The “polluter pays” principle requires those persons or entities that pollute to take responsibility for the costs that arise from the pollution. This principle requires the polluter to take responsibility for the costs arising from the pollution by either cleaning it up or restoring the environment to the condition it was in prior to being polluted.

The “polluter pays” principle is in essence reflected in the:

  • drafting of pollution provisions in environmental legislation
  • granting approval for a development subject to conditions relating to the prevention, control and abatement of pollution);
  • issuing of administrative orders by regulatory authorities; and
  • sentencing metered out by the Courts for environmental crime;

This article examines the last of those scenarios and reviews the latest decisions made by the Courts in order to determine the impact and relevance of the “polluter pays” principle in sentencing considerations.

It is worth pointing out that the majority of the decisions in the Courts of Australia, including the most recent, stem from the Land and Environment Court of New South Wales. The reason for this may be due to the fact that Magistrates Court decisions are not reported in the other states and taped records of proceedings are in any event destroyed within a short period of time. As a result, there is no other developed body of recorded law on the reasons and approaches adopted by the judiciary in applying the relevant environmental legislation in enforcement matters.

The most recent decisions handed down in the New South Wales Land Environment Court in relation to the commission of environmental offences include:

1.Minister for Planning v Coalpac Pty Ltd [2008] NSWLEC 271

Coalpac Pty Ltd (“Coalpac”) owned and operated an open cut coal mine near Lithgow in NSW. In September 2006, the Minister for Planning granted project approval for extensions to the mine and rehabilitation activities. The approval permitted an annual production cap of 350,000 tonnes of coal in a year. However, between 7 September 2006 and 6 September 2007, Coalpac produced 635,000 tonnes of saleable coal from the mine and represented the production of 80% more coal than that allowed under the annual cap.

Coalpac pleaded guilty to carrying out development without approval of the Minister pursuant to s15D(2) of the Environment Planning and Assessment Act 1979 (NSW) (“EP & A Act”) (contrary to s125 of EP & A Act). The Maximum fine for an offence under this section of the EP & A Act was $1.1m.

Coalpac had no record of any prior offences, however the Court determined that the appropriate penalty to impose in this matter was a fine of $200,000 stating that (at paras 55-56)

“notwithstanding the absence of actual environmental harm, there has been damage to the integrity of the planning system. The Defendant acted quite intentionally over a significant period of time, particularly after June 2007, in committing this offence, in order to obtain a financial advantage. Importantly, the Defendant has, as a result, derived gross revenue amounting to millions of dollars.”

This decision highlights the consideration taken into account by the Courts in sentencing and indicates the view that tougher penalties will be warranted to deter offenders even in the circumstances that the offence results in no actual environmental harm.

2.Director-General of the Department of Environment and Climate Change v Hudson [2009] NSWLEC 4

The defendant in this matter Mr Hudson owned a property 60km east of Moree (with his wife) and had authorised the clearing of 486 hectares of native vegetation on the property between 2006 and 2007 for the purposes of “weed management”. A prosecution was brought against Mr Hudson for clearing the native vegetation otherwise than in accordance with a development consent or property vegetation plan contrary to s.12 of the Native Vegetation Act 2003 (NSW). A further charge was brought in that Mr Hudson had , without reasonable excuse, failed to comply with a notice requiring him to produce evidence about the commission of the offence (contrary to s.36(4) of the Native Vegetation Act 2003 (NSW)).

Mr Hudson pleaded “not guilty” to the charges on the basis that the clearing had been taken out for the purposes of routine management activities and accordingly permitted under Division 2 or 3 or otherwise excluded by Division 4 of the Act. The court found Mr Hudson guilty and in imposing the sentence, pointed out that the penalty should probably reflect the large area of land cleared, the deliberate nature of the offence, the absence of any contrition or remorse and the need for the penalty to act as both a general and specific deterrent.

The court concluded that as the clearing was carried out as part of the agriculture activities on the land and in that sense was part of a commercial operation (i.e. “motivated by commercial considerations”) that a significant fine totalling $408,000 (for both offences) was appropriate. This decision again highlights the importance the Court places on the deterrent effect of the penalty imposed in matters involving the environment.

3.Hawkesbury City Council v Johnson[2008] NSWLEC 138 and Hawkesbury City Council v Johnson (No. 2) [2009] NSWLEC 6

The decisions in these matters resulted in penalties of over $30,000 for illegal tree clearing. The landowner, Mr Johnson, and his company, were found guilty of the same offence under s125 of the EP & A Act of an authorised land clearing.

In determining the objective seriousness of the offence, the Judge (Pain J) held that although the defendants relied on advice that the clearing was lawful, they acted recklessly as more should have been done to clarify whether the clearing was lawful before it commenced. The decision demonstrates once again that the Courts are more likely to hand down tougher penalties if the offence results in significant environmental harm.

4.Garrett v Freeman (No. 5); Garrett v Port Macquarie Hastings Council; Carter v Port Macquarie Hastings Council [2009] NSWLEC 1

In Garret v Freeman (No.5) the Court delivered sentence against both the Port Macquarie Hastings Council (“the Council”) and its Director of Infrastructure Services, Mr Freeman.

Mr Freeman had been charged with two offences under the National Parks and Wildlife Act 1974 in his capacity as “a person concerned with the management of the Council”. Mr Freeman was a senior Council employee authorising the construction of road works owned by the Council. The Court found that Mr Freeman had failed to comply with the requirements of the environment assessment for the construction of a road on environmentally sensitive land with the effect that damage was caused to the habitat of certain protected species. The Council, charged in its corporate capacity, pleaded guilty and Mr Freeman pleaded not guilty.

In the penalty judgment, the Court ordered Mr Freeman to personally pay fines in the sum of $57,000 plus prosecutor’s costs in the sum of $167,500 and the Council were ordered to pay total fines in the sum of $80,500 plus the prosecutor’s costs in the sum of $194,000.

This case is significant as it not only demonstrates that the Department of Environment and Climate Change’s willingness to prosecute an individual for breaching environmental laws in addition to the punitive approach it takes against corporations, but also the fact that the Court placed significant weight on the deterrence effect in it’s sentencing considerations..

It is clear from the decisions in the above matters that courts, in being faced when determining the appropriateness of a sentence for environmental offences, will take into account not only the degree of environmental harm as well as the need for deterrence. The trend, however, is clearly for significant monetary penalties to be imposed on environmental offenders, particularly for more serious offences.

It is arguable that the increase in the size of fines imposed at the upper end is not only as a result of the Courts desire to deter the commission of similar offences, but also the fact that the defendant, normally a corporation, has a greater capacity to financially absorb the penalty.

Corporations must accordingly take particular care in how they act to prevent, contain or abate incidents of pollution, because if prosecuted and convicted, they are likely to face significant penalties in future.