The NSW Environment Protection Authority (EPA) has made a major concession that significantly limits the scope of its compulsion powers and the reach of executive liability provisions under the Protection of the Environment Operations Act 1997 (POEO Act).
In a recent case, the EPA conceded that where notices have been issued under Part 7.5 of the POEO Act to a company executive, the information obtained from this notice will be inadmissible in any subsequent prosecution where the compelled party:
- could face prosecution for a 'special executive liability' offence under section 169 of the POEO Act
- has previously provided the EPA with information as required by a notice
- at the time of giving that information, objected to doing so on the basis of self-incrimination.
This concession marks a significant departure from the EPA's position at first instance (discussed below) and has had the effect that compliance with a notice may, in certain circumstances, be optional.
The statutory context
The power to issue notices
The EPA is empowered under section 203 of the POEO Act to issue notices to authorised officers where they are reasonably suspected of having knowledge of matters relevant to an investigation. Such notices may require someone to make themselves available for EPA questioning about a person or company's conduct.
The POEO Act also mandates that it is an offence under the POEO Act to neglect or fail to comply with a notice 'without lawful excuse'.
Special Executive Liability
The special executive liability provisions of the POEO Act effectively state that a company officer may be held personally liable for offences committed by the company in breach of the POEO Act, provided the offence attracts special executive liability (as set out in section 169(1A) of the POEO Act).
This liability will only be waived where the person satisfies the Court that:
- they were not in a position to 'influence to conduct' of the company
- the person used 'all due diligence' to prevent the contravention by the company.
However, the POEO Act does provide compelled parties with some protections. In particular, sections 212(2) and (3) provide that, while self-incrimination cannot be used to justify a failure to respond to a notice, the information gleaned will not be admissible in evidence against the compelled person in criminal proceedings, provided an objection is made at the time on grounds of self-incrimination.
Interestingly, this protection is not afforded with respect to documents produced under a notice.
Fordham v Environmental Protection Authority  NSWLEC 28
The nature and scope of the notice and executive liability provisions were the focus of the recent decision of Fordham v Environmental Protection Authority  NSWLEC 28.
In this case, the EPA was conducting an investigation into a company's transportation and application of waste in breach of POEO Act. As part of this investigation, the EPA issued notices to a director, operations manager and bookkeeper of the company.
The company officers were concerned that if they were to comply with the notice, they would be required to answer questions and their answers could be used against them personally in future special executive liability prosecutions.
When the EPA refused to give undertakings that this was not the case, the compelled parties commenced proceedings in the Land and Environment Court (LEC). They sought a declaration that section 212 of the POEO Act prevented the EPA from introducing into evidence in any criminal prosecution, any information that was given by them in response to a contested notice. This approach, they argued, was consistent with the common law right to privilege against self-incrimination.
Alternatively, they argued that it is a 'lawful excuse' for the purpose of section 211(1) of the POEO Act, for an individual to refuse to answer questions where that person is in jeopardy of future prosecution for a special executive liability offence.
Conversely, the EPA sought declarations that the company officers were in breach of section 203 by failing to comply with the notices issued to them. The EPA also sought orders compelling the parties to submit to questioning.
In rejecting the applicant's claim, Molesworth AJ found that section 212(3) only provides protection to parties already charged with special executive liability offences. In this case, the executives had not yet been charged and accordingly, the question of whether the evidence was admissible was still entirely hypothetical.
Molesworth AJ found that the applicants had breached the POEO Act and were ordered to attend the EPA for questioning.
The concession and the appeal
Approximately two weeks after the LEC's decision, the compelled parties filed a notice of appeal. The following day however, the EPA wrote to the company officers conceding that information gathered as a result of the notices would not be admissible as evidence in any future prosecution under the special executive liability provisions.
This concession satisfied the concerns of the compelled parties relating to self-incrimination and they indicated that they were prepared to attend the EPA to answer questions. Nevertheless, the appeal proceeded, but largely focussed on the effect of the concession and whether the LEC judgement should be reversed.
While finding for the company officers, the Court of Appeal neither endorsed nor rejected the parties' jointly-agreed interpretation of the relevant provisions of the POEO Act. Rather, the Court found that the primary judge erred when finding that no legal controversy existed because the issue before him was hypothetical. In contrast, the Court held that at the time of the proceedings, the compelled parties were faced with a choice, either:
- respond to the notice by answering the EPA's questions and hope that these responses are protected by the immunity afforded by section 212(3)
- refuse to comply with the notice, citing a lawful excuse not to do so, and be guilty of an offence if there was, in fact, no lawful excuse.
Despite this, the Court noted that it was no longer appropriate for the Court to make the declarations sought by the company officers. This was because there was no longer a dispute between the parties about the operation of the POEO Act and therefore, no controversy to be determined. Therefore the earlier LEC judgement was set aside but no alternative orders were made.
On the one hand, this case should ease the nerves of company officers who are faced with notices by the EPA requiring them to submit to questioning. This is because the EPA has clearly and publicly indicated that they interpret section 212(3) as granting a compelled party immunity from criminal prosecution under special executive liability provisions on the basis of evidence gathered as a result of a contested notice.
However, it is important to note that the Court of Appeal did not comment on whether this interpretation was correct. To this extent, the issue regarding the correct interpretation of section 212(3) remains unsettled.
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