Te Kinga Farms Limited v West Coast Regional Council [2015] NZHC 293 (26 February 2015)

Last Updated: 9 March 2015

IN THE HIGH COURT OF NEW ZEALAND GREYMOUTH REGISTRY

CRI 2014-418-10 [2015] NZHC 293

TE KINGA FARMS LIMITED Appellant

v

WEST COAST REGIONAL COUNCIL Respondent

Hearing:	13 February 2015
Counsel:	D J Taffs for Appellant A J Logan for Respondent
Judgment:	26 February 2015

_{JUDGMENT OF BROWN J}

[1] The appellant originally faced four charges under the Resource Management Act 1991 (RMA) which were set down for a defended hearing of approximately one week duration commencing on 11 April 2014. On the morning of the fixture, after discussions between counsel, one charge was withdrawn and the appellant entered guilty pleas to the following three charges:

(a) Te Kinga Farms Limited, on 19 December 2012 at 793 Lake Brunner Road, Kumara, West Coast, on a dairy farm known as Westland Milk Products Supply Number 372, together with Donald McKenzie Harcourt discharged contaminants (dairy herd effluent) from an overflow pipe onto land, namely a dry drain, in circumstances which may have resulted in those contaminants (or any other contaminants emanating as a result of natural processes from those contaminants) entering water, namely water in Tube Creek, when the discharge was not expressly allowed by a National Environmental Standard, or other regulations, a rule in a Regional Plan as well as a rule in the Proposed Regional Plan for the same region, or a resource consent (CRN ending 081);

TE KINGA FARMS LTD v WEST COAST REGIONAL COUNCIL [2015] NZHC 293 [26 February 2015]

(b) Te Kinga Farms Limited, on 27 September 2012 at 793 Lake Brunner Road, Kumara, West Coast, on a dairy farm known as Westland Milk Products Supply Number 372, together with Donald McKenzie Harcourt discharged contaminants (dairy herd effluent) onto land from a stock underpass in circumstances which may have resulted in those contaminants (or any other contaminants emanating as a result of natural processes from those contaminants) entering water, namely water in Kangaroo Creek, when the discharge was not expressly allowed by a National Environmental Standard, or other regulations, a rule in a Regional Plan as well as a rule in the Proposed Regional Plan for the same region, or a resource consent (CRN ending 082);

(c) Te Kinga Farms Limited, on 19 December 2012 at 793 Lake Brunner Road, Kumara, West Coast, on a dairy farm known as Westland Milk Products Supply Number 372, together with Donald McKenzie Harcourt contravened an abatement notice dated

28 September 2012 directing Te Kinga Farms Limited to cease the discharge of farm animal effluent to land in circumstances which might result in that contaminant (or any other contaminant emanating as a result of natural processes from that contaminant) entering water, when the discharge was not expressly allowed by a National Environmental Standard, or other regulations, a rule in a Regional Plan as well as a rule in the Proposed Regional Plan, or a resource consent by 5 October 2012, when it discharged contaminants (dairy herd effluent) from an overflow pipe onto land in circumstances which may have resulted in those contaminants (or any other contaminant emanating as a result of natural processes from those contaminants) entering water, namely water in Tube Creek, when the discharge was not expressly allowed by a National Environment Standard, or other regulations, a rule in a Regional Plan as well as a rule in the Proposed Regional Plan for the same region, or a resource consent (CRN ending 083).

[2] There being no suggestion that a discharge without conviction was an appropriate outcome (a matter which Judge B P Dwyer recorded at [2] of his decision on sentencing), convictions were entered on all three charges on

11 April 2014.

[3] At sentencing on 21 August 2014 Judge Dwyer imposed the following sentences:¹

(a) CRN 081: A fine of $19,000 with a contribution towards the

_{respondent’s costs of $4,500 and Court costs $130.00;}²

¹ _{CRI-2013-018-000257.}

2. The appellant agreed to make the payment of $4,500.00 by way of contribution towards the costs incurred by the respondent in bringing the prosecutions.

(b) CRN 082: A fine of $28,500 and Court costs $130.00; (c) CRN 083: A fine of $19,000 and Court costs $130.00.

In each case the Judge directed that the fines, less 10 per cent Crown deduction, were to be paid to the respondent.

Appeal and application for leave to appeal

[4] By notice of appeal filed on 7 October 2014 the appellant appealed against the sentences on all three charges. The grounds specified in the notice of appeal stated:

The fines imposed on each charge are, with regard to the circumstances of the offences, and the offender are manifestly excessive.

[5] The notice of appeal acknowledged that the application was out of time and sought an extension of time for leave to appeal. The reason provided was the fact of “miscommunication on appeal issue between appellant and counsel”.

[6] The circumstances were elaborated upon in a letter from Mr Taffs to the Court dated 7 October 2014. He explained that immediately after sentencing the director of the appellant expressed his desire to appeal but Mr Taffs advised him that to make such a decision at that time was hasty and he should take time for reflection. Unfortunately the director formed the view that instructions to appeal had in fact been provided while Mr Taffs was of the view that the appellant was to defer its consideration of the matter. The time for appeal had expired when the director of the appellant made inquiry of Mr Taffs about progress on the appeal.

[7] In opposing the grant of leave the respondent noted that the appeal had been filed 19 days out of time and that no evidence had been offered in support of the application for leave except for Mr Taffs’ letter of 7 October 2014.

[8] I consider that this is a case of genuine misunderstanding between counsel and client such that it is appropriate to exercise the discretion conferred by s 123 of the Summary Proceedings Act 1957 to extend the time for the filing of the notice of appeal. I extend time accordingly.

The judgment under appeal

[9] After reviewing the circumstances that resulted in the charges Judge Dwyer addressed the issue of starting point, noting that Parliament regards offending under the RMA as a serious matter, that the maximum penalty for each of the offences was

$600,000 and that it is common practice in dairy effluent sentencing to analyse the seriousness of the offending by reference to the levels of seriousness identified in Waikato Regional Council v GA & BG Chick Ltd.³

[10] In respect of the 27 September 2012 discharge of effluent from the underpass (CRN ending 082), the Judge concurred with the respondent’s assessment that this fell into the least serious level of offending being an unintentional one-off discharge with little or no effect on the environment. A starting point was determined of

$30,000.

[11] In respect of the offence of discharging contaminants to land on

19 December 2012 (CRN ending 081) the respondent submitted that the offence had elements of both levels two and three of Chick. However the Judge considered that it fell within level two, being an unintentional or careless discharge of a recurring nature, a delay in taking restorative action and, at most, a moderate effect on the environment.

[12] However he viewed the abatement notice offence (CRN ending 083) as a matter of considerable significance which warranted a not insubstantial penalty. He adopted the suggestion of the respondent that the sentence for these two offences be approached on a global basis, recognising that the one incident involved two separate offences. Although the Judge viewed the respondent’s suggested starting point of

$40,000 as conservative, ultimately he concurred with it because of the limited

evidence of adverse environmental effects from the offending. Rather than choosing a lead charge as suggested by the respondent the Judge proceeded to apportion the penalty between the two offences equally.

[13] The Judge then proceeded to consider mitigating factors. The following paragraphs are material to the contentions advanced for the appellant on this appeal:

[22] Mr Taffs has advanced a number of mitigating factors on the Defendant’s behalf. It seems apparent that Te Kinga has generally taken a responsible approach to effluent management on the farm since its purchase and has sought advice on that issue which it has endeavoured to implement.

[23] The presence of the drain which caused the problems in this case was not apparent at the time of purchase of the farm and it was only in 2012 that its full dimensions became known. Te Kinga had intended to fill in the drain but weather conditions had delayed that. A release pipe was put through the bund to enable the escape of effluent as it was thought that the bund might otherwise blow out. Unfortunately any overflow from the pipe was in breach of RMA and Mr Harcourt of Te Kinga had been advised of that matter by Council officers.

[24] I note that the drain was filled in in 2013 and Te Kinga has had a new farm environmental management plan put in place and is presently in the course of constructing a new farm effluent system using holding tanks and piping. It is usual to observe in such situations that the defendant was only putting the system in the order it ought to have been and while that is also true in this case, it is equally true that any shortcomings in the system were inherited by Te Kinga at the time of purchase and that it was genuinely unaware of that time of issues in respect of the drain.

[25] Because of the significant extent of expenditure involved in Te Kinga, at least $300,000 in remedial works and the fact that those works go beyond putting things right, I will treat those as a tangible expression of remorse and give some credit by way of reduction from starting point to reflect that. However, I am unable to give the Defendant any additional credit for previous good character as it had been the subject of a formal warning and a non-compliance notice prior to these offences and an incident of effluent discharge to Kangaroo Creek from the stock underpass had occurred in September 2011, although no prosecution was initiated by the Council. Although these incidents do not qualify as prior convictions, I consider that they disqualify Te Kinga from any credit for previous good conduct. I will allow the Defendant a credit in the order of five percent from starting point to reflect the remorse which it has demonstrated.

[26] Finally, I consider what credit should be given for the Defendant’s guilty plea which came in on the morning that trial was about to commence, about as late as it could be. Although the Defendant did not ultimately put the Council to proof, the Council was in Court with its witnesses ready to do so and I consider that the guilty plea was so belated that no credit can be given for that.

[27] I have considered the financial information submitted on the Defendant’s behalf. It shows a situation which is not uncommon with dairy farm defendants, a very high income stream with significant levels of expenditure, both of which can fluctuate markedly depending on a number of factors. Similarly, with the Defendant’s capital position there are substantial assets whose value can also fluctuate and also high levels of debt. Ultimately, I determine that the Defendant’s financial capacity is such that it can arrange its affairs to meet a fine of the amount discussed in this case, particularly when regard is had to the ability to make payment over a period of time.

[14] In fixing the sentences for the three offences⁴ the Judge observed that the totality of the penalty was appropriate having regard to the fact that there were two separate offending incidents involving three separate charges and taking into account the level of fines which the Court had imposed on dairy effluent offenders in other cases.

Approach on appeal

[15] The notice of appeal was purportedly filed under s 244(1) of the Criminal Procedure Act 2011. However, as Mr Logan correctly observes, the charges upon which the appellant was sentenced were brought by informations dated

21 March 2013 under the Summary Proceedings Act 1957. Consequently, in accordance with the transitional provisions of the Criminal Procedure Act 2011, this appeal is to be determined in accordance with s 121 of the Summary Proceedings Act 1957.

[16] Section 121(3)(b) provides that the High Court may quash or vary a sentence where it is “clearly excessive or inadequate or inappropriate” or if the Court is “satisfied the substantial facts relating to the offence or the offender’s character or personal history were not before the Court imposing sentence”.

[17] The approach to be taken to appeals under s 121(3) was set out in Yorston v

Police where the Court said:⁵

(a) There must be an error vitiating the lower Court's original sentencing discretion.

(b) The appeal must proceed on an “error principle”.

(c) To establish an error in sentencing it must be shown that the Judge in the lower Court made an error whether intrinsically or as a result of additional material submitted to the appeal Court.

(c) It is only if an error of that character is involved that the appeal

Court should re-exercise the sentencing discretion.

[18] The High Court will not intervene where the sentence is within the range that can properly be justified by accepted sentencing principles, save in those cases recognised by the Court of Appeal in Tutakangahau v R where what has gone wrong is such as to require correction (e.g. explicit mathematical error) albeit the sentence

imposed is within range.⁶

Analysis

[19] For the appellant Mr Taffs advanced three lines of argument:

(a) that on the two charges concerning the 19 December 2012 incident (CRN’s ending 081 and 083) the appellant should have been discharged without conviction;

(b) the fines imposed by the Judge were excessive having regard to changes in milk solid payouts since sentencing;

_{(c) the Judge erred in failing to give any discount for the guilty pleas.}

⁵ _{Yorston v Police HC Auckland CRI 2010-404-164, 14 September 2010 at [13]–[15].}

⁶ Tutakangahau v R [2014] NZCA 279, [2014] 3 NZLR 482 at [36].

That on two charges (CRN’s ending 081 and 083) the appellant should have been

discharged without conviction

[20] Mr Taff ’s first drew attention to the Judge’s description of the discharge offence as being unintentional or careless and to the considerations recognised by the Judge in paras [24] and [25].⁷ However he identified as a contentious issue what he described as the Judge’s implicit view that the abatement order was ignored and submitted that the Judge’s finding that the appellant had wilfully ignored the abatement order could not be sustained on the facts. In effect his submission was that the abatement order was breached but the breach was unavoidable having regard, among other things, to weather and terrain factors beyond the appellant’s

control.

[21] Mr Logan responded that the Judge’s assessment was, if anything, favourable to the appellant. Whereas at [23] the Judge referred to a single release pipe, Mr Logan submitted that the undisputed facts were:

(a) the appellant inserted an overflow pipe through the bund which ensured that once liquid retained by the bund reached a certain level it would discharge into the drain leading to Tube Creek;

(b) the respondent’s advice, that discharge through the bund was not

acceptable, was reinforced by the issuing of the abatement notice;

(c) no appeal was lodged against the abatement notice and no application made to the respondent to cancel it;

(d) when reinspected on 19 December 2012 an additional overflow pipe had been inserted into the bund at a lower level and effluent was discharging through it.

[22] Mr Logan submitted that the discharge through the bund detected on

19 December 2012 was an unlawful discharge which contravened the abatement notice. That discharge was deliberate, the pipes having been intentionally put through the bund to release effluent.

[23] Mr Logan further noted that there was no reference to a discharge without conviction in the notice of appeal and that that issue had been raised for the first time in the appellant’s submissions of 9 February 2015. He drew attention to ss 106 and

107 of the Sentencing Act 2002, emphasising that under the latter section the Court must not discharge an offender without conviction unless the Court is satisfied that the direct and indirect consequences of a conviction would be out of all proportion to the gravity of the offence.

[24] He drew attention to the Judge’s comments at [20]:

However, the abatement notice offence is a matter of considerable significance which of itself warrants a not insubstantial penalty. Abatement notices are instruments available to councils to require people to meet their environmental obligations. If they can be ignored without serious consequence, they lose their effectiveness so that penalties for breaches of abatement notice should be substantial.

[25] He further noted the Judge’s observation that the global starting point for the two offences of $40,000 was conservative having regard to the fact that the offending involved at least a level two discharge and a breach of an abatement notice.

[26] It has to be recognised that the appellant’s submission was an ambitious one having regard to the way in which the matter had proceeded before Judge Dwyer. As the Judge had noted at [2] there had been no suggestion that a discharge without conviction was an appropriate outcome in this case. The Judge further noted at [14] that Mr Taffs did not take issue with the Council’s submissions as to the matters to which the Judge was required to have regard under the Sentencing Act 2002. One of those matters was the need for deterrence. The Judge then noted that deterrence is a factor of considerable importance in dairy effluent sentencing due to the regularity with which such offending comes before the Court. Furthermore at para [10] of the

appellant’s written submissions in the District Court the appellant acknowledged that

fines were unavoidable.

That acknowledgement was soundly made at the time. While the appellant may consider that a breach of the abatement notice was inevitable in the circumstances the fact is that it was an intentional breach of the abatement notice. No issue can be taken with the Judge’ approach at [20].

The fines imposed by the Judge were excessive having regard to changes in milk solid payouts since sentencing

[27] This ground of appeal was directed particularly at the last sentence of para [27] of the judgment.⁸ Mr Taffs explained that at the time of sentencing the milk solid payout of Westland Milk, to which the appellant supplies, was

$7.60 kgMS to $8.00 kgMS before retentions. On that projected basis he submitted that the Judge’s conclusion could be sustained. However within months of the sentencing he suggested that the dairy price had collapsed and that at the date of his written submission (9 February 2015) the price was $4.40 kgMS. He submitted that the substantial downturn in income permitted the Court to revisit the matter of quantum in light of the changed situation.

[28] Mr Logan accepted that on appeal a Court may revise a sentence because of changes in circumstances but noted that that exercise should be undertaken sparingly and only in exceptional circumstances which create a very different factual situation from that confronted by the sentencing Judge such that the penalties imposed are rendered unjust or otherwise inappropriate.

[29] He submitted that it is well known that commodity prices, including milk prices, can vary significantly over time. While acknowledging that prices have fallen since sentencing, he submitted there has been some recent recovery and he provided information which suggested that the milk solid payout forecast for Westland Milk as at 27 January 2015 was $5.00 to $5.40 per kgMS before retentions.

[30] I consider that Judge Dwyer, who is an experienced Judge in enforcement matters under the RMA, would have been well aware of the likelihood of fluctuations in milk solid payouts. Indeed the written submissions for the appellant at sentencing in August 2014, with reference to the issue of financial capacity to pay a fine, made reference to the then markedly reduced milk payment projections for the

2014/2015 season. I consider that the Judge took such potential fluctuations into account in his concluding words at [27], namely “particularly when regard is had to the ability to make payment over a period of time”.

[31] I do not consider that there was any relevant error on the part of the Judge, nor that there is shown to be such a change in circumstances that would justify the Court reconsidering the levels of fines imposed.

The Judge erred in failing to give any discount for the guilty pleas

[32] The Judge explained at [26] why he considered that no discount should be given for the appellant’s guilty pleas. This was consistent with the stance of the respondent in its written submissions for sentencing to the effect that the appellant was not entitled to any discount because of the belated nature of the pleas.

[33] However Mr Logan very fairly acknowledged in the course of his oral submissions on the appeal that at the sentencing hearing he had had second thoughts and had accepted that some discount was appropriate, given that time and some money on the part of the prosecution had been saved as a result of the guilty pleas.

[34] The Supreme Court in Hessell v R explained that in the administration of criminal justice the courts give credit in sentencing for a guilty plea principally for policy reasons.⁹ The policy expressed in s 9(2)(b) of the Sentencing Act 2002 reflects the benefits that a guilty plea delivers to the administration of justice and to those who otherwise must participate in the trial process. After noting the various benefits associated with guilty pleas, the Court observe that even very late pleas will

usually generate some of those systemic and social benefits.

[35] Although the guilty pleas in this case were late, they were made in the context where another significant charge was withdrawn. The fixture did not proceed and the need for witnesses to give evidence was avoided. I consider that the Judge erred in declining to allow any discount for the three guilty pleas. Late as the pleas were, I consider that a discount of 10 per cent would have been appropriate.

Disposition

[36] The appeal is allowed to the extent of the refusal of the Judge to allow a discount for the appellant’s guilty pleas. The fines imposed by the Judge at [3] above are set aside and the following fines are imposed:

(a) CRN 081: A fine of $17,100; (b) CRN 082: A fine of $25,650; (c) CRN 083: A fine of $17,100.

The appellant’s contribution towards the respondent’s costs of $4,500 and the Court

_{costs remain.}

_{Brown J}

Solicitors:

Ross Dowling Marquet Griffin, Solicitors, Dunedin