The Land and Environment Court of NSW (“Court”) has again reminded directors of their obligations to ensure that the companies for which they are responsible comply with environmental laws. Recently, the Court gave its decision in the first prosecution of a director under the Water Management Act 2000 for the unauthorised taking of water from the Lachlan River during a severe water shortage.

Mr Baring, the Defendant, was the sole director of Baring Park Pty Ltd, a company now deregistered with the ASIC.

Mr Baring was found guilty of 10 offences. Mr Baring was ordered to pay $370,000 being fines totalling $290,000 and the Prosecutor’s costs of $80,000.

Here we deal with 2 decisions, being the prosecution of Mr Baring, in Harrison v Baring [2012] NSWLEC 117 and on the subsequent sentencing of Mr Baring in Harrison v Baring (No.2) [2012] NSWLEC 145.

Mr Baring did not appear nor was he legally represented at either of the hearings.

Background

During a period of severe drought, between 280 and 632 megalitres of water was taken by Baring Park Pty Ltd from the Lachlan River, NSW, to water:

  • a wheat crop in mid April 2008 and late July / early August 2008; and
  • a canola crop in mid May 2008 and late August / early September 2008.

Expert evidence was submitted to the Court as to the amount of water taken.

At the time the water was taken, the Water Sharing Plan for the Lachlan Regulated River Water Sources 2003 was suspended due to severe drought conditions. No water was allocated to the water licences held by Baring Park Pty Ltd, under the regulated river (general security) access licences, for the years 2006/7, 2007/8 and 2008/9.

Further, the water available for purchase was relatively expensive, being traded up to $1,000 per megalitre.

Court’s findings

The Court found that Mr Baring knowingly authorised the taking of the water from the Lachlan River on 4 occasions and permitted the use of that water on 4 occasions.

Further, at the time the water was taken, the water meters on the property held by Baring Park Pty Ltd were not functioning and as a result, Mr Baring was also found guilty of 2 failures to notify the Office of Water of the broken meters.

Section 363 of the Water Management Act 2000 provides for charges against a director of a company, if the person knowingly authorised or permitted the act or omission constituting the offence.

The Court found Mr Baring guilty of all 10 offences, as follows:

  1. On 4 occasions Mr Baring breached section 341(1)(a) by taking water from a water source other than in accordance with an access licence;
  2. On 4 occasions Mr Baring breached section 343(1)(a)(i) for the use of a Water Supply Work to take water other than in accordance with a Water Supply Work approval; and
  3. On 2 further occasions Mr Baring breached section 343(1)(a)(i) by failing to report that the meter was not functioning and subsequently using a Water Supply Work to take water other than in accordance with a Water Supply Work approval.

Factors in Sentencing

When considering factors relevant to the sentencing of Mr Baring, the Court found that:

  1. the distribution of a vital public resource underpins the scheme for water licensing and access, hence the taking of the water constituted a breach of public trust;
  2. the State was precluded from effectively monitoring water taken, due to the broken meters;
  3. the circumstances of the offence were in the moderate to serious range; and 
  4. in this circumstance, a general deterrent was a particularly important consideration in sentencing for the offences

The Court further commented that, during severe water shortages, most if not all licence holders are likely to experience significant reductions in their expected water allocations and most, if not all, farmers are likely to come under significant financial pressure because of lack of water.

Implications for holders of Water Access Licences and Water Supply Work approvals

Harrison v Baring and Harrison v Baring (No. 2) demonstrate the seriousness of non compliance with Water Access Licences and Water Supply Works approvals.

These cases further indicate that directors of companies that breach these authorisations can personally face significant criminal penalties.