Salient reminder of directors' liability - forestry directors held personally liable for clean-up costs

The High Court has issued a judgment which serves a reminder to company directors of the risks and liabilities they assume when accepting a directorship position.

In Samnic Forest Management Ltd v Gisborne District Council [2026] NZHC 1880, the High Court upheld the issue of enforcement orders under the Resource Management Act 1991 (“RMA”) against the directors of a forestry company and a land holding company compelling the remediation of a forestry block following the unauthorised discharge of slash, harvesting debris and felled trees.

The High Court further confirmed that the joint and several liability basis of the enforcement order was appropriate, meaning that each director, alongside their respective companies, is personally responsible for the full costs of the remediation measures required.  

Key takeaways  

• Under the RMA, enforcement orders can be made against company directors in their personal capacity. This does not, in principle, amount to an illegitimate lifting of the “corporate veil”. Directors have a responsibility for ensuring their company complies with the RMA. While the appropriateness of enforcement orders against company directors will turn on the relevant circumstances, in this case, non-compliance by the companies with the RMA had been established as a matter of fact, and accordingly, the making of enforcement orders against each director personally was justified. The Court further held that the amount paid to each director in fees is irrelevant to the question of liability.

  
  

• Although the Environment Court is able to apportion liability, this should not be the standard position. It would turn cases into civil proceedings, which goes beyond the intended role of the Environment Court. Sometimes, the RMA’s purpose is better served through joint and several liability to achieve remediation and mitigation, rather than delaying relief to determine the extent of parties’ liability. If parties cannot privately resolve questions of contribution, they are able to pursue separate civil proceedings.

Context

The High Court’s decision relates to the management of the 940ha Waingaromia Forest (“Forest”) near Gisborne. The Forest lies mostly in areas identified as erodible land.

The Forest was progressively harvested between 2015 and 2022. Woodlett Investments Ltd (“Woodlett”), as landowner, contracted Samnic Forest Management Ltd (“Samnic”) to undertake the harvesting. Following the harvest of a section of Forest, Samnic would hand back the land to Woodlett for replanting and maintenance.

Samnic relied on a Foresty Right granted by Woodlett for access to the land. Samnic itself also held various resource consents for harvesting and associated earthworks. Notably, no resource consents authorised the discharge of contaminants into water, or onto land where contaminants could enter water.

Environment Court finding

The Environment Court held that the Forest posed a risk to the environment, and that making enforcement orders was necessary. The bigger question was against which party/parties the enforcement orders should be made.

Samnic’s position was that it had done its job in completing the harvesting, and when it handed the Forest back to Woodlett in 2022, the Forest complied with the resource consents. Woodlett argued that Samnic did not leave the Forest in a state that was compliant with the resource consents, which meant Woodlett was not able to exercise its maintenance responsibilities.

The Environment Court held that both Samnic and Woodlet were accountable, and made enforcement orders against each of them. The Environment Court further considered that enforcement orders should be made against each companies’ directors in their personal capacity, finding that each of Samnic’s directors had roles in the company’s operations and were involved in the decisions made regarding the Forest, and Woodlett’s sole director was, or ought to have been, aware of what was happening at the Forest.

High Court appeal

Enforcement orders against directors personally

The High Court was satisfied that section 314 of the RMA allows enforcement orders to be made against “any person”, which includes directors. The High Court framed Samnic’s argument as essentially being a challenge to the rationality of identifying Samnic’s directors as culpable parties that ought to comply with enforcement orders, where there were other individuals/parties that were either similarly liable, or more culpable, including other companies within the joint venture associated with the Forestry Right.

The High Court found there was logic to the Environment Court making orders against the directors. It cited Samnic’s purpose on incorporation to manage the harvest of the Forest, and that it was Samnic who operated under the Forestry Right to access the land. It referenced that Samnic’s directors had willingly assumed their directorship roles, and were actively involved in overseeing the harvesting. As directors, they had the responsibility to ensure that Samnic complied with its resource consents and with the RMA. The amount paid to each director in directors fees was irrelevant. Further, non-compliance, as a matter of fact, was established to the Environment Court’s satisfaction. As such, the High Court held there was nothing unreasonable about imposing personal liability on the directors.

The High Court also rejected Samnic’s argument that making enforcement orders against Samnic’s directors had illegitimately pierced the “corporate veil”, and that if the Court was going to do this, then it needed to look the whole way through the veil to find that the joint venture for which Samnic was acting as agent also liable. The High Court noted that lifting the corporate veil usually means to expose shareholders to liability for obligations owed by the company, and that the corporate veil is not designed to protect directors where a cause of action is made out against them in a personal capacity as directors.

Apportioning liability in RMA proceedings

Woodlett argued that the Environment Court should have appropriated liability between the respective parties based on their contribution to the compliance issues, instead of imposing the enforcement orders on a joint and several basis.

The High Court accepted that the Environment Court can apportion liability in appropriate circumstances, but did not consider there is an imperative to do this in every case. It considered it often better if the parties can co-operate to ensure enforcement orders are complied with, as they are best placed to understand the nuances of the causation responsibilities. It considered a standard practice of apportionment by the Environment Court would turn cases into civil liability hearings, which would go beyond the primary role of a specialist Environment Court.