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Canterbury Regional Council v Newman [2001] NZCA 213; (2001) 7 ELRNZ 137; [2002] 1 NZLR 289 (5 July 2001)

Last Updated: 13 December 2011



IN THE COURT OF APPEAL OF NEW ZEALAND
CA182/00


BETWEEN
CANTERBURY REGIONAL COUNCIL


Appellant


AND
EDMUND FRITH NEWMAN


Respondent

Hearing:
30 May 2001


Coram:
Thomas J
McGechan J
Hammond J


Appearances:
G H Nation for Appellant
K N Hampton and BRD Burke for Respondent


Judgment:
5 July 2001

JUDGMENT OF THE COURT DELIVERED BY McGECHAN J

The appeal

[1] This is an appeal against a decision of the High Court allowing an appeal by the present Respondent against his conviction in the District Court on charges under ss338(1) and 340(1)(a) Resource Management Act 1991.
[2] Section 340(1)(a) imposes criminal liability upon a principal for the actions of his agent, with s340(2)(c) providing a defence where inter alia the principal took all reasonable steps to remedy “any effects” of the relevant act or omission. The central question in this appeal relates to the scope of the “effects” so referred to. Are those “effects” to be confined to direct effects; or do they extend to consequential effects, and if so within what limits?
[3] Within and around that central issue, the appeal poses five specific questions of law:

“1. WHETHER in seeking to establish a defence under Section 340(2)(c) of the Resource Management Act 1991, an employer need prove only that it took all reasonable steps to remedy the effects of the act or omission giving rise to the offence, in the sense of stopping or containing the act or omission, preventing its occurrence and securing the situation in its immediate aftermath, or whether the effects to be remedied extend to and include all consequential effects of the act or omission on the environment or payment of the costs to remedy them.

  1. WHETHER an employer liable for an offence against Section 338(1)(a) and Section 340(1)(a) of the Resource Management Act 1991, in endeavouring to establish the defence provided for in Section 340(2)(c) that the employer took all reasonable steps to remedy the effects of the act or omission giving rise to the offence, can rely on remedial steps taken by a third party including the party who suffered damage.
  2. IF the effects of the act or omission giving rise to the offence, to be remedied by an employer in seeking to establish the defence under Section 340(2)(c), include indirect but consequential effects such as costs, can such an employer be fixed with constructive notice of a requirement to pay such costs.
  3. OVER what period of time is an employer required to take reasonable steps to remedy the effects of the act or omission giving rise to the offence, and in particular having regard to the limitation provision contained in Section 338(4) of the Act.
  4. WHETHER there is an obligation on a Local Authority, such as the Informant here, having obtained Environmental Impact Reports and given the obligation on such Local Authorities to implement the statutory purpose of avoiding, remedying or mitigating adverse effects on the environment, to make such Environmental Impact Reports available to parties affected, including an employer in the position of the Defendant here, so as to further the remedying of the effects of the act or omission giving rise to the offence.”
[4] Questions 3, 4 and 5 were included at the behest of the present Respondent. They follow from submissions by the Respondent on which the High Court did not need to rule in light of its approach to matters raised by the first question. They do not arise unless the appeal succeeds on points raised by either of Questions 1 or 2. They were not pressed at hearing in this Court.
[5] To avoid confusion we will term the Appellant “CRC”; the Respondent “Mr Newman”; and the Resource Management Act 1991 “the Act”.

Factual background

[6] The principal underlying facts as found by the District Court are usefully summarised in submissions by counsel for CRC in the following terms (references to the District Court judgment and exhibits are omitted):

“1 On 13 September 1998 the Respondent’s Manager started a fire to burn off vegetation on an area of the Respondent’s Dry Acheron Station in Canterbury. The fire got out of control and spread beyond the area for which a consent to burn had been issued pursuant to bylaws administered by the Canterbury Regional Council. The fire also escaped to burn areas of land higher than 900 metres above mean sea level and areas where the slope was 29 degrees or greater which was contrary to the publicly notified Canterbury Proposed Land and Vegetation Management Regional Plan.

  1. The fire was first lit at approximately 1315 hours on 13 September 1998. By about 1500 on 13 September the fire had travelled well up a face on Dry Acheron Station and was outside the permitted area. Between 1500 and 1600 the fire spread over the top of the range above where it had been started. At 1610 the Manager notified the Department of Conservation Rural Fire Officer at Oxford and attempts to fight the fire began within an hour. The fire continued to burn until 17 September 1998 fanned by strong Northwest winds.
  2. An area of approximately 468 hectares outside the permitted area was burnt;
    1. 73 hectares was on Dry Acheron Station
    2. 308 hectares of the burnt land was on Snowdon Station, next door to Dry Acheron Station
    1. 87 hectares of the area was land controlled by the Department of Conservation.
  3. Although damage was done to the Respondent’s Dry Acheron station and to the land administered by the Department of Conversation, the focus of the Appellant’s case on prosecution related to damage done to land owned or leased by Snowdon Station. Two blocks called “the Big Ben” block and “the Slips” block were partially burnt. To re-establish vegetation on those areas the land had to be re-seeded and top-dressed. Snowdon Station carried that out in November 1999 at a cost to them of $23,000.00. Fences on the two blocks were also damaged by the fire and had to be replaced. These repairs and new fencing were provided by Snowdon Station and paid for by its insurers to the extent of $20,000.00 and beyond that to the extent of $2,000.00 at Snowdon Station’s cost. The areas burnt provided Snowdon Station with summer grazing. Stock had to be kept off the land to allow it to recover and because of the loss of pasture. Snowdon Station had to lease a neighbouring block to provide alternative grazing at a cost of $10,000.00 a year and in addition had to pay rates on that property.
  4. As soon as the Respondent heard about the fire, he told his manager to notify the appropriate fire authorities and to keep him informed. The next day after he had completed his operating list (he is an orthopaedic surgeon) he drove to the Station. He offered the Department of Conversation who were responsible for the fire fighting operation the services of Dry Acheron.
  5. By 30 September 1998 the Respondent’s manager and/or his workers had seeded and top dressed the burnt area on Dry Acheron. That area of Dry Acheron Station was not grazed from about March 1998 until August 1999.
  6. The Respondent met with officials from the Department of Conservation in August 1999. Basically it was agreed that the Respondent would manage stock on Dry Acheron so that they did not graze the DOC land affected by the fire.
  7. The Respondent had no personal contact with the manager or owner of Snowdon Station. He attended a fire debrief at Mt Hutt Station on 27 September 1998. People from Snowdon Station were present but did not approach him (and he did not speak to them). During the fire fighting Snowdon Station’s manager Ms Tripp spoke to the Respondent’s Manager and mentioned the problems the fire would cause Snowdon Station as far as grazing was concerned. The Respondent’s manager said that they did not have any spare grazing on Dry Acheron Station. After the fire the Respondent’s manager rang Ms Tripp and said that he hoped the Snowdon people would understand “but he wasn’t in a position to say anything regarding the fire”.
  8. In the District Court the Judge found that Ms Tripp and Snowdon Station made no attempt other than Ms Tripp’s phone call to Mr Stainger while the fire was still burning until January 1999 to contact the Respondent and press a claim for compensation. The claim they did make was first formulated in a letter of 20 January 1999 sent by the owners of Snowdon Station, Ms Tripp’s parents to solicitors acting for the Respondent’s insurers.
  9. The Respondent contacted his insurance brokers to notify them about the fire and contacted his solicitor about insurance and legal obligations on the night the fire started and had contact with them over the next few days. His insurance policy stated that he was not without the consent of his insurer to make any admission of liability, offer or promise of payment in connection with the claim. Basically he was to ensure that his insurer was responsible for the negotiation defence enquiry and settlement of any claim. He received advice from his lawyers to leave matters in the insurer’s hands. Basically it was his evidence that he thought the damage to DOC land and Snowdon Station land would be covered either by his insurers or the insurers of Snowdon Station. When the Respondent was interviewed about the fire on Monday 15 February 1999 and was asked what he had done to remedy the effects of the fire on Snowdon Station, he replied “as far as I am aware we haven’t done anything specific. I believe that is up to their insurers”.”
[7] There was no dispute the manager Mr Stainger was Mr Newman’s employee; or that the spread of the fire was a breach of the proposed Regional Plan and By-law as charged.

Relevant legislation

[8] We set out for convenient reference the crucial provisions of the Act. In the interests of brevity we omit s338 under which Mr Newman was charged (there is no dispute his employee and the fire concerned fell within its terms); the definition of “environment” in s2; section 322 relating to abatement notices; and penalty provisions contained in s339, although all have some significance.

“3 Meaning Of “Effect”


In this Act, unless the context otherwise requires, the term “effect” [ ] includes—


(a) Any positive or adverse effect; and


(b) Any temporary or permanent effect; and


(c) Any past, present, or future effect; and


(d) Any cumulative effect which arises over time or in combination with other effects—


regardless of the scale, intensity, duration, or frequency of the effect, and also includes—


(e) Any potential effect of high probability; and


(f) Any potential effect of low probability which has a high potential impact.

...


  1. Scope of Enforcement Order

(1) An enforcement order is an order made under section 319 by the [Environment Court] that may do any one or more of the following:


(a) Require a person to cease, or prohibit a person from commencing, anything done or to be done by or on behalf of that person, that, in the opinion of the [Court],—


(i) Contravenes or is likely to contravene this Act, any regulations, a rule in a plan, [a rule in a proposed plan,] a requirement for a designation or for a heritage order, or a resource consent, section 10 (certain existing uses protected), or section 20 (certain existing lawful activities allowed); or


(ii) Is or is likely to be noxious, dangerous, offensive, or objectionable to such an extent that it has or is likely to have an adverse effect on the environment:


(b) Require a person to do something that, in the opinion of the [Court], is necessary in order to—


(i) Ensure compliance by or on behalf of that person with this Act, any regulations, a rule in a plan, [a rule in a proposed plan,] a requirement for a designation or for a heritage order, or a resource consent; or


(ii) Avoid, remedy, or mitigate any actual or likely adverse effect on the environment caused by or on behalf of that person:


(c) Require a person to remedy or mitigate any adverse effect on the environment caused by or on behalf of that person:


(d) Require a person to pay money to or reimburse any other person for any [actual and] reasonable costs and expenses which that other person has incurred or is likely to incur in avoiding, remedying, or mitigating any adverse effect [on the environment, where the person against whom the order is sought] fails to comply with—


(i) An order under any other paragraph of this subsection; or


(ii) An abatement notice; or


(iii) A rule in a plan [or a proposed plan] or a resource consent; or


(iv) Any of that person's other obligations under this Act:


[(da) Require a person to do something that, in the opinion of the [Court], is necessary in order to avoid, remedy, or mitigate any actual or likely adverse effect on the environment relating to any land of which the person is the owner or occupier:]

...


[(2) For the purposes of subsection (1)(d), “actual and reasonable costs” include the costs of investigation, supervision, and monitoring of the adverse effect on the environment, and the costs of any actions required to avoid, remedy, or mitigate the adverse effect.]

...


(4) Without limiting the provisions of subsections (1) to (3), an order may require the restoration of any natural and physical resource to the state it was in before the adverse effect occurred (including the planting or replanting of any tree or other vegetation). ...


  1. 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-mentioned person, be liable under this Act in the same manner and to the same extent as if he, she, or it had personally committed the offence; or

(b) ...

(2) Notwithstanding anything in subsection (1), where any proceedings are brought by virtue of that subsection, it shall be a good defence if the defendant proves—

(a) In the case of a natural person (including a partner in a firm) that—

(i) He or she did not know nor could reasonably be expected to have known that the offence was to be or was being committed; or

(ii) He or she took all reasonable steps to prevent the commission of the offence:

(b) In the case of a body corporate that—

(i) ...

(ii) ...

(c) In all cases, that the defendant took all reasonable steps to remedy any effects of the act or omission giving rise to the offence.

(3) ...”

District Court decision

[9] The District Court decision, which the High Court reversed, serves as a useful introduction to the issues still in contention.
[10] The District Court began its examination of the scope of “effects” in s340(2)(c) by construing the term “effects” to mean “adverse effects”. (That undoubtedly is correct, and is not in contention).
[11] The District Court then considered a distinction advanced by counsel for Mr Newman between “effects” and “paying for the costs of the remedies”. The latter was put by counsel as a matter for the civil courts. The submission was seen as based on Augustowicz v Puketutu Island Timber Co Limited, an earlier unreported District Court decision in which the defendant’s agent had made a significant payment towards remedial costs. The District Court distinguished Augustowicz on the basis the defendant’s agent had carried out remedial work; not a course undertaken by Mr Newman’s employee.
[12] The District Court then sought enlightenment by considering the relationship between s340(2)(c) and the enforcement order provisions of s314. It was noted that the two provisions were linked through s339(5) under which a defendant convicted pursuant to s338 could, instead of or in addition to fines or imprisonment, be subjected to enforcement orders under s314.
[13] The District Court noted in particular s314(c)(d) and (da), adopting observations as to relationships between these paragraphs made by Skelton DCJ in another unreported decision, CRC v Doug Hood Limited. Those observations, so adopted, begin by pointing to distinctions between s314(1)(c)(d) and (da). Paragraph (c) catches the person who caused an adverse effect, or on whose behalf it was caused. Paragraph (da) catches the owner and occupier of land. Paragraph (d), however, was said by Skelton DCJ not to raise questions “about causation”: while there must be “some connection” between effects and failure to meet obligations, that connection did not need to be “causal, at least in a direct way”. If direct causation had been required, Parliament would not have removed certain words (unfortunately those words so removed are not identified, but the reference appears to be to the effect of a 1993 amendment). Skelton DCJ then concluded that for “these reasons” “all adverse effects proved to have occurred as a result of the failure to comply can be the subject of an order under these subsections including consequential effects” (the underlining is the District Court’s). Skelton DCJ added such may have been the purpose of the 1993 amendment; and as such accorded with “the reality of the situation”.
[14] Having so accepted that an enforcement order under s314(1)(d) could require payment in respect of even “consequential effects”, the District Court rejected a submission there was no relationship between s340(2)(c) and s314 due to s340(1)(a) containing its own offence provision for principals. Imposition of liability was under s340(1) in the same manner and to the same extent as liability of the employee. That indicated the employer’s offence was under s338.
[15] The District Court then returned to the question of a distinction between “effects” and the “costs of remedying them”, this time focusing on s314(1)(d). It had been submitted s314(1)(d) drew a distinction, in which light “costs were not adverse effects”. The District Court saw a difficulty with that distinction in that s340(2)(c) referred to effects “of the act or omission giving rise to the offence”, whereas s314(1) referred to “effects on the environment”. The District Court considered the adverse effects in s340(2) are to be ascertained “widely”, and included the physical effects on the environment “as well as the indirect consequential effects such as costs”.
[16] The District Court also found encouragement for the view s340(2)(c) “effects” included consequential effects, such as the cost of remedial work, in the “inclusive” nature of the s3 definition of “effects”. It was open, the District Court considered, to apply other definitions. The District Court regarded itself as doing so.
[17] The District Court ultimately held “that remedial costs are a consequential effect of the primary remedial actions”. Put shortly, “s340(2)(c) “effects” could include the costs of remedial work.
[18] It assists understanding of the breadth of costs which the District Court had in mind as included within “effects” to note the “reasonable steps to remedy the adverse effects” which the District Court considered should have been taken. These included (so far as those involving payment are concerned)

The High Court judgment

[19] The Judge started from the premise s340(2)(c) “effects” are the “effects” of the “act or omission giving rise to the offence”; and are effects relating to the land concerned. (The focus on effects on the land arose in the Judge’s mind from the Proposed Plan and Bylaw rules the breach of which resulted in the charges, rather than an examination of the Act itself). The act which gave rise to the offences was the lighting of the fire: the effects “are those caused by the fire”.
[20] Consistently with the land-orientation earlier expressed, the Judge then asked “what then are all the effects of the fire on this hill country land”?. Applying a “but for” test the Judge considered that but for the fire there would not have been no need for fire fighting activity (with respect, indisputable) and “nor would the consequential farming effects have occurred”. The Judge categorised removal of stock, re-pasturing, and re-fencing as “consequential effects”; and asked whether those consequential effects were “effects” of the fire for the purposes of s340(2)(c).
[21] The Judge first approached that question as one of “causation”; but acknowledged immediately that in causative terms it would be tenable both to limit effects to the “immediate” or to include “all consequential effects”. Faced with the need to “draw the line”, the Judge turned to ascertain the “extent of the legal responsibility intended” under s340(2)(c) “in the context of the Act as a whole”.
[22] The Judge noted the s3 definition of “effect” as lending support to a “broad approach”. (The Judge did not refer to this s3 definition again).
[23] The Judge then looked for guidance from the “immediate context” of s340. This was taken as Part XII containing the offence provisions. The Judge looked in particular at the context provided by ss341, 341B, and also 314.
[24] Section 341, imposing strict liability on actual offenders, allowed offences of necessity or accident provided that effects of the “action or event” were “adequately mitigated and remedied”. The focus was seen as upon “the very act which gives rise to liability”. The Judge noted a defendant could mitigate instead of remedying; and the standard required was adequacy, not reasonable steps.
[25] Section 341B was seen as illustrating that same focus upon the very act giving rise to liability; with, in that section, a requirement to take reasonable steps to prevent or minimise.
[26] Section 314 was noted as defining the scope of enforcement orders, which could be available following conviction instead of or in addition to fines or imprisonment. The Judge concentrated on s314(1)(c) and (d). Contending submissions as to the implications for s340(2)(c) “effects” of the contrast between “adverse effect” in 314(1)(c) and the express power to direct payment to third parties in 314(1)(d), and also an asserted concern in s314(1) with financial consequences, were noted without resolution. Machinery Movers Ltd v Auckland Regional Council (1991) 1 NZLR 492 and Auckland Regional Council v Puketutu Island Timber Co Ltd (unreported) were regarded as of little assistance, beyond acceptance the former showed an object of the Act was to impose “cleanup costs” upon the “guilty party”, and that a principal may rely on remedial steps taken by an agent. CRC v Doug Hood Limited supra was noted as a case where a s314 enforcement order included a liability for the cost of what Skelton DCJ “termed consequential effects”, but was regarded as not directly in point as at did “not confront” the meaning of “effects” in s340(2)(c).
[27] After those guarded references to submissions and authorities on s314, the Judge drew what was to become a crucial distinction between the wording in s340(2)(c) and in s314(1)(c) and (d). The Judge stated:

“[32] What assistance, if any, is to be gained from a consideration of the defence sections which incorporate a requirement to remedy or mitigate effects, alongside s314(1)(c) and (d) in particular? In my view the focus of these two types of enforcement order is wider. Effects are defined as “adverse” but I doubt that makes any difference. However it is adverse effects “on the environment”, not the effects of the very act or event which led to the prosecution, which may be the subject matter of an order. This difference I consider is deliberate and real.”

With s340(2)(c) and s314(1)(c) and (d) contrasted, s340(2)(c) “effects” were seen as the effects of the act which led to the prosecution (here, the fire). Section 314(1)(c) and (d) “effects” were effects on the environment. The latter were seen as a wider class.

[28] That wider scope was seen as reinforced by the s2 definition of “environment”, and within that of “natural and physical resources” and “structure”. Given the breadth of those definitions, effects on the “environment” must, the Judge considered, extend to consequential effects.
[29] The Judge, having established that context, then made key findings as to applicable principle:

“[34] I return to the question posed earlier : what is the intended extent of the legal responsibility upon a defendant in terms of s340(2)(c)? In my view the scheme of Part XII of the Act supplies the answer. In particular I consider the terms of s340(2)(c) when considered alongside s314(1)(c) and (d), are determinative. With the former the focus is upon “effects of the act...giving rise to the offence”, here the lighting of the fire which spread over hill country. The obligation cast upon the principal is to remedy the effects of the fire itself, if the statutory defence is to avail him. This means he must take all reasonable steps to deal with the fire : that is to extinguish it, to ensure that it does not flare again, and to secure the situation in its immediate aftermath. Exactly what steps will be reasonably required, will obviously depend upon the circumstances of the particular case.

[35] But I do not consider s340(2)(c) requires the defendant to remedy consequential effects of the fire. Those effects, albeit caused by the act giving rise to the offence, are not in my view within the scope of the duty cast by the subsection. In short a defence is available to a principal in relation to the act of his agent for this strict liability offence, provided he could not reasonably have prevented its commission and reasonably remedied its effects, in the sense I have described.”

(It should be remembered the Judge previously had regarded “consequential” effects as including the moving of stock, re-pasturing, and re-fencing).

[30] The Judge then looked at repercussions which could follow.
[31] The Judge said this did not mean a principal would not be responsible under the Act for consequential effects caused by his agent. The principal could be reached through an enforcement order under s314(1)(c) which related to effects caused by “or on behalf of” the principal.
[32] The Judge regarded the question whether a s314(1)(d) reimbursement order could be made against “a vicariously liable defendant” as “less straight forward”. The Judge rather seems to have taken the view such would not be possible:

“The answer will depend on whether the defendant, as opposed to his agent, has failed to comply with one of the four obligations defined in the subsection”.

The implication is that if the failure (for example to comply with a resource consent) is that of an agent, his principal may not be open to a s314(1)(d) reimbursement order.

[33] The Judge considered it might also be the case that where neighbours, as here, remedied the effect on an environment themselves, and sought reimbursement, “there will be no failure as defined” (i.e. failure to comply with s314(1)(d)(i)-(iv)), so that the trigger for a payment/reimbursement order “does not exist”.
[34] These latter two possibilities did not concern the Judge: there could be recovery “in the ordinary way” at common law, for example in case of fire under Rylands v Fletcher.
[35] The Judge expressed himself “fortified” in this view by two more general considerations.
[36] First, limiting s340(2)(c) to “immediate effects”—“here, a duty to deal with fire itself”—is “consistent” with the approach indicated by sections in the Act creating a statutory defence in the context of strict liability. (The Judge does not amplify).
[37] Second, if statutory defences required consideration of all effects on the environment, including “consequential effects” previously identified, there would be scope for “tangled factual arguments” inappropriate to a “quasi-criminal setting” involving significant penalties. Lines should be clearly drawn.
[38] The Judge then came to the resulting outcome for the present case.
[39] Given the Judge’s differing views as to the interpretation of s340(2)(c), the District Court’s findings could not stand. The issue was whether on the Judge’s “more restricted view”, the statutory defence was established. The Judge did not refer expressly to the matters of replacement grazing and repair of fences. (Evidently, those were beyond the pale). As to “re-establishment of pasture” the Judge said this:

“[39] Particularly with reference to re-establishment of pasture, the dividing line for the purposes of s340(2)(c) is not easily drawn. I accept that to remedy the effects of the fire itself a defendant may have to take immediate steps to prevent, for example, the subsidence or spread of fire debris which could cause further damage. If there was an immediate risk of erosion, there may be interim remedial steps which were immediately required to preserve the position pending a long term solution. However, in this case there is nothing in the evidence to indicate a failure to take reasonable steps of this kind. The only evidence is of a need to resow and fertilise as soon as regenerative growth would result. The owners of Snowdon Station did that and the real issue became one of liability for the cost involved. As the evidence stands, I therefore conclude that the positive defence was established.”

Submissions for Appellant CRC

[40] We note first submissions on Question 1.
[41] Submissions supported the wider interpretation adopted by the District Court. The interpretation adopted by the High Court was criticised as inconsistent with the scheme of the Act as a whole.
[42] First, the interpretation adopted by the High Court was put as meaning in practice that for the defence to be available a principal only needs to stop the activity, without obligation to restore or to compensate. That conflict with the scheme of the Act is not resolved by the availability of enforcement orders under s314. Utilisation of s314 involves a shift in responsibility away from the wrongdoer onto those who suffered the damage or onto the community through the local authority. In a case such as the present, all a defendant would need to do is notify the relevant fire-fighting agency; the onus to assess and remedy damage then shifting to the landowner affected or to the council.
[43] Second, it does not promote the s5 purpose of sustainable management of natural and physical resources to allow escape from criminal liability without remedial obligations.
[44] Third, the Act is concerned with the financial consequences of environmental damage, as demonstrated by the definition of “sustainable management” in s5(2) which incorporates reference to economic well-being; and by the provisions of s314(1)(c) and (d) which can relate to consequential effects.
[45] Fourth, the Act endeavours to make those responsible for damage responsible also for the remedial work. Submissions invoke the emphasis in the Machinery Movers case supra upon statements (in the Rio Declaration and upon Canadian authority) to the effect those having control of contamination should bear the costs of contamination, and indeed on a wider scale than merely cleaning up. Sections 340(1)(a) and (b), 340(3), 338(1)(b), and s17 are advanced as supportive.
[46] Submissions then turned more directly to the statutory language.
[47] There is nothing in the definition of “effect” in s3, or in s340 context, which limits “effect” to immediate effects on the environment, or which excludes financial effects.
[48] It was accepted that “effects” in s340 referred to “effects of the fire”, although it was wrong to say the act which gave rise to the offence was lighting the fire; the offence being allowing the lit fire to spread into unauthorised areas.
[49] Submissions interpreted the Judge’s reference to the wording of s341(2) as intended to draw a contrast with the wording of s340(2)(c), the latter being seen by the Judge as more limited. It is argued that if there is a difference between s341(2) “action or event to which the prosecution relates” and s340(2)(c) “act or omission giving rise to the offence” the opposite is true. The submission is similar in relation to s341B(2)(b)(ii).
[50] Submissions contest the support the Judge found from a “consistency” perceived by the Judge with other strict liability/statutory defence sections, e.g. s341. The “consistency” is put as begging the question. Submissions retort that section 341 “effects” must be limited in the way proposed for s340. Section 341 “effects”, given the width of the s3 definition, would also include consequential damage with financial loss.
[51] Turning to the implications of s314, it was submitted the interpretation of s340(2)(c) should not be affected by the availability of remedies through s314, or at common law. On the Judge’s own analysis, s314(1)(d) would not necessarily provide financial reimbursement. Moreover, and contrary to the policy of the Act, a principal will not have an incentive to be proactive over remedies if aware he can be brought to account only by application made under s314. Common law remedies under Rylands v Fletcher are dismissed as of uncertain current standing in New Zealand. In any event, one purpose of the statutory offences with their heavy penalties is put as rendering the difficult common law actions unnecessary.
[52] As to the support which the Judge found in the necessity for clarity in relation to offences carrying severe penalties, Parliament’s intention was to set limits not by “artificial restriction on the effects which had to be remedied” but by requiring defendants to take all “reasonable” steps to remedy effects occasioned. That “reasonable steps” criterion was more open-ended, but would not be difficult to apply in practice, as in other areas of the criminal law and the law of nuisance demonstrate. It is a test which can apply to any set of circumstances. Further, even on the High Court test, there would still be grey areas as the Judge’s concluding remarks (paragraph 39) demonstrate.
[53] The wider interpretation urged—developed to an obligation “to do everything reasonable to ‘remedy any effects of the act or omission giving rise to the offence’”—is put as more compatible with Rio Declaration principles 10, 13 and 16.
[54] Question 1, therefore, should be answered by a finding that the taking of all reasonable steps to remedy effects under s340(2)(c) “...depending on the particular circumstances of the case...may include the remedying of consequential effects including the financial costs suffered by another party as a result of the environmental damage”.
[55] We turn to submissions on Question 2.
[56] Submissions for the CRC proceed on an assumption the Judge held re-sowing may have been required as part of the obligation to secure in the immediate “aftermath”, but further held Snowdon Station itself had done so, and the real issue was liability for cost.
[57] On those assumptions the CRC submission protests this amounts to a conclusion a liable employer can invoke the s340(2)(c) defence where the remedial action is taken by a third party “even a third party who had in fact suffered the damage”. While (in line with ARC v Puketutu, supra) the actions of a third party “closely associated with the defendant” might be relied upon, a defendant ought not to be allowed to rely on remedial steps taken by a third party, including the injured party, “unless there were particular circumstances which made it reasonable for him to do so”. The purpose of this section is to encourage employer responsibility for damage: the Judge’s ruling allows an employer to sit back and take the benefit of third parties’ steps and expenditure.
[58] Question 2 should be answered “no”. An employer liable under s338(1)(a) and s340(1)(a) “ought not to be able to rely on remedial steps taken by a third party unless in all the circumstances it was reasonable for him to do so”.
[59] It was not reasonable for Mr Newman to rely on the actions and payments by Snowdon Station in this case.

Submissions for Respondent Mr Newman

[60] On the first question, submissions adopted the High Court decision with its narrower interpretation.
[61] It was not correct, it was said, that on the High Court’s interpretation a principal would not need to take positive steps to remedy consequential effects. That proposition confused the liability of the employer under the Act with the sentencing powers of the Court. The employer can be reached through s322 abatement notices and/or s314 enforcement orders, the purpose of which is to ensure the principal or agent “clean up the mess and remedy consequential effects”.
[62] Those s322 and s314 procedures properly allow the agent and principal to be heard on matters such as quantum, betterment, and remoteness, and allow consequential effects to be dealt with more expeditiously and fairly. Use of s322 and s314 avoids requiring an employer to guess what effects must be reimbursed over an extended period of time, and what action must be taken to avoid prosecution.
[63] It is put as undesirable to use criminal provisions of the Act to achieve remedial purposes: the criminal provisions are for deterrence, with orders under s314 intended to avoid, remedy, or mitigate, and to compensate: Interclean Industrial Services Ltd v Auckland Regional Council [2000] 3 NZLR 389 para 25(c). There is no policy reason to enlarge s340(2)(c) “effects” because s314 is available in sentencing. It is sufficient the principal be required to end the breach and secure the situation and the immediate aftermath.
[64] Appellant’s argument that on the High Court interpretation the onus to assess the damage and fix it shifts from persons responsible for the damage to those who suffer the damage or to the local authority is met by the ability under s314 to award costs of investigation, supervision and monitoring, and the availability of costs at common law. It is not necessary to impose a criminal conviction to ensure a principal meets those costs.
[65] Taking matters a stage further, it is submitted that if the purpose of s340 is to ensure victims are compensated, it is debatable whether the District Court decision would achieve that purpose. Under that decision it could suffice for an employer merely to make inquiries and to negotiate: “it is difficult to see how doing so can be remedying the effects”. Consideration of consequential effects would present scope for tangled arguments. Liability could come and go as negotiations progressed. There could be questions as to the reasonableness of responses to offers. Compensation received might be applied to uses other than remedying the damage, contrary to the scheme of the Act.
[66] Submissions then turned to the purpose and scheme of the Act and to language considerations.
[67] The High Court’s finding that “effects” in s340(2)(c) relate to “immediate effects” was correct. The s3 definition of “effects” is “extremely broad”, but is subject to context. The submission turns, as context, to the intended focus of the offence sections of the Act upon “the very act which gives rise to liability”; reiterating and adopting the approach of the High Court through s341, s341B and s314(c) and (d) to a distinction between “the effects of the very act or event which give rise to liability” and effects “on the environment”. The former phrase does not include consequential effects. The latter does.
[68] The High Court’s interpretation in those terms will not breach the scheme of the Act by allowing persons to escape liability without compensation. Redress is available through s322 and s314 and civil remedies, with better opportunity for principals to be heard and less risk of pressures to overcompensate to avoid prosecution.
[69] Submissions accept the Act is concerned with financial consequences of acts and events; but that, it is said, does not mean powers given to the District Court under s314 define the scope of “effects” to be remedied under s340. Further, submissions note the High Court’s doubts whether an order under s314(1)(d) may be made against a vicariously liable defendant; accepting the Judge appears to have taken a view that cannot be so. If the Judge’s view is correct (a point on which the submission is silent) the penal provisions of s340 should not be given an artificial construction so as to cover s314(1)(d) inadequacies. Matters should be left to the civil jurisdiction.
[70] Machinery Movers v ARC supra is put as of limited assistance, being concerned with levels of sentence for a primary offender and not with ss340 and 341. R v Bata Industries Limited is put as illustrating policy that offence provisions are directed at general deterrence. Section 17 of the Act is to be read down in light of restrictive approaches taken as exemplified by Cooke v Auckland City Council (1996) NZRMA 511.
[71] Arising out of arguments directed to the wording of s341 and s341B submissions identify a “common thread” running through statutory defences in s340, 341, and 341B under which an onus is cast on principals to “show due diligence”; something done by showing action without negligence and by the taking of reasonable steps “to prevent or minimise further breach”. That interpretation is put as consistent with societal values and also the purpose of the Act. If a principal is not at fault, and meets those requirements, there is no need for disapproval or deterrent to others. The penal provisions operate to minimise damage to the environment by requiring principals to act immediately in respect of continuing breaches. Consequential effects can be dealt with under ss322 and/or 314 “with due consideration”.
[72] Section 340(2)(c) is not to be construed to cover perceived defects in the civil law; it not being accepted in any event there is such uncertainty in the civil law or enforcement procedures. Section 340 is not to be used as a mechanism for forcing settlement. Where there is a doubt as to meaning in a penal statute of this nature, the defendant should have the benefit.
[73] Obligations under the Rio Declaration are best served by the High Court interpretation. Principle 10, encouraging participation, points to the s314/s322 procedures. Principle 13 does not require the criminal law to be elevated into the chief method of obtaining compensation. Principle 16, imposing costs of pollution upon the polluter, is met through ss314, 322 and sentencing procedures. It does not require compensation as an aspect of defence.
[74] We turn to submissions on the second question. These concentrate upon the matter of re-sowing (including top dressing).
[75] The High Court decision is put as inconclusive as to whether re-sowing fell within the category of immediate steps to preserve. It is submitted the requirement to re-sow was not an immediate effect. It was a consequential effect, there being no evidence of an immediate threat of erosion.
[76] If, however, re-sowing was an immediate effect, then Mr Newman was entitled to rely on steps taken by Snowdon. If appropriate remedial steps are taken by a third party, there can be no obligation on a defendant to remedy the same effect: ARC v Puketutu supra. If not, the principal must do so. The principal is not, it is said, encouraged to sit back for as long as possible.

Decision

[77] The question is the meaning of “effects” as the word appears in s340(2)(c). We prefer to avoid so far as practicable formulation in terms of “immediate” as opposed to “consequential” effects, as that terminology is slippery and can confuse analysis.
[78] “Effects” taken in isolation can extend to a chain of consequences of almost infinite length. As the homily goes, “for want of a nail the kingdom was lost”. The word is not to be taken in isolation, and is not to be allowed ridiculous scope. The question is as to the limits which Parliament must have intended, as ascertained by accepted principles of statutory interpretation.
[79] The first point of reference must be the statutory definition in s3. That is what statutory definitions are for, albeit s3 is subject to context and is merely inclusive.
[80] Section 3 assumes some recognised meaning for “effects” and then proceeds to ensure that meaning is read very broadly, capturing even future or merely potential effects. The expansion does not cover questions of an immediate/consequential character. Those are left to the assumed recognised meaning of the term. That recognised meaning is of course vague on the topic, going no further than assuming some reasonable limit along the chain. The most which can be gained from the section is a probable overall intention that “effects” be approached expansively.
[81] The next point of reference is context. What is the purpose and scheme of the section, within of course the Act as a whole, and what are the implications of associated language?
[82] As to legislative purpose, section 340, read with the offence section s338, is intended to impose absolute liability offences on a principal for the acts of an agent. (Those acts must, of course, be acts within authority in the sense which has come to be recognised in the principal and agent and employment field).
[83] Absolute criminal liability, especially on a vicarious basis, is a harsh regime. Parliament justifies such a regime in the public interest, but has provided some amelioration in s340(2). Absolute criminal liability is not to be imposed where the defendant principal establishes reasonable lack of knowledge, or reasonable precautions, plus the taking of “all reasonable steps to remedy any effects of the act or omission giving rise to the offence”.
[84] While that context is to be remembered, we do not regard it as decisive. It can be argued one way that a penal statute should be construed strictly in favour of the defendant, with the “effects” to be remedied narrowed accordingly. It can be argued with equal force that a concession of this nature from an absolute liability imposed in the public interest should be construed narrowly in itself, widening the class of the effects which would need to be remedied. In the end, the most which can be assumed with safety is that the extent of the word “effects” is to be considered in the light of action which would justify and fairly excuse an otherwise absolute vicarious criminal liability imposed to protect the environment.
[85] As to associated language, section 340 applies where an offence is committed against the Act. The offences concerned are stated in s338.
[86] It is a condign feature of s338 that for the most part, although not entirely, the offences created relate to adverse repercussions on land, water, or air; in short, on natural or physical features. Section 338(1), which in penalty terms creates the most serious offences, refers back to contraventions of ss9, 11, 12, 13, 14 and 15. These impose duties and restrictions in relation to land, subdivisions, the coastal marine area, the beds of certain rivers or lakes, water, and the discharge of contaminants (the present prosecution alleges breach of s9). Certain paragraphs in relatively lesser offences under ss338(2) and (3), for example those relating to failure to provide information and to obstruction of the exercise of powers, do not; but they are minor and exceptional.
[87] In relation to the more serious s338(1) offences—including the s9 offence in this case—the “effects” which will be involved and which (or some of which) may fall for consideration under s340(2)(c) will be effects on natural or physical features. They will not, to further illustrate, be effects upon social or cultural matters. They will not be effects by way of loss of profits.
[88] This class of effects upon natural and physical features necessarily is narrower than effects (or adverse effects) “on the environment”. The definition of “environment” in s2 of the Act, while it specifically includes natural and physical features, is vastly wider.
[89] However, while a useful step in the distillation, this does not answer in itself how far the chain of s340(2)(c) “effects” upon such natural and physical features is to be taken. Would it, for example, extend to the need to resow?
[90] The High Court was able to find considerable assistance from the coupling in the subsection of the word “effects” and the phrase “of the act or omission giving rise to the offence”. The act or omission was taken as the lighting of the fire. (That seems erroneous, as the relevant act as charged was allowing the fire to spread beyond its permitted area, but nothing much turns on the distinction). The “effects” of that “act”, it was then reasoned, did not go beyond fire-fighting and securing the immediate aftermath (e.g. subsidence or shifting of debris), excluding it seems re-sowing, repair of fences, or like restoration. The reasoning involved is not amplified. It seems almost a matter of assumption.
[91] We are unable to agree with that approach. The simple fact that the word “effects” is coupled with the phrase “of the act or omission giving rise to the offence” need not restrict the meaning of “effects” in that way. Logically, all matters which follow from the act are equally effects of the act (or omission) giving rise to the offence—the fire-fighting, or failure to stop spread—whether they be immediate blackened grass or downstream loss of profits or nervous breakdowns. The mere close association of the word “effects” with the succeeding words does not in itself dictate or even point to a limitation of that sort.
[92] A safer approach, in our view, is to come back to the simple truth that the “effects” in issue under s340(2)(c) in a s9 type offence generally will be effects on a natural and physical feature. Section 340(2)(c) is intended to require a defendant to remedy any effects on that natural and physical feature. That naturally includes re-sowing, replanting and re-fencing. In ordinary language, one does not “remedy any effects” (and the “any” means “all”) of burning a pasture by merely putting out the fire, dealing with immediate debris or stability problems, and then walking away. One can imagine a farmer’s reaction to such a proposition. One remedies the damage to that natural and physical feature by taking further steps reasonably involved in re-sowing, re-planting, and re-fencing. One remedies the effects of the infringing act by restoring the physical damage done by it.
[93] An interpretation in this way of “effects” as simply having reference to effects on natural and physical features imposes its own natural limits. While effects upon those features are to be remedied, the defendant need not go further than that. It is not necessary for the defendant to proceed on to consequential matters such as arranging alternative grazing, compensating for loss of profits, or compensating for distress and inconvenience occasioned, or like matters.
[94] Interpretation in this fashion also produces a simple test, appropriate for the administration of the criminal law. There can be relatively little doubt about the existence of effects on physical and natural features. For the most part they should be readily and immediately observable. They do not carry the innate complexities of classic consequential losses.
[95] Interpretation on these lines also caters for the statutory limitation period. It is an odd period so far as s338(1) offences are concerned, being set under s338(4) at 6 months after the relevant local authority knew or should have known. It would be unusual if the scope of effects on a natural and physical feature could not be at least ascertained or predicted within a 6 month period, so extended in some cases.
[96] We do not regard this approach to s340(2)(c) as inconsistent with the purposes of the Act, or as unduly limiting obligations of defendants or rights to compensation for those injured.
[97] As to purposes of the Act, the primary purpose of the offences sections—notably s338—is like most penal provisions, deterrence. That deterrence is not significantly diminished. The agent—usually an employee—is liable irrespective of s340, and under incentives accordingly. The principal faces the exacting task of establishing not only s340(2)(a) lack of knowledge or taking precautions, but also establishing the taking of all reasonable steps to remedy damage done of a physical nature. The obligation to take all reasonable steps to restore can be a very expensive matter, with incentives accordingly.
[98] As to financial obligations of defendants, the s340(2)(c) obligation of course is not exhaustive. The owners of the physical and natural features concerned, and indeed any other persons affected by the act or omission giving rise to the offence, including local authorities, retain rights under s314 enforcement orders (and occasionally under s322 abatement notices) and at common law. As noted, s314 with its reference to “adverse effect on the environment” encompasses a wider—and intrinsically very wide—horizon of damage. The general law—not least relating to nuisance and negligence—may also apply, and covers any residue.
[99] In that regard, we do not accept the view implicitly stated in the High Court that s314(1)(d) is not available in situations of purely vicarious liability. There simply is no sufficient basis in the words or purposes of s314(1)(d) to support such a restrictive view. A principal “against whom an order is sought” in law “fails to comply with” the relevant matters (including a resource consent) where he fails to do so by his agent. The failure need not be by the principal in his own person. Nor do we accept that the common law is so unsatisfactory in this area that it should be ignored.
[100] There is little force in the “shifting the onus” argument against this supplementary role for s314; although one can see the appeal of the argument on administrative and tactical grounds for local authorities. A correct perspective starts from the other end, with s314 (or s322) the obviously intended usual starting point for remedial or reimbursement action. Section 340(2)(c), a defence to vicarious liability on absolute offences, is at best a somewhat arcane incidental route. Section 314 enforcement orders are a procedure which allow a measured investigation of the propriety and conditions for enforcement, and are the generally appropriate route. Emphasis upon s314 as the appropriate usual approach to remedy or reimbursement also reduces the potential for abuse in the form of threats to prosecute unless an excessive range of remedial action or excessive payments are made.
[101] The limitation in this case of s340(2)(c) effects to those physical and natural features does not limit the CRC’s or Snowdon’s rights. The CRC for some reason did not seek to take s314 action, or even seek a s314 order under s339(5) upon sentencing. Snowdon still has any s314 and common law rights. It has not exercised those either.
[102] In many cases, and perhaps in the majority, the effect on physical or natural features will occur on land owned or occupied by the defendant. In those cases, of course, s340(2)(c) remedial steps will be carried out by the defendant or by others authorised or arranged by the defendant. Questions of payment instead of work do not arise. In some cases, and this is an instance, the natural or physical features adversely affected will be on land outside the defendant’s own control. In those situations the defendant can do nothing himself without consent. In many cases, as here, the land owners adversely affected may prefer to carry out the remedial work themselves.
[103] A defendant in the latter situation who wishes to preserve a position under s340(2)(c), can formally offer to carry out the remedial work needed, or if that is not accepted, to pay the actual and reasonable costs of the injured party or council doing so. The obligation under s340(2)(c) is to take “all reasonable steps to remedy any effects”. In such off-property situations, an offer in those terms is the only practicable step open. The “actual and reasonable” formula is drawn from s314(1)(d), and with that imprimatur should function satisfactorily.
[104] In that regard, a defendant cannot justify inaction on the basis of a personal fear of prejudicing liability insurance cover. To allow that would be to elevate something which at bottom is a personal financial interest (indemnity) over a specific statutory requirement to remedy, meaning in these cases to offer to pay for remedial work. That cannot be brought within the exacting “reasonable” category. The insurance industry must work within the statute or seek specific statutory amendment.
[105] In the result, we go somewhat further than the High Court. The effects under s340(2)(c) which the defendant must take all reasonable steps to remedy are the effects on natural and physical features, and the obligation to remedy those effects extends to reasonable restorative measures, in this case re-sowing, replanting, and re-fencing. There was an obligation to offer to carry out that work for Snowdon, or to pay the actual and reasonable costs of doing so. We do not go, however, as far as the District Court, in holding there was a requirement to arrange and pay for alternative grazing. That is not restorative work. Adopting this test does not exclude the proper scope and application of the enforcement provisions provided in the Act.
[106] We turn to the second question. It can be dealt with quite shortly.
[107] The s340(2)(c) obligation in a s338(1)(a)and s9 case of this sort is to take all reasonable steps to remedy effects of the spread of the fire on natural and physical features. That s340(2)(c) obligation ceases when the effects cease. There are then no longer any steps needed, let alone reasonable steps, by way of remedy. A defendant is quite entitled for s340(2)(c) purposes to take advantage of remedial work which happens to have been carried out by an injured party or Council or indeed anyone else. The environment is totally indifferent to the identity of the restorer. The defendant may of course be liable to the restorer for reimbursement under s314, or at common law.
[108] To be useful to a defendant in this way, the residual work must have been carried out by the injured party or a third party before the information is laid. In practical terms, given the s338(4) limitation period, this means within 6 months after the infringing act. The offence involves a snapshot at a point in time. If the victim or third party has not carried out remedial work at that point in time, the “effects” still enure and the defendant cannot establish a windfall defence. The solution for a potential defendant is to make a prompt and genuine offer to carry out the required remedial work or to pay for its actual and reasonable cost. As long as that step is taken, (and where time reasonably permits is implemented) before an information is laid, the s340(2)(c) defence requirements are met. As noted, a desire not to prejudice insurance cover is not a sufficient excuse for inaction.
[109] In that light, the work eventually carried out by Snowdon itself on fences and in repasturing does not assist Mr Newman. It was carried out after the informations had been laid. There was no offer by Mr Newman to carry out that work, or to pay the actual and reasonable costs, at any time—let alone before the informations were laid. Section 340(2)(c) requirements were not fulfilled in time.
[110] The appeal must be allowed. While the interpretation in the District Court was too wide, the interpretation adopted in the High Court in relation to requirements of s340(2)(c) “effects” was somewhat too narrow. While it would have been preferable to bring this long and expensive matter to a close, counsel were at one that in the event so-called “consequential” effects (including fences and repasturing) fall within s340(2)(c) the case must be remitted back to the High Court. It may of course be that there are outstanding matters at that level of which we are unaware. There is also, it seems, an outstanding appeal against sentence, and it may be that both should be considered together.

Order

(1) The appeal is allowed.

(2) The decision in the High Court is quashed.

(3) The proceeding is remitted to the High Court for determination of the appeal to that Court by the Respondent (Mr Newman) in accordance with this decision [paragraphs 106 and 109].

(4) There is no order as to costs in this Court. Costs in the High Court are a matter for that Court.


Solicitors
Wynn Williams & Co, Christchurch, for Appellant
Harman & Co, Christchurch, for Respondent



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