Environment Protection Authority v Ableway Waste Management Pty Ltd

[2005] NSWLEC 469

Land and Environment Court

of New South Wales

CITATION:

Environment Protection Authority v Ableway Waste Management Pty Limited & Anor [2005] NSWLEC 469

PARTIES:

APPLICANT:
Environment Protection Authority

FIRST RESPONDENT:
Ableway Waste Management Pty Limited

SECOND RESPONDENT:
Charles Xhiat Song Tsaur

FILE NUMBER(S):

40544 of 2004

CORAM:

Lloyd J

KEY ISSUES:

Contempt :- contempt of court - plea of guilty - penalty - purpose of - relevant considerations - impecunious defendant - effect of bankruptcy on fine - contempt of court amounts to "an offence against a law" within the meaning of s 82(3) of the Bankruptcy Act 1966 (Cth) - mitigating factors

Fines and Penalties:- Fines Act 1996 (NSW) applies to penalties for contempt of court

Bankruptcy:- bankrupt fined - whether fine provable in the bankruptcy

Words and Phrases:- "offence" - "a law" - "offence against a law"

LEGISLATION CITED:

Bankruptcy Act 1966 (Cth) s 60 and s 82(3)
Crimes (Sentencing Procedure) Act 1999 (NSW) s 21A
Fines Act 1996 (NSW) s 4 and s 6
Land and Environment Court Act 1979 s 67(d)
Protection of the Environment Operations Act 1997 (NSW) s 252

CASES CITED:

Attorney General (NSW) v Whiley (1993) 31 NSWLR 314;
Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98;
Australian Winch and Haulage Co Pty Ltd v State Debt Recovery Office [2005] NSWSC 423;
Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357;
Camilleri’s Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683;
Capral Aluminium Ltd v WorkCover Authority (NSW) (Inspector Mayo-Ramsay) (2000) 49 NSWLR 61;
Environment Protection Authority v Port Kembla Copper Pty Ltd [2001] NSWLEC 124;
Environment Protection Authority v Richardson; Environment Protection Authority v Behnfeld [2002] NSWLEC 205;
Environment Protection Authority v Thaler [2005] NSWLEC 109;
Fletcher Construction Australia Limited v WorkCover Authority (NSW) (Inspector Fisher) (1999) 91 IR 66 at 77-81;
Hannah v Wonar Pty Ltd (1992) 34 AILR 337;
Lawrenson Diecasting Pty Limited v WorkCover Authority (NSW) (Inspector Ch'ng) (1999) 90 IR 464;
Marshall v State of Western Australia (1998) 84 FCR 363;
Mathers v The Commonwealth (2004) 134 FCR 135;
Palechowski v Registrar of the Court of Appeal (1999) 198 CLR 435;
Principal Registrar of the Supreme Court (NSW) v Jando (2001) 53 NSWLR 527;
R v Morgan (2003) 57 NSWLR 533;
R v Thomson; R v Houlton (2000) 49 NSWLR 383;
Registrar, Court of Appeal (NSW) v Maniam (No 2) (1992) 26 NSWLR 309;
Smith v The Queen (1991) 25 NSWLR 1;
State of Victoria v Mansfield (2003) 130 FCL 376, (2003) 199 ALR 395;
Witham v Holloway (1995) 183 CLR 525;
Wood v Staunton (No.5) (1996) ACrimR 138;
WorkCover Authority (NSW) (Inspector Kelsey) v University of Sydney [1977] NSWIRComm 44

DATES OF HEARING:

26/06/2005 and 21/07/2005

 
DATE OF JUDGMENT: 

09/22/2005

LEGAL REPRESENTATIVES:

APPLICANT:
J M Jagot (barrister)
SOLICITORS:
Stephen Garrett

FIRST RESPONDENT:
N/A

SECOND RESPONDENT:
G A Bolger (barrister)
SOLICITORS:
N/A

JUDGMENT:

- 21 -

IN THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Lloyd J

Thursday, 22 September 2005

LEC No. 40544 of 2004

ENVIRONMENT PROTECTION AUTHORITY v ABLEWAY WASTE MANAGEMENT PTY LIMITED & ANOR [2005] NSWLEC 469

JUDGMENT

1 The respondents, Ableway Waste Management Pty Limited (“Ableway”), and Charles Xhiat Song Tsaur, are charged with contempt of court for having failed to comply with orders made by the Court on 24 June 2004 by Bignold J. The first respondent, Ableway, although duly served, has not appeared. The second respondent, Mr Tsaur, has appeared, represented by Mr C A Bolger on a pro bono basis and admits the contempt.

2 The question for determination is what should be the penalty, if any, to be imposed in circumstances where Ableway is insolvent and Mr Tsaur is a bankrupt and neither has the capacity to purge the contempt.

3 The Court has been greatly assisted by a statement of agreed facts. This has been supplemented by the affidavit of Mr G Cooper on behalf of the Environment Protection Authority (the “EPA”); and by two affidavits of Mr Tsaur prepared over the course of a number of meetings with his solicitors also acting for him on a pro bono basis. Mr Tsaur also gave some additional oral evidence.

The relevant facts

4 At the time of the Court’s orders, Ableway held an environment protection licence from the EPA which permitted the use of premises known as Nos. 37-55 Lee Holm Road, St Marys, as a waste facility on condition that the waste - in this case used tyres - was to be stored in accordance with the New South Wales Fire Brigade Guidelines for Bulk Storage of Rubber Tyres (the “NSW FB Guidelines”) and that no more than 250 tonnes of tyres be stored on the premises. Mr Tsaur is one of the two directors of Ableway and is and was effectively responsible for the day-to-day operations of that company. The NSW FB Guidelines contain limits on the size of the tyre piles, the separation of the tyre piles from each other and from the boundary of the premises. The purpose of the guidelines is to ensure that tyres are stored in a manner that reduces the risk of fire. Tyre fires present a risk to the environment because they burn at very high temperatures, creating difficulties in approaching the tyres for the purpose of extinguishing the fire. The fires can continue to burn for many days or even weeks, emitting very dense smoke; and large quantities of water are required to extinguish the fires depending on the nature and quantity of waste which in turn creates large quantities of contaminated liquid run-off.

5 On 12 May 2004, the EPA commenced proceedings in Class 4 of the Court’s jurisdiction seeking orders under s 252 of the Protection of the Environment Operations Act 1997 (the “POEO Act”). At the time of commencement of the proceedings, tyres were being stored at the premises in contravention of the conditions of the licence.

6 On 22 June 2004, Bignold J made orders by consent which required the respondents to comply with the conditions of the licence and, in particular, to reduce the tyre stockpiles to no more than 60 square metres at any one time; to reduce stack heights so they would be no greater than 3.7 metres above the ground; to create a gap between each stockpile so there would be a minimum of 3 metres between the base of each stockpile; to increase the setback of the stockpiles from the boundaries of the premises; and to provide fire hoses adequate to service the tyre stockpiles at the premises at all times (inter alia). A timetable was fixed by the orders for bringing the premises into conformity with the conditions of the licence.

7 On 22 July 2004, a copy of the orders, duly endorsed in accordance with Pt 42, r 8 of the Supreme Court Rules 1970, was served upon each respondent.

8 As at the date of the Court’s orders at least 650 tonnes of tyres were stored on the premises, which far exceeded the maximum amount of tyres allowed by the licence of 250 tonnes; the size of the largest tyre stockpile was 1189 square metres, compared with the maximum size permitted of 60 square metres; and tyres were stored in piles of up to 5.7 metres in height, whereas the maximum tyre pile height permitted was 3.7 metres.

9 The respondents have not complied with any of the Court’s orders, in particular those which required the removal of certain quantities of tyres from the premises by nominated dates set out in the orders. It seems that only about 112 tonnes of tyres have been removed from the premises. Moreover, the EPA’s costs of the proceedings, which the respondents were ordered to pay, have not been paid.

10 On 13 January 2005, the present notice of motion for contempt, statement of charge and supporting affidavits were filed. As at 15 June 2005 the largest tyre pile was about 1937 square metres, compared with the maximum permissible of 60 square metres; the total tonnage of tyres on the premises exceeded 550 tonnes, compared with the maximum permissible tonnage of 250 tonnes; the distance of tyres from the boundaries of the property was variously 9.8 metres, 6 metres and, in one case, straddling the boundary, compared to the minimum distance required of 18 metres from the boundary; some piles of tyres were up to 3.9 metres in height, compared with the maximum permissible height of 3.7 metres; and some tyres were not stored in specific piles with debris between the piles and machinery being located in front of them, reducing access to the tyre stockpiles in the event of a fire.

11 According to the affidavit of Mr G Cooper dated 9 May 2005, a senior project officer of the EPA, the used tyre waste industry is a small component of the New South Wales waste industry and comprises relatively few members. In his opinion, industry participants in used tyre collection, storage, processing, recycling and disposal are very familiar with other participants, their premises and activities. Mr Cooper believes that Ableway is appropriately characterised as a used tyre collector. In his experience, as the revenue of used tyre disposal businesses is obtained upon receipt of tyres, to be then followed by the processing, transport and disposal of tyres, there is an incentive for unscrupulous semi-illegal operators to obtain the revenue by accepting tyres and to then neglect to properly deal with them. He notes that strict regulation by the EPA ensures a level playing field for all lawful operators in the industry and discourages the undercutting of the prices offered by lawful operators for the receipt of tyres, which reflects the appropriate cost of proper disposal. Mr Cooper states further that regulation of the industry is necessary to restrict the accumulation of large volumes of tyres in order to minimise the risk of an uncontrolled fire, and the associated environmental effects, and also to avoid the cost to taxpayers of removing abandoned tyre waste.

12 According to Mr Cooper, over the last six years there have been two cases where used tyres have been abandoned after it was claimed that the tyres would be processed before recovery or disposal. In one case, the cost to the New South Wales government and landowners to undertake the clean up was around $100,000 and was the subject of criminal proceedings in the Court: Environment Protection Authority v Richardson; Environment Protection Authority v Behnfeld [2002] NSWLEC 205.

The evidence of Mr Tsaur

13 As noted above, Mr Tsaur relies upon two affidavits and he also gave some oral evidence. Mr Tsaur emigrated with his wife and family from Taiwan in about 1987. When he first arrived in Australia he worked for about six months as a general hand for his sister in her restaurant in the City. In about late 1987 he started a business importing health food products and cosmetics from Taiwan. He continued to do that until about 1993 when he became involved in the tyre recycling industry. He and a colleague set up a company to collect used tyres and to separate the contents of oil, gas, steel wire and carbon components. Ableway was incorporated in or about 1995 as a non-trading company. Mr Tsaur and his wife are the shareholders of Ableway. On legal and financial advice, Ableway was set up as a trustee for the Tsaur Family Trust. Ableway owned a property at No. 95 Oakhill Drive, Castle Hill, which was the family home until it was sold in November 2003.

14 On 20 December 1999, Ableway entered into rental agreement with Hallinan’s Haulage and Plant Hire (“Hallinan’s”) for premises from which the tyre recycling business could operate. In February 2000, Ableway officially started its business from those premises, being Nos. 37-55 Lee Holm Road, St Marys. In April 2001, however, Ableway’s large shredder malfunctioned due a problem with its gearbox. The shredder was repaired by early October 2001, by which time Ableway had lost between $100,000 and $200,000 in profits as the result of the shredder not being operational. In late September 2002, the shredding machine broke down again, this time due to a problem with the machine’s shaft. Despite efforts to shred tyres with a smaller shredding machine during the time when the large shredding machine was being repaired, tyre waste built up at the premises. The large shredder was repaired and operational again by February 2003. By July 2003 Mr Tsaur was unable to repay the mortgage moneys on the family home and was in arrears with the rent to Hallinan’s. In November 2003, the family home was sold to repay a loan and since then Mr Tsaur and his family have been living in rented premises. As a result of the sale the loan moneys owning, $475,299.67, was repaid and a cheque for $113,782.53 was made to Ableway. Most of this money went into the business.

15 On 24 June 2004, Mr Tsaur attended the Court when the consent orders were made by Bignold J. He understood what the consent orders required him to do and he thought he would be able to comply with the orders, because he had a forklift available to move tyres and remove tyre waste from the boundaries of the premises. However, on 28 June 2004, the loan company put up the forklift for auction as the repayments on it were no longer able to be met. Not having a forklift meant it was difficult for Mr Tsaur to remove the tyres from the boundaries of the premises to the distances set out in the consent orders. Further, he was then no longer able to transport any shredded material to trucks for disposal. Ableway still owes GE Commercial the sum of $16,599.20 in relation to the loan for the forklift.

16 In or about July 2004, both of the Ableway’s trucks were repossessed by Bendigo Bank because of Ableway’s failure to meet the repayments on the purchase of those trucks. In June or July 2004, Ableway’s company car was also repossessed because of Ableway’s failure to meet the repayments on the car loan. In March 2005, Mr Tsaur received a letter from Bendigo Bank demanding payment of $52,397.73. This amount is still owing on the purchase agreement for the trucks even though the trucks have been sold. Mr Tsaur states that Bendigo Bank commenced bankruptcy proceedings against him in relation to that debt.

17 In order to comply with the Court’s orders, Mr Tsaur decided that hiring a forklift was necessary. In September 2004, he hired one, but when he received it, found that it was too old to do the job and he had no choice but to return it. In August and September 2004, he managed to clear about 63 tonnes of tyre waste from the premises using the capital he had available. In late February 2005, Mr Tsaur hired a bobcat so that he could carry out the work of loading empty containers with shredded tyres and managed to remove around other 30 tonnes of tyres waste at that time.

18 Mr Tsaur does not presently make any income from the business. He lives in rented premises with his wife, three children and his parents. His wife is currently on Centrelink benefits, but Mr Tsaur says that he is too ashamed to apply for government assistance himself. After the family home was sold in November 2003 he received $2,558.65 from Ableway paid to him by the Tsaur Family Trust. This was the residue from the sale of the family home after repayment of the mortgage and the payment to Ableway. His wife owns a Toyota Avalon, which is about six years old, and she owes about $11,000 on the car loan. Mr Tsaur’s income for the financial year ending June 2004 was between $3,000 and $5,000. He estimates his income for the financial year ending June 2005 to be less than $5,000.

19 Ableway’s insolvency means that it does not have the financial resources to complete the removal of tyres and waste from the premises in accordance with the consent orders. Mr Tsaur personally does not have any financial resources available to complete the removal of tyres and waste from the premises in accordance with the consent orders. Once Ableway’s forklift was repossessed on 28 June 2004, Mr Tsaur was unable to physically move the tyre waste to comply with the Court’s orders. On 10 June 2005, as requested by the EPA, Mr Tsaur signed an application for the surrender of Ableway’s environment protection licence.

20 Mr Tsaur has formally apologised to the Court, both personally and on behalf of Ableway, for not complying with the consent orders. He states that the non-compliance was not intentional.

21 Mr Tsaur is aged 49 and in March 2005 was diagnosed with Bells Palsy. He was advised by his doctor to rest. He has been told not to do hard work and that it will take a long time for him to get back to normal. According to Mr Tsaur’s medical practitioner, the condition is aggravated by heavy lifting and exposure to wind, sun and dust; he also suffers from “easy fatiguibility”; he is not fit for lifting objects more than 5 kilograms in weight; and he must avoid extremes in temperature and weather.

22 Mr Tsaur’s parents live with the family in the rented home. They are both retired and receive the aged pension. Mr Tsaur’s three children live at home and are dependent on Mr Tsaur and his wife for financial support, although his son, aged 21, has some casual work at a call centre and his eldest daughter, aged 19, has casual work at Coles. Mr Tsaur’s youngest daughter is 9 years old.

23 According to Ableway’s accountant, the company is hopelessly insolvent and the only realistic call is to place the company into liquidation. A letter from Mr K A Shirlaw, a chartered accountant, dated 20 May 2005 is in evidence and, as to the company’s financial position for year ended 30 June 2003, states that the company incurred a net trading loss of $213,985, and for the period from 1 July 2003 to 30 June 2004 a trading loss in excess of that figure would have been incurred.

24 As to Mr Tsaur’s personal financial position, Mr Shirlaw states as follows:

Bankruptcy proceedings have been brought against Mr Tsaur by Atlas Copco Australia Pty Ltd in relation to the hire of a generator. This equipment was supplied to the company however Mr Tsaur guaranteed the payments to Atlas Copco. He had also guaranteed numerous other creditors of the company many of whom are taking action against him personally. These include Bendigo Bank who repossessed two trucks, and the company’s bankers who provided an overdraft to the company, which was supported by the personal guarantee of Mr Tsaur. Curlis Bros containers have filed a statement of claim against Mr Tsaur for the sum of $51,245.
The debtor lives in rented premises at Kellyville with his wife and three children, two of whom are working. He sold his house in Castle Hill in November 2003.
It has become apparent from my discussions with Mr Tsaur and from a review of the financial records of his company, that he is personally insolvent. In those circumstances my advice to him is that he should no incur credit and that an appropriate course of action would be to file voluntarily for bankruptcy.

25 It seems that Mr Tsaur accepted Mr Shirlaw’s advice and has completed an application for voluntary bankruptcy. That petition for bankruptcy was apparently filed on 15 June 2005 and Mr Tsaur became a bankrupt upon its acceptance by the Official Receiver on that day.

Punishment for contempt

26 The Court’s power to punish persons guilty of contempt, or disobedience to any order made by the court, is the same as that of the Supreme Court: Land and Environment Court Act 1979 (the “Court Act”), s 67(d).

27 The underlying purpose of the exercise of the power of the court to punish for contempt is to protect the effective administration of justice by demonstrating that the court’s order will be enforced: Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 106–107. In Mudginberri the High Court referred to G Borrie and N Lowe, Law of Contempt, (2nd ed, Butterworths, London, 1983 at p 3):

If a court lacked the means to enforce its orders, if its orders could be disobeyed with impunity, not only would individual litigants suffer, the whole administration of justice would be brought into disrepute.

28 The function of punishment for contempt serves two purposes: (a) the enforcement of the process and orders of the court, and (b) punishment as vindication of the authority of the court: Mudginberri at 108. Thus, in addition to its coercive purpose, punishment also serves the purposes of deterring both the contemnor, and others who might be so minded, from flouting the authority of the court. Non-compliance with an order or judgment of a court necessarily constitutes an interference with the administration of justice: Witham v Holloway (1995) 183 CLR 525 at 533-534. Any punishment must, therefore, show that obedience to a court’s order is important and should reflect its gravity.

29 Finally, on the question of the nature and purpose of a penalty for contempt, it is worth quoting the judgment of Kirby J in Palechowski v Registrar of the Court of Appeal (1999) 198 CLR 435 at [149]:

Unless courts are seen to respond firmly to deliberate defiance of their orders, their effectiveness in the authoritative determination of disputes of law would be undermined. And if they were not effective, "serious and lasting damage to the fabric of the law may result" [ Registrar, Court of Appeal v Maniam [No 2] (1992) 26 NSWLR 309 at 318; R v Sergiou (1983) 5 Cr App R (S) 227]. Obviously, the culpability of the contemnor is relevant to the order which must be made [ Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98] . The contemnor must then be punished in an emphatic way. He or she must be deterred effectively from any temptation to re-offend. However, the focus of attention is not solely on the contemnor. It is also addressed to the community at large and to any others who might consider acting in a similar manner.

30 In Registrar, Court of Appeal (NSW) v Maniam (No. 2) (1992) 26 NSWLR 309, Kirby P (Hope A-JA concurring) in an important passage said (at 313-316):

A conviction of contempt of court is a conviction of an offence, criminal in nature. Punishment of the convicted contemnor must therefore take into account the considerations normally applicable to the punishment of crime and apt to uphold the purpose of this jurisdiction, viz, the undisturbed and orderly administration of justice in the courts according to law. Thus, in determining the punishment which is apt to the circumstances which have led to a conviction of contempt, it is appropriate to bear in mind the purposes of punishing the contemnor; deterring the contemnor and others in the future from committing like contempts; and denouncing the conduct concerned in an approximately emphatic way: see Director of Public Prosecutions v John Fairfax & Sons Ltd (1987) 8 NSWLR 732 at 741. In this jurisdiction, contempt is a common law offence for which there is therefore no maximum penalty in this Court: R v Dunbabin; Ex parte Williams (1935) 53 CLR 434 at 442. Any limits which are imposed upon the Court's powers derive from the purposes stated above and the limitations expressed in the Tenth Article of the Bill of Rights 1688 which restrains the imposition of cruel or unusual punishments or "excessive fines": see Smith v The Queen (1991) 25 NSWLR 1, noted (1991) 65 ALJ 695.

31 Although a conviction of contempt is a conviction for a common law offence, Talbot J held in Environment Protection Authority v Thaler [2005] NSWLEC 109 that the Fines Act 1996 (NSW) (the “Fines Act”) does not apply to a monetary penalty imposed by the court for contempt. Judicial comity would normally require that I should accept this decision as correct, unless convinced that it was wrong: Michael Realty Pty Ltd v Carr [1975] NSWLR 812 at 820. Talbot J gave no reasons for his view that the Fines Act does not apply. A “fine” is defined in s 4 of the Act, however, as “(a) any monetary penalty imposed by a court for an offence, …”: In view of the fact that the Court of Appeal has held that a conviction of contempt of court is a conviction for a common law offence, criminal in nature, it seems clear that a monetary penalty imposed by the court for such an offence is a “fine” within the meaning of the Fines Act. Since Talbot J gave no reasons for the contrary conclusion, I am prepared to hold that the Fines Act applies.

The impecuniosity of the contemnors

32 Both Ablelway and Mr Tsaur are insolvent. The have no means to carry out the Court’s orders, let alone pay any monetary penalty. But as Kirby J said in Pelechowski (at par [149] quoted above) the focus of attention must not be solely on the contemnor, but also be addressed to the community at large and to deter others who might consider acting in a similar way. The contemnors in the present case must be punished in an emphatic way.

33 In Smith v The Queen (1991) 25 NSWLR 1 the question was the appropriateness of a fine of $60,000 imposed on a contemnor who was already imprisoned for another offence, who had no assets and whose sole source of income was $12 a week for work in goal. The alternative penalty of an additional gaol sentence would have served no purpose, since the contemnor was already serving a life sentence. In holding that a fine of $60,000 was appropriate, Mahoney JA said (at 23):

A punishment must be both appropriate to the offence and be seen publicly to be such. Given Mr Smith's conviction for murder and his life sentence, a further sentence will have no great effect on him: that, no doubt, is why he did what he did. It is the significance to others of the present punishment which has a particular importance.
…
But it remains important that what is done to him should both mark, clearly and emphatically the community’s view of his offence and (if it may) deter other possible offenders.

34 Mahoney JA continued (at 24):

If the offence is to be marked by a punishment and if imprisonment is inappropriate, then fine remains the appropriate punishment. I shall assume, without deciding, that in the end the fine may not be able to be collected. But there remains the effect of it on the others.

(Meagher JA, giving separate reasons, concurred.)

The effect of the bankruptcy on any fine

35 Mr Tsaur became a bankrupt on 15 June 2005 when his debtor’s petition was accepted by the Official Receiver. This raises a question as to whether a fine or monetary penalty impose by the Court, if any, becomes a provable debt in the bankruptcy. If so, then the burden of the fine would be borne not by Mr Tsaur but by his creditors, whose dividend would be thereby diminished. If it is not a provable debt in the bankruptcy then Mr Tsaur would continue to be personally liable for any such fine.

36 Section 82 of the Bankruptcy Act 1966 (Cth) relevantly states:

(1) Subject to this Division, all debts and liabilities, present or future, certain or contingent, to which a bankrupt was subject at the date of the bankruptcy, or to which he or she may become subject before his or her discharge by reason of an obligation incurred before the date of the bankruptcy, are provable in his or her bankruptcy.
…
(3) Penalties or fines imposed by a court in respect of an offence against a law, whether a law of the Commonwealth or not, are not provable in bankruptcy.

37 Thus, the Court must determine whether contempt of court is “an offence” against “a law”.

38 I have noted in par [30] above the statement by Kirby J (Hope A-JA concurring) in Maniam(No. 2) that a conviction of contempt is a “conviction of an offence, criminal in nature” and that contempt is “a common law offence” (at 314).

39 In Marshall v State of Western Australia (1998) 84 FCR 363, a Federal Court Judicial Registrar found that a fine imposed for a breach of the Occupational Health and Safety Act 1984 (WA) was not a provable debt as it fell within the exception provided by s 82(3) of the Bankruptcy Act. However the question of whether the breach of the Occupational Health and Safety Act 1984 (WA) was “an offence against a law” was not specifically considered.

40 In State of Victoria v Mansfield (2003) 130 FCR 376, (2003) 199 ALR 395, a Full Bench of the Federal Court considered whether parking infringement penalties were provable debts within the meaning of s 82(1) of the Bankruptcy Act. Specifically the Full Court considered the critical question: “Are relevant liabilities properly characterised as penalties or fines imposed by a court in respect of an offence against a law of the State?” (at 399[16]). The Full Court then considered the policy behind s 82(3) of the Bankruptcy Act and said (at [33]):

Section 82(3) is framed on the premise, first, that a penalty or fine in respect of an offence is imposed by a court to meet the public interest in punishing the offender for his or her offence; and, secondly, that the interests of ordinary creditors should not be adversely affected by the criminal or quasi-criminal conduct of the bankrupt. (If fines or penalties were to be treated as provable debts, then the funds available to ordinary creditors would be diminished: see M Murray, "Fines and Penalties - Provable in Bankruptcy?" (2000) 10(3) New Directions in Bankruptcy 13, 13-14.)

41 In Mansfield the Full Court found that the amount payable pursuant to an enforcement order under Sch 7 of the Magistrates’ Court Act1989 (Vic) had the characteristics of a penalty or fine imposed by a court in respect of an offence against a law within the meaning of that provision. What was meant by the term “an offence against a law” in s 82(3) was not specifically considered.

42 In Mathers v The Commonwealth (2004) 134 FCR 135, Heerey J considered whether a penalty imposed under s 76 of the Trade Practices Act 1974 (Cth) for a contravention of Pt IV of that Act constituted a penalty for “an offence against a law” within the meaning of s 553B of the Corporations Act 2001 (Cth). Section 553B(1) of the Corporations Act is a provision in relevantly identical terms to s 82(3) of the Bankruptcy Act. Heerey J said (at 139-140):

In my opinion what must be construed is the expression "offence against a law" in s 553B(1) of the Corporations Act . The Trade Practices Act does not purport to say what is the construction to be put on language used in other legislation.
The word "offence" has no fixed technical meaning in the law: Kingswell v The Queen (1985) 159 CLR 264 at 276. A failure to do something prescribed by a statute may be described as an offence although Parliament does not impose a criminal sanction upon it, but a mere pecuniary sanction which is to be recovered as a civil debt: Brown v Allweather Mechanical Grouting Co [1954] 2 QB 443 at 447.
…
In my opinion, a contravention of s 46 or 47 of the Trade Practices Act is an "offence against a law" within the meaning of s 553B(1) of the Corporations Act . Plainly those provisions of the Trade Practices Act answer the description of "a law". A contravention of those sections is an "offence" against that law. …a contravention of s 46 or 47 has much in common with the public law aspects of criminal offences in the strict sense: …

43 The decision in Mansfield was followed and applied by Palmer J in Australian Winch and Haulage Co Pty Ltd v State Debt Recovery Office [2005] NSWSC 423. The question was whether a fine imposed by the Industrial Relations Commission of New South Wales on a company for a breach of the Occupational Health and Safety Act 1983 (NSW) was a provable debt against an insolvent company by virtue of the operation of s 553B(1) of the Corporations Act 2001 (Cth). Palmer J found that the fine was not a provable debt and in following Mansfield said (at [10]):

It will be seen at once that, if the argument of the Plaintiff in the present case is correct, the rationale behind s.553B(1) would be defeated utterly. The burden of the fine imposed by the Industrial Relations Commission on the Plaintiff will be borne, not by the Plaintiff and its shareholders, but by the Plaintiff's creditors, whose dividend from the Deed Fund will be diminished substantially. Further, if the Plaintiff’s argument is correct, the deterrent effect of a fine or penalty imposed upon a company by a court may be very easily negated by the simple expedient of entering into a Deed of Company Arrangement.

44 Having regard to each of the cases described above, I conclude that a finding of contempt of court amounts to “an offence” within the meaning of s 82(3) of the Bankruptcy Act. The next question is what is meant by the term “a law”.

45 Kirby J used the term “contempt law” in Maniam(No. 2) (at 313). According to Osborne’s Concise Law Dictionary (7th ed) a law is “an obligatory rule of conduct”. Jowitt’s Dictionary of English Law (2nd ed) defines “law” as “a rule of action to which men are obliged to make their conduct conformable; a command, enforced by some sanction, to acts or forbearance of a class”. A court’s orders declare rights and obligations in terms which are enforceable under sanction. If the term “a law” in s 82(3) of the Bankruptcy Act was limited to statute law, such construction would not sit comfortably with the general purpose and policy behind that section as explained by the Full Bench in Mansfield and by Palmer J in Australian Winch and Haulage.

46 Having regard to these considerations I conclude that a fine imposed by the Court for an offence of contempt of court is a fine for “an offence against a law” within the meaning of s 82(3) of the Bankruptcy Act. It would follow that any fine imposed by the Court would not be provable in the bankruptcy. Neither would the Federal Court be empowered to make orders under s 60 of the Bankruptcy Act or to place any limit on the cCurt to punish the contemnor for his contempt.

Penalty

47 The Crimes (Sentencing Procedure) Act 1999 (NSW) (the “Sentencing Procedure Act”) applies to the sentencing of contemnors: Attorney General (NSW) v Whiley (1993) 31 NSWLR 314; Principal Registrar of the Supreme Court (NSW) v Jando (2001) 53 NSWLR 527. Section 3A of that Act sets out the purposes for which a court may impose a sentence on an offender:

(a) to ensure that the offender is adequately punished for the offence,
(b) to prevent crime by deterring the offender and other persons from committing similar offences,
(c) to protect the community from the offender,
(d) to promote the rehabilitation of the offender,
(e) to make the offender accountable for his or her actions,
(f) to denounce the conduct of the offender,
(g) to recognise the harm done to the victim of the crime and the community.

48 Section 21A of the Act sets out the aggravating, mitigating and other factors which the court is to take into account in the course of sentencing an offender. I accept the submission of Mr Bolger on behalf of Mr Tsaur that none of the aggravating factors set out in s 21A(2) are relevant in this case. A number of the mitigating factors set out in s 21A(3) are, however, relevant: Mr Tsaur has no record of previous convictions, he is a person of otherwise good character, the offence was not part of a planned or organised criminal activity, he is unlikely to re-offend and has shown remorse and made a formal apology to the Court.

49 Mr Bolger submits that the only reason that Mr Tsaur is a party to the proceedings is because of his position as a director of Ableway together with the deeming provision of the POEO Act, which provides that a person who is a director of a corporation or who is concerned with the management of the corporation is taken to have contravened the same provision as the corporation – in this case it is the corporation which held the relevant licence: s 169. I do not accept that submission. Mr Tsaur was the person who was in effective control of the corporation and it was he who caused the corporation to fail to comply with the conditions of the licence.

50 Moreover, the holder of a licence under the pollution control legislation has a responsibility to ensure that its operations are carried out in accordance with the conditions of the licence: Environment Protection Authority v Port Kembla Copper Pty Ltd [2001] NSWLEC 124 at [23]-[25], per Pearlman J.

51 In addition to the aggravating factors and the mitigating factors set out in s 21A of the Sentencing Procedure Act, the court is required to take into consideration any other objective and subjective factors that affect the relative seriousness of the offence.

52 In Wood v Staunton (No. 5) (1996) ACrimR 138, Dunford J identified relevant factors of general application to the sentencing of persons for contempt (at 185). These factors were applied by Studdert J in Jando, namely:

(i) the seriousness of the contempt proved;

(ii) whether the contemnor was aware of the consequences to himself of what he did;

(iii) the reason for the contempt;

(iv) whether there has been any apology or public expression of contrition;

(v) general and personal deterrence;

(vi) denunciation of the contempt; and

(vii) the character and antecedents of the contemnor.

53 Some of these factors have been already considered above. By far the most important factor in all sentencing is the objective gravity or seriousness of the offence: Fletcher Construction Australia Limited v WorkCover Authority (NSW) (Inspector Fisher) (1999) 91 IR 66 at 77-81; Lawrenson Diecasting Pty Limited v WorkCover Authority (NSW) (Inspector Ch'ng) (1999) 90 IR 464 at 474. The actual or likely consequences of the offence may be taken into account in assessing the gravity of the offence: Hannah v Wonar Pty Ltd (1992) 34 AILR 337, WorkCover Authority (NSW) (Inspector Kelsey) v University of Sydney [1977] NSWIRComm 44 at [10]. The licence in the present case authorised the storing of 250 tonnes of tyres in accordance with clearly stated conditions. As at 15 June 2005 – and there has been no change since that date – storage of the tyres has been undoubtedly in breach of the Court’s orders.

54 The quantity, location and manner of storage of the tyres presented a very high risk of fire, which risk still remains. Any fire would have serious environmental consequences in that the ability of the fire service to control a fire may be impeded, any fire would require a significant commitment of specialist resources to control and there would be significant environmental consequences in terms of smoke and contaminated run-off.

55 Mr Tsaur advances a reason for the contempt. It is said that the financial difficulties experienced by the respondents, together with the repossession of the forklift, limited the ability of Mr Tsaur to move tyres around the premises. I do not, however, accept this as an excuse. When the tyres were brought into the premises they should have then been stored in the manner required by the conditions of the licence. For example, once it became apparent that the maximum permissible tonnage of tyres had been reached, then no more deliveries to the premises should have been allowed. Similarly, once a pile of tyres had reached a coverage of 60 square metres or a height of 3.7 metres, then no more tyres should have been added to the pile. And in no circumstances should tyres have been deposited within 18 metres of the boundaries. Mr Tsaur must have known that he was operating the business in breach of the conditions of the licence and continued to knowingly do so.

56 General deterrence and denunciation of the conduct concerned are major considerations in the imposition of penalties for contempt: Maniam (No. 2) at 314, Palechowski at 435; Smith v The Queen at 23, 24; Wood v Staunton at 138. In determining the punishment in the present case it is proper to bear in mind the potentially serious environmental consequences of the contempt: Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 at 359; Camilleri’s Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 701; Capral Aluminium Ltd v WorkCover Authority (NSW)(Inspector Mayo-Ramsay) (2000) 49 NSWLR 61. In particular, in Axer Mahoney JA said (at 359) that the quantum of a fine is not only to indicate the seriousness of such offences but also to deter those engaged in similar activities and to procure that they will take the precautions necessary to ensure that it does not occur. The penalty to be imposed must thus be sufficient to draw attention to the seriousness of the offence and to ensure that others are encouraged to comply with the law. In particular, it is critical that other operators in the tyre collection and recycling industry be given the message that they cannot take the “front end” income without escaping the consequences of proper and lawful disposal.

57 I accept the submission on behalf of Mr Tsaur that he is unlikely to re-offend, and hence there is little need for an element of specific deterrence. The fact remains, however, that the environmental problem that he has created is now left to someone else to rectify and at a considerable cost.

58 The final matter for consideration is that Mr Tsaur’s early plea of guilty to the charge of contempt must be taken into account: Sentencing Procedure Act, s 22. The timing of the plea is an important consideration and the appropriate discount on penalty depending upon the timing of the plea, inter alia, is in the range of 10 to 25 per cent: R v Thomson; R v Houlton (2000) 49 NSWLR 383; R v Morgan (2003) 57 NSWLR 533. In the present case I accept the submission that the plea of guilty was entered at the earliest opportunity. I am prepared to allow a full discount of 25 per cent on the penalty which would otherwise be imposed in this case.

59 As to the penalty itself, it is clear that Mr Tsaur is not a suitable candidate for a community service order in view of the facts I have described in par [21] above. A term of imprisonment would achieve both the objectives of punishment and deterrence, but this would deprive Mr Tsaur of the opportunity of finding work so as to support his family. It seems, therefore, that a fine remains the most appropriate penalty. Moreover, since a fine for the punishment of contempt of court is not a provable debt in Mr Tsaur’s bankruptcy, then he will continue to remain personally liable for that debt. Section 6 of the Fines Act requires the Court to take into consideration Mr Tsaur’s means to pay. Although he is presently a bankrupt, he may not always be so. He is a proud man, anxious to support his family and he may well be able to find remunerative work in the future. The appropriate course is to impose a fine but postpone its operation so that it does not became payable until he is likely to have found his feet. In all the circumstances a fine of $50,000 is appropriate, which I reduce by 30 per cent to take account of all mitigating factors that I have described. I will, however postpone the operation of the orders for the payment of the fine and costs in view of the fact that Mr Tsaur is clearly unable to pay at present.

60 The applicant does not seek the imposition of a fine upon Ableway. As noted above, the company is insolvent. The company’s acts were controlled by Mr Tsaur and it is Mr Tsaur who should bear the full burden of the penalty.

Orders

61 The formal orders are:

(1) The first respondent, Ableway Waste Management Pty Limited, is guilty of the offence of contempt of court as charged.

(2) The second respondent, Charles Xhiat Song Tsaur, is guilty of the offence of contempt of court as charged.

(3) The second respondent, Charles Xhiat Song Tsaur, pay a fine by way of penalty in the sum of $35,000.

(4) The second respondent, Charles Xhiat Song Tsaur, pay the applicant’s costs.

(5) Orders 3 and 4 above are postponed for a period of twenty four (24) months from today.

I hereby certify that the preceding 61 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice D H Lloyd.

Associate

Dated: 22 September 2005
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