Key Points: The breach of the section 77A Notice could have been
avoided through the implementation of a robust environmental
The recent Federal Court case, Minister for the Environment,
Heritage and the Arts v PGP Developments Pty Limited 
FCA 58 (12 February 2010) is the first instance in which the
Minister has sought a penalty and declaration in relation to a
section 77A Notice under the Environment Protection and
Biodiversity Conservation Act 1999 (Cth) (EPBC Act). The case was
prosecuted even though no damage to the Great Barrier Reef was
The Development and the section 77A notice
Back in 2004, PGP Developments referred stage 2 of an 8 stage
residential development to the Environment Minister. Stage 2
involved the construction of around 160 residential blocks over an
18 hectare site very close to the boundary of the Great Barrier
Reef World Heritage Property. The decision made by the
Minster's delegate on 11 November 2004 was that the action was
not a controlled action if it were undertaken in a particular
manner. This decision was made under section 77A of the EPBC Act
and a Notice was issued to PGP Developments to that effect. This
section provides that an action is not a controlled action if it is
taken in a particular manner as provided for in the Notice.
As long as the construction and development was undertaken in
accordance with the conditions specified in the Notice, PGP
Developments would not breach any controlling provision of the EPBC
Act. The importance of acting in compliance with the Notice is
underscored by the offence provision in section 77A(2) of the Act
which imposes a maximum corporate penalty of $1,100,000 for taking
any action that is inconsistent with the Notice.
The Notice required PGP Developments to construct two lagoons to
provide for the settlement of sediments prior to discharge to
Edgecombe Bay, to protect the Great Barrier Reef and marine
ecosystems from sediment laden run off during the wet season.
One of the directors of PGP Developments marked out the area of
the two lagoons and initial construction commenced immediately. A
survey showed the volume of both lagoons was inadequate. A method
to enlarge both lagoons was agreed upon between the director and
civil engineering company and further earthworks were undertaken in
early December 2004.
A Department of Environment and Heritage survey in late January
2007 found lagoon number 2 had a capacity of 450m3 well short of
the 2,300m3 required under the conditions. It was not disputed that
PGP Developments voluntarily and at its own expense carried out the
required remediation works to increase the capacity of the lagoon.
It was also agreed that the failure to meet the conditions of the
Notice was the result of "inadequate attention being given to
the design and construction of the lagoon."
Setting the penalty
In considering the amount of the penalty Justice Stone noted
that: "[T]he amount of the penalty imposed in respect of other
contraventions provides little guidance as to the permissible range
here because, as the parties submit, they involve different
provisions with different maximum penalties."
Justice Stone took into account a number of factors including
the significant risk of damage to the Great Barrier Reef (although
no damage was identified); the fact that the nature and extent of
the damage caused by the contravention was at the low end of
possible contraventions of section 77A(2) of the EPBC Act; the lack
of evidence to suggest that the contravention was conscious or
deliberate or motivated by commercial interests and the full
co-operation of PGP Developments in the investigation and in
conducting the remediation work required to increase the capacity
of the lagoon.
Although specific deterrence was not a significant factor in the
case, Justice Stone did note the need for general deterrence such
that "[t]he penalty must not invite potential contraveners to
discount the consequences of contravention." She accepted the
amount of $40,000 submitted by the Minister and PGP Developments
was an appropriate penalty in the circumstances, and also made a
declaration that PGP Developments had breached the Notice.
What this case means for other proponents
This case sends a clear signal to proponents that the Department
of the Environment, Waters, Heritage and the Arts is prepared to
investigate and prosecute breaches of the EPBC Act. In this
instance PGP Developments did not deliberately set out to
contravene the Notice and was not motivated to do so to save costs.
Despite this, PGP Developments' error cost it $40,000. It's
the sort of mistake that should be prevented by a robust
environmental compliance program, and this decision serves as a
good reminder to review your compliance system.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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