Posted on February 28, 2024 by Megan Hawley and James King 4

Do special executive liability provisions extend to council officers?

In a recent NSW Land and Environment Court decision, the Court rejected an appeal against a decision of the Local Court to stay a prosecution against a former General Manager of a regional Council. In doing so, the Court took a narrow view of the application of a special executive liability provision in the Protection of the Environment Operations Act 1997 (POEO Act).

This decision is likely to have a wide-ranging application across a number of special executive liability provisions in relation to General Managers and other officers involved in the management of local government.

Background

The respondent in the proceedings was formerly the General Manager of a regional Council. The Environment Protection Authority (EPA) alleged that while acting as General Manager the respondent caused a sewage treatment plant to be used for the disposal of liquid waste, including leachate, without lawful authority.

The EPA charged the respondent with using a place as a waste facility without lawful authority, which is an offence under s 144(1) of the Protection of the Environment Operations Act 1997 (POEO Act).

Special Executive Liability and the Legal Status of Councils

Section 169(1) of the POEO Act provides that if a corporation contravenes, whether by act or omission, a provision of that Act attracting special executive liability, each person who is a director of the corporation or who is concerned in the management of the corporation is taken to have contravened the same provision.

An individual person may be proceeded against under s 169(1) whether or not the corporation has been separately proceeded against or convicted under the relevant offence provision: s 169(2) POEO Act.

An offence against s 144(1) of the POEO of unlawfully using a waste facility committed by a corporation is specified as an offence attracting special executive liability for a director or other person involved in the management of the corporation.

A council’s legal status generally is as a body politic of the State and not as a corporation, see s 220(1) of the Local Government Act 1993 (LG Act).

However, section 220(4) of the LG Act provides that, although a council is not a body corporate (including a corporation), ‘a law of the State applies to and in respect of a council in the same way it applies to and in respect of a body corporate (including a corporation)’ (emphasis added).

Prior to 20 November 2008, s 220 of the LG Act provided that a local council was a ‘body corporate’ and so executive liability provisions applied to council officers concerned in the management of a council, see for example Garrett v Freeman (No 4) [2007] NSWLEC 389. The Local Government Amendment (Legal Status) Act 2008 repealed the former s 220 of the LG Act and replaced it with the current s 220(1)-(4). The Parliament, when passing that legislation made it clear that the amendments were for the sole purpose of excluding the application of the Commonwealth WorkChoices legislation to councils.

Issues in the case

The Local Court had found that s 169 of the POEO Act was unavailable against the respondent as an officer of a council as the LG Act provides that a council is not a corporation and s 220(4) does not apply.

The EPA stated that it was clear that the 2008 amendment to s 220 of the LG Act was not meant to alter the status quo in respect of executive liability such as that contained in s 169 of the POEO Act. The EPA’s main argument, in summary, was that although a Council is not a corporation, it is to be treated as a corporation for the purposes of State laws attributing special executive liability to relevant officers.

The respondent submitted that the ordinary and grammatical meaning of the words of s 220(4) of the LG Act give it no application to s 169 of the POEO Act as that section is not a law of the State that applies to and in respect of a corporation. Rather, the respondent submitted that s 169 imposes personal liability on directors and persons concerned in the management of corporation. The section does not apply to a corporation.

The Court agreed with the respondent and found that the laws to which s 220(4) of the LG Act relates are those laws that apply to and in respect of a body corporate (including a corporation). As s 169 of the POEO Act relates to the liability of individual persons it does not apply to a corporation even though it may be a law in respect of a corporation. As a result, s 220(4) of the LG Act does not apply.

The Court did not consider that any express or implied intention that could be ascertained from the introduction of s 220 of the LG Act to the effect that it was intended to retain the application of special executive liability laws to Council officers.

Implications

Similar provisions to s 169 of the POEO Act establishing executive liability offences for environmental offences exist in a number of other acts. Those include the National Parks and Wildlife Act 1974, Heritage Act 1977, Contaminated Land Management Act 1997 and Biodiversity Conservation Act 2016. The interpretation established by this decision will no doubt be carried across into those provisions, which are similarly drafted to the POEO Act provision.

As a result, Council officers and executives involved in the management of Council are unable to be charged individually for offences committed by the Council under any of those Acts.

The judgment in Environment Protection Authority v McMurray [2024] NSWLEC 6 can be accessed here.

If you have any questions in relation to this decision, please leave a comment below or contact Megan Hawley on 02 8235 9703 or James King on 02 8235 9722.