The recent case of Environment Protection Authority v McMurray [2024] NSWCCA 160 (McMurray) highlights how council executives and those involved in council management can be held accountable under laws attracting special executive liability.
The central issue in the case was the legal status of a council and whether its executives, such as the General Manager, could be prosecuted under section s 169(1) of the Protection of the Environment Operations Act 1997 (NSW) (POEO Act). Section 169(1) of the POEO Act holds individuals involved in the management of a corporation liable if the corporation is found to have contravened certain provisions of the Act.
Facts of McMurray
The respondent in the proceedings was formerly the General Manager of a regional Council (Council). The Environment Protection Authority (EPA) prosecuted the Council for using a sewage treatment plant as a waste facility for disposal of liquid waste without lawful authority, which is an offence pursuant to section 144(1) of the POEO Act.
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 offence against s 144(1) of the POEO of unlawfully using a waste facility committed by a corporation is specified as one of the 19 offences under section 169(1) of the POEO Act that carries special executive liability.
In McMurray the EPA submitted that special executive liability should apply to council executives including the respondent in his capacity as the former General Manager of the Council, by operation of s 220(4) of the Local Government Act 1993 (NSW) (LGA). This provision allows state legislations to apply to councils in the same manner as it does to a body corporate or a corporation.
The Local Court found that s 169(1) of the POEO Act could not be applied to the respondent as a General Manager of the Council, because the Local Government Act provides that a council is not a corporation, and section 220(4) does not apply in this context. The EPA appealed to the Land and Environment Court, which rejected the appeal.
The issue to be determined
The main issue on appeal to the New South Wales Court of Criminal Appeal was whether s 169(1) of the POEO Act applied to Mr McMurray by operation of s 220(4) of the Local Government Act 1993.
The EPA’s case
As part of their argument that s 220(4) of the POEO Act operates to extend the special executive liability under section 169(1) of the POEO Act to Mr McMurray, the EPA raised the following submissions:
- Section 169(1) of the POEO Act is “a law of the State”.
- Section 169(1) “applies to and in respect of” a corporation because it provides liability for executives of a corporation who contravene a provision attracting special executive liability, of which s 144(1) of the POEO Act is such a provision.
- Section 220(4) of the LG act operates to apply the special executive liability contained within s 169(1) to and in respect of a council “in the same way” as s 169(1) applies to an in respect of executives of a corporation.
The EPA also sought consequential orders to set aside the L&E Court’s order dismissing the EPA’s appeal and instead making orders that the appeal to the LEC be allowed and the Magistrate’s order permanently staying the proceedings be set aside.
Judgment of the NSWCCA
Chief Justice Preston ultimately agreed with the EPA’s submissions, determining that special executive liability contained within s 169(1) of the POEO Act applies to and in respect of executives of a council “in the same way” that it applies to and in respect of executives of a corporation.
His Honour held that Mr. McMurray, as the General Manager of the Council, can be considered as a person who is concerned in the management of the Council and thus held accountable under section 169(1). As a result, the law is applied in the same way to a council through the application of section 220(4) of the LG Act.
Ultimately, the appeal against the Land and Environment Court was upheld, finding that “if a council contravenes a provision of the POEO Act attracting special executive liability, including s 144(1), a person who is concerned in the management of the council is taken to have contravened the same provision, unless the person satisfies the court of one of the matters in s 169(1)(b) or (c)”.
Key Takeaway
The judgment of this case sends a strong message about the importance of leadership within councils. Those concerned in the management of councils, has held in this case, must ensure their councils are compliant with environmental regulations and obligations, as an omission to do so could result in personal liability. This ensures accountability at the highest level of local government, compelling councils to take their environmental responsibilities seriously.
