EP Act executive officer liability tied to when harm is actually caused

Take home point

The liability of an executive officer of a corporation under s 493(2) of the Environmental Protection Act 1994 (Qld) (EP Act) ,for failing to ensure that the corporation complies with the Act, is tied to the corporation’s actual commission of an offence. The environmental harm caused by the corporation must have come to fruition during the executive officer’s tenure as an executive officer. 

The decision

On 6 August 2021, the Court of Appeal handed down its reasons in R v Dumble & Ors [2021] QCA 161 relating to a ruling by the District Court of Queensland referred under Section 668A of the Criminal Code 1899 (Qld).  

The Respondent parties were directors of Linc Energy Limited, with the case relating to the charges brought against those directors, alleging serious environmental harm while undertaking underground coal gasification activities near Chinchilla. The Respondents were charged under Section 493 of the EP Act with failing to ensure that the company complied with the EP Act. 

Broadly, the Respondents asserted that to prove the commission of the charged offences, the prosecution must prove that the company committed the alleged offence (against Section 437(1) of the EP Act) during a period when the respective Respondents were one of its executive officers. 

The question referred to the Court pursuant to Section 668A of the Criminal Code was framed in the following way: 

Is it necessary, pursuant to s 493(2) of the EP Act, that, for an executive officer of a corporation to be guilty of the offence of failing to ensure that the corporation complies with the EP Act (in circumstances where the corporation commits the offence of wilfully and unlawfully causing serious environmental harm), the serious environmental harm caused by the corporation must have come to fruition during the executive officer’s tenure as an executive officer?

With reference to executive officer liability provisions under the Corporations Act 2001 and the Taxation Administration Act 1953, the Court found: 

1. at the moment when the offence is committed by the corporation, every executive officer of the corporation also commits an offence. An executive officer of the corporation who was not an executive officer at the moment the offence is committed by the corporation, does not answer the description of an executive officer who also commits an offence;
2. by virtue of Section 493(3) of the EP Act, proof of the commission by the corporation of the Section 437 offence, becomes presumptive proof of the executive officers’ commission of the offence of failing to ensure that the corporation complies with the EP Act; 
3. it may be difficult to determine with certainty when the causative act was actually done. For instance, a corporation’s wilful act may have been done a long time before resulting harm ensues. A different analysis however would not apply in such a case — it is upon the occurrence of an effect which must be regarded as falling within the definition of serious environmental harm that the corporation becomes criminally liable under Section 437(1) of the EP Act; and 
4. it is unnecessary for the prosecution to allege or prove that an executive officer had any kind of “connection” with the corporation’s causative act. The question of the nature of the connection between the officer and the causative act however, may potentially become matters for defence under Section 494(3) of the EP Act. 

Ultimately, the Court of Appeal concluded that a person who is an executive officer of the corporation when the harm was actually caused is guilty of an offence under Section 493(2) of the EP Act (subject to the statutory defences). 

In relation to the prosecution’s submission, that executive officers who have been grossly negligent could escape liability by resigning before the corporation put into effect the decisions to which the executive officer had contributed, the Court indicated that such a submission required proof of a connection between an accused and the corporation’s causative act and the text of the provision does not require that. Further, a director’s liability for offences committed in a corporate context is not limited to liability under Section 493 and Section 493 might not render criminally culpable all those who manage corporations who are morally culpable. 

For further information and discussion, please contact ourPlanning and Environmentteam.