Reparations and the Resource Management Act

GDC v Aratu Forestry Ltd

Introduction

This recent sentencing decision is notable for two reasons. First, because of the large fine imposed on a forestry company for breaching the Resource Management Act 1993 (RMA), and second  – perhaps more interestingly – because the Court ordered the defendants to pay a significant sum in reparations to affected persons for emotional harm.  While reparation payments are common for other kinds of offences, they are uncommon for convictions under the RMA.

The case also raises issues such as whether a defendant is insured for reparation payments, and, if so, which insurance policy will provide cover?

Background

Aratu Forests Ltd (Aratu) pleaded guilty to two charges brought against it by the Gisborne District Council (the Council) for a breach of s 15(1)(b) of the RMA.  The Council alleged that Aratu had discharged a contaminant, namely forestry debris, from two forests, the Wakaroa Forest and Te Marunga Forest.  None of the resource consents held by Aratu authorised the discharge of forestry debris to land in circumstances where it might enter water or get into water directly.  The case came before Judge Dwyer who decided to sentence the offences separately.

Wakaroa Forest

In June 2018, there were two major storm events in the Gisborne area.  These caused major flooding in catchments near Tolaga Bay.  Large quantities of logging debris were mobilised from plantation forests.  The debris caused damage to neighbouring farms, covered the beach at Tolaga Bay, and generated widespread media coverage.  Council officers tracked some of the debris back to Wakaroa Forest.  A subsequent inspection by Council officers found that Aratu had breached six conditions of its resource consent. 

In sentencing, Judge Dwyer held a significant factor was the known vulnerability of the forest environment.  The land was highly erodible and the possibility of extreme weather ought to have been well known.  Judge Dwyer decided upon a penalty starting point of $200,000. 

Te Marunga Forest

Judge Dwyer found that the factors mentioned for Wakaroa were largely also at play in Te Marunga.  In fixing a starting point, Judge Dwyer gave particular attention to the relationship between landslides, slash deposition, and breach of consent conditions.  The combination of poor forestry management, breach of resource consent conditions and Aratu’s actions in priming the slopes for failure by harvesting them led the Judge to the view that Aratu’s culpability for this offending was at the very high end of the scale.  Council inspections had identified 83 landing failures across the forest. 

There was extensive damage to streams. The deposition of large quantities of forestry debris in the creek and river system interfered with river processes and flows. Water flooded properties and houses, causing life-threatening situations.  Homes, buildings and livestock were destroyed.

Judge Dwyer considered, having regard to all matters, that the appropriate starting point was $360,000 for the Te Marunga Forest offences.

Mitigating Factors

In respect of Te Marunga, Judge Dwyer gave a reduction of 15% from the starting point for the remorse shown by Aratu including visits to victims, formal apologies by its local manager and payments to two victims.

Aratu was entitled to a further reduction of 25% on both the Wakaroa and Te Marunga cases for prompt guilty pleas.  This gave an end penalty in Wakaroa of $150,000 and Te Marunga of $229,500, a total of $379,500.

Reparation Payments

Judge Dwyer applied s 32 of the Sentencing Act 2002, which dictates that reparation payments may be paid to victims.  The judge reasoned that the emotional harm suffered by persons affected by the debris flow was so severe that a large sum ought to be paid.  Three people had suffered sheer terror and the real potential to be killed.  They had also suffered a sense of desolate loss from no longer being able to live in a much-loved home.

In deciding on a sum of reparation, Judge Dwyer gave regard to the fact that Aratu is part of a wealthy international conglomerate which can afford to make a substantial payment.  Judge Dwyer stressed that reparation payments were not designed to further punish, and that there are no other cases that give any real guidance or involved comparable circumstances.

Judge Dwyer ordered a sum of $50,000 each to Mr Te Kira and Ms Maraki, who went through a terrifying life-threatening experience and $25,000 to Ms Grace, a total of $125,000 in reparation payments.  When combined, the total penalty imposed was $504,500.  This is one of the most substantial penalties that we have seen imposed under the RMA to date.

Strict Liability?

Aratu submitted in mitigation that a significant degree of damage would have occurred in any event because many of the slips occurred in areas unaffected by Aratu’s breach of consent conditions.  This argument found no truck with Judge Dwyer.  The judge said that Aratu had primed the slopes for failure by harvesting them.  He indicated that even if Aratu had complied with the conditions of its consent, the company would still have been criminally liable because Aratu had accepted the risk when it engaged in harvesting the forest.

This raises the spectre of an extreme form of strict liability in which a person can be held criminally liable for the consequences of lawfully carrying out an activity in accordance with the consent granted to it by Council.  It suggests that responsibility for assessing the environmental consequences of a proposed activity may be shifted from the local authority to the party who wishes to engage in it.

Is there indemnity for reparation payments?

While orders for reparations are commonplace in respect of prosecutions under the Health and Safety at Work Act 2015 (HSW Act), they are not so under the RMA.  Many statutory policies provide cover for reparations under the HSW Act, but otherwise exclude cover for reparations.  Depending on circumstances, if reparations ordered in a RMA prosecution arise from personal injury or property damage then they may find cover under a general liability policy.  However, close attention will be required to policy terms and exclusions.  In some cases, an order of reparation may leave an insured with a large uninsured liability.

Matthew Atkinson is a Partner at Fee Langstone