06 Sep 2010

Environmental consultant liable for providing "incorrect advice"

In a first for NSW, an environmental consulting firm, Orogen Pty Ltd, and its director have been found guilty of an offence under the National Parks and Wildlife Act. Although neither Orogen or the director actually committed the acts which led to the damage to the habitat of a threatened species (koalas), they were liable for giving incorrect advice (Gordon Plath of the NSW DECC v Fish; Gordon Plath of the DECC v Orogen Pty Ltd [2010] NSWLEC 144).

The decision will affect the way that environmental consultants and their clients do business, particularly when it comes to knowing your areas of expertise, scoping the consultancy work, limiting liability and assessing insurance.

What did the environmental consultant do?

Developers engaged Anthony Fish and his company, Orogen, to provide expert planning and environmental advice in relation to a proposed industrial subdivision.

The scope of the work included advice on the approvals required for the project to proceed. Their fee proposal accepted responsibility for ensuring "legislative compliance" for the proposed clearing work.

Clearing occurred on the site, which was later found to have caused a cumulative loss of about 3.7 hectares of high quality koala habitat and the narrowing of a significant koala habitat corridor link.

Orogen and Fish accepted responsibility for the offence on the basis that, through an oversight, they had failed to advise the developer that under section 118D of the National Parks and Wildlife Act, the clearing of koala habitat could not occur without a licence under the Threatened Species Conservation Act. Through previous environmental assessments Orogen and Fish were aware of koala habitat and koala movement corridors on site.

Sentencing factors

A number of factors were considered by Justice Pain in imposing sentence.

The extent of the harm caused was judged to be of low to medium significance.

The advice had not been given in order to remove an impediment to development.

Justice Pain also found that Orogen's advice was not criminally negligent, as the DECC's own fact sheets, which had been referred to by Orogen in forming its advice, did not identify the necessary links between the relevant pieces of legislation, and consequently it would be unfair to decide that the defendant "could reasonably have concluded that this habitat could not be legally removed without approval".

Justice Pain went on to note that the "legislation for the protection of vegetation comprising threatened species habitat is not logical. The prohibition on causing damage to threatened species habitat is not located in the Threatened Species Conservation Act but in the National Parks and Wildlife Act which deals with national parks and wildlife."

She concluded that the defendant's culpability for the offence was low.

The penalty for the breach

Justice Pain ordered that Fish and Orogen pay a total of $15,000 in fines and prosecution costs ($105,000). In addition, under the newly inserted section 205(1)(c) of the National Parks and Wildlife Act, she also ordered that Orogen and Fish undertake koala habitat mapping as part of a Port Stephens koala habitat mapping project, a task valued at more than $150,000. Public advertisements about the decision in the Sydney Morning Herald and the Newsletter of the Ecological Consultants Association of NSW Inc were also required.

What this decision means

Justice Pain stated "the offences underscore the importance of consultants… advising those engaged in the property development process to ensure they undertake work only within their area of competence. I surmise that these prosecutions will provide an important signal to those engaged in similar activities of the need to ensure that correct advice is given."

It would be prudent for environmental consultants to review their consultancy agreements and insurance arrangements in light of the decision. People who are engaging environmental consultants should also be reviewing consultancy agreements carefully, to ensure the scope of work is clear and there is an appropriate allocation of responsibility in delivering environmental advice.

Although the developer in this case was not separately prosecuted, developers should not see the decision as an opportunity to use their consultants' advice as a shield from enforcement action. On the contrary, the decision follows what we see as a trend of increasing focus from the regulators on compliance with all biodiversity laws.

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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.