Glenholme Farms Ltd v Bay of Plenty Regional Council [2012] NZHC 2971 (9 November 2012)

Last Updated: 5 December 2012

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CRI 2012-470-7
CRI 2012-470-8 [2012] NZHC 2971

BETWEEN GLENHOLME FARMS LTD AND ALEXANDER PAUL ATKINSON Appellants

AND BAY OF PLENTY REGIONAL COUNCIL Respondent

Hearing: 24 September 2012

Counsel: A G W Webb for Appellants

A A Hopkinson for Respondent

Judgment: 9 November 2012

_{JUDGMENT OF HEATH J}

This judgment was delivered by me on 9 November 2012 at 3.00pm pursuant to Rule

11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:

Buddle Bentley McCleary, PO Box 43, Whakatane Cooney Lees Morgan, PO Box 143, Tauranga Counsel:

_{A G W Webb, PO Box 106215, Auckland}

GLENHOLME FARMS LTD AND ATKINSON V BAY OF PLENTY REGIONAL COUNCIL HC TAU CRI

2012-470-7 [9 November 2012]

Introduction

[1] Following a defended hearing in the District Court at Tauranga in November

2011, Glenholme Farms Ltd (Glenholme) and Mr Atkinson (the sole director of the company and its farm manager) were each convicted on charges of unlawfully discharging untreated dairy effluent into a drain.1 Sentencing took place on 14

December 2011. Judge J A Smith fined Glenholme $36,000. Mr Atkinson was fined

$17,000. Both were ordered to pay Court and solicitors’ costs. Ninety percent of the fines were to be paid to the informant, the Bay of Plenty Regional Council (the Council).2

[2] Glenholme and Mr Atkinson each appeal against both conviction and sentence, seeking an extension of time to do so. The applications for an extension of time were, initially, opposed by the Council.

Application for extension of time to appeal

[3] It is common ground that the appeal has been filed out of time. However, in accordance with usual practice, I heard argument on the merits in order to determine whether an extension of time was justified. The points that arose on the challenges to both conviction and sentence were distinctly arguable and of some importance to territorial authorities.

[4] At the conclusion of the hearing, I indicated that I proposed to grant extensions of time to appeal so that the points raised could properly be considered. At that stage, Mr Hopkinson, for the Council, did not oppose that course. I make an

_{order extending the time to bring both appeals.}

1 Bay of Plenty Regional Council v Glenholme Farms Ltd DC Tauranga CRI 2011-047-136,

9 November 2011. The charges were brought under s 15(1)(b) of the Resource Management Act

_1991.

2 Bay of Plenty Regional Council v Glenholme Farms Ltd DC Tauranga CRI 2011-047-136,

14 December 2011, at paras [26] and [27]. The order requiring 90% of the fine to be paid to the

Council was made under s 342 of the Resource Management Act 1991.

Background facts

[5] Glenholme owns a farm property at Nukuhou. In March 2006, the Council issued a resource consent (the Consent) authorising Glenholme to discharge untreated dairy effluent to pasture. The effluent is applied through the use of a travelling irrigator that pumps the effluent from a pond.

[6] The Consent was subject to conditions, one of which required Glenholme to ensure that discharged effluent did not enter any drain or natural watercourse, either directly or by overland flow.3

[7] On 4 November 2010, a Council officer undertook a random inspection of the farm property. He located a large amount of effluent ponding near the travelling irrigator. The ponded effluent had travelled through a shallow channel, over a small embankment and into a drain.

[8] There were few factual matters in issue at the defended hearing. What follows is a summary of relevant facts. To a large extent, the summary is taken from the conviction judgment.4

[9] At the relevant time, the irrigator was about 20 years old. It had worked without significant problems for most of that time, even though there was no regular maintenance plan in place. About two months before the event giving rise to the charges, the irrigator suffered a mechanical failure. The irrigator underwent a complete overhaul. The problem appeared to have been fixed. Mr Atkinson thought that the reason for the breakdown was very unusual and that the work done during the overhaul meant that it was unlikely to reoccur in the foreseeable future. Nevertheless, it did and, on the second occasion, it resulted in the unlawful discharge in issue.

[10] Mr Atkinson had planned to use the irrigator in Paddock 26 on 3 and 4

_{November 2010. On 3 November, he inspected it at that location. Mr Atkinson was}

3 _{Condition 7.5.}

4 Bay of Plenty Regional Council v Glenholme Farms Ltd DC Tauranga CRI 2011-047-136,

9 November 2011, at para [9].

aware that Paddock 26 was susceptible to ponding from irrigation and that spreading

in that area was “risky”.

[11] About two hours before the Council’s inspector arrived, on 4 November

2010, the irrigator began its work. While operating, it stalled. As a result, effluent was discharged. It ponded. In breach of Condition 7.4 of the Consent, the ponded effluent flowed, through a depression in the paddock, into a farm drain. From that drain, it entered a tributary of the Nukuhou River, some several hundred metres beyond the farm boundary. Subsequent water testing revealed a significant amount of effluent in the waterway.

[12] At the time the irrigator stalled, it was not in the direct sight of any of the farm workers. While, from a distance, Mr Atkinson had viewed it working several times that day, he did not become aware of the stalling, or the discharge of effluent, until after that happened.

[13] On becoming aware of the discharge, Mr Atkinson and staff members immediately closed off about 80 metres of the drain and pumped the liquid elsewhere, to be disposed of by tanker. That was done in accordance with a Council direction and minimised the adverse effect of the discharge on the tributary.

The offence

[14] The offence of discharging a contaminant in this situation is created by ss 15(1) and 338(1)(a) of the Resource Management Act 1991 (the Act). The penalty for such an offence is, in relation to a natural person, a term of imprisonment not exceeding two years or a fine not exceeding $300,000 and, in the case of a company,

a fine not exceeding $600,000.5 Both a principal (in this case the company) and an

agent (in this case Mr Atkinson, its director) are liable for such offences.6 The offence is one of strict liability.7

5 _{Resource Management Act 1991, s 339(1).}

6 _{Ibid, s 340(1)(a).}

7 Ibid, s 341(1).

[15] It was common ground that the elements of an offence under s 15 were proved by the Council. At issue in the District Court was whether Glenholme and Mr Atkinson had made out a statutory defence. The defence is a statutory manifestation of the total absence of fault defence that is generally available for regulatory offences.8

The statutory defence

[16] Section 341(2) sets out the statutory defence:9

341 Strict liability and defences

...

(2) Subject to subsection (3), it is a defence to prosecution of the kind referred to in subsection (1), if the defendant proves—

(a) That—

(i) The action or event to which the prosecution relates was necessary for the purposes of saving or protecting life or health, or preventing serious damage to property or avoiding an actual or likely adverse effect on the environment; and

(ii) The conduct of the defendant was reasonable in the circumstances; and

(iii) The effects of the action or event were adequately mitigated or remedied by the defendant after it occurred; or

(b) That the action or event to which the prosecution relates was due to an event beyond the control of the defendant, including natural disaster, mechanical failure, or sabotage, and in each case ...—

(i) The action or event could not reasonably have been foreseen or been provided against by the defendant; and

(ii) The effects of the action or event were adequately mitigated or remedied by the defendant after it occurred.

_{(emphasis added)}

8 _{For example, see Civil Aviation Department v MacKenzie [1983] NZLR 78 (CA).}

9 I have highlighted those parts of s 341(2) that are in issue on this appeal.

[17] The defence must be raised by a defendant giving written notice to the prosecutor within seven days after the service of a summons or within such further time as the Court may allow. The notice must state that the defendant intends to rely on the statutory defence and must identify primary facts on which the defence is based.10 While no such notices were given in this case, I shall consider the appeals as if they had been.

[18] Judge Smith held that the statutory defence had not been made out. Mr Webb, for Glenholme and Mr Atkinson, contended that the Judge was wrong to do so. The conviction appeals turn on the interpretation to be given to s 341(2)(b) of the Act.

The District Court decisions

(a) The conviction judgment

[19] The sole issue was whether Glenholme and Mr Atkinson had proved, on a balance of probabilities, the elements of the s 341(2)(b) defence. Judge Smith held that they had not because the discharge was not beyond the control of the defendants and could have been reasonably foreseen or provided for.11 He expressed no final view on whether steps to mitigate the effect of the discharge were adequate.12

[20] In holding that the events were not beyond the control of Glenholme and Mr Atkinson, Judge Smith took the view that the irrigation itself was deliberate and that mechanical failure did not cause the discharge. He added that “it merely meant that [the discharge] did not meet the conditions of consent”.13 Judge Smith, in putting the matter “more bluntly” said that someone “should not be operating the consent if [that

_{person could not] comply with the conditions”.}14

10 _{Resource Management Act 1991, s 341(3).}

11 Bay of Plenty Regional Council v Glenholme Farms Ltd DC Tauranga CRI 2011-047-136, 9

_{November 2011 (Judge J A Smith), at paras [17]–[24].}

12 _{Ibid, at para [25].}

13 _{Ibid, at para [17].}

14 Ibid, at para [18].

[21] On the “reasonable foreseeability” point the Judge observed that the “failure of irrigators is well attested to in prosecutions before” the Court.15 He concluded that “constant vigilance is required if the irrigator does not have safety controls” and, in the absence of a management plan for monitoring and detecting problems with the irrigator, “ponding and overland flow was reasonably foreseeable” and “controlled by the consent”.16

(b) Sentencing

[22] In sentencing Glenholme and Mr Atkinson, the Court regarded “general deterrence” as the primary purpose of sentencing for offending involving irrigators in the Bay of Plenty region.17 After assessing the nature of the environment and the extent of damage, the Judge took a starting point of $45,000 for the fine, apportioning it as to $30,000 (for the company) and $15,000 (for Mr Atkinson).18

[23] An uplift of 20% was applied for a previous conviction for an offence under the Act, committed by the company at a time when Mr Atkinson was involved in its management. A credit of 5% was given for remorse. Assessing totality, the Judge ordered that Glenholme pay a fine of $36,000 and Mr Atkinson one of $17,000.19

[24] In addition, Judge Smith made two (unopposed) enforcement orders to respond to the offending:20

(a) By 15 February 2012, [Glenholme and Mr Atkinson] are to ensure that a failsafe device and an alarm system are installed that will switch off the farm’s effluent irrigator if it stalls or if there is a loss of pressure in the irrigation pipe and notify the operator; and

(b) By 15 February 2012, [Glenholme and Mr Atkinson] are to provide an Effluent Management Plan to the Regional Council which has been prepared by a suitably qualified person and which is considered satisfactory by the Regional Council.

15 _{Ibid, at para [21].}

16 _{Ibid, at paras [22]–[24].}

17 Bay of Plenty Regional Council v Glenholme Farms Ltd DC Tauranga CRI 2011-047-136, 14

_{December 2011, at para [6].}

18 _{Ibid, at paras [11], [12], [18] and [19].}

19 _{Ibid, at paras [20], [22], [24], 26] and [27].}

20 Ibid, at para [8]. These orders were made under ss 339(5)(a) and 314 of the Resource

Management Act 1991.

[25] On the conviction appeal, Mr Webb, for Glenholme and Mr Atkinson, submitted that the Judge erred in his approach to the s 341(2)(b) defence. He contended that the Judge erred in failing to consider whether the specific mechanical failure that caused the discharge “could not reasonably have been foreseen or been provided against” by Glenholme and Mr Atkinson.

[26] Mr Webb’s proposed approach requires the words “action or event” in s 341(2)(b)(i) to be read as referring to the mechanical failure and the words “could not reasonably have ... been provided against” as referring to that failure.21

[27] On the sentence appeal, Mr Webb submits that the penalty imposed was manifestly excessive, having regard to the mitigating factors identified by the Judge and others to which he referred. In addition, Mr Webb questioned the appropriateness of the uplift applied to reflect the prior offending by Glenholme.

[28] Mr Hopkinson submitted that the Judge correctly interpreted s 341(2)(b) by focussing on the pooling and overflow as the “action or event” to which s 341(2)(b)(i) referred. Further, in terms of an approach to whether that could reasonably have been foreseen or provided against, Mr Hopkinson supported the Judge’s view that the issue should be addressed by reference to the need for regular maintenance of such equipment and supervision of the work for which it is used.

[29] As to sentence, Mr Hopkinson contended that the Judge imposed a penalty against both Glenholme and Mr Atkinson that reflected their relative culpability for the offending, having regard to the maximum sentences available. He also supported

_{the uplift for the prior offending and the credit given for mitigating factors.}

21. Section 341(2) is set out at para [16] above. Glenholme and Mr Atkinson were not legally represented in the District Court. This issue was not raised explicitly with the presiding Judge.

(a) The conviction appeal

[30] Both counsel acknowledged that there is no decision of this Court or the Court of Appeal on point. Mr Webb submitted that the closest case, on the facts, was McKnight v NZ Biogas Industries Ltd.22 In that case, the company was charged with discharging a contaminant otherwise than as permitted in a regional plan, resource consent or regulation. While the Court’s observations are of limited value (given the different point being addressed), some have marginal relevance to the s 341(2) defence. Delivering the judgment of the Court of Appeal in McKnight, Gault J said:23

A person may discharge contaminant within s 15(1) though not intending to do so. That follows from s 341(1) which says that it is not necessary for intention to be proved. Any requirement that the person foresee, or be aware of, the discharge would not be consistent with the available defences. It is difficult therefore to see room for any mental element in the act of discharge.

Plainly however a person could not be said to discharge the contaminant unless there is a causal connection between the person and the discharge. Even this causative element, however, is to be considered in light of the statutory defence available of proof that the offence was due to an event beyond the control of the defendant that could not reasonably have been foreseen or been provided against.

[31] I was referred to decisions of the District Court in which the issue had been considered; in particular Auckland Regional Council v Bitumix Ltd,24 and Manawatu- Wanganui Regional Council v Schulze.25

[32] In Bitumix, Judge Willy drew attention to s 5 of the Act, which identifies its purposes. Adopting counsel’s submission, the Judge held “that the general policy of

_{the Act in relation to the sort of matters at issue in this case, is to impose strict duties}

22 _{McKnight v NZ Biogas Industries Ltd [1994] 2 NZLR 664 (CA).}

23 _{Ibid, at 669.}

24 Auckland Regional Council v Bitumix Ltd DC Otahuhu CRN 3048009825/93, 27 September

1993.

on persons who are in a position by their activities to affect the environment”.26

Referring specifically to s 341(2)(b), Judge Willy said:27

Section 341(2)(b) is in my view a clear “declaration of policy” as to the circumstances in which a defendant will be permitted to exculpate himself from the consequences of a discharge of a contaminant onto land, in circumstances where it may enter water. It imposes a standard of care upon those having control of premises on which contaminants are accumulative to ensure that the equipment used is adequate to the task, while allowing for the reality of mechanical failure, but only in circumstances where it could not reasonably have been foreseen or provided against. That of course, implies the requirement that the plant and equipment used shall be of an appropriate standard, regularly serviced and checked for any defects. It also implies that the systems in use in any particular plant in which contaminants are manufactured or accumulated shall be such that in the event of plant failure the contaminant will not be allowed to escape onto land in circumstances where it may enter water. Whatever may be said about the defendant’s inability to know of the hairline crack on the back of this valve, it is clear beyond any doubt in this case that the systems employed by the defendant were such that inevitably any leakage of contaminant from those valves would end up on land and from there find its way into the sump and stormwater system.

(emphasis added)

[33] In Manawatu-Wanganui Regional Council v Schulze,28 Judge Thompson considered s 341(2)(b) in the context of a charge (to which Mr Schulze’s principal had already pleaded guilty), of discharging a contaminant onto land when it may have entered a waterway. After setting out s 341(2)(b), Judge Thompson continued:

[26] In my view it is clear that the “event” to which this prosecution relates in terms of sub-section (2)(b) was the overflowing of the ponds. That did not occur due to an event beyond the control of either the two present defendants. I emphasise that an event beyond a defendant’s control does not need to be as extreme as a disaster, or a mechanical failure, or sabotage or something of that kind. This occurred because the ponds were not monitored and the levels were not kept within operable limits. Secondly, a defendant, under that sub-section, is required to prove on the balance of probabilities, that the event could not reasonably have been foreseen or been provided against.

[27] In my view, on any objective basis, nothing could have been more reasonably foreseeable than if this relatively unsophisticated system was not well monitored and not well managed, it would fail and overflows would occur It could reasonably have been provided against by having clear and

26 Auckland Regional Council v Bitumix Ltd DC Otahuhu CRN 3048009825/93, 27 September

_{1993, at p 33.}

27 Ibid, at p 40.

simple processes in place to monitor it and manage it. There [were] none at all.

(emphasis added)

[34] While other decisions of the District Court were cited, they are no more than further illustrations of the type of approach taken in that Court. In the absence of any binding authority, I do not need to discuss them.

[35] In my view, the approach taken by Judge Thompson in Schulze is an accurate reflection of the text of s 341(2)(b), read in light of its purpose.29

[36] Section 341(2)(b)(i)30 focuses on the “event ... to which the prosecution relates”. The prosecution relates to the entry of the contaminant into a drain or natural waterway, contrary to the terms of the Consent.31 Mechanical failure, of itself, is not an event giving rise to the prosecution, even though the relevant event might be caused by it. The possibility of an unlawful discharge into a drain or waterway was reasonably foreseeable.

[37] The fact that the equipment was over 20 years old was indicative of a need for a maintenance plan that included means of monitoring and detecting problems with the machine,32 to avoid mechanical problems that might cause an unlawful discharge. The fact that an unusual problem had emerged some two months earlier should have elevated need for care to ensure the failure did not reoccur. In contrast to the way in which Mr Webb argued the case, I regard those factors as indicators that a relevant event (unlawful discharge) caused by mechanical failure was reasonably foreseeable and could have been prevented through the use of an appropriate maintenance plan.

[38] In practical terms, that is the same concern to which Judge Smith referred. He said:33

29 _{Interpretation Act 1999, s 5(1).}

30 _{Set out at para [16] above.}

31 _{See para [6] above.}

32 _{See para [21] above.}

33 Bay of Plenty Regional Council v Glenholme Farms Ltd DC Tauranga CRI 2011-470-136, 9

[19] Given the number of past irrigations failures dealt with by this Court over many years, I am concerned as to whether or not consent for irrigators can properly be issued in the future. Failure of such irrigators is inevitable and, unfortunately, regular.

[20] Without proper control devices, breaches seem to be inevitable. This is supported by a non-compliance rate in the Bay of Plenty over the last year of in excess of 30% – 32% in this catchment – in recent compliance monitoring. I should add here I accept that not all of that non-compliance relates to irrigator failures. But I cannot but wonder if more regular monitoring would not demonstrate continuing non-compliance, especially with irrigators.

[39] For those reasons, I find that Glenholme and Mr Atkinson did not discharge the onus of proving the elements of the s 341(2)(b) defence. The appeals against conviction must be dismissed.

(b) The sentence appeal

[40] On the sentence appeal, the issue is whether the fines imposed were manifestly excessive. An appellate Court must focus on the substantive question, as opposed to conducting a minute analysis of the way in which the sentence was constructed.34

[41] I agree with Judge Smith that the primary sentencing goal, in an environmental prosecution, must be deterrence; both of those before the Court and others who might commit like offences. Sentences should be pitched at a level that provides a disincentive for a person to take the risk of environmental damage to avoid the need to expend money on repairs and maintenance of critical equipment.

[42] The fine imposed on Glenholme of $36,000 represented 6% of the available maximum penalty of $600,000. The fine of $17,000, in respect of Mr Atkinson, equated to about 5.7% of the available maximum penalty.35 The comparator

calculations for the starting points used36 were 5% for both the company and Mr

_Atkinson.

34 _{See R v Xie [2007] 2 NZLR 240 (CA) at paras [16]–[21].}

35 _{Resource Management Act 1991, s 339(1).}

36 See para [22] above.

[43] Viewed in that context, it is difficult to regard either sentence as manifestly excessive. An end sentence representing between 5% and 6% of available maximum penalties took account of all relevant mitigating factors: the relatively minor damage; the negligent (as opposed to deliberate) nature of the pollution; the degree of co- operation with the Council in responding to what occurred and (taking the best position from their perspective) Glenholme’s and Mr Atkinson’s ultimate acceptance of responsibility for what occurred, as evidenced by the lack of opposition to the enforcement orders that were made.

[44] While it might be said that the uplift of 20% for prior offending was stern and the deduction of 5% for remorse on the low side, when viewed in totality, neither sentence can be regarded as manifestly excessive. Therefore, the sentence appeal also fails.

Result

[45] For the reasons given:

(a) An extension of time for both Glenholme and Mr Atkinson to appeal against conviction and sentence is granted.

(b) The appeals against conviction are dismissed. (c) The appeals against sentence are dismissed.

_{[46] I thank counsel for their assistance.}

_{P R Heath J}

Delivered at 3.00pm on 9 November 2012