Hawke's Bay Regional Council v Edwards Bros Construction (Hawke's Bay) Limited [2023] NZDC 15584 (29 August 2023)

Last Updated: 8 September 2023

IN THE DISTRICT COURT AT HASTINGS I TE KŌTI-Ā-ROHE KI HERETAUNGA

CRI-2022-020-003333 via AVL [2023] NZDC 15584

HAWKE’S BAY REGIONAL COUNCIL Prosecutor

v

EDWARDS BROS. CONSTRUCTION (HAWKE’S BAY) LIMITED Defendant

Hearing:	12 June 2023
Appearances:	NM Graham for the prosecutor RB Philip for the defendant
Judgment:	29 August 2023

SENTENCING DECISION OF JUDGE MJL DICKEY

Introduction

[1] Edwards Bros. Construction (Hawkes Bay) Limited is charged that between 1 July and 5 July 2022 it excavated the bed of the Ngaruroro River contrary to s13(1)(b) of the Resource Management Act 1991 as it was not expressly allowed by a national environmental standard, a rule in a regional plan or a resource consent.

[2] The defendant has pleaded guilty to the charge and is liable to a maximum fine not exceeding $600,000.

HAWKE’S BAY REGIONAL COUNCIL v EDWARDS BROS. CONSTRUCTION (HAWKE’S BAY) LIMITED [2023] NZDC 15584 [29 August 2023]

[3] The Council seeks a starting point for the offending of $25,000 while the defendant proposes a starting point of up to $10,000.

[4] No application for discharge without conviction has been made and I do not consider there are any circumstances that would support such an application.

Background1

[5] Edwards Bros. Construction (Hawkes Bay) Limited is a duly incorporated company operating in the engineering field in Hawke’s Bay. As part of its business it owns and operates heavy machinery for use in excavation, including extracting gravel from rivers.

[6] The Ngaruroro River is the most important gravel resource in Hawke’s Bay due to the quality and suitability of its gravel for a range of engineering end uses and its proximity to demand centres. To ensure fairness and protection of the resource, extraction from this river is carefully managed and consented extraction is consistent with current natural supply.

Regulatory framework2

[7] Gravel extraction from river beds in Hawke’s Bay is governed by Rules 73 and 74 of the Hawke’s Bay Regional Resource Management Plan (HBRRMP). Rule 73 permits extraction of small quantities of bed material (less than 0.25 cubic metres per day and less than one cubic metre per year) subject also to other conditions.

[8] Rule 74 classifies all other extraction of sand, gravel or other material from the bed of any river as “restricted discretionary” requiring a resource consent or authorisation from Hawke’s Bay Regional Council.

[9] “Gravel consents” are issued to applicants permitting extraction of gravel from specific river beds for defined periods within a 12 month window running from 1 July to 30 June the following year. The consents are subject to a number of conditions.

1 Agreed Summary of Facts at [1] and [5].

2 Agreed Summary of Facts at [2], [3] and [6].

The offending3

[10] On 5 July 2022 an officer from the Regional Council was conducting surveillance patrols on the Ngaruroro River. He could see a digger and two Moxy’s (articulated haul trucks used in construction) operating on the other side of the river extracting gravel. As the person responsible for overseeing the gravel consents for the Council, the officer was aware that no gravel consents had yet been issued for the new year beginning 1 July 2022.

[11] The officer and a colleague approached the workers and asked them to produce the consent under which they were working. They were told that there was a consent, but it was not on site (having a copy of the consent during work is required under any consent). They advised that they had been extracting gravel for approximately six days and had extracted approximately 7,000 cubic metres in that time. The workers were asked to cease work immediately and leave.

[12] The workers were employed by the defendant. Roger Edwards, one of two directors of the defendant company, was contacted. He advised that they were extracting under a consent issued to Higgins Contractors.

[13] Council records show that a consent (number 1232101) had been issued to Higgins Contractors on 27 July 2021 to extract up to 30,000 cubic metres from that location. That consent was no longer active, having expired on 30 June 2022. As part of that consent (and every consent) the consent holder must file returns when they extract in order to keep track of what is taken. Higgins Contractors had filed a return for October 2021 confirming that 18,479m3 was extracted. This left 11,521m3 remaining under the consent.

[14] Higgins Contractors had engaged the defendant around six weeks earlier to extract the remaining entitlement under the consent. The defendant was not instructed to continue extracting after the consent expired, and the defendant admitted that the work completed after 30 June 2022 was its fault.

3 Agreed Summary of Facts at [7] – [12], [14] and [15].

[15] The two piles extracted and stockpiled at the river as of 5 July 2022 were photographed and, using imaging tools, were measured to be approximately 4,400m3 (the smaller pile) and 15,300m3 (the larger pile).

[16] The defendant has previously been granted four consents for gravel extraction so is well aware of the conditions, including that the extraction period under the consents expires on 30 June each year. The defendant has previously received a formal warning for breaching a gravel consent.

Sentencing principles

[17] 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.

[18] I address the environmental effects of the offending and the defendant’s culpability. I will then consider the appropriate starting point for the offending and any aggravating and mitigating factors personal to the defendant.

Environmental effects

[19] It is accepted that the Ngaruroro River is the most important gravel resource in Hawke’s Bay due to the quality and suitability of its gravel for a range of engineering end uses, and its proximity to demand centres. Extraction is carefully managed and consented extraction is consistent with current natural supply. The purpose of the rules controlling extraction is to sustainably manage extraction from rivers for flood protection purposes, to ensure community safety, and allow for economic development while not compromising cultural, social and environmental outcomes and values associated with the region’s freshwater resources.5

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

5 Agreed Summary of Facts at [4]-[5].

[20] Ms Graham, counsel for the prosecutor, acknowledged that this is not a case where there is an immediate effect on the environment or damage to the area. However, Ms Graham submitted that anyone interfering with a natural resource for their own gain is rightly a matter of public interest. Operating outside the terms of consent puts the entire consent process into jeopardy and risks future applications being declined.

[21] Mr Philip, counsel for the defendant, acknowledged that there was no evidence of effects on the environment of exceeding the consented timeframe by six days, and addressed how the defendant’s activities impacted on macroinvertebrate community health. He argued that gravel substrates are not ideal habitat for macroinvertebrates and fish. He submitted there is no suggestion that bankside riparian value has been completely degraded as a result of the extraction of gravel from the river, as there was no removal of overhanging vegetation (a potential habitat for fish) or undermining the shade value of pre-existing riparian vegetation or the like. He also submitted that as there was a consent granted for extraction of gravel, there is no suggestion that the sedimentation by the extraction process of gravel six days after consent expired resulted in a loss of habitat to any aquatic life or any destabilisation or contribution to the damage to the riverbed.

[22] I note that none of the effects addressed by Mr Philip were raised by the Council for this sentencing. Taking note of the fact that a consent, albeit expired, had authorised the extraction of gravel, and having regard to the Council’s acknowledgement that there are no immediate effects on the environment, I determine that the effects of the unlawful extraction are low.

Culpability

[23] Ms Graham emphasised that the defendant is an experienced industry participant and has previously been granted four consents for gravel extraction. It is, therefore, well aware of the conditions – including that the extraction period under the consents expires on 30 June each year. It is not, therefore, a situation where the defendant has been let down by contractors or is unaware of the rules. The extraction

to 5 July 2022 is five days over the consent timeframe. She submits that the offending cannot be said to be careless against that background, but was deliberate.

[24] With reference to the defendant’s claim that there was no financial benefit, Ms Graham responded that that was difficult to understand when the purpose of extraction is either for its own benefit or to fulfil the terms of an agreement with another contractor.

[25] Mr Philip noted that the relevant consent was held by Higgins Contractors, and that it had authorised extraction of up to 30,000m3 from the location on the Ngaruroro River where the defendant company was located. He noted that, in terms of a return filed by Higgins in October 2021, 11,521m3 remained for extraction under the consent.

[26] Approximately two months before the consent expired the defendant was contracted to extract the remaining entitlement. The defendant transported its heavy machinery to the site, however there were some weather and operational delays. One was to wait for water levels in the river to drop, and the second was to identify the best extraction point for the best quality of gravel. Mr Philip said that this placed time pressure on the defendant company.

[27] Mr Philip acknowledged that the Higgins consent expired on 30 June 2022. The company acknowledges that it worked four days beyond the consent period to 6 July 2022. It says that it excavated the gravel after the consent date in order to meet its contractual obligations to Higgins.

[28] The company contended that, while the offence was admitted for extracting the gravel after the consent had expired, there are no aggravating features of this offending to suggest excessive extraction of gravel or that the extraction was in an area of the river where no consent was initially granted.

[29] The company submitted that there was no financial benefit obtained for the work beyond the consent date to extract gravel. The defendant suffered financial detriment as it paid a haulage contractor for six heavy transport trips to move the defendant’s heavy equipment to and from the excavation site.

[30] When assessing culpability, there are two elements of the offending that cause me concern. The first is that the defendant is an experienced contractor and is aware

– from past experience – of the requirements of resource consents for the extraction of gravel. The second is that, despite being aware of those requirements, it chose to continue with the extraction following the expiry of the consent in order to meet its contractual obligations. This was not accidental offending or ignorant offending, it was deliberate offending.

[31] Resource consents authorise activities that are not otherwise allowed. Generally, they contain conditions which manage the effects of the activity on the environment. In this case there is an added benefit to the consent process in that it ensures fairness between users and ensures that the resource is protected by careful management of extraction, consistent with current natural supply. I acknowledge that the gravel extracted came within the parameters authorised by the expired consent, however I am concerned that the company determined it was appropriate to work beyond the term of the consent.

Starting point

[32] The Council submitted that a starting point in the vicinity of $25,000 was appropriate while the defendant submitted that a fine of up to $10,000 would reflect the circumstances of the offending. That said, Mr Philip submitted that instead of a fine the Court could convict and discharge the defendant upon which $10,000 could be advanced to the Hastings District Council cyclone relief fund. He noted that the company has been engaged in clean up work after Cyclone Gabrielle for the benefit of the local community, and the betterment and advancement of a safer Hawke’s Bay around riverways and hills. It has, for several months, been involved in an intensive clean-up in the Dartmoor Valley, removing silt and debris from an orchard property. It has not charged for the work carried out on private properties. Ms Graham advised that there was no opposition to such a proposal, provided that the Court proceeded with the sentencing process insofar as setting a starting point and addressing any aggravating and mitigating factors.

[33] Ms Graham referred to two cases which she said provided useful comparisons for sentencing purposes. The first was Canterbury Regional Council v SOL Shingle Limited.6 The company excavated gravel from a river otherwise than in accordance with its consent by extracting 25 per cent more than the consent permitted. The Court discussed the reasons behind the excavation from riverbeds being an activity controlled by the Act, and noted:7

Consents are granted on the assumption that conditions will be complied with so that the failure to do so goes to the heart of the resource consent system. If conditions may be breached either inadvertently or deliberately without significant consequences, neither local authorities nor the wider community can have any confidence in the resource consent system.

[34] A starting point of $25,000 was adopted.

[35] Ms Graham also referred to Canterbury Regional Council v Taylors Contracting Company Limited.8 In that case two charges arose from one incident relating to excavation in a river. Ms Graham acknowledged that the offending was more serious than here, given that it also involved diversion of water, but the failure to abide with the terms of a gravel extraction consent make it relevant. An overall starting point of $50,000 was adopted with the fine being split between the two charges.

[36] Considering the defendant’s experience in the field of gravel extraction, its knowledge of the conditions of those consents, and its decision to fill its contract beyond the expiry of the consent, Ms Graham submitted that a starting point of

$25,000 is appropriate.

[37] Mr Philip referred to two cases in support of his submissions in regard to the starting point. The first was West Coast Regional Council v Cargill Road Barrytown Limited.9 The defendant was subject to one charge concerning work undertaken on the bed of a creek and its riparian margins, comprising substantial earthworks, vegetation removal among others. There were environmental effects on the

6 Canterbury Regional Council v SOL Shingle Limited DC Christchurch CRI-2014-009-003604, 18 September 2014.

7 At [14].

8 Canterbury Regional Council v Taylors Contracting Company Limited [2018] NZDC 7710.

9 West Coast Regional Council v Cargill Road Barrytown Limited [2021] NZDC 18213.

invertebrate community health, water quality and riparian vegetation. The Court imposed a starting point of $40,000. Mr Philip submitted that the aggravating features of the Cargill Road decision is not apparent here. There is no apparent environmental impact before the Court.

[38] Mr Philip provided another example which he said was of “higher gravity” than the defendant’s situation, being Hardegger v Southland Regional Council.10 In that case the property owner employed a contractor to carry out laning and subdivision work with limited supervision. The contractor constructed a gravel embankment on the bed of the Oreti River, which diverted the river away from the true bank of the river protecting farmland to its west. The Court found the defendant’s failure to consider the need for a resource consent was reckless. On appeal the High Court found a starting point of $50,000 was appropriate. Mr Philip submitted that the decision is a blatant non-consented activity with immediate effects on the environment and for the betterment of the defendant.

[39] Having regard to the deliberate nature of the offending and that the defendant is an experienced contractor, I determine that a starting point of $25,000 is appropriate. I echo the Court’s comments in SOL Shingle Limited that failure to comply with resource consents goes to the heart of the resource consent system. Breaches of consents must carry with them consequences so as to ensure the integrity of the system.

Aggravating and mitigating factors

[40] I am advised that the guilty plea was entered at the earliest opportunity and that there is no reason that the usual 25 per cent discount should not be afforded to the defendant. I agree.

[41] I was not made aware of any previous convictions for this defendant, so would allow a discount of five per cent for good character.

[42] Allowing for discounts of 30 per cent, that would bring the end point for the fine to $17,500.

10 Hardegger v Southland Regional Council [2017] NZHC 469.

Offer to pay Cyclone Relief Fund

[43] I had the defendant’s offer to pay $10,000 to the Hastings District Council Cyclone Relief Fund if I were to convict and discharge it.

[44] In determining whether to convict and discharge a defendant I must consider the provisions of ss 108 and 109 of the Sentencing Act 2002. Section 109 requires that I must not convict and discharge an offender unless I am satisfied that conviction is sufficient penalty in itself.

[45] Having regard to the circumstances of the offending, and recent events in Hawke’s Bay; the advice I have received about the defendant’s engagement in clean- up work after Cyclone Gabrielle for the benefit of the local community; and its offer to pay $10,000 to the Cyclone Relief Fund, I determined in all the circumstances that it is appropriate to convict and discharge the defendant on the basis of that offer.

[46] By Minute dated 1 August 2023 I indicated that the defendant’s proposal was acceptable to the Court. However, before finalising the sentence, I required assurance that the donation has been paid.

[47] By memorandum dated 17 August 2023, the defendant advised $10,000 was paid to the Hawke’s Bay Disaster Relief Fund managed by the Hawke’s Bay Regional Council.

Outcome

[48] Accordingly, the defendant is convicted and discharged.

Judge MJL Dickey

District Court Judge | Kaiwhakawā o te Kōti ā-Rohe

Date of authentication | Rā motuhēhēnga: 29/08/2023