A record-breaking fine for companies dumping contaminated
earthquake waste in Christchurch is the outcome of a District Court
ruling, which described the practice as a "complete
The case (Canterbury Regional Council v Coutts Island Holdings
Ltd) related to the disposal of an estimated 5000 cubic metres of
contaminated materials removed from buildings being demolished
following the Canterbury earthquakes.
A total of $165,000 in fines and costs orders was imposed after
two companies and a company director pleaded guilty to discharging
contaminants to land in contravention of the Resource Management
The regional council regarded the offending as the worst of its
type seen in post-earthquake Christchurch. It estimated that
between 800 and 1000 truckloads of contaminated material would have
been dumped, costing up to $2 million in landfill fees.
The companies had agreed to undertake clean-up at their own cost
(understood to be up to $150,000). Despite that, the court imposed
a total of $165,000 in fines and costs orders.
The decision sends a clear message to demolition contractors of
the need to properly dispose of waste. It is also interesting
because, in sentencing, the court referred specifically to the
availability of insurance as a mitigating factor.
It took the view that insurance was not compulsory and came at a
cost to the companies. As such, it said the companies had taken
responsible steps in obtaining cover.
The court highlighted the positive features of insurance, noting
that in many cases it enables the clean-up costs to be paid for
which, if there was no cover and a defendant was not otherwise able
to pay, the community would have to fund.
The Court went further to say that insurance policies encourage
adherence to environmental laws and/or regulations. It said that
insurers have the ability to impact on certain behaviours by
requiring precautions against loss, reflecting insurers' role
in promoting compliance.
This recognition of the positive role and mitigating benefits of
insurance is encouraging. The fine in this particular case was
high, but was due to the particular circumstances of the case. The
court found elevated culpability because of a total lack of
knowledge, systems or procedures for ensuring compliance with the
applicable demolition sorting and disposal rules.
Breaches of the RMA are strict liability offences with high
maximum penalties, which can be incurred through acts or omissions
by employees, contractors or agents, for which ignorance of the law
or of the offending generally provide no excuse. The potential for
inadvertent offending and significant fines is therefore high,
making it vital to have statutory liability cover in place to
respond when there is an accidental breach.
But, this and the increasing fines and remediation costs for
environmental offences translates to increased exposure for
insurers, who would do well to focus on how effectively they are
limiting their potential exposure from this particular source.
Encouraging insureds to focus on risk management and
implementing proper compliance systems may avoid exposure to
increased payouts resulting from the absence of such systems.
In environmental offences, effective compliance systems do often
succeed in preventing an offence from occurring. But because of the
strict and vicarious liability associated with environmental
offences, even the best systems will not totally eliminate
non-compliance. However, in such cases the existence of systems may
allow a successful statutory defence and be a relevant mitigating
factor which could result in a lower penalty than might otherwise
have been the case.
This decision highlights the value of statutory liability
insurance as recognised by the Courts. Insurers may have a role to
play in encouraging appropriate systems and compliance so that the
existence of cover can act as the fence at the top of the cliff, as
well as an ambulance at the bottom.
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The Government aims to tighten laws regulating the taking of groundwater for mining activities by resource proponents.
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