thedefences under s 340(2) were not proved, he did not need to consider whether RFLwas liable directly.[81] A court has a discretion as to whether to direct a new trial.39 The approach isflexible and there are no hard and fast rules regarding the exercise of that discretion.40In this case I do not consider that it is in the interests of justice to order a retrial toconsider whether RFL is liable as a principal for contravening s 15(1)(b) of the RMA.[82] This proceeding has already occupied five days of hearing time in the DistrictCourt and a day in this Court. The issues have been fully ventilated. The underlyingbreach by Mr Willacy (who no longer works on the farm) appears to have been anisolated and uncharacteristic contravention, towards the lower end of the RMAoffending spectrum. The directors of RFL have since undertaken a comprehensive39 R v Samuels [1985] 1 NZLR 350 (CA) at 356.40 At 356.review of their effluent management plan, including taking advice from anindependent expert. A repeat of this incident seems highly unlikely.[83] Overall, it is my view that there is likely to be little benefit in committing theDistrict Court's limited resources (already stretched due to the current COVID-19crisis) to a further trial in this matter.Result[84] The appeal is allowed, and the conviction is quashed. No retrial is ordered.__________________________Katz J