New Zealand: Absentee farm ownership and Resource Management Act (RMA) prosecution risk – is it worth it?

Many farm owners who have someone else running their farms still end up facing Resource Management Act prosecutions or enforcement investigations even if they were nowhere near the property when the incident happened. This then comes as a double shock, given that the decision only to invest in a farm and not run it, or to move off the farm and employ someone else to run it, may have been a deliberate one to distance themselves from the demands and stresses of farming. They find themselves asking how this is possible, could it have been avoided, or is it better simply to avoid owning farms that are operated by someone else?

The answers lie in the way that RMA offences have been structured and what this requires of absentee farm owners. These offences have both strict and vicarious liability, which means that no intent or negligence needs to be proven to establish an offence, and if the owner's employee, agent or contractor commits an offence the owner is guilty of that same offence. So if a share milker has an effluent system breakdown that leads to ponding, both the share milker and the owner may be convicted of an offence, even if there was no negligence or intent and the owner lives on the other side of the country. Further, where an owner 'permits' a breach of the RMA they also commit an offence, and the definition of 'discharge' of contaminant, which is one of the most common types of offences, is so wide that the owner can commit an offence simply if they did not do enough to prevent the incident. So if an owner knew that a share milker was operating a property without enough effluent storage for the conditions and did nothing to solve the problem, and the effluent pond then overflowed, they have 'allowed' that 'escape' and 'permitted' the 'breach' and are therefore themselves liable for that offence. That may then suggest that someone would be a fool to buy a farm that someone else is going to operate, or to move off a farm they have operated and bring in someone else to take over that role.

Even though there might be situations where it would be better to sell or not invest at all, that is definitely always not the case, because although the RMA has 'strict' liability, it does not have 'absolute' liability. Both strict and vicarious liability are limited by statutory defences in the RMA, which mean that an owner, who has done everything a reasonable person in their position could have done to make sure the offence did not happen, can escape liability by providing that. Also, the Council can only hold an owner liable for 'permitting' the offence or 'allowing the escape' of the contaminant, if it can prove they did not do everything that a reasonable owner ought to have done. This means that an owner who has done everything that a reasonable owner in their position could have done to prevent an offence should be safe from convictions for RMA offences.

So what do the Courts expect of a reasonable farm owner? The Courts expect that they do everything reasonably possible to ensure that industry best practice for achieving environmental compliance is met and adhered to on the property they own. So owners who want to leave someone else in charge of their property are reasonably expected to ensure that:

  • The infrastructure and systems (like for example the irrigators, lines and ponds) meet and will continue to meet Council requirements and industry best practice standards for ensuring compliance, like proper construction, sizing and sealing of effluent storage ponds, capacity to apply effluent thinly enough, failsafe devices and contingency plans;
  • Whoever is going to be left in charge has the level of qualifications, skill and management ability to ensure full compliance, without the need for constant supervision by the owner;
  • Staff training, monitoring and performance management systems, as well as reporting requirements, are in place to a level where they should reasonably to ensure fully compliant operation of the farm and its systems;
  • The record-keeping is such that all the paperwork necessary to prove this is always available and can be easily produced1.

These measures have a dual benefit: Firstly they tend to reduce the risk of offences happening in the first place and if they do happen, they often make it difficult and unattractive for the relevant council to prosecute the owner. Without them it is often not a question as to whether the owner will be prosecuted, convicted and fined, but when, particularly with dairy farms in higher rainfall areas with heavy soils.

Therefore while the structure of RMA offences enables absentee owners to be criminally liable for breaches on their properties, absentee ownership does not need to be avoided, as long as the owner can afford to, and does indeed, ensure that the above measures are taken. Only the owner or prospective owner who cannot take these measures is better off, from an RMA prosecution risk perspective, not owning the farm.

Footnote

1 This list is high level and not exhaustive, but gives an indication of the types of measures required.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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