A defence every director would reach for, comprehensively rejected
Three directors of Samnic Forest Management Ltd have lost their High Court appeal and now face personal liability for cleaning up slash and debris left on a 940-hectare block near Tolaga Bay, about 45 kilometres north of Gisborne. Richard Hayes, Scott Funnell and Gavin Fortune are looking at potential bankruptcy and the loss of their family homes.
Their defence will sound familiar to almost any director sitting on a company that operates on sensitive land. They argued there was no evidence of personal acts justifying the orders, that the enforcement order came two years after Samnic had left the forest, that current problems could be pinned on the landowner’s failure to maintain the site, and that they were paid only limited director’s fees. Their lawyer called the orders “completely unfair”.
Justice Andrew Becroft rejected all nine grounds of appeal. His line on the pay argument is the one every board should read twice: “Whether the directors were paid minimally or handsomely, they had a responsibility to ensure that Samnic complied with the RMA,” he ruled. The fee is irrelevant to the obligation. He added that the RMA “quite clearly sets out that enforcement orders can be made against any ‘person'” and that “there is nothing especially unreasonable about imposing personal liability on them.”
This is not a forestry story
The mainstream coverage frames this as a forestry problem. It is not. It is a director liability problem, and it reaches across every sector where companies hold resource consents, operate on environmentally sensitive land, or hire contractors to manage compliance on their behalf. Construction, agriculture, mining, infrastructure and property development all fit that description.
The Institute of Directors saw this coming. Its guidance, published in May 2026 just weeks before the ruling, warns that enforcement orders impose positive obligations on directors personally, separate from their companies. The critical line for anyone who thinks a services contract insulates them: “Contracting out will not protect against RMA liability.”
The legal mechanics make this deliberate rather than accidental. Under Section 314 of the RMA, enforcement orders can require persons to “avoid, remedy, or mitigate” environmental effects caused by or on behalf of that person. If orders could only target empty corporate shells, there would be no effective remedy. Personal director liability is what gives the enforcement regime teeth.
A decade in the making
The Samnic case has been building since compliance issues were first identified in March 2017, with the forest harvested between 2015 and 2022. In 2024, Samnic Forest Management and Forest Management Solutions pleaded guilty to breaching the RMA, including building an unconsented 400-metre road on highly erodible land, and were fined a combined $126,000.
The Environment Court’s personal enforcement order followed in July 2025. In September 2025, the High Court refused to stay the orders pending appeal, meaning they stayed enforceable throughout. The risk assessment plan alone was estimated at around $30,000, and the court noted the directors had provided no evidence of the strained finances they now cite.
The stakes just rose in a live political fight
The ruling lands in the middle of an active debate. As of January 2026, the forestry industry was lobbying the government to remove legal accountability when slash escapes during storms, arguing severe weather makes escape inevitable. Not everyone buys that. Dr Mark Bloomberg, an adjunct senior fellow at Canterbury University’s School of Forestry, has argued the largest clear-fells “should have seen it coming” and pushed for smaller coupes on erodible land.
Even if the industry wins that argument, the Samnic precedent goes further. It establishes that directors cannot walk off a site, cite a services contract, and treat their obligations as discharged.
What boards should actually do
The IoD’s practical takeaway runs to five steps: understand the company’s regulated activities, keep an eye on environmental compliance even when work is contracted out, take all reasonable steps to prevent offences, cooperate with regulators, and review insurance against RMA exposure.
That last point is the sleeper. Many directors have never checked whether their D&O cover extends to RMA enforcement orders and clean-up costs, and the penalties are not trivial. Beyond civil orders, Section 340 allows criminal prosecution with fines up to $300,000 or two years imprisonment for individuals. With the Samnic directors now staring at bankruptcy over a site they left years ago, any gap in that cover is no longer academic. It is existential.
Sources
- Forestry directors face bankruptcy and loss of homes after losing appeal (2026-07-02)
- Gisborne forestry companies fined $126,000 for breaching consent conditions (2024-08-02)
- Directors in the firing line for environmental non-compliance (2026-05-28)
- Forestry: Gisborne District v. Samnic Forest Management (2025-09)
- Storms make forestry slash inevitable, so who’s legally responsible? (2026-01-27)
- Tolaga Bay forest directors held responsible for compliance issues
- Limited liability is not immunity: director and officer accountability in recent New Zealand cases
- Storms, forestry slash: Where does legal responsibility lie?