FEDERAL COURT OF AUSTRALIA

Minister for the Environment v Thermal Dell Pty Ltd [2014] FCA 1442

THE COURT:

1.    DECLARES that in the period 10 August 2011 to 12 August 2011 Thermal Dell Pty Ltd t/as Full Force Fishing (Thermal Dell) contravened s 354(1)(f) of the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act) on two occasions in that :

(a)    Wayne Graham Seddon, as skipper of the AFV Full Force, conducted two commercial pelagic longline fishing shots in the Elizabeth and Middleton Reefs Marine National Nature Reserve; and

(b)    each of Wayne Graham Seddon’s commercial pelagic longline fishing shots within the Elizabeth and Middleton Reefs Marine National Nature Reserve were undertaken on behalf of Thermal Dell.

2.    DECLARES that in the period 10 August 2011 to 12 August 2011, CDF Marine Pty Ltd (CDF Marine) contravened s 354(1)(f) of the EPBC Act on two occasions because:

(a)    Wayne Graham Seddon, as skipper of the AFV Full Force, conducted two commercial pelagic longline fishing shots in the Elizabeth and Middleton Reefs Marine National Nature Reserve; and

(b)    each of Wayne Graham Seddon’s commercial pelagic longline fishing shots within the Elizabeth and Middleton Reefs Marine National Nature Reserve were undertaken on behalf of CDF Marine.

3.    ORDERS that Thermal Dell pay to the Commonwealth of Australia a pecuniary penalty pursuant to s 481 of the EPBC Act in the sum of $45,000.

4.    ORDERS that CDF Marine pay to the Commonwealth of Australia a pecuniary penalty pursuant to s 481 of the EPBC Act in the sum of $10,000.

5.    ORDERS the respondents to pay the applicant’s costs, as agreed or taxed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

The issue

1    The issue to be resolved in this matter is the penalty that should be imposed on each respondent by reason of their admitted contraventions of s 354(1)(f) of the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (the EPBC Act).

2    Section 354(1)(f) of the EPBC Act provides that:

A person must not do one of the following acts in a Commonwealth reserve except in accordance with a management plan in operation for the reserve:

…

(f)    take an action for commercial purposes.

3    Section 354(1) is a civil penalty provision. It provides for maximum penalties as follows:

Civil penalty:

(a) for an individual - 500 penalty units;

(b) for a body corporate - 5,000 penalty units.

4    A penalty unit equalled $110 at the time of the contraventions by the respondents (s 4AA(1) of the Crimes Act 1914 (Cth)). Although the value of a penalty unit subsequently increased to $170, it is common ground that the lower value must be applied to these contraventions (Murrihy v Betezy.com.au Pty Ltd (No 2) (2013) 221 FCR 118; [2013] FCA 1146).

5    Accordingly, the maximum penalty for a body corporate for a contravention of s 354(1)(f) is $550,000.

Agreed facts

6    The parties filed a statement of agreed facts (SAF).

The respondents

7    Relevant facts include the following, referring to the first respondent as Thermal Dell and the second respondent as CDF Marine.

4.    In 2011, Thermal Dell held a 1/3 interest in the business of Full Force Fishing…

5.    In August and September 2011, Thermal Dell was part owner of the Australian Fishing Vessel Full Force… (AFV Full Force)…

6.    Full Force Fishing utilised the AFV Full Force to undertake commercial fishing activities.

…

10.    Thermal Dell is, and was in 2011, the sole shareholder of CDF Marine.

…

12.    In August and September 2011, CDF Marine held [certain] fishing concessions (the Concessions) issued under the Fisheries Management Act 1991 (Cth).

8    Thermal Dell, CDF Marine and Full Force Fishing were under common control. According to the SAF:

3.    William Frankiewicz (Mr Frankiewicz) is, and was in 2011, the sole director and shareholder of Thermal Dell and had primary responsibility for the day to day business activities of Thermal Dell.

…

7.    Mr Frankiewicz managed the onshore maintenance of AFV Full Force and management of the day to day running of Full Force Fishing.

…

11.    Mr Frankiewicz is, and was in 2011, the sole director of CDF Marine and had primary responsibility for the day to day business activities of CDF Marine.

The Fishery

9    The Concessions authorised CDF Marine to conduct commercial fishing by pelagic longline fishing in the Eastern Tuna and Billfish Fishery (the ETBF) using the AFV Full Force (SAF [13]). Longline fishing uses a longline, called the main line, with baited hooks attached at intervals by means of branch lines called snoods. A snood is a short length of line, attached to the main line using a clip or swivel, with the hook at the other end. The main line is typically many tens of kilometres long, with 1000 or more baited snoods attached along its length (SAF [22]). Further:

23.    A single Longline Fishing ‘shot’ involves three main stages – a ‘setting’ stage, a ‘soaking’ stage and a ‘hauling’ stage as follows:

23.1.    Setting: The vessel is moved along the proposed lie of the longline. As the vessel moves, the longline is prepared through the progressive attachment of baited snoods which are placed in the water as the main line is run out from the moving vessel.

23.2.    Soaking: The longline is completely detached from the fishing vessel and is left to drift with the prevailing currents. A float attached to one end enables the long line to be located and picked up again at the end of the soak.

23.3.    Hauling: The crew of the fishing vessel locates the end of the longline and retrieves it by navigating the vessel along the mainline and progressively removing snoods and caught fish.

Each stage takes many hours, and a single Longline Fishing shot can take about 20 to 24 hours in total.

10    In 2011-12, there were 44 active vessels in the ETBF, which were issued a total of 105 longline boat SFRs [statutory fishing rights] and 131 minor-line boat SFRs. The outcome of this case is likely to be particularly noticed by the people who conduct commercial fishing activities in the ETBF [SAF [25]). The fees payable to the Australian Fisheries Management Authority (AFMA) in respect of the Concessions were paid by Thermal Dell in the amount of $22,401.94 (at [14]).

11    CDF Marine authorised Full Force Fishing to utilise the Concessions [relating to the ETBF] in respect of Full Force Fishing’s commercial fishing activities (SAF [15]).

Elizabeth and Middleton Reefs Marine National Nature Reserve

12    The SAF at [26] records that:

Elizabeth and Middleton Reefs Marine National Nature Reserve (Elizabeth and Middleton Reserve) was declared by proclamation under the National Parks and Wildlife Conservation Act 1975 on 23 December 1987. The Elizabeth and Middleton Reserve comprised an area of 187,726 hectares located in the Tasman Sea approximately 600 kilometres east of Coffs Harbour and 150 kilometres north of Lord Howe Island. The Elizabeth and Middleton Reserve included two separate reefs, Elizabeth Reef and the Middleton Reef (the Reefs).

13    According to the SAF:

28. The first management plan for the Elizabeth and Middleton Reserve came into operation on 24 March 1994 and ceased to have effect on 23 March 2004. The second management plan was in operation for the Reserve under the EPBC Act from 22 March 2006 to 17 November 2012.

…

30. Commercial fishing activities have long been excluded from the Elizabeth and Middleton Reserve. The first management plan for Elizabeth and Middleton Reserve (1994 to 2004) prohibited all commercial fishing in the Reserve. In August 2011 the Elizabeth and Middleton Reefs Marine National Nature Reserve Management Plan 2006-2013 (the Management Plan) was in force for the Elizabeth and Middleton Reserve and maintained the prohibition on commercial fishing.

14    The SAF discloses that:

    Elizabeth and Middleton Reefs are of considerable ecological importance… Their location, where tropical and temperate ocean currents meet, contributes to a diverse assemblage of marine species. The variety of habitats found in the Reserve are not represented in any other marine protected areas in Australia and their isolation and oceanic environment has led to the development of plant and animal communities that are unique within Australian waters (at [33]).

    In recognition of the conservation significance of the ecosystem, the Elizabeth and Middleton Reserve was listed in 2002 under the Ramsar Convention on Wetlands of International Importance given the uniqueness and rarity of the reef habitat globally, that fifteen species listed as Vulnerable or Endangered under the EPBC Act are known or considered likely to occur at the site, the high levels of biodiversity at the site, the importance of the site for migratory marine species including turtles and seabirds, and the importance of the sites for endemic species which complete their life cycles on the reefs (at [34]).

    There are at least 29 species (mammals, reptiles, birds, fish, others) listed under the EPBC Act that are known or likely to occur within Elizabeth and Middleton Reserve…[including] three endemic reef fish species, which are not found outside Australia…[and which] are considered especially important for the conservation of marine biodiversity globally (at [35]).

    The Reefs are among the last few remaining strongholds of the black cod…. Once common along the New South Wales coast, the black cod is now rare and is protected under both Commonwealth and NSW legislation. The Reefs are also the southernmost limit to the range of the Queensland Groper (at [36]).

    High numbers of Galapagos sharks… have been observed in the Elizabeth and Middleton Reserve… Galapagos sharks are classified by the International Union for the Conservation of Nature (IUCN) as Near Threatened which means the species is either close to meeting thresholds for classification as a threatened species, or that the species would be threatened if it were not for ongoing conservation efforts. The species is not known to occur in coastal Australian waters, so the presence of the sharks within the Elizabeth and Middleton Reserve is very significant as it appears to be an important nursery habitat for the species (at [37]).

    The Reef ecosystems provide a significant resting and feeding area for migratory marine species including turtles and several seabirds listed on the Japan-Australia Migratory Bird Agreement and the China - Australia Migratory Bird Agreement (at [39]).

    Remote oceanic reefs, like Elizabeth and Middleton Reefs, are particularly prone to human pressures, from even low levels of fishing as their isolation means that fish populations are unlikely to be replenished from distant reefs (at [40]).

    Given their isolated environment, the Reefs have very important scientific values and are a reference monitoring site to compare to those marine areas elsewhere subject to human influence and impacts (at [41]).

Mr Seddon

15    The SAF records the following:

44.    In March 2011, Mr Frankiewicz engaged Wayne Graeme Seddon (Mr Seddon) to skipper the AFV Full Force for Full Force Fishing.

45.    From March 2011 until about October 2011, Mr Seddon conducted commercial fishing activities for Full Force Fishing using the AFV Full Force.

46.    Mr Seddon was engaged to take responsibility for the AFV Full Force, its crew and commercial fishing activities whilst at sea.

47.    For Mr Seddon’s work in skippering the AFV Full Force, Full Force Fishing paid Mr Seddon a percentage of the sale of any fish caught, after some costs.

48.    As part of his engagement to skipper the AFV Full Force, Mr Seddon was nominated on 9 March 2011 as the agent for CDF Marine on the Concessions, allowing him to use the AFV Full Force to conduct commercial fishing in the ETBF and complete the relevant AFMA documents related to the AFV Full Force’s commercial fishing operations within the ETBF. Mr Seddon continued to be nominated as the agent for CDF Marine during August and September 2011.

AVF Full Force’s general activities

16    According to the SAF:

50.    Between March 2011 and October 2011, Mr Seddon took the AFV Full Force out to sea to undertake commercial fishing trips in the ETBF on 11 occasions.

51.    On each occasion Mr Seddon would cause between 5 and 9 pelagic longline fishing shots to be set, soaked and hauled by himself and the crew.

52.    In total, Mr Seddon caused 79 pelagic longline fishing shots to be set, soaked and hauled by himself and the crew on the AFV Full Force.

53.    From 1 August 2011 to 16 August 2011, Mr Seddon took the AFV Full Force out to sea to undertake one of those commercial fishing trips in the ETBF (the Fishing Trip).

54.    At all times during the Fishing Trip Mr Seddon was the skipper of the AFV Full Force and was in charge of the crew of the AFV Full Force.

The contraventions

17    The SAF sets out the details concerning Shots 7 and 8 (which caused the contraventions) in these terms:

Shot 7

56.    In the period from 10 August 2011 to 11 August 2011 the AFV Full Force was used to conduct the 7th pelagic longline fishing shot of the Fishing Trip (Shot 7).

57.    The AFV Full Force conducted Shot 7 by setting its longline in the period from 7.30pm (at 29°47.2ʹ South 158°50.3ʹ East) to 10.23pm (at 29°33.6ʹ South 158°38.5ʹ East) on 10 August 2011.

58.    The first hook of the longline for Shot 7 was set approximately 12 kilometres outside the boundary of the Elizabeth and Middleton Reserve and last hook set approximately 35 kilometres outside the boundary of the Elizabeth and Middleton Reserve.

59.    The length of the longline set for Shot 7 was approximately 42 kilometres in length and contained 1,141 hooks.

60.    The AFV Full Force then detached the longline from the vessel and allowed the longline to soak in the period from 10.23pm on 10 August 2011 to 9.40am on 11 August 2011.

61.    During the soaking stage of Shot 7, part of the AFV Full Force’s longline drifted into the Elizabeth and Middleton Reserve.

62.    The AFV Full Force then began to haul its longline by locating its end and hauling it onto the vessel in the period from 9.40am (at 29°51.6ʹ South 158°55.8ʹ East) to 6.53pm (at 29°46.6ʹ South 158°51.4ʹ East) on 11 August 2011.

63.    The end of the longline was located, and the start of the haul of began, approximately 1 kilometre outside the boundary of the Elizabeth and Middleton Reserve and the last haul of the longline occurred approximately 9 kilometres outside the boundary of the Elizabeth and Middleton Reserve.

64.    During the hauling stage of Shot 7, the AFV Full Force entered and remained within the boundary of the Elizabeth and Middleton Reserve for the purposes of hauling its longline.

65.    Therefore, part of the hauling stage of Shot 7 was conducted within the boundaries of Elizabeth and Middleton Reserve, and part was conducted outside the boundaries.

66.    The AFV Full Force’s maximum incursion within the boundary of the Elizabeth and Middleton Reserve was approximately 1 kilometre, and the vessel approached within approximately 13 kilometres of Elizabeth Reef.

67.    During Shot 7, the following fish were caught, being 66 in total:

67.1.    7 Yellowfin Tuna (210kg processed weight)

67.2.    3 Bigeye Tuna (110kg processed weight)

67.3.    10 Albacore Tuna (100kg processed weight)

67.4.    13 Broadbill Swordfish (500kg processed weight)

67.5.    1 Striped Marlin (60kg processed weight)

67.6.    17 Ray’s Bream (35kg processed weight)

67.7.    7 Escolar (50kg processed weight)

67.8.    1 Dolphinfish (5kg processed weight)

67.9.    1 Wahoo (21kg processed weight)

67.10.    6 Blue shark (not kept)

Shot 8

68.    In the period from 11 August 2011 to 12 August 2011 the AFV Full Force was used to conduct the 8th pelagic longline fishing shot of that Fishing Trip (Shot 8).

69.    The AFV Full Force conducted Shot 8 by setting its longline in the period from 7.06pm (at 29°46.8ʹ South 158°51.7ʹ East) to 10.14pm (at 29°33.4ʹ South 158°36.6ʹ East) on 11 August 2011.

70.    The first hook of the longline for Shot 8 was set approximately 8 kilometres outside the boundary of the Elizabeth and Middleton Reserve and last hook set approximately 39 kilometres outside the boundary of the Elizabeth and Middleton Reserve.

71.    The length of the longline set for Shot 8 was approximately 43.5 kilometres in length and contained 1,141 hooks.

72.    The AFV Full Force then detached the longline from the vessel and allowed the longline to soak in the period from 10.14pm on 11 August 2011 to 9.05am on 12 August 2011.

73.    During the soaking stage of Shot 8, part of the AFV Full Force’s longline drifted into the Elizabeth and Middleton Reserve.

74.    The AFV Full Force then began to haul its longline by locating its end and hauling its longline onto the vessel in the period from 9.05am (at 29°51.1ʹ South 159°01.0ʹ East) to 10.00pm (at 29°29.9ʹ South 158°35.00ʹ East) on 12 August 2011.

75.    The end of the longline was located, and the start of the haul began, at approximately 8 kilometres inside the boundary of the Elizabeth and Middleton Reserve and the last haul of the longline occurred approximately 43 kilometres outside the boundary of the Elizabeth and Middleton Reserve.

76.    During the hauling stage of Shot 8, the AFV Full Force entered and remained within the boundary of the Elizabeth and Middleton Reserve for the purposes of hauling its longline.

77.    Therefore, part of the hauling stage of Shot 8 was conducted within the boundaries of Elizabeth and Middleton Reserve, and part was conducted outside the boundaries.

78.    The AFV Full Force’s maximum incursion within the boundary of the Elizabeth and Middleton Reserve when hauling its longline was approximately 8 kilometres and the vessel approached within approximately 8 kilometres of Elizabeth Reef.

79.    During Shot 8, the following fish were caught, being 34 in total:

79.1.    2 Yellowfin Tuna (70kg processed weight)

79.2.    8 Broadbill Swordfish (310kg processed weight)

79.3.    14 Ray’s Bream (28kg processed weight)

79.4.    4 Dolphinfish (20kg processed weight)

79.5.    1 Northern Bluefin Tuna (257kg processed weight)

79.6.    1 Dusky Whaler shark (not kept)

79.7.    4 Blue Shark (not kept)

18    When the AFV Full Force returned to port, after conducting other Longline Fishing activities in other parts of the ETBF, he unloaded approximately 7 tonnes of fish including fish caught during Shots 7 and 8, being approximately 1.09 tonnes of fish caught during Shot 7, or about 15% of the total catch and 0.69 tonnes of fish caught during Shot 8, or about 9% of the total catch (at [80]-[82]). Further:

•    The total gross sale value of the 7 tonnes of fish unloaded on 16 August 2011 was $68,358.29. The Fish Receiver deducted $18,738.17 in fees, reducing the gross value of the fish caught on the Fishing Trip to $49,620.12 (at [83]).

•    Full Force Fishing was allocated $49,620.12 from the Fish Receiver and paid the following costs incurred as a direct consequence of the Fishing Trip:

•    $11,543.61 in payment of purchases from Prime Fish, including bait costs;

•    $14,637.90 in payment of wages to Mr Seddon and the crew of the AFV Full Force;

•    $589.49 in payment of superannuation contributions to Mr Seddon and the crew of the AFV Full Force;

•    $12,841.40 in payment of the 8,980 litres of fuel used for the Fishing Trip;

•    $700.00 in payment of bulk ice required for unloading the fish;

•    $2,210.53 in payment of fishing equipment supplies required to be replaced (at [85]).

•    Without taking [other indirect] expenses into consideration, Full Force Fishing net the amount of about $7,097.19 from the Fishing Trip and approximately:

•    $1,000.00 in relation to fish caught during Shot 7 (pro-rata 15%); and

•    $640.00 in relation to fish caught during Shot 8 (pro-rata 9%) (at [87]).

•    It is not possible to determine what fish, if any, were in fact caught within the Elizabeth and Middleton Reserve during Shot 7 or 8 and therefore not possible to determine what financial benefit, if any, was received from the contravening conduct (at [88]).

•    Of the possible income received by Full Force Fishing for Shots 7 and 8, one third, or about $580.00 may have been payable to Thermal Dell if Full Force Fishing had recorded a profit for that financial year (at [89]).

•    However, in the financial year 1 July 2011 to 30 June 2012 Full Force Fishing recorded a net loss of $89,864.00. As Full Force Fishing recorded a net loss for that financial year it ultimately did not make a net profit from the Fishing Trip (at [90]).

•    CDF Marine received no financial reward for the Fishing Trip, or any activity of Full Force Fishing, beyond the payment of its fees for the Concessions (at [91]).

Consequences of the contraventions

19    Long line fishing has the potential to result in adverse effects to the marine environment including by reduction in the abundance of large predator species and the halting of species population growth and recovery (at [99]), as well as impacts on ‘by catch species’ and have complex and unforeseen impacts on the rest of the ecosystem, [given that] removal of key functional groups of fish through fishing activities has underpinned the degradation of coral reef systems worldwide (at [100.1] and [100.2]). Further, seabirds are particularly vulnerable from long line fishing practices (at [101]). Other potential impacts of Longline Fishing include harms caused by fishing gear debris such as snoods, hooks, swivels, floats, and lightsticks which may become dislodged from the longline. Such debris can cause damage to reef communities, including corals, in the Elizabeth and Middleton Reserve (at [102]). Longline Fishing can also impact on the management of protected areas. This is due to the potential of the fishing activity interfering or skewing the results of long term monitoring at ‘no fishing’ reference sites (at [103]).

20    While the risk of harm caused by shots 7 and 8 was as identified above, it is impossible to determine the extent to which any of those harms may in fact have resulted from Shots 7 and/or Shot 8 (at [106]). Further, as only part of the hauling stage for each shot [Shots 7 and 8] was conducted within the Elizabeth and Middleton Reserve, it is not possible to calculate which or how many of the fish caught in Shots 7 and 8, if any, were caught while the AFV Full Force was in the Elizabeth and Middleton Reserve (at [104]).

Other relevant matters

21    In July 2013 Thermal Dell sold its interest in the AFV Full Force and no longer has any interest in commercial fishing activities in the ETBF (at [107]).

22    In June 2014 CDF Marine sold its interest in the Concessions (at [108]).

23    Thermal Dell and CDF Marine have cooperated with and assisted the Department's investigation of alleged breaches of the EPBC Act (at [111]) and in the proceedings (at [112]).

24    Thermal Dell, CDF Marine and Mr Frankiewicz have not previously been found by a court to have contravened the EPBC Act (at [113]).

25    Thermal Dell and CDF Marine, through Mr Frankiewicz, were not aware of the extent of the boundaries of the Elizabeth and Middleton Reserve but were aware that it was unlawful to undertake commercial fishing within marine reserve parks generally (at [114]).

26    Mr Frankiewicz assumed that because of Mr Seddon’s experience in undertaking commercial longline fishing in the ETBF, and the material made available to him, that Mr Seddon was aware of the restrictions on fishing in marine reserve parks, including the Elizabeth and Middleton Reserve, and that Mr Seddon would ensure that he did not fish there (at [117]).

27    Thermal Dell and CDF Marine acknowledge that they failed to take sufficient and reasonable precautions to avoid the conduct (at [118]).

28    Mr Seddon was subjected to summary criminal prosecution for an offence against s 354A(5) of the EPBC Act in relation to his actions in the present case. Mr Seddon entered a plea of guilty and the Maroochydore Magistrates Court imposed a fine of $1,500.00 (at [120]). As a result, and having regard to s 486A of the EPBC Act, the Department was unable to pursue civil penalty action against Mr Seddon (at [121]).

Discussion

29    There was no material dispute about the principles to be applied in the assessment of any penalty to be imposed on the respondents.

30    The respondents are liable by operation of s 498B(1) of the EPBC Act, which is in these terms:

(1)    Any conduct engaged in on behalf of a body corporate:

(a)    by a director, employee or agent of the body corporate within the scope of his or her actual or apparent authority; or

(b)    by any other person at the direction or with the consent or agreement (whether express or implied) of a director, employee or agent of the body corporate, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, employee or agent;

is to be taken, for the purposes of this Act, to have been engaged in also by the body corporate unless the body corporate establishes that the body corporate took reasonable precautions and exercised due diligence to avoid the conduct.

31    Section 498B(5) specifies the matters to which a court must have regard in determining whether a body corporate took reasonable precautions and exercised due diligence for the purposes of s 498B(1).

32    Section 481 of the EPBC Act applies. It provides as follows:

(1)    Within 6 years of a person (the wrongdoer) contravening a civil penalty provision, the Minister may apply on behalf of the Commonwealth to the Federal Court for an order that the wrongdoer pay the Commonwealth a pecuniary penalty.

(2)    If the Court is satisfied that the wrongdoer has contravened a civil penalty provision, the Court may order the wrongdoer to pay to the Commonwealth for each contravention the pecuniary penalty that the Court determines is appropriate (but not more than the relevant amount specified for the provision).

(3)    In determining the pecuniary penalty, the Court must have regard to all relevant matters, including:

(a)    the nature and extent of the contravention; and

(b)    the nature and extent of any loss or damage suffered as a result of the contravention; and

(c)    the circumstances in which the contravention took place; and

(d)    whether the person has previously been found by the Court in proceedings under this Act to have engaged in any similar conduct.

(4)    If conduct constitutes a contravention of 2 or more civil penalty provisions, proceedings may be instituted under this Act against a person in relation to the contravention of any one or more of those provisions. However, the person is not liable to more than one pecuniary penalty under this section in respect of the same conduct.

33    The matter involves two contraventions of the same provision (arising during shots 7 and 8). As such, s 481(4) of the EPBC Act does not apply. However, as the Minister noted, separate acts may be so inextricably interrelated that they should be viewed as one multi-faceted “course of conduct” (Clean Energy Regulator v MT Solar Pty Ltd [2013] FCA 205 (MT Solar) and Registrar of Aboriginal and Torres Strait Islander Corporations v Matcham (No 2) (2014) 97 ACSR 412; [2014] FCA 27 (Matcham)).

34    In the present case, as the Minister put it in written submissions:

12.1. Although the Longline Fishing Shots were conducted across different days (and the two incursions into the Elizabeth and Middleton Reserve occurred on separate days), Shots 7 and 8 were undertaken in quick succession, in that the setting stage of Shot 8 commenced only 13 minutes after the completion of the hauling stage of Shot 7.

12.2. Each of the Shots took place in a similar location and were executed in a similar manner, in that the same Longline Fishing technique was used during each shot and the location was targeted by Mr Seddon to take advantage of thermal currents.

12.3. On the basis of the information known to the parties, there is no way to differentiate the level of harm caused, or risk of harm, as a result of each contravention. That is, it cannot be said that one contravention had a significantly greater impact than the other.

12.4. Neither shot is significantly more serious than the other in terms of conduct – in both cases, Mr Seddon was not aware of the Elizabeth and Middleton Reserve and was aware that the longline would drift with the prevailing currents.

35    The Minister also submitted, correctly I accept, that:

the course of conduct principle does not enable the two respondents to be ‘bundled together’ – each is separately responsible for its own course of conduct.

36    I also accept the Minister’s submission that the imposition of a single penalty for a course of conduct involving two contraventions means that the totality principle need not be considered.

37    Otherwise, the applicable principles include the following (adapted from the Minister’s submissions):

    “…careful attention to maximum penalties will almost always be required, first because the legislature has legislated for them; secondly, because they invite comparison between the worst possible case and the case before the court at the time; and thirdly, because in that regard they do provide, taken and balanced with all of the other relevant factors, a yardstick” (Markarian v The Queen (2005) 228 CLR 357; [2005] HCA 25 at [31] (Markarian)).

    The maximum penalty continues to apply to each contravention which forms part of the course of conduct (Construction, Forestry, Mining and Energy Union v Cahill (2010) 194 IR 461; [2010] FCAFC 39 at [42]).

    Deterrence is an essential consideration in the imposition of a civil penalty (NW Frozen Foods Pty Ltd v Australian Competition and Consumer Commission (1996) 71 FCR 285; [1996] FCA 1134 at 293 (NW Frozen Foods); Minister for Sustainability, Environment, Water, Population and Communities v Woodley (2012) 194 LGERA 290; [2012] FCA 957 (Woodley) at [47]-[50]).

    “The proper approach to be taken to the consideration and assessment of relevant factors in relation to each contravention is the ‘instinctive synthesis’ approach explained by the High Court in Markarian and applied in the context of civil penalties under the EPBC Act in Woodley. The following general principles apply:

    The process requires a weighing together of all relevant factors, rather than starting from some pre-determined figure and making incremental additions or subtractions for each separate factor.

    It is critical that the reasoning process involved in ‘synthesising’ the penalty be transparent”.

38    The respondents noted that while general deterrence remained relevant in the present case, specific deterrence considerations were immaterial because neither continued to be involved in commercial fishing, Thermal Dell having sold its interest in Full Force Fishing in July 2013 and CDF Marine having sold the Concessions in June 2014. The Minister accepted that specific deterrence was not as weighty a consideration as general deterrence in this case, not so much because of the respondents no longer being involved in the ETBF (it being unclear whether they continued to be involved in commercial fishing at all), but by reason of the respondents’ frank admissions, extensive co-operation and genuine contrition. I accept the Minister’s submissions.

39    The Minister also submitted that:

Mr Seddon was subjected to summary criminal prosecution and convicted for an offence against s 354A(5) of the EPBC Act for his actions in the present case. Mr Seddon entered a plea of guilty and received a fine of $1,500 (or about 22% of the statutory maximum). Having regard to s 486A of the EPBC Act, the Minister was unable to pursue civil penalty action against Mr Seddon.

No useful comparison of the penalties sought against the respondents can be made with the penalty imposed on Mr Seddon. Most importantly, the fundamental differences between criminal sentencing and the imposition of civil penalties make any attempt to achieve numerical equivalence neither possible nor appropriate.

40    Section 354A(5) provides that a person commits an offence if the person takes an action for a commercial purpose in a Commonwealth reserve. The maximum penalty for this offence is 2 years imprisonment and/or a fine of 1000 penalty units (or $110,000). However, because the matter was dealt with, by consent, in a court of summary jurisdiction, the maximum penalty to which Mr Seddon was subject was $6,600. He was convicted and fined $1500. Section 486A of the EPBC Act precludes the imposition of any pecuniary penalty on Mr Seddon as he has been convicted of an offence for the same conduct.

41    The respondents submitted that “to impose a civil penalty that is grossly outweighed by the fine imposed against Mr Seddon for the very same conduct in the very same circumstances would be unjust”.

42    I am not persuaded that the fine imposed on Mr Seddon for contravention of s 354A (5) is an irrelevant consideration to the question of the appropriate fine to be imposed on the respondents. The respondents are liable because Mr Seddon acted as the agent of Thermal Dell and CDF Marine (given that CDF Marine authorised the use of the Concessions by Mr Seddon). That said, the statutory regimes are different in subject and purpose, and considerations of parity cannot be meaningfully applied. Mr Seddon’s criminal conviction also does not alter the fact of the respondents’ own culpability for their contraventions.

43    The Minister sought declarations and penalties against both respondents. The Minister submitted that penalties in the following ranges would be appropriate:

Thermal Dell: A penalty in the range of $85,000 to $110,000. This represents about 15 to 20% of the statutory maximum for one contravention (and 7.5 to 10% of the total maximum for both contraventions).

CDF Marine: A penalty in the range of $10,000 to $20,000. This represents about 2 to 4% of the statutory maximum for one contravention (and only 1 to 2% of the total maximum for both contraventions).

44    The respondents accepted that declarations should be made. They also noted the following in respect of penalties:

Mr Frankiewicz is the sole director of both Respondents and the sole shareholder of the First Respondent. The First Respondent is the sole shareholder of the second respondent.

The Respondents are in all respects a product of Mr Frankiewicz’s commercial and business activities.

The extent of knowledge and awareness of the contravening conduct and potential for avoidance of the First Respondent is the very same for the Second Respondent.

It is submitted that these circumstances provide an appropriate basis upon which the Court should recognise the burden that would be placed upon Mr Frankiewicz if both Respondents were ordered to pay pecuniary penalties that were determined without any regard to corporate relationship between them and the overall penalty obligation.

45    The respondents submitted that:

given the corporate structure and identity of the Respondents…any pecuniary penalty ordered in respect of each Respondent [should] be apportioned as follows:

a.    A 75% apportionment to the First Respondent, up to a maximum of $30,000.00; and

b.    A 25% apportionment to the Second Respondent, up to a maximum of $10,000.00.

46    I do not consider the respondents’ apportionment approach to be consistent with principle. I accept the Minister’s submission that the course of conduct principle does not enable the two respondents to be “bundled together”, each respondent being separately responsible for its own course of conduct. However, I also accept the respondents’ submission that the corporate structure of and relationship between the respondents is a consideration relevant to the penalties to be imposed on each. Mr Frankiewicz was (and is) the sole shareholder in Thermal Dell and Thermal Dell was (and is) the sole shareholder in CDF Marine. He was (and is) also the sole director of both respondents. For his own reasons Mr Frankiewicz chose to structure his business activities through two corporations. For present purposes, the consequence of his having done so is that both corporations have contravened s 354(1)(f) of the EPBC Act. If he had chosen to structure his business activities through a single corporation, then that corporation alone would be liable for the contraventions. The underlying reality, that both corporations are the means by which Mr Frankiewicz conducted his business activities, should not be overlooked. The Minister acknowledged this in submitting that while it would be appropriate to impose a penalty in the ordinary course on Thermal Dell, the penalty to be imposed on CDF Marine should be significantly reduced (by around one half) to reflect the common ownership of the companies.

47    The Minister and the respondents, by their submissions, accepted that Thermal Dell’s conduct warranted a greater penalty than that of CDF Marine. As the Minister put it, Thermal Dell was actively involved in the commercial fishing activity (having engaged Mr Seddon) and stood to gain a profit from the contraventions, if Full Force Fishing had ultimately recorded a profit for the relevant financial year. CDF Marine authorised Thermal Dell to use the Concessions but was not a partner of the Full Force Fishing business and, apart from payment of the AFMA fees by Thermal Dell, was not seeking or expecting to gain benefits from the Longline Fishing activities.

48    The Minister submitted that general deterrence was of particular importance in this matter for a number of reasons.

    The relevant provisions of the EPBC Act “are designed to ensure that areas of international and/or national environmental significance are protected and managed consistently with the natural values of the area and Australia’s international environmental responsibilities” and the consequences of non-compliance with those provisions are “very serious” (Woodley at [54] and [56]).

    Longline Fishing poses a very grave risk to marine life in Commonwealth Marine Reserves.

    There is a need to send a strong message to commercial fishing businesses to actively ensure they do not undertake unauthorised fishing in Commonwealth Marine Reserves given that the ETBF is the dominant Commonwealth fishery located off the coast of Eastern Australia and, in 2011 to 2012, was fished by 44 active vessels with longline boat SFRs. Further, the Elizabeth and Middleton Reserve had long been subject to conservation protection and that should have been well known to the respondents.

    Section 354 continues to be contravened despite warnings and earlier decisions. In the present case:

The ETBF Management Arrangement Booklet, 2011 Season states, under the heading ‘Where can’t I fish?’, that ETBF boats are not allowed to fish inside Commonwealth managed Marine Protected Areas, and directs Concession holders to the Marine Protected Areas webpage of the Department of Sustainability, Environment, Water, Populations and Communities (as it then was). The respondents, through Mr Frankiewicz, have acknowledged that despite these directions they were not aware of the boundaries of the Elizabeth and Middleton Reserve and, aside from forwarding the same Booklet to Mr Seddon and relying upon his experience, did nothing to ensure that Mr Seddon would avoid that reserve when fishing in the ETBF.

As has been the case in each of the Wilson [Minister for the Environment and Heritage v Wilson [2004] FCA 6 (Wilson)], Warne [Minister for the Environment and Heritage v Warne [2007] FCA 599 (Warne)] and Woodley matters, the contraventions resulted from a failure to take proper precautions to ensure that commercial fishing activities were not undertaken in the marine reserve. In other words, more than a decade after the introduction of the provisions to protect marine reserves from the effects of commercial fishing, and even after the enforcement provisions were strengthened in 2007, commercial fishing businesses still fail to take basic steps necessary to comply with those provisions.

49    The respondents accepted that general deterrence was a relevant consideration but contended that a substantial penalty was not warranted. As the respondents put it:

The circumstances of these contraventions were not deliberate, Mr Seddon did not embark on risky conduct without fear of being caught; he was simply unaware that the longline had drifted into the Elizabeth and Middleton Reserve.

To impose a substantial civil penalty in those circumstances will do nothing to deter the ‘would-be contraveners’ who engage in conduct deliberately and take steps to go undetected or escape liability.

50    I accept that general deterrence is the decisive consideration in this case. As stated in Woodley at [62]:

If those who contravene s 354(1) of the EPBC Act receive relatively small penalties when apprehended, there is every chance that commercial fishermen will conclude that the benefits of fishing in protected areas (given its potential for deriving significant financial rewards) far outweigh the risk of being caught committing a contravention because the risk of detection is low and the financial penalties relatively insignificant. If such conduct is undertaken, the harm to the environment is likely to be significant.

51    That said, general deterrence directed towards education of the community about the law’s proscriptions cannot result in the imposition of a penalty disproportionate to the objective seriousness of the contraventions. It has been said that in such a case “care must be taken in imposing a penalty lest the offender be made to shoulder an unfair burden of community education” (Walden v Hensler (1987) 163 CLR 561 at 570). In the context of civil penalties, as the Minister submitted, the principle has been expressed in these terms in NW Frozen Foods at 293:

…insistence upon the deterrent quality of a penalty should be balanced by insistence that it “not be so high as to be oppressive”. Plainly, if deterrence is the object, the penalty should not be greater than is necessary to achieve this object; severity beyond that would be oppression.

52    I do not accept that the other cases involving contraventions of s 354 of the EPBC Act involve facts comparable to the present case. In this regard, the observations in NW Frozen Foods at 295 are relevant. Burchett and Kiefel JJ noted that “other things being equal, corporations guilty of similar contraventions should incur similar penalties”. However, “the facts of the instant case should not be compared with a particular reported case in order to derive therefrom the amount of the penalty to be fixed. Cases are authorities for matters of principle; but the penalty found to be appropriate, as a matter of fact, in the circumstances of one case cannot dictate the appropriate penalty in the different circumstances of another case”.

53    In Wilson the respondent set his net in the marine park. He knew that he was close to the park and his vessel might enter the park (as it did). He “plainly took a risk in setting his line very close to the boundary of the park” (at [7]). The penalty was $12,500 compared to a maximum of $55,000 (23%). I accept the respondents’ submission that Wilson is different from the present case on grounds including that the respondents:

a.    Had no knowledge of the boundary of the Elizabeth and Middleton Reserve;

b.    Relied upon the experience and knowledge of Mr Seddon;

c.    Were not directly engaged in the contravening conduct;    

d.    Had a fully operational VMS and detailed and submitted accurate Daily Fishing Logs used for detection of the conduct.

54    In Warne the respondent’s vessel entered the marine park to fish on four occasions. During the contraventions the species caught included scampi, a species of fish classified as a native species within the terms of the EPBC Act. The respondent was the skipper and in control of the vessel. The penalty was $25,000 compared to a maximum of $55,000 (45%). As the respondents submitted:

Warne can be distinguished from the present proceedings on the basis that the Respondents:

a.    Were not directly engaged in the contravening conduct;

b.    Mr Seddon did not target any protected native species.

55    In Woodley the respondents were the skipper and the (related) family company which owned the vessel. He unintentionally but recklessly set four rock lobster pots inside a sanctuary zone in a marine reserve. He did not catch any rock lobster in the reserve. The vehicle monitoring system (or VMS) on the vessel was not operating. The skipper intended to keep working as a commercial fisherman. He had not co-operated during the investigation. The skipper was fined $13,000 compared to the maximum of $55,000 (24%). The company was fined $65,000 compared to the maximum of $550,000 (12%). As the respondents submitted:

Woodley can be distinguished from the present proceedings on the basis that the Respondents:

a.    Had no knowledge of the boundary of the Elizabeth and Middleton Reserve;

b.    Relied upon the experience and knowledge of Mr Seddon;

c.    Were not directly engaged in the contravening conduct;

d.    Co-operated fully with the investigative authority; and

e.    Had a fully operational VMS and detailed and submitted accurate Daily Fishing Logs used for detection of the conduct.

56    The Minister also referred to Minister for the Environment and Heritage v Atterton (Federal Court, unreported, 11 December 2003, matter no S 294 of 2002) (Atterton). The respondent had knowingly set nets and caught fish in a reserve at a time when the reserve was closed to commercial fishing. He was fined $25,000 (45% of the maximum, being an agreed penalty).

57    Insofar as it might be relevant to the principle of even-handedness, Wilson, Warne, Woodley and Atterton, in my view, each involved a substantially greater level of culpability than the present case. The contraventions in each were objectively more serious than the present case and this fact should be reflected in the imposition of penalties. Otherwise, there will be a lack of even-handedness in the imposition of penalties which is undesirable.

58    In particular, and as the respondents in the present case submitted, the respondents did not undertake any fishing activity. Mr Seddon did. Mr Seddon was the agent of Thermal Dell (and the other owners of the business and the vessel) and of CDF Marine, but neither Thermal Dell nor CDF Marine undertook any fishing activity. They are liable by operation of s 498B(1) of the EPBC Act but the fact that they are one step removed from the activities (in the case of Thermal Dell) and possibly two steps removed (in the case of CDF Marine) is relevant. So too is the fact that they believed Mr Seddon to be an experienced fisherman. They were not careless or reckless in the choice of Mr Seddon. They are liable because they did not take reasonable precautions and exercise due diligence to avoid Mr Seddon’s particular contravening conduct which they ought to have done. The contravening conduct involved the drift of the longlines into the reserve, rather than the setting of longlines in the reserve. While this was a result of good luck and not good management (as the Minister said), the respondents are nevertheless entitled to the benefit of this good luck.

59    Other considerations support this approach.

60    The contraventions created a risk of significant loss or damage but there is no evidence that any material loss or damage in fact was caused.

61    Despite having fished in the ETBF for about four years, neither Thermal Dell nor CDF Marine have previously been found by the Court in proceedings under the EPBC Act to have engaged in any similar conduct. As the Minister acknowledged, the respondents’ excellent record is an important factor in their favour. .

62    As noted, specific deterrence is of limited relevance in the present case.

63    The Minister accepted that there was no meaningful remediation which the respondents could have undertaken.

64    In the words of the Minister:

70.    Thermal Dell and CDF Marine have cooperated extensively through:

70.1.    providing assistance to authorities during the investigation into the contraventions, including by participating in interviews and making full and frank admissions as to a range of factual matters;

70.2.    filing a Defence admitting the contraventions;

70.3.    joining with the Minister in filing a Statement of Agreed Facts describing the facts relevant to the contraventions.

65    The Minister (properly) submitted that, as a result:

the respondents should each be given a significant discount for co-operation in the order of a 25-30% reduction on the penalties which would otherwise be appropriate.

66    Taking into account all of the above matters I am satisfied that the contraventions by the respondents and the requirements of general deterrence arising from those contraventions require the imposition of a penalty on each. The respondents did not take care and exercise due diligence to ensure Mr Seddon knew of the location of the Elizabeth and Middleton Reserve and understood he was not to fish in that area. Failures of care of this kind attract the need for general deterrence. Accordingly, to the extent that the respondents suggested that it might be reasonable for no penalty to be imposed in all of the circumstances, I disagree. To accede to that submission would be to undermine an important statutory scheme for protection of environmentally significant areas. The lack of intent of the respondents and lack of profit made cannot displace the need for general deterrence in this case. As the Minister submitted, the respondents’ ignorance and inadvertence were “just not good enough” and involved a failure of due care and diligence.

67    I consider that each penalty should reflect the fact that the two contraventions by each respondent represent a single course of conduct. Further, the penalties (or, at the least, the penalty imposed on CDF Marine) should reflect the corporate structure of the respondents as manifestations of the business activities of the one person, Mr Frankiewicz. The penalties should also reflect the substantially lesser culpability of the respondents for the contraventions than those of the respondents in Wilson, Warne, Woodley and Atterton in order to ensure even-handedness. The extensive co-operation given by the respondents, as the Minister acknowledged, also should result in the maximum reduction of penalty for each respondent of 30% compared to the penalties that otherwise would have been imposed. This is a distinguishing factor from Woodley in particular where the penalty of $65,000 (12% of the maximum) appears not to have been reduced on account of co-operation.

68    On the above basis, and making allowance for the 30% reduction in penalty to which each respondent is entitled by reason of its co-operation, I consider that Thermal Dell should be subjected to a single penalty in the sum of $45,000 (about 4% of the maximum penalty for each separate contravention) and CDF Marine a single penalty in the sum of $10,000 (about 1% of the maximum penalty for each separate contravention).

69    Declarations, generally as the Minister sought, should also be made. These declarations clearly disclose the nature of the contraventions, which is appropriate. The declarations proposed by the respondents do not sufficiently perform this important function of disclosure.

70    Although the respondents sought a lump sum costs order in the amount of $15,000, there is no evidentiary basis to determine whether that amount is appropriate. The usual order as to costs should be made.

Associate:

Dated:    13 January 2015