Until recently, directors could personally be held criminally liable for over 1000 offences committed by corporations in breach of New South Wales laws. The Miscellaneous Acts Amendment (Directors’ Liability) Act 2012 (NSW) (the Amendment Act), which commenced on 11 January 2013, has reduced this to around 150 offences. In addition, the Amendment Act has altered the proof requirements for many of the remaining directors’ liability offences and expanded the basis on which a director can be held criminally liable as an accessory to the commission. In this article, Elizabeth McDonald of our property and planning team, considers new amendment laws which have reduced the personal liability of directors for over 1000 offences committed by corporations.
Over 50 NSW laws were altered by the Amendment Act across a broad spectrum of areas including long service leave, workplace injury management and workers compensation, gaming machines, explosives, food, veterinary practices and water industry competition. In this article we focus on the laws which relate to land and land development.
The amendments are generally very beneficial for directors. However, all persons responsible for the management or oversight of a company should bear in mind the points outlined below.
Directors and corporate officers should continue to be prudent and take all reasonable steps to minimise the risk of corporate offences generally. Such steps could include:
These steps will assist in managing the risk of the company or its employees / contractors committing an offence, which in turn provides protection for directors and corporate officers.
The amendments bring NSW laws into line with principles developed by the Council of Australian Governments (COAG) to deliver a nationally-consistent approach to the use of Directors’ Liability Provisions. These principles were adopted in light of concerns that Directors’ Liability Provisions were being imposed too regularly and often inconsistently within and across jurisdictions. Other states and territories are also amending laws to reflect the COAG principles.
The land-related laws affected including the following:
Generally, the onus of proving that a person is liable for a criminal offence falls on the party prosecuting the offence. In limited circumstances, a law may reverse this onus of proof so that, rather than being presumed innocent, the prosecuted person is presumed to have committed an offence unless that person can prove otherwise (reverse onus of proof).
Previously, there were a wide range of NSW laws which applied a reverse onus of proof to directors’ liability for corporate offences. This meant that, if a company committed an offence, a director could also be taken to have committed that offence unless the director could prove that he or she was not in a position to influence the conduct of the company or used all due diligence to prevent the offence from occurring.
The amendments removed most of the Directors’ Liability Provisions from the laws, leaving around 150 of these provisions. As well as applying to directors, the Directors’ Liability Provisions which remain apply to any individual who is involved in the management of the corporation and who is in a position to influence the conduct of the corporation in relation to the commission of the offence
In the case of Land Development, apart from the Protection of the Environment Operations Act 1997, all of the laws which retained the Directors’ Liability Provisions were amended to remove the reverse onus of proof. The Protection of the Environment Operations Act 1997 retains reverse onus of proof provisions in relation to a number of offences including:
If a company commits these offences, a director (or a corporate officer) will be deemed guilty of an offence as well unless the director can satisfy the court that he / she was not in a position to influence the conduct of the corporation in relation to its contravention or, if he / she was in such a position, he / she used all due diligence to prevent the contravention.
A new accessorial liability was introduced to confirm that directors, or corporate officers, can be held criminally liable as an accessory to an offence committed by a corporation if the director or corporate officer:
The Directors’ Liability Provisions in relation to Aboriginal cultural heritage offences committed under the National Parks and Wildlife Act 1974 (the Wildlife Act) give rise to very serious criminal penalties. The relevant laws are not as widely discussed or understood as many other environmental arid land related laws but illustrate how material this area of law is when developing land.
The Wildlife Act contains various prohibitions on causing harm or desecration to an Aboriginal object or an Aboriginal place (Aboriginal Cultural Heritage Laws).
“Harm” in this context is defined to include any act, or even an omission, that:
Significant personal penalties as well as corporate fines can be imposed for a breach of this law. Some of these penalties are summarised in the following table.
|Harming an Aboriginal object – section 86(2)
|Harming an Aboriginal object in the course of carrying out a commercial activity – section 86(2)
|Harming or desecrating an object that the person knows to be an Aboriginal object – section 86(1)
|$275,000 and / or 1 years’ imprisonment
|Harming or desecrating an object that the person knows to be an Aboriginal object in the course of carrying out a commercial activity – section 86(1)
|$550,000 and / or 2 years’ imprisonment
|Harming or desecrating an Aboriginal place – section 86(4)
|$550,000 and / or 2 years’ imprisonment
Importantly, the offences of harming an Aboriginal object or harming / desecrating an Aboriginal place are offences of strict liability (the defence of honest and reasonable mistake of fact applies).
If a corporation commits an offence under the Aboriginal Cultural Heritage Laws, then a director or corporate officer of the corporation also commits an offence if:
The maximum penalties for directors or corporate officers are the same as the individual penalties outlined above.
Proof requirements and accessorial liability
The prosecution bears the legal onus of proving the offence. In the past, the director would have been taken to have committed an offence unless the director proved that he / she was not in a position to influence the conduct of the corporation in relation to its contravention of the Aboriginal Cultural Heritage Law or, if the director was in such a position, he or she used all due diligence to prevent the contravention by the corporation.
Directors and corporate officers should be aware that they can also be criminally liable as an accessory to an offence committed by a corporation under the Aboriginal Cultural Heritage Laws (or any offences under the Wildlife Act).
Steps companies can take to minimise the risk of breaching Aboriginal Cultural Heritage Laws
 That is, beyond what would normally apply to a person who had directly committed, or had been an ordinary accessory, to the offence.
 Exemptions from these prohibitions, and defences to committing an offence under the Aboriginal Cultural Heritage Laws, apply.
This article is not legal advice. It is intended to provide commentary and general information only. Access to this article does not entitle you to rely on it as legal advice. You should obtain formal legal advice specific to your own situation. Please contact us if you require advice on matters covered by this article.