WAIKATO REGIONAL COUNCIL V KERERU FARMS LTD HC HAM CIV 2009-419-37

WAIKATO REGIONAL COUNCIL V KERERU FARMS LTD HC HAM CIV 2009-419-37 18 August 2009IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY CIV 2009-419-37BETWEEN WAIKATO REGIONAL COUNCIL Appellant AND KERERU FARMS LTD Respondent Hearing: 18 August 2009 Counsel: P Cornege for Appellant J B Forret and N Edwards for Respondent Judgment: 18 August 2009(ORAL) JUDGMENT OF HEATH JSolicitors: Almao Douch, PO Box 19173, Hamilton Harkness Henry, Private Bag 3077, HamiltonIntroduction[1] The Waikato Regional Council prosecuted Kereru Farms Ltd on three charges of discharging farm animal effluent onto land, in circumstances which may have resulted in a contaminant entering water. The company was also charged with breaching an abatement notice in respect of the earlier discharges. The company pleaded guilty to each of the charges brought against it. [2] Two of the charges related to specific discharges on 6 March 2008. The abatement notice was issued on 17 March 2008. A further discharge occurred between 13 June and 20 June 2008. The company was sentenced to pay a fine. The fine totalled $9,100. That fine has, I am told, been paid. [3] The sentencing Judge arrived at that figure by taking a starting point from which she deducted an allowance to provide for her view that the farm manager was culpable in respect of the offences, even though he had not been charged separately. An Information was originally laid charging the farm manager but that was subsequently withdrawn, as were separate Informations against the directors of the company.The appeal[4] The Waikato Regional Council, as Informant, appeals against the sentence imposed. The sentence is challenged on the basis that the Judge erred in principle by allowing a credit in respect of the actions of the company's employee. [5] The primary submission was that the Judge ought to have held a disputed fact hearing under s24 of the Sentencing Act 2002 if she intended to rely on Mr Nathan's acts as a mitigating factor. Another, more general, point arose during the course of the hearing; namely, whether as a matter of principle, it was appropriate for the Judge to give the type of credit in respect of the human being carried out the acts that led to corporate liability.The facts[6] The company operates a 50/50 share milking arrangement with the Pohara Trust. The property in issue is a dairy farm, comprising some 277 hectares at Arapuni. [7] Kereru is a company associated with the Tauroa family. James and Laurie Tauroa were directors of it, along with Mr Edward Tauroa, who was also chairman of the Pohara Trust. James and Laurie Tauroa were responsible for the overall management of the farm. Mr Nathan was employed as farm manager. [8] Mr Nathan's role included daily management of the farm, oversight of staff and other incidental duties performed by a farm manager. In particular, he was responsible for the day-to-day management of the effluent system; specifically he had control of cleaning a sand trap when it was full. Mr Nathan had been involved in dairying for some six years at the relevant time. He left the farm in May 2008. [9] The effluent management system consisted of farm animal effluent being piped through two sand traps into a 22,000 litre storage sump. It was then pumped directly to a travelling irrigator and a canon irrigator. The system operated under the permitted activity rules of the Waikato Regional Plan. Those rules do not allow discharge of farm animal effluent directly onto land in circumstances where the effluent may find its way into water. The concern is that application of such effluent can affect ground water, through contamination by faecal coli forms and nitrogen. It also has the potential to run off into surface water. [10] The Arapuni property was chosen at random by officers of the Council as one of 100 farms over which an aerial monitoring survey was carried out on 4 March 2008. The survey was for the purpose of checking compliance with various parts of the Plan. At the time of inspection, the farm was milking approximately 550 cows. [11] On 6 March 2008, staff from the Regional Council observed two sand traps and established that a five metre channel in the ground was leading away from the sand trap. Effluent was observed in the channel moving to an area of ponding. Fromthat ponding, channels of effluent were flowing a distance of approximately 60 metres down a hill, through an area of pine trees, towards a marshy region at the base. [12] Council staff also observed a significant volume of effluent overflowing from the storage sump across land over a distance of about 90 metres, downhill. That flowed towards the same marshy region at the base of the hill. [13] An abatement notice was sent on 17 March 2008 requiring the company to cease the unlawful discharge of effluent. The abatement notice required compliance no later than 5pm on 26 March 2008. [14] A further inspection was undertaken on 20 June 2008. The inspection revealed a storage sump almost full of farm animal effluent. Council officers observed that the overflow pipe from the sump entered the ground. They also observed farm animal effluent ponding around the base of the pipe and wet effluent on the pipe. [15] Once the pump was turned on, the officers saw an area of aerated ponded farm animal effluent near the sump. The effluent was seen to flow down a hill across the paddock surface, for about five metres. It had dropped below the outlet to the overflow pipe. [16] Helpful photographic evidence has been produced, together with the summary of facts, to indicate clearly the nature of the offending in issue.Sentencing in the District Court[17] The Infomrations were laid in the District Court at Te Awamutu, but sentencing took place in the District Court at Hamilton on 27 March 2009. [18] Judge Harland found that the offending in March 2008 was worse than that which occurred in June. Having considered aggravating factors, the Judge took the view that the starting point for sentence should be a fine of $28,000, based onprinciples set out in Waikato Regional Council v G A and B G Chick Ltd (District Court, Thames, CRN 707950094, 27 September 2007, Judge Whiting). [19] The Judge held that "it would be wrong for [Kereru] to be required to take responsibility for all of the offending" because "Mr Nathan's contribution was significant and had he performed the duties he was required to, there would not have been the difficulties with the sand traps and the overflow down the hill". The Judge considered that a starting point, to reflect Kereru's culpability, should be set at $14,000. In effect, she halved the starting point from that taken to reflect the overall culpability in respect of the offending. [20] The Judge then gave a full deduction of 30% to allow for the early guilty pleas. She allowed a further credit of 5% to reflect remorse and the fact that the company had no prior convictions for any offence under the Resource Management Act 1991 or otherwise. [21] Applying the total credit of 35% to the revised starting point of $14,000, the Judge reached an end point of $9,100 which she apportioned between the various charges on a basis into which it is unnecessary to go.The Council's challenge to the District Court's decision[22] Mr Cornege, for the Informant, submitted that the Judge erred in finding that the failure of the effluent system was in part due to the management of Mr Nathan. At the time of sentencing, counsel for Kereru had learnt, for the first time, that the charges against Mr Nathan had been withdrawn. Nevertheless, she elected to submit that the Judge could still take into account his role as a factor in determining an appropriate starting point for sentencing. [23] The Council took the contrary view, namely that Mr Nathan performed the very acts on the basis of which the company had entered a plea of guilty to the charges and his acts could not be removed from those of the company when it came to imposing sentence.[24] Mr Cornege, for the Council, also advised Her Honour that the Council would be prepared to proceed to a disputed fact hearing on the point and that Mr Nathan was available to give evidence. Having considered its position, the company elected not to go to a disputed fact hearing. [25] That election was important because s 24(2) of the Sentencing Act 2002 provides that if a fact is put forward by a party as relevant to the sentence to be imposed and is disputed by the other, a hearing must take place to resolve the fact for sentencing purposes. If the fact is one that goes to mitigation, it is necessary for the defendant to establish the fact for sentencing purposes. Having not proceeded in that way, Mr Cornege submitted that it was not open to the company to rely on Mr Nathan's acts. The same point was pursued on appeal.Analysis[26] In argument, I raised with Mrs Forret, for the company, the point of principle involved. I suggested to her that it was not a principled approach to say that a company's liability for offending could be mitigated, in some way, by reliance on the acts of an authorised agent when those very acts formed the basis of the company's criminal liability. A company cannot act without human intervention. It seemed wrong to me that the company could reduce its culpability in this way. [27] Also I agree with Mr Cornege's submission that if there were any allegation that a company employee acted without authority, that is a factor that ought to have gone to a disputed fact hearing before sentence was imposed. It was wrong in principle for the District Court Judge to sentence on the basis she did for those reasons. [28] I was referred to some cases where there had been Informations laid against both principal and agent, in which dual responsibility and apportionment was held to exist (for example, Otago Regional Council v Kelly and Scott (District Court, Balclutha, CRN 2008-005-135, 24 June 2008, Judge J A Smith) but none of those cases referred to a corporate defendant in respect of acts for which an authorised employee was responsible.[29] In my view, the Judge erred in allowing an apportionment of liability. Because a company cannot commit an offence other than through the acts of a human agent, it is wrong in principle for the Court to treat an authorised agent's acts as mitigating or reducing the criminal culpability of the company. The position may be otherwise, if the human agent acted without authority. [30] The next question is what sentence to impose in lieu of that given by the District Court Judge. Mrs Forret raised issues relating to the company's ability to pay. [31] Having taken instructions and having had an opportunity, through Council representatives, to discuss the issue with a director of the company present in Court today, Mr Cornege advised me that the Informant does not press for an increased sentence. I consider that stance appropriate, in the circumstances of this case. [32] I make it clear that the starting point for sentence and the way in which the final sentence was calculated is not something into which I have gone for the purposes of this appeal. The sentence imposed should not be regarded as having been approved for precedent purposes by this Court.Result[33] The appeal is allowed but the sentence imposed in the District Court is confirmed. ________________________ P R Heath J