Environment Protection Authority v Buchanan (No 2) - [2009] NSWLEC 31

Reported Decision: 165 LGERA 383

Land and Environment Court

of New South Wales

CITATION: Environment Protection Authority v Buchanan (No 2) [2009] NSWLEC 31

PARTIES: PROSECUTOR
Enivronment Protection Authority
DEFENDANT
Ruth Buchanan

FILE NUMBER(S): 50074 of 2007

CORAM: Pain J

KEY ISSUES: ENVIRONMENTAL OFFENCES :- sentencing - breach of conditions of environment protection licence - operation of hazardous industrial waste treatment and storage facility - clean up notices issued not complied with - sole director liable for environmental offence - potential for significant environmental harm - harm foreseeable - negligent conduct of business - consideration of means to pay as defendant bankrupt - mitigating factors - whether third party clean up costs payable - whether legal costs payable - appropriate penalty

LEGISLATION CITED: Protection of the Environment Operations Act 1997 s 3, s 64, s 169, s 241, s 246, s 298(1)
Crimes (Sentencing Procedure) Act 1999 s 3A, s 21A, s 22
Criminal Procedure Act 1986 s 257
Fines Act 1996 s 6
Land and Environment Court Act 1979 s 41
Occupational Health And Safety Act 2000

CASES CITED: Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357
Bentley v BGP Properties Pty Limited (2006) 145 LGERA 234
Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683
Carbonne Shire Council v Environmental Protection Authority (2001) 115 LGERA 304
Environment Protection Authority v Ableway Waste Management Pty Ltd and Anor [2005] NSWLEC 469
Environmental Protection Authority v Australian Waste Recyclers 1 Pty Ltd [2005] NSWLEC 739
Environmental Protection Authority v Ballina Shire Council (2006) 148 LGERA 278
Environment Protection Authority v Barnes [2006] NSWCCA 246
Environmental Protection Authority v BlueScope Steel (AIS) Pty Limited [2004] NSWLEC 400
Environment Protection Authority v Buchanan [2008] NSWLEC 315
Environment Protection Authority v Douglass [No 2] [2002] NSWLEC 94
Environment Protection Authority v Eljo Pty Limited;Environment Protection Authority v Solo Waste Australia Pty Limited [2005] NSWLEC 341
Environment Protection Authority v Emerald Peat Pty Ltd (in liq) [1999] NSWLEC 147
Environment Protection Authority v Hogan [2008] NSWLEC 125
Environment Protection Authority v HTT Huntley Heritage Pty Ltd [2003] NSWLEC 142
Environment Protection Authority v Incitec Ltd (2003) 131 LGERA 176
Environmental Protection Authority v Nalco Australia Pty Ltd [2007] NSWLEC 831
Environment Protection Authority v Obaid [2005] NSWLEC 171
Environment Protection Authority v Rethmann Australia Environmental Services [2003] NSWLEC 351
Environment Protection Authority v Sydney Ship Repair and Engineering Pty Ltd [2005] NSWLEC 236
Environment Protection Authority v Taylor (No 4) (2002) 120 LGERA 414
Environmental Protection Authority v Timber Industries Ltd [2001] NSWLEC 25
Environment Protection Authority v Waste Recycling and Processing Corp (2006) 148 LGERA 299
Gittany Constructions Pty Ltd v Sutherland Shire Council (2006) 145 LGERA 189
Latoudis v Casey (1990) 170 CLR 534
Newcastle City Council v Pace Farm Egg Products [2002] NSWLEC 66
R v Carroll [2008] NSWCCA 218
R v Rahme (1989) 43 A Crim R 81
R v Sharma (2002) 54 NSWLR 300
R v Slattery (1996) 90 A Crim R 519
R v Thomson; R v Houlton (2000) 49 NSWLR 383
Resoureco Pty Ltd v Harvey (2007) 154 LGERA 37
Veen v The Queen [No. 2] (1988) 164 CLR 465

DATES OF HEARING: 25 November 2008
26 November 2008
30 January 2009 (written submissions)
6 February 2009 (written submissions)
25 February 2009
26 February 2009 (written submissions)

DATE OF JUDGMENT:
30 March 2009

LEGAL REPRESENTATIVES: PROSECUTOR
Ms R Pepper
SOLICITORS
Environment Protection Authority
DEFENDANT
Mr J Rowe
SOLICITORS
Dib Lawyers

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Pain J

30 March 2009

50074 of 2007 Environment Protection Authority v Buchanan (No 2)
JUDGMENT

1 Her Honour: The Defendant has pleaded guilty to an offence that from about 29 September 2006 until 12 April 2007 at St Mary’s she committed an offence against s 64(1) of the Protection of the Environment Operations Act 1997 (POEO Act). At all relevant times the Defendant was the sole director of Plastech Operations Pty Ltd. Her liability arises under s 169 of the POEO Act.

2 Section 169 of the POEO Act provides that:

(1) If a corporation contravenes, whether by act or omission, any provision of this Act or the regulations, each person who is a director of the corporation or who is concerned in the management of the corporation is taken to have contravened the same provision …

(2) A person may be proceeded against and convicted under a provision pursuant to this section whether or not the corporation has been proceeded against or been convicted under that provision.

…

3 Plastech was the holder of an environment protection licence and contravened a condition of that licence, giving rise to a breach of s 64(1). Plastech operated a hazardous industrial waste treatment facility at 66 Links Road, St Mary’s (the premises). The maximum penalty for individuals convicted of this offence is $250,000.

4 The Defendant has pleaded guilty and has therefore admitted the essential elements of the offence. The offence is one of strict liability so that no mental element forms part of the elements of the offence.

5 The parties agreed a detailed statement of agreed facts. In light of the submissions made it is necessary to set these out in some detail. The Statement of Agreed Facts (SOAF) relevantly states:

Licensed activities must be carried out in a competent manner.
This includes:
a. The processing, handling, movement and storage of materials and substances used to carry out the activity; and
b. The treatment, storage, processing, reprocessing, transport and disposal of waste generated by the activity.

a. was likely to aggravate any pollution incident on the premises; and/or
b. was contrary to condition 16 of development consent DA 80/94;
c. was contrary to the Australian Standards AS 1940-04 and AS 4332-04;
d. was contrary to the WorkCover NSW “Code of Practice for the Storage and Handling of Dangerous Goods” (2005);
e. was contrary to the Environment Protection Authority “Environmental Guidelines: Assessment, Classification and Management of Liquid and Non-Liquid Wastes” (1999);
f. was contrary to the Polychlorinated Biphenyl (PCB) Chemical Control Order 1997;
g. was in breach of the requirements of the Occupational Health and Safety Act 2000 and Occupational Health and Safety Regulation 2001;
h. was in breach of the Protection of the Environment Operations Act 1997; and
i. was dangerous.

“All materials and goods associated with the use are to be contained within the building at all times”
…

…

…

29. On 29 September 2006 Peter Watson, Department of Environment and Conservation (now Department of Environment and Climate Change) Senior Regional Operations Officer, conducted a routine inspection of the premises accompanied by Mr Stephen Beaman, Manager Waste Operations.

30. The officers observed a large number of different types and sized containers marked as containing hazardous waste, including dangerous goods, in the open yard area of the premises. The capacity and type of containers on the open area of the premises included, but was not limited to: 0.5, 1, 5, 20 litre plastic, cardboard and steel drums and containers; 240 litre plastic wheelie bins; 1000 litre IBCs (Intermediate Bulk Containers – plastic container fixed inside a metal cage); 205 litre steel drums; gas bottles and Pallecons (large wooden boxes with the volume to hold four 205 litre drums). A large number of the containers had dangerous goods labels attached. Also, adjacent to some of the container stockpiles was a sign which displayed a dangerous goods category.

31. The officers observed that on a large number of containers the following was written: “dry cleaning waste”, “flammable”, “printing waste”, “mercury waste”, “mercury”, “chloropicrin”, “solvent”, “chlorinated solvent”, “spent acid”, “toluene”, “sodium hydroxide”, “pesticides”, “cyanide”, “sodium cyanide”, “unknowns”, “PCBs”, “waste transformer oil”, “toxic”, “poison”, “arsenic”, “lab chemicals”, “paint waste”, “reactive chemicals”.

32. A number of the palletised containers were stacked up to 5 pallets high on the western boundary and 4 pallets high on the eastern boundary. Mr Watson estimated that there was likely to be more than 3,000 various sized containers of dangerous goods and hazardous goods located on the open area of the premises.

33. During the inspection Mr Watson observed evidence of:

(a) leakage of waste/dangerous goods from a few containers on the open yard; and

(b) discolouration of the concrete surface in the open area and the application of liquid absorbing material similar in appearance to that of diatomaceous earth or kitty litter.

…

38. On 31 October 2006 WorkCover Senior Inspector Mark Morgenthal in [sic] inspected the premises.

…

41. On 10 November 2006 DECC sent a letter and draft Notice of Clean-up Action (notice No.1067060) by registered post to Plastech, with [sic] a copy was faxed to the defendant. The letter advised the defendant that during a DEC inspection on 29 September 2006 waste was observed being stored outside buildings, and that a condition of the consent issued by council required waste “to be contained within the building at all times”. The defendant was aware of the letter and draft Notice. The draft notice required Plastech to either lawfully dispose of waste stored outside the building or relocate all materials including waste within the building by 2 December 2006.

…

46. On 2 December 2006 Plastech’s lease expired. Plastech continued to operate on the site.

…

48. On 7 December 2006 Mr Watson attended the premises accompanied by Mr Oliver Griffith (university student on work placement experience) to monitor the premises’ environmental situation including progress in complying with requirements of the clean-up notice. Mr Watson and Mr Griffith entered the open yard area of the premises and observed that a number of the palletised containers were stacked up to 3 pallets high (on the north, east and western boundaries). The officers estimated that more than 2,000 various sized containers of dangerous goods and hazardous waste were located on the open area of the premises.

49. The officers observed:

a. evidence of spillages on the ground through discolouration of the concrete surface and the application of liquid absorbing material similar in appearance to that of diatomaceous earth or kitty litter;

b. that the required separation distances between most stockpiles of dangerous goods were not provided (ie incompatible classes of dangerous goods were stockpiled immediately adjacent to one another); and

c. a stockpile located on the western boundary comprising of approximately 50. 100 various sized containers which was sign posted as “Unknowns”.

50. After leaving the site Mr Watson observed electrical capacitors stored in the open yard area of the premises near the Eastern boundary. Flammable toxic waste was stored in plastic containers above and adjacent to the capacitors. The storage of the capacitors in an open area exposed to the weather and in close proximity to flammable liquids contravened condition 6.3.6.1 of the “Polychlorinated Biphenyl (PCB) Chemical Control Order 1997” which states:

“Scheduled PCB waste must be kept in a storage facility which must:

(i) be located and constructed to adequately protect the contents

from the ingress of stormwater, weather conditions and

unlawful entry,

(ii) have an impermeable floor or base with no drainage outlets.

Where liquids are kept on concrete floors, the floors must be

coated with sealant material to prevent the absorption of any

leak or spill,

(iii) have appropriate environmental controls to prevent offsite

contamination and, where practicable, be bunded in accordance

with Australian Standard AS1940

(iv) be appropriately ventilated,

(v) be located no closer to any storage of:

(a) flammable or combustible liquids than permitted for

protected works by Australian Standard AS1940, and

(b) liquefied petroleum gas than permitted for protected

works by Australian Standard AS1596,

but in any case not less than twelve metres.

…

56. During the period between 15 December 2007 [sic - 2006] and when Plastech staff returned to the site the defendant relocated office equipment to storage and moved from her office premises at Crows Nest. During this period Ms Runge organised for Plastech employees to pick up waste from illicit drug manufacturing from NSW Police for delivery to the premises. Ms Runge liaised with Peter Wong to allow access to the yard in order that Plastech employees could deposit the waste.

57. On 19 December 2006 Mr Watson attended the premises and observed Plastech staff removing office equipment and furniture from the site. Mr Watson then walked into the “6, 8, 9 store” building accompanied by Mr Wong where he took a number of photos with the digital camera. There was an overpowering chemical smell in the store. Mr Watson observed about one hundred 205 litre and 25 litre containers. On a number of the containers were the following dangerous goods codes: “6.1 toxic substances” and “9 miscellaneous dangerous goods and articles”. On a number of the containers the following information was written: “asbestos”, “strychnine”, “PCBs”, “organochlorine pesticides”, “transformer oil”, “sodium cyanide” and “mustard gas”. Inspection of the open yard area revealed considerably more waste than the previous inspection. Mr Watson estimated it was likely more than 3000 various sized containers of dangerous goods and hazardous waste were located on the open area of the premises.

a. that a number of the palletised containers were stacked up to 5 pallets high on the western boundary and up to 4 pallets high on the Eastern boundary. The manner in which the containers were stored increased the risk of spillage of dangerous goods/hazardous waste and injury to workers from top containers toppling.

b. evidence of leakage and or spillages of waste from a few containers with discolouration of the concrete of the open yard and application of liquid absorbing material similar in appearance to that of diatomaceous earth or kitty litter.

c. the required separation distances between most stockpiles of dangerous goods such that incompatible classes of dangerous goods were stockpiled immediately adjacent to one another.

…

60. On 28 December 2006 the owners of the premises granted Plastech a licence to access the premises to remove waste. Under the licence Plastech had control of the premises but were prevented from bringing further waste onto the premises.

61. On 2 January 2007 DEC Officers Mr Trevor Wilson and Ms Molley Tregoning conducted a site inspection accompanied by the landlord Mr Peter Wong.

62. On 4 January 2007 Mr Trevor Wilson of DEC conducted a follow-up inspection.

63. Between 5 and 16 January 2007 Plastech and NSW Police processed redundant court exhibits from secure storage. On 17 January 2007 four garbage skips of exhibits were compacted on the premises and sent to landfill.

64. On 8 January 2007 the site owners returned Plastech’s locks to the front gates to allow Plastech access to the premises.

65. On 8 January 2007 DEC sent a letter by registered post to the defendant at her Crows Nest office. Facsimile copies of the letter were sent to the premises and to the defendant’s solicitor Mr Jason Li. The letter detailed the obligation to comply with licence conditions and the DEC’s findings from its inspections on 2 and 4 January 2007 among other things.

66. On 9 January 2007, DEC sent a letter to the defendant attaching notice of an intention to vary the environment protection licence preventing the receipt of waste at the premises. The letter also expressed DEC’s concerns regarding excessive quantity of waste stored at the premises contrary to conditions of the development consent, and issues concerning the company’s intention to relocate waste to another site.

67. On 15 January 2007 DEC sent a letter to Mr Jason Li, (solicitor acting on behalf of the defendant) expressing concerns regarding excessive storage of waste on external areas of the premises.

68. On 16 January 2007 Mr Watson conducted a further site inspection of the premises. Mr Watson observed the condition of the premises to be substantially similar to that at his previous inspection. In particular, Mr Watson observed the plastic shrink-wrap securing a number of 10 litre plastic containers holding flammable and toxic solvents had deteriorated resulting in the containers falling onto capacitors containing scheduled PCBs. There was significant potential for the metal terminals on the top of the capacitors to rupture the plastic containers holding toxic flammable liquids causing spillage and possibly a fire (see photographs attached to inspection report). The storage of scheduled PCBs contained in the capacitors in contact with the plastic containers holding flammable toxic liquids was in contravention of the PCB Chemical Control Order, and subsequently was in breach of condition O4.3 of POEO licence No.4801, and condition 7 of EHC licence No.23.

…

70. On 6 February 2007 a meeting was held in the DEC’s Goulburn Street offices attended by the defendant, Ms Michelle Runge of Plastech and Mr Stephen Beaman, Mr Tony Hodgson and Mr Peter Watson of the DEC. The purpose of the meeting was to discuss the DEC’s concerns of the inappropriate storage of excessive quantities of hazardous waste, to discuss the proposed variations to the licence, current site activities and to progress possible solutions at the Plastech premises.

In a conversation between the EPA officers and the Defendant they expressed concern about the state of the premises due to the quantity of dangerous and hazardous goods in the open yard. The waste had to be removed because the current risk was unacceptable. The Defendant said she was aware of that concern and explained her difficulties in complying with the Prosecutor’s requirements to remove the waste. The Defendant said that the Wongs were frustrating her efforts and she was negotiating finance and reorganising her business arrangements. Police work is continuing and is a considerable part of the work. The Wongs were preventing the re-establishment of an office on the premises and wouldn’t allow empty containers to be brought onto the premises so that these could be washed and used to remove flammable waste. There was further discussion about when the large amounts of flammable waste could be removed. The Defendant said about half was ready to go elsewhere. She estimated it would take six to eight weeks to remove all the waste stored on the premises. She also estimated about 80 per cent of the material was flammable.

71. On 8 February 2007 the DEC varied Plastech’s environment protection licence to prohibit the receipt of waste at the premises. A copy was sent by registered post and fax to the defendant. The defendant acknowledged receipt of the fax.

72. On 7 February 2007 the owners of the premises extended the licence granted to Plastech to 7 February 2007. The licence was extended on the basis that Plastech was to purchase the premises by purchasing shares in EPSTech (the company that had entered into a contract of sale with the Wongs).

73. On 15 February 2007 Plastech failed to purchase EPSTech and the licence expired. However, access and control of the premises was granted to Plastech to enable it to comply with its obligations under the lease.

74. On 19 February 2007 the Mr and Mrs Wong’s solicitor wrote to Plastech advising of the terms of the continued access and control.

75. On 5 March 2007 Mr Watson attended the premises accompanied by Ms Victoria Farrar, Regional Operations Officer of the DEC’s Waste Operations Section. Ms Farrer observed a large portion of the yard area was covered in water up to a depth of about 25 centimetres from recent rain events. On the surface of the water was a chemical film or scum.

76. As Ms Farrer and Mr Watson walked towards the 6,8,9 store they were met by Mr Mansell, Ms Runge, Mr Rasmussen and Mr Hendrikson of Plastech. Mr Mansell handed Mr Watson a number of yellow pages stapled together with the title “Site Manifest”.

77. On 5 March 2007, DEC sent a letter to the defendant attaching two draft clean-up notices by facsimile to the defendant. One draft clean-up notice was directed to Plastech Operations Pty Ltd and one to the defendant. The notices had the same requirements and completion dates for works concerning removal of various waste types from the Premises.

78. On 6 March 2007 Mr Watson arrived at the premises to assist and observe WSN Environmental Services representative Mr Arvi Maltz identify/audit hazardous waste from the “Chemcollect” program for removal from the Plastech site. The Chemcollect program was funded by the NSW Government for the collection of unwanted agricultural and veterinary chemicals from around NSW. Forty-five pallets of waste were identified by Mr Maltz and removed from the premises later in the week by WSN Environmental Services for disposal.

79. On 7 March 2007 Mr Stephen Beaman, Manager Waste Operations, received an email from the defendant commenting on the draft clean up notices and requesting 3 week extension for disposal of flammables and acids from the site.

80. On 7 March 2007, Clean-up notice (notice number 1070032) was served by registered post on Plastech, and marked to the attention of the defendant. A copy of the notice was sent to the defendant.

81. On 8 March 2007, a Clean-up notice (notice number 1070034) was served by registered post on the defendant. A facsimile copy of the notice was sent to the defendant.

82. On 9 March 2007 Mr Watson attended the premises for the purpose of an inspection. During the inspection Mr Watson observed that the condition of the site had deteriorated. A number of the palletised containers were stacked up to 5 pallets high on the western and eastern side boundaries. The manner in which the containers were stored increased the risk of spillage of dangerous goods/hazardous waste and injury to workers from top containers toppling. There was evidence of a number of spillages onto the open yard area from a number of leaking drums stored on pallets.

83. Mr Watson inspected the Class 4 dangerous goods cabinets where he observed a number of small containers inappropriately stored with some leaking. Mr Watson left the site at approximately 1215hrs. As he left the site he approached Ms Michelle Runge who was standing near the roadside curb outside the premises and had the following brief conversation (summary follows):

Mr Watson spoke to Ms Runge and said he was very concerned about the number of containers still onsite, including a number which are leaking. One spill had to be cleaned up immediately. Ms Runge agreed to do it and to read the licence condition O1.1.

84. An inspection report including photographs taken during the inspection was created as a record.

85. On 14 March 2008 [sic – 2007] Mr Watson attended the Premises and observed a forklift truck loading a semi trailer. On the semi trailer were a number of Pallecons and 205 litre drums on pallets containing organochlorine pesticides, chloropicrin, PCBs, strychnine, heavy metal contaminated pesticides and other types of hazardous waste from the government sponsored ChemCollect program. The containers of waste were being moved from the 6,8,9 store and onto the semi-trailer. During the operation Mr Watson observed four 205 litre drums shrink-wrapped on a pallet was [sic] leaking black coloured liquid. The drums were labelled Organochlorine pesticide – toxic Class 6. This pesticide has been banned in Australia due to its toxicity, propensity for bioaccumulation and persistence in the environment and is a known carcinogen. The pesticide had covered sections of the pallet and flowed onto the floor. When brought to the attention of two Plastech employees they proceeded to move the drums into a spill containment tray on a pallet and used absorbent material to mop up the spill. Respirators, safety glasses or impervious overalls were not worn by the employees during the cleanup operation.

86. Schedule A of the Chemical Control Order in Relation to Scheduled Chemical Wastes under the Environmentally Hazardous Chemicals Act 1985 describes organochlorine pesticides (OCPs) (by their common names) as Scheduled chemical wastes. Condition 16 of licence No.23 under the Environmentally Hazardous Chemicals Act 1985 states that:

“16 Appropriate personal protective equipment, clean-up material and equipment to deal with any spill must be available wherever the…….scheduled chemical wastes…..are handled”

87. As the organochlorine pesticide is in a solution of flammable solvent, personal protective equipment to industry requirements are - approved grade respirator, impervious overalls, chemical resistant elbow length gloves, goggles or face shield and chemical resistant safety footware.

88. On 28 March 2007 Ms Melissa Bull, DEC Regional Operations Officer and Mr Watson attended the premises. The officers observed the premises to be in a substantially similar state to the previous inspection. In particular a number of blue coloured plastic drums located in steel trays had their side walls punctured. A white coloured material had flowed out through the holes filling the trays. There was evidence of one of the trays overflowing onto the ground. The white material had solidified. The white material had the appearance of a type of filler or glue.

89. On around 27 March 2007 Plastech was issued with 2 Prohibition Notices and 1 Improvement Notice from a WorkCover inspector who visited the premises. Ms Runge telephoned the defendant and had a conversation in words to the following effect:

Ms Runge said

: We’ve received another 3 Prohibition Notices from WorkCover. We’re not allowed to access the 6, 8, 9 store until we have someone qualified.

Ms Buchanan said

: I’ve got Science Know-how looking for a chemist for me.

Ms Runge said

: Ok.

90. On 28 March 2007 Ms Runge sent an email to Doug Rolland of WorkCover attaching a site manifest for the premises. The site manifest shows that a total of around 325 tonnes of waste stored in the open yard area of the premises.

91. A few days later Ms Runge handed the WorkCover notices to the defendant while inspecting a property at Prestons.

92. On 30 March 2007 Mr Watson sent an email to the defendant.

93.On 4 April 2007 Mr Watson attended the premises and approached Ms Runge in the open yard area of the Premises and had the following conversation. (summary follows)

Mr Watson spoke to Ms Runge about what was being done to remove waste from the site. Waste was booked for removal in stages from 12 April 2007. As there was no money to pay for pump out of collected contaminated stormwater, these were pumped into IBCs. No processing work was occurring as there was not enough money for protective clothing.

94. On 11 April 2007 Mr Watson sent emails to the defendant and Ms Runge respectively, requesting advice on when tankers were to arrive to remove chlorinated solvents from the Premises, the amount of solvents that would be removed and name of the receiving facility. No response to this email was received from either the defendant or Ms Runge.

95. On 12 April 2007 Plastech Operations Pty Limited was placed into liquidation.

96. Between 2 January 2007 and 13 April 2007, from a total of around 376 tonnes of hazardous waste and dangerous goods, Plastech had removed only:

a. around 40 pallets of hazardous waste from the yard which contained over 1,000 such pallets;

b. the soil from two 15 cubic meter bins (refused for lawful landfill);

c. seven tanker loads of stormwater;

d. approximately twenty 3 cubic metre, and two 15 cubic metre bins with domestic/general waste which were sent to landfill.

e. 54 wheely bins of waste for incineration;

f. several loads of scrap metal, were sent off the Premises for recycling; and

g. surplus pallets which were de-hired and returned to Chep Pty Limited.

97. The clean up notices issued to Plastech and the defendant were not complied with.

Action taken subsequent to offence

98. On 13 April 2007

Mr Watson attended the premises and observed the site in a substantially similar state to his previous visit.

…

100. The EPA incurred costs of $88,395.75 in managing the immediate risk presented by the condition of the premises.

101. On 1 August 2007

the Department of Environment and Climate Change issued a clean up notice to Peter and Lynne Wong.

Environmental harm

6 The parties also relied on an Agreed Statement of Facts on Environmental Harm which stated:

1. The disorderly and dangerous storage of Dangerous Goods and Hazardous Substances on the Plastech site had the potential to cause a significant pollution incident, as defined in the Dictionary of the POEO Act.

2. The storage presented a serious risk to the health and safety of site employees, to neighbouring businesses and to the environment via the possibility of a significant pollution incident.

Further evidence of Prosecutor

7 The Prosecutor relied on affidavits of Ms Runge and Mr Le Roy. Ms Runge was employed by Plastech from May 2006 to November 2007 first as client services manager then as plant manager. She observed a lot of waste entering the premises but little leaving. She raised concerns about the premises with the Defendant. She conveyed the draft clean up notice from the Prosecutor and final notice to the Defendant who said she would handle them. At the time the clean up notice dated 1 December 2006 was received some pallets holding drums of chemicals classified as dangerous goods had begun to rot and collapse in the yard. The Defendant was told of this by Ms Runge on many occasions. Ms Runge also observed pooled water in the open yard on many occasions while she was plant manager and told the Defendant so that a pump could be called. When the Wongs required Plastech to leave the premises the Defendant told Ms Runge to keep servicing customers so funds would come in. During her employment she was aware that companies refused to do business with Plastech due to non-payment. Her employment was terminated on 12 April 2007 when Plastech went into liquidation.

8 The affidavit of Mr LeRoy sworn 15 November 2007 was read in part. He was employed by Plastech as a site technician between December 2004 and November 2005 and then as a safety officer from February 2006 to November 2006. Previously he was employed as a driver technician by CWDS Pty Ltd at the premises. Mr LeRoy held a dangerous goods transport licence between 1973 and 2007. Mr LeRoy also attended a five day course on Hazmat training every three years. Mr LeRoy attests that on 27 October 2006 Plastech received a 400kg load of ammonium nitrate from Cleanway Chemicals. Mr LeRoy states that there was nowhere to store it in order to properly segregate it from the other waste (including flammable waste). He contacted Ms Runge who said that he had to accept it. Mr LeRoy refused. He witnessed Ms Runge sign to accept it. On 28 October 2006 Mr LeRoy resigned because he considered the premises too dangerous to work at and it appeared Plastech did not intend to limit the amount or type of waste entering the premises. Mr LeRoy attests the staff did not appear to be adequately trained and were without adequate safety gear. During October 2006 he raised concerns about this with the Defendant. When he told the Defendant waste could not be brought on she told him not to worry about it as they were going to move up the road and they had to keep money coming in so they could buy the property.

9 Plastech leased the premises from Mr and Mrs Wong (SOAF par 7). They swore affidavits which were read in part. I consider these later in the judgment.

Evidence of the Defendant

10 An affidavit of the Defendant dated 25 November 2008 was read. This set out her personal circumstances. The Defendant is 64 years old. She had sole responsibility for bringing up her daughter since 1985 and caring for her frail mother from 1995 to October 2004. She became involved in the business after being approached by a client of her accounting practice to help in raising capital to implement the Startech Plasma Converter into Australia. She received advice from a solicitor that capital raising should be done through establishing a holding company, a separate company Plastech Solutions Limited (PS) to hold the rights and a subsidiary of the holding company to operate the facility. She obtained advice from lawyers, accountants and an environmental auditor about how to establish the business. She was advised that funding for PS could be obtained from Equinox Equities, a USA based corporation. In July 2004 PS entered into a distribution agreement with Startech for the right to distribute the Startech Plasma converter technology in Australia, New Zealand and other Pacific rim countries. She received advice that the company should acquire an existing business. CWDS Pty Ltd then owned by Mr Wong was bought by the holding company in December 2004. Mr Wong was employed under a contract to rebuild the medical waste disposal business for the converter. The company leased the premises in about June 2004 from the Wongs. In December 2004 the managing director and chairman of the holding company resigned unexpectedly and the Defendant was asked to take over the running of the holding company and business, which she did. Mr Wong’s employment was terminated in about June 2005.

11 The Defendant had difficulty finding specialist chemists and technical staff. HLA Environmental was employed to advise on layout, licensing and development of the premises. A qualified chemist supervised classification work and processing and most of the other work was done by unskilled labour. An expert consultant was retained when required. A recruitment consultant was also retained to constantly look for qualified chemists prepared to work in the yard because it was hard to find experienced staff. Many samples were sent to independent laboratories including the University of NSW to ensure the correct classification of hazardous material.

12 In January 2005 the Defendant went to the US and negotiated arrangements with the Startech Environmental Corporation Board to enable her to build the business in Sydney. A substantial contract was assigned by CWDS to Plastech for support of the work of the NSW Police Drug squad. The contract required attendance at various sites when notified by police to collect exhibits such as raw materials and drug manufacturing utensils. These were brought to the site and kept in secure storage. The building had to be illuminated by bright lights and scanned by cameras as required by the police department.

13 Plastech also had contracts with councils throughout NSW to collect hazardous and toxic waste that could not be disposed of in land fill. The waste was collected then brought to the premises and sorted into the relevant dangerous goods categories. The company also had contracts with hospitals, veterinary clinics, universities and other establishments to collect bio waste which had to be destroyed in 24 hours. Plastech trucks took this waste direct to the destruction sites. There were also contracts with universities, chemical companies, industrial manufacturing companies and pharmaceutical companies to collect chemical waste on a weekly, or other cyclical basis, and replace with empty bins. The full bins were brought back to the yard and sorted into dangerous goods categories. Once sorted the material was sent for destruction in the way appropriate for the class of goods.

14 The premises were fully bunded. There were drains into which any runoff gravitated and these drains emptied to substantial underground storage tanks. The contents of the storage tanks were tested and pumped out and sent for appropriate destruction. The processing facility was in a separate building containing the appropriate air filtration system, safety requirements and storage tanks. Staff working in the facility wore full safety protection gear and there were never fewer than two people in the area at any time. In this building chemicals were neutralised or pooled into containers for transport to destruction.

15 Equinox agreed in October 2005 to provide funding for Plastech’s development in Australia however funding of Plastech suddenly ceased in December 2005 when its head office was destroyed in hurricanes in Florida and as a result the company ceased trading. This was devastating for Plastech and alternative funding had to be found. Alternative funding was found after a search but Plastech was then evicted by the Wongs from the premises on 15 December 2006 and no finance was forthcoming. The Defendant tried to find an alternative site for the company to continue operations but was not able to do so. It had been hoped to get premises with greater undercover storage than the St Marys site. In November 2006 the Defendant had a solicitor write to solicitors for the Wongs to request an extension of the lease on a month-to-month arrangement.

16 The Defendant attests that at 5.30pm on the day of the eviction (15 December 2006) the Wongs, security guards and a locksmith arrived to take possession of the business and the premises. The Defendant was ordered out by Mr Wong but she refused to go until the office was packed up and loaded onto Plastech trucks. Mr Wong refused access to the property after 7pm but stated that the premises would be open on Monday 20 December 2007 for collection of anything remaining. Mr Wong denied access on the following Monday until the police were contacted by a Plastech employee. A licence agreement for access was finalised between the Wongs and Plastech on 28 December 2006. The Defendant was informed in January 2007 by the Police and the Department of Commerce that Mr Wong had approached them on 18 December 2006 asking for the contract to be transferred from Plastech to him. On 2 January 2007 Mr Wong did not allow staff to enter through the ground floor of the building and Plastech staff had to enter through the truck gate which was in 20cm deep water. Mr Wong had changed all the locks on all doors and the gate to the storm water outlet.

17 On 5 January 2007 there was no electric power to the processing area when the staff arrived from completing a job for the police. Mrs Wong told the staff that Plastech had not paid its electricity bill though the Defendant was subsequently told by Plastech’s accountant that the account was paid up to date. The Defendant was told that Mrs Wong had said to Energy Australia that Plastech had left the premises and sought disconnection of power to the yard. Mrs Wong had instructed Energy Australia to disconnect lights which illuminated the yard at night. The Defendant was told that Mrs Wong had said to the police that Plastech was in breach of contract by not having the required security. The Defendant was told Mrs Wong had told the security company that Plastech had left the premises and patrols were no longer required. In February 2007 Mr Wong provided access to the premises only when trucks and tankers were booked for collection. Mr Wong insisted having 24 hours written notice when access to the premises was sought.

18 The Defendant was also cross-examined by the Prosecutor’s counsel. She stated that two facilities where waste could usually be sent for processing were not available during the offence period.

Purposes of Sentencing

19 Section 3A of the Crimes (Sentencing Procedure) Act 1999 (the CSP Act) identifies the purposes of sentencing. It states:

The purposes for which a court may impose a sentence on an offender are as follows:

(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.

20 Section 21A of the CSP Act sets out the various aggravating (s 21A(2)) and mitigating (s 21A(3)) factors which also need to be taken into account in sentencing.

POEO Act objects

21 The POEO Act is directed to the protection, restoration and enhancement of the environment of NSW including by reducing harm to the environment through pollution prevention (s 3). The purposes of sentencing in s 3A should be considered in the context of the legislation under which an offence arises.

Relevant matters under s 241 POEO Act

22 Section 241 of the POEO Act refers to several factors the Court must consider in relation to an offence under the POEO Act.

Section 241(1)(a) - the extent of the harm caused or likely to be caused to the environment by the commission of the offence

23 The Dictionary of the POEO Act defines “environment” as:

environment

means components of the earth, including:

(a) land, air and water, and

(b) any layer of the atmosphere, and

(c) any organic or inorganic matter and any living organism, and

(d) human-made or modified structures and areas,

and includes interacting natural ecosystems that include components referred to in paragraphs (a)–(c).

harm

to the environment includes any direct or indirect alteration of the environment that has the effect of degrading the environment and, without limiting the generality of the above, includes any act or omission that results in pollution.

24 The Prosecutor submitted that “likely” harm as referred to in s 241(1)(a) should be defined to mean “a real or not remote chance or possibility regardless of whether it is less or more than a fifty per cent chance”; Newcastle City Council v Pace Farm Egg Products [2002] NSWLEC 66 at [44]. Potential harm is also to be taken into account: Environment Protection Authority v Waste Recycling and Processing Corp (2006) 148 LGERA 299 at [145]. The potential harm in the present matter is serious.

25 The Defendant submitted the harm is as agreed in the agreed statement of facts on environmental harm. Her affidavit also referred to the fact that the site was fully bunded and there were measures in place to ensure the appropriate trained staff sorted out the chemicals on delivery to ensure correct classification.

26 The agreed statement of environmental harm is set out at par 6. It is agreed that the dangerous storage had the potential to cause a significant pollution incident. Pollution incident is defined in the Dictionary of the POEO Act as:

…

an incident or set of circumstances during or as a consequence of which there is or is likely to be a leak, spill or other escape or deposit of a substance, as a result of which pollution has occurred, is occurring or is likely to occur. It includes an incident or set of circumstances in which a substance has been placed or disposed of on premises, but it does not include an incident or set of circumstances involving only the emission of any noise.

It was agreed that the manner of storage was likely to aggravate any pollution incident. I find that there was potential for significant environmental harm as a result of the actions giving rise to the offence given the definition of “environment” in the Dictionary of the POEO Act, that there was a real and not remote chance or possibility of harm to the environment, and the agreed statement of facts on this issue. As submitted by the Prosecutor “real” means a real or not remote chance or possibility. It is agreed in the SOAF that the storage presented a serious risk to the health and safety of employees, neighbouring businesses and the environment. The potential for environmental harm suggests this matter is reasonably serious, but I note that actual harm to the environment did not result from the offence.

Section 241(1)(b) - the practical measures that may be taken to prevent, control, abate or mitigate that harm

27 The Prosecutor submitted that the Defendant could and should have ensured that the terms and conditions of the relevant licence were complied with in accordance with the licence time frames. No logical reason has been proffered by the Defendant as to why this could not occur. The Defendant could have stopped accepting waste onto the site or disposed of it elsewhere. There is no evidence such steps were taken. The Defendant’s oral evidence that two facilities where waste would ordinarily be sent were not available should be given little weight, as there was no such evidence in her affidavit. Both Mr LeRoy and Ms Runge, then employees of the Defendant, gave evidence that the Defendant was informed by them that the site was unsafe.

28 The Defendant submitted that there was a matrix of circumstances leading to the events giving rise to the offence that were outside the Defendant’s control which she actively attempted to deal with. The Defendant took the available practical measures but they had limited success. These measures are dealt with in her affidavit at length. The affidavit identifies the circumstances in which the Defendant became sole director of Plastech, the financial challenges faced by the company and the difficulties experienced in getting appropriate technical staff. Her affidavit also identifies that measures were taken to ensure proper handling of chemicals stored on the premises and that these were adequately bunded.

Finding

29 In terms of the events leading up to and giving rise to the offence, which commenced on 29 September 2006 and continued until 12 April 2007, there were practical measures which could have been taken to prevent, control, abate or mitigate the harm caused by the Defendant as director of Plastech but were not. Better control of the volume and manner of storage of chemicals on the premises was required in order to comply with the licence condition. That is clear from the agreement in par 4 of the SOAF. Storage was in breach of EPA guidelines on storage of waste, Australian Standards for the storage and handling of gas cylinders and flammable and combustible liquids, WorkCover guidelines for the storage and handling of dangerous goods and occupational health and safety laws. There was also a breach of a condition of development consent prohibiting storage of chemicals in the open air.

30 The events identified in the SOAF demonstrate that the unsatisfactory storage of chemicals on the premises was identified by DEC officers on numerous occasions commencing with an inspection on 29 September 2006 (the start of the offence period). The large amount of material stored on the premises in the open as seen on that inspection is referred to at par 32 of the SOAF. The officer’s estimate was 3,000 containers and he saw leakage of chemicals from a number of those containers.

31 There were further inspections by officers of the Prosecutor on 17 November 2006, 7 December 2006 (when the officer’s estimate was 2,000 containers in the open, there was evidence of spillage and the required separation distances between stockpiles were not being observed), 19 December 2006, 2 January 2007, 4 January 2007, 16 January 2007, 5 March 2007, 6 March 2007 (when waste was removed by WSN Environments at the DEC’s direction), 9 March 2007 (when the officer considered the premises had deteriorated and that there were several spillages), 14 March 2007, 28 March 2007 and 4 April 2007. Waste was prohibited from being received at the premises under the amended licence condition from 8 February 2007. There were also inspections by officers of the WorkCover Authority on 31 October 2006, following which four improvement notices were issued under the Occupational Health And Safety Act 2000. The notices were not complied with. On 27 March 2007, following an inspection, a WorkCover inspector issued two prohibition notices and an improvement notice to Plastech. A site manifest sent to WorkCover by Ms Runge on 28 March 2007 stated that a total of 325 tonnes of waste were stored in the open yard area of the premises.

32 In terms of the efforts made to clean up the premises, a draft clean up notice was sent to Plastech on 10 November 2006 by the Prosecutor. On 1 December 2006 a clean up notice was issued which required Plastech to lawfully dispose of waste stored outside the building on the premises or relocate all materials including waste within the building by 8 December 2006. Plastech occupied the premises under the lease with the Wongs which expired on 2 December 2006. It continued in occupation of the premises after that date until evicted on 15 December 2006. A draft clean up notice addressed to the Defendant and a draft clean up notice addressed to Plastech were sent to the Defendant on 5 March 2007 and required removal of various waste types from the premises. A clean up notice was sent on 8 March 2007. It is agreed at par 97 of the SOAF that none of the clean up notices were complied with. The amount of material removed between 2 January 2007 and 13 April 2007 is identified in par 96 of the SOAF. There clearly were substantial problems with the way chemicals were stored in the open at the premises. Substantial material remained on the premises and was removed after 12 April 2007 when Plastech went into liquidation and the offence period ends.

33 In relation to the Defendant’s efforts to comply with the clean up notices, which would have mitigated and abated the potential for harm, part of the circumstances put before the Court by the Defendant is that clean up actions were hampered by the Wongs’ behaviour after 2 December 2006 when the lease between Plastech and the Wongs expired. Negotiating access arrangements was difficult after the eviction of Plastech on 15 December 2006. According to the Defendant’s affidavit, access to carry out the necessary clean up work was made difficult by the Wongs. I have summarised that part of the Defendant’s affidavit dealing with the Wongs in order to set out the Defendant’s case at par 16 and 17. Mr Wong also swore a lengthy affidavit about his actions at the premises after 15 December 2006. Mr Wong’s affidavit contains considerable detail about what occurred after 15 December 2006 on the premises from his point of view.

34 I do not consider that I need to determine the factual disputes between the Defendant and Mr Wong as to whether there was unreasonable interference by the Wongs in the Defendant’s operations after Plastech was evicted from the premises on 15 December 2006. The offence period commenced on 29 September 2006, well before the lease expired, and concluded on 12 April 2007. Even assuming that Mr Wong did make it difficult for Plastech to operate (and I will make no factual finding on that matter), the fact is that the premises belonged to the Wongs and the lease expired on 2 December 2006. According to the SOAF at par 7, at the end of the lease Plastech was to return vacant possession to Mr and Mrs Wong. According to affidavit evidence of Mrs Wong sworn 21 July 2008, the premises were in good order and not the subject of any clean up order at the time they were leased to Plastech. By 2 December 2006 when the lease expired there were very large volumes of chemicals stored in the open by Plastech, too close together based on the SOAF at par 48-50 referring to the inspection of the premises on 7 December 2006 by DEC officers. There was a failure on the part of Plastech and hence the Defendant to mitigate the harm through an effective response to the clean up orders.

35 While the Defendant’s affidavit does identify measures taken to ensure proper sorting and handling by properly qualified staff and measures such as the premises being fully bunded, the volume and storage of material was excessive. Efforts were made to remove some material, identified in the SOAF, however these efforts were not sufficient. That there were problems at the premises were drawn to the attention of the Defendant by her employees Mr Le Roy and Ms Runge on more than one occasion. A substantial reduction in the volume of chemicals stored in the open was necessary. The potential for harm caused by the offence was not mitigated or abated to the extent necessary to prevent its occurrence.

36 More practical measures to prevent, control, abate and mitigate that harm could have been taken by the Defendant.

Section 241(1)(c)- the extent to which the person who committed the offence could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence

37 The Prosecutor submitted that the Defendant, as sole director, was aware of the need to comply with the terms and conditions of the licence to avoid potential harm and has not suggested she was not aware of the likely harm that could have been caused by reason of the breach of condition 01.1. The Defendant had control once Plastech was evicted from the site by the Wongs on 15 December 2006 as licences were given to re-enter the site.

38 The Defendant submitted that she is liable because of her position in the company and she did not have the expertise of her qualified employees. As a consequence she did not have the requisite knowledge to be able to reasonably foresee the harm caused or likely to be caused. The Prosecutor’s submissions that the Defendant was aware of the likely harm mislead the Court as they are not supported by evidence and do not refer to the SOAF.

Finding

39 There is an obligation on the holder of an environmental protection licence to comply with the terms and conditions of the licence. The importance of complying with the conditions of an environment protection licence has been referred to in numerous cases, for example, Environmental Protection Authority v BlueScope Steel (AIS) Pty Limited [2004] NSWLEC 400 where Talbot J stated at [58]:

“…I accept that the operator of an industrial undertaking in the nature of that conducted by the defendant has a high responsibility to protect the environment from harm as a consequence of its operations. The legislation recognises the level of this duty by providing that a breach of the Act attracts strict liability.”

40 The Defendant submits that a combination of several difficult events resulted in her being unable to prevent the circumstances giving rise to the offence. The Defendant’s affidavit set out in par 10-13 and 15 details a number of substantial difficulties she experienced in relation to the finances and management of the company over an extended period which were not within her control. She was forced to take control of the company due to unforeseen circumstances involving the resignation of Plastech’s chairman and managing director. She had to obtain appropriate technical advice over an extended period. As she did not have the expert knowledge to conduct the business, she had to find appropriately qualified staff and had difficulty doing so. The Defendant also had difficulty securing finance for Plastech’s operations as the funding she had expected from Equinox fell through after that company collapsed. Alternative finance could not be arranged as Plastech did not have sufficient security and the business was considered by financiers as unviable once Plastech was evicted from the premises.

41 In light of that evidence, while more could have been done to prevent, control and mitigate the harm arising from the breach I accept the Defendant was taking steps to deal with the state of the premises albeit not as effectively as was required. I do not consider there was any deliberate or premeditated behaviour on the Defendant’s part giving rise to the offence with which she is charged.

Section 241(1)(d) - the extent to which the person who committed the offence had control over the causes that gave rise to the offence

42 The Prosecutor submitted that the Defendant was the sole director of Plastech and had complete control over the treatment facility’s operation.

43 The Defendant did not make specific submissions on the s 241 factors I must consider so did not make specific reference to this section. I surmise from other submissions made that the Defendant accepted that she had control over the causes of the offences but was endeavouring to address the issues in difficult circumstances giving rise to the offence. Given her position in the company she was the person who had control over the causes that gave rise to the offence. I do not accept to the extent argued by the Defendant that she was the victim of a chain of events beyond her control, given the serious nature of the undertaking on which she embarked with Plastech required that she, through the company, manage the premises so that the licence was complied with. What was needed was a substantial reduction in the volume of material stored but this was not done over a lengthy period.

44 Section 241(1)(e) is not relevant.

Prosecutor’s submissions on objective seriousness of offence

45 The Prosecutor argued that a significant factor in sentencing is whether the contravention of the licence was deliberate and culpable; see Environment Protection Authority v Eljo Pty Limited; Environment Protection Authority v Solo Waste Australia Pty Limited [2005] NSWLEC 341 at [23]. In Environment Protection Authority v Incitec Ltd (2003) 131 LGERA 176, McClellan J held at [49] that, in the circumstances of a second offence by the defendant company, there needed to be:

a penalty which [would] ensure that the defendant accepts its obligations to install and manage its processes effectively. A licence provides a privilege, permitting the holder to pollute within the terms of that licence.

46 Similar findings have been made in South Australia under comparable legislation. In Resoureco Pty Ltd v Harvey (2007) 154 LGERA 37 there were frequent breaches of a condition over a continuous period which were held to be relevant in relation to a finding that the appellant’s offending was not an isolated offence. The Prosecutor also submitted that the breach of public trust in committing the offence is highly relevant; see Pearlman J’s comments in Environment Protection Authority v HTT Huntley Heritage Pty Ltd [2003] NSWLEC 142 at [14].

47 The maximum penalty for a breach of s 64(1) indicates such an offence is treated by the legislature as serious but “should be understood as accommodating the full spectrum of gravity of possible contraventions of licence conditions”: Environment Protection Authority v Sydney Ship Repair and Engineering Pty Ltd [2005] NSWLEC 236 at [42] per Bignold J.

Defendant’s submissions on seriousness of offence

48 The Prosecutor’s submission in relation to the culpability and the deliberateness of the offence has no basis in evidence. The Prosecutor’s submissions as to knowledge and as to whether the Defendant knew why the operation was dangerous are not based on the SOAF or any other evidence. Rather the evidence shows the Defendant’s low culpability in committing the offence. The Defendant had relied on advice from qualified staff and the EPA. Instead the Defendant is liable because of the position she held in the company. She did not have the expertise of her qualified employees.

49 The statute imposes liability on the Defendant. There is no personal element in this offence as there may be in a crime such as assault. There is no evidence the Defendant acted other than appropriately given the commercial problems that befell her.

Finding on objective seriousness

50 In relation to the other s 241 factors and the need to consider the objective circumstances, regard must be had to the culpability of the Defendant and the individual circumstance which led to the commission of the offence and the consequences of those circumstances, R v Carroll [2008] NSWCCA 218.

51 The matters identified under s 241(1) suggest this matter is in the low to medium range of seriousness. The objective circumstances include the lengthy period of the offence over several months, the extent of the failure to properly store a large number of dangerous and hazardous chemicals in breach of a number of guidelines and standards and the potential for serious environmental harm.

52 In relation to the Defendant’s state of mind and reason for committing the strict liability offence, such an offence committed deliberately is more serious than one committed accidentally, see Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683, Gittany Constructions Pty Ltd v Sutherland Shire Council (2006) 145 LGERA 189 at 218. In light of the Defendant’s state of mind as disclosed in her affidavit I accept the breaches were unintentional in that she was taking active steps to manage the business without adequately trained staff and was experiencing financial difficulties. However the conduct of that business was negligent given the circumstances at the premises outlined in the SOAF which continued over an extended period of time.

Maximum penalty

53 In setting a penalty the Court should have regard to the maximum penalty applicable, as this is an expression of the seriousness Parliament attributes to the offence: see Camilleri's Stock Feeds Pty Ltd at [698] and [701] respectively that:

The task of a court is to assess the relative seriousness of the offender’s particular offence in relation to a worst case for which the maximum penalty is provided…

..the more serious the lasting environmental harm involved the more serious the offence and, ordinarily, the higher the penalty.

54 The maximum penalty for offences committed by an individual after 1 May 2006 under s 64 of the Act is $250,000 and up to $60,000 for each day the offence continues. The maximum penalty was increased to $250,000 in 2006 from $120,000. The maximum penalty for a corporation is $1 million (increased in 2006 from $250,000). Corporations can be penalised $120,000 for each day the offences continues.

55 The fourfold increase in the maximum penalty to $1 million for corporation and the more than twofold increase in the maximum penalty to $250,000 for individuals in May 2006 did not result in commensurate increases in penalties but does reflect a legislative intention to increase penalty levels substantially; Environmental Protection Authority v Nalco Australia Pty Ltd [2007] NSWLEC 831 at [28] referring to R v Slattery (1996) 90 A Crim R 519 at 524. The relative criminality must be considered in relation to the worst case for which the maximum penalty is provided; Environmental Protection Authority v Timber Industries Ltd [2001] NSWLEC 25 approved in Cabonne Shire Council vEnvironmental Protection Authority (2001) 115 LGERA 304 at [37].

Deterrence

56 Section 3A(b) CSP Act states that one of the purposes for a court in imposing a sentence is to prevent crime by deterring offenders. The Prosecutor submitted that the sentence for this offence must serve as both general and specific deterrence, pursuant to s 3A(b) of the CSP Act. An offence under s 64(1) is serious, attracting strict liability, and so general and specific deterrence are to be reflected in a penalty for breach: Environment Protection Authority v Rethmann Australia Environmental Services [2003] NSWLEC 351 at [41] and [46]. The fact that there is no observable harm to the environment does not mean an offence under s 64(1) is not serious: Environment Protection Authority v Incitec at [47]. In Environment Protection Authority v HTT Huntley Heritage Pearlman J imposed a daily penalty for 19 days after finding that a breach of s 64(1) continued after the first warning of breach. The offence in that matter occurred over the course of several months.

57 The Prosecutor submitted that an important message needs to be sent to other companies engaged in waste treatment and so the penalty must incorporate this element. Sentences for breach of environment protection licence and in relation to environmental offences generally must embrace powerful considerations of general deterrence; Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 per Mahoney JA at 367.

58 Specific deterrence is also sought by the Prosecutor so as to ensure the Defendant continues to take the necessary steps and precautions to comply with the legislation given it is unknown whether the Defendant will engage in a similar business in future.

59 The Defendant argued the Prosecutor’s submissions are not supported by the evidence. There is no basis in law or fact to impose a deterrent sentence on the Defendant. In her current personal circumstances she is very unlikely to engage in any similar business activity. The Defendant’s counsel submitted that the Defendant is bankrupt and this was confirmed by the Defendant in her oral evidence. Plastech is in liquidation. Her counsel submitted that the Court should not have regard to the Prosecutor’s submission that the penalty should act as a deterrent, since the Defendant ultimately will not have the capacity to pay.

Finding on deterrence

60 As the quantum of the fines allowed to be imposed under environment protection legislation indicates, general deterrence is a vital consideration in sentencing; see Axer per Mahoney JA at 359:

The quantum of the fines which the legislation allows to be imposed has no doubt been fixed not merely to indicate the seriousness with which such pollution is regarded but also to deter those engaged in such activities and to procure that they will take the precautions necessary to ensure that it does not occur.

61 Nominal fines will not act as a deterrent: Bentley v BGP Properties Pty Limited (2006) 145 LGERA 234 at [140]. I accept the Prosecutor’s submissions on the need for general deterrence to be reflected in the penalty.

62 In Veen v The Queen [No. 2] (1988) 164 CLR 465 at 477 the majority judgment of Mason CJ, Brennan, Dawson and Toohey JJ stated that past criminal behaviour is relevant in sentencing:

to show whether the instant offence is an

uncharacteristic aberration

or whether the offender has manifested in his commission of the instant offence a

continuing attitude of disobedience of the law

There is no need to consider specific deterrence in light of the Defendant’s personal circumstances which suggest she is highly unlikely to undertake similar activities again.

Means to pay - s 6 Fines Act 1996

63 Section 6 of the Fines Act 1996 provides that in fixing a penalty the Court is required to consider information regarding the means of the accused as is reasonably and practicably available. A penalty imposed by the Court for an offence under the POEO Act is not a debt provable in bankruptcy. This means that the Defendant will continue to be liable to pay if she is discharged (Environment Protection Authority v Ableway Waste Management Pty Ltd and Anor [2005] NSWLEC 469 at [35]). While the Defendant may emerge from bankruptcy in the future, the oral and written evidence is that the Defendant is 64 years old, at the end of her working life and has no assets and no job. It is very unlikely that she will be ever able to pay a substantial fine and this should be taken into account in determining any penalty according to her counsel.

64 The Prosecutor submitted that, in the case of serious offences, the financial impecuniosity of the Defendant must have little bearing on the penalty determined. In Environment Protection Authority v Hogan [2008] NSWLEC 125, the financial position of the defendant, an undischarged bankrupt with an ongoing earning capacity, was given some but not significant weight. In Environment Protection Authority v Douglass [No 2] [2002] NSWLEC 92, also involving an impecunious offender, Lloyd J took into account the seriousness of the offence and the need for general deterrence in awarding costs for over $1 million in mitigation of the environmental harm.

65 The appropriate method for considering a defendant’s means to pay was set out by Finlay J in R v Rahme (1989) 43 A Crim R 81 at 87:

…once a determination has been made that a fine should be imposed the correct procedure in assessing the appropriate amount of the fine is to determine it by reference to the gravity of the offence for which it is imposed. If the court is satisfied that the offender would be unable to pay the amount determined it may reduce it to take account of the offender's means and impecuniosity.

66 I will take into account that the Defendant has limited ability to pay a substantial fine, on the basis identified in Rahme.

Mitigating circumstances

67 Under s 21A(3) of the CSP Act a number of mitigating factors must be taken into account in determining penalty.

Early guilty plea – s 21A(3)(k), s 22 CSP Act

68 The Defendant pleaded guilty at the first reasonable opportunity. A plea of guilty entitles the Defendant to a discount in penalty under s 22 of the CSP Act in the range of 10-25 per cent: R v Thomson; R v Houlton (2000) 49 NSWLR 383; R v Sharma (2002) 54 NSWLR 300.

No prior convictions - s 21A(3)(e) CSP Act

69 The Defendant has no prior convictions for environmental offences in NSW.

70 The Defendant co-operated with and assisted the Prosecutor in its investigations of this matter.

Contrition/remorse - s 21A(3)(i) CSP Act

71 The Prosecutor submitted that the Defendant has not expressed contrition and this is not a matter that can be taken into account in mitigation. The Defendant perceives herself as a victim of circumstance and of Mr and Mrs Wong’s conduct after 15 December 2006.

72 The Defendant submitted that the Court cannot infer that there is no remorse by the fact the Defendant has not apologised. The evidence, personal history of the Defendant and the whole circumstances suggest that remorse would be palpable without her having to say “I’m sorry”. She pleaded guilty early, agreed to a statement of agreed facts, co-operated with the Prosecutor, and the offence does not involve mens rea. The Prosecutor’s submission that the fact the Defendant did not say “I’m sorry” would encourage the Court to penalise the Defendant to prevent future similar conduct on her part is wrong in law and in fact. I accept the Defendant’s submissions that she has demonstrated remorse.

Good character - s 21A(3)(f) CSP Act

73 The Prosecutor does not contest that the Defendant has no prior convictions and is otherwise of good character. I accept that the Defendant is of good character.

Evenhandedness

74 The Prosecutor acknowledged that the wide divergence of facts and circumstances in various cases makes it difficult to compare the penalty in one with that in another; see Axer per Badgery Parker J at 365. The cases referred to by the parties concern offences by corporations when the maximum penalty was $250,000 (now $1 million). The daily penalty has continued at $120,000 per day for corporations.

75 The Prosecutor submitted that a comparable case at the lower end of the penalty range is Environmental Protection Authority v Ballina Shire Council (2006) 148 LGERA 278. At the higher range is Environmental Protection Authority v Australian Waste Recyclers 1 Pty Ltd [2005] NSWLEC 739. The Prosecutor submitted that the latter case would be a more useful guide given the overwhelming seriousness for potential environmental harm in the present offence and the Defendant’s lack of insight. The Defendant argued that the Prosecutor’s submissions direct the Court to impose a heavy penalty. This is in breach of the Prosecutor’s duties to the Court.

76 In Environment Protection Authority v Rethmann Australia Environmental Services Pty Ltd the defendant pleaded guilty to two offences of a breach of a licence condition requiring licensed activities to be carried out in a competent manner. The incident arose from the operation of a tanker truck used in its liquid waste transport and disposal service. The first charge was a failure by the defendant to properly instruct employees on dealing with odour incidents. The second charge was the failure to properly deal with an odour incident which physically affected a number of people and inconvenienced them for several days as they required medical treatment. Both offences were considered serious as the licence condition was “a statement of a very general common sense rule or duty to conduct a hazardous task in a competent manner” [42]. On the first charge, Talbot J accepted that the employee paid little regard to guidance and instruction he had received and therefore the defendant was not entirely derelict in its duty to properly instruct employees. For both offences, Talbot J noted the defendant’s early guilty plea and cooperation with the prosecutor in completing a statement of agreed facts as well as its exemplary record of no prior offences of irresponsible conduct. The seriousness of the harm caused was also considered. The defendant was fined $20,000 for the first offence and $50,000 for the second offence (maximum penalty $250,000).

77 In Environment Protection Authority v HTT Huntley Heritage Pty Ltd a licence condition limiting the nature of waste material that could be brought upon the colliery site was breached. The defendant accepted 37,000 tonnes of non-authorised material. The contravention was found to be deliberate and culpable. Pearlman J also stated that the licence conferred a privilege on the defendant and its deliberate breach amounted to a serious breach of public trust. Pearlman J accepted the prosecutor’s submissions that the waste contained concentrations of lead and this was likely to cause environmental harm. The likely harm could have been prevented by the defendant refusing the waste after verification that it was not permitted under licence. This was a matter over which it had full control. A penalty of $60,000 (maximum penalty $250,000) was imposed along with a daily penalty of $3,000 for 19 days, totalling $57,000.

78 In Environment Protection Authority v Incitec Limited the defendant contravened a licence condition by discharging waste water with a lower than permitted pH level into the Hunter River. The discharge was the result of a rupture of a tube in an acid heater in the plant used to manufacture ammonium nitrate. Although an alarm was triggered, there was no appropriate response by the defendant for two hours. McClellan J found there was “a failure in the defendant to provide for appropriate management of its facility” [45]. There was no actual observable environmental harm but some harm was likely to have been caused by the discharge and would have been localised and short term in nature. McClellan J stated that this harm was more than negligible but not substantial. The defendant had two convictions for breaches of environmental laws on two separate occasions. In mitigation, McClellan J considered the defendant’s cooperation with the prosecutor, its efforts to participate with the local community in harm minimisation, its expression of genuine regret and the steps taken since the event to prevent further offences. The plea of guilty was given little weight because the defendant was obliged to report the breach as a licence condition. Overall the offence was viewed as serious and the defendant was fined $90,000 (maximum penalty $250,000).

79 In Environment Protection Authority v Sydney Ship Repair and Engineering Pty Limited there was a contravention of a licence condition requiring bulk liquid storage containers and drums to be stored in bunded and roofed areas. After the offence, the requisite bunding had been installed and further water treatment introduced so that the activity creating the waste became permitted by the EPA. No water pollution resulted from the breach. The defendant had no prior convictions, expressed contrition, entered a guilty plea at an early stage, had fully cooperated with the investigation and had taken subsequent remedial action rendering it unlikely any repeat offences. A penalty of $12,500 was imposed (maximum penalty $250,000).

80 In Environment Protection Authority v Australian Waste Recyclers 1 Pty Ltd the defendant was guilty of breaching a condition of its licence by receiving hazardous waste which it was not permitted to do. The defendant’s director knew the waste was hazardous and of a type not permitted to be held at the site. Accepting the waste amounted to “dishonest conduct, recklessness or gross negligence” [137] and the defendant’s method of treating the waste “showed complete incompetence, lack of expertise and lack of awareness of the appropriate guidelines” [145]. The defendant made a substantial profit as a result of its deliberate conduct. The offence was committed without regard for public safety and no measures were taken by the defendant to ensure the waste would be dealt with safely despite knowing the dangers. The defendant had complete control over the commission of the offence and the conduct was deliberate. The defendant’s guilty plea was considered but the penalty reduction applied was 10 per cent as the plea came less then two days before the hearing. There was no evidence of genuine contrition or that the company had taken any steps to prevent a similar breach in the future. There was no evidence that the company had cooperated with the authorities. Cowdroy J imposed a penalty for the offence of $150,000 (maximum penalty $250,000) and a daily penalty for the ongoing breach which lasted 128 days. The defendant was fined a total of $225,000.

81 In Environment Protection Authority v Ballina Shire Council the defendant contravened a licence condition requiring monitoring leachate levels at a solid waste landfill site. There was a systemic failure over a period of time to monitor because of an absence of a proper system of management or control. There was no actual environmental harm. In considering the seriousness of the offence Preston J stated that the condition of the licence was more than an administrative requirement and instead it was “an integral part of prudent environmental management and regulation” [76] of the site. Preston J considered that the ongoing breach increased objective seriousness. The fact that monitoring did not occur meant that data was not provided to the licensing body and such data could have been used for the purpose of adaptive management. This also added to objective seriousness. Preston J considered the defendant’s early guilty plea, evidence of the defendant’s contrition and remorse (though it was noted the defendant did attempt to evade responsibilities by not alerting the EPA of its monitoring failure). There was cooperation with the authorities however this occurred only after there had been a failure by the Council to disclose the monitoring breaches. Preston J stated that the case was at the lower end of the middle range and imposed a penalty of $35,000 (maximum penalty $250,000).

82 Contrary to the Prosecutor’s submissions I do not consider this case is as serious as Australian Waste Recyclers and that case is not a suitable guide for sentencing in this matter. The other cases mentioned above all concern corporate defendants when the maximum penalty was $250,000. They show a range for low level offences of $12,500 (Sydney Ship Repair) to $20,000 (Rethmann), low to medium $35,000 (Ballina Shire Council) and for more serious offences $90,000 (Incitec) to $157,000 including daily penalties (Huntley), to $225,000 including daily penalties (Waste Recyclers).

Claim under s 246 POEO Act for costs incurred by EPA

83 It is also relevant to consider the liability for clean up costs and the amount of those costs in assessing the appropriate level of penalty.

84 Section 246 of the Act states:

246 Orders for costs, expenses and compensation at time offence proved

(1) The court may, if it appears to the court that:

(a) a public authority has incurred costs and expenses in connection with:

(i) the prevention, control, abatement or mitigation of any harm to the environment caused by the commission of the offence, or

(ii) making good any resulting environmental damage, or

(b) a person (including a public authority) has, by reason of the commission of the offence, suffered loss of or damage to property or has incurred costs and expenses in preventing or mitigating, or in attempting to prevent or mitigate, any such loss or damage,

order the offender to pay to the public authority or person the costs and expenses so incurred, or compensation for the loss or damage so suffered, as the case may be, in such amount as is fixed by the order.

(2) An order made by the Land and Environment Court under subsection (1) is enforceable as if it were an order made by the Court in Class 4 proceedings under the Land and Environment Court Act 1979.

85 The EPA has claimed $88,395.75 in clean up costs pursuant to s 246 of the POEO Act. The Defendant does not dispute that amount is payable.

Claim under s 246 POEO Act for costs incurred by Wongs

86 A controversial matter in the proceedings is the claim by the EPA for the clean up costs incurred by Mr and Mrs Wong, the owners of the premises which Plastech leased for its business. Lengthy affidavits of Mr Wong and the Defendant concerning events after the lease to Plastech expired on 2 December 2006 were read. Some of that material in the Defendant’s affidavit is summarised above at par 16-17. Mr Wong, prior to his retirement, was the founder and managing director of CWDS Pty Limited and the joint owner, with Mrs Wong, of the premises.

87 Mrs Wong stated in that part of her affidavit dated 21 July 2008 that was read at the sentence hearing that it had always been her and Mr Wong’s intention to sell the premises at the end of Plastech’s lease, which ran from 3 December 2004 to 2 December 2006, a one year option having been exercised by the Defendant. At the time the premises were leased, they were in good order, not contaminated and not the subject of any cleanup notice. Cleanup notices were issued to Mr and Mrs Wong by the Prosecutor on 6 July 2007 and 1 August 2007. The EPA now claims the clean up costs of complying with those clean up notices on behalf of the Wongs pursuant to s 246.

88 The Defendant opposes the payment of the Wongs’ clean up costs on the basis that the claim was unreasonable. The Wongs acted unreasonably in preventing the Defendant from cleaning up the site and the amount claimed was excessive. The Prosecutor’s argument as to the Wongs’ position and conduct is inappropriate. The amount of clean up costs claimed is also excessive and unreasonable.

89 During the sentence hearing the concession was made by both the EPA on behalf of the Wongs and the Defendant that the amount of the claim for clean up costs was $375,933.43. As a consequence that part of the affidavit of Mrs Wong which identified the clean up costs incurred by her and her husband was not read by the Prosecutor.

Finding

90 The EPA is claiming the clean up costs of a third party, in this case Mr and Mrs Wong pursuant to s 246. The clean up notices served by the EPA in July and August 2007 and complied with by the Wongs relate to the chemicals left on the premises by Plastech when the premises were vacated by that company, now in liquidation. The lease with the Wongs was with Plastech not the Defendant. She has pleaded guilty to this offence and her liability arises under s 169 of the POEO Act. The issue arises of whether she should also be personally liable for the clean up costs of the Wongs pursuant to an order under s 246. Section 246 states that once an offence has been proved, as it has in this case, a person who suffers loss by reason of the commission of the offence and incurs costs in preventing or mitigating that loss may recover the costs and expenses incurred in this Court. In Environment Protection Authority v Obaid [2005] NSWLEC 171 Lloyd J ordered an individual defendant under s 246 who was guilty because he was a director of a company to pay clean up costs.

91 The claim by the EPA on behalf of the Wongs is legally available under s 246 and the circumstances referred to in the previous paragraph suggest that I should make an order for payment of the Wongs’ clean up costs. I am also guided by the fact that such an order has been made by another judge in at least one matter in this Court in similar circumstances to those before me.

92 It is therefore necessary to determine the amount of clean up costs which should be ordered. As already noted above in par 33, there was dispute by the Defendant about the Wongs’ actions in relation to the premises after the eviction of Plastech on 15 December 2007. As noted at par 34, I did not consider it necessary to determine all the factual matters in issue as to the reasonableness of the Wongs actions in relation to the eviction of the Defendant on 15 December 2007 and then the limited access provided to the premises they own. I have not therefore set out in detail Mr Wongs affidavit as to what occurred from his point of view. The Defendant alleged in her affidavit various actions by Mr Wong in particular which she considers caused her/Plastech difficulty in cleaning up the site. As her affidavit sworn 25 November 2008 was received on the first day of the hearing on 25 November 2008, Mr Wong did not have the time to prepare an affidavit in reply but did provide an unsworn short form response to the allegations made in the Defendant’s affidavit denying her version of events. He was not cross-examined, nor was the Defendant, about the areas of disagreement between them.

93 In light of the agreement at the hearing concerning the amount of clean up costs incurred and given that there is no legal impediment to the making of an order for payment of clean up costs I do not consider it is necessary that I rule on the dispute between the Wongs and the Defendant. The agreement concerning clean up costs overcomes any need to try and sort out what parts of the claim are unreasonable and therefore whose behaviour may have caused these to be unreasonable.

94 Unfortunately a further matter then arose after the sentence hearing in relation to the amount of clean up costs. A financial assurance (bond) may be required as a condition of licence under s 298(1) of the POEO Act. Plastech was required to pay and did pay a bond to the Prosecutor of $120,000 under its licence. The Defendant’s counsel stated from the bar table at a mention on 25 February 2009 (after the sentence hearing in 2008) that the Defendant was unaware of what had happened with the bond and submitted this should be deducted from any amount of clean up costs which the Court orders to be paid by the Defendant. In further written submissions dated 26 February 2009 filed after that February mention the Prosecutor advised that the bond had already been paid to the Wongs in several stages to assist in payment of the clean up costs pursuant to the clean up notice. The Wongs estimated that their clean up costs were $681,933.43. The amount of $561,933.43 claimed at the start of the sentence hearing took into account the bond of $120,000 already paid to the Wongs. The first time I was aware the total of the clean up costs was more than $561,933.43 was in these written submissions. I was not informed about the relevance of the bond at the time agreement was reached.

95 Upon further inquiry from me about the agreement on clean up costs in relation to the bond, the Defendant advised recently through her counsel that she had settled on the agreed amount on the basis this was the full amount of clean up costs without the bond having been deducted. The relevant paragraph in Mrs Wong’s affidavit which identifies that the amount of $561,933.43 was arrived at by deducting the bond of $120,000 from $681,933.43 was not read at the sentence hearing. It is clear from the transcript on 25 November 2008 that the only reason Mrs Wong’s affidavit containing this information was not read was because of the agreement reached. That affidavit was served on the Defendant on 24 July 2008.

96 The circumstances are unfortunate to say the least. I have raised the differences of view as to the basis of settlement with the parties. The Defendant has agreed that I should determine the matter without further hearing. The Prosecutor in its written submissions dated 25 March 2009 submitted that the Court should read at least paragraph 7 (but I note the paragraph reference should be par 10) of the Mrs Wong’s affidavit which makes clear the amount of clean up costs overall incurred by the Wongs was $681,933.43 and that the bond was deducted from that amount. In the circumstances I consider I should read par 10.

97 Mrs Wongs’ affidavit in par 10 clearly states that the clean up costs were $681,933.43 from which the bond was deducted to arrive at $561,933.43. This circumstance therefore should have been known to the Defendant from the date of service of the affidavit of 24 July 2009. I consider that an order in the full amount agreed at the hearing of $375,933.43 should be made pursuant to s 246 payable by the Defendant to Mr and Mrs Wong.

Costs of the proceedings

(i) vacation of hearing date

98 The first hearing of this matter on 31 July 2008 was vacated on 30 July 2008 on the Defendant’s application. The Defendant has submitted that each party should pay its own costs of the vacation. The Prosecutor argues that is costs of the vacation ought be paid.

99 Section 257F of the Criminal Procedure Act 1986 applies to these proceedings by reason of s 41 of the Land and Environment Court Act 1979 (the Court Act). Section 257F provides:

257F Costs on adjournment

(1) A court may in any proceedings under this Part, at its discretion or on the application of a party, order that one party pay costs if the matter is adjourned.

(2) An order may be made only if the court is satisfied that the other party has incurred additional costs because of the unreasonable conduct or delays of the party against whom the order is made.

(3) The order must specify the amount of costs payable or may provide for the determination of the amount at the end of the proceedings.

(4) An order may be made whatever the result of the proceedings.

100 The Prosecutor submitted that it is entitled to the costs of the Defendant’s motion to vacate heard on 30 July 2008 and to the costs thrown away by the vacation of the original hearing date of 31 July 2008. The vacation was necessary because of unreasonable delays by the Defendant. The Prosecutor relied on an affidavit of Mr Ross Fox affirmed on 31 July 2008. The affidavit was filed in response to the affidavit of Mr Gus Dib, solicitor for the Defendant, sworn and filed on 29 July 2008 in support of the application to vacate the original hearing dates. The affidavit of Mr Fox evidences the factual matters discussed below.

101 The Prosecutor argued that it served on the Defendant the majority of its evidence by 20 December 2007. By that date, the evidence clearly indicated to the Defendant the case she had to meet. The Prosecutor served a draft Statement of Agreed Facts on the Defendant on 30 May 2008 in accordance with the Court’s directions. All attachments to that Draft Statement of Agreed Facts had already been served on the Defendant in December 2007.

102 The Prosecutor made considerable attempts to negotiate the Statement of Agreed Facts to narrow the issues for the hearing. The Defendant had been directed to serve any proposed changes to the draft Statement of Agreed Facts by 20 June 2008. The solicitor for the Prosecutor had telephone conversations with counsel for the Defendant on 24 June 2008, 2 July 2008 and 7 July 2008, seeking a written response to the Prosecutor’s draft Statement of Agreed Facts. The Defendant did not provide any written comments on the draft until 10 July 2008, and did not serve her proposed changes until 14 July 2008.

103 On 21 July 2008 the Prosecutor served on the Defendant a response to the Defendant’s version of the draft Statement of Agreed Facts and a further marked-up version of the draft Statement of Agreed Facts. On 24 July 2008 the Prosecutor faxed a letter to the Defendant requesting that she identify those witnesses required for cross-examination. No response was received.

104 On 29 July 2008 the Prosecutor had still not received a response from the Defendant to the further proposed Statement of Agreed Facts sent by the Prosecutor on 21 July 2008. The Prosecutor served on the Defendant a letter seeking an urgent response. The Court had directed the Defendant to file and serve her evidence by 4 July 2008. At the date of the application to vacate the hearing on 30 July 2008, the Defendant had not provided her evidence to the Prosecutor.

105 The Prosecutor was ready to proceed with the hearing on 30 July 2008. The Defendant sought the vacation of the hearing date because the Defendant was not ready to proceed. This was not due to any conduct of the Prosecutor. That the Defendant is impecunious is not a relevant factor in the awarding of costs.

106 The Defendant argued that both parties were essentially responsible for the delay in the preparation of the hearing due to ongoing disagreement about the appropriate content of the SOAF. This resulted in the necessity for the vacation of the hearing date so that each party should pay its costs.

Finding on costs of the vacation

107 The Defendant applied for a vacation of the hearing date in this matter on 30 July 2008, the day before the hearing, and this was granted by me as it was clear that the agreement on a lengthy SOAF could not be achieved by 31 July 2008. I did hear argument about some evidentiary matters at 2 pm on 31 July 2008 as the Prosecutor wished to rely on additional evidence not in the SOAF which the Defendant opposed. The hearing on 31 July 2008 was otherwise adjourned to a later occasion. I refused the application of the Prosecutor to rely on additional evidence in relation to affidavits of Mr Bone at the adjourned sentence hearing on 25 November 2008.

108 While the Prosecutor alleges there has been delay on the Defendant’s part which gave rise to the application to vacate, it was apparent at the sentence hearing that there was considerable disagreement concerning the content of the SOAF between the parties and whether additional evidence could be relied on by the Prosecutor. The SOAF ultimately agreed was extensive, albeit less than had originally been sought by the Prosecutor judging from the number of paragraphs identified as having been deleted. The steps in the litigation as outlined in the affidavits of both of the solicitors makes clear that there was considerable difficulty in finalising the SOAF. The final version was lengthy but it was clear from the large number of deletions that a far lengthier version was originally served and was the subject of much debate. It was also clear from the arguments before me about whether the Prosecutor could rely on additional affidavit evidence that the parties did not satisfactorily resolve between them whether the SOAF was to be the totality of the material before the Court before the sentence hearing. The Defendant believed that it was and opposed the additional expert evidence being relied on by the Prosecutor. I upheld that argument in Environment Protection Authority v Buchanan [2008] NSWLEC 315 in relation to some of the additional evidence the Prosecutor sought to rely on. The extent of the lengthy SOAF no doubt contributed to the delay in its finalisation.

109 The chronology identified in the solicitor’s affidavits does not suggest any greater fault by one party than the other in achieving the finalisation of the SOAF. I do not agree with the Prosecutor’s submission that there was obviously delay on the Defendant’s part given the lengthy SOAF which had to be negotiated and the uncertainty about whether additional evidence should or could be relied on by the Prosecutor. Costs when ordered are compensatory; Latoudis v Casey (1990) 170 CLR 534. I have discretion in how costs ought be awarded under s 257F, provided I make any order judicially. I consider each party should pay its costs of the vacation in light of the circumstances giving rise to the vacation.

(ii) costs of the hearing on sentence

110 Section 257B of the Criminal Procedure Act 1986 applies to these proceedings by reason of s 41 of the Court Act . Section 257B provides:

257B When costs may be awarded to prosecutor

A court may, in and by a conviction or order, order an accused person to pay to the registrar of the court, for payment to the prosecutor, such costs as the court specifies or, if the conviction or order directs, as may be determined under section 257G, if:

(a) the court convicts the accused person of an offence, or

(b) the court makes an order under section 10 of the Crimes (Sentencing Procedure) Act 1999 in respect of an offence

Prosecutor’s submissions

111 The principles relating to the award of costs to a prosecutor were discussed by Lloyd J in Environment Protection Authority v Taylor (No 4) (2002) 120 LGERA 414 at 420-22. Although the principles relating to costs in civil proceedings are not precisely analogous to those in summary criminal proceedings, they do inform the principles for exercise of the power to order costs in criminal proceedings: Latoudis v Casey (1990) 170 CLR 534 at 568 per McHugh J; Taylor (No 4) 421-22 per Lloyd J. The objective of an order for costs is not to punish the unsuccessful party, but to compensate the successful party for the expense to which it has been put: Latoudisv Casey at 543 per Mason CJ, at 562-3 per Toohey J and at 566-7 per McHugh J.

112 In the absence of special circumstances, a prosecutor has a reasonable expectation of an award of costs in proceedings in which it has been successful, such as where a defendant is convicted or the offence is found proved: Taylor (No 4) at 421-2 per Lloyd J.

113 The fact that the hearing on penalty ran for two days was not due to any improper or disentitling conduct by the Prosecutor but due to a robust contest between the two parties to the proceedings. To the extent that the Defendant suggests otherwise, no particulars of this purported disentitling conduct are given. Factors contributing to the length of the hearing these were not the fault of the Prosecutor but the Defendant. They included:

(a) the Defendant’s delay in communicating to the Prosecutor her position on the agreed facts. Had this been done in accordance with the timetable then the Prosecutor could have formulated a different approach to the agreed facts. Instead it was not until the first day of the hearing that the Defendant’s position became clear;

(b) the Defendant’s objections to the Prosecutor’s legitimate attempt to rely on Mr Boné’s expert evidence on environmental harm to supplement the Statement of Agreed Facts (see Environment Protection Authority v Buchanan (No 1)). That the Prosecutor was not successful in its application to rely on this material does not constitute disentitling conduct. Parties routinely seek to put forward evidence which, upon ruling, is rejected; and

(c) the Defendant’s significant objections to the Wongs’ evidence, which led to an argument on the admissibility of that evidence. Again, for the reasons given above, this does not constitute disentitling conduct on the part of the Prosecutor.

114 The Prosecutor pressed the evidence of Mr Boné and the Wongs in order to assist the Court to appreciate the seriousness of the offence. The Prosecutor submitted that it did not engage in any conduct that would justify a departure from the ordinary rule that the Prosecutor be compensated for its costs of the full two days of the penalty hearing.

Defendant’s submissions

115 The Defendant argued that she has made extensive admissions in the SOAF and the matter should have been dealt with in one day. Any costs order the Court does make should be restricted to one day.

Finding on costs of final hearing

116 The Prosecutor would generally be entitled to costs under s 257B in the absence of any disentitling conduct on its part. The Defendant does not dispute that costs ought be paid to the Prosecutor but considers any costs order ought be limited to only one hearing day. The sentence hearing took two days.

117 Despite agreement on an extensive SOAF in this matter the parties continued to be in dispute about the admission of further evidence at the hearing. While it appears there was difficulty in finally establishing each other’s respective positions on whether the SOAF was the sum total of evidence or not up until that point and whether the EPA could rely on additional evidence, there is no disentitling conduct on the Prosecutor’s part which suggests costs ought not be payable for the whole hearing. I do not consider the Prosecutor’s actions in seeking to rely on additional material of Mr Bone or the Wongs unreasonably extended the hearing. Nothing else in the conduct of the proceedings by the Prosecutor suggests disentitling conduct such that I should award only one day of costs. The amount of costs payable can be considered in relation to the level of penalty imposed (EPA v Barnes [2006] NSWCCA 246).

Appropriate penalty

118 The necessary balancing of the objective and subjective factors in this matter has been particularly complex due to the offence occurring over a lengthy period of over six months and the personal circumstances of the individual Defendant. She is also liable for the substantial clean up costs of both the EPA and Mr and Mrs Wong and the legal costs of the Prosecutor. Any penalty I impose should be reduced to some extent to take these matters into account. She has very limited ability to pay any of these amounts in her current financial circumstances and little prospect of doing so in the future.

119 In Environment Protection Authority v Douglass (No 2) the defendant used land as a waste facility without lawful authorisation. Drums of waste containing a variety of toxic and flammable liquids were badly corroded or in poor condition and the contents of some leaked and escaped onto adjoining properties. As there was actual and potential environmental harm which was foreseeable and which could easily have been prevented the offence was considered to be in the more serious category. The defendant had very limited means to pay any penalty, as he had no steady income or assets. Lloyd J asked at [15]:

Under these circumstances the question is posed, what is the utility of imposing a substantial penalty upon the defendant? The purpose of a penalty is not only to act as a specific deterrent but to act as a general deterrent, that is, to discourage others who might be minded to commit similar or like offences in the future. I also must have regard to the seriousness of the offence in this instance.

120 In a case described as extremely serious, a significant penalty was ordered by Talbot J in Environment Protection Authority v Emerald Peat Pty Ltd (in liq) [1999] NSWLEC 147. The defendant operated a peat mine and a split in a pipe at the site caused the pollution of nearby waters with serious environmental harm resulting. Measures available to prevent and mitigate the harm were not taken and no action to report the offence or cooperate with authorities was taken. A base penalty of $85,000 was ordered despite the defendant company being in liquidation and obvious questions over its ability to meet the commitment of the substantial fine. While the circumstance in both Douglass (No 2) and Emerald Peat were more serious than those before me, I have included these case references as support for my decision to impose a more than nominal penalty on the Defendant in light of the objective seriousness of the offence.

121 A fine of $40,000 and a daily penalty of $500 per day commencing from the first day of the offence on 29 September 2006 up to the date of eviction of Plastech from the premises (15 December 2007), a total of 78 days, is appropriate. I will assume that the Defendant did have trouble in the period after 15 December 2006 in cleaning up at the premises. The daily penalty totals $39,000, resulting in a total fine of $79,000. Taking into account the mitigating factors before me, the substantial clean up costs to be ordered and the requirement to pay the Prosecutor’s costs of the sentence hearing, I consider a penalty of $39,500 should be imposed.

Orders

122 The Court orders that:

1. The Defendant is convicted of the offence with which she is charged.

2. The Defendant is fined the sum of $39,500 to be paid to the Registrar of the Court within 28 days of today's date.

3. Pursuant to s 246 of the Protection of the Environment Operations Act 1997 the Defendant is ordered to pay the Prosecutor’s clean up costs of $88,395.75.

4. Pursuant to s 246 of the Protection of the Environment Operations Act 1997 the Defendant is ordered to pay the clean up costs of Mr and Mrs Wong of $375,933.43.

5. Each party should pay its costs of the vacation of the hearing on 31 July 2008.

6. Subject to order 5, the Defendant must pay the Prosecutor’s costs of the proceedings as agreed or assessed.

7. The exhibits may be returned.

CITATION:	Environment Protection Authority v Buchanan (No 2) [2009] NSWLEC 31
PARTIES:	PROSECUTOR Enivronment Protection Authority DEFENDANT Ruth Buchanan
FILE NUMBER(S):	50074 of 2007
CORAM:	Pain J
KEY ISSUES:	ENVIRONMENTAL OFFENCES :- sentencing - breach of conditions of environment protection licence - operation of hazardous industrial waste treatment and storage facility - clean up notices issued not complied with - sole director liable for environmental offence - potential for significant environmental harm - harm foreseeable - negligent conduct of business - consideration of means to pay as defendant bankrupt - mitigating factors - whether third party clean up costs payable - whether legal costs payable - appropriate penalty
LEGISLATION CITED:	Protection of the Environment Operations Act 1997 s 3, s 64, s 169, s 241, s 246, s 298(1) Crimes (Sentencing Procedure) Act 1999 s 3A, s 21A, s 22 Criminal Procedure Act 1986 s 257 Fines Act 1996 s 6 Land and Environment Court Act 1979 s 41 Occupational Health And Safety Act 2000
CASES CITED:	Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 Bentley v BGP Properties Pty Limited (2006) 145 LGERA 234 Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 Carbonne Shire Council v Environmental Protection Authority (2001) 115 LGERA 304 Environment Protection Authority v Ableway Waste Management Pty Ltd and Anor [2005] NSWLEC 469 Environmental Protection Authority v Australian Waste Recyclers 1 Pty Ltd [2005] NSWLEC 739 Environmental Protection Authority v Ballina Shire Council (2006) 148 LGERA 278 Environment Protection Authority v Barnes [2006] NSWCCA 246 Environmental Protection Authority v BlueScope Steel (AIS) Pty Limited [2004] NSWLEC 400 Environment Protection Authority v Buchanan [2008] NSWLEC 315 Environment Protection Authority v Douglass [No 2] [2002] NSWLEC 94 Environment Protection Authority v Eljo Pty Limited;Environment Protection Authority v Solo Waste Australia Pty Limited [2005] NSWLEC 341 Environment Protection Authority v Emerald Peat Pty Ltd (in liq) [1999] NSWLEC 147 Environment Protection Authority v Hogan [2008] NSWLEC 125 Environment Protection Authority v HTT Huntley Heritage Pty Ltd [2003] NSWLEC 142 Environment Protection Authority v Incitec Ltd (2003) 131 LGERA 176 Environmental Protection Authority v Nalco Australia Pty Ltd [2007] NSWLEC 831 Environment Protection Authority v Obaid [2005] NSWLEC 171 Environment Protection Authority v Rethmann Australia Environmental Services [2003] NSWLEC 351 Environment Protection Authority v Sydney Ship Repair and Engineering Pty Ltd [2005] NSWLEC 236 Environment Protection Authority v Taylor (No 4) (2002) 120 LGERA 414 Environmental Protection Authority v Timber Industries Ltd [2001] NSWLEC 25 Environment Protection Authority v Waste Recycling and Processing Corp (2006) 148 LGERA 299 Gittany Constructions Pty Ltd v Sutherland Shire Council (2006) 145 LGERA 189 Latoudis v Casey (1990) 170 CLR 534 Newcastle City Council v Pace Farm Egg Products [2002] NSWLEC 66 R v Carroll [2008] NSWCCA 218 R v Rahme (1989) 43 A Crim R 81 R v Sharma (2002) 54 NSWLR 300 R v Slattery (1996) 90 A Crim R 519 R v Thomson; R v Houlton (2000) 49 NSWLR 383 Resoureco Pty Ltd v Harvey (2007) 154 LGERA 37 Veen v The Queen [No. 2] (1988) 164 CLR 465
DATES OF HEARING:	25 November 2008 26 November 2008 30 January 2009 (written submissions) 6 February 2009 (written submissions) 25 February 2009 26 February 2009 (written submissions)
DATE OF JUDGMENT:	30 March 2009
LEGAL REPRESENTATIVES:	PROSECUTOR Ms R Pepper SOLICITORS Environment Protection Authority DEFENDANT Mr J Rowe SOLICITORS Dib Lawyers