Southland Regional Council v MacPherson DC Invercargill CRI-2010-025-3422 [2011] NZDC 66 (19 January 2011)

Last Updated: 26 September 2016

IN THE DISTRICT COURT
AT INVERCARGILL

CRI-2010-025-003422 CRI-2010-025-001042 CRI-2010-025-001044 CRI-2010-025-001043 CRI-2010-025-001046 CRI-2010-025-001045 CRI-2010-025-003421

(JOINTLY CHARGED)

BETWEEN SOUTHLAND REGIONAL COUNCIL

Informant

AND ANTHONY MACPHERSON

PETER FLANNERY

MATTHEW DENIZE

ANTHONY CLELAND

TUSSOCK CREEK DAIRIES LIMITED

FARMRIGHT LIMITED

MATTHEW DICKSON

Defendants

Hearing: 19 January 2011

Appearances: B Slowley for the Informant

A MacPherson appears in Person

H Grant for Defendants Flannery, Denize, Cleland, Tussock Creek

and Farmright Limited

R R Smith for Defendant Dickson

Judgment: 19 January 2011

NOTES OF JUDGE J R JACKSON ON SENTENCING

[1] All the charges for which I am sentencing various defendants today relate to
one property, a dairy farm containing 161 hectares of land at Tussock Creek, to the east of State Highway 6 about two-thirds of the way between Invercargill and

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first on 8 November 2009 (incident one) and the second on 4 May 2010 (incident two).

[2] The defendants have pleaded guilty to the following charges:

■ Peter Flannery, Matthew Denize and Anthony Desmond Cleland have each pleaded guilty to a charge that on 8 November 2009 they committed an offence against sections 15(1)(b), 338 and 340(3) of the Resource Management Act 1991 in that as directors of Tussock Creek Dairies Limited they each permitted the discharge by that company of dairy farm effluent onto land in circumstances that resulted in that contaminant entering water when it could have been reasonably expected to have known that the discharge was taking place and did not take all reasonable steps to stop it.
■ Tussock Creek Dairies Limited has pleaded guilty to a charge that on 8 November 2009 it committed an offence under the Act by discharging dairy farm effluent onto land in circumstances that resulted in that contaminant entering water. It has also pleaded guilty to a charge that on 4 May 2010 (the date of the second incident) it committed an offence against the Act by discharging a contaminant, namely dairy farm effluent, onto land in circumstances that resulted in that contaminant entering water.
■ Farmright Limited has pleaded guilty to two charges — first on 8 November 2009 it committed an offence under the Resource Management Act in that as a person concerned in the management of the farm it permitted the discharge by Tussock Creek Dairies Limited of dairy farm effluent onto land in circumstances that resulted in that contaminant entering water when Farmright Limited could have been reasonably expected to have known that a discharge was taking place and did not take all reasonable steps to stop it. It has pleaded guilty to an identical charge in terms of its elements in relation to 4 May 2010.
■ Anthony Samuel MacPherson has pleaded guilty to a charge that on 4 May 2010 he committed an offence against the Resource Management

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Act by discharging a contaminant, namely dairy farm effluent, onto land in circumstances that resulted in that contaminant entering water.

■ Matthew John Dickson has pleaded guilty to an identical charge also for the offence on 4 May 2010.
[3] The property at Tussock Creek is an established dairy unit on flat to easy
rolling land. Disposal of dairy effluent is by travelling irrigator and I note that there is pond storage on the farm for 21 days of effluent from 800 cows. The defendant Tussock Creek Dairies Limited is the property owner and consent holder. It has a contract with the defendant Farmright Limited to manage effluent disposal on the property. Farmright Limited is a local company based in Lumsden. It is a dairy farm consultancy specialising in the management and conversion of dairy units.
[3] The defendants Flannery, Cleland and Denize are directors of Tussock Creek
Dairies Limited. They are charged only for the first incident. The informant alleges that conditions specified in section 340(3) of the Resource Management Act apply, in particular there was no cut-off or fail-safe device on the travelling irrigator and the irrigator was defective. Messrs MacPherson and Dickson were the farm manager and the farm worker concerned on the 4 May 2010 incident. Mr MacPherson has a contract with Farmright Limited which makes him responsible for daily operations on the farm (I will refer further later).
[3] Tussock Creek Dairies Limited has a resource consent to discharge dairy
shed effluent onto land. That consent expires in 2014. Two of the conditions of consent provide respectively that there must be no surface run-off or overland flow or contamination of water resulting from the application of dairy shed or feed pad effluent to pasture; and secondly that effluent cannot be applied to pasture within 15 metres of waterways and ditches.
[3] Turning to the environment in which this operation takes place — the Tussock
Creek property is in the Makarewa River catchment. This river is a medium sized watercourse flowing for approximately 60 kilometres from the Hokonui Hills to join the Oreti River just north of Invercargill. Tributaries of the river include Tussock Creek. The catchment is mostly highly productive farmland, drained of swamps and

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cleared of natural cover. There have been extensive drainage and flood alleviation works in the past. Although the river system supports a brown trout fishery and does have other recreational values. it has deteriorated in recent times, probably as a result of conversion of local farms to dairy operations.

[7] Turning to the circumstances of the first incident — on 8 November 2009 the
Council received a complaint from a neighbour of the defendant (Tussock Creek Dairies Limited) that dairy farm effluent was flowing onto that neighbour's property. A Council staff member investigated the complaint on the same day. They found that there was significant ponding on the company's land with an overland flow of effluent onto the neighbour's property through a series of pools and runners. The effluent had flowed some distance into the neighbour's property to a point where a series of flexible plastic drains converged. At this point the farm drainage system went underground before discharging into an open ditch which in turn discharged to a waterway. The waterway was discoloured from where the neighbour's drain discharged into it and it smelt of dairy effluent.
[7] During the Council's investigations it was ascertained that on the day of the
discharge the irrigator had been set up by a farm worker while the farm manager had a day off. The defendants accept that the irrigator was operating at too slow a speed for the wet conditions. That is important because at the time the moisture was at or near field capacity so effluent was being spread in unsuitable conditions. In those circumstances I consider the offending was careless rather than deliberate although I have thought about that with some anxiety.
[7] As far as the company directors are concerned they were obviously aware of
the method of discharge permitted by the resource consent and at least could have been reasonably expected to have known of the shortcomings of the irrigator and the problems that it would cause. They failed, prior to the offences, to take the obvious step to prevent this kind of problem, which is the upgrading of a piece of equipment which is vital for the whole farming operation.
[8] Turning to the second incident — on 4 May 2010 the Southland Regional

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again that dairy farm effluent was flowing onto the neighbour's property. The discharge, which had the characteristic colour and odour of dairy shed effluent, was flowing under the boundary fence in considerable quantities and pooling by the fence. It was flowing along the swale to another area on the neighbour's property where it was also pooling, continued under a fence into the next paddock and then into the tributary of Tussock Creek as I have described earlier. Soil moisture levels were at field capacity and the ground underfoot was very soft. The stream was the colour of dairy shed effluent and had the characteristic dairy shed odour. The waterway was fast flowing and over 30 centimetres deep. Because of the wet state of the paddocks it was decided it would be impracticable to use a sucker truck to clear the effluent out of the waterway.

[11] Again the moisture level on the farm at Tussock Creek appeared to be at field capacity and there was ponding of rainwater in low-lying areas. The paddock where the irrigator was situated was gently rolling and the slopes angled towards a swale that led to the complainant's property. The ponding area of effluent was approximately 10 metres by 10 metres adjacent to the boundary fence and about 10 centimetres deep.
[11] Mr Dickson was asked about this by Southland Regional Council staff. They asked him where the irrigator had been operating on the run on the day of the offence and he showed them a position where the irrigator was in direct line with the swale which ran to the complainant's property. The irrigator had been running down the hill which sloped towards the swale.
[11] I turn to establish starting points for the offence. To establish the starting points for the discharges I must look first at the scale and intensity of the offending. I have little information on the scale. I was told there was ponding on the Tussock Creek land and on the neighbour's land. Looking at the photographs I would say there was moderate ponding. As for the intensity of the offence, the technical reports for the Southland Regional Council show that the discharges contained "very high level of contaminants". I will not go into all the details shown in the technical reports but I noted that ammonium compounds were found in the waterways. That

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form of nitrogen does not occur naturally in most waterways but it does occur in effluent.

[14] As for the environment affected — the waterway does contain cobbles and gravels at the discharge point so it has the potential to support some of the less sensitive inhabitants but I need to bear in mind that the water quality in this catchment has already been degraded and has been described by Council officers as "typical for a small tributary of this type". As I have said the extent of the damage inflicted was not quantified other than in the way I have just described but the impact of the contaminants on the water has been described as "significant". Further, in my view, dairy farmers need to be much more aware of the accumulative effects of their discharges, whether legal or (as here) illegal, on waterways.
[14] Overall I regard the offending in both these two incidents as being at the low end of Level 2 offending in terms of the three levels stated for dairy farm discharges in Waikato Regional Council v Chick1. However, I note that the starting points set out there were prior to the 2009 amendments under the Resource Management Act. There has been a change to maximum penalties that may now be imposed.
[14] I accept that Ms Grant, counsel for Tussock Creek Dairies Limited and its directors and indeed for Farmright Limited, has the general level about right when she says that the primary defendant, whoever I find that to be, and if it is a company, should have a starting point for these offences of $50,000 for the 8 November 2009 discharge and $60,000 for the 4 May 2010 discharge. The difference between those two figures reflects the fact that the first incident was very soon after the maximum penalties were increased on 1 October 2009. For an individual the starting points would be $30,000 and $35,000 consistent with Taranaki Regional Council v Yates2 and the recent decision in this region of Otago Regional Council v Plakmaj Holdings Limited3 .

(2007) 14 CLRNZ 291, 27 September 2007, Judge Whiting, DC Thames.

2. Taranaki Regional Council v T E Yates, CRI-2007-043-001360, 4 May 2007, Judge Dwyer,
   DC New Plymouth.
3. Otago Regional Council v Plakmaj Holdings Limited and others, CM-2010-017-000247,
   246, 245, Judge Jackson, DC Invercargill.

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[17] I have thought and had some difficulty trying to set the starting point for the permitting charges. Initially I thought they should be less than for the direct discharge starting points but on final reflection I consider that the basic figures should be the same as for the discharge starting points. Any aggravating or mitigating factors that might come into play give the Courts sufficient flexibility to adjust sentences to the appropriate level in due course.
[17] The next step is to adjust those starting points as to personal factors. I deal with each of the defendants separately4.

Tussock Creek Dairies Limited

[17] This is the only party charged with discharge in relation to the first offence. Further, it is a company so the starting point is high as I have just stated ($50,000); and that is because the maximum penalty under the 2009 amendment is now $600,000. However, there are strong mitigating factors here in that Tussock Creek Dairies Limited has delegated responsibility through a contractor (Farmright) and so its responsibility is much reduced, but not negated. I consider that and the other mitigating factors reduce the fine heavily so that a provisional starting point of $20,000 for the 8 November offence is appropriate. Similar considerations apply for the 4 May 2010 offence. I move to that figure there also.
[17] I interpolate in relation to both this defendant and all the others that there are two common mitigating circumstances that apply to all of the defendants. It so happens that they are all first offenders and I take that into account. That is a substantially important matter. They have all co-operated with the Regional Council and they are entitled to credit for that. There are other special mitigating circumstances in relation to guilty pleas and timing which I will come to later.

Defendant — Mr MacPherson

[17] Mr MacPherson is only charged in relation to the second incident on 4 May 2010. I have to say that, if there is any inconsistency in the figures I finally come up with in relation to these offences, it is because it seems to me that Mr MacPherson is

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quite fortunate that he has only been charged in relation to that second offence. It is likely that he had some responsibility (and possibly considerable responsibility) for the first offence too.

[22] Mr MacPherson was not represented. He was given the chance to have legal counsel and to apply for Legal Aid at earlier appearances and he has declined that. He has accepted all the facts alleged by the defendants except for the fact that he thinks he told the defendant Mr Dickson that he should not irrigate in wet weather. I do not think much turns on that because Mr MacPherson accepts Mr Dickson's word that he instructed the latter to irrigate on 4 May 2010.
[22] When I asked him Mr MacPherson said that he did not check the Southland Regional Council website as to field capacity on 4 May 2010. He accepted that he does have a computer but in fact he was not aware of the website until told of it after the second incident. That is a slight aggravating factor because he should have known by then. So there are various things about Mr MacPherson's management that are not impressive. However, I was impressed today by his candour and his frank admission of responsibility. He did not seek to blame others, as self represented defendants so often do, and I give him credit for that.
[22] In relation to that second incident, in general terms, and this is a very approximate figure, I hold Mr MacPherson responsible as to 60% for that offending, Tussock Creek Dairies Limited responsible as to 30% and Mr Dickson as to 10%. That does not mean that there is a directly proportionate reduction in penalties but it is a factor that has to be borne in mind.
[22] Taking account of the mitigating factors and the other matters I have just mentioned, I consider that the provisional figure for Mr MacPherson reduces the original starting point of $35,000 down to $17,500 but it does not end there, as I will go on to say shortly.

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Farmright Limited

[26] This company manages a number of dairy farms in Southland. Ms Grant told me that it has systems and procedures in place for all farms and that they were operative prior to 8 November 2009. They included effluent manuals, irrigation logs and monthly checks of effluent irrigation systems. I was not told when the last inspection of each was made on this farm nor were the records produced to me. Importantly, Farmright's contract with Mr MacPherson states the latter has the contractual obligation for overall responsibility for management and supervision of the farming operations. That includes, importantly, the effluent disposal system and for the training of all staff in this regard.
[26] In terms of mitigation Farmright has taken a number of steps to remedy matters and in a sense all defendants gain some benefit from this, not only Farmright. First of all it took steps, possibly in consultation with Mr MacPherson, to pump the effluent out of the neighbour's property and to place bales to stop further run-off in relation to the first incident. Secondly, it arranged for a replacement irrigator and that is of some importance because it means that the irrigator at the time of the second offence was not the same as the irrigator that caused the problems the first time round. Thirdly, after the second incident it arranged for further training of all operators on all its farms. Fourthly, it has added a comprehensive check for all aspects of irrigation as an extra step in its supervision of dairy farms on an annual basis. Fifthly, after the first incident it commenced steps to arrange an entirely new effluent system for this property but unfortunately that could not be installed as quickly as desired.
[26] After all mitigating factors are taken into account the figures for Farmright need to be amended provisionally to $20,000 in respect of the 8 November 2009 offence and $11,500 in respect of the 4 May 2010 offence.

Three directors — Messrs Flannery, Denize and Cleland

[26] The directors have only been charged in respect of the first incident on 8 November and then only with permitting the discharge. As indicated I consider

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their liability is significantly less than that of Farmright's, 33% collectively to its 67%, so the starting point should be reduced not proportionately but generously. Since there are three of them, I reduce their provisional figures to $5,000 each and even then I am concerned that that is a little on the high side.

Matthew John Dickson

[30] Matthew John Dickson is 32. He currently resides in Winton where he works as an assistant milker. His first job in that line was on the Tussock Creek Dairy Farm. He started there in June 2009 with no previous experience in dairy farming. He was not re-employed on this property at the end of the season which was soon after the second incident on 4 May 2010. I was told that upon starting his job at Tussock Creek Mr Dickson was provided with a book with written procedures on how to set up irrigation, how to keep it running, how to check for leaks and other issues. He was also told what paddocks the irrigators could not be placed in.
[30] Through his counsel Mr Dickson told me that he did not receive any other training in terms of the irrigator and effluent disposal and he did not receive any training in respect of slopes in paddocks or as to field capacity. He claims that he was not told what to do with the irrigator in wet weather. In fact Mr MacPherson disputed that but I do not think anything turns on it because Mr MacPherson candidly accepts that he probably told Mr Dickson to operate the irrigator on 4 May 2010 and Mr Dickson set it up as instructed and as normal. I do think that on that basis the instruction and training given to Mr Dickson was inadequate.
[30] It is important to note that Mr Dickson is only charged in respect to the incident on 4 May 2010. He was away from the farm in November 2009 when the first incident occurred and was unaware of it so obviously he cannot be in any way penalised as a consequence of not learning from that incident.
[30] Counsel for Mr Dickson submits that a discharge without conviction is appropriate. I have given that serious thought but the main thing that dissuades me from that is that on 4 May 2010 Mr Dickson changed the timing on the temporary irrigator so that it ran for two hours rather than the usual one to one and a half hours. In the circumstances with the paddocks close to capacity that was at best unfortunate

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although I accept with some scepticism that Mr Dickson may not have been aware of that. However Mr Dickson's actions meant that he did not check the irrigator as he should have and it ran for longer than normal, so I regard him as partly responsible for the 4 May 2010 offence in a small but significant way. If I was looking at a fine I would regard the provisional starting point as being $10,000.

[34] I now need to further adjust the provisional sentences to allow for the guilty pleas and the timing of them and also for the remedial work carried out. I consider each of the defendants is entitled to a 20% discount for entering a guilty plea at the earliest opportunity, except for Farmright in relation to the first incident where they delayed until December 2010 to enter a guilty plea. It will receive approximately a 10% reduction in relation to the first incident. Less easy to compute is how to allow for the amounts spent by the defendants, especially Tussock Creek Dairy Limited and Farmright, on remedying the work. I consider all the defendants are entitled to benefit from the money the companies have spent on remedying. There was the remedial work after the first incident, there was the replacement temporary irrigator that had to be brought onto the property and of course paid for, and I give some credit for the likely cost of the new irrigation system which I sincerely hope is going to be put in place on the property. Similarly, Farmright has spent time and effort on improving its systems, further training of farm managers and workers and on its proposed new cut-off regime.
[34] Finally, I must step back and take an overall view of the offending. I must also have regard to the financial capacity of the offenders and the need not to punish company directors twice when the company is also charged and I consider I should be conscious of the mere fact of a conviction is punishment itself especially, for those wishing to travel overseas. Turning to consider financial capacity, Tussock Creek Dairies Limited has a net equity of nearly $2.5 million for the year ending 31 May 2010 so it is clearly able to pay a fine. The fines for the directors are sufficiently small that I do not need to make many adjustments there although Mr Denize and Mr Flannery are entitled to rather more an allowance than Mr Cleland who is clearly in a better financial situation. Mr MacPherson, for his part, does not own a house. He owns a truck and a few cows. He has payments to make on cars. He owes about $3,000 on his credit card. He has no overdraft at

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present. He and his wife each drew a salary of approximately $45,000 in the last financial year as far as Mr MacPherson can remember. Mr Dickson has no assets and is certainly not in a position to pay a fine. I think Mr MacPherson is in a position to pay a fine. He accepted that. I recommend that he be given generous opportunity to pay the fine off in instalments.

[36] In all the circumstances and taking an overview of all this offending, I sentence the defendants as follows:

(1) Defendant, Peter Flannery on CRN suffix 214, is convicted and fined the sum of $1,500 and ordered to pay Court costs of $132.89 and solicitors costs of $113.
(1) Defendant Anthony Desmond Cleland on CRN suffix 215, is convicted and fined the sum of $2,000 and ordered to pay Court costs of $132.89 and solicitors costs of $113.
(1) Defendant Matthew Denize on CRN suffix 216, is convicted and fined $1,500 and ordered to pay Court costs of $132.89 and solicitors costs of $113.
(1) Defendant Farmright Limited on CRN suffix 217, of permitting unlawful discharge of effluent as a person concerned in management of the property, is convicted and fined $10,000 and ordered to pay Court costs of $132.89 and solicitors costs of $113.
(1) Defendant Tussock Creek Dairies Limited on CRN suffix 281, is convicted and fined the sum of $8,000 and ordered to pay Court costs of $132.89 and solicitors costs of $113.
(1) Turning to the offences of 4 May 2010, the defendant Farmright Limited under CRN suffix 737, permitting unlawful discharge, is convicted and fined the sum of $7,000 and ordered to pay Court costs of $132.89 and solicitors costs of $113.
(1) Defendant Anthony Samuel MacPherson on CRN suffix 740, is convicted and fined $10,000 and ordered to pay Court costs of $132.89 and solicitors costs of $113. I request that Fines Collections allow Mr

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employment and domestic arrangements are not unfairly interfered with.

(8) Defendant Tussock Creek Dairies Limited on CRN suffix 745, is convicted and fined $8,000 and ordered to pay Court costs of $132.89 and solicitors costs of $113.
(8) Lastly, I turn to Mr Dickson. The defendant on CRN suffix 739 is convicted and ordered to complete 100 hours community work. He is ordered to pay Court costs of $132.89 and to pay solicitors costs of $113.
[37] In all cases the fine less 10% to the Crown consolidated account is to be paid to the Southland Regional Council.
[37] In respect of the offences on 8 November 2009 each of the defendants is jointly and severally liable to pay investigation costs of $2,288.80 to the Southland Regional Council. In respect of the offences on 4 May 2010 each of the defendants is jointly and severally liable to pay investigation costs of $2,935.12 to the Southland Regional Council.

J R Jackson
District Court Judge

Jacksoj/D/Southland RC v MacPherson, Flannery etc.doc.