In this case, former Linc Energy executives were charged with offences against Queensland’s Environmental Protection Act 1994 after a Linc Energy underground coal gasification project near Chinchilla caused serious environmental harm. The Court of Appeal decision in R v Dumble has implications for executive officer liability in environmental harm offences under Australian environmental legislation.
Brief overview of the Environmental Protection Act 1994 (Qld)
Under section 493 of the Act, if a corporation commits an offence, each of the executive officers of the corporation also commits an offence of failing to ensure the corporation’s compliance with the Act.
‘Executive officer’ is defined in Schedule 4 of the Act to mean a person who is either:
- a member of the governing body of the corporation
- concerned with, or takes part in the corporation’s management,
whatever the person’s position is called, and whether or not the person is a director of the corporation.
An earlier decision concerning Linc Energy found that environmental obligations of a company under the Act can apply to liquidators.
Executive officer liability
In R v Dumble, the Court of Appeal found that, to establish an environmental harm offence under section 493 of the Act, two elements are required:
1. The status of the offender in a position of executive officer of the corporation must be contemporaneous to the commission of the offence.
2. An environmental harm offence is committed at the time when the harm results from the unlawful causative acts or omissions (not at the time when the acts or omissions occurred).
This means that an executive officer of the corporation at the time that the environmental harm results, notwithstanding that the causative acts or omissions were done before or after their tenure, can be found liable.
There is a defence under section 493(4) if the executive officer can prove either:
- they took all reasonable steps to ensure the corporation complied with the relevant provisions of the Act
- they were not in a position to influence the conduct of the corporation in relation to the offence.
While former executive officers who are not executive officers of the corporation at the time that the environmental harm occurred may escape liability (which was the scenario in R v Dumble) the Court cautioned that such a person may still be:
- convicted as a principal offender under the Act if there is proof of the person’s actual involvement
- criminally liable as an accomplice under the Criminal Code.
There is also the possibility of civil liability.
This decision is likely to apply to other forms of environmental harm under the Act (e.g. serious environmental harm offences, material environmental harm offences and environmental nuisance offences under sections 437, 438, 439 and 440) and similar environmental offences in other Australian jurisdictions.
How can the risk be mitigated?
Directors and other officer holders, and potentially liquidators, involved in a company that may previously have committed acts or omissions that result in environmental harm can be personally liable under the Act. They should consider these risks carefully and ensure they have the appropriate protections to manage their personal and financial exposure.
Clearly, it is also important for executives to be fully informed of a company’s environmental track record and ensure the company has appropriate environmental management systems, controls and measures in place to comply with environmental protection laws.
If you would like more information about these issues, please contact partner Leanne O’Neill.