December 2002

Corporate Liability And Liability For Agents

Under the Resource Management Act 1991

There are a number of sections in the Resource Management Act 1991 ("the RMA") which deal with offences under that Act. These offences can be generically described as offences that interfere or harm the environment.

Depending on the offence, the maximum fine upon conviction is $200,000.00. There is also provision for a further fine to be imposed of up to $10,000.00 for every day which the offence continues. In a case where the offender has made commercial gain from the offending the Court can impose an additional penalty of up to three times the value of any commercial gain resulting from the offending. For particularly serious breaches of the RMA the Court may impose a prison sentence of up to two years or impose a sentence of community work. 

A breach of the RMA can have serious implications for Corporate clients and their directors.

Agents and Employees

When agents and employees commit offences against the RMA, their principals and employers are liable as if they had personally committed the offences regardless of whether the agent or employee is convicted. To sustain a conviction of a principal or employer, two essential elements must be made out: namely that an offence has been committed, and that the offence was committed by the principal’s agent or employee.

Due Diligence

A defence of due diligence is provided. In the case of a body corporate, it must be proven that neither the directors nor any person involved in management knew or ought to have known of the offence or that the body corporate took all reasonable steps to prevent the commission of the offence. In all cases, the Defendant company must additionally prove that all reasonable steps were taken to remedy the effects of the offence.

Personal Liability

Where a body corporate has been convicted of an offence the directors and persons "concerned in the management" of the company will also be liable if it is established that the offence took place with the particular person’s permission, authority or consent, or that he or she knew or could reasonably be expected to have known of the offence and failed to take all reasonable steps to stop it.

The RMA effectively lifts the "corporate veil" in certain circumstances and makes directors personally liable.