Director-General, Department of Planning and Infrastructure v Aston Coal 2 Pty Ltd

Background 4At the time of commission of the offences the defendant was a wholly-owned subsidiary of Aston Resources Limited (Aston) a company listed on the Australian Stock Exchange. All of the defendant's directors and officers at the time of the offences were directors, officers or employees of Aston. 5Aston's business undertaking was substantial. In 2011 Aston, together with the subsidiary companies that it controlled, including the defendant (collectively the Aston Group) reported total assets of $923M and net assets of $645M. 6The defendant was incorporated at the direction of Aston on or about 15 September 2009, specifically for the purpose of both acquiring assets associated with a proposed coal mine project at Maules Creek in the Gunnedah Basin of New South Wales and also for the purpose of carrying out coal mining at that site, collectively referred to as the Maules Creek Coal Project. Acquisition of the Maules Creek Coal Project occurred in February 2010 with the defendant being the vehicle through which the acquisition was funded. 7In its 2010 Annual Report, Aston described the Maules Creek Coal Project as "the key asset of the company" with Maules Creek having one of the largest Australian coal deposits. In the 2011 Annual Report of Aston the Chairman stated that, on a marketable reserve basis, "Maules Creek is the seventh largest coal deposit in Australia." 8In August 2010 Aston issued a prospectus for the initial public offering of shares in the company, the purpose of which was to raise capital for implementation of the Maules Creek Coal Project. The offer contained in the prospectus was successful in raising $400M, described as "the largest coal IPO in Australian history". 9On 16 August 2010 the defendant lodged Major Project Application MP10_138 for approval under the former Pt 3A of the EPA Act to carry out the Maules Creek Coal Project. As required by Pt 3A (s 75E), the application was lodged with the Director-General through whom the approval of the Minister was sought. Obtaining the Minister's approval to the Project was seen to be critical to the achievement of Aston's business plan as is made clear in the public statements made by it both in its Annual Reports, investor presentations and statements to the Australian Stock Exchange. 10Project approval was granted for the Maules Creek Coal Project on 23 October 2012. The Major Project Application was determined by the Planning Assessment Commission to whom the Minister had delegated his functions under Pt 3A. 11In May 2010, Aston and its subsidiaries merged with and became subsidiaries of Whitehaven Coal Limited. As a result, both Aston and the defendant are now subject to the control and direction of the Board and management team of Whitehaven Coal Limited.

Legislative provisions 12The obligation to disclose "reportable political donations" in the context of a "planning application" is imposed by the provisions of s 147 of the EPA Act. Relevantly, subsection (3) of that section provides: "(3) A person: (a) who makes a relevant planning application to the Minister or the Director-General is required to disclose all reportable political donations (if any) made within the relevant period to anyone by any person with a financial interest in the application. ... The relevant period is the period commencing 2 years before the application ... is made and ending when the application is determined." 13Section 147(6) addresses the timing of the disclosure required by subsection (3). If, as in the present case, the donation is made after the making of a "relevant planning application", the disclosure is to be made "in a statement to the person to whom the relevant planning application ... was made within 7 days after the donation is made" (s 147(6)(b)). 14The expression "relevant planning application" is defined in s 147(2) to include an application for project approval under Pt 3A, while the same subsection defines "reportable political donation" by reference to the meaning of that expression in Pt 6 of the Election Funding, Expenditure and Disclosures Act 1981 (the Election Funding Act). The combined operation of ss 85 and 86 of the Election Funding Act is to identify a reportable political donation as a donation to a political party exceeding $1,000. 15There are two further subsections of s 147 that need to be noticed for present purposes. First, subsection (7) identifies a "financial interest" in the following terms: "(7) For the purposes of this section, a person has a financial interest in a relevant planning application if: (a) the person is the applicant or the person on whose behalf the application is made, ... (c) the person is associated with a person referred to in paragraph (a) ... and is likely to obtain a financial gain if development that would be authorised by the application is authorised or carried out (other than a gain merely as a shareholder in a company listed on a stock exchange) ... " 16Subsection (8) identifies those persons who, for the purpose of the section, are taken to be associated with each other. Relevantly, a director of an applicant company is associated with that company for the purpose of the section (s 147(7)(c)). 17By subsection (11) a person is guilty of an offence under s 125 of the EPA Act: " ... in connection with the obligations under this section ... only if the person fails to make a disclosure of a political donation ... in accordance with this section that the person knows, or ought reasonably to know, was made and is required to be disclosed under this section." The section also provides that the maximum penalty for the offence is the maximum penalty under Pt 6 of the Election Funding Act "for making a false statement in a declaration of disclosures lodged under that Part". Relevantly, the maximum penalty is 200 penalty units ($22,000) or imprisonment for 12 months or both (Election Funding Act, s 96H(2)).

The obligations imposed by s 147 are breached 18The Major Project Application submitted to the Director-General in August 2010 was accompanied by a document provided to the defendant by the Department of Planning. It was headed "Political Donations Disclosure Statement". The first two pages of that document explained the operation of s 147 of the EPA Act, including the obligation to disclose reportable political donations made after the lodgement of the Major Project Application. The Disclosure Statement which was signed and dated 2 August 2010 had the word "Nil" inserted under the heading "Name of Donor". It is accepted that at the date of signing that document, no reportable political donations had been made by the defendant. 19Thomas Todd was a director of the defendant from 15 September 2009 until 17 November 2011. Todd Hannigan was a director of the defendant from 1 May 2010 until 17 November 2011. By letters dated 11 August 2010 to each of Mr Todd and Mr Hannigan, Aston offered to enter into a "Long Term Incentive Plan" with each of them under which each was to be granted certain non-transferable options, free of charge, to acquire shares in Aston, those options to be exercisable if they each met specified performance conditions. The "Long Term Incentive Plan" was accepted by each of Mr Todd and Mr Hannigan within days of the offer being made to them. The only substantial conditions to which the exercise of the options were subject was that the Board of Aston determine that "first coal" from Maules Creek had been delivered before 17 August 2013 and that when either sought to exercise the option to acquire shares he remained an employee of the Aston Group. 20On 15 March 2011, when Mr Todd was both a Director and the Chief Executive Officer of the defendant, he made a donation of $5,000 to the "NSW National Party". On 22 March 2011, when Mr Hannigan was a director and Chief Financial Officer of the defendant, he made a donation of $4,250 to the "NSW National Party". 21Between January 2011 and 27 October 2011, that is, in the period immediately before and in the period following the making of each of the donations, a number of public announcements were made by Aston as to the expectation it had for coal production from Maules Creek: (a) A document prepared by Aston in January 2011 and described as an "Investor Presentation", directed to the Maules Creek Coal Project, stated that "production expected to commence in 2012, ramping up to steady state production in three years". (b) In a statement released by Aston to the Australian Stock Exchange on 7 July 2011, Aston said: "Aston continues to progress its planning application and infrastructure access arrangements, and is currently targeting environmental approval by the end of 2011, which would enable Aston to achieve its target of first coal by mid calendar year 2013." (c) In its Annual Report for 2011 Aston stated that the "first commercial coal is still expected in mid 2013". (d) In a further document prepared as an "Investor Presentation" in September 2011, Aston stated (p 11) that "first coal is expected mid-2013". (e) A transcript of the address given by the Chairman of Aston at its Annual General Meeting held on 28 October 2011, the estimate of "first commercial coal in mid 2013" was restated. 22The various pronouncements by Aston make apparent that throughout 2011 it was likely that first coal would be delivered before 17 August 2013. Accordingly, provided that Mr Todd and Mr Hannigan remained in employment with the Aston Group at that time, the share purchase options granted to them would be exercisable. If exercised they were each likely to make a financial gain if the Maules Creek Coal Project was "authorised or carried out". This is because it was likely that if their share options were able to be exercised, the market or trading price of shares in Aston at the time of exercise would exceed the option exercise price. 23The exercise price for the options was $5.96 per share. At the respective dates on which the donations were made by Mr Todd and Mr Hannigan, the trading price of Aston shares was $8.47 and $8.95 per share respectively. Each of them had been granted an option to purchase 2,180,232 shares at the exercise price. While other contingencies needed to be considered when identifying the prospective trading price at the date of exercise of the respective options, the defendant accepts that at the date of each donation, Mr Todd and Mr Hannigan were likely to obtain a financial gain if the Maules Creek Project was authorised or carried out. That financial gain would not be one that was made "merely as a shareholder in a company listed on a stock exchange". 24As a consequence, Mr Todd and Mr Hannigan had a "financial interest" within the meaning of s 147(7)(c) which necessitated disclosure by the defendant of the respective donations. The making of those donations was not disclosed in a written statement to the Minister or to the Director-General within 7 days of the date of each donation or at all. 25Although the Agreed Statement of Facts together with the Agreed Bundle of Documents identifies the facts that establish the elements of the two offences, the written submissions of the defendant succinctly acknowledged that by its plea of guilty it accepts that: (i) the donations made by Mr Todd and Mr Hannigan respectively were each a "reportable political donation" as defined in s 147(2) of the EPA Act because, in each case, the donor had a financial interest in the Major Project Application, within the meaning of s 147(7); and (ii) the defendant had an obligation under s 147(3) to disclose those donations to the Director-General or Minister in the circumstances that, when the donations were made, the Major Project Application had already been made, but remained undetermined. 26On a date that has not been established by the evidence, Mr Todd disclosed to the Election Funding Authority the donation that he had made on 15 March 2011. That disclosure was made in the form required by the Authority for the purpose of Pt 6 of the Election Funding Act. Similarly, on a date that the evidence does not reveal, Mr Hannigan lodged with the Election Funding Authority a disclosure of the donation made by him on 22 March 2011. It is not suggested that either disclosure failed to conform with the requirements of the Election Funding Act. 27However, those disclosures to the Election Funding Authority were not disclosures required to be made for the purpose of s 147 of the EPA Act. As will be apparent from my reference to the provisions of the latter section, the obligation for disclosure imposed by the section was upon the defendant. Nothing said about the conduct of the defendant should be taken to reflect adversely upon the conduct of Mr Todd or Mr Hannigan in making the donations that they did.

The Investigation 28On 8 November 2011 an employee of the prosecutor enquired by email, directed to the defendant's General Manager at Maules Creek, as to whether the political donations disclosure attached to the defendant's Major Project Application needed to be updated. The defendant's General Manager responded promptly that same day by stating that "there is no change to our political donation status since our form dated 2 August 2010." 29The prosecutor wrote to the defendant's General Manager at Maules Creek on 18 January 2012 stating that he was writing to the company "in relation to its possible failure to disclose political donations." By that letter the defendant was requested to provide details of any donations "made by the company or persons/companies associated with it from the period August 2008 to date". Attention was drawn to the provisions of subsections (7) and (8) of s 147 of the EPA Act. The letter continued: "The information provided should contain adequate detail for the Department to consider whether such donations were reportable political donations under s 147 of the Act such that an offence was committed by the company in failing to disclose these donations at the time the project application was made and/or within 7 days after the donation was made." 30Aston responded to the Director-General by letter dated 23 January 2012. That letter maintained that there were no reportable political donations required to be disclosed by it. After referring to the provisions of s 147 of the EPA Act and the manner in which the defendant interpreted those provisions, the letter continued: "On this basis, the Company previously confirmed that neither it, its related bodies corporate or its joint venture partner, made reportable political donations in the relevant period. In fact, Aston Resources Group has an internal policy prohibiting political donations. The Company was not aware of, and was not in a position to require disclosure of, political donations and/or activities undertaken by its directors in their personal capacities ... The Company is of the view that, as directors and shareholders of a public company, there is no direct/personal financial gain (as described in section 147(7)) flowing to the directors as a consequence of approval of the Maules Creek Project." 31Notwithstanding the opinion just expressed, the defendant's letter of 23 January indicated that a database search had been conducted for political donations made by a number of entities or persons, including directors of the defendant. As a consequence, the letter disclosed the donations made in March 2011 by Mr Todd and Mr Hannigan. The letter stated that, as directors and shareholders, there was "no direct/personal financial gain (as described in s 147(7)) flowing to the directors as a consequence of approval." The letter made no reference to the share purchase options that had been granted to each of Mr Todd and Mr Hannigan. 32On 20 June 2012, 5 September 2012 (incorrectly recorded in the Agreed Statement of Facts as being 5 September 2013) and again on 12 September 2012, an authorised officer of the Department of Planning and Infrastructure issued notices under s 122Q of the EPA Act to Aston requiring both information and records directed to the appointment of directors of Aston at the date upon which the project application was made. The notices also required disclosure as to whether "there was a 'success bonus' to be paid to any of the directors or any other financial benefit to be obtained by the directors upon approval of the application or the carrying out of the works the subject of the application." 33On 3 July 2012, Aston responded to the notice dated 20 June, attaching details of the terms of appointment of persons who were directors at the time of lodgement of the Major Project Application. With that letter it included "copies of letters of offer setting out the option arrangements" for the directors, together with the 2011 Annual Report summarising details of the directors' remuneration. The information supplied in that letter was supplemented in a further letter from Aston dated 26 September 2012 which also included further documents supporting the information supplied.

Sentencing principles 34Section 3A of the Crimes (Sentencing Procedure) Act 1999 (the CSP Act) provides that the purposes of imposing a sentence include: "(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, (f) to denounce the conduct of the offender, (g) to recognise the harm done to the victim of the crime and the community." 35In imposing a sentence it is also necessary to take into account matters both in aggravation and mitigation of the offence conformably with s 21A of the CSP Act as well as the provisions of ss 22 and 23 of that Act directed to circumstances that may reflect upon the penalty to be imposed.

Objective gravity of the offences 36When imposing a sentence, the primary factor for consideration is the objective gravity or seriousness of the offence charged. That objective gravity or seriousness fixes both the upper and lower limits of proportional punishment. The upper limit is so fixed because the sentence should not exceed that which can be justified as appropriate or proportionate to the gravity of the crime, considered in light of its objective circumstances (Veen v The Queen (No 2) [1988] HCA 14; (1988) 164 CLR 465 at 472). The lower limit is determined by the objective seriousness because allowance for subjective factors, particularly those pertaining to the defendant, cannot produce a sentence which fails to reflect the objective gravity or seriousness of the offence. That observation articulates the common law principle of proportionality (R v Scott [2005] NSWCCA 152 at [15]). 37Factors relevant to determining the objective gravity of the present offences include: (i) the maximum penalty for each offence; (ii) the extent to which the legislative purpose of the provision breached is undermined; and (ii) the defendant's state of mind or reasons for committing the offence. It is convenient to consider each of these matters separately.

The maximum penalty 38As I have earlier stated, the maximum penalty provided by s 147(11) of the EPA Act for failure to comply with the provisions of that section is a fine of $22,000 or imprisonment for 12 months or both. That maximum penalty reflects the public expression by Parliament and by extension, the community, of the seriousness of the offence charged (Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 per Kirby P, Campbell and James JJ agreeing, at 698). 39The imposition of a maximum fine of $22,000 for failure to make a disclosure required by s 147 does not demonstrate that such an offence is minor. The defendant did not submit to the contrary. Nonetheless, the defendant did seek to contrast that maximum with the maximum fine imposed for most offences against s 125 of the EPA Act, being a penalty of $1.1M (s 126(1)). It submits, correctly in my view, that the latter penalty cannot be used as a measure to justify the imposition of a penalty in the present case at or close to the maximum fine of $22,000. 40The penalty imposed in a given case must be commensurate with that proportion of the maximum penalty provided for the offence that is reflective of, among other matters, the objective seriousness of the offence as charged. In identifying that objective seriousness, I do not overlook the fact that while a much higher maximum fine is available under s 126(1) than that provided for by s 147(11), the maximum penalty for the present offences includes both the imposition of a fine and the imposition of a custodial sentence. The imposition of such a sentence is not available under s 126(1). This suggests that the seriousness with which the Parliament viewed the failure to comply with s 147 of the EPA Act should not be viewed so narrowly as if a fine only of $22,000 was the measure against which that seriousness should be judged. 41There are two observations made by Kirby P in Camilleri's Stock Feeds that are of present relevance. First, his Honour stated that once the relative seriousness of the offence charged is determined "the penalty to be imposed is that which approximately correlates upon the scale of penalty set by the legislature from zero to the maximum" (at 698). His Honour then continued by addressing the circumstance in which a maximum penalty may be imposed (omitting case citation): "A maximum penalty is to be imposed where the case falls within the worst category of cases for which the penalty is prescribed. This is to be determined on the facts of the case: ... However, 'that does not mean that a lesser penalty must be imposed if it is possible to envisage a worse case; ingenuity can always conjure up a case of greater heinousness. A sentence which imposes the maximum penalty offends this principle only if the case is recognisably outside the worst category'". 42The latter observations and citation of authority are made because the prosecutor submitted that the penalty for each offence should be between $18,000 and $20,000, that is, close to the maximum fine that may be imposed for each offence. I will return to that submission in due course.

Undermining of the legislative purpose 43The defendant acknowledges that a factor informing the objective seriousness of an offence is the degree to which the commission of the offence tends to undermine the legislative purpose or object of the statutory provision that is breached (Bentley v BGP Properties Pty Ltd [2006] NSWLEC 34; (2006) 145 LGERA 234 at [168] - [172]; Plath v Rawson [2009] NSWLEC 178; (2009) 170 LGERA 253 at [49]). 44The legislative purpose in enacting s 147 of the EPA Act is neither obscure nor requires the drawing of an inference from generally expressed provisions of that Act. The legislative object is expressed in the section itself which relevantly provides: "147 Disclosure of political donations and gifts (1) The object of this section is to require the disclosure of relevant political donations or gifts when planning applications are made to minimise any perception of undue influence by: (a) requiring public disclosure of the political donations or gifts at the time planning applications (or public submissions relating to them) are made, and (b) providing the opportunity for appropriate decisions to be made about the persons who will determine or advise on the determination of the planning applications. ...". 45As I have earlier recorded, there was no breach of the obligation for disclosure under s 147 in August 2010 when the Major Project Application was lodged by the defendant with the Director-General. The object stated in paragraph (a) of s 147(1) was not, by reference to its terms, undermined as no reportable political donation had at that time been made. However, the obligation imposed by s 147(6) for disclosure of a donation made after lodgement of a planning application relevantly feeds into the purpose implicit in paragraph (a) by requiring disclosure of the donation so as "to minimise any perception of undue influence" in respect of an undetermined planning application. 46However, it is the objective expressed by operation of the chapeau to subsection (1) with paragraph (b) that is potentially undermined by the commission of the present offences. Failure to disclose the making of a donation denies the relevant planning instrumentality the opportunity to decide as to who should provide relevant advice upon the undetermined application and who should, in turn, determine that application. In the present case, the Minister was the relevant decision maker (s 75D) although it was within his power to delegate that function. Failure to make the disclosure would, in the case of a project application, deny the Minister the opportunity to identify an alternate decision maker lawfully able to determine such an application under the provisions of the EPA Act. 47As it happened, the Minister had, in fact, delegated his functions under Pt 3A to the Planning Assessment Commission. It was the Commission which determined the defendant's Major Project Application. However, that circumstance does not detract from the fact an object of s 147 was undermined when the defendant committed the present offences. This said, it is necessary to identify all of those facts and circumstances that bear upon the extent to which the legislative objects of s 147 were undermined, in particular the extent to which a perception of undue influence was minimised so as to afford the opportunity for those steps to be implemented that are identified in paragraph (b) of s 147(1). 48It is relevant to notice that the donations made by Mr Todd and Mr Hannigan were not made in secret. The evidence discloses that the appropriate forms of disclosure were completed by each of them and provided to the Election Funding Authority in accordance with the provisions of the Election Funding Act. Under the provisions of s 95(1) of the latter Act, the Election Funding Authority was required to publish on a website the disclosure of reportable political donations. That is the website to which the defendant had recourse when writing to the prosecutor on 23 January 2012 disclosing the fact that donations had been made by Mr Todd and Mr Hannigan. 49It is not suggested that the disclosure by Mr Todd and Mr Hannigan under the Election Funding Act excuses the failure of the defendant to make the disclosure required by s 147(3) of the EPA Act. However, as the defendant submits, it is relevant to the degree to which the commission of the present offences tended to undermine the object expressed in s 147(1)(b). There was no attempt to hide from the public the fact that the two donations had been made. 50The defendant next refers to the fact that the making of the two donations was disclosed to the Director-General by its letter of 23 January 2012, that is, some 9 months prior to the date upon which the Major Project Application was determined. As will be apparent from my earlier discussion of the contents of that letter, the disclosure of those donations was made in the context of an assertion that they did not constitute "reportable political donations". Moreover, the share purchase option agreements were not then disclosed. As a consequence, there was no material provided to the Director-General, enabling a conclusion to be drawn that the donations were made in circumstances where the two directors in question were "likely to obtain a financial gain if development that would be authorised by the application is authorised or carried out" (s 147(7)(c)). 51I accept that the Minister or Director-General was able to take such steps as were thought appropriate to minimise any perception of influence, having been made aware of the two donations. However, in light of the failure to disclose the likelihood of obtaining financial gain by reason of the grant of approval and implementation of the proposal, any step taken by him was not informed as a consequence of compliance with s 147. Therefore, I consider the disclosure on 23 January 2012 of the fact that the two donations had been made to be of only marginal relevance in determining the extent to which the undermining of the objectives of s 147 was diminished. 52There are two further matters relating to the disclosure of the share purchase options afforded to Mr Todd and Mr Hannigan under the Long Term Incentive Plans which bear upon the extent to which the objectives of s 147 were diminished. First, and perhaps of less significance, is the disclosure in the 2011 Annual Report of Aston that long term incentive plans had been provided to each of the Chief Executive Officer and Chief Financial Officer of the defendant and that the option to purchase $2,180,232 shares had been granted to each of them. As would be obvious, the defendant's Annual Report was, by dint of its status as a public company listed on the Stock Exchange, a report that was in the public domain. While the existence of the Long Term Incentive Plans was important to the investigation by the prosecutor when determining compliance with s 147, the relevance of disclosure of those Plans in the Annual Report was that the defendant did not seek to hide their existence or the terms upon which they were granted from public scrutiny. 53Perhaps of greater significance in the present context is the fact that "copies of letters of offer setting out the option arrangements" for Mr Todd and Mr Hannigan together with the 2011 Annual Report containing the information concerning the Long Term Incentive Plans provided to each of them were forwarded by the defendant to the Department of Planning and Infrastructure by letter dated 3 July 2012. Although that letter continued to maintain (wrongly) that nothing in the terms of those arrangements provided a "financial interest" within the meaning of s 147, upon receipt of that letter the Director-General then had information that the two donations that had been made together with information as to share options, disclosing the entitlement to exercise those options subject to the conditions earlier identified. 54Clearly, the piecemeal disclosure of these documents in or accompanying letters from the defendant of 23 January and 3 July 2012, coupled with the statements that the defendant did not consider itself to be in breach of the obligation imposed by s 147, did not constitute a statement giving disclosure of a reportable political donation within the meaning of s 147(6)(b). Nonetheless, by July 2012 the Director-General had information revealing the prospect that a reportable political donation had been made at a time when the Major Project Application remained undetermined. Thus, the opportunity existed to take such steps as was seen to be appropriate as to persons who should advise on the determination of the application as well as the person or body who should determine it. 55It is also relevant in the present context to repeat that the determination of the defendant's Major Project Application on 23 October 2012 was made by the Planning Assessment Commission on delegation from the Minister. That Commission was not subject to the direction or control of the Minister when determining the defendant's Application (EPA Act, s 23B(3)). In that circumstance the defendant submitted that to the extent there is potential for an undisclosed reportable political donation to engender a perception of undue influence, the potential for that perception must logically be diminished as a consequence of the assessment and approval role played by the Planning Assessment Commission. I accept that submission. 56The prosecutor submitted that the section serves an important public purpose of ensuring that planning applications are not determined by persons who are, or might be seen to be, susceptible to influence by an applicant, or those controlling the activities of an applicant, consequent upon the making of political donations. At a level of principle, there is substance in this submission and I have regard to it. Consistent with the observations made by the Attorney-General in his second reading speech when introducing the legislation that amended the Election Funding Act and introduced s 147 of the EPA Act, the requirement for disclosure helps to preserve the integrity of the electoral system, together with the transparency and accountability of the planning assessment process (Hansard, 25 March 2010). 57I accept that the defendant's failure to disclose the donations made by Mr Todd and Mr Hannigan when, as directors of the defendant, they were likely to obtain a financial gain if the defendant's Major Project Application was authorised or carried out, did have the potential to undermine the objects which s 147 was enacted to achieve. Nonetheless, the circumstances that I have discussed, resulting in the provision of information and documents from which the probability that a reportable political donation had been made, coupled with the fact that this information and these documents were available to the Director-General some months prior to the defendant's Major Project Application being determined, leaves me to conclude that the extent to which the objects of the legislative provision were undermined was relatively low.

Defendant's state of mind: circumstances attending commission of the offence 58I have already identified the defendant's legally erroneous assertions in correspondence with the prosecutor that it was not required to make a disclosure under s 147. The basis for or provenance of any advice informing that erroneous assertion is not disclosed. The fact that the defendant acted on the basis of the assertions made does not excuse the offence but explains why it challenged the obvious implication of the enquiries first made of it by the prosecutor. 59The obvious error in the approach taken by the defendant in its correspondence with the prosecutor, is evidenced by its guilty plea, involving acceptance that it ought reasonably to have known at the time at which the donations were made that they were required to be disclosed. Accepting that those donations were made by directors in their private capacity, there ought to have been a system in place whereby such donations were disclosed to the defendant so that it could consider its obligation under s 147. No evidence is adduced by the defendant that any such policy was in place at the time of commission of these offences. Clearly, the terms of the option agreements entered into with directors were known to the defendant, including the fact that realisation of likely financial gain by the directors turned significantly upon approval of the defendant's Major Project Application. That circumstance was sufficient to require a policy for disclosure of political donations by directors to ensure that the obligations imposed by s 147 were met. 60It cannot be suggested that the defendant was ignorant of the requirement to comply with s 147. The Political Donations Disclosure Statement attached to the Major Project Application, with its reference to, and explanation of, the provisions of s 147, were signed by the defendant's then General Manager in August 2010. 61Further, as the prosecutor submits, the defendant is and was at the time of commission of the offences, part of a corporate group with significant assets, able to raise capital of $400M through a public share offer for the purpose of carrying out a multimillion dollar mining development. This evidence demonstrates that it had and ought to have utilised its significant resources to learn or obtain advice upon the manner in which it was to comply with statutory reporting obligations. 62The prosecutor also submits that demonstrative of the knowledge that the defendant ought to have had of the need to disclose "reportable political donations" was the significant financial gain that each of Mr Todd and Mr Hannigan were likely to realise once project approval was granted. He makes the submission on the basis that "first coal could hardly be achieved" without that approval. The likely financial gain for each donor is said to be at least $4M. 63On the evidence before me I am not able to conclude that the prospective financial gain for each donor is in the sum identified by the prosecutor. The grant of approval to the Major Project Application was but one of the contingencies that determined the entitlement to exercise the share options, at least at the level of return posited by the prosecutor. 64The time for determination of the likely financial gain is the time at which the two critical donations were made in March 2011. While the share price for shares in the defendant was then more than $2 above the exercise price for the options held by Mr Todd and Mr Hannigan, there remained other elements of infrastructure that required approval and implementation before "first coal" could be delivered. These items are identified in the documents published by the defendant and to which I have earlier referred. They include the provision of rail infrastructure and port facilities as well as the construction of a coal holding processing plant. Clearly, in March 2011 the appreciation that all would be in place, even assuming Major Project Approval, so as to permit "first coal" to be delivered by mid 2013 was speculative. 65The defendant's plea of guilty necessarily accepts that the two directors in question, as persons "associated" with the defendant, were likely to obtain a financial gain if the Major Projects Application was authorised and carried out. On the evidence before me, the exigencies attending the delivery of "first coal" by the requisite date does not enable me to determine the quantum of that financial gain as of March 2011. 66Notwithstanding these matters, the prosecutor accepts that the actions of the defendant in committing the offence were not dishonest or wilfully contumelious. Consistent with that submission, the prosecutor accepts that the donations were not designed to or have the effect of, influencing "any decision making process on the part of anyone exercising powers with respect to the Maules Creek Coal Project." 67On the evidence before me, I accept those submissions as fairly reflecting upon the reasons for and circumstances in which the defendant failed to report the critical donations. However, accepting that the making of the donations and the failure to disclose them was not motivated by any intention to influence the decision making process in respect of the Maules Creek Coal Project has little impact in assessing the objective seriousness of the offence. Had there been evidence that such was the purpose of the defendant in failing to disclose the donations, with the consequence that the granting of approval would result in financial gain, that would have been an aggravating factor of a kind identified in s 21A(2)(o) of the CSP Act (cf De Celis (Election Funding Authority) v Lindsay Bennelong Developments [2012] NSWSC 917 at [16]). 68An aggravating factor of that kind, if established, had the potential to increase the seriousness of the offence and therefore the penalty to be imposed for the commission of that offence. However, I make clear that I accept the submission of the defendant to the effect that there are no aggravating factors of the kind identified in s 21A(2) of the CSP Act that bear upon the commission of the present offences. The prosecutor has not made any submission to the contrary.

Conclusion on objective gravity 69Having regard to the matters to which I have adverted by reference to the maximum penalty for the present offences, the extent to which the purpose of s 147 was undermined and the defendant's state of mind when committing the offences, I consider the objective gravity of the offence to be in the mid range of seriousness.

Subjective considerations 70There are a number of mitigating factors that must be considered when determining penalty in the present proceedings. These factors, relevantly identified by reference to s 21A(3) of the CSP Act and about which there is no issue between the prosecutor and the defendant, are that: (i) the defendant does not have any record of previous convictions (s 21A(3)(e)); (ii) the defendant is a corporation exhibiting good character (s 21A(3)(f)); (iii) some assistance was afforded to the prosecutor in the investigation of the offence and conduct of the proceedings (s 21A(3)(m) and s 23). 71In relation to the last of these items, the defendant acknowledges that it was required to respond to statutory notices in order to have produced to the prosecutor all relevant documents ultimately relied upon to establish that the offences had been committed. However, it did not cavel with nor seek to frustrate this process: it was the defendant's erroneous interpretation and application of the law that ultimately caused the prosecutor to rely upon the statutory notice process. Importantly, the defendant cooperated with the prosecutor in settling the detailed Agreed Statement of Facts and Bundle of Documents that comprised the only substantive evidence tendered in the proceedings.

Early plea of guilty 72The summons in each matter was filed on 16 April 2013. The first return date was 31 May when, by consent, the prosecutor was ordered to provide a response to a request for particulars that had been made by the defendant. The prosecutor was also ordered to give the defendant notice of the prosecution case in accordance with s 247E of the Criminal Procedure Act 1986 by 4.00pm on 26 July 2013. At the time of the orders and directions then given, the proceedings were to be next listed for directions on 16 August 2013. 73Having received the particulars provided by the prosecutor in accordance with the Court's order, the defendant advised the prosecutor on 10 July that it would enter a plea of guilty and that it would arrange for the matter to be re-listed so that the plea could be entered and appropriate directions made for a sentence hearing. Compliance with the order made on 31 May requiring the prosecutor to prepare notice of its case in accordance with s 247E of the Criminal Procedure Act was waived (s 247P). At the request of the defendant, the matter was re-listed before the Court on 19 July 2013 when its plea of guilty to each offence was entered and directions given for the preparation of evidence at a sentence hearing. 74The orders previously made, requiring the parties to give notices under s 247E and 247F respectively were vacated. At the time at which the plea of guilty was entered, the prosecutor had not served any evidence beyond that which had been served with the summons in each matter. In these circumstances, the defendant submits that it is entitled to a discount by reason of the utilitarian value of its early plea of guilty (s 21A(3)(k) and s 22 of the CSP Act). The defendant submits that it is entitled to a discount of between 20 and 25 per cent (R v Thomson; R v Houlton [2000] NSWCCA 309; (2000) 49 NSWLR 383). 75The prosecutor submits that while the plea of guilty must be acknowledged, the utilitarian value of the plea was lost because the plea was not entered until some three months after the summons was served. That delay is said to have caused the prosecutor to incur costs in preparing expert evidence for trial. No such evidence was ever served and the additional costs said to have been incurred are not quantified. The only evidence that additional costs might be incurred is in the form of a letter from the Department of Planning and Infrastructure to the defendant on 29 April 2013 that contains the following statement: "To date, we have incurred limited costs. However, we are considering briefing an expert in relation to a particular aspect of the case in the event the matter proceeds to a contested hearing." 76In response, the defendant points to the fact that its plea of guilty was entered on the second occasion upon which the matter was listed before the Court, that listing being the consequence of the defendant's indication to the prosecutor that a plea of guilty would be entered. It had reasonably so indicated after it had the opportunity to review the particulars of the charges brought against it (Cameron v The Queen [2002] HCA 6; (2002) 209 CLR 339 at [20] and [75]). Upon the plea being entered on that second occasion, the procedural requirements under Div 2A of Pt 5 of Ch 4 of the Criminal Procedure Act were waived by the defendant with the consequence that the obligation of the prosecutor to comply with s 247E was avoided. 77The defendant further submits that by operation of s 247D of the Criminal Procedure Act, the Court is required to give a direction at the first mention of summary criminal proceedings that notice of the prosecution case be given to the defendant under s 247E. Presumably at the time of the letter from the Department of Planning and Infrastructure to the defendant on 29 April 2013, the prosecutor was contemplating the preparation of evidence in accordance with the notice that it would be required to file following a direction at the first mention of the proceedings on 31 May. It would be heterodox, so the defendant submits, to suggest that a defendant should lose the benefit of a discount for an early plea by reason of the prosecutor complying with the obligation contemplated by the statutory provisions. As I have earlier recorded, the intimation given to the prosecutor on 10 July that a plea of guilty would be entered relieved the prosecutor of the burden of compliance with the statutory provisions and their incorporation in the orders of the Court made on 31 May. 78There is substance in the submissions of the defendant in this regard and I accept them. There was utilitarian value in the entry of a plea at an early point in the proceedings when, so the evidence before me reveals, the prosecutor was relieved of the burden of preparing documents and evidence that would otherwise have been required. In the circumstances, I consider that the defendant is entitled to a 20 per cent discount by reason of its plea of guilty.

Remorse 79Remorse by a defendant for the commission of an offence is a mitigating factor, provided there is evidence demonstrating that remorse conformably with s 21A(3)(i) of the CSP Act. I accept that the remorse of the defendant has been satisfactorily demonstrated, albeit only after the proceedings were commenced and, so it seems, after it had received appropriate legal advice as to the meaning and operation of s 147 of the EPA Act. 80Timothy Andrew Burt is the General Counsel and Company Secretary of Whitehaven Coal Limited, the holding company of which the defendant is a wholly-owned subsidiary. Correspondence passing between Aston and the prosecutor in July and September 2012, being correspondence to which I have earlier referred, indicates that Mr Burt was also the Company Secretary of Aston. 81In his affidavit evidence Mr Burt accepts that the view expressed as to the operation of s 147 in his correspondence of July and September 2012 was incorrect. He expresses regret and apologises on behalf of the defendant for its failure to disclose the reportable political donations made in March 2011. He further states that the defendant "appreciates the importance of disclosing reportable political donations to ensure the integrity of the planning assessment process." 82By providing that evidence, which I accept, he demonstrates on behalf of the defendant that it was wrong in taking the position that it did. His evidence also recognises the impact which the failure to make the disclosure required by s 147 had by undermining the objectives sought to be achieved by enactment of the section. 83Further, demonstration that action has been taken to address the defendant's breach is found in the form of a Political Donations Policy adopted by the Board of Whitehaven Coal Limited on 26 March 2013. The policy applies to all of the Whitehaven group of companies. In substance, the policy prohibits companies in the group from making political donations for the benefit of a New South Wales political party; prohibits directors from making political donations on behalf of Whitehaven and requires any directors making donations in a personal capacity to notify the Company secretary within three business days from making that donation. 84The fact that the defendant has taken the step of adopting this Policy indicates to me that the articulation of an apology is not a hollow utterance. The remorse shown by the defendant in this case is properly to be considered as a mitigating factor.

Specific deterrence 85The purposes of sentencing articulated in s 3A of the CSP Act have earlier been recorded. One of those purposes is deterrence, both specific and general (s 3A(b)). Having regard to the evidence before me, there is little scope for reflecting an element for specific deterrence in imposing a sentence upon the defendant. 86As I have earlier recorded, Aston has no prior convictions. Importantly, it has now merged with Whitehaven Coal Ltd and is, in effect, controlled by the Board of that company. There are no recorded convictions against any company in the Whitehaven group of companies and no suggestion that any of those companies have failed to comply with the requirements of s 147. Importantly, Whitehaven Coal has adopted the Policy to which I have just adverted relating to the making of political donations. That action having been taken, coupled with the salutary lesson of the present proceedings, causes me to conclude that specific deterrence has little part to play in the present proceedings.

General Deterrence 87General deterrence has an important role to play in the imposition of a penalty. The objects that the enactment of s 147 were intended to serve have earlier been identified. A penalty must be imposed such that those responsible for failing to report political donations when making planning applications will be held accountable and appropriately punished because they have undermined the important objects of the section. To adapt the language of Latham J in De Celis at [16], the section strikes at the fact of an undeclared donation because it is the appearance of influence of public officials responsible for planning decisions that arises from such donations and which damages public confidence in the planning and environmental assessment system. 88The sentence to be imposed upon the defendant must reflect this element of deterrence.

Evenhandedness 89These prosecutions are said to be the first brought for failure to comply with the provisions of s 147 of the EPA Act. The only case that is arguably comparable for the purpose of ascertaining any general pattern of sentencing for like offences is that of De Celis. In that case the defendant pleaded guilty to an offence against s 91 of the Election Funding Act in that he failed to lodge a declaration disclosing that a reportable political donation had been made. The maximum penalty for that offence was $22,000. Unlike the position that pertains in respect of the present offences, that penalty did not include a term of imprisonment (Election Funding Act, s 96H(1)). The defendant had made three political donations totalling $47,000. Although the beneficiaries of those donations had lodged returns with the Election Funding Authority, the defendant had failed to lodge the disclosure declaration that it was required to make. After investigation by the Authority and requests to the defendant to make a disclosure, the appropriate declaration was ultimately provided. 90Latham J imposed a fine of $6,000. In doing so, her Honour was critical of the significant delay on the part of the Authority in bringing the proceedings. The Authority delayed commencement of the proceedings for a period in excess of 2 years after the failure of the defendant to lodge a return was apparent and a request first made to it to make the appropriate disclosure. Her Honour remarked that the delay mitigated "the penalty otherwise appropriate to the offence" (at [15]). The penalty "otherwise appropriate" was not stated. 91The defendant in that case had mistakenly believed that an appropriate declaration disclosing the donations had been lodged after prompting by the Authority. Her Honour also accepted that the donations were not designed to influence the decision making process with respect to property developments to be undertaken by the defendant. In the circumstances, she determined that the objective gravity of the offence was "not of a high order but nor is it low on the scale of objective seriousness". 92While the decision in De Celis is of some assistance, as would be expected the different factual circumstances surrounding the commission of the offence, its prosecution and different maximum penalty means that the fine imposed cannot be directly transposed to the present offences.

Totality 93The defendant submits that the principle of totality should be applied when determining the appropriate sentence or penalties in the present cases. The prosecutor contends that there is no scope for application of the principle as these are discrete offences involving separate breaches of s 147. 94The principle of totality and the manner of its application was described by Street CJ in R v Holder [1983] 3 NSWLR 245 in the following way (at 260): "The principle of totality is a convenient phrase, descriptive of the significant practical consideration confronting a sentencing judge when sentencing for two or more offences. Not infrequently a straight-forward arithmetical addition of sentences appropriate for each individual offence considered separately will arrive at an ultimate aggregate that exceeds what is called for in the whole of the circumstances. In such a situation the sentencing judge will evaluate, in a broad sense, the overall criminality involved in all of the offences and, having done so, will determine what, if any, downward adjustment is necessary, whether by telescoping or otherwise, in the aggregate sentences in order to achieve an appropriate relativity between the totality of the criminality and the totality of the sentences." 95In the course of argument before me, reference was made to observations of Lloyd AJ in Chief Executive of the Office of Environment and Heritage v Rinaldo (Nino) Lani [2012] NSWLEC 115 where at [63] his Honour declined to apply the principle of totality to the matters before him. In so doing his Honour said: "For example, a person may commit two speeding offences on successive days. These would be two separate and discrete offences. The totality principle would not apply." The prosecutor adopted that analogy for present purposes. 96With respect, I do not accept that the principle of totality would not apply in all circumstances attending the commission of two speeding offences on successive days. Assume that the evidence accepted in each case to be that the defendant relied upon the speedometer reading in the same vehicle that was being driven at the time of each offence and that by reference to that speedometer reading the defendant was driving within the speed limit. Assume also the evidence to show that the speedometer at the time of each offence was faulty as it did not record the actual speed of the vehicle. I would have thought that those circumstances would be sufficient to engage the principle of totality. They bear some analogy to the present circumstances. 97Applying the observations of the Chief Justice in Holder, I am of the opinion that the principle of totality is to be applied when considering the appropriate sentence in the present proceedings. The single course of conduct on the part of the defendant, erroneously understanding its obligation under s 147, applied to each donation for which disclosure was required. The fact that the donations were made seven days apart is also relevant to the application of the principle. As the defendant submits, the two offences "were so closely related both conceptually and temporally" the principle should be applied.

Conclusion on penalty 98The present offences are, as I have determined, in the mid range of objective seriousness. They are not trivial. However, contrary to the submission of the prosecutor, they are not so serious as to justify the imposition of a penalty close to the maximum penalty prescribed by s 147(11). Without exercising ingenuity of the kind identified by Kirby P in Camilleri's Stock Feeds and to which I have referred at [41], this is not a case at or close to the worst case for which the penalty is prescribed. By way of example that is not far-fetched, one could contemplate as occurring the determination of a planning application by a single or individual decision-maker who is a member of a political party to which a reportable political donation has been made but not disclosed at the time of determination. The offence against s 147 in that example is objectively more serious case than the present. 99The offences committed by the defendant justify a conviction being entered against it and fines imposed. 100Applying the instinctive synthesis that requires the weighing of the objective seriousness of the offence with the subjective circumstances of the defendant (Markarian v The Queen [2005] HCA 25; (2005) 228 CLR 357 at [72]; Muldrock v The Queen [2011] HCA 39; (2011) 244 CLR 120 at [26]), I have determined that an appropriate penalty for each offence, before applying the principle of totality, would be $12,000, yielding aggregate fines of $24,000. These penalties include a total discount of 25 per cent for the early plea of guilty and other subjective factors that I have identified and which operate in mitigation of the offences committed. Applying the principle of totality to reflect the overall criminality of the defendant, I conclude that the fine for each offence should be reduced to $10,000 or an aggregate of $20,000.

Costs 101The defendant has agreed to pay the prosecutor's costs of the proceedings. There is no agreement between the parties as to what those costs will be and no indication has been given to me of the quantum of likely costs. The quantum of those costs will need to be determined in accordance with s 257G of the Criminal Procedure Act.

Fines Act 1996: s 122 102The prosecutor seeks a direction that half the fine imposed for each offence be paid to him pursuant to s 122 of the Fines Act 1996. The defendant made no submission in response to this application. In the circumstances of these cases I consider that such a direction is appropriate.

Orders 103I make the following orders: In proceedings 50265 of 2013

1. The defendant is convicted of the offence as charged.
2. The defendant is fined the sum of $10,000.
3. Pursuant to s 122 of the Fines Act 1996, direct that half the fine of $10,000 be paid to the prosecutor.
4. The defendant must pay the prosecutor's costs of the proceedings to be determined in accordance with s 257G of the Criminal Procedure Act 1986. In proceedings 50266 of 2013
5. The defendant is convicted of the offence as charged.
6. The defendant is fined the sum of $10,000.
7. Pursuant to s 122 of the Fines Act 1996, direct that half the fine of $10,000 be paid to the prosecutor.
8. The defendant must pay the prosecutor's costs of the proceedings, such costs to be determined in accordance with s 257G of the Criminal Procedure Act 1986. In both proceedings
9. Exhibits may be returned

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 November 2013