Executive officer liability under Environmental Protection Act 1994 (Qld) clarified by Court

By Ian Motti, Olivia Back
02 Sep 2021
Executive officers' liability for certain environmental offences under Queensland's Environmental Protection Act will only arise if the harm came to fruition during their tenure.

The Queensland Court of Appeal has confirmed that if a corporation commits the offence of wilfully and unlawfully causing serious environmental harm under the Environmental Protection Act 1994 (Qld) (EP Act), only the executive officer(s) of the corporation at the time the environmental harm occurs will be guilty of an offence and personally liable under section 493(2) of the EP Act, subject to statutory defences (R v Dumble [2021] QCA 161).

The breach of the Environmental Protection Act 1994 (Qld)

Linc Energy Limited was undertaking "underground coal gasification" at five gasifiers near Chinchilla in the Western Downs Region of Queensland. Underground coal gasification involves injecting air or oxygen into a coal seam and then igniting the gases inside the seam, which creates a valuable gas product.

The four respondents, all directors of Linc Energy at some point, were charged on indictment with having committed an offence against section 493(2) of the EP Act, of failing to ensure Linc Energy complied with the EP Act when it wilfully and unlawfully caused serious environmental harm under section 437(1) of the EP Act.

Section 437(1) states that a person (including a company) must not wilfully and unlawfully cause serious environmental harm.

Section 17 explains that "serious environmental harm" is harm:

  • that is irreversible, of a high impact or widespread; or
  • caused to an area of high conservation value or an area of special significance, such as the Great Barrier Reef World Heritage Area; or
  • that causes actual or potential loss or damage to property of an amount of, or amounts totalling, more than $50,000; or
  • that results in costs of more than $50,000 being incurred in taking appropriate action to prevent or minimise the harm and rehabilitate or restore the environment to its condition before the harm.

Further, under section 493(2), if a company commits an offence under the EP Act, each of its executive officers also commit an offence of failing to ensure the company complies with the EP Act.

Court's decision: when does the harm occur?

The Court of Appeal upheld the original decision that section 493(2) of the EP Act did not apply to executive officers who had left the company before the serious environmental harm had occurred. 

The Director of Public Prosecutions (appellant) had not identified when the serious environmental harm by Linc Energy had occurred.  The appellant argued that it was unnecessary to establish that the serious environmental harm occurred at a time when the accused persons were still executive officers of Linc Energy and that it was enough if they were executives officers at a time "when there was a sufficiently close connection between [them] and the acts of the company to make it reasonable to hold [them] liable".  The Court of Appeal rejected this argument.

The Court held that, for the purpose of enlivening section 493(2), "[a] person who was once an executive officer of the corporation, but who is not an executive officer at the moment the offence is committed by the corporation, can in no sense answer the description of an "executive officer" who "also commits an offence". A company only commits an offence, under section 437(1) of the EP Act, when the serious environmental harm occurs. This means that, until then, the company is not criminally liable for its wilful act and has committed no offence under this section. The Court recognised that a company's wilful act may occur a long time before the resulting harm ensues and that a number of "acts" can contribute to causing the relevant harm.

Key takeaways for Queensland environmental offences

The Court of Appeal's decision means that, if a company has wilfully and unlawfully caused serious environmental harm, an executive officer will only have committed an offence under section 493(2) for failing to ensure the company complied with the EP Act if the harm came to fruition during their tenure.

While the decision related specifically to serious environmental harm, it is likely to impact on how section 493(2) is interpreted and applied to all of the offences under the EP Act, including the offences relating to causing material environment harm and environmental nuisance.

In response to the appellant's argument that this finding could allow executive officers to "escape liability by simply resigning before the corporations servants put into effect the decisions to which the executive officer has contributed", the Court pointed out that executive officers can still be prosecuted via other avenues, including the Criminal Code Act 1899 (Qld) (and still be considered morally culpable).

For the executive officers who are in office at the time that the company commits the relevant offence but who post-date the "causative act", their lack of connection to the causative act may be raised in defence under section 493(4) of the EP Act.

While not part of the Court's decision, the appellant has now dropped all charges against the former executive officers of Linc Energy.

Get in touch

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.