Case: Minister for the Environment and Heritage v Greentree (No 3) [2004] FCA 1317
Outcome: discussed
481(3) is very similar to s 76(1) of the Trade Practices Act 1974 (Cth) (the TP Act). The joint submissions note that in Minister for the Environment and Heritage v Greentree (No 3) [2004] FCA 1317 ( Greentree ), Sackville J said that the appropriate approach to imposing pecuniary penalties under s 481(3) of the EPBC Act is the same as that under s 76(1) of the TP Act, subject to any necessary adaptations specific to the relevant type of damage caused. The parties contended that I should adopt his Honour's approach, and I shall do so. The joint submissions note that the Court has considered the amount of the pecuniary penalty to be imposed pursuant to the EPBC Act in several recent cases. In Greentree , a corporate entity contravened s 16(1) of the EPBC Act by taking the deliberate action of clearing, ploughing and subsequently sowing wheat that had a significant impact on the ecological character of a declared Ramsar wetland. The maximum penalties were the same under s 16(1) of the EPBC Act as apply to the present conduct. Sackville J found that the contravening conduct was deliberate, as the respondents (as a corporate entity and its director) carried out the contravening conduct when they were well aware that any unauthorised action had a significant impact on the ecological character of the Ramsar wetlands site and would constitute a contravention of the EPBC Act. The deliberate conduct was found to be more than an isolated act of the kind that might occur as the result of an impulsive error of judgment, and that it was planned conduct. The nature and extent of the contraventions of the EPBC Act suggested that substantial pecuniary penalties were warranted. The personal respondent was ordered to pay a pecuniary penalty of $150,000, and the corporate respondent was ordered to pay $300,000. The parties jointly submit that the Court should consider the first respondent's conduct as more serious than the relevant conduct in Wilson and Warne , but less serious than that in Greentree . Whilst that analysis may reflect the comparative degrees of culpability, it is not clear how the comparison leads to the proposed and agreed penalty. The submissions further note that the proposed penalty equates to approximately 20% of the maximum penalty which could be imposed upon an individual pursuant to s 18(3) of the EPBC Act. The parties jointly submit that this is relevant to the assessment of penalty in light of the second respondent's role in the conduct of the first respondent and that any penalty upon the first respondent is essentially a penalty upon the second respondent. They draw support for that contention from the decision in Greentree . I do not accept that contention. Greentree relevantly concerned charges against a company and its director where the company was effectively a "one-man" company, and the personal respondent was its sole director and sole shareholder. Sackville J noted, at [78]: I infer that Mr Greentree will bear the burden of any diminution of Auen's assets that will result from the imposition of a pecuniary penalty on the company. It is appropriate to take that fact into account in order to prevent Mr Greentree being punished, in effect, twice over: Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (No 2) [2002] FCA 559 ; (2002) 190 ALR 169 , at 182 [45], per Finkelstein J; Australian Securities and Investments Commission v Adler [2002] NSWSC 483 ; (2002) 42 ACSR 80 , at 116-117 [131]-[132], per Santow J. On the other hand, Auen has been involved in a deliberate contravention of s 16(1) of the EPBC Act . The contravening conduct was undertaken in Auen's commercial interests. It is also necessary to bear in mind that the maximum penalties that can be imposed on a corporation are ten times larger than the penalties that can be imposed on individuals who contravene the EPBC Act . The overall pecuniary penalty should obviously be no less than if Auen, a corporation, had been the sole contravenor. On the contrary, the overall penalty should reflect the fact that Mr Greentree, as well as Auen, has contravened s 16(1) of the EPBC Act . His Honour first fixed the pecuniary penalty payable by the personal respondent. It was about 27% of the maximum. He then said at [82]: Having regard to the maximum penalty applicable to a contravention by an individual, I think that a pecuniary penalty of $150,000 should be imposed on Mr Greentree. Had Auen been the only contravenor, taking into account its status as a private company and the higher maximum penalty applicable to a contravention by a corporation, I would have imposed a penalty in the order of $400,000. Having regard to the desirability of avoiding penalising Mr Greentree twice over, I think that Auen should pay a penalty of $300,000. In my view, the total penalty of $450,000 is appropriate in the circumstances of the case. That does not amount to his Honour determining the penalty imposed on the company as if it were an individual. The contrary is the case. His Honour recognised that a significant penalty should be imposed on the company having regard to the higher applicable maximum. The amount he would have ordered was, however, reduced somewhat for the reasons explained in that passage. In this matter, there is no penalty to be imposed on the second respondent. It is appropriate to impose a penalty on the first respondent as a corporation, having regard to the applicable maximum. It is the sole contravenor against whom a penalty is sought. It is not appropriate to adopt the lesser maximum applicable to individuals because the second respondent, its managing director, was the person who decided upon and arranged for the clearance of the vegetation on its behalf. Of course, that is not to say its individual circumstances should not be considered. It would be appropriate to take into account in the present circumstances that any penalty imposed on the first respondent is effectively a penalty imposed on the second respondent, if the second respondent were also the subject of a pecuniary penalty, in order to avoid the second respondent being punished "twice over". Here, the applicant no longer seeks orders against the second respondent. In these proceedings, the second respondent will not personally be the subject of a pecuniary penalty. Another factor raised by the parties The joint submissions refer to the fact that the first respondent did not make a profit from reselling the property, and submit this is a relevant factor in assessing the appropriate pecuniary penalty. In Greentree , Sackville J noted at [65] that: It is true that the evidence does not suggest that either Mr Greentree or Auen reaped a substantial financial reward from the development of the Windella Ramsar site. That is a factor to take into account. His Honour made that remark because it was part of the picture about why those respondents took the actions they did. He went on to note that the contravening conduct was motivated by commercial considerations. It may be a relevant factor to take into account, if the first respondent undertook the land clearing for commercial reasons, that it did or did not profit by virtue of the contravening conduct. However, I do not consider that the fact that, since the contravening conduct, the property has been resold at a loss is of any especial significance. There may be many reasons for that. It is unlikely to have become less valuable because its cropping potential was increased by the contravening conduct. There is certainly no evidence on that topic. It may be that it was resold at a lower value because the market generally had fallen. It may be that the first respondent had disposed of certain water rights attaching to it. It may be (although it is unlikely) that the property was allowed to run down. Without evidence, the reason for the lower resale value of the property is simply unexplained. If the focus is on the profitability of cropping the illegally cleared land, again there is no evidence to indicate whether the particular cleared land was cropped at a profit or a loss, compared to the more generally available cropping area.