Waikato Regional Council v Gregan Farms Limited [2022] NZDC 19331 (7 October 2022)

Last Updated: 14 October 2022

IN THE DISTRICT COURT AT HAMILTON I TE KŌTI-Ā-ROHE KI KIRIKIRIROA

CRI-2021-075-000533 via AVL [2022] NZDC 19331

WAIKATO REGIONAL COUNCIL Prosecutor

v

GREGAN FARMS LIMITED Defendants

Hearing:	19 September 2022
Appearances:	Mr Macklin for the Prosecutor Mr Gurnick for Gregan Farms Limited
Judgment:	7 October 2022

JUDGMENT OF JUDGE MJL DICKEY

Introduction

[1] The defendant, Gregan Farms Limited (GFL), appeared for sentencing for one charge under s 13(1)(b) of the Resource Management Act 1991 (RMA) of permitting the disturbance of the bed of a river, by excavating the bed and banks.1

[2] A sentence indication was delivered by the Court on 26 May 2022. The indicated sentence was a starting point of $45,000 and a 10 percent discount for previous good character. Any guilty plea discount would be addressed at sentencing.2

1 CRN 21075500126.

2 [2022] NZDC 8598.

WAIKATO REGIONAL COUNCIL v GREGAN FARMS LIMITED [2022] NZDC 19331 [7 October 2022]

[3] GFL accepted the sentence indication. A sentencing hearing was held on 19 September 2022. I reserved my decision.

Guilty plea

[4] The outstanding matter is whether the full 25 percent discount for the guilty plea should be allowed. The parties made further submissions.

[5] Mr Macklin, for the Council, submitted that a discount of something less than 25 percent is appropriate. Mr Gurnick, for GFL, submitted the discount should be 25 percent.

Timeline of appearances

[6] Charging documents were filed in the Thames District Court on 19 August 2021 against GFL. The matter was listed for first call in the Thames District Court on 12 October 2021. Full disclosure was provided on 14 September 2021.

[7] The matter was adjourned until 9 November 2021. The date was further adjourned until 21 December 2021 due to Covid-19 restrictions.

[8] On 7 November 2021, GFL sought a sentence indication on the charge. The sentencing indication hearing was held on 8 February 2022. The formal sentence indication was delivered by the Court on 26 May 2022. The defendant filed a memorandum with the Court accepting the indication on 12 June 2022. A guilty plea was formally entered on 1 August 2022.

Hessell v R

[9] The guideline decision in respect of guilty plea discounts is the Supreme Court decision in Hessell v R.3 In Hessell the Supreme Court discussed a sliding scale of up to 25 percent being available for a guilty plea, noting that the level of the discount would be assessed by considering all of the surrounding circumstances.

3 [2010] NZSC 135.

Prosecutor submissions

[10] Mr Macklin submitted that Hessell gives clear guidance that a guilty plea can be seen as early if an offender enters a plea after having the opportunity to be informed of all implications of the plea.

[11] Mr Macklin highlighted that the Supreme Court acknowledged the rationale behind a large discount being awarded for a guilty plea is to provide an incentive for an offender to accept responsibility and finalise the proceedings at an early stage. As a flow on effect, this saves costs associated with court proceedings and facilitates the effective operation of the justice system.

[12] Mr Macklin submitted that the guilty plea did not come at the first reasonable opportunity. GFL received full disclosure on 14 September 2021. It was legally represented. Despite this, a sentence indication was sought, prior to guilty pleas being entered.

[13] Mr Macklin submitted that, given the strict liability nature of the charges and the corporate nature of the defendant, upon receiving full disclosure and fulsome legal advice the defendant was in a position to make an informed decision without the need for a sentence indication.

[14] Accordingly, Mr Macklin submitted, GFL cannot be said to have entered its plea at the first reasonable opportunity. Although it was accepted that some delay can be attributed to Covid-19 and court capacity, given the time since first appearance, GFL had an opportunity to be fully informed of the implications of a plea. Despite this, it chose to receive a sentence indication prior to entering a plea. Further, it made a decision to seek a sentence indication instead of simply pleading guilty. Mr Macklin submitted that, in the context of corporate defendants and charges with strict liability offences, this can be viewed as weighing up the cost of doing business.

[15] Mr Macklin further submitted the proceedings have been considerably lengthened by GFL seeking a sentence indication. Doing so has required additional appearances by all parties, being the sentence indication hearing on 8 February 2020, the entry of pleas on 1 August 2022 and the sentencing hearing on 19 September 2022.

In turn, this has resulted in more than necessary costs for the parties and the judicial system itself. Mr Macklin submitted that due to the rationale surrounding the guilty plea discount providing an incentive to minimise costs, GFL should not be entitled to the maximum discount.

[16] Furthermore, Mr Macklin observed, unlike some criminal cases where a plea can be said to be sparing a direct victim of offending from the trauma and emotional toll of giving evidence at trial, no such victims were spared in this case.

[17] Mr Macklin submitted that a discount of something less than 25 percent is appropriate.

Gregan Farms Limited submissions

[18] Mr Gurnick submitted there has been no delay caused by GFL. To the contrary, GFL has made every effort to deal with this matter as quickly and as efficiently as possible.

[19] Mr Gurnick noted that it is unusual for the Court not to indicate, as part of a sentence indication, the credit to be given a defendant if a guilty plea is entered. He submitted, if anything, it is the prosecutor that has prolonged the proceedings by seeking to make further submissions on the issue of the guilty plea credit, requiring further court time. Mr Gurnick did not agree that GFL has caused the proceeding to be considerably lengthened resulting in more than necessary cost being incurred by the parties and the judicial system.

[20] Mr Gurnick observed, without going so far as submitting it is convention, that a defendant who seeks a sentence indication at case review hearing, almost without fail received a guilty plea credit of 25 percent. That is because the entry of a guilty plea at that stage is often considered the first reasonable opportunity.

[21] In practice, the ability to seek a sentence indication does not generally arise before a case review hearing. This is reflected in the case management memorandum (generated by the Court and sent to defence counsel) which specifically provides for

a defendant that seeks a sentence indication. GFL sought a sentence indication before its first proper scheduled appearance on 7 November 2021.

[22] Mr Gurnick submitted that applying the prosecutor’s rationale, a defendant that seeks a sentence indication would never be entitled to the full credit for a guilty plea.

[23] Mr Gurnick submitted there ought to be no distinction between a natural person and a corporate defendant in terms of credit for a guilty plea. Such a position would offend against s 8(e) of the Sentencing Act 2002 and the requirement to take into account the general desirability for consistency in dealing with offenders. Mr Gurnick submitted the prosecutor’s submission also tends to ignore that the maximum penalty for a corporate is higher than it is for an individual.

[24] Mr Gurnick addressed the prosecutor’s submission that seeking of a sentence indication prior to entering pleas should be viewed by the Court in relation to a corporate defendant as weighing up the cost of doing business. He submitted that the prosecutor’s submission assumes that the financial penalty is the only factor a corporate defendant is concerned with. It ignores the legislative framework Parliament provided for any defendant to seek clarity and certainty regarding the jeopardy they face. Mr Gurnick submitted such a submission by the prosecutor is offensive and ignorant of a defendant’s predicament when charged with a serious offence.

[25] Mr Gurnick suggested that where the prosecutor serves to fiscally benefit by receiving 90 percent of any fine imposed pursuant to s 342 of the RMA, the Court may wish to consider the prosecutor’s motivation for seeking to reduce the amount of credit a defendant is entitled to for pleading guilty.

[26] Mr Gurnick submitted that it would be extraordinary for a defendant not to be afforded the full 25 percent discount where a sentence indication was sought prior to the entry of a plea.

[27] Mr Gurnick highlighted that GFL pleaded guilty on the second appearance the case was actually called in Court on 1 August 2022 after the sentence indication. He submitted therefore that the plea was entered at the first reasonable opportunity.

[28] Mr Gurnick submitted nothing has changed since the sentence indication other than the entry of a guilty plea.

[29] Mr Gurnick submitted a 25 percent discount for guilty plea is appropriate.

Evaluation

[30] Applying Hessell, a full 25 percent discount for a guilty plea is generally given when a plea is entered at the first reasonable opportunity. Express reasons for a discount include savings in time, resources, and social benefits such as reducing anxiety. Those savings diminish as the criminal process progresses, and so too does the credit arising from the plea.

[31] Further, absent countervailing circumstances, it strikes me as inappropriate to give the same discount to a defendant who unconditionally pleads guilty at the first or second appearance and to someone who elects not to enter a plea until after a sentence indication. The sentence indication itself uses time and resources, and often involves delays of months. Further, a plea following a sentence indication can in some sense be characterised as conditional upon knowing the outcome.

[32] If a full 25 percent discount is commonly allowed following sentence indications, as Mr Gurnick claims, that could be viewed as having incentivised defendants and their counsel to seek sentence indications because there is no penalty for doing so, by way of reduced guilty plea discount.

[33] A sentence indication involves a substantial step in the criminal process. Applying Hessell, that should result in a reduced guilty plea discount.

[34] In reaching my decision, I observe that the possibility of a reduced discount being allowed for a guilty plea following the sentence indication was a live issue at the sentence indication hearing.

[35] Mr Macklin has acknowledged that there is no issue about timing in this matter

– in terms of when various steps were taken in the process. The issue relates primarily to the impact of the request for a sentence indication on any discount for a guilty plea.

[36] Mr Gurnick claimed that the Council is motivated by a pecuniary interest in seeking a smaller discount. That was roundly rejected by the prosecutor.

[37] Guided by Hessell, I observe that the level of any discount depends on all the surrounding circumstances of any case. While, in terms of timing, the request for a sentence indication was made relatively early in the process, it is for note that it followed disclosure being made. Timing does not assist here. I find that the request impacts the amount of discount I will allow for a guilty plea. In the circumstances, I determine it is appropriate to allow a discount of 20 per cent for GFL.

Outcome

[38] A copy of my decision dated 26 May 2022 is attached. The embargo prohibiting publication of the sentencing indication is lifted.

[39] I have adopted the two-step methodology outlined by the Court in Moses v R.4

[40] Applying a discount of 30 per cent to the starting point, I convict Gregan Farms Limited and impose a fine of $31,500. I direct that ninety percent of the fine be paid to the Council in terms of s 342 of the RMA.

Judge MJL Dickey

District Court Judge | Kaiwhakawā o te Kōti ā-Rohe

Date of authentication | Rā motuhēhēnga: 07/10/2022

4 Moses v R [2020] NZCA 296 at [45] to [47].

NOTE: PUBLICATION OF THE JUDGMENT AND OF THE REQUEST FOR A SENTENCING INDICATION IN ANY NEWS MEDIA OR ON THE INTERNET OR OTHER PUBLICLY ACCESSIBLE DATABASE IS PROHIBITED BY SECTION 63 OF THE CRIMINAL PROCEDURE ACT 2011 UNTIL THE DEFENDANT HAS BEEN SENTENCED OR THE CHARGE DISMISSED. SEE http://www.legislation.govt.nz/act/public/2011/0081/latest/DLM3865734.html

IN THE DISTRICT COURT AT HAMILTON I TE KŌTI-Ā-ROHE KI KIRIKIRIROA

CRI-2021-075-000533 via AVL [2022] NZDC 8598

WAIKATO REGIONAL COUNCIL Prosecutor

v

GREGAN FARMS LIMITED Defendant

Hearing:	8 February 2022
Appearances:	Ms McConachy for the Prosecutor Mr Gurnick for the Defendant
Judgment:	26 May 2022

SENTENCE INDICATION OF JUDGE MJL DICKEY

Introduction

[1] Gregan Farms Limited (GFL) seeks a sentence indication for one charge under s13(1)(b) of the Resource Management Act 1991 (RMA) of permitting the disturbance

of the bed of a river, by excavating the bed and banks between 10 and 24 January 2021.

[2] The maximum sentence is a fine not exceeding $600,000.

[3] A summary of facts has been agreed for the purpose of this proceeding.

[4] For the prosecution, Ms McConachy submitted that a starting point fine of

$65,000 is appropriate. For GFL, Mr Gurnick submitted that a starting point of no more than $25,000 is justified.

Property and environment 1

[5] Brian Joseph Gregan (Mr Gregan) is the sole director of GFL, the registered owner of the properties located at 21 McWatt Road, 81 McWatt Road (the McWatt Road properties) and 874 Okaeria Road, Waitakaruru.

[6] The McWatt Road properties are adjoining while 874 Okaeria Road runs adjacent, separated by Okaeria Road. Running through both 21 and 81 McWatt Road is a modified watercourse (the watercourse), being an unnamed tributary stream to the Waitakaruru River.

[7] The Waitakaruru River has no classifications. The headwater to the watercourse is located at the north-eastern end of the Maramarua forestry block and runs in a northerly direction along the western side of Okaeria Road through the McWatt Rd properties, across State Highway 2 to the confluence with the Waitakaruru River at the Steen Road Quarry.

[8] The McWatt Road properties consist of reasonably flat lands with the paddocks consistent with dairy pasture, except for wetland areas which branch off the edges of the watercourse forming a part of the flood plain.

1 Summary of Facts at [1] - [9].

Investigation2

[9] On 24 February 2021, in response to a complaint alleging unlawful earthworks within a stream, Waikato Regional Council officers inspected the McWatt Rd properties. Upon arrival an excavator was operating on the property working on a farm race.

[10] The excavator was owned by Steve Barker Limited (SBL), with the operator being Stephan Francis Barker. Mr Barker is the sole director of SBL and has been in the industry for over forty years.

[11] The inspection of the McWatt Rd properties identified an area of earthworks originating south of the Maramarua Forest extending to the intersection of State Highway 2. The length of those earthworks and the streambed disturbance is approximately 1390 metres.

[12] The watercourse upstream of the excavated area was significantly different in nature and appearance containing thick vegetation and sediment. The newly excavated channel was approximately 1.3m deeper than the non-excavated channel. A flow of water was visibly running through the uncut watercourse and flowing into the base of the recently cut channel.

[13] To better record details of the inspection, Council officers classified the excavated watercourse into three sections. The inspection detailed:

• (a) within Area 1, excavation of a ‘V’ shape channel, approximately 350m of the main watercourse had been excavated and 200m of the second tributary of the watercourse had been excavated, a small amount of water (40-100mm in depth) was flowing through the channel;
  
• (b) within Area 2, excavation of a ‘V’ shape channel (more extensive than Area 1), approximately 290m of the watercourse had been excavated, excavation encroached into a wetland; and
  

2 Summary of Facts at [10] - [33], [41] – [42].

(c) within Area 3, excavation of a ‘V’ shape channel, approximately 550m of the watercourse had been excavated.

[14] The earthworks and stream excavation had all been completed without any erosion or sediment controls. Some remedial work was undertaken along parts of the flood plain post excavation with spoil being power hoed and re-seeding having taken place.

Abatement notices

[15] On 2 March 2021, GFL and SBL were issued with abatement notices requiring they cease and are prohibited from commencing the unlawful excavation in the beds and banks of a river (waterway).

Explanation3

[16] Mr Gregan was spoken to and in explanation outlined the following:

• (a) Mr Barker was engaged to construct a farm race and extend the culverts in the drain on the property;
  
• (b) while the excavator was there he directed Mr Barker to clean out the drain;
  
• (c) the drain was completely blocked and not allowing water to flow, causing extensive flooding during high rainfall;
  
• (d) the grazable pastoral land already existed, but parts had become very wet and full of rushes;
  
• (e) during the summer months the wetland dried out;
  
• (f) he believed the watercourse to be a drain as it was straight and did not have continuous flow; and
  
• (g) to his knowledge the drain had not been cleaned out for over 40 years.
  

3 Summary of Facts at [38].

RMA and Waikato Regional Plan rules

[17] Section 13(1)(b) RMA states no person may, in relation to a river, excavate or otherwise disturb the bed, unless expressly allowed by a resource consent.

[18] A river is defined at s 2 RMA and includes a continually or intermittently flowing body of fresh water; and includes a stream and modified watercourse.

[19] The activity contravened Rule 4.3.4.4 of the Waikato Regional Plan, which states any river or lake bed disturbance activity, including the excavation, drilling, tunnelling, that is not otherwise provided for by, or does not comply with, a permitted or controlled activity rule with this regional plan is a discretionary activity (requiring resource consent).

[20] There is no other rule in the Plan, or a resource consent granted to authorise the earthworks or riverbed disturbance activities carried out by the defendants. The defendants did not make inquiry in relation to any obligations in respect of the earthworks or riverbed disturbance activities undertaken.

Sentencing principles

[21] The purposes and principles of the Sentencing Act 2002 are relevant. The High Court in Thurston v Manawatu Wanganui Regional Council4 provides a useful summary of the approach to be taken to sentencing, which includes consideration of culpability; precautions taken to prevent discharges; the vulnerability or importance of the affected environment; extent of damage; deterrence; capacity to pay a fine; disregard for abatement notices; co-operation and guilty pleas.

Environmental effects

[22] The summary of facts records:5

• [40] No consideration was given by either Mr Gregan nor Mr Barker as to the disturbance of the habitat or wildlife recovery.
  

4 Thurston v Manawatu Wanganui Regional Council HC Palmerston North CRI-2009-454-24, -25, -27, 27 August 2010.

5 Summary of Facts at [40] – [48].

[41] WRC Officers attended the scene several days after the activity had been completed and noted no sediment loading in the small volume of water flowing through the watercourse therefore no water samples were taken.

[42] Whilst no evidence of sediment loading was noted, sediment build-up was observed in the vegetation downstream of the excavation work (near State Highway 2), suggesting the area would have been subject to significant sediment loading whilst the works were being undertaken.

[43] The effects of soil and sediment on waterways are well known. Generally, the introduction of elevated levels of suspended solids can physically alter waterways by affecting the chemical and physical water characteristics, plants, algae, invertebrates and fish, as well as human aesthetic, recreational, and spiritual values, of surface water, namely the receiving environment. These effects may include, but are not limited to:

1. elevated suspended solids resulting in excessive turbidity, in-filling of the riverbed and/or smothering;
   
2. sediment-laden water affects benthic macro-invertebrates by five primary mechanisms. These are:
   
   1. reduction of light penetration;
      
   2. abrasion;
      
   3. absorbed toxicants;
      
   4. changes in substrate character;
      
   5. reduction in food quality.
      

[44] Direct effects on fish usually occur when concentrations of suspended solids are high. These include avoidance of turbid water by some fish, lower growth rates, impairment of growth in fish that use vision during feeding and clogging of gills resulting in death.

[45] Indirect effects include reduction in the invertebrate food source (by mechanisms discussed above), avoidance by adult fish of silt gravels for spawning, and high egg mortality due to reduced oxygen levels in gravel fouled by silt deposition.

[46] Along the length of the excavated watercourse, WRC Officers noted numerous dead eels in the paddock as well as in and around the piles of material that had been removed during the excavation. The eels appeared to have been dead for a couple of days.

[47] Within the watercourse itself, WRC Officers again noted numerous dead or dying eels as well as eels which appeared to be struggling to find space in the shallow ponding water. Within a straightened span of 50m along Area 3, 48 dead eels were counted in the water.

[48] WRC Scientist, Dr Bruno David (Dr David), viewed images taken at the scene and made the following comments:

1. Watercourses that are not regularly disturbed support much higher numbers and diversity of aquatic biota and habitat.
   
2. When this instream habitat diversity is removed, a largely sterile environment results.
   

100. When the organic matter on the bed of the watercourse is disturbed through excavation, anoxic sediments are released creating a rapid decline in dissolved oxygen in the water. It is likely that many of the dead eels seen within the watercourse may have died from suffocation as many in the images did not appear to have direct physical injuries.
     

4. Mortality also occurs within and around deposited spoil piles and depending on the conditions during which excavation occurred, eel mortalities due to desiccation (wind/sun) is also common. This also appears to have occurred in this instance with numerous eels being found some distance from the watercourse.
   
5. It would likely take quite a long time for instream structure to rebuild to support the numbers of fish that appeared to have been residing in stream prior to excavation.
   

[23] Ms McConachy highlighted the sediment build-up observed downstream was suggestive of sediment loading, noting that within a straightened span of 50m along Area 3, 48 dead eels were counted in the water and that it is likely they died of suffocation.

[24] Mr Gurnick submitted the damage caused to the environment can only be described as falling at the lower end of the range. He noted the offending was of short duration and the scale of the offending was not extensive. He also submitted there was nothing significant about the area excavated in terms of its ecological value or any particular effects on the environment. He submitted there are no specific environmental effects as a result of the offending.

[25] Mr Gurnick submitted there was no evidence of sediment loading; that several days after the activity there was no sediment loading in the small volume of water that was flowing through the watercourse.

Conclusion on environmental effects

[26] While no sediment loading was noted two days after the alleged offending, sediment build-up was observed downstream of the excavation work suggesting

significant sediment loading while the works were undertaken. The effects of soil and sediment on waterways are well-known and can include excessive turbidity, infilling of the river-bed and/or smothering, and can have effects on benthic macro- invertebrates. It will likely take a lot of time for instream structure to rebuild to support the numbers of fish that appear to have been residing in the stream prior to the excavation. I note also the death of a number of eels. That illustrates that the immediate while possibly short-lived effects as they relate to sediment loads are of concern because they did cause the death of eels – placing the seriousness of the environmental effects into the low – moderate range.

Culpability

[27] Ms McConachy submitted that while not a deliberate breach of the Act, the works undertaken were deliberate. GFL claim to have been under the mistaken impression that the watercourse was a drain. Ms McConachy submitted given the extent of the works, the defendant should have known the rules they were required to operate under. She submitted the extent of the eel kill was foreseeable.

[28] Ms McConachy accepted the conduct of GFL does not involve the additional recklessness of the Okawa Limited farm owner in Waikato Regional Council v Okawa Limited,6 where the director had been on notice as to the need for a resource consent. Rather, she submitted, the conduct of GFL can be characterised as highly careless, similar to that of Greener Earth Limited (see Okawa) and Mr Veen,7 by being unaware of the relevant rules and making no enquiry about them.

[29] Ms McConachy submitted SBL is more culpable than GFL.

6 Waikato Regional Council v Okawa Limited [2018] NZDC 7725 (Okawa) – one charge of unlawfully permitting the excavation of a riverbed. 1.063km of stream cleaning and excavation. Defendants considered the stream to be a drain. Okawa Limited was on notice as to the need for a resource consent, behaviour characterised as reckless. Greener Earth Limited was careless to the highest degree, it failed to check out the lawfulness of what it was being asked to do with the Council. Starting point of $45,000 for Okawa and $35,000 for Greener.

7 Waikato Regional Council v Veen [2021] NZDC 23501 (Veen) – one charge of excavating a waterway. Earthworks and streambed disturbances of approximately 568m. Turbid water flowing through a section of the excavated stream, with a sediment-laden plume observed flowing from the tributary and mixing with clear water of the stream. Court observed that the discharge of sediment into waterways is a serious matter. Defendant believed the waterway was a drain, and he was unaware of the RMA rules relating to earthworks. Defendant was highly careless, should have made enquiry of the Council as to his responsibilities. Starting point of $37,000.

[30] Ms McConachy accepted the defendants did not profit directly from the offending. She did however refer to Judge Dwyer’s comments in Taranaki Regional Council v Bunn Earthmoving Limited,8 submitting there was a financial motive for GFL in undertaking the works, which were for farm improvement purposes, namely improved pastureland. GFL also indirectly profited from not having to expend money on a resource consent.

[31] Mr Gurnick submitted that GFL is considerably less culpable than SBL. He submitted the culpability for the offending sits squarely with SBL and Mr Barker. He submitted GFL’s offending was no more than careless. He also noted that GFL has been charged with permitting a contravention rather than contravening.

[32] GFL relied on SBL, believing it would have the necessary expertise to know whether consent was required. Mr Gurnick submitted GFL was entitled to rely on the expertise of SBL and Mr Barker, and it is arguable that Mr Barker and SBL should have known the rules when it came to excavating farm drains – they were the experts.

[33] Mr Gurnick submitted GFL did not appreciate that the area that was excavated fell under the technical definition of river as defined in s 2 RMA. GFL did not think it was carrying out illegal activity because it considered the area was a farm drain (or for technical purposes a “farm drainage canal”, which is expressly excluded from the definition of river s 2 RMA).

[34] Mr Gurnick submitted the Council’s internal memorandum of 30 June 2021 from Thomas Wilding to Mark Watt went to great lengths to establish the drain as a “river” for the purposes of the RMA. Without such detailed inquiry, the waterway was, on its face, no more than a “drain”.

8 Taranaki Regional Council v Bunn Earthmoving Limited DC New Plymouth CRI-2013-021-473, 5 November 2013 at [17] – three charges relating to work undertaken around a river without resource consent, 400m disturbed. A combination of factors led the Court to conclude that this was a matter of some considerable seriousness: the extent of the works; the seriously detrimental effects on the stream environment; the extent of discernible effects and the fact that it was not possible to reinstate the tributary to its original condition. Further, the offending was deliberate. Starting point of $70,000.

[35] While with the benefit of hindsight GFL recognised it should have obtained advice from the Council prior to carrying out the excavation, the actions were not intentionally unlawful, nor were they reckless. Mr Gurnick submitted that had GFL known that resource consent was required, as is consistent with its blemish free record, it would have obtained the appropriate consent.

[36] Given its location bordering on a state highway, this was not a clandestine attempt by GFL to undertake unlawful earthworks without being detected by authorities. Mr Gurnick submitted this supports the submissions that this offending was no more than careless.

[37] Mr Gurnick rejected entirely the suggestion that GFL’s actions were designed for a commercial purpose. He stated that GFL’s actions were designed to improve the environment. There was no commercially motivated activity other than trying to improve the drain.

Conclusion on culpability

[38] GFL as landowner has a responsibility to ensure that any works which occur on its land are undertaken lawfully. While it may contract with another to undertake works on its behalf, that responsibility remains. In determining its culpability for offending, the Court will consider the steps it took to ensure that the works were lawful. GFL hired an experienced company, SBL, whose director had been in the industry for over 40 years, to construct a farm race, extend culverts in a drain and clean out the drain. In terms of the agreed summary of facts what Mr Gregan determined to be a drain was a watercourse.9

[39] The works that were undertaken adversely impacted approximately 1,390m of the watercourse and, as I have found, had a low – moderate adverse effect on the environment.

[40] Despite engaging SBL, I find that GFL should have enquired of the Council or SBL as to the legality of the proposed works. The works were of some significance

9 Summary of Facts at [6].

and should have triggered for GFL the need to make enquiry. I find the company was careless. I do not accept that the activity was commercially motivated as such, but note it benefitted from the improvements to its land.

Starting point

[41] Ms McConachy referred me to the following decisions: Waikato Regional Council v Okawa Limited;10 Taranaki Regional Council v Bunn Earthmoving Limited;11 Waikato Regional Council v Whakapona Farms Ltd;12 and Waikato Regional Council v Veen.13

[42] Ms McConachy submitted the adverse cumulative effects of discharges on our waterways are an additional aggravating factor, which was present in the cases cited.

[43] Ms McConachy submitted this case has similarities to Okawa. In particular, she drew my attention to the following part of that decision:14

In my view, the starting point adopted by the prosecution [$65,000 - $75,000] is not untoward. I fall short, however, of adopting a starting point within this range on this occasion because I consider that a further warning to the farming and earthmoving/contracting industry should be signalled on this occasion. The opportunity to re-read many of the cases provided to me reveal that the message about the need for caution when excavating waterbodies, particularly where they may be viewed as "drains", has still not been fully appreciated. It is somewhat concerning that the Court has been talking about these sorts of matters for many years.

[44] Ms McConachy submitted starting points for environmental offending have increased markedly since Okawa.15 She referred to the case of Veen, in which the

10 Waikato Regional Council v Okawa Limited [2018] NZDC 7725.

11 Taranaki Regional Council v Bunn Earthmoving Limited DC New Plymouth CRI-2013-021-473, 5 November 2013.

12 Waikato Regional Council v Whakapona Farms Ltd [2019] NZDC 15533 – two charges for unlawful earthworks and excavation. Resource consent had been obtained for earthworks. Mr Greenbank undertook the earthworks without complying with conditions and went beyond the scope of the consent

- as a result sediment discharged into a watercourse. Adverse effects included elevated solids and turbidity in the receiving waterways. The Court found the effects to be moderately serious, because of the scale of the works and the length of time over which they occurred. The Court found that Mr Greenbank’s culpability was carelessness to the highest degree. Starting point of $45,000.

13 Waikato Regional Council v Veen [2021] NZDC 23501.

14 At [63].

15 Ms McConachy stated Okawa was decided almost seven years ago. She was mistaken, Okawa is a 2018 decision, not 2015 as in the citation provided by Ms McConachy.

starting point for an individual defendant, subject to a maximum penalty of half that of a corporate defendant, was $37,000, in a case involving earthworks of under half the length of this case (568m). The length of the earthworks and streambed disturbance undertaken in this case measured 1,390m. Ms McConachy noted that this is further than the excavations undertaken in any of the other cited cases.

[45] Ms McConachy highlighted the significant instream effects of this offending, including the death of eels. She submitted such significant effects on wildlife are not noted in the cases cited. This is on top of the cumulative adverse effects of soil and sediment in our waterways.

[46] Ms McConachy submitted a starting point of $65,000 is appropriate for GFL.

[47] Mr Gurnick submitted the starting point proposed by the prosecutor is manifestly excessive and consistent with a Council which is financially motivated to prosecute and strive for the highest penalty it can achieve. He submitted such an approach is inconsistent with the Solicitor-General’s Prosecution Guidelines 2013.

[48] Mr Gurnick referred me to the following cases: Waikato Regional Council v Hold the Gold Limited16 and Otago Regional Council v MFS Ventures Ltd & Nelson.17 He submitted the cases cited by the prosecutor are considerably more serious than the alleged offending in this case.

16 Waikato Regional Council v Hold the Gold Limited DC Hamilton CRN-14019501673, 674, 19 December 2014 – two charges of unlawfully disturbing the bed of a river and undertaking earthworks without adequate erosion and sediment controls. The defendant managed the farm and engaged a contractor to complete earthworks on the farm. The length of the gully and stream affected was approximately 1,510m. The effect of the offending on the environment was relatively significant in terms of the impact on aquatic habitat and the discharges of sediment into the excavated stream were pronounced, given the lack of sediment and erosion controls. The director of the defendant company was aware of a report giving advice on works. The Council was not consulted about the works. While there was no intent to cause environmental damage, the court characterised the offending as careless. Starting point of $30,000.

17 Otago Regional Council v MFS Ventures Ltd & Nelson [2018] NZDC 11952 – one charge of disturbing the bed of a tributary. MFS engaged a contractor to excavate the tributary. Excavation works extended 500m. Resource consent was necessary but had not been sought. Although the tributary was an artificial watercourse it had quite high instream ecological values which would have been impacted. Photos showed significant damage to streambed and banks. Defendants genuinely thought they were undertaking permitted works. The court commented there is an obligation on farmers, foresters and contractors to understand the rules under which they have to operate. Starting point for both defendants was $20,000.

[49] Mr Gurnick highlighted that in Veen it was a representative charge, and that Mr Veen himself carried out the earthworks rather than engaging the expertise of a drainage contractor. He submitted GFL is not as culpable as the defendant in Veen.

[50] Mr Gurnick submitted that the size of the commercial enterprise must also be taken into consideration; a small company should not necessarily be treated the same as a large-scale commercial operation.18 GFL has one director and three shareholders. It is essentially a company set up by Mr Gregan and his wife to operate their farm. Mr Gurnick submitted GFL is not the large commercial dairy operation that the Court saw in Waikato Regional Council v Trinity Lands Limited & Ors, which owned and operated 20 dairy farms.19

[51] Mr Gurnick submitted that a starting point of no more than $25,000 is justified.

Conclusion on starting point

[52] I have considered the cases cited to me. Points of similarity can be found in all of them. Leaving factual similarities to one side, the way in which the Court has approached offences of works undertaken in and around streams and rivers is consistent. The starting points manifest increasing concern about the adverse effects of such works on the environment.

[53] There is a sizeable difference between counsel on starting points.

[54] While GFL must accept responsibility for the alleged offending I do not think the starting point should be as high as proposed by the prosecutor, nor do I think it should be as low as suggested by Mr Gurnick.

[55] Mr Gurnick submitted that the prosecutor’s proposed starting point was manifestly excessive. I do not accept that submission – it was proposed with reference to comparable cases.

18 Referring to Waikato Regional Council v Graze Limited [2019] NZDC 15963.

19 Waikato Regional Council v Trinity Lands Limited & Ors [2020] NZDC 24380.

[56] I consider an appropriate starting point for GFL is in the range of $40,000 to

$50,000, which broadly aligns with the cases I was cited and takes into account my findings on effects and culpability. Each case is different and must be considered on its own facts. While there are similarities with Veen, the area of works in this case was considerably larger and the effects included dead eels. Given that GFL hired an experienced contractor to undertake the works I determine the appropriate starting point to be $45,000.

Aggravating and mitigating factors

Previous history / good character

[57] GFL has no previous enforcement history with the Waikato Regional Council.20

[58] Mr Gurnick submitted a discount of 10 percent should be afforded to GFL for previous good character and for its cooperation with the Council investigators. Mr Gurnick referred to Banora v Auckland Council in which Gault J considered the five percent discount for previous good character to be “rather light”.21 Gault J afforded the appellant who was 70 years old and had no previous convictions and was unlikely to reoffend, a 10 percent credit.

[59] I would adopt a discount of 10 percent for good character.

Plea

[60] If a plea is entered following the sentence indication, Ms McConachy submitted it will have come at a relatively early stage. She submitted however that a plea following a sentence indication – particularly for a corporate defendant – does not indicate the same level of acceptance of responsibility that would arise from a defendant who pleaded guilty at the first call, without first obtaining an indication as to the likely sentence. As a plea has not been entered, Ms McConachy noted she would make further submissions on this at sentence (in the event a plea is entered).

20 Summary of Facts at [49].

21 Banora v Auckland Council [2019] NZHC 2545 at [97] – [98].

[61] Mr Gurnick submitted the full 25 percent discount for early guilty plea is appropriate (if entered).

[62] I will address this matter if the sentence indication is accepted.

Result

[63] I would adopt a starting point of $45,000 and a discount of 10 percent for good character. I would address any discount for a guilty plea if the sentence indication is accepted.

[64] Ninety percent of any fine will be payable to the Council in accordance with s 342 of the RMA.

Judge MJL Dickey

District Court Judge | Kaiwhakawā o te Kōti ā-Rohe

Date of authentication | Rā motuhēhēnga: 26/05/2022

NOTE: PUBLICATION OF THE JUDGMENT AND OF THE REQUEST FOR A SENTENCING INDICATION IN ANY NEWS MEDIA OR ON THE INTERNET OR OTHER PUBLICLY ACCESSIBLE DATABASE IS PROHIBITED BY SECTION 63 OF THE CRIMINAL PROCEDURE ACT 2011 UNTIL THE DEFENDANT HAS BEEN SENTENCED OR THE CHARGE DISMISSED. SEE http://www.legislation.govt.nz/act/public/2011/0081/latest/DLM3865734.html

IN THE DISTRICT COURT AT HAMILTON I TE KŌTI-Ā-ROHE KI KIRIKIRIROA

CRI-2021-075-000533 via AVL [2022] NZDC 8598

WAIKATO REGIONAL COUNCIL Prosecutor

v

GREGAN FARMS LIMITED Defendant

Hearing:	8 February 2022
Appearances:	Ms McConachy for the Prosecutor Mr Gurnick for the Defendant
Judgment:	26 May 2022

SENTENCE INDICATION OF JUDGE MJL DICKEY

Introduction

[1] Gregan Farms Limited (GFL) seeks a sentence indication for one charge under s13(1)(b) of the Resource Management Act 1991 (RMA) of permitting the disturbance

of the bed of a river, by excavating the bed and banks between 10 and 24 January 2021.

[2] The maximum sentence is a fine not exceeding $600,000.

[3] A summary of facts has been agreed for the purpose of this proceeding.

[4] For the prosecution, Ms McConachy submitted that a starting point fine of

$65,000 is appropriate. For GFL, Mr Gurnick submitted that a starting point of no more than $25,000 is justified.

Property and environment 1

[5] Brian Joseph Gregan (Mr Gregan) is the sole director of GFL, the registered owner of the properties located at 21 McWatt Road, 81 McWatt Road (the McWatt Road properties) and 874 Okaeria Road, Waitakaruru.

[6] The McWatt Road properties are adjoining while 874 Okaeria Road runs adjacent, separated by Okaeria Road. Running through both 21 and 81 McWatt Road is a modified watercourse (the watercourse), being an unnamed tributary stream to the Waitakaruru River.

[7] The Waitakaruru River has no classifications. The headwater to the watercourse is located at the north-eastern end of the Maramarua forestry block and runs in a northerly direction along the western side of Okaeria Road through the McWatt Rd properties, across State Highway 2 to the confluence with the Waitakaruru River at the Steen Road Quarry.

[8] The McWatt Road properties consist of reasonably flat lands with the paddocks consistent with dairy pasture, except for wetland areas which branch off the edges of the watercourse forming a part of the flood plain.

1 Summary of Facts at [1] - [9].

Investigation2

[9] On 24 February 2021, in response to a complaint alleging unlawful earthworks within a stream, Waikato Regional Council officers inspected the McWatt Rd properties. Upon arrival an excavator was operating on the property working on a farm race.

[10] The excavator was owned by Steve Barker Limited (SBL), with the operator being Stephan Francis Barker. Mr Barker is the sole director of SBL and has been in the industry for over forty years.

[11] The inspection of the McWatt Rd properties identified an area of earthworks originating south of the Maramarua Forest extending to the intersection of State Highway 2. The length of those earthworks and the streambed disturbance is approximately 1390 metres.

[12] The watercourse upstream of the excavated area was significantly different in nature and appearance containing thick vegetation and sediment. The newly excavated channel was approximately 1.3m deeper than the non-excavated channel. A flow of water was visibly running through the uncut watercourse and flowing into the base of the recently cut channel.

[13] To better record details of the inspection, Council officers classified the excavated watercourse into three sections. The inspection detailed:

• (a) within Area 1, excavation of a ‘V’ shape channel, approximately 350m of the main watercourse had been excavated and 200m of the second tributary of the watercourse had been excavated, a small amount of water (40-100mm in depth) was flowing through the channel;
  
• (b) within Area 2, excavation of a ‘V’ shape channel (more extensive than Area 1), approximately 290m of the watercourse had been excavated, excavation encroached into a wetland; and
  

2 Summary of Facts at [10] - [33], [41] – [42].

(c) within Area 3, excavation of a ‘V’ shape channel, approximately 550m of the watercourse had been excavated.

[14] The earthworks and stream excavation had all been completed without any erosion or sediment controls. Some remedial work was undertaken along parts of the flood plain post excavation with spoil being power hoed and re-seeding having taken place.

Abatement notices

[15] On 2 March 2021, GFL and SBL were issued with abatement notices requiring they cease and are prohibited from commencing the unlawful excavation in the beds and banks of a river (waterway).

Explanation3

[16] Mr Gregan was spoken to and in explanation outlined the following:

• (a) Mr Barker was engaged to construct a farm race and extend the culverts in the drain on the property;
  
• (b) while the excavator was there he directed Mr Barker to clean out the drain;
  
• (c) the drain was completely blocked and not allowing water to flow, causing extensive flooding during high rainfall;
  
• (d) the grazable pastoral land already existed, but parts had become very wet and full of rushes;
  
• (e) during the summer months the wetland dried out;
  
• (f) he believed the watercourse to be a drain as it was straight and did not have continuous flow; and
  
• (g) to his knowledge the drain had not been cleaned out for over 40 years.
  

3 Summary of Facts at [38].

RMA and Waikato Regional Plan rules

[17] Section 13(1)(b) RMA states no person may, in relation to a river, excavate or otherwise disturb the bed, unless expressly allowed by a resource consent.

[18] A river is defined at s 2 RMA and includes a continually or intermittently flowing body of fresh water; and includes a stream and modified watercourse.

[19] The activity contravened Rule 4.3.4.4 of the Waikato Regional Plan, which states any river or lake bed disturbance activity, including the excavation, drilling, tunnelling, that is not otherwise provided for by, or does not comply with, a permitted or controlled activity rule with this regional plan is a discretionary activity (requiring resource consent).

[20] There is no other rule in the Plan, or a resource consent granted to authorise the earthworks or riverbed disturbance activities carried out by the defendants. The defendants did not make inquiry in relation to any obligations in respect of the earthworks or riverbed disturbance activities undertaken.

Sentencing principles

[21] The purposes and principles of the Sentencing Act 2002 are relevant. The High Court in Thurston v Manawatu Wanganui Regional Council4 provides a useful summary of the approach to be taken to sentencing, which includes consideration of culpability; precautions taken to prevent discharges; the vulnerability or importance of the affected environment; extent of damage; deterrence; capacity to pay a fine; disregard for abatement notices; co-operation and guilty pleas.

Environmental effects

[22] The summary of facts records:5

• [40] No consideration was given by either Mr Gregan nor Mr Barker as to the disturbance of the habitat or wildlife recovery.
  

4 Thurston v Manawatu Wanganui Regional Council HC Palmerston North CRI-2009-454-24, -25, -27, 27 August 2010.

5 Summary of Facts at [40] – [48].

[41] WRC Officers attended the scene several days after the activity had been completed and noted no sediment loading in the small volume of water flowing through the watercourse therefore no water samples were taken.

[42] Whilst no evidence of sediment loading was noted, sediment build-up was observed in the vegetation downstream of the excavation work (near State Highway 2), suggesting the area would have been subject to significant sediment loading whilst the works were being undertaken.

[43] The effects of soil and sediment on waterways are well known. Generally, the introduction of elevated levels of suspended solids can physically alter waterways by affecting the chemical and physical water characteristics, plants, algae, invertebrates and fish, as well as human aesthetic, recreational, and spiritual values, of surface water, namely the receiving environment. These effects may include, but are not limited to:

1. elevated suspended solids resulting in excessive turbidity, in-filling of the riverbed and/or smothering;
   
2. sediment-laden water affects benthic macro-invertebrates by five primary mechanisms. These are:
   
   1. reduction of light penetration;
      
   2. abrasion;
      
   3. absorbed toxicants;
      
   4. changes in substrate character;
      
   5. reduction in food quality.
      

[44] Direct effects on fish usually occur when concentrations of suspended solids are high. These include avoidance of turbid water by some fish, lower growth rates, impairment of growth in fish that use vision during feeding and clogging of gills resulting in death.

[45] Indirect effects include reduction in the invertebrate food source (by mechanisms discussed above), avoidance by adult fish of silt gravels for spawning, and high egg mortality due to reduced oxygen levels in gravel fouled by silt deposition.

[46] Along the length of the excavated watercourse, WRC Officers noted numerous dead eels in the paddock as well as in and around the piles of material that had been removed during the excavation. The eels appeared to have been dead for a couple of days.

[47] Within the watercourse itself, WRC Officers again noted numerous dead or dying eels as well as eels which appeared to be struggling to find space in the shallow ponding water. Within a straightened span of 50m along Area 3, 48 dead eels were counted in the water.

[48] WRC Scientist, Dr Bruno David (Dr David), viewed images taken at the scene and made the following comments:

1. Watercourses that are not regularly disturbed support much higher numbers and diversity of aquatic biota and habitat.
   
2. When this instream habitat diversity is removed, a largely sterile environment results.
   

100. When the organic matter on the bed of the watercourse is disturbed through excavation, anoxic sediments are released creating a rapid decline in dissolved oxygen in the water. It is likely that many of the dead eels seen within the watercourse may have died from suffocation as many in the images did not appear to have direct physical injuries.
     

4. Mortality also occurs within and around deposited spoil piles and depending on the conditions during which excavation occurred, eel mortalities due to desiccation (wind/sun) is also common. This also appears to have occurred in this instance with numerous eels being found some distance from the watercourse.
   
5. It would likely take quite a long time for instream structure to rebuild to support the numbers of fish that appeared to have been residing in stream prior to excavation.
   

[23] Ms McConachy highlighted the sediment build-up observed downstream was suggestive of sediment loading, noting that within a straightened span of 50m along Area 3, 48 dead eels were counted in the water and that it is likely they died of suffocation.

[24] Mr Gurnick submitted the damage caused to the environment can only be described as falling at the lower end of the range. He noted the offending was of short duration and the scale of the offending was not extensive. He also submitted there was nothing significant about the area excavated in terms of its ecological value or any particular effects on the environment. He submitted there are no specific environmental effects as a result of the offending.

[25] Mr Gurnick submitted there was no evidence of sediment loading; that several days after the activity there was no sediment loading in the small volume of water that was flowing through the watercourse.

Conclusion on environmental effects

[26] While no sediment loading was noted two days after the alleged offending, sediment build-up was observed downstream of the excavation work suggesting

significant sediment loading while the works were undertaken. The effects of soil and sediment on waterways are well-known and can include excessive turbidity, infilling of the river-bed and/or smothering, and can have effects on benthic macro- invertebrates. It will likely take a lot of time for instream structure to rebuild to support the numbers of fish that appear to have been residing in the stream prior to the excavation. I note also the death of a number of eels. That illustrates that the immediate while possibly short-lived effects as they relate to sediment loads are of concern because they did cause the death of eels – placing the seriousness of the environmental effects into the low – moderate range.

Culpability

[27] Ms McConachy submitted that while not a deliberate breach of the Act, the works undertaken were deliberate. GFL claim to have been under the mistaken impression that the watercourse was a drain. Ms McConachy submitted given the extent of the works, the defendant should have known the rules they were required to operate under. She submitted the extent of the eel kill was foreseeable.

[28] Ms McConachy accepted the conduct of GFL does not involve the additional recklessness of the Okawa Limited farm owner in Waikato Regional Council v Okawa Limited,6 where the director had been on notice as to the need for a resource consent. Rather, she submitted, the conduct of GFL can be characterised as highly careless, similar to that of Greener Earth Limited (see Okawa) and Mr Veen,7 by being unaware of the relevant rules and making no enquiry about them.

[29] Ms McConachy submitted SBL is more culpable than GFL.

6 Waikato Regional Council v Okawa Limited [2018] NZDC 7725 (Okawa) – one charge of unlawfully permitting the excavation of a riverbed. 1.063km of stream cleaning and excavation. Defendants considered the stream to be a drain. Okawa Limited was on notice as to the need for a resource consent, behaviour characterised as reckless. Greener Earth Limited was careless to the highest degree, it failed to check out the lawfulness of what it was being asked to do with the Council. Starting point of $45,000 for Okawa and $35,000 for Greener.

7 Waikato Regional Council v Veen [2021] NZDC 23501 (Veen) – one charge of excavating a waterway. Earthworks and streambed disturbances of approximately 568m. Turbid water flowing through a section of the excavated stream, with a sediment-laden plume observed flowing from the tributary and mixing with clear water of the stream. Court observed that the discharge of sediment into waterways is a serious matter. Defendant believed the waterway was a drain, and he was unaware of the RMA rules relating to earthworks. Defendant was highly careless, should have made enquiry of the Council as to his responsibilities. Starting point of $37,000.

[30] Ms McConachy accepted the defendants did not profit directly from the offending. She did however refer to Judge Dwyer’s comments in Taranaki Regional Council v Bunn Earthmoving Limited,8 submitting there was a financial motive for GFL in undertaking the works, which were for farm improvement purposes, namely improved pastureland. GFL also indirectly profited from not having to expend money on a resource consent.

[31] Mr Gurnick submitted that GFL is considerably less culpable than SBL. He submitted the culpability for the offending sits squarely with SBL and Mr Barker. He submitted GFL’s offending was no more than careless. He also noted that GFL has been charged with permitting a contravention rather than contravening.

[32] GFL relied on SBL, believing it would have the necessary expertise to know whether consent was required. Mr Gurnick submitted GFL was entitled to rely on the expertise of SBL and Mr Barker, and it is arguable that Mr Barker and SBL should have known the rules when it came to excavating farm drains – they were the experts.

[33] Mr Gurnick submitted GFL did not appreciate that the area that was excavated fell under the technical definition of river as defined in s 2 RMA. GFL did not think it was carrying out illegal activity because it considered the area was a farm drain (or for technical purposes a “farm drainage canal”, which is expressly excluded from the definition of river s 2 RMA).

[34] Mr Gurnick submitted the Council’s internal memorandum of 30 June 2021 from Thomas Wilding to Mark Watt went to great lengths to establish the drain as a “river” for the purposes of the RMA. Without such detailed inquiry, the waterway was, on its face, no more than a “drain”.

8 Taranaki Regional Council v Bunn Earthmoving Limited DC New Plymouth CRI-2013-021-473, 5 November 2013 at [17] – three charges relating to work undertaken around a river without resource consent, 400m disturbed. A combination of factors led the Court to conclude that this was a matter of some considerable seriousness: the extent of the works; the seriously detrimental effects on the stream environment; the extent of discernible effects and the fact that it was not possible to reinstate the tributary to its original condition. Further, the offending was deliberate. Starting point of $70,000.

[35] While with the benefit of hindsight GFL recognised it should have obtained advice from the Council prior to carrying out the excavation, the actions were not intentionally unlawful, nor were they reckless. Mr Gurnick submitted that had GFL known that resource consent was required, as is consistent with its blemish free record, it would have obtained the appropriate consent.

[36] Given its location bordering on a state highway, this was not a clandestine attempt by GFL to undertake unlawful earthworks without being detected by authorities. Mr Gurnick submitted this supports the submissions that this offending was no more than careless.

[37] Mr Gurnick rejected entirely the suggestion that GFL’s actions were designed for a commercial purpose. He stated that GFL’s actions were designed to improve the environment. There was no commercially motivated activity other than trying to improve the drain.

Conclusion on culpability

[38] GFL as landowner has a responsibility to ensure that any works which occur on its land are undertaken lawfully. While it may contract with another to undertake works on its behalf, that responsibility remains. In determining its culpability for offending, the Court will consider the steps it took to ensure that the works were lawful. GFL hired an experienced company, SBL, whose director had been in the industry for over 40 years, to construct a farm race, extend culverts in a drain and clean out the drain. In terms of the agreed summary of facts what Mr Gregan determined to be a drain was a watercourse.9

[39] The works that were undertaken adversely impacted approximately 1,390m of the watercourse and, as I have found, had a low – moderate adverse effect on the environment.

[40] Despite engaging SBL, I find that GFL should have enquired of the Council or SBL as to the legality of the proposed works. The works were of some significance

9 Summary of Facts at [6].

and should have triggered for GFL the need to make enquiry. I find the company was careless. I do not accept that the activity was commercially motivated as such, but note it benefitted from the improvements to its land.

Starting point

[41] Ms McConachy referred me to the following decisions: Waikato Regional Council v Okawa Limited;10 Taranaki Regional Council v Bunn Earthmoving Limited;11 Waikato Regional Council v Whakapona Farms Ltd;12 and Waikato Regional Council v Veen.13

[42] Ms McConachy submitted the adverse cumulative effects of discharges on our waterways are an additional aggravating factor, which was present in the cases cited.

[43] Ms McConachy submitted this case has similarities to Okawa. In particular, she drew my attention to the following part of that decision:14

In my view, the starting point adopted by the prosecution [$65,000 - $75,000] is not untoward. I fall short, however, of adopting a starting point within this range on this occasion because I consider that a further warning to the farming and earthmoving/contracting industry should be signalled on this occasion. The opportunity to re-read many of the cases provided to me reveal that the message about the need for caution when excavating waterbodies, particularly where they may be viewed as "drains", has still not been fully appreciated. It is somewhat concerning that the Court has been talking about these sorts of matters for many years.

[44] Ms McConachy submitted starting points for environmental offending have increased markedly since Okawa.15 She referred to the case of Veen, in which the

10 Waikato Regional Council v Okawa Limited [2018] NZDC 7725.

11 Taranaki Regional Council v Bunn Earthmoving Limited DC New Plymouth CRI-2013-021-473, 5 November 2013.

12 Waikato Regional Council v Whakapona Farms Ltd [2019] NZDC 15533 – two charges for unlawful earthworks and excavation. Resource consent had been obtained for earthworks. Mr Greenbank undertook the earthworks without complying with conditions and went beyond the scope of the consent

- as a result sediment discharged into a watercourse. Adverse effects included elevated solids and turbidity in the receiving waterways. The Court found the effects to be moderately serious, because of the scale of the works and the length of time over which they occurred. The Court found that Mr Greenbank’s culpability was carelessness to the highest degree. Starting point of $45,000.

13 Waikato Regional Council v Veen [2021] NZDC 23501.

14 At [63].

15 Ms McConachy stated Okawa was decided almost seven years ago. She was mistaken, Okawa is a 2018 decision, not 2015 as in the citation provided by Ms McConachy.

starting point for an individual defendant, subject to a maximum penalty of half that of a corporate defendant, was $37,000, in a case involving earthworks of under half the length of this case (568m). The length of the earthworks and streambed disturbance undertaken in this case measured 1,390m. Ms McConachy noted that this is further than the excavations undertaken in any of the other cited cases.

[45] Ms McConachy highlighted the significant instream effects of this offending, including the death of eels. She submitted such significant effects on wildlife are not noted in the cases cited. This is on top of the cumulative adverse effects of soil and sediment in our waterways.

[46] Ms McConachy submitted a starting point of $65,000 is appropriate for GFL.

[47] Mr Gurnick submitted the starting point proposed by the prosecutor is manifestly excessive and consistent with a Council which is financially motivated to prosecute and strive for the highest penalty it can achieve. He submitted such an approach is inconsistent with the Solicitor-General’s Prosecution Guidelines 2013.

[48] Mr Gurnick referred me to the following cases: Waikato Regional Council v Hold the Gold Limited16 and Otago Regional Council v MFS Ventures Ltd & Nelson.17 He submitted the cases cited by the prosecutor are considerably more serious than the alleged offending in this case.

16 Waikato Regional Council v Hold the Gold Limited DC Hamilton CRN-14019501673, 674, 19 December 2014 – two charges of unlawfully disturbing the bed of a river and undertaking earthworks without adequate erosion and sediment controls. The defendant managed the farm and engaged a contractor to complete earthworks on the farm. The length of the gully and stream affected was approximately 1,510m. The effect of the offending on the environment was relatively significant in terms of the impact on aquatic habitat and the discharges of sediment into the excavated stream were pronounced, given the lack of sediment and erosion controls. The director of the defendant company was aware of a report giving advice on works. The Council was not consulted about the works. While there was no intent to cause environmental damage, the court characterised the offending as careless. Starting point of $30,000.

17 Otago Regional Council v MFS Ventures Ltd & Nelson [2018] NZDC 11952 – one charge of disturbing the bed of a tributary. MFS engaged a contractor to excavate the tributary. Excavation works extended 500m. Resource consent was necessary but had not been sought. Although the tributary was an artificial watercourse it had quite high instream ecological values which would have been impacted. Photos showed significant damage to streambed and banks. Defendants genuinely thought they were undertaking permitted works. The court commented there is an obligation on farmers, foresters and contractors to understand the rules under which they have to operate. Starting point for both defendants was $20,000.

[49] Mr Gurnick highlighted that in Veen it was a representative charge, and that Mr Veen himself carried out the earthworks rather than engaging the expertise of a drainage contractor. He submitted GFL is not as culpable as the defendant in Veen.

[50] Mr Gurnick submitted that the size of the commercial enterprise must also be taken into consideration; a small company should not necessarily be treated the same as a large-scale commercial operation.18 GFL has one director and three shareholders. It is essentially a company set up by Mr Gregan and his wife to operate their farm. Mr Gurnick submitted GFL is not the large commercial dairy operation that the Court saw in Waikato Regional Council v Trinity Lands Limited & Ors, which owned and operated 20 dairy farms.19

[51] Mr Gurnick submitted that a starting point of no more than $25,000 is justified.

Conclusion on starting point

[52] I have considered the cases cited to me. Points of similarity can be found in all of them. Leaving factual similarities to one side, the way in which the Court has approached offences of works undertaken in and around streams and rivers is consistent. The starting points manifest increasing concern about the adverse effects of such works on the environment.

[53] There is a sizeable difference between counsel on starting points.

[54] While GFL must accept responsibility for the alleged offending I do not think the starting point should be as high as proposed by the prosecutor, nor do I think it should be as low as suggested by Mr Gurnick.

[55] Mr Gurnick submitted that the prosecutor’s proposed starting point was manifestly excessive. I do not accept that submission – it was proposed with reference to comparable cases.

18 Referring to Waikato Regional Council v Graze Limited [2019] NZDC 15963.

19 Waikato Regional Council v Trinity Lands Limited & Ors [2020] NZDC 24380.

[56] I consider an appropriate starting point for GFL is in the range of $40,000 to

$50,000, which broadly aligns with the cases I was cited and takes into account my findings on effects and culpability. Each case is different and must be considered on its own facts. While there are similarities with Veen, the area of works in this case was considerably larger and the effects included dead eels. Given that GFL hired an experienced contractor to undertake the works I determine the appropriate starting point to be $45,000.

Aggravating and mitigating factors

Previous history / good character

[57] GFL has no previous enforcement history with the Waikato Regional Council.20

[58] Mr Gurnick submitted a discount of 10 percent should be afforded to GFL for previous good character and for its cooperation with the Council investigators. Mr Gurnick referred to Banora v Auckland Council in which Gault J considered the five percent discount for previous good character to be “rather light”.21 Gault J afforded the appellant who was 70 years old and had no previous convictions and was unlikely to reoffend, a 10 percent credit.

[59] I would adopt a discount of 10 percent for good character.

Plea

[60] If a plea is entered following the sentence indication, Ms McConachy submitted it will have come at a relatively early stage. She submitted however that a plea following a sentence indication – particularly for a corporate defendant – does not indicate the same level of acceptance of responsibility that would arise from a defendant who pleaded guilty at the first call, without first obtaining an indication as to the likely sentence. As a plea has not been entered, Ms McConachy noted she would make further submissions on this at sentence (in the event a plea is entered).

20 Summary of Facts at [49].

21 Banora v Auckland Council [2019] NZHC 2545 at [97] – [98].

[61] Mr Gurnick submitted the full 25 percent discount for early guilty plea is appropriate (if entered).

[62] I will address this matter if the sentence indication is accepted.

Result

[63] I would adopt a starting point of $45,000 and a discount of 10 percent for good character. I would address any discount for a guilty plea if the sentence indication is accepted.

[64] Ninety percent of any fine will be payable to the Council in accordance with s 342 of the RMA.

Judge MJL Dickey

District Court Judge | Kaiwhakawā o te Kōti ā-Rohe

Date of authentication | Rā motuhēhēnga: 26/05/2022