Director-General, Department of Environment and Climate Change v Jack & Bill Issa Pty Ltd

Director-General, Department of Environment and Climate Change v Calman Australia Pty Ltd [2009] NSWLEC 182 CASES CITED: Director-General, Department of Environment and Climate Change v Jack and Bill Issa Pty Ltd (No 5) [2009] NSWLEC 232 Director-General, Department of Environment and Climate Change v Mura [2009] NSWLEC 233 Director-General, Department of Environment and Climate Change v Wilton [2008] NSWLEC 297

PROSECUTOR: Mr T Howard SOLICITORS: Department of Environment, Climate Change and Water LEGAL REPRESENTATIVES: DEFENDANT: Mr Jack Issa, director of the defendant SOLICITORS: n/a

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

DIRECTOR-GENERAL, DEPARTMENT OF ENVIRONMENT AND CLIMATE CHANGE v JACK & BILL ISSA PTY LTD

EX TEMPORE JUDGMENT 1 HIS HONOUR: The defendant company was convicted of an offence against s 12 of the Native Vegetation Act 2003 of carrying out the clearing of native vegetation otherwise than in accordance with a development consent granted in accordance with the Act or a property vegetation plan: Director-General, Department of Environment and Climate Change v Jack & Bill Issa Pty Ltd (No 5) [2009] NSWLEC 232. 2 The defendant is now before the Court for sentencing.

SENTENCING PRINCIPLES 3 The purposes of sentencing are set out in s 3A of the Crimes (Sentencing Procedure) Act 1999: " 3A Purposes of sentencing

The purposes for which a court may impose a sentence on an offender are as follows:

(a) to ensure that the offender is adequately punished for the offence,

(b) to prevent crime by deterring the offender and other persons from committing similar offences,

(e) to make the offender accountable for his or her actions,

(g) to recognise the harm done to the victim of the crime and the community." 4 In determining the appropriate sentence the Court is required to consider specified aggravating and mitigating circumstances that are relevant and known to the Court, any other objective and subjective factor that affects the relative seriousness of the offence, a guilty plea, the timing of the plea and the degree to which the offender has assisted or undertaken to assist law enforcement authorities in the prevention, detection or investigation of, or in proceedings relating to, the offence: ss 21A, 23.

THE EVIDENCE 5 Clearing of native vegetation occurred on about 12 of 40 hectares of rural land owned by the defendant known as 106 Q7 Lane Quorrobolong in the local government area of Cessnock between about 1 April and 24 May 2007. The native vegetation was not cleared in accordance with a development consent or a property vegetation plan. The clearing was carried out by a contractor. Mr Mario Mura instructed the contractor to carry out the clearing and paid him from the bank account of a company with which he was associated but which was unrelated to the defendant. At all relevant times Mr Mura was one of the two directors and two equal shareholders of the defendant company, the other being Mr Jack Issa. Mr Mura has since been declared bankrupt and is no longer a director of the defendant. 6 When convicting the defendant I held at [118]: "In my opinion Mr Mura was the mind and will of the defendant so far as concerns the management of the land and it was within his implied or apparent authority to mange the land. Mr Issa was purely a passive investor with no interest at all in the land other than as a long term investment. Mr Mura was the only active director and the company had put him in possession and control of the land. From start to finish Mr Issa left everything to Mr Mura. Mr Issa may well have assumed, as he says, that Mr Mura would consult him in relation to major matters not involving Mr Mura's cattle grazing business but I do not accept that that included clearing of land which served the interests not only of that business but of the defendant." 7 I proceeded to find that Mr Mura's conduct in causing the clearing of the land was attributable to the defendant on the basis of one or more of three alternative rules of attribution. 8 Upon Mr Mura making enquiry by phone of the Hunter Central Rivers Catchment Management Authority on or around 9 March 2006 he spoke with a catchment officer, Mr Russell, who put him on notice as to the ecological value of the understorey vegetation. Mr Russell told Mr Mura that he could not advise Mr Mura as to whether particular vegetation was regrowth or not, that this needed to be determined by the owner of the land or the person carrying out the clearing, and that he would send Mr Mura some printed information about the Act.

9 On the same day a receptionist employed by the Authority sent out an information kit to Mr Mura. One of the documents in the kit is headed "What Clearing Requires Approval?" under which the following appeared: "Clearing remnant native vegetation or protected regrowth requires approval under the Native Vegetation Act 2003 (NV Act) unless the clearing is a permitted activity. Explanations of clearing, remnant vegetation, regrowth and protected regrowth are in Info Sheet 4 while details of all permitted activities are in Info Sheets 6 and 7. Under the Native Vegetation Act your local Catchment Management Authority (CMA) can only approve the clearing of remnant vegetation or protected regrowth when the clearing will improve or maintain environmental outcomes (see below)...Development consent cannot be granted unless the clearing itself improves or maintains environmental outcomes because offsets are not available...If your clearing proposal forms part of a Property Vegetation Plan and the clearing itself does not improve or maintain environmental outcomes, you may be able to offset your proposal with positive management actions to help meet the 'improve or maintain' test. Offsets are actions that a landholder agrees to in order to balance any negative impacts of clearing. Offsets may include, for example, agreeing not to clear regrowth, reducing stocking rates from areas of remnant vegetation, planting, re-seeding or improving habitat by weed control." OBJECTIVE SERIOUSNESS OF THE OFFENCE 10 The primary sentencing consideration is the objective seriousness of the offence which fixes the upper and lower limits of proportionate punishment. Having regard to the evidence considered below, I think that it lies at the lower end of the scale. MAXIMUM PENALTY 11 The maximum penalty for this offence is $1.1 million. The maximum penalty is an expression by the legislature of the seriousness of the offence. ENVIRONMENTAL HARM 12 About twelve hectares of native vegetation was the subject of the form of mechanical clearing employing the use of a bulldozer which predominantly left the canopy trees intact, with a small number of exceptions, but which involved the removal of a high proportion of understorey and groundcover vegetation. 13 Mr Mura's purpose was to retain the landscape featuring canopy trees and replace the scrub and groundcover with grasses to facilitate pasture improvement for the purpose of grazing cattle on that part of the land.

14 More than half of the forty hectare property, being its western part, was already suitable for grazing.

15 The retention of the majority of canopy trees in the cleared area weighs in favour of mitigation. So too does the fact that the land was not virgin land and had been the subject of selective logging over a period of many years and as recently as the late 1990s.

16 On the other hand, although the canopy trees were maintained, the understorey itself, including groundcover, was of high conservation value as is evident from the evidence of harm to three endangered ecological communities.

17 There is also evidence that the nature of the clearing operation exposed the disturbed soils to the risk of erosion and, although this is not entirely clear, brought about the invasion of certain weeds.

18 Expert evidence tendered by the prosecutor indicates that: (a) soil conservation practices, such as re-establishing vegetation cover, will need to be implemented to stabilise the soil in the cleared area; (b) whilst groundcover vegetation is slowly returning to the cleared area, it is likely that erosion will continue in the cleared area during subsequent heavy rainfall events unless soil conservation works are implemented which are sympathetic with any planned revegetation of the area; (c) overall the vegetation on the property was displaying strong recovery potential from local sources of seeds and plant fragments; (d) this clearing event can be rehabilitated largely through natural regeneration but it will likely require some targeted areas of soil stabilisation and periodic weed control for best results; (e) the clearing event was accompanied by widespread soil disturbance that led to significant gully, rill and sheet wash erosion during a subsequent heavy rainfall event in June 2007. The soil in the cleared area is still vulnerable to further erosion until either sufficient groundcover vegetation has become re-established or until soil conservation techniques are implemented. 19 I accept the prosecutor's submission that the environmental harm was significant but somewhere towards the lower middle end of the spectrum. REMEDIAL DIRECTION 20 The harm occasioned by the commission of the offence is likely to be remediated by compliance with a Remedial Direction issued by the Department of Environment and Climate Change on 4 March 2010 or some appropriate variation thereof (see below). The Remedial Direction records an opinion of an officer of the Department that native vegetation had been cleared on the property in contravention of the Act, that the clearing had caused soil erosion and land degradation, and that the clearing had caused an adverse effect on the environment. 21 The Remedial Direction directed the defendant to repair damage caused by the clearing, to rehabilitate land affected by the clearing (including the taking of steps to allow the land to regenerate) and to ensure that the cleared land would not be further damaged by the clearing. It required the defendant to perform specified remedial works on the property within the time specified, if any, for each work or where no time was specified for a period of thirteen years.

22 The first requirement thereunder was for the landholder to construct a fence around the boundary of the "Remediation Area", as shown on an attached map, for the purpose of excluding stock, by 7 June 2010. Precise specifications for the fence were then set out. Prima facie, this fencing requirement seems unduly onerous because the cleared land (referred to in the direction as the "Remediation Area") comprises the eastern part of the defendant's land which is already fenced on three sides. This may be an appropriate case for variation of the remediation order under s 38(3) of the Native Vegetation Act 2003 to limit the required fencing to a north/south fence which separates the cleared land from the western part which is already cleared. Under the remediation order there are ongoing inspection and reporting requirements.

STATE OF MIND/REASONS FOR COMMISSION OF THE OFFENCE 23 The defendant is guilty of the offence because Mr Mura's conduct is attributable to the defendant. Mr Issa himself was unaware that the land had been cleared until after it was cleared. In separate proceedings I sentenced Mr Mura who pleaded guilty to the same offence on the basis of his status as a director of the defendant: Director-General, Department of Environment and Climate Change v Mura [2009] NSWLEC 233. I said at [77] - [81]: "The defendant is guilty of the offence by reason of his status as a director of the corporation which he admits committed the offence. However, it should be recognised that the defendant was the directing mind of the corporation so far as the offence was concerned. It was he who caused and permitted the contractor to carry out the clearing works.

The intention of the defendant in clearing the land was to increase its grazing yield, which should thereby have improved its value.

The defendant was conscious of the possibility that consent might be required which is why he made inquiries: I've earlier referred to the evidence concerning his communications with the council and the Hunter Central Rivers Catchment Authority...

I am prepared to accept that the defendant formed the impression that the council and the authority did not have any objection to the work about which he informed them. But even on his own account, he did not inform them that he proposed to entirely clear the house site nor that elsewhere the clearing of some trees and the understorey would occur.

I make some allowance for the fact of the defendant's imperfect English expression and comprehension when considering his communications with the council and the authority, but, to say the least, he should have been more precise with them as to what was proposed if he was going to rely upon their responses when proceeding with the work." 24 Mr Mura was not ignorant of the possibility that consent might be required nor did he fail to make inquiry. The council had informed Mr Mura that he might need consent under the Native Vegetation Act and had pointed him in the direction of the Hunter Central Rivers Catchment Management Authority. He contacted that authority and was put on notice by what was said to him that the understorey vegetation had significant ecological value. As indicated above, I am satisfied that the Authority sent Mr Mura a native vegetation information kit. DETERRENCE 25 It is not submitted by the prosecutor that the penalty needs to serve as a specific deterrent in the circumstances of this case, and the prosecutor submits that it appears highly unlikely that the corporate defendant will re-offend even if it has the opportunity to do so. I agree with the submission and accept that the penalty need not serve as a specific deterrent in this case. 26 The importance of general deterrence in sentencing for environmental offences including under the Native Vegetation Act is well established. However, in this case I do not think that it is particularly weighty relative to other considerations.

OTHER SUBJECTIVE CONSIDERATIONS 27 The individual who made the decisions which involved the commission of the offence by the defendant company, was its then director, Mr Mura. The other director, Mr Issa, had very little involvement or knowledge. Subsequently, Mr Mura, having become bankrupt, ceased being a director of the defendant company leaving only Mr Issa as a sole director. 28 Consequently, the prosecutor accepts the penalty imposed by the Court will fall upon the shoulders of Mr Issa in circumstances where he personally has very little culpability for the commission of the offence. This should be taken into account in determining penalty.

29 The defendant did not plead guilty and is therefore not entitled to a discount on penalty for that reason. Nevertheless, it is a mitigating factor that the defence was restricted to the specific and legally complex matter of attribution which had not been fully explored in earlier decisions of this Court, and that the defendant did not contest other complex issues under the Act. The conduct of the defence avoided a potentially protracted hearing. Consequently, the conduct of the defence had significant utilitarian value for the administration of justice. In my view, that should be taken into account as a mitigating factor in sentencing.

CONSISTENCY IN SENTENCING 30 The prosecutor submits, and I accept, that there are an insufficient number of cases to establish a pattern of sentencing for this type of offence. Relevant sentencing principles applicable to offences under this Act and the few cases decided under it were reviewed in Director-General, Department of Environment and Climate Change v Calman Australia Pty Ltd [2009] NSWLEC 182. Sentencing considerations under the now repealed Native Vegetation Conservation Act 1997 were reviewed in Director-General, Department of Environment and Climate Change v Wilton [2008] NSWLEC 297. 31 Of assistance is my judgment on sentence in relation to Mr Mura, although there are significant points of distinction. I there concluded that a fine of $20,000 was appropriate but should be reduced to $5,000 because of his poor financial circumstances which, on the evidence, most likely meant that he would be unable to pay the fine, at least when account was taken of the costs order that I made against him.

FINANCIAL CIRCUMSTANCES 32 The defendant is in financial difficulty. It has had no money to afford legal representation at this sentencing hearing, nor to fence or to run cattle on the land. Consequently, Mr Issa intends to sell the land. CONCLUSION 33 This is a two man company and one of the men, Mr Mura, has already been punished. No personal culpability attaches to Mr Issa except for not exercising tighter corporate governance as a director in an endeavour to be better informed as to what Mr Mura was doing. 34 Mr Issa was purely a passive investor who invested in the land through a corporate structure at the instigation of his friend and accountant, Mr Mura, to help Mr Mura in his financial predicament and in the hope or expectation of making a capital gain in the long term. In the result, Mr Issa's good intentions in trying to help Mr Mura in his financial predicament have been to no avail; the hope or expectation of realising a long term capital gain will be lost; the prospect of making any capital gain on the now foreshadowed sale is uncertain; and Mr Issa will bear a financial burden from all that has happened.

35 In the unusual circumstances of this case, including the financial burden of any compliance with the Remedial Direction or any variation of it, I think that a conviction and an order that the defendant pay the prosecutor's costs is sufficient.

36 The orders of the Court are as follows: 1. The defendant is convicted of the offence as charged. 2. The defendant is to pay the prosecutor's costs. 3. The exhibits may be returned.

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