South Australian Supreme Court dismisses an appeal by an employer, which alleged an error of the application of the statutory equivalent of vicarious liability for contraventions of mandatory provisions of the Environment Protection (Water Quality) Policy 2003 (SA)

In brief

The case of Ashton Valley Fresh Pty Ltd v Dolan [2021] SASC 44 concerned an appeal to the Supreme Court of South Australia (Court) against convictions ordered under section 34(2) of the Environment Protection Act 1993 (SA) (EPA) by the Environment, Resources and Development Court of South Australia (ERD Court) in Dolan v Ashton Valley Fresh Pty Ltd (ACN 129 405 410) [2020] SAERDC 15 for contraventions of mandatory provisions in the now repealed Environment Protection (Water Quality) Policy 2003 (SA) (Water Policy).

The charges against the Appellant were laid after an officer of the Environmental Protection Authority collected a sample of water from a creek located near the Appellant's fruit juice processing plant (Juice Plant) and conducted a test of the sample and further investigations, which revealed that raw wastewater (Pollutant) had flowed as part of the Juice Plant business into the creek and caused:

(a)  contrary to clause 12(h) of the Water Policy, an increase in turbidity and sediment levels (Count 1); and

(b)  contrary to clause 13(1) of the Water Policy, the relevant water quality criteria stated in Table 1 of Schedule 2 of the Water Policy to exceed the maximum concentration permitted in the creek in respect of biochemical oxygen demand (five-day test), phosphorus (total as phosphorus), and total organic carbon and to decrease below the minimum pH (Ph units) level (Count 2).

It was uncontroversial on appeal that the elements of both Count 1 and Count 2 had been satisfied. The following grounds of appeal were argued before the Court:

• Ground 1 – The verdicts of the ERD Court were unreasonable or unsupported by the evidence.

• Ground 2 – The Trial Judge made an error of law in holding that the Appellant had breached clause 13 of the Water Policy because clause 13 required that the taking of the sample of water from the creek by the Environmental Protection Authority be "measured by a method approved by the Authority.".

• Grounds 3 and 4 – The Trial Judge erred by not being satisfied that an employee of the Appellant had opened the tap, which had caused the wastewater flow that resulted in the contraventions of the EPA (Contravening Conduct), and in finding that the general defence in section 124(1) of the EPA had not been proved because the contraventions of the EPA were not a result of the failure of the Appellant to take "all reasonable and practicable measures", but from the intentional act of an employee without authority.

The Court held that the findings made by the Trial Judge were open to his Honour and therefore the Appellant failed in respect of Ground 1.

In respect of Ground 2, the Court held that the correct question to be asked was "does the intended meaning of the words used by Parliament extend to these circumstances" and agreed with the Trial Judge that the requirement of measurement by an approved method stated in clause 13(2) of the Water Policy only extended to the testing of the wastewater sample, and not its collection.

The Court relied on the ordinary principles of statutory construction stated by the High Court of Australia in respect of Grounds 3 and 4, and considered the objects of the EPA, the regime relating to the creation of an environmental protection policy, the relevant offence provisions under the EPA and the Water Policy, the general defence in section 124 of the EPA, and the statutory equivalent of vicarious liability enunciated in section 127 of the EPA.

The Court held that an employer will be liable for acts authorised by the employer as well as for acts which the employer has not authorised, where "the acts are so connected with acts which [the employer] ha[s] authorised that the acts may rightly be regarded as modes – although improper modes – of doing them." (at [120]). The Court noted that a mode of doing what an employee is employed to do, even where improper, differs from conduct which is outside of the scope of an employment.

The Court found no error in the lack of persuasion of the Trial Judge to find that the employee of the Appellant had acted on a "frolic of his own" and without authorisation. The Court agreed with the ERD Court's construction of the EPA and that the conduct and state of mind of the employee of the Appellant ought to be imputed to the Appellant.

The Court similarly found no error in the Trial Judge's conclusion that the Appellant had not on the balance of probabilities proved the general defence in section 124 of the EPA. The Court held that section 124(1) of the EPA required measures "designed to prevent the problem, not just minimise the risk" (at [145]) and that the "steps required to be taken to prevent harm are all steps that are reasonable and practicable".

The Court rejected the finding of the Trial Judge that a lack of sufficient training of the Appellant's employee could be used as evidence of a "reasonable and practicable" measure that the Appellant did not take. The Court nevertheless accepted that it was open to the Trial Judge on the evidence to find that the design of the location of the tap the subject of the Contravening Conduct could have been altered to prevent the contravention. Such a measure was inferred by the Court to be within the financial resources of the Appellant (see [157]).

The Court held it unnecessary to fully consider a submission of the Respondent alleging that because the Appellant did not call a witness alleged to have unique knowledge of facts relevant to the appeal, a Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 inference (Jones v Dunkel Inference) ought to be drawn to infer that the evidence of that witness would not have assisted the Appellant, but noted that such an inference required exceptional circumstances.

The Court, in obiter, observed that the general rule in criminal cases is that a trier of fact is not entitled to infer that the evidence of a witness, whom an accused did not call, would not have assisted the accused. An exception to the general rule may apply, where an accused has failed to give evidence in their own case and the explanation of the facts is uniquely within the accused's knowledge (at [109] and Weissensteiner v The Queen (1993) 178 CLR 217; [1993] HCA 65).

Having considered the reasons of the ERD Court and the evidence before it in respect of the satisfaction of the general defence against an alleged contravention of the EPA in conjunction with statutory equivalent of the general law of vicarious liability and the rules of statutory interpretation, the Court was satisfied that the ERD Court did not err in convicting the Appellant of Count 1 and Count 2 and dismissed the appeal.

Factual matrix

A natural drainage line exposed the creek the subject of the Contravening Conduct to runoff, which flowed from a wastewater treatment plant (Wastewater Plant) used to process and treat raw wastewater created as part of the apple-juicing process of the Appellant's Juice Plant business. The raw wastewater ran downhill through a pipe under a roadway from the Juice Plant to the Wastewater Plant. A tap was affixed to the pipe, which enabled raw wastewater to be released from the tap into the Wastewater Plant.

It was common ground between the parties that the tap was required to be turned to a specific position before being turned on to allow the wastewater to enter the Wastewater Plant. Where the tap was turned on and not in the correct position, raw wastewater would instead be directed toward an open drain outside of the Wastewater Plant, which after a period of being filled with raw wastewater, would follow through into the creek.

Although the tap generally remained in the correct position, the evidence before the ERD Court established that the tap may be used to divert the raw wastewater away from the Wastewater Plant to assist with the identification of a blockage stopping the raw wastewater from entering the Wastewater Plant, to sample and test the raw wastewater, and to pump raw wastewater into a tanker, where the Wastewater Plant became inoperable for any reason.

At trial, the Appellant accepted that the Pollutant came from the land occupied by the Appellant but plead not guilty to the offences alleged in Count 1 and Count 2.

The Contravening Conduct occurred in late August 2014 and was alleged to have been done by a then employee acting outside of the scope of their employment. Of relevance to the trial was the lack of an operating procedure, instruction, or document in relation to the use of the Wastewater Plant tap, and the employee having been trained on the job by the managing director and being certified as competent to operate the Wastewater Plant by the manager responsible for training and educating the Appellant's employees.

It was accepted by the ERD Court based on the evidence that the managing director and his son also contributed to the operation of the Wastewater Plant.

The substantive issue for the Court on appeal was whether the Appellant had satisfied the general defence in section 124(1) of the EPA on the basis of its allegation that the Contravening Conduct occurred outside of the scope of what the employee was employed to do.

Appeal principles

The appeal was made to the Court under section 30(4) of the Environment, Resources and Development Court Act 1993 (SA), which provided in criminal proceedings a right of appeal "in the same way, and to the same extent, as an appeal…under [section 42 of] the Magistrates Court Act 1991 [(SA)]".

The appeal was by way of rehearing and the Court had the power to allow further evidence. As an appellate court, the Court was required to "conduct a real review of the evidence and the judicial officer's findings and reasons" and "make due allowance for the advantage held by the judicial officer in seeing and hearing the witnesses", without excusing itself from "…the task of weighing conflicting evidence and drawing [its] own inferences and conclusions." (at [27]).

Where the Court concluded that the judgment of the lower court was wrong, the Court must overturn the judgment (at [27] and Fox v Percy (2003) 214 CLR 118; (2003) HCA 22).

Ground 1 – Verdicts of the ERD Court are not unreasonable

The Court held the ERD Court was correct in its findings of the Appellant's guilt in respect of Count 1 and Count 2. The Court, based on its findings in respect of the other grounds of appeal, held that the Appellant also failed to establish Ground 1.

Ground 2 – ERD Court's finding that the Water Policy requires only the testing of a sample, and not its collection, to be measured by an approved method was correct

The Court rejected the Appellant's submission that clause 13 of the Water Policy required the Environmental Protection Agency to have an approved method for collecting and testing samples.

The Court considered the words of clause 13 in their context, including other statutory provisions, and the statute as a whole, which included looking at the mischief the statute was intended to remedy. The Court held that "a very general purpose may not detract from the meaning" of the words used in a particular provision (at [39]).

The Court noted that a statutory offence provision is to be construed according to the ordinary principles of statutory construction, and that only in circumstances of ambiguity, after the application of the ordinary rules of construction, ought a provision be resolved in favour of an accused (at [40]).

The Court held that the requirement to "measure" a sample under clause 13 of the Water Policy focused on the analysis of the relevant sample and did not extend to the collection of the sample. The Court observed that there is no harm caused by this interpretation because, as was the case in the appeal, a defendant may argue that a method of collection was inadequate and affected the subsequent testing so as to render it unreliable.

Ground 3 and 4 – Appellant unable to satisfy the Court that it was not liable for acts of an employee

The Court considered the following in respect of Grounds 3 and 4:

(a)  Issue 1 – The relationship between section 127 of the EPA, which imputed to a body corporate the conduct and state of mind of an officer, employee, or agent of the body corporate acting within the scope of their actual, usual, or ostensible authority, and section 124 of the EPA, which created a general defence if it was proved that an alleged contravention of the EPA did not result from a failure of a defendant to take "all reasonable and practicable measures" to prevent the contravention.

(b)  Issue 2 – The factual basis for the ERD Court's finding that an employee of the Appellant had not on a "frolic of his own" engaged in the Contravening Conduct, including whether the Trial Judge sufficiently exposed his Honour's reasoning and whether a Jones v Dunkel Inference ought to be drawn against the Appellant for not having called the managing director of the Appellant as a witness.

(c)  Issue 3 – Whether the Appellant took "all reasonable and practicable measures" to prevent the contraventions of the EPA.

Issue 1 – Section 124 and section 127 of the EPA are not mutually exclusive

The Court agreed with the ERD Court's construction of the EPA that the imputation of the conduct and state of mind of an officer, employee, or agent in section 127 of the EPA was relevant to the defence in section 124(1) of the EPA. Despite the fact that section 127 of the EPA may make the defence difficult to make out, a defendant is not precluded from attempting to do so (at [67]).

Issue 2 – Trial Judge's conclusions in respect of the evidence are correct

The Court rejected the Appellant's submission that the Trial Judge did not consider all of the evidence in respect of the employee acting outside of the scope of their employment, when they engaged in the Contravening Conduct. The Court held that it is not necessary for a trial judge to resolve every non-substantial issue that arises during the course of a trial.

The evidence before the ERD Court that the employee acted on a "frolic of his own" was required "to make the Trial Judge feel an 'actual persuasion' [on the balance of probabilities] of its occurrence or existence before it could be found" (at [139]). The Court found no error in the Trial Judge's finding that the employee of the Appellant did not engage in the Contravening Conduct without authorisation. The Court held that the Trial Judge sufficiently exposed his Honour's reasoning process, and that no error had been demonstrated in his Honour's approach.

The Court held that it was unnecessary to fully consider the submission that a Jones v Dunkel Inference ought to be drawn, but noted that such an inference required exceptional circumstances (at [111]).

Issue 3 – General defence not satisfied on the balance of probabilities

The Court held that the Appellant was required to prove the following to make out the general defence in section 124 of the EPA:

• "[T]hat the alleged contravention did not result from any failure [of the Appellant] to take all reasonable and practicable measures to prevent the contravention or contraventions of the same or a similar nature" (section 124(1)).

• That the Appellant had in place proper systems and procedures for reporting a contravention or a risk of a contravention of the EPA (section 124(3)(a)).

• That the Appellant "actively and effectively promoted and enforced compliance with [the EPA] and with all such systems and procedures within all relevant areas of the workforce." (section 124(3)(b)).

The Court observed that the satisfaction of both limbs of section 124(3) of the EPA did not necessarily mean that section 124(1) of the EPA was also satisfied.

Measures "designed to prevent the problem, not just minimise the risk" were held to be required to satisfy section 124(1) of the EPA. The Court agreed with the Trial Judge that a different design for the Wastewater Plant is a measure that the Appellant could have taken.

Conclusion

The Appellant did not satisfy the Court in respect of any of the grounds of appeal. The Court held that the ERD Court was correct in its findings of the Appellant's guilt under section 34(2) of the EPA for breaches of the mandatory provisions in the Water Policy.

The principles of statutory construction and evidence relied upon by the Court were enunciated by the High Court of Australia, and are therefore applicable to criminal proceedings in each Australian State and Territory.