Company directors and managers take note: You can be held personally liable for your company’s environmental law breach

  • Recent prosecutions show directors are increasingly under scrutiny by environment protection authorities.
  • Directors and those concerned in the management of corporations need to be aware of their liability under relevant environmental laws.
  • Directors and officers should carefully examine their company deed of indemnity and their D&O insurance in order to understand the scope of their cover.

Smoke pollution

As company directors and managers can be personally prosecuted for breaches of environmental laws, it is essential that they are aware of liability under environmental laws and are also up to date on how to avoid the risk of prosecution.

Defending a criminal prosecution can also be costly and it is therefore important that directors and managers are aware of how their company deed of indemnity and directors and officers (D&O) insurance can cover them.

Prosecutions by environment protection authorities

With the recent cases in NSW of Environment Protection Authority v Foxman Environmental Development Services; EPA v Botany Building Recyclers Pty Ltd; EPA v Foxman (No 2)1 and a growing list of other prominent prosecutions, it is clear that directors are increasingly coming under scrutiny by environment protection authorities. With this comes the greater personal risk of penalties (of up to $792,8502) and civil damages awards arising from environmental related contraventions.

Since September 2016, Victoria’s Environment Protection Agency (EPA) has prosecuted 11 matters. In four of those, orders were made against directors personally. These directors were either given a fine of less than $5000 or provided an undertaking to be of good behaviour for 12 months.

Air emissions, waste disposal and operating underground storage tanks are some common areas where companies trip up environmentally — and potentially face major prosecutions as a result.

Directors and officers across a broad range of industries — including manufacturing, property development and construction, and operators of industrial facilities — need to be aware of potential personal liability they may be facing under their state’s environmental laws.

EPA v Foxman

In September 2016, Phillip Foxman and his two companies were convicted and fined a total of $390,000 for six waste offences involving the unlawful transport, deposit and storage of at least 15,900 tonnes of waste material. Mr Foxman was personally fined $250,000.

The offenders also had to pay the EPA’s investigation costs of $4,646, publish a notification of the offences in The Sydney Morning Herald and Inside Waste Magazine and remove the waste within 90 days.

Mr Foxman was found guilty of offences pursuant to the NSW equivalent3 of the Victorian Environment Protection Act 1970 (Vic) (Act). The court determined that the major criminality in this case was on the part of Mr Foxman himself because he was ‘deeply and personally involved in every aspect of the behaviour proven’.4

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