Beatty Hughes

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NSW Court of Criminal Appeal finds that special executive provisions under the POEO Act extend to Council officers

Key Takeaways

  • Section 169(1) of the POEO Act provides that if a corporation contravenes, whether by act or omission, a provision of that Act attracting special executive liability, each person who is a director of the corporation or who is concerned in the management of the corporation is taken to have contravened the same provision unless a specified defence applies.
  • Under s220 of the Local Government Act, a council’s legal status is as a body politic of the State and not as a corporation, but laws of the State are specifically stated to apply to a council in the same way as they apply to a corporation.
  • The NSW Court of Appeal has found that s169(1) of the POEO Act is a ‘law in respect of a corporation’ that applies to a Council in the same way as it applies to a corporation.
  • Executives of a council who are ‘concerned in the management of the corporation’ accordingly have special executive liability in relation to any contraventions by the Council of a provision of the POEO Act.

Background

The NSW EPA prosecuted the Cootamundra-Gundagai Regional Council (Council) for an offence against s 144(1) of the Protection of the Environment Operations Act 1997 (NSW) (POEO Act) of causing a place to be used as a waste facility without lawful authority.

The Council operated the Cootamundra Sewage Treatment Plant under an environment protection licence (EPL) that authorised the Council to carry out sewage treatment processing at the plant under certain conditions. The Council received leachate from the Tumblong Landfill and deposited it in a pond at the plant. The EPL did not authorise the receipt and depositing of the leachate in that pond.

The Council pleaded guilty to the offence against s144(1) of the POEO Act and was convicted and sentenced by the Local Court on 6 December 2022, which imposed a fine of $8,500.

Section 169(1) of the POEO Act provides that if a corporation contravenes, whether by act or omission, a provision of that Act attracting special executive liability, each person who is a director of the corporation or who is concerned in the management of the corporation is taken to have contravened the same provision unless one of the available defences applies.

The EPA also prosecuted Mr McMurray, the General Manager of the Council, for the same offence against s144(1) of the POEO Act as the Council under the special executive liability provision in s169(1) on the basis that he was a person concerned in the management of a corporation that had contravened s144(1).

Mr McMurray applied for the proceedings against him to be permanently stayed on the basis that s 169(1) of the POEO Act did not apply to him as the General Manager of the Council, as he was not a person who is a director of a corporation or who is concerned in the management of a corporation.

The Local Court upheld that application and permanently stayed the proceedings. The EPA then appealed against that decision to the land and Environment Court, which dismissed that appeal.

The EPA further appealed to the New South Wales Court of Criminal Appeal.

Decision of the Court of Criminal Appeal

The question before the Court of Criminal Appeal was – Does s 169(1) of the POEO Act apply to Mr McMurray by operation of s 220 of the LG Act?

Section 220 of the Local Government Act provides that a:

  • council is a body politic of the State with perpetual succession and the legal capacity and powers of an individual, both in and outside the State;
  • council is not a body corporate (including a corporation); and
  • law of the State applies to and in respect of a council in the same way as it applies to and in respect of a body corporate (including a corporation).

The Court of Criminal Appeal found that:

  • a law that provides for special executive liability of executives of a corporation is a law that applies to and in respect of a corporation and that 169(1) of the POEO Act accordingly applies ‘to and in respect of’ a corporation; and
  • in order to apply s 169(1) in the same way it applies to and in respect of a corporation, s 169(1) applies to and in respect of the Council by providing for special executive liability of executives of the Council answering the description of persons in s 169(1).

Implications

A number of other Acts contain executive liability provisions in relation to environmental offences, including the Biodiversity Conservation Act 2016, the Contaminated Land Management Act 1997, the National Parks and Wildlife Act 1974 and the Pesticides Act 1999. Many of these provisions are similarly drafted to those in the POEO Act that were the subject of the Court of Criminal Appeal decision.

As a result, executives and council officers who are ‘concerned in the management’ of the Council have the potential to be held liable under those executive liability provisions for the offences of their Council.

Generally, for executive liability offences, defences such as the due diligence offence apply or a prosecutor needs to prove that the person knew or reasonably ought to have known that the offence (or an offence of the same type) would be or is being committed and that they failed to take all reasonable steps to prevent or stop the commission of the offence.

At this stage, it appears that a general manager of a council could be liable under various executive liability provisions. The requirement that a person must be ‘concerned with the management’ of a council and the types of defences available provide the general parameters as to which other council officers could also potentially be liable under an executive liability provision.

Executives and council officers who are ‘concerned in the management’ of the Council will accordingly need to take extra care to ensure that Councils remain in compliance.

The decision can be found here – Environment Protection Authority v McMurray [2024] NSWCCA 160

Jennifer Hughes