In the recent NSW Land and Environment Court (LEC) decision of Secretary, Department of Planning and Environment v Shoalhaven Starches Pty Ltd  NSWLEC 23, Justice Moore convicted and fined Shoalhaven Starches Pty Ltd (SSPL) $107,000 for failure to make disclosures of political donations made by a director and indirect shareholder of SSPL that should have been disclosed when submitting five separate Part 3A project modification applications.
In January 2009, the Minister for Planning granted an approval for a major project application (MP Approval) under the former Part 3A of the Environmental Planning and Assessment Act 1979 (EPA Act) for SSPL's proposed expansion of its factory in Bomaderry.
From the 2012-2013 financial year to the 2014-2015 financial year, John Honan Junior (Mr Honan), a director of SSPL, made 12 donations, totalling $23,355, to various political parties.
In 2015 and 2016, SSPL submitted five separate applications to modify the MP Approval. The five applications were each accompanied by a political donation disclosure statement (PDSS) signed by the company secretary of the Manildra Group of companies (to which SSPL belonged), that disclosed donations by the Manildra Group but did not disclose the personal donations made by Mr Honan.
SSPL was charged with five offences for failing to disclose the various donations made by Mr Honan when making each project modification application.
The legal context
Former section 147(3)(a)1 of the EPA Act provides that a person who makes a relevant planning application (including a Part 3A project modification application) is required to disclose all "reportable political donations" made within the "relevant period" to anyone by any person with a "financial interest" in the application.
A reportable political donation under Part 6 of the Election Funding, Expenditure and Disclosures Act 1981 is:
- a political donation of or exceeding $1,000 made to or for the benefit of a party, elected member, group, candidate or third-party campaigner; and
- a political donation less than $1,000, if that political donation and other separate political donations made to the same party, elected member, group, candidate, third-party campaigner or person within the same financial year would, if aggregated, be equal to or greater than $1,000.
The "relevant period" under former section 147(3)(a) of the EPA Act is the period commencing two years before the relevant planning application is made and ending when the application is determined.
Under former section 147(7)2 of the EPA Act, a person has a "financial interest" in a relevant planning application if:
- the person is the applicant or the person on whose behalf the application is made;
- the person is an owner of the site to which the application relates or has entered into an agreement to acquire the site or any part of it;
- the person is associated with such an applicant or owner/prospective owner and is likely to obtain a financial gain if the proposed development is authorised or carried out;3 or
- the person has any other interest relating to the application, the site or its owner that is prescribed by the regulations.
Here, Mr Honan had a financial interest in the five separate project modification applications as a director and indirect shareholder of SSPL.
The Court's decision
The SSPL was found to have been reckless or negligent due to the Company Secretary's conduct in failing to disclose Mr Honan's donations. SSPL was fined $107,000, which was distributed amongst the five offences as an accumulatively discounted outcome, as all offences arose from the same failure by the Company Secretary to fulfil SSPL's obligations under the disclosure regime.
SSPL was also ordered to publish a notice of the offences and pay the costs of the Secretary, Department of Planning and Environment (Prosecutor) of $40,000.
What are the implications of the decision?
Companies should ensure that they have properly documented and fulsome procedures in place to ensure that any reportable political donations are appropriately recorded when making relevant planning applications and objections to other people's development applications.
Company officers completing political donations disclosure forms must undertake proper due diligence before signing and lodging such disclosures.
1 Renumbered as section 10.4(3)(a) of the EPA Act following the commencement of the Environmental Planning and Assessment Amendment Act 2017 (Amendment Act) on 1 March 2018.
2 Renumbered as section 10.4(7) of the EPA Act following the commencement of the Amendment Act.
3 Other than a gain merely as a shareholder in a company listed on a stock exchange.
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