41 The respondents submitted that "to impose a civil penalty that is grossly outweighed by the fine imposed against Mr Seddon for the very same conduct in the very same circumstances would be unjust".
42 I am not persuaded that the fine imposed on Mr Seddon for contravention of s 354A (5) is an irrelevant consideration to the question of the appropriate fine to be imposed on the respondents. The respondents are liable because Mr Seddon acted as the agent of Thermal Dell and CDF Marine (given that CDF Marine authorised the use of the Concessions by Mr Seddon). That said, the statutory regimes are different in subject and purpose, and considerations of parity cannot be meaningfully applied. Mr Seddon's criminal conviction also does not alter the fact of the respondents' own culpability for their contraventions.
43 The Minister sought declarations and penalties against both respondents. The Minister submitted that penalties in the following ranges would be appropriate:
Thermal Dell: A penalty in the range of $85,000 to $110,000. This represents about 15 to 20% of the statutory maximum for one contravention (and 7.5 to 10% of the total maximum for both contraventions).
CDF Marine: A penalty in the range of $10,000 to $20,000. This represents about 2 to 4% of the statutory maximum for one contravention (and only 1 to 2% of the total maximum for both contraventions).
44 The respondents accepted that declarations should be made. They also noted the following in respect of penalties:
Mr Frankiewicz is the sole director of both Respondents and the sole shareholder of the First Respondent. The First Respondent is the sole shareholder of the second respondent.
The Respondents are in all respects a product of Mr Frankiewicz's commercial and business activities.
The extent of knowledge and awareness of the contravening conduct and potential for avoidance of the First Respondent is the very same for the Second Respondent.
It is submitted that these circumstances provide an appropriate basis upon which the Court should recognise the burden that would be placed upon Mr Frankiewicz if both Respondents were ordered to pay pecuniary penalties that were determined without any regard to corporate relationship between them and the overall penalty obligation.
45 The respondents submitted that:
given the corporate structure and identity of the Respondents…any pecuniary penalty ordered in respect of each Respondent [should] be apportioned as follows:
a. A 75% apportionment to the First Respondent, up to a maximum of $30,000.00; and
b. A 25% apportionment to the Second Respondent, up to a maximum of $10,000.00.
46 I do not consider the respondents' apportionment approach to be consistent with principle. I accept the Minister's submission that the course of conduct principle does not enable the two respondents to be "bundled together", each respondent being separately responsible for its own course of conduct. However, I also accept the respondents' submission that the corporate structure of and relationship between the respondents is a consideration relevant to the penalties to be imposed on each. Mr Frankiewicz was (and is) the sole shareholder in Thermal Dell and Thermal Dell was (and is) the sole shareholder in CDF Marine. He was (and is) also the sole director of both respondents. For his own reasons Mr Frankiewicz chose to structure his business activities through two corporations. For present purposes, the consequence of his having done so is that both corporations have contravened s 354(1)(f) of the EPBC Act. If he had chosen to structure his business activities through a single corporation, then that corporation alone would be liable for the contraventions. The underlying reality, that both corporations are the means by which Mr Frankiewicz conducted his business activities, should not be overlooked. The Minister acknowledged this in submitting that while it would be appropriate to impose a penalty in the ordinary course on Thermal Dell, the penalty to be imposed on CDF Marine should be significantly reduced (by around one half) to reflect the common ownership of the companies.
47 The Minister and the respondents, by their submissions, accepted that Thermal Dell's conduct warranted a greater penalty than that of CDF Marine. As the Minister put it, Thermal Dell was actively involved in the commercial fishing activity (having engaged Mr Seddon) and stood to gain a profit from the contraventions, if Full Force Fishing had ultimately recorded a profit for the relevant financial year. CDF Marine authorised Thermal Dell to use the Concessions but was not a partner of the Full Force Fishing business and, apart from payment of the AFMA fees by Thermal Dell, was not seeking or expecting to gain benefits from the Longline Fishing activities.
48 The Minister submitted that general deterrence was of particular importance in this matter for a number of reasons.
The relevant provisions of the EPBC Act "are designed to ensure that areas of international and/or national environmental significance are protected and managed consistently with the natural values of the area and Australia's international environmental responsibilities" and the consequences of non-compliance with those provisions are "very serious" (Woodley at [54] and [56]).
Longline Fishing poses a very grave risk to marine life in Commonwealth Marine Reserves.
There is a need to send a strong message to commercial fishing businesses to actively ensure they do not undertake unauthorised fishing in Commonwealth Marine Reserves given that the ETBF is the dominant Commonwealth fishery located off the coast of Eastern Australia and, in 2011 to 2012, was fished by 44 active vessels with longline boat SFRs. Further, the Elizabeth and Middleton Reserve had long been subject to conservation protection and that should have been well known to the respondents.
Section 354 continues to be contravened despite warnings and earlier decisions. In the present case:
The ETBF Management Arrangement Booklet, 2011 Season states, under the heading 'Where can't I fish?', that ETBF boats are not allowed to fish inside Commonwealth managed Marine Protected Areas, and directs Concession holders to the Marine Protected Areas webpage of the Department of Sustainability, Environment, Water, Populations and Communities (as it then was). The respondents, through Mr Frankiewicz, have acknowledged that despite these directions they were not aware of the boundaries of the Elizabeth and Middleton Reserve and, aside from forwarding the same Booklet to Mr Seddon and relying upon his experience, did nothing to ensure that Mr Seddon would avoid that reserve when fishing in the ETBF.
As has been the case in each of the Wilson [Minister for the Environment and Heritage v Wilson [2004] FCA 6 (Wilson)], Warne [Minister for the Environment and Heritage v Warne [2007] FCA 599 (Warne)] and Woodley matters, the contraventions resulted from a failure to take proper precautions to ensure that commercial fishing activities were not undertaken in the marine reserve. In other words, more than a decade after the introduction of the provisions to protect marine reserves from the effects of commercial fishing, and even after the enforcement provisions were strengthened in 2007, commercial fishing businesses still fail to take basic steps necessary to comply with those provisions.
49 The respondents accepted that general deterrence was a relevant consideration but contended that a substantial penalty was not warranted. As the respondents put it:
The circumstances of these contraventions were not deliberate, Mr Seddon did not embark on risky conduct without fear of being caught; he was simply unaware that the longline had drifted into the Elizabeth and Middleton Reserve.
To impose a substantial civil penalty in those circumstances will do nothing to deter the 'would-be contraveners' who engage in conduct deliberately and take steps to go undetected or escape liability.
50 I accept that general deterrence is the decisive consideration in this case. As stated in Woodley at [62]:
If those who contravene s 354(1) of the EPBC Act receive relatively small penalties when apprehended, there is every chance that commercial fishermen will conclude that the benefits of fishing in protected areas (given its potential for deriving significant financial rewards) far outweigh the risk of being caught committing a contravention because the risk of detection is low and the financial penalties relatively insignificant. If such conduct is undertaken, the harm to the environment is likely to be significant.
51 That said, general deterrence directed towards education of the community about the law's proscriptions cannot result in the imposition of a penalty disproportionate to the objective seriousness of the contraventions. It has been said that in such a case "care must be taken in imposing a penalty lest the offender be made to shoulder an unfair burden of community education" (Walden v Hensler (1987) 163 CLR 561 at 570). In the context of civil penalties, as the Minister submitted, the principle has been expressed in these terms in NW Frozen Foods at 293:
…insistence upon the deterrent quality of a penalty should be balanced by insistence that it "not be so high as to be oppressive". Plainly, if deterrence is the object, the penalty should not be greater than is necessary to achieve this object; severity beyond that would be oppression.
52 I do not accept that the other cases involving contraventions of s 354 of the EPBC Act involve facts comparable to the present case. In this regard, the observations in NW Frozen Foods at 295 are relevant. Burchett and Kiefel JJ noted that "other things being equal, corporations guilty of similar contraventions should incur similar penalties". However, "the facts of the instant case should not be compared with a particular reported case in order to derive therefrom the amount of the penalty to be fixed. Cases are authorities for matters of principle; but the penalty found to be appropriate, as a matter of fact, in the circumstances of one case cannot dictate the appropriate penalty in the different circumstances of another case".
53 In Wilson the respondent set his net in the marine park. He knew that he was close to the park and his vessel might enter the park (as it did). He "plainly took a risk in setting his line very close to the boundary of the park" (at [7]). The penalty was $12,500 compared to a maximum of $55,000 (23%). I accept the respondents' submission that Wilson is different from the present case on grounds including that the respondents:
a. Had no knowledge of the boundary of the Elizabeth and Middleton Reserve;
b. Relied upon the experience and knowledge of Mr Seddon;
c. Were not directly engaged in the contravening conduct;
d. Had a fully operational VMS and detailed and submitted accurate Daily Fishing Logs used for detection of the conduct.
54 In Warne the respondent's vessel entered the marine park to fish on four occasions. During the contraventions the species caught included scampi, a species of fish classified as a native species within the terms of the EPBC Act. The respondent was the skipper and in control of the vessel. The penalty was $25,000 compared to a maximum of $55,000 (45%). As the respondents submitted:
Warne can be distinguished from the present proceedings on the basis that the Respondents:
a. Were not directly engaged in the contravening conduct;
b. Mr Seddon did not target any protected native species.
55 In Woodley the respondents were the skipper and the (related) family company which owned the vessel. He unintentionally but recklessly set four rock lobster pots inside a sanctuary zone in a marine reserve. He did not catch any rock lobster in the reserve. The vehicle monitoring system (or VMS) on the vessel was not operating. The skipper intended to keep working as a commercial fisherman. He had not co-operated during the investigation. The skipper was fined $13,000 compared to the maximum of $55,000 (24%). The company was fined $65,000 compared to the maximum of $550,000 (12%). As the respondents submitted:
Woodley can be distinguished from the present proceedings on the basis that the Respondents:
a. Had no knowledge of the boundary of the Elizabeth and Middleton Reserve;
b. Relied upon the experience and knowledge of Mr Seddon;
c. Were not directly engaged in the contravening conduct;
d. Co-operated fully with the investigative authority; and
e. Had a fully operational VMS and detailed and submitted accurate Daily Fishing Logs used for detection of the conduct.
56 The Minister also referred to Minister for the Environment and Heritage v Atterton (Federal Court, unreported, 11 December 2003, matter no S 294 of 2002) (Atterton). The respondent had knowingly set nets and caught fish in a reserve at a time when the reserve was closed to commercial fishing. He was fined $25,000 (45% of the maximum, being an agreed penalty).
57 Insofar as it might be relevant to the principle of even-handedness, Wilson, Warne, Woodley and Atterton, in my view, each involved a substantially greater level of culpability than the present case. The contraventions in each were objectively more serious than the present case and this fact should be reflected in the imposition of penalties. Otherwise, there will be a lack of even-handedness in the imposition of penalties which is undesirable.
58 In particular, and as the respondents in the present case submitted, the respondents did not undertake any fishing activity. Mr Seddon did. Mr Seddon was the agent of Thermal Dell (and the other owners of the business and the vessel) and of CDF Marine, but neither Thermal Dell nor CDF Marine undertook any fishing activity. They are liable by operation of s 498B(1) of the EPBC Act but the fact that they are one step removed from the activities (in the case of Thermal Dell) and possibly two steps removed (in the case of CDF Marine) is relevant. So too is the fact that they believed Mr Seddon to be an experienced fisherman. They were not careless or reckless in the choice of Mr Seddon. They are liable because they did not take reasonable precautions and exercise due diligence to avoid Mr Seddon's particular contravening conduct which they ought to have done. The contravening conduct involved the drift of the longlines into the reserve, rather than the setting of longlines in the reserve. While this was a result of good luck and not good management (as the Minister said), the respondents are nevertheless entitled to the benefit of this good luck.
59 Other considerations support this approach.
60 The contraventions created a risk of significant loss or damage but there is no evidence that any material loss or damage in fact was caused.
61 Despite having fished in the ETBF for about four years, neither Thermal Dell nor CDF Marine have previously been found by the Court in proceedings under the EPBC Act to have engaged in any similar conduct. As the Minister acknowledged, the respondents' excellent record is an important factor in their favour. .
62 As noted, specific deterrence is of limited relevance in the present case.
63 The Minister accepted that there was no meaningful remediation which the respondents could have undertaken.
64 In the words of the Minister:
70. Thermal Dell and CDF Marine have cooperated extensively through:
70.1. providing assistance to authorities during the investigation into the contraventions, including by participating in interviews and making full and frank admissions as to a range of factual matters;
70.2. filing a Defence admitting the contraventions;
70.3. joining with the Minister in filing a Statement of Agreed Facts describing the facts relevant to the contraventions.
65 The Minister (properly) submitted that, as a result:
the respondents should each be given a significant discount for co-operation in the order of a 25-30% reduction on the penalties which would otherwise be appropriate.
66 Taking into account all of the above matters I am satisfied that the contraventions by the respondents and the requirements of general deterrence arising from those contraventions require the imposition of a penalty on each. The respondents did not take care and exercise due diligence to ensure Mr Seddon knew of the location of the Elizabeth and Middleton Reserve and understood he was not to fish in that area. Failures of care of this kind attract the need for general deterrence. Accordingly, to the extent that the respondents suggested that it might be reasonable for no penalty to be imposed in all of the circumstances, I disagree. To accede to that submission would be to undermine an important statutory scheme for protection of environmentally significant areas. The lack of intent of the respondents and lack of profit made cannot displace the need for general deterrence in this case. As the Minister submitted, the respondents' ignorance and inadvertence were "just not good enough" and involved a failure of due care and diligence.
67 I consider that each penalty should reflect the fact that the two contraventions by each respondent represent a single course of conduct. Further, the penalties (or, at the least, the penalty imposed on CDF Marine) should reflect the corporate structure of the respondents as manifestations of the business activities of the one person, Mr Frankiewicz. The penalties should also reflect the substantially lesser culpability of the respondents for the contraventions than those of the respondents in Wilson, Warne, Woodley and Atterton in order to ensure even-handedness. The extensive co-operation given by the respondents, as the Minister acknowledged, also should result in the maximum reduction of penalty for each respondent of 30% compared to the penalties that otherwise would have been imposed. This is a distinguishing factor from Woodley in particular where the penalty of $65,000 (12% of the maximum) appears not to have been reduced on account of co-operation.
68 On the above basis, and making allowance for the 30% reduction in penalty to which each respondent is entitled by reason of its co-operation, I consider that Thermal Dell should be subjected to a single penalty in the sum of $45,000 (about 4% of the maximum penalty for each separate contravention) and CDF Marine a single penalty in the sum of $10,000 (about 1% of the maximum penalty for each separate contravention).
69 Declarations, generally as the Minister sought, should also be made. These declarations clearly disclose the nature of the contraventions, which is appropriate. The declarations proposed by the respondents do not sufficiently perform this important function of disclosure.
70 Although the respondents sought a lump sum costs order in the amount of $15,000, there is no evidentiary basis to determine whether that amount is appropriate. The usual order as to costs should be made.
I certify that the preceding seventy (70) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jagot.