Court of Appeal decision determines liability of executive officers under Queensland’s Environmental Protection Act

Court of Appeal decision determines liability of executive officers under Queensland’s Environmental Protection Act

17 September 2021 Authored by: Tom Jury and David Grace   |   Topics: Corporate and commercial, Energy and resources

Former executive officers of a corporation have been found not liable under certain provisions of Queensland’s Environmental Protection Act for harm caused by the corporation in circumstances where the harm came to fruition after their tenure.

Introduction

Section 493(2) of the Environmental Protection Act 1994 (Qld) (EPA) sets out that, if a corporation commits an offence against a provision of the EPA, each of the executive officers of the corporation also commits the offence of failing to ensure the corporation complies with the EPA.

In the recent case of R v Dumble [2021] QCA 161, the Queensland Court of Appeal determined that, if a corporation breaches the EPA by wilfully and unlawfully causing serious environmental harm, former executive officers of the corporation will not be liable under section 493(2) unless the harm came to fruition during their tenure.

This decision is significant, as it defines the limited circumstances under which executive officers of a corporation will be liable for breaches of the EPA by corporations. It points to the need of prosecutors to rely on more onerous provisions if executive officers are to be held liable.

Factual background

The respondents in this case were former executive officers of Linc Energy Limited. This corporation engaged in a process known as underground coal gasification in various locations around Chinchilla between March 2007 and July 2008. This involved injecting air or oxygen into a coal seam and igniting the gases inside the seam to create a valuable gas product.

The prosecution’s case was that the performance of certain acts by Linc Energy as part of this process resulted in the corporation wilfully and unlawfully causing serious environmental harm in contravention of section 437(1) of the EPA. As a result, it alleged that the respondents had committed an offence under section 493(2). The prosecution did not consider it necessary to prove that the harm actually occurred during the time the respondents were executive officers of the corporation.

The respondents sought a ruling from the District Court to the effect that they could not be held liable under section 493(2) unless the prosecution showed that the alleged offence was committed by Linc Energy at the time they were engaged as executive officers of the corporation. The District Court ruled in favour of the respondents, setting out that the provision only applied to individuals who were engaged as executive officers at the time the alleged offence was committed.

Referral to the Court of Appeal   

The Director of Public Prosecutions (DPP) referred the issue to the Court of Appeal on the limited question of whether, for executive officers to be held liable under section 493(2) for an alleged offence by a corporation under section 437(1), the serious environmental harm caused by the corporation must come to fruition during the executive officer’s tenure.

The basis of the DPP’s argument was that executive officers, who had actively planned and approved the proposed actions of a corporation, should not avoid responsibility merely because they had moved on by the time their planning and approval was implemented. They argued that an interpretation of the provision other than that proposed by the prosecution could allow executive officers to escape liability by simply resigning immediately before their decisions were put into effect.

The Court determined that a corporation is not taken to have committed an offence under section 437(1) until serious environmental harm has actually resulted from the corporation’s causative wilful act. Only a person who is an executive officer at the time the harm actually occurred will be guilty of an offence under section 493(2) (subject to the statutory defences). The respondents therefore could not be held liable under this provision.

However, the Court noted that executive officers may not avoid liability by resigning before harm is caused, as they may be held liable under other legislation. These findings however were obiter and therefore, while noteworthy, are of less importance than the decision on section 493(2) of the EPA.

Conclusion

This decision will be well received by former executive officers, as prosecutors may face greater difficulty in holding individuals liable for the conduct of the corporations they served. Prosecutors may instead be required to rely on other liability provisions that often require evidence of involvement by the individual. However, there is uncertainty as to whether this reasoning will apply to corporate breaches of other provisions, and executive officers should therefore remain prudent in ensuring corporations maintain compliance with the EPA.

For further information on any of the matters discussed in this article, please contact a member of our corporate advisory team.

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