Environment Protection Authority v Sydney Drum Machinery Pty Ltd (No 4)

[2016] NSWLEC 59

Land and Environment Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Environment Protection Authority v Sydney Drum Machinery Pty Ltd (No 4) [2016] NSWLEC 59
Hearing dates:	16, 17, 18 June 201429, 30 September 20141,2,3,7,8 October 20144 December 2014
Date of orders:	01 June 2016
Decision date:	01 June 2016
Jurisdiction:	Class 5
Before:	Craig J
Decision:	(1) In proceedings 2016/158256 (13/50010) I record plea of guilty entered by the defendant on 29 September 2014. (2) In proceedings 2016/158257 (13/50011) I find the defendant guilty of the offence that between 24 January 2012 and 8 March 2012, at or near St Marys in the State of New South Wales, he committed an offence against s 91(5) of the Protection of the Environment Operations Act 1997 (NSW) by reason of s 169(1) of that Act in that: (a) he was a director of Sydney Drum Machinery Pty Ltd (ACN: 102625507); and (b) that Company was given a clean-up notice and did not comply with that clean-up notice without reasonable excuse. (3) In proceedings 2016/158258 (13/50012) I find the defendant guilty as charged. (4) In proceedings 2016/158195 (13/50007) I order that the summons be dismissed. (5) In proceedings 2016/158196 (13/50008) I order that the summons be dismissed. (6) In proceedings 2016/158197 (13/50009) I order that the summons be dismissed. (7) In proceedings 2016/158256 (13/50010), 2016/158257 (13/50011) and 2016/158258 (13/50012) I order that the proceedings be stood over to Friday 24 June 2016 for directions and to fix a date for hearing on sentence.
Catchwords:	OFFENCES – prosecution – liquid waste pollution incidents – failure to comply with issued clean-up notices – pleas of not guilty – whether regulatory authority reasonably suspected pollution incident – whether notice directions sufficiently related to pollution incident – whether notice terms sufficiently clear – whether regulatory authority failed to take into account certain considerations in issuing notices – whether notice legally invalid due to unreasonableness – whether reasonable excuse for failure to comply – whether due diligence exercised to prevent failure to comply.
Legislation Cited:	Corporations Act 2001 (Cth) Criminal Procedure Act 1986 (NSW) Environmental Trust Act 1998 (NSW) Protection of the Environment Operations Act 1997 (NSW)
Cases Cited:	Corporate Affairs Commission (NSW) v Yuill [1991] HCA 28; 172 CLR 319 Environment Protection Authority v Multi-Fill Pty Ltd (1997) 93 LGERA 131 George v Rockett [1990] HCA 26; 170 CLR 104 Goldie v Commonwealth of Australia [2002] FCA 433; 117 FCR 566 Lismore City Council v Ihalainen [2013] NSWLEC 149; 198 LGERA 47 Liverpool City Council v Cauchi [2005] NSWLEC 675; 145 LGERA 1 McKinnon v Secretary, Department of Treasury [2006] HCA 45; 228 CLR 423 Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; 162 CLR 24 Minister for Immigration and Border Protection v Singh [2014] FCAFC 1; 231 FCR 437 Minister for Immigration and Citizenship v Li [2013] HCA 18; 249 CLR 332 New South Wales v Hunt [2014] NSWCA 47 Pace Farm Egg Products Pty Ltd v Newcastle City Council [2006] NSWCCA 403; 151 LGERA 260 Queensland Bacon Pty Ltd v Rees [1966] HCA 21; 115 CLR 266 Ruddock v Taylor [2005] HCA 48; 222 CLR 612 R v Rondo [2001] NSWCCA 540; 126 A Crim R 562 Ryding v Kempsey Shire Council [2008] NSWLEC 306 SD v New South Wales Crime Commission [2013] NSWCA 48; 84 NSWLR 456 Sean Investments Pty Ltd v MacKellar [1981] FCA 191; 38 ALR 363 Taikato v The Queen [1996] HCA 28; 106 CLR 454
Category:	Principal judgment
Parties:	2016/158195-158197 (50007-50009 of 2013) Environment Protection Authority (Prosecutor) Sydney Drum Machinery Pty Ltd (Defendant)   2016/158256-158258 ((50010-50012 of 2013) Environment Protection Authority (Prosecutor) Imad Osman-Kerim (Defendant)
Representation:	Counsel: J Giles with S Lees (Prosecutor) Self-represented (16, 17, 18 June 2014) (Defendant) G Segal (29, 30 September 2014, 1,2,3,7, 8 October 2014, 4 December 2014) (Defendant)   Solicitors: Legal Department, Environment Protection Authority (Prosecutor) Segal & Associates (Defendant)
File Number(s):	2016/158195-158197 and 2016/158256-158258(Formerly 13/50007-13/50012)

TABLE OF CONTENTS

Introduction [1]

Relevant statutory provision [8]

Facts pertaining to the offences charged [19]

The Premises and their use [21]

The EPL [31]

Delivery of containers to the Premises contrary to the suspension notice [37]

Inspections of the Premises prior to the charge period [40]

Water samples tested [132]

Further evidence: the fire of 23 January 2012 [137]

Evidence of Mr Osman-Kerim [144]

Expert evidence [163]

The offence against s 91 of the Act: 17 January Notice [177]

Element (iii) of the offence: the Company as occupier of the Premises [180]

Element (iv) of the offence: reasonable suspicion that a pollution event has occurred [186]

Reasonable suspicion of a pollution incident [189]

Clean-up action related to the pollution event [299]

Terms of notice vague and uncertain [234]

Failure to take account of relevant considerations [247]

Reasonable excuse [255]

Section 169(1) of the Act [265]

Conclusion in respect of the 17 January Notice 2012 [268]

The offence against s 91 of the Act: 24 January Notice [271]

The challenge to validity of the 24 January Notice: defendant’s submission [276]

The prosecutor’s submissions [291]

Consideration [316]

Reasonable excuse [335}

Section 169(1)(c) [347]

Conclusion on offence by reference to 24 January Notice [348]

Orders [355]

Judgment

Introduction

1. Sydney Drum Machinery Pty Ltd (the Company) has been charged with the commission of three offences against the provisions of the Protection of the Environment Operations Act 1997 (NSW) (the Act). The Company’s sole director, Imad (Eddie) Osman-Kerim has also been charged with three offences against the Act arising out of the same facts as those that found the charges against the Company. These offences arise from the conduct by the Company of a drum cleaning and repair business at 75 Christie Street, St Marys (the Premises).

2. In proceedings 2016/158196 (13/50008) the Company is charged that between 10 October 2011 and 18 January 2012, it committed an offence against s 64(1) of the Act in that it contravened a condition of a notice suspending an environment protection licence, that condition operating to prevent the Company from receiving containers at its Premises while its licence was suspended. In proceedings 50010 of 2013, Mr Osman-Kerim is charged with the same offence in his capacity as a director of the Company.

3. In proceedings 2016/158195 (13/50007), the Company is charged with an offence against s 91(5) of the Act in that, without reasonable excuse, it failed to comply with a clean-up notice given to it on 17 January 2012. The period over which the failure to comply occurred is alleged to be “from about 5.00pm 17 January 2012 to about 30 January 2012”. Mr Osman-Kerim is charged with the identical offence, again in his capacity as a director of the Company (proceedings 2016/158258 (13/50012)).

4. The Company is charged with a further offence against s 91(5) of the Act in that, without reasonable excuse, it failed to comply with a clean-up notice given to it on 24 January 2012 (proceedings 2016/158197 (13/50009). The period in which non-compliance with the notice is alleged to have occurred is “between about 24 January 2012 and 30 March 2012”. Again, Mr Osman-Kerim is charged with that same offence in his capacity as a director of the Company (proceedings 2016/158257 (13/50011)).

5. It is convenient to refer to the clean-up notice given on 17 January 2012 as “the 17 January Notice” and that given on 24 January 2012 as “the 24 January Notice”.

6. At the time that each offence is alleged to have been committed, the Company was registered under the Corporations Act 2001 (Cth). However, on 7 April 2013 the Company was deregistered pursuant to s 601AB of that Act. As a consequence, the prosecutor asks that the charges against the Company be dismissed. However, that circumstance does not deny the right of the prosecutor to proceed with the prosecution of offences against Mr Osman-Kerim, albeit that the charges against him are brought in his capacity as a director of the Company and are founded upon the acts of the Company.

7. Mr Osman-Kerim had initially pleaded not guilty to the offences alleged in all three charges brought against him. However, in the course of the trial he has pleaded guilty to the offence against s 64(1) of the Act but maintained his plea of not guilty to the offences against s 91(5). While the evidence adduced in support of the charge under s 64(1) will be referred to, my focus will be upon the charges in respect of which the plea of not guilty is maintained.

Relevant statutory provision

8. Before turning to the facts that give rise to the commission of the offences charged, it is appropriate to identify the statutory provisions against which those facts are to be understood. The provisions to which I refer are those in force at the time of commission of the offences charged.

9. Section 64 of the Act relevantly provides:

“64   Failure to comply with condition

(1)   Offence

If any condition of a licence is contravened by any person, each holder of the licence is guilty of an offence.

Maximum penalty:

(a)   in the case of a corporation - $1,000,000 and, in the case of a continuing offence, a further penalty of $120,000 for each day the offence continues, or

(b)   in the case of an individual - $250,000 and, in the case of a continuing offence, a further penalty of $60,000 for each day the offence continues.

…

(3)   Application

This section extends to conditions to which the suspension, revocation or surrender of a licence is subject under section 81. For that purpose, a reference to the holder of the licence includes a reference to the former holder of the licence.”

10. Section 81(1) authorised the suspension of a licence either unconditionally or subject to conditions. Subsection (3) of that section provided:

“(3)   The appropriate regulatory authority may, by notice in writing given to the former holder of the licence, attach new conditions to, or vary or revoke any existing conditions of, the suspension, revocation or surrender of the licence.”

11. The prosecutor was “the appropriate regulatory authority” (s 6(1)). The term “licence” is defined in the Dictionary to the Act to mean “an environment protection licence”.

12. The entitlement to give a clean-up notice and the consequence of failure to comply with such a notice is found in s 91 of the Act. That section relevantly provides:

“91   Clean-up by occupiers or polluters

(1)   Notices

The appropriate regulatory authority may, by notice in writing, do either or both of the following:

(a)   direct an owner or occupier of premises at or from which the authority reasonably suspects that a pollution incident has occurred or is occurring,

(b)   direct a person who is reasonably suspected by the authority of causing or having caused a pollution incident,

to take such clean-up action as is specified in the notice and within such period as is specified in the notice

…

(5)   Offence

A person who, without reasonable excuse, does not comply with a clean-up notice given to the person is guilty of an offence.

Maximum penalty:

(a)   in the case of a corporation - $1,000,000 and, in the case of a continuing offence, a further penalty of $120,000 for each day the offence continues, or

(b)   in the case of an individual - $250,000 and, in the case of a continuing offence, a further penalty of $60,000 for each day the offence continues.”

13. The Dictionary to the Act defines the term “pollution incident” as follows:

“pollution incident means 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 the emission of any noise.”

14. The phrase “clean-up action” is also defined in the Dictionary in the following terms:

“clean-up action, in relation to a pollution incident, includes:

(a)   action to prevent, minimise, remove, disperse, destroy or mitigate any pollution resulting or likely to result from the incident, and

(b)   ascertaining the nature and extent of the pollution incident and of the actual or likely resulting pollution, and

(c)   preparing and carrying out a remedial plan of action.

It also includes (without limitation) action to remove or store waste that has been disposed of on land unlawfully.”

15. Section 256 of the Act identifies the onus of proof in a manner that is relevant to the provisions of s 91(5). The former section provides:

“256   Onus of proof of certain matters

(1)   In any proceedings under this Act, the onus of proving that a person had a reasonable excuse or lawful excuse (as referred to in any provision of this Act or the regulations) lies with the defendant.”

16. As will become apparent, both the 17 January Notice 2012 and the 24 January Notice 2012 specified a time by which compliance with some of the directions in each notice were required. Relevant to that requirement are the provisions of s 319A of the Act that provide:

“319A   Continuing effect of notices and conditions

(1)   A notice given, or a condition of a licence imposed, under this Act or the regulations that specifies a time by which, or period within which, the notice or condition must be complied with continues to have effect until the notice or condition is complied with even though the time has passed or the period has expired.

(2)   A notice that does not specify a time by which, or period within which, the notice must be complied with continues to have effect until the notice is complied with.

(3)   This section does not apply to the extent that any requirement under a notice or a condition of a licence is revoked.

(4)   Nothing in this section affects the powers of a regulatory authority with respect to the enforcement of a notice or a condition of a licence.”

17. I have stated that, as a director of the Company, Mr Osman-Kerim, has been charged with the same offences as those with which the Company has been charged. I have also recorded that the prosecutions against him are pressed, notwithstanding that the prosecutor seeks to have the charges against the Company dismissed because it has been deregistered. The entitlement of the prosecutor to proceed against Mr Osman-Kerim in these circumstances is founded upon the provisions of s 169 of the Act. That section relevantly provides:

“169   Offences by corporations

(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, unless the person satisfies the court that:

(a)   (Repealed)

(b)   the person was not in a position to influence the conduct of the corporation in relation to its contravention of the provision, or

(c)   the person, if in such a position, used all due diligence to prevent the contravention by the corporation.

(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.”

18. Mr Osman-Kerim relies upon the exculpatory provision of s 169(1)(c) as an element of his defence to the offences against s 91(5) of the Act.

Facts pertaining to the offences charged

19. The relevant facts and circumstances pertaining to the offences charged are generally founded upon a Statement of Facts (Exhibit B) and a number of documents tendered in evidence without objection. The Statement of Facts was the subject of a consent order made by Biscoe J on 12 August 2013 pursuant to s 247M(1)(a) of the Criminal Procedure Act 1986 (NSW). Further facts are found in affidavits read in the course of proceedings and oral evidence given at trial.

20. At all times prior to and during the period from 10 October 2011 and 30 March 2012, being the period during which the offences charged are alleged to have occurred, the Company traded as Better Drums Pty Ltd (Better Drums) and held Environment Protection Licence No 12893 (the EPL). That licence enabled the Company to undertake container reconditioning and “waste processing (non-thermal treatment)” at the Premises. Mr Osman-Kerim was not only the sole director of the Company, he was also involved in the daily management of its business at the Premises.

The Premises and their use

21. The Premises comprise a battle axe allotment of land with a long driveway from Christie Street leading to an irregularly shaped area of land upon which the Company conducted its activities. Erected on that “head” of land is a rectangular factory building oriented to the north-east with hard paved areas surrounding the building. A number of drainage structures are found both along the access handle and within the paved area to the north-east, north and north-west of the factory building.

22. Tendered in evidence was the Statement of Environmental Effects prepared for the Company when development consent was sought for the development of the Premises in October 2007 (the SEE) (Exhibit W). The SEE describes the nature of the activities carried on by the Company. For the purpose of understanding the present charges, it is appropriate to give a brief description of those activities, taken from the SEE, and evidence led before me that was not controversial.

23. The Company cleaned and as needed, reconditioned, intermediate bulk containers (IBCs) used as chemical containers. Chemicals used to clean these IBCs were stored within the factory building and included hazardous materials such as sodium hydroxide in flakes, sulphuric acid and other chemicals used as additives in the cleaning process.

24. IBCs were reused numerous times by suppliers of liquid products. Although the majority of IBCs washed and treated by the Company were plastic containers approximately 1m³ in size, other larger containers or drums were also processed by the Company. On receipt at the Company’s Premises, the IBCs were emptied using a vacuum lance. The liquids so extracted were stored on site prior to being removed for disposal at a liquid waste facility. The containers then passed along a washing line in which they were exposed to a caustic cleaning solution spray both internally and externally. That washing liquid was then drained and returned from a sump into a holding tank system where it was retained for reuse. Retained washing liquids were used several times before requiring transfer to a waste water plant. The containers were then further rinsed, dried and stored ready for delivery to the owner or for sale. A waste water treatment plant was located on site in order to treat the washing liquid, thereby enabling its use on multiple occasions.

25. The process of cleaning and waste water treatment was undertaken in an area on the south-eastern side of the factory building within a bund of about 10cm in height that extended to the south-eastern wall of the factory. Immediately to the south of that area were located four 45,000L and one 20,000L above-ground storage tanks. While Exhibit W states that the latter tank had a capacity of 20,000L, other evidence refers to the capacity of that tank as being 18,000L. Nothing turns upon that difference. The 45,000L tanks were cylindrical in shape and stood vertically above the factory floor. The 20,000,000L tank was also cylindrical but was lying horizontally on supports close to the floor. The four 45,000 litre tanks were contained within a bund also of about 10cm in height, while a bund of the same height contained the 20,000,000L storage tank. Again, the bund for each of those areas ran to the south-eastern side wall of the factory so that the wall, in effect, completed the bunded enclosure.

21. The five storage tanks that are described were said to be interconnected by piping with attached pumps. They were used as the holding tanks for the washing liquid that was pumped from the processing area. As waste liquid passed through each tank, some of the suspended solids in the liquid settled in the tank.

22. Apart from the 10cm bund around the wash bay and storage tank areas, internal bunds were also in place around each of the doors giving access to the factory building, although the evidence indicates that the height of those bunds was about 4cm to 5cm. Relevantly, these bunds were inside two large roller doors fixed to the north-eastern face of the factory. Those doors would appear to have been the primary means of access to the factory building by vehicles and other mobile equipment used in the conduct of the Company’s business.

23. The Premises are located adjacent to and to the north-east of Dunheved Golf Course (the golf course). An unnamed watercourse appears to commence a short distance to the north-east of the Premises and then runs through the golf course before flowing into South Creek, a tributary of the Nepean River.

24. Inside the north-western boundary of the Premises and beneath the hard stand area outside the factory building is an underground stormwater retention tank (the SRT) with a capacity of approximately 200,000 litres. This SRT is designed to collect rain water that falls on the factory roof and outdoor paved areas of the Premises and then to provide a controlled release of that rainwater into the unnamed watercourse. The SRT is approximately two metres in depth.

25. The SEE at par 53 stated that at present there was no site isolation valve in place “in case of an incident such as a fire or chemical spill”. The document further stated that the SRT “once isolated is expected to retain contaminated water on site”.

The EPL

31. The EPL was subject to a number of conditions. Included among those were the following three “operating conditions”:

“O5.2   the number of metal drums on the Premises must not exceed 100 at any one time.

O5.3   The total number of containers (including drums or intermediate bulk containers) (‘IBCs’) at the Premises must not exceed 3,000 at any one time.

O5.4   All containers shall be stored wholly within the building”.

32. By a Notice of Suspension of Licence dated 5 October 2011 (the Suspension Notice), the prosecutor notified the Company that the EPL was suspended. After recording inspections of the Premises by officers of the prosecutor on 16 March, 20 April and 2 September 2011 when, on each occasion, the number of metal drums and intermediate bulk containers exceeded the numbers specified in the EPL and were being stored outside the building located on the Premises, the Suspension Notice stated that the EPL was suspended for the reason that conditions O5.2, O5.3 and O5.4 had been contravened. Further reasons included:

“b.   The receipt and storage of more than 3,000 containers and the storage of containers not wholly within the building at the Premises is likely to cause pollution and impact on the surrounding environment; and

c.   The suspension of the Licence and the works required to be carried out under the conditions of the suspension are a practical measure to control and mitigate pollution from the excessive number of containers received and stored at the Premises and the storage of containers not wholly within the building at the Premises and to protect the environment from harm as a result of this pollution.”

33. As s 81(3) of the Act allowed, a number of conditions were imposed by the Suspension Notice. The first two conditions expressed in par 3 of the Suspension Notice, stated:

“a.   The licensee must ensure that no containers are received at the Premises while the licence is suspended.

b.   The Premises must be maintained in a condition which minimises or prevents any pollution of waters from the Premises.” (Original emphasis).

34. Subparagraphs c, d and e of par 3 imposed time limits within which excess drums and containers were required to be removed from the Premises and all containers stored outside were either to be removed from the Premises or relocated “to within the building at the Premises”. Subparagraph f imposed an obligation on the Company to provide receipts and dockets “showing” that removal from the Premises of excess containers had occurred and that excess number of containers had been taken to a facility that could lawfully receive them.

35. Finally, Condition 4 of the Suspension Notice stated:

“4.   The suspension will remain in force until such time as the licensee can demonstrate to the EPA’s satisfaction (expressed in writing) that Conditions O5.2, O5.3 and O5.4 of the licence have been complied with and the EPA issues a notice indicating that the suspension is lifted.”

36. Subject to the operation of s 84(2) of the Act, the Suspension Notice recorded that the suspension of the EPL operated from the date of the Notice. As there was no appeal to this Court against the decision to suspend the EPL, s 84(2) of the Act was not engaged. As a consequence, the EPL was suspended, subject to the conditions imposed upon suspension, on 5 October 2011.

Delivery of containers to the Premises contrary to the suspension notice

37. Notwithstanding receipt of the Suspension Notice, Mr Osman-Kerim admits that there were “occasions in December 2011” when trucks either belonging to or contracted to Toll North Pty Limited (Toll) entered the Premises carrying containers or drums while the Suspension Notice remained current. In fact, the evidence obtained by the prosecutor established that on 17 November 2011, 72 containers were delivered to the Premises by Mr Pace who was a subcontract driver for Toll or one of its subsidiary companies. Evidence was also obtained by the prosecutor that Mr Purin, also a subcontract driver to Toll, delivered two containers to the Premises on 24 November 2011. That evidence included delivery dockets from Toll for the containers delivered on those dates together with an acknowledgement given by Mr Osman-Kerim in a record of interview conducted with officers of the prosecutor that the signature appearing on one of those dockets acknowledging receipt at the Premises was his signature.

38. By letter dated 25 November 2011, the Company informed the prosecutor that it had complied with all conditions of the Suspension Notice. Clearly, that statement is incorrect, not only because of the deliveries that occurred on 17 and 24 November but also because Mr Osman-Kerim later admitted that there had been some deliveries to the Premises in December 2011.

39. In light of the evidence to which I have referred, the plea of guilty to the offence charged under s 64(1) of the Act is unsurprising. Based upon that evidence together with the plea of guilty entered by Mr Osman-Kerim, I am satisfied beyond reasonable doubt that the Company, being the holder of the EPL that was suspended by Notice dated and given on 5 October 2011, received 72 containers at the Premises on 17 November 2011 and a further two containers on 24 November 2011 at those Premises while Condition 3a of the Notice of Suspended Licence remained an operative condition of that suspension. In so doing, the Company acted in contravention of s 64(1) of the Act.

Inspections of the Premises prior to the charge period

40. Alexander Bourne, an officer of the prosecutor, visited the Premises on 2 September 2011. The purpose of his visit was to conduct “an announced compliance inspection”. Mr Osman-Kerim was present at that time. Among other matters, Mr Bourne observed that one of the 45,000 litre storage tanks appeared to have overflowed as there was liquid waste with a strong solvent smell pooled on the factory floor within the storage tank bunded area. When this matter was drawn to the attention of Mr Osman-Kerim, he is recorded by Mr Bourne as stating that the tank “overflows from time to time when the filter blocks up”. On a further visit to the Premises on 28 September 2011, Mr Bourne observed liquid waste that appeared to have spilled within the waste water treatment area but which was being contained by the bund surrounding that area. Waste water within the floor of the waste water treatment plant was also observed by Mr Bourne when inspecting the Premises on 5 October 2011. On each occasion the spilled waste water had a strong solvent smell.

41. Mr Bourne again inspected the site on 14 October 2011 in company with, among others, Maree Davidson, an inspector from WorkCover NSW. Mr Bourne recorded an observation then made that the sight gauges on the above ground storage tanks associated with the waste water treatment system were broken. The Company’s representative on that occasion, Sandra Kemp, who was described as the Company’s Operations Manager, along with three other employees of the Company stated that the tanks overflowed on a regular basis due to blockages.

42. On 18 October 2011, Mr Bourne was provided by WorkCover with a copy of a number of notices issued to Better Drums at the Premises, including Improvement Notice 7-236463, identifying potential exposure of risk to the health and safety of employees “due to the inadequate provision of spill containment for the dangerous goods stored or handled at the place of work, particularly the wash bay water treatment tanks, that had various substances or various classes being treated and regularly overflowing”. The measure required by the Notice was the provision, so far as is reasonably practicable, “for the containment of spills from the water treatment tanks holding various classes of dangerous goods” (Exhibit O(1) at Tab 3).

43. Another of the copy Notices received by Mr Bourne that day from WorkCover was Improvement Notice 7-236469, also directed to Better Drums. Again, the Notice identified potential exposure of risk to the health and safety of employees at the Premises “due to the plant not being maintained in a safe condition e.g. water tanks regularly overflow due to paper [sic] blockages, sight gauges broken or not functioning”. The Notice required that the Company implement and maintain a system “to ensure that the water tanks are inspected, cleaned and maintained in a safe operating/working condition according to the Manufacturer’s requirements”.

44. Mr Bourne returned to the locality of the Premises on 24 November 2011. A report had been received by the prosecutor that liquid waste had leaked into a factory building that adjoined the Premises in Christie Street, St Marys. The adjoining premises were occupied by Lisbon Engineering, with its factory building located to the south of the Premises. Upon inspection of the Lisbon Engineering site Mr Bourne observed that approximately 200 to 300 litres of “a black odorous liquid” was pooled across a section of the factory floor at the northern end of the building. A similar liquid had pooled between the northern end of Lisbon Engineering building and the southern (south-eastern) wall of the Premises. A phytotoxic impact upon the grass between the two buildings was observed.

45. Following inspection of the Lisbon Engineering building, Mr Bourne inspected the Premises accompanied by Mr Osman-Kerim. During that inspection, Mr Osman-Kerim is recorded as stating that waste water had overflowed from a waste water tank due to a pump failure three days earlier; that the water had then flowed across the concrete floor and under the factory wall due to a failed floor/wall seal and that the escaping liquid had flowed onto the Lisbon Engineering site and into its workshop. Mr Bourne observed residual brown waste down the side of the north-eastern above ground storage tank, splash marks of residual brown waste both across containers standing at ground level and also on the walls surrounding the north-eastern tank. He also saw residual liquid waste both inside and outside of the bund that surrounded the liquid waste treatment plant. Photographs were taken by Mr Bourne, reflecting the observations that he had made on that day (Exhibit N, Tab 8). At the time, water samples were taken from a number of places including spilled waste from the above ground storage tanks. Testing of those samples showed the liquid waste to be “environmentally hazardous, with high levels of pesticides present” (Exhibit O(2) at Tab 43).

46. Mr Bourne returned to the Premises the following day. He again observed residual liquid waste both inside and outside the bund of the liquid waste treatment plant. A clean-up notice dated 25 November 2011 was then given to the Company.

47. The inspection of the Premises by Mr Bourne on 25 November 2011 was conducted in conjunction with Ms Davidson of WorkCover. As a consequence of that inspection, WorkCover issued further Improvement Notices to Better Drums and provided copies of those Notices to the prosecutor. In particular, Improvement Notice 7-238504 gave as the reason for that Notice the “inadequate provision of spill containment for the dangerous goods stored or handled”, in particular the wash bay water treatment tank overflowing “into bunding that does not maintain containment or is adequate size [sic] for the storage requirements of tanks contained within the bunded area” resulting in the spill onto neighbouring property (Exhibit O(1) at Tab 7).

48. A further Improvement Notice issued to the Company at that time by WorkCover, a copy of which was provided to Mr Bourne, again identified a risk to the health and safety of employees using the plant “such as the water treatment tanks” and stated that water treatment tanks were “regularly overflowing due to faulty pumps and blockages, sight gauges broken or not functioning”. Remedial action was required in the same terms as that expressed in the earlier Notice that had also identified blockages and faulty gauges.

49. On 14 December 2011, Mr Bourne again inspected the premises of Lisbon Engineering at 77 Christie Street, St Marys. He observed a “red, brown and white odorous liquid” between the northern end of the Lisbon Engineering building and the southern or south-eastern wall of the Premises. The same phytotoxic impact on grass between the two buildings that he observed on 24 November remained.

50. He then went to the Premises where he met Mr Osman-Kerim. During that inspection he observed “a red, brown and white odorous liquid” originating from the rear of the container wash bay. That wash bay was located on the opposite side of the south-eastern wall of the Premises to the impacted area of the Lisbon Engineering building. Mr Osman-Kerim repeated the explanation given on 24 November for the escape of that liquid and stated that a new pump had been installed on 13 December. Mr Bourne photographed the liquid he had described between the two buildings as well as the red, solvent smelling liquid located within the wash bay area and waste water sump area of the Premises.

51. A follow-up inspection of the Premises was carried out by Mr Bourne on 15 December 2011. The red, brown and white odorous liquid between the factory building on the Premises and the Lisbon Engineering building had not been cleaned up although it appeared that efforts were being made within the factory on the Premises to clean up the spill within the wash bay area. At that time, Mr Bourne observed a damaged IBC that was leaking an oily liquid waste onto the factory floor.

52. On 16 January 2012, there was a fire at the Premises that caused substantial damage to the office area within the factory and limited damage to the remainder of that building. Mr Bourne, inspected the Premises that day and noted that while fire damage to the office area was extensive, the fire did not appear to have impacted upon the liquid waste storage tanks. Small quantities of water apparently used to extinguish the fire (“firewater”) were observed on the floor of the factory.

53. Mr Bourne also observed liquid waste both within the area of the waste water treatment system and the above ground storage tanks. That liquid waste was breaching the treatment plant bund. Liquid waste had also filled the bunded area behind the wash bays. He also noted that a fire door adjacent to the liquid waste treatment plant had been damaged with a photograph then taken, revealing that the bottom section of that fire door had been broken open.

54. Mr Osman-Kerim was present during that inspection. When the liquid waste within the area beneath the storage tanks, wash bays and waste treatment plant were pointed out to him, he stated that he was unaware of the spilled liquid waste, how it had occurred or the cause of the spill within the treatment and storage areas.

55. Section 93 of the Act enabled a regulatory authority or a person acting in accordance with an authority from that authority, to give a clean-up direction orally. On 16 January 2012 Mr Bourne was an authorised officer under the Act. Exercising his authority and relying upon the provisions of s 93(1) of the Act, he issued a verbal clean-up direction to Mr Osman-Kerim in the following terms:

“1.   Engage a suitably qualified liquid waste removalist to remove all liquid waste from the liquid waste containment bund and wash bays by 5.00pm on 17 January 2012;

2.   Isolate the stormwater retention pit by 5.00pm on 17 January 2012;

3.   Provide receipts to EPA demonstrating liquid waste removed from the Premises was taken to a facility that can lawfully receive that waste by 5.00pm 18 January 2012; and

4.   At a time to be determined remove all waste contained within the 4 x 45,000L and 1 x 20,000L tanks by a waste removal company to a facility that can lawfully receive that waste.”

56. In response to that oral notice, Mr Osman-Kerim is recorded as stating that he would comply with Directions 1, 2 and 3 but was not in a financial position to comply with Direction 4.

57. At that time, all electric power to the Premises had been cut off by the fire officers who had attended to extinguish the office fire. As it happened, that power had not been restored to the Premises when, as will shortly be recorded, there was a second fire at the Premises. Pumps used to transfer waste to the above ground storage tanks as well as pumps used to transfer liquid waste between tanks could not be operated in the absence of power to the Premises.

58. That oral notice was followed up the following day when the prosecutor issued clean-up Notice no 1503772 directed to the Company (being the 17 January Notice). The decision to issue that Notice was made by Jacqueline Ingham, whose position was as Unit Head of Waste Operations within the office of the prosecutor. Ms Ingham issued the Notice based upon the advice that she had received from Mr Bourne. The Notice recorded the fact that a fire had occurred at the Premises; that the fire had been contained but that liquid waste had entered wash bays; that liquid waste had entered the bunded area provided for the waste water treatment system and above ground waste storage tanks; and that the bunding was “inadequate for the volumes of waste stored in the above ground tanks”. Among the directions included in that Notice was Direction No. 3 requiring that the following clean-up action be taken:

3.   Immediately engage a suitably qualified expert to isolate the stormwater retention tank so that any liquid waste spilt at the Premises does [sic] not leave the Premises by 5.00pm Tuesday 17 January 2012” (Original emphasis).

59. Once the 17 January Notice had been prepared, Mr Bourne, together with Andrew Reece, an authorised officer of the prosecutor, attended the Premises and there served the Notice upon Mr Osman-Kerim. At that time Sandra Kemp, the Company’s Operations Manager was at the Premises. Mr Bourne and Mr Reece explained to Mr Osman-Kerim and Ms Kemp what the clean-up notice required the Company to do. Each direction given in the notice was explained to Mr Osman-Kerim and Ms Kemp.

60. Following their inspection of the Premises that day, Mr Bourne and Mr Reece inspected the Lisbon Engineering site. They there observed liquid waste on the ground between the Lisbon Engineering building and the factory on the Premises. They also observed that in the northern end of the Lisbon Engineering building the same solvent smelling liquid waste covered approximately 6m² of the floor. As a result of those observations, Mr Bourne telephoned Mr Osman-Kerim, issuing a further clean-up direction requiring that he make immediate arrangements to remove liquid waste from the Lisbon Engineering site.

59. On 19 January 2012, the Prosecutor issued a variation of the 17 January Notice. The purpose of that variation was to add the requirement to clean up the liquid waste that had spilt onto the Lisbon Engineering land and building. Condition 3 of the 17 January Notice was not varied. Later that day Mr Bourne spoke with Mr Osman-Kerim by telephone and had a conversation to the following effect:

“IOK:   I am on site at the moment. Next door has been cleaned up.

AB:   Okay.

IOK:   Tomorrow I will get the stormwater retention tank sealed.

AB:   Have you removed any liquid waste from the Premises?

IOK:   I am not able to yet. I am getting Transpacific to test the liquid waste on the site.”

62. The Premises were again inspected by Mr Bourne on 20 January 2012. Upon inspection, he observed that the SRT had not been isolated so as to prevent the escape of liquid wastes from the Premises. In his subsequent Record of Interview with officers of the prosecutor, Mr Osman-Kerim admitted that he had not complied with the 17 January Notice.

63. In the early morning of 23 January 2012, there was a second fire at the Premises that caused substantial damage to the factory building. The fire was extinguished by officers of Fire and Rescue NSW. However, “firewater”, that is, water used to extinguish the fire, together with liquid waste already on the Premises was mobilised resulting in waste water discharging from the Premises, eventually entering South Creek.

64. Mr Bourne and Mr Reece visited the Premises that same day. On arrival at the Premises Mr Reece observed what appeared to be contaminated water flowing from the SRT via a culvert adjacent to the Premises into the unnamed watercourse that ran through the golf course. The SRT had not been isolated and in an endeavour to stem the flow of water from the SRT, a traffic cone or “witches hat” was inserted into the pipe through which the SRT drained. This appeared to stop the flow of liquid from the SRT as the pressure of water behind the cone forced its narrow end into the outlet pipe and maintained it in that position.

65. Mr Reece observed that prior to inserting the traffic cone into the SRT grey coloured water was flowing from the SRT into the external drainage channel. After the traffic cone was installed he also observed that apparently contaminated liquid was flowing out of the north-eastern door of the factory building but not all of that flow was being captured by the central stormwater drains. As a consequence, booms brought to the site by the HAZMAT crew of Fire and Rescue NSW were used in an attempt to divert the escaping liquid to the SRT.

66. A number of further steps were taken by Mr Reece during the morning of 23 January. He discovered that contaminated water was leaving the Premises via a stormwater drain that also discharged directly into the watercourse running across the golf course and into South Creek. He arranged for the drainage line to be blocked, ultimately using some sand bagging brought to the site so that the pooled liquid could then be pumped out. He also arranged for a contractor to attend the Premises for the purpose of pumping out the liquid then being retained in the SRT as a result of the outlet drain blockage that he had achieved by inserting the witches hat.

67. Mr Bourne arrived at the Premises on 23 January, after Mr Reece. Upon his arrival, Mr Bourne observed the measures that had been taken by Mr Reece both to divert liquid waste into the SRT and to prevent water flowing from it. Mr Bourne observed that the liquid waste in the SRT was black to charcoal in colour, had a strong solvent smell and was foaming. Upon inspection of the watercourse to the north of the Premises he also observed liquid waste to be present with the same characteristics. Water samples were collected by him and taken to the Environmental Forensic and Analytical Science Section of the Office of Environment and Heritage (OEH) for analysis.

68. As a result of the fire that occurred on 23 January 2012, a number of State government and local government agencies were present on the site. Actions then taken by those other agencies included:

1. (assistance by staff of Penrith City Council in undertaking temporary works to divert and contain contaminated firewater and liquid waste to the SRT;

2.   engagement of contractors to contain and remove liquid waste both from the SRT and from the watercourse into which contaminated liquid had flowed;

3. collecting liquid waste samples from both the Premises and along the unnamed watercourse; and

4. action by staff of the Department of Primary Industries and its Office of Hawkesbury Nepean, notifying all licensed and riparian users that the pumping of water from South Creek between St Marys and the Hawkesbury River was banned. That ban was not lifted until 3 February 2012.

69. On the morning of 24 January 2012 Mr Bourne telephoned Mr Osman-Kerim and gave verbal directions for action to be taken in relation to the Premises, including a requirement to isolate the SRT and to maintain the level of liquid waste in the SRT to below 30% of its maximum capacity. During the course of that day clean-up notice no 1503916 directed to the Company (the 24 January Notice) was issued by the prosecutor. The Notice recited the background events leading to its issue, including the fire on 23 January 2012; the leaking of liquid waste from the Premises onto adjoining premises and into the watercourse leading to South Creek; the temporary measures taken to divert liquid waste draining from the damaged building into the SRT; the fact that EPA officers “reasonably suspected that a pollution incident had occurred, was occurring and is likely to occur, due to the spill of liquid waste at the Premises”; the compromised integrity of the above ground tanks and the verbal clean-up directions given earlier that day. The Notice then directed that the following clean-up action be taken:

“1.   Immediately engage a suitably qualified expert to isolate the stormwater detention tank so that any liquid waste spilt at the Premises does not leave the Premises by 5.00pm 24 January 2012;

2.   Immediately direct all runoff from the fire damaged building at the Premises to the stormwater retention tank so that any liquid wastes do not leave the Premises by 5.00pm 24 January 2012;

3a   Immediately monitor and maintain an appropriate level of liquid waste in the stormwater retention tank and the adjacent stormwater pit ensuring the retention tank does not fill in excess of 30% of their capacity;

3b   The liquid waste contained within the stormwater retention tank and the adjacent stormwater pit is to be appropriately classified and removed by a suitably qualified and experienced chemical spill clean-up company;

3c   The liquid waste is to be transported to or disposed of at a facility that can lawfully receive that type of waste;

4.   Within one week of access being granted to the fire damaged building, all liquid waste contained within the 4 x 45,000L and 1 x 20,000L above ground storage tanks is to be appropriately classified and is to be transported to or disposed of at a facility that can lawfully receive that type of waste; and

5.   The licensee must provide receipts or dockets showing the liquid waste removed from the Premises has been transported to or disposed of at a facility that can lawfully receive that type of waste within one week of that waste being transported from the Premises.” (Original emphasis)

70. Later that day Mr Bourne and Mr Reece attended the Premises where they gave the 24 January Notice to Sandra Kemp and explained the directions that were required to be implemented. At that time the SRT was inspected and the traffic cone plugging the outlet was observed to remain in place. As was acknowledged in Exhibit B, the SRT had not been isolated in accordance with the requirement of the 17 January Notice.

71. At the time of inspection on that day, Mr Bourne observed what he described as “liquid waste/firewater” flowing from the eastern side of the factory building being directed to the SRT by the temporary booms that had been placed on the hard stand area of the Premises the previous day. An underground stormwater pipe leading from the building to below the weir within the SRT was observed to have a dark charcoal liquid flowing from it into the SRT. According to the report of Mr Bourne prepared following that inspection (Exhibit N,Tab 18) liquid wastes were observed at a low level within the SRT so that, at that time, the SRT was able to hold the liquid wastes flowing to it. However, contaminated waste water that was not captured by the stormwater drainage system leading into the SRT was being captured by a drainage line running north/south along the eastern boundary of the Premises.

72. The Premises were again visited by Mr Reece on 25 January 2012. Once again, it was observed that the SRT had not been isolated by any measure taken by or on behalf of the Company. The traffic cone remained in place. It was raining at the time of his visit. Mr Reece estimated that the SRT was approximately 40 percent full with waste water from the factory building seen to be entering the SRT. While Mr Reece understood the capacity of the SRT to be 200,000L, given the catchment for contaminated water running to it, he formed the opinion that the SRT would overflow if it was not pumped out and the rain continued to fall as it was.

73. Samples of water were taken from the SRT and also from a stormwater drain in the northern corner of the Premises. These samples were taken for analysis that subsequently showed that water taken from the SRT had a pH of 10-11 while stormwater in the drain in the northern corner of the Premises had a pH of 6-7.

74. On 27 January 2012 Ms Ingham, on behalf of the prosecutor, engaged Michael Sidaros of Dr H2O Pty Ltd, a plumbing and maintenance contractor, to undertake work at the Premises, including the sealing of the SRT. On that same day, Ms Ingham also made contact with Transpacific, the liquid and hazardous waste division of Transport Waste Services, requesting that a tanker be provided to remove liquid waste from the SRT at the Premises.

75. The Premises were attended by Mr Bourne on 27 January in company with Deanne Thomas, Christine Mitchell and Michael Celona, officers of the prosecutor, together with Brad Lynch and Shane Barter from the Office of Hawkesbury Nepean. Mr Bourne inspected the SRT and observed that it had not been isolated in accordance with the 17 January Notice. He also observed that the SRT was approximately half full of liquid waste. Together with Ms Mitchell, Mr Bourne collected liquid samples from locations within the Premises while Mr Lynch and Mr Barter left the Premises to collect water samples from local water courses.

76. Mr Bourne also observed that liquid waste/firewater was flowing from the north-eastern side of the building on the Premises with the temporary booms that had been put in place on 23 June appearing to direct that waste water into the SRT. Stormwater drains carrying this waste water were observed to be carrying foam. Other waste water discharging from the building on the Premises that was not being captured by the stormwater drainage system leading to the SRT was also being retained by the temporary measures put in place on 23 January, although the level of water damned by this measure had reached the level of the curb at the boundary of the Premises. A stormwater culvert adjacent to the Premises showed signs of impact by the waste water that had flowed from the Premises, as a boom previously in place across the culvert had been washed out of position. Foam was being generated at this point from an auxiliary stormwater drain entering the culvert causing the liquid waste to be aerated.

77. After making these observations, Mr Bourne and Ms Thomas left the Premises to traverse the unnamed watercourse running across the golf course. Mr Bourne noted that the flow of water in the watercourse was higher than that observed on 23 January and that while no odour was detected, foam was visible on the flowing water. He then travelled to the confluence of the watercourse with South Creek. At that point, water in the watercourse falls several metres over a series of small cascading waterfalls into South Creek. A large volume of foam was noted to be present at this point with foam also present on surrounding tree trunks, causing Mr Bourne to form the opinion that the foam had been up to two metres above the creek level. Upon walking approximately 25m downstream from this point, Mr Bourne observed that there was a high flow of water in South Creek with a water level approximately 1m above the levels he had observed on 23 January. At this point, the water in South Creek was observed to be brown in colour with foam floating on top. Water samples were taken.

78. Mr Bourne and Ms Thomas then walked upstream from the confluence where the water appeared to be brown in colour but no foam was present. The high flow and increased water levels at this point was such that samples could not be taken, although on walking approximately 15m further upstream a location was identified at which water samples were able to be taken. The water at this point was observed to be brown in colour, but no foam was present.

79. Further observations and water sampling were undertaken by Mr Bourne and Ms Thomas further downstream in South Creek. They then returned to the Premises, collected all water samples taken that day by those in attendance and conveyed those to the prosecutor’s Lidcombe laboratory. Prior to leaving the premises on 27 January, Ms Mitchell observed a tanker from Transpacific remove liquid waste from the Premises.

80. On 30 January 2012, Jacqueline Ingham spoke to Michael Sidaros of Dr H2O in relation to the quote that he had given for works to be undertaken at the Premises. Mr Sidaros was authorised to proceed with that work which included sealing of the SRT.

81. Mr Bourne again visited the Premises on 30 January 2012. He observed that liquid waste was continuing to flow from the north-eastern side of the building at the Premises. He also observed liquid waste within the SRT.

82. While Mr Bourne was at the Premises during the morning of that day, two liquid waste tankers from Transpacific arrived at the Premises. This occurred at the request of Ms Ingham on behalf of the prosecutor. The driver of the Transpacific truck was instructed by Mr Bourne to remove liquid waste from a stormwater pit located in the north-eastern corner of the Premises as well as from the SRT. Upon arrival of a second truck, the driver was instructed by Mr Bourne to complete removing liquid from the SRT and also to remove liquid waste from the ground surfaces, stormwater system and a small stormwater retention tank at the eastern boundary of the adjoining premises of Lisbon Engineering. An inspection of those premises by Mr Bourne on that day revealed that liquid waste had flowed from the Premises onto the factory floor, yard and stormwater system of the Lisbon Engineering premises. Later in the day Mr Bourne met Michael Sidaros of Dr H2O at the site and observed him seal the SRT.

83. On 7 February 2012, Mr Bourne and Mr Reece attended the Premises. They inspected the SRT and noted that the liquid draining into it appeared to be a black viscous substance. The depth of liquid waste within the SRT was also measured at 60cm from the top, above an internal weir, and 90cm from the top below the internal weir. Mr Bourne and Mr Reece also inspected the stormwater culvert adjacent to the Premises. This culvert was carrying water that was dark green in colour. Following his inspection, Mr Bourne dialled the telephone number of the Company and also the mobile telephone number that he had for Mr Osman-Kerim. Neither phone call was answered but Mr Bourne left a voice mail message requesting that his call be returned. Shortly after leaving that message he received a telephone call from Sandra Kemp. Mr Bourne informed Ms Kemp of his observations at the Premises, stating that the Company was required to comply with the 24 January Notice, in particular that it was to maintain the liquid waste contained within the SRT below 30 percent of its capacity. Mr Bourne records Ms Kemp’s response as being, “We will comply with the conditions of the Notice.”

84. During the morning of 14 February, Mr Bourne again dialled the telephone number for the Company and the mobile telephone number of Mr Osman-Kerim. Neither telephone was answered and a voice mail message was left requesting that the call be returned. Approximately one hour later Mr Bourne received a telephone call from Ms Kemp. He related the observations that he had last made of the levels of liquid in the SRT, the catchment area of the Premises and the rainfall forecast he had obtained from the Bureau of Meteorology. In the circumstances he stated that the SRT was likely to fill and needed to be pumped out, as if an overflow occurs it may constitute an offence against s 116 of the Act. Ms Kemp is recorded as responding:

“Okay I will call Eddie and advise him of what you have told me. Can you please advise our solicitor Jamie on 9231 3433.”

85. Following that conversation, Mr Bourne spoke with James Vernon who he understood to be “Jamie” referred to by Ms Kemp. Mr Vernon was a solicitor in the solicitor’s firm of Benjamin & Khoury. Mr Bourne told Mr Vernon of the content of his conversation with Ms Kemp, directed him to the EPA public register in which copies of the suspension notice and the clean-up notices could be viewed. He also advised Mr Vernon of “the current environmental issues” involving the Premises and of Mr Osman-Kerim’s commitment to comply with the Notices.

86. Later that morning Mr Bourne received a telephone call from Ms Kemp in which she stated words to the effect:

“Eddie will arrange the pump out of liquid waste from the site by Solveco.”

In response to a question from Mr Bourne, Ms Kemp stated that the pump out would occur that day.

87. Shortly after that telephone conversation with Ms Kemp, Mr Bourne received a telephone call from Mr Osman-Kerim. In that conversation Mr Osman-Kerim stated that the water in the SRT was “just water from the rain”. Mr Bourne responded by stating that it was rainwater mixed with contaminants from the Premises to which Mr Osman-Kerim responded by saying “okay”.

88. During the morning of 15 February 2012 Mr Bourne again was unsuccessful in making telephone contact either with the Company or with Mr Osman-Kerim. A voice mail message was left on each telephone requesting that his call be returned. Shortly thereafter Mr Osman-Kerim telephoned Mr Bourne when a conversation to the following effect occurred:

“IOK:   I went out to the site and looked at the stormwater retention tank. I will get Remondis to come and pump it out tomorrow. It should be okay, the stormwater retention tank is nearly full.

AB:   How much liquid waste is in the stormwater retention rank?

IOK:   Probably 20,000 to 25,000L in the tank. Remondis will empty it completely. I will fax or email you the receipts and dockets tomorrow.

AB:   Have you got access to the Premises?

IOK:   Yes, I have the keys to the front gate. I will be moving the Chep pallets today.”

89. In the early afternoon of 15 February, Andrew Reece returned to the Premises. At the time of his inspection he noted that the SRT was 90 percent full, with very little capacity to store any more waste water or site run off. In the course of that inspection, Mr Reece also discovered an 8,000 litre above ground water tank on the Premises that was full of liquid. The liquid had a green fluorescent colour. Mr Reece had added green fluorescence to the SRT during a previous inspection so that any leakage or discharge from it could be determined.

90. Mr Reece again went to the Premises on 16 February. During the course of the morning he observed the arrival of a tanker truck from Remondis. Mr Osman-Kerim arrived at the Premises shortly thereafter and directed the driver of the Remondis truck to commence pumping water from the SRT. Once pumping commenced Mr Reece had a conversation with Mr Osman-Kerim to the following effect:

“IOK:   Its clean water just block the pipes and let it go into the creek.

AR:   Eddie, it’s not clean water. All the water going into the tank is from the factory where all the waste from the waste tanks has leaked. If you block the pipes and let it drain into the creek that is intentional environmental harm and that is a Tier 1 offence that carries a custodial sentence.

IOK:   This is bullshit. It is costing me too much money to keep pumping out the tank, its clean water.

AR:   Eddie, you are responsible for the Premises and all the waste on it. EPA has issued you a Clean-Up Notice that requires you to keep the tank below 30 percent so that if it rains and more waste comes out of the factory it does not pollute the creek.”

91. After the Remondis truck left the Premises, Mr Reece observed that the SRT was still about 80 percent of its capacity. He informed Mr Osman-Kerim that more trucks were required to reduce the volume of waste in the SRT to 30 percent in order to comply with the 24 January Notice.

92. Mr Reece returned to the Premises at about 7.30am on 20 February 2012. Heavy rain had fallen overnight and the purpose of the visit was to check water levels in the SRT. Upon inspection, Mr Reece observed that the SRT was “filled to capacity” with water apparently contaminated by chemicals that were washed from the fire damaged factory building. He formed the opinion that any further rain would cause the SRT to overflow into the watercourse and ultimately into South Creek. Mr Reece reported his observations to Mr Bourne.

93. During the morning of 20 February Mr Bourne made several unsuccessful attempts to contact the Company and Mr Osman-Kerim by telephone. Eventually, he spoke to Sandra Kemp and had a conversation to the following effect:

“SK:   We organised two truckloads of liquid waste to be transported from the Premises on Thursday (16 February).

AB:   An EPA authorised officer inspected the stormwater retention pit at the Premises this morning. The SRT is now full and an overflow of the liquid waste into South Creek is imminent if it isn’t overflowing already.

SK:   The Remondis driver said levels would be compliant with the clean-up notice and Eddie checked the levels last week.

AB:   How can a 20,000L liquid waste tanker reduce a full 200,000L stormwater retention tank to below 30%? How did Eddie measure the levels of liquid waste in the tank to ensure compliance with the clean-up notice?

SK:   I don’t know.

AB:   The stormwater retention tank is currently full and potentially overflowing. Sydney Drum Machinery must get liquid waste removable tankers to suck the liquid waste out of the stormwater retention tank as soon as possible.

SK:   I will let Eddie know.

AB:   Should Sydney Drum Machinery fail to comply with the clean-up notice EPA may have to organise the works and issue a costs compliance notice to recover the costs.

SK:   Okay.”

94. Mr Reece returned to the Premises shortly after 9.30am on 21 February 2012. The prosecutor had been advised by Mr Osman-Kerim that he had arranged for tankers to attend during the course of the morning so as to remove waste water that had filled the SRT. Upon arrival, the gate to the Premises was locked and no one was present. Mr Reece unlocked the gate with a key that he had and went immediately to the SRT where he observed that water had overflowed from the SRT into the watercourse leading to South Creek. After waiting for about one hour Mr Reece left the Premises as no one on behalf of the Company nor any waste tankers had come to the Premises since his arrival. He later returned with water sampling equipment and took samples of water in both the SRT and the watercourse leading to South Creek. He observed that the water in the SRT was very dark in colour and had a very strong odour.

95. The water samples collected that day were then taken by Mr Reece to the laboratory for analysis. He also contacted Mr Bourne with the request that water tankers be engaged to pump out some of the liquid from the SRT.

96. After attempting to contact the Company and Mr Osman-Kerim by telephone and leaving voice mail messages requesting that his call be returned, Mr Bourne eventually spoke to Ms Kemp early in the afternoon of 21 February. They had a conversation to the following effect:

“AB:   Remondis are not pumping any liquid waste from the stormwater retention tank at the Premises.

SK:   The solicitor is writing a letter to EPA regarding the costs of pumping out the liquid waste.

AB:   There is a pollution event occurring now. Have trucks to remove liquid from the stormwater retention tank at the Premises been ordered?

SK:   I don’t think so. The solicitor is writing a letter to EPA regarding the costs of pumping out the liquid waste.

AB:   That is not a lawful excuse or defence for failure to comply with the Clean-Up Notice issued on 24 January.

SK:   I will let Eddie know.

AB: Note that the spilling of stormwater retention tank [sic] could be considered a Tier 1 offence under section 116 of the Protection of the Environment Operations Act 1997 and has a maximum penalty of $5,000,000 for wilfully causing or contributing to the offence plus there are the cost compliance costs [sic] to consider.

SK:   Okay.”

97. A short time later Ms Kemp called Mr Bourne, stating that four Remondis liquid waste removal trucks would be onsite “first thing in the morning”. Later in the afternoon of 21 February 2012, Mr Bourne had a telephone conversation with Mr Osman-Kerim. Mr Osman-Kerim stated that at 8.00am the following day Remondis would be taking water from the Premises “to stop the tank from overflowing”. When asked how many tankers would be used Mr Osman-Kerim responded by stating that there would be “a few tankers”.

98. Mr Bourne visited the Premises on 22 February 2012. He there observed that liquid waste was continuing to flow from the eastern side of the factory building on the Premises. He also observed that liquid in the SRT was “black and odorous”. It was at a level that was only 35cm from the top of that tank, far exceeding the 30 percent capacity that was the subject of the 24 January Notice. That same day Mr Bourne caused a reminder letter to be sent by the prosecutor to the Company, reminding it of the requirements imposed by the January 24 Notice, and stating that the failure to comply could involve “further regulatory action” of the kind indicated in the letter and noting that an obligation to comply remained operative even if the stipulated date for compliance had passed.

99. On the morning of 28 February 2012, Mr Bourne learned from the website of the Bureau of Meteorology that significant rain was forecast for the ensuing three days. He attempted to call Mr Osman-Kerim on his mobile telephone but when that call was unanswered he left a voice mail message stating that 65mm of rainfall was predicted over the next three days which would cause the SRT to overflow unless it was pumped out. Mr Bourne requested that Mr Osman-Kerim return his call.

100. Mr Bourne next telephoned the landline for the Company and spoke to Ms Kemp. After stating that calls had been made to the mobile telephone number for Mr Osman-Kerim but messages were not being returned, Mr Bourne warned of the likely rainfall over the ensuing days and requested that the Company organise to have the SRT pumped out as soon as possible. Ms Kemp indicated that she would “let Eddie know”. A little later Mr Bourne telephoned Mr Vernon, the solicitor from Benjamin & Khoury, solicitors, who had written to the prosecutor confirming that the firm represented the Company. Mr Bourne repeated his concern about the impact of further heavy rain over the ensuing days with a request that the EPA be advised of the actions proposed by the Company. The prospect that the prosecutor would take “further regulatory action” should no response be received was also stated. Mr Vernon is recorded as responding by saying “okay”.

101. As no response was received either from Mr Osman-Kerim, Ms Kemp or Mr Vernon, Mr Bourne again attempted to speak to Mr Osman-Kerim on his mobile telephone. The call was not answered but a voice mail message was left on that phone stating that the prosecutor would take action to pump some of the liquid waste from the SRT to prevent a pollution incident and that it would seek recovery of the costs associated with that action from the Company. A further telephone call to the landline telephone number of the Company was unsuccessful.

102. As a consequence, Mr Bourne again telephoned Mr Vernon. After stating that a breach of s 120 of the Act was occurring at the Premises because of the potential for a pollution incident to occur and that the Company was in breach of the January 24 Notice, Mr Bourne stated that because of the potential for significant risk of environmental harm, the prosecutor would engage two liquid waste removal tankers to remove some of the liquid waste from the SRT and was likely to seek recovery of the costs incurred in so doing. Mr Bourne indicated that he was contacting Mr Vernon because his telephone calls and messages to the Company had not been returned.

103. Both during the morning and afternoon of 29 February 2012, Mr Bourne telephoned Mr Osman-Kerim on his mobile telephone as well as the Company on its landline. Until about 5.00pm in the afternoon those telephone calls had not been returned, although messages had been left requesting information from the Company as to its intention to remove the liquid waste accumulating in the SRT. Shortly after 5.00pm, Mr Bourne was successful in speaking with Ms Kemp by telephone. During that conversation he asserted that the Company had failed to comply with its obligations in relation to the level of liquid waste in the SRT and requested to know what the Company was intending to do, indicating that the removal of two tanker loads of liquid waste from the SRT had been arranged by the prosecutor but that the SRT would require further “pumping out”. Ms Kemp advised that she would so inform Mr Osman-Kerim.

104. Mr Bourne and Mr Reece had attended the Premises earlier in the afternoon of 29 February. They had supervised the extraction of liquid waste from the SRT by the liquid waste removal tankers engaged for that purpose by the prosecutor. Before the extraction of liquid waste commenced, Mr Bourne observed that the level of waste within the SRT was 32cm from the top. That waste is described as having a strong solvent odour. An onsite measurement of a sample indicated the liquid to have a pH of 9. That waste liquid was observed to foam during the extraction process. Upon completion of that process by two tankers, the surface of the liquid waste in the SRT was 59cm from the top. The total volume of liquid removed by the two tankers was 41,700L.

105. Upon arrival at the Premises that day, Mr Bourne noted that the access driveway gate was closed and locked with a sign on the gate stating:

“For access contact Better Drums on xxxxxxxxx  Eddie Osman Email start="106">

The mobile telephone number was that called by Mr Bourne in endeavouring to make contact with Mr Osman-Kerim.

At about 5.30pm in the afternoon of 29 February, Mr Bourne spoke by telephone with Mr Osman-Kerim and had a conversation to the following effect:

“IOK:   I called Ramondis but they won’t work for me because they have not been paid for the past four loads.

AB:   The stormwater retention tank is near full and rainfall is predicted. To avoid the stormwater retention tank overflowing with liquid waste it will need to be pumped out before this Friday (2 March 2012).

IOK:   I will get back to you tomorrow.

AB:   Does Sydney Drum Machinery intend to maintain the Premises and levels of liquid waste contained within the stormwater retention tank?

IOK:   Yes, I spoke to the plumber who has a solution.

AB:   Okay. Note that black ooze is coming through underground stormwater pipe leading from the factory into the stormwater retention tank.

IOK:   That’s impossible.

AB:   It is the case. I have photographs to prove it.

IOK:   My lawyer says it is the landowners and insurance company’s responsibility.

AB:   Okay, [the 24 January Notice] is issued to Sydney Drum Machinery and based on the information provided to EPA to date, EPA will seek to recover the costs of the continual maintenance of the level of liquid waste within the stormwater retention tank from Sydney Drum Machinery.

IOK:   Okay.”

108. After several unsuccessful attempts to speak with Mr Osman-Kerim by telephone on 1 March 2012, Mr Bourne did speak with Ms Kemp who stated that Mr Osman-Kerim would return the call. When telephone contact was finally made with Mr Osman-Kerim later that day, Mr Bourne records a telephone discussion to the following effect:

“IOK:   Things are okay onsite. The stormwater retention tank is three quarters full.

AB:   The weather forecast is that it will rain over the next few days and that will make the stormwater retention tank overflow.

IOK:   Ramondis won’t work for me. Dieb Khoury said to call him. I’ll make some calls to get more liquid pumped out.

AB:   [the 24 January Notice] requires liquid waste contained within the stormwater retention tank to be maintained below 30% of the capacity of the tank. Now you are saying the tank is 75% full. You must get the tank pumped tomorrow at the latest.

IOK:   Talk to my lawyer.

AB:   Okay.”

109. Shortly thereafter Mr Bourne had a telephone conversation with Mr Dieb Khoury. Mr Bourne indicated that he was calling concerning both the Suspension Notice and 24 January Notice issued to the Company. Mr Bourne states that a conversation to the following effect then took place:

“DK:   Eddie doesn’t have a problem with compliance with the notices except he is unable to pay. He put in a claim for advance from the insurance company and was in a conference with them all day yesterday. Eddie says there is only water in the tanks onsite.

AB:   The EPA has laboratory results that demonstrate otherwise.

DK:   My client is not disputing the EPA’s claims but can’t pay.

AB:   Can you confirm Imad (Eddie) Osman-Kerim does not dispute the lawfulness of the EPA notices but is not in a financial position to comply.

DK:   Yes. There has been a breakthrough with the Landlord. Quotes are being gathered.

AB:   The material in the stormwater retention tank is toxic. It has a pH of 9. There are water users downstream of South Creek that use the water for irrigation. Letting the material in the stormwater retention tank go into the creek is not an acceptable option.

DK:   Okay.”

110. Later that day the prosecutor wrote to Mr Osman-Kerim and the Company what is described as a “show cause” letter. Reference is made in that letter both to the conditions attaching to the notice suspending the EPL as well as the directions contained in the 24 January Notice. Reference is also made to the letter of 21 February 2012, reminding the Company of its obligations under the Notices to which reference is made and to the fact that a number of inspections of the Premises reveal that liquid waste in the SRT was “well above 30 percent of its capacity”. After stating that the prosecutor was investigating further action, the letter indicated:

“Prior to taking any regulatory action in relation to the apparent breaches of the POEO Act, the EPA invites the Licensee to forward any submission it may wish to make in relation to the matter including, but not limited to, any defence or matter in mitigation the Licensee wishes the EPA to consider.”

111. The letter also stated that any submission the Company wished to make was required to be submitted in writing by 5.00pm on 8 March 2012. No response to that letter is recorded as having been received by the prosecutor by the stipulated deadline.

112. Mr Bourne attended the Premises on 2 March, essentially for the purpose of supervising removal of liquid waste from the SRT by six liquid waste removal trucks, whose attendance had been arranged by the prosecutor. This had occurred because of the rainfall that occurred and the rainfall predicted for the ensuing days. Upon arrival Mr Bourne observed that the SRT was full and overflowing into a stormwater pit that, in turn, drained to the unnamed watercourse. The liquid waste was foaming in the stormwater pit and a strong solvent odour was experienced by him both at the SRT and in the north-eastern section of the Premises. He also observed that liquid within the unnamed watercourse was foaming. Water samples were taken.

113. Throughout the day, the six liquid waste removal trucks came to the Premises and removed liquid waste from the SRT. After the last of those trucks had left, Mr Bourne measured the level of waste water in the SRT to be 80cm from the top. That level meant that the remaining water exceeded 30 percent of the SRT’s maximum capacity. Before departing the Premises, Mr Bourne observed that black liquid waste continued to drain into the SRT from a stormwater pipe leading from the factory building on the Premises. The absence of a roof on the building meant that rain falling on the factory floor was draining directly to the SRT.

114. After leaving telephone messages to call, Mr Bourne received a telephone call from Mr Osman-Kerim during the morning of 2 March. Mr Bourne advised Mr Osman-Kerim that the SRT was overflowing and enquired as to what he was going to do “to fix the current pollution incident”. He responded by stating that he would “get a sucker truck to tanker liquid off site”.

115. On 5 March 2012 Mr Bourne held a meeting with Mr Osman-Kerim at which John Machiani of the firm Environmental Services Pollution Control, and Michael Sidaros of Dr H2O Plumbing were present. Mr Sidaros and Mr Machiani had been engaged by the Company to assist it. In the course of that meeting, the following exchange took place between Mr Bourne and Mr Osman-Kerim:

“AB:   Can you advise if you are capable of maintaining the Premises and complying with the Notices?

IOK:   I’ll try my best.

AB:   But are you capable?

IOK:   I’ll try my best.

AB:   EPA is getting mixed messages. You say you will try to comply with the Notices and yet the Premises has not been maintained and Dieb Khoury of Benjamin & Khoury Attorneys & Solicitors who represent you states that you do not have the funds. Have you tried to raise funds?

IOK:   Yes, but I haven’t been able to.

AB:   EPA requests some evidence of the inability to comply for financial reasons. For example creditors statements, bank statements or accountant statements of assets owned.

IOK:   Okay.

AB:   If there is non-compliance with the Notices and no maintenance occurs, EPA will consider an injunction in Court requiring compliance. Do you understand that?

IOK:   Yes.”

116. There is no evidence of any financial information relating to the Company having been provided to the prosecutor following that conversation.

117. On the morning of 6 March 2012 Mr Bourne telephoned Mr Osman-Kerim, advising that forecast rainfall was for 25mm on 7 March and 50mm on 8 March. He stated that by his calculation the SRT would overflow on 7 March and a pump out of the SRT would be required “by no later than tomorrow morning”. Mr Osman-Kerim responded by stating that he would organise the tank to be pumped out. He was requested by Mr Bourne to confirm by 12.00pm that day that arrangements had been made for the pump out to occur. In the early afternoon, Mr Osman-Kerim advised by telephone that three trucks from Toxfree had been organised “to pump liquid waste from the stormwater retention tank between 8.00am and 9.00am”. Mr Osman-Kerim was requested to forward by facsimile a copy of “the paperwork” confirming that arrangement. Later in the afternoon when Mr Bourne informed Mr Osman-Kerim that no “paperwork” had been received, the former stated that pump-out works were “confirmed for tomorrow at 9.00am”.

118. Mr Bourne and Mr Reece inspected the Premises on 7 March 2012. Mr Bourne observed that the stormwater diversion system that had been put in place on the premises as a temporary measure was damaged and so was not acting to divert all water to the SRT. When the SRT was inspected the water level was only 20cm from the top.

285. Ultimately it was submitted by Mr Osman-Kerim that the question was not whether, from an engineering perspective, one solution was better than another but that the solution advanced by Mr Forrest was credible, was able to be put in place relatively easily and cheaply and reduced the risk of the Company breaching the law. In contrast, it was said that the onus cast upon the Company to pump out the SRT at any time, day or night, “in the face of the risk of any unknown quantity of rainfall” when there was an alternative “that was not likely to have that effect” demonstrated that Direction 3a was unreasonable. Further, it was submitted that it was not for the Company to suggest an alternative proposal because the prosecutor decided to impose the Direction and in doing so had to “look past the simplistic notion of whatever the licensee is required by [it] to do (the Company) shall do”.

The prosecutor’s submissions

291. The prosecutor correctly observes that the submissions made by Mr Osman-Kerim directed to each notice given under s 91 involves a collateral challenge to the decisions made by the prosecutor to issue those Notices. It accepts that it is open to Mr Osman-Kerim to make such a challenge in these proceedings (Liverpool City Council v Cauchi [2005] NSWLEC 675; 145 LGERA 1 at [41]; Ryding v Kempsey Shire Council at [9]).

292. At a level of general principle, the prosecutor submits that a decision is relevantly unreasonable only if it can be concluded that the decision-maker must have misunderstood the power being exercised because no reasonable decision-maker, understanding that power, could have made the decision. Reliance is placed upon the judgment of the plurality in Li at [66]-[67] for that proposition. Unless the decision can be so categorised, the decision-maker is left with a freedom as to the decision made, provided it is made within the confines of the power given by the relevant statute.

293. In the present case, the power available to the prosecutor under s 91 was enlivened because a pollution incident had occurred on 23 January and was continuing on 24 January 2012. The fact that there was a pollution incident that occurred and was occurring on those dates is acknowledged by Mr Osman-Kerim.

294. Whether the terms of Direction 3a were outside the power conferred by s 91 requires an analysis of both the scope of the power and the purpose for which the power is able to be exercised (Li at [67]). The prosecutor contends that the response to both the scope of the power and the purpose of its exercise are addressed by the respective definitions of “pollution incident” and “clean-up action” found in the Dictionary to the Act. They are definitions that I have earlier quoted.

295. As my earlier recitation of fact indicates, the pollution incident involves the escape of liquid waste from the premises into the SRT and then into the unnamed watercourse, leading ultimately to South Creek. Further, as the state of the Premises was on 23 and 24 January, there was a risk of further escape of that liquid waste.

296. The response of the prosecutor was to direct that liquid waste discharging into the SRT be kept at a level that was below 30 percent of its capacity, clearly intended to prevent overflow of that liquid waste into the adjoining watercourse. That solution met the description of clean-up action in that it was intended to prevent water pollution resulting from the incident.

297. That analysis, so it is submitted, demonstrates that the exercise of discretion available to determine an appropriate means or method of clean-up action was exercised following the pollution incident. The evidence of Mr Forrest does not advance a case to the contrary. The only difference between the solution posited by him and the direction given by the prosecutor was that “the SRT, having less capacity than the lake” he proposed creating, may require more frequent pump-out (Tcpt 285:24-29). Moreover, Mr Forrest acknowledged that “the 30 percent selection is a good solution in an initial emergency response” but that, as a long-term measure, a further review of that requirement should have been considered (Tcpt 287:13-23). In short, Mr Forrest considered Direction 3a of the 24 January Notice to be workable but imposed a potentially more onerous obligation on the Company than did his solution. That does not demonstrate a decision that is, in the relevant legal sense, unreasonable.

298. The submission by Mr Osman-Kerim that the direction challenged was unreasonable because it was not limited in time is answered by a proper analysis of the provisions of s 91. At the time at which the decision to give the Notice was made, the likely duration of the pollution incident was unknown. Had the 30 percent capacity requirement been limited in time there would potentially have been a disconnect between that limitation and the pollution incident. A reasonable construction of the direction indicates that Direction 3a remained an operative direction only while the pollution incident pertained. That construction is consistent with the power being exercised.

299. I observe that the submission just summarised is implicitly accepted by Mr Osman-Kerim by dint of his challenge to an allegation of breach of the Notice after 8 March because, on his analysis, there is no evidence that liquid in the SRT after that date was “liquid waste”. Once the content of the SRT ceased to be “liquid waste”, Direction 3a ceased to be engaged. Apart from applying the definition of “waste” in the Dictionary to the Act, the clear purpose reflected in the Directions given in the 24 January Notice is to prevent the escape of liquid that was contaminated by or had come into contact with both the firewater and liquids that emanated from the fire-damaged factory building. That was the “liquid waste” to which the Direction related.

300. The prosecutor submits that the circumstances in which the 24 January Notice came to be given are relevant to the reasonableness of the Directions given. Although earlier described in more detail, those circumstances are relevantly:

1.  the factory on the Premises had been substantially destroyed by fire with liquid waste flowing directly from the damaged factory building into the stormwater system;

2.  liquid contaminated by chemicals as well as material washed to the ground by firefighters was flowing into the SRT and then surcharging into the unnamed creek;

3.  as a temporary measure to stem the escape of liquid from the SRT, a traffic cone had been jammed into the discharge pipe from the SRT in an endeavour to prevent the escape of further contaminated liquid;

4. contaminated liquid was observed to have escaped and by observation could be determined to have polluted the nearby watercourse and creek.

301. Mr Bourne and Mr Reece, both experienced officers of the prosecutor, were present on the site immediately following the fire on 23 November. Mr Bourne was present for some hours while Mr Reece was onsite for the entire day seeking to address the escape of contaminated liquids across the boundaries of the Premises. Mr Reece learned that some 60 firefighters had attended to control the fire but, understandably, the focus of the efforts of the firefighters was to extinguish the blaze without undue concern as to the extent to which liquids used to that end were either contained within or discharged from the Premises. A great part of the day was spent by Mr Reece addressing the escape of contaminated liquid both in assessing its extent and supervising its removal. (Exhibit U, Tab 5).

302. Both officers returned the following day, observing that firewater and liquid waste was flowing from the eastern side of the factory premises, being the waste that was directed by booms into the SRT. Failure of the above ground storage tanks was a risk that had been materially increased by the fire that occurred on 23 January. Mr Bourne gave evidence that when looking into the damaged factory building from the outside he could see that one of the above ground storage tanks was at an angle with the top of that tank “somewhere between 30 and 45 degrees” (Tcpt 219:37-41). He remained of the opinion that if the large storage tanks failed, none of the bunding within the factory, including that which was supposed to protect the openings, was likely to be adequate to retain any significant spill from those tanks.

303. These were all circumstances that caused Mr Bourne to frame the 24 January Notice in the terms that he did. Directing that contaminated liquids within the SRT be maintained at 30 percent of maximum capacity was a level chosen so as to afford capacity to retain contaminated liquids in the event of tank collapse or rainfall. The circumstances that led to the decision to issue the 24 January Notice in those terms render, according to the submission, the decision as being one that is “unimpeachable”.

304. The reasonableness of the decision cannot be judged by taking into account events that occurred after but not reasonably foreseen on 24 January. Moreover, so it is submitted, the contention that the decision was unreasonable cannot be judged by now determining whether the decision was either the “best” or even “preferable” decision. The correct inquiry is whether the decision was within power and not unreasonable in the relevant sense.

305. An argument advanced by Mr Osman-Kerim was that Mr Sidaros had, during February 2102, advanced an alternate proposal which, he submitted, had been rejected by the prosecutor. It was submitted by the prosecutor that, for several reasons, that submission failed to identify any proper basis for challenge to the 24 January decision.

306. First, the proposals by Mr Osman-Kerim and his plumber were irrelevant to the question as to whether the impugned decision was unreasonable given that they were proposals advanced well after the decision was made. Mr Osman-Kerim had not demurred to the critical direction when it was shown to him in draft.

307. Secondly, some of the measures that were taken by or on behalf of Mr Osman-Kerim did not prevent the liquid waste flowing into the SRT. Mr Bourne’s evidence that subsequent overflows from the SRT occurred demonstrated that the work failed to achieve its stated purpose.

308. Thirdly, the proposals advanced seem to assume that the bunds constructed within the factory building would be adequate to prevent the escape of contaminated liquids whereas evidence, earlier recorded, had shown that the bund in the storage tank and wash bay area had overtopped on prior occasions.

309. Fourthly, the proposal by Mr Osman-Kerim’s plumber to place concrete around the eastern door of the factory building was anticipated by Mr Bourne to fail and, as Mr Osman-Kerim acknowledged, did in fact fail to arrest the flow of liquid from the building.

310. Fifthly, to the extent that other proposals were advanced by or on behalf of Mr Osman-Kerim, they were articulated on a conceptual basis but not followed up with detail, despite Mr Bourne’s request for details so that the proposals could properly be considered.

311. A second basis upon which Mr Osman-Kerim contended that the decision to impose Direction 3a was “grossly unreasonable” was the financial burden that it imposed upon the Company. However, as the prosecutor submits, an obligation to prevent pollution was an obligation imposed by the EPL granted to the Company and by s 120 of the Act, rendering it an offence to pollute waters. Costs incurred in addressing a pollution event are an incident of carrying on the Company’s business. First and foremost, the consideration to be brought to bear when determining to issue a notice under s 91 is the achievement of its objects. Those objects are sought to be achieved by giving power for urgent or prompt measures to be taken, necessary to avoid pollution occurring or the imminent likelihood of pollution occurring (Lismore City Council v Ihalainen [2013] NSWLEC 149; 198 LGERA 47 at [59]).

312. Reliance by Mr Osman-Kerim on the exceptionally high rainfall that occurred after 24 January as manifesting the unreasonable cost burden that is asserted is an argument based on hindsight. It provides no sound basis upon which to assert that the decision made on 24 January 2012 was unreasonable.

313. As I have earlier recorded, one of the bases upon which Mr Osman-Kerim submitted that the decision to issue the 24 January Notice was unreasonable was that the prosecutor failed to seek and to consider appropriate engineering advice in order to determine the best means of avoiding waste liquids contaminating the nearby watercourse and South Creek. The prosecutor submits that there is no substance in that submission and that it cannot ground the challenge to validity that is made by Mr Osman-Kerim. It submits that the submission involved a misconception of a prosecutor’s power, the circumstances of exercise of the power and the concept of unreasonableness as a basis upon which to challenge the exercise of power by an administrative decision-maker.

314. The power conferred by s 91 is, as already stated, a power the exercise of which directed to the prevention or minimisation of environmental harm. As the circumstances in which the power was exercised in the present case demonstrates, it will often be exercised in emergency or urgent circumstances. In those circumstances it will often, if not usually, require the exercise of that power without the benefit of engineering evidence or upon expert advice directed to competing considerations, such as undertaking a cost/benefit analysis. It is a power that allows a range of effectively evaluative considerations made by staff whose function it is to respond to the occurrence of a pollution incident. The decision to be made by reference to the section falls within the prosecutor’s “area of decisional freedom” provided that it is not arbitrary, capricious or without commonsense (Minister for Immigration and Border Protection v Singh [2014] FCAFC 1; 231 FCR 437 at [44]).

315. Moreover, had the prosecutor sought the advice of Mr Forrest at the time, it must be assumed that his response would have been consistent with the evidence that he gave. That evidence was to the effect that the requirement of Direction 3a was effective to address the pollution incident and an appropriate response, at the time. That, so it was submitted, was a sufficient answer to Mr Osman-Kerim’s submission that appropriate engineering advice should have been sought. It is therefore a sufficient basis upon which to conclude that the decision was within power, absent the rejection of an alternate response that rationally was required to be preferred. For reasons already stated, none of the suggested alternatives, advanced well after the relevant decision was made, identify a basis upon which it was unreasonable to impose Direction 3a on 24 January.

Consideration

316. I have concluded that Mr Osman-Kerim’s challenge to the decision of the prosecutor to give the 24 January Notice must fail. I reach this conclusion essentially for the reasons advanced by the prosecutor. Mr Osman-Kerim has not established, on the balance of probabilities, that the decision to give that Notice was, in the relevant legal sense, unreasonable.

317. Mr Osman-Kerim’s submissions fail to grapple, in a principled manner, with the considerations that must be brought to bear when exercising the discretion under s 91. Only the failure to take account of factors or matters that the prosecutor was bound to take into account when making its decision will render that decision susceptible to challenge. Those factors or matters must be determined upon the proper construction of the statute conferring the power. Where the statute does not expressly circumscribe the discretion, its ambit must be determined by reference to the subject matter, scope and purpose of the legislative provision conferring power (Minister for Aboriginal Affairs v Pekoe-Wallsend Ltd at 39-40).

318. The limit of the discretion imposed by s 91 is the scope of clean-up action, as defined, so as to give effect to the purpose of the section, namely to address the consequence of a pollution incident, as defined. So understood, the cost of clean-up action to address a pollution incident is not expressly or impliedly a mandatory consideration nor is the seeking of specialist advice, notwithstanding that each may inform the decision that is made.

319. The fact that cost is addressed in s 91(4) supports the conclusion that the cost of compliance in determining the exercise of discretion is not a mandatory consideration. The subsection makes apparent that the entity responsible for the pollution incident is the entity responsible for payment of the cost of complying with a notice given under s 91(1). The imposition of that liability renders it unlikely that when determining the scope of clean-up action that is the subject of a direction, the financial circumstances of or economic impact upon the polluter is a mandatory consideration.

320. Likewise, inconvenience or difficulty in complying with a direction given under s 91(1) are not mandatory matters for consideration when deciding whether the power should be exercised. So much is apparent from the provisions of s 91(5). By operation of that subsection, if the requirement imposed is, in the circumstances, unable to be performed, that circumstance, if properly established, potentially affords the “reasonable excuse” defence identified in that subsection.

321. I have accepted that the power available under s 91(1) will, more often than not, be required to be exercised in circumstances that require prompt action. The overriding power provided in s 91(2) for the present prosecutor to give a notice under s 91(1) in an emergency, even if it is not “the appropriate regulatory authority” with respect to the particular pollution incident, speaks against a general obligation to obtain expert advice before giving such notice. That is particularly relevant in the present case because neither of the expert engineers called at trial gave evidence to the effect that the determination to give Direction 3a necessitated prior input of an expert in order to understand its implications. Clearly, compliance with that direction did not involve the erection of any structure requiring engineering input nor did it involve the assessment of the stability or integrity of any existing structure in order to give effect to the direction.

322. I accept that the cost of compliance, the capacity to comply with a requirement imposed (objectively judged) and the input of specialist skills may be relevant when determining whether a direction imposed by a notice is reasonable in the relevant sense. However, there are two important limitations upon that acceptance. First, the relevance of those factors can only be determined by reference to the facts and circumstances pertaining at the date of the decision to give the relevant direction. Second, each of the factors require objective assessment rather than by assessment directed to the circumstances of the particular recipient. Thus, the financial burden to be considered would only be relevant to demonstrate that there was an alternate measure to be taken than that directed, which was equally effective in addressing the pollution event, and where, at the date of decision, the cost of complying with the direction was disproportionate to the cost of implementing the alternative. Even a disproportionate cost of compliance would be a factor to be considered rather than a sole determinant that a decision was unreasonable.

323. I have already indicated that if a challenge to a decision was made on the basis of capacity to comply with the direction given, an objective assessment would be necessary. The assessment would be ‘can it be done by a competent operator’ rather than whether ‘the recipient can do it’. Likewise, whether expert input is required to formulate the direction and assess its implications will depend upon the apparent complexity of the action required by the direction that is in contemplation. However, once again, all the circumstances would need to be considered.

316. In addressing the principles of reasonableness in the context of administrative decision-making, Mr Osman-Kerim characterised the power of a court to review such a decision too broadly. I accept that as a consequence of the decision of the High Court in Li the bar to a successful challenge on that ground is not necessarily set at the height of a decision that is irrational or bizarre such that it must be described as so unreasonable that no reasonable person could have arrived at it. However, the High Court made clear that review on the ground that a decision was unreasonable did not permit a reviewing court, in effect, to conduct a merit review. As French CJ stated in the opening passage of [30]:

“The requirement of reasonableness is not a vehicle for challenging a decision on the basis that the decision-maker has given insufficient or excessive consideration to some matters or has made an evaluative judgment with which a Court disagrees even though that judgment is rationally open to the decision-maker. Gleeson CJ and McHugh J made the point in Eshetu that the characterisation of somebody’s reasoning as illogical or unreasonable, as an emphatic way of expressing disagreement with it, ‘may have no particular legal consequence’.”

325. In the same case the plurality said at [66] (omitting citation of authority):

“This approach does not deny that there is an area within which a decision-maker has a genuinely free discretion. That area resides within the bounds of legal reasonableness. The courts are conscious of not exceeding their supervisory role by undertaking a review of the merits of an exercise of discretionary power. Properly applied, a standard of legal reasonableness does not involve substituting a court’s view as to how a discretion should be exercised for that of a decision-maker.”

326. To similar effect are the observations of Gageler J in the same case where his Honour said at [105] (omitting citation of authority):

“Review by a court of the reasonableness of a decision made by another repository of power is ‘concerned mostly with the existence of justification, transparency and intelligibility within the decision-making process’ but also with ‘whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law’.”

327. The decision of the High Court in Li was considered by the Full Federal Court in Minister of Immigration and Border Protection v Singh. In a joint judgment the Court said at [45]:

“In circumstances where no reasons for the exercise of power, or for a decision, are produced, all a supervising court can do is focus on the outcome of the exercise of power in the factual context presented, and assess, for itself, its justification or intelligibility bearing in mind that it is for the repository of the power, and not for the court, to exercise the power but to do so according to law.”

328. For reasons that I have earlier given, the decision to give the 24 January Notice met the criteria for a pollution incident and the requirement for clean-up action to which s 91(1) is directed. Therein lies its legal “justification” (Li at [105]).

329. In his submissions, Mr Osman-Kerim focussed upon that part of Direction 3a requiring the Company to “ensure” that the retention tank did not fill in excess of 30 percent of its capacity. Focus upon that part of the direction was too limiting. The intelligibility of the Direction required it to be read and considered as a whole. Properly understood, the Direction required:

1.  the monitoring of liquid waste within the SRT and adjacent stormwater pit;

2. when, as a consequence of monitoring, the level of liquid waste was in excess of 30 percent of capacity, steps were required to be taken to dispose of the excess so that the level returned to a level that was at or below 30 percent.

330. The purpose and intended effect of Direction 3a is made apparent when read in the context of Directions 1 and 2. Direction 1 required isolation of the pit so that its contents did not discharge through the outlet pipe and Direction 2 clearly intended that there would be run-off from the factory building directed to the SRT. That process, coupled with any rainfall that might reasonably have been anticipated as at 24 January 2012 was predicted to be captured in the SRT. The contemplation was that the 30 percent level may well be exceeded but with an appropriate monitoring regime, sufficient capacity would be preserved to capture run-off so that volume above 30 percent could be accommodated without surcharge but then removed.

331. I do not accept the submission of Mr Osman-Kerim that the Direction was unduly onerous upon the Company because, at the instant at which capacity of the SRT exceeded 30 percent, he was potentially guilty of an offence against s 91(5). Reading Direction 3a as a whole, an offence was committed only if he failed appropriately to monitor the level of liquid waste within the SRT and, having done so, then failed with appropriate promptitude to reduce the liquid waste to the 30 percent level. The evidence establishes that he did neither.

332. I do not overlook the expert engineering evidence given by Mr Forrest and Mr Ryan. Their evidence is referred to at [165]-[176]. The essence of the evidence given by Mr Ryan is summarised at [175]. Mr Forrest’s concession that the direction to isolate the SRT and maintain the level of liquid waste in the SRT at or below 30 percent of capacity was “a good solution in an emergency situation” and that the alternate solution posited by him would also require removal of retained liquid waste by tanker trucks, satisfies me that there was no difference of present relevance between the experts. That being so, it is unnecessary to resolve differences of detail between them, being detail that is not directed to the fundamental consensus that they reached.

333. There is a further observation to be made in response to the contention that Mr Osman-Kerim’s access to the Premises was limited for a time following the fire that had occurred on 23 January. Clearly, officers of the prosecutor were able to gain access to the Premises for the purpose of pumping out the SRT. I have accepted the evidence of Mr Bourne that he offered to assist Mr Osman-Kerim to gain access to the Premises should the police or fire authorities seek to restrict that access. This offer was not taken up. While Mr Osman-Kerim originally suggested that no such offer was made, his final response to the proposition that it had was, as I have earlier recorded, that Mr Bourne “may have said that”. Given that the prosecutor did in fact gain access to the areas external to the damaged factory building for the purpose of sealing, observing liquid in the SRT and then having excess liquid pumped out, it is apparent that had the offer made by Mr Bourne been accepted by Mr Osman-Kerim, the Company would have had access necessary to comply with Direction 3a. For that reason Mr Osman-Kerim cannot properly contend that the Direction was unreasonable on the basis that lack of access prevented him complying with the Direction.

334. The reasons that I have expressed found my conclusion that the challenge to the validity of the 24 January Notice, on the basis that the decision to give it was unreasonable, cannot be supported. The decision to give Direction 3a was within a range of acceptable responses to the pollution incident and is defensible in the circumstances that existed on 24 January, thereby engaging the provisions of s 91(1).

Reasonable excuse

335. I have earlier held that by operation of s 256(1) of the Act, the onus is upon Mr Osman-Kerim to establish, on the balance of probabilities, that the Company had a reasonable excuse not to comply with the 24 January Notice. Only very brief submissions were made at the conclusion of the hearing on behalf of Mr Osman-Kerim directed to this defence.

336. As the prosecutor submits, the phrase “reasonable excuse” derives its content and meaning from the context of the particular statute in which it appears, particularly having regard to the purpose of the provision to which “reasonable excuse” is a defence (Taikato v The Queen [1996] HCA 28; 106 CLR 454 at 464; SD v New South Wales Crime Commission [2013] NSWCA 48; 84 NSWLR 456 at [17]). The purpose of s 91(5) is a mechanism to punish non-compliance with a notice given under s 91(1) which, in turn, is directed to the prevention or mitigation of environmental harm. The defence of reasonable excuse does not import a choice on the part of the recipient of the notice as to whether he, she or it will comply.

337. In Corporate Affairs Commission (NSW) v Yuill [1991] HCA 28; 172 CLR 319 Dawson J said at 336 that reasonable excuse “aptly refers to any physical or practical difficulties in complying with” the statutory requirement. Although being considered in a different statutory context, his Honour’s observation is apt to be applied to the present offence. At least, factors having the character that he identified must be the primary focus of the reasonable excuse defence under s 91(5).

338. The basis upon which Mr Osman-Kerim submitted that the defence was made out was founded upon the rainfall that occurred after the Notice had been given. Reference is also made to “the amount of water pumped onto the site by the Fire Brigade”. The severity of the damage occasioned by the fire on 23 February and the number of fire fighting personnel present would suggest that extinguishing the fire involved a significant operation. However, the evidence does not provide any basis upon which to consider “the amount of water” used in extinguishing the fire. The submission is that the firewater together with the rainfall “occurring in such volume and falling at any time of the day and night created a situation where it was reasonable for the defendant not to be able to comply with such notices [sic]”.

339. The facts established and Mr Osman-Kerim accepts (Exhibit B, par 48) that there were 14 occasions between 25 January and 20 March 2012 when officers of the prosecutor observed the liquid in the SRT to exceed 30 percent of its maximum capacity. Only the last two of those observations, namely those made on 9 and 20 March occurred when, so it is argued, the content of the SRT has not been shown to be “liquid waste”. The evidence of Mr Osman-Kerim does not suggest that the rainfall that occurred in that period, somehow prevented tanker trucks entering the site and removing waste from the SRT. Indeed, the evidence readily discloses that such a contention could not be made, not only because there were, throughout this period, trucks attending to remove waste at the request of the prosecutor, but also because Mr Osman-Kerim established that he engaged Remondis to remove liquid waste from the SRT on 16 February, 22 February and 7 March 2012.

340. Moreover, Mr Osman-Kerim advanced no evidence to demonstrate that he was unable to monitor the liquid level in the SRT because of the weather or for any other reason, nor did he adduce evidence indicating that because of the weather or volume of liquid on the site, tankers were unable to attend the Premises and remove the contents of the SRT. His evidence establishes only that he did as much as he was prepared to do or able to do because of his financial circumstances.

341. I have earlier referred to the obligation imposed by Direction 3a to monitor the level of liquid in the SRT so as to determine when removal of liquid was required. Evidence from the prosecutor demonstrates that there were a number of occasions during the charge period on which the SRT overflowed. That circumstance casts considerable doubt upon whatever monitoring regime had been put in place. Moreover, on those occasions upon which Mr Osman-Kerim did arrange for tankers to attend and remove liquid waste, the volume removed by him could not have reduced the level in the SRT to 30 percent capacity. Why the tankers could not have returned to reduce the capacity of stored liquid to the required level was not explained.

342. Although cost was not identified in final submissions as the basis upon which non-compliance was sought to be excused, costs of compliance was one of the bases upon which it was submitted that the Direction was unreasonable. I have already addressed that submission. To the extent that cost might be thought to be relevant to the reasonable excuse defence, the evidence is not persuasive, even on the balance of probabilities standard. Indeed, it is conflicting. At one point in his record of interview (Exhibit P, question 406), Mr Osman-Kerim was asked whether the Company was in a financial position to comply with the requirement in January 2012. The recorded answer was “Always. No problem. There was no problem. This question – we didn’t have drama.”

343. However, when being pressed by Mr Bourne in January, February and March 2012 to take action to remove liquid waste from the SRT, Mr Osman-Kerim complained that he could not obtain the services of contractors because their bills had not been paid and that it was costing too much to remove the material. In evidence, he stated that, at the time, he did not have enough money to meet ongoing pump-out costs (Tcpt 405:47-49).

344. At [115] I have set out a conversation that took place between Mr Bourne and Mr Osman-Kerim on 5 March 2012 in which Mr Osman-Kerim’s financial means to comply with the 24 November Notice was raised and in which he was asked to provide financial statements demonstrating his position. As I have recorded at [117], no financial information relating to the Company was provided. When asked in the course of his record of interview whether the Company was in a good financial position, Mr Osman-Kerim indicated that the financial position of the Company was a private matter (Exhibit B, question 408) which, in the course of cross-examination at trial, he explained as indicating that he did not wish to disclose the financial position of the Company in the course of the interview (Tcpt 424:12-14). Upon being further questioned, he stated that it was not the prosecutor’s business to know the Company’s financial position in January and February 2012. He stated that in February 2012 he decided that no further money would be spent on emptying out the SRT because he believed it was costing too much money for nothing and that the prosecutor had made a mistake in issuing the Direction in the terms that it did (Tcpt 427:13-29).

345. On the evidence that I have identified, Mr Osman-Kerim has not established that there were physical or practical difficulties that, objectively judged, prevented him from complying with the 24 January Notice. It has not been established that the Company sought to comply with the obligation imposed upon it. Rather, Mr Osman-Kerim’s own evidence established that he chose not to comply because of the costs being incurred and the fact the he considered the prosecutor to be mistaken in giving Direction 3a.

346. For these reasons, it has not been established that the Company had a reasonable excuse for failing to comply with the 24 January Notice.

Section 169(1)(c)

347. No facts have been adduced additional to those given and discussed when addressing the reasonable excuse defence. For reasons expressed when addressing that defence, Mr Osman-Kerim has not established, on the balance of probabilities, that, in his capacity as a director of the Company, he used all due diligence to prevent the Company failing to comply with the 24 January Notice, the failure to comply with which was a contravention by the Company of s 91(5) of the Act.

Conclusion on offence by reference to 24 January Notice

348. For the reasons I have stated, I am satisfied beyond reasonable doubt that the Notice given on 24 January 2012:

1. was given in writing by the prosecutor in its capacity as the appropriate regulatory authority;

2.  that the Notice was given to the Company as occupier of the Premises being the premises to which that Notice related;

3.  that at the time of giving the Notice the prosecutor reasonably suspected that a pollution event had occurred;

4. that the directions given in the Notice required clean-up action to be taken consequent upon the pollution event; 

5. that the Company failed to take the clean-up action required by Direction 3a of the Notice;

6.  that at the time at which the Notice was given to the Company and thereafter, Mr Osman-Kerim was a director of the Company.

349. The one matter about which I have not yet recorded any finding is the period during which the Company failed to comply with the 24 January Notice. The charges in the respective summonses served upon the Company and Mr Osman-Kerim allege that the offence occurred between 24 January 2012 and 30 March 2012.

350. I have earlier stated that the relevant obligation imposed upon the Company by Direction 3a was to maintain the level of “liquid waste” in the SRT at a level that did not exceed 30 percent of the capacity of the SRT. Relevantly, “liquid waste” was any liquid that did or might flow to the SRT and which was either the product of fire residue or chemical substances emanating from the damaged factory building.

351. The analyses of liquid waste samples taken from the Premises, including the SRT, were tendered (Exhibit L) and were the subject of evidence given by Mr Julli for the purpose of establishing their likely environmental impact of the liquid waste. The latest of the samples that were the subject of analysis and upon which Mr Julli has given evidence were samples taken on 8 March 2012. As a consequence, I have no evidence establishing beyond reasonable doubt that liquid waste was present in the SRT after 8 March 2012. As a consequence, I cannot determine that there was a failure by the Company to comply with Direction 3a after that date.

352. Accordingly, I find beyond reasonable doubt, that the period during which the Company failed to comply with the 24 January Notice was from 24 January to 8 March 2012.

353. I am not satisfied, on the balance of probabilities, that:

1.  the Company had a reasonable excuse for not complying with Direction 3a in the 24 January Notice; or that

2. Mr Osman-Kerim, as a director of the Company, used all due diligence to prevent the Company from contravening the 24 January Notice.

354. I am therefore satisfied beyond reasonable doubt that the Company, by its failure to comply with the 24 January Notice given to it under s 91(1) of the Act, has contravened s 91(5) of the Act. I am also satisfied beyond reasonable doubt that, by operation of s 169(1) of the Act, Mr Osman-Kerim has also contravened s 91(5) of the Act.

Orders

355. The orders that I make are as follows:

1. In proceedings 2016/158256 (50010 of 2013) I record the plea of guilty entered by the defendant on 29 September 2014.

2. In proceedings 2016/158257 (50011 of 2013) I find the defendant guilty of the offence that between 24 January 2012 and 8 March 2012, at or near St Marys in the State of New South Wales, he committed an offence against s 91(5) of the Protection of the Environment Operations Act 1997 (NSW) by reason of s 169(1) of that Act in that:

1. he was a director of Sydney Drum Machinery Pty Ltd (ACN: 102625507); and

2. that Company was given a clean-up notice and did not comply with that clean-up notice without reasonable excuse.

3. In proceedings 2016/158258 (50012 of 2013) I find the defendant guilty as charged.

4. In proceedings 2016/158195 (50007 of 2013) I order that the summons be dismissed.

5. In proceedings 2016/158196 (50008 of 2013) I order that the summons be dismissed.

6. In proceedings 2016/158197 (50009 of 2013) I order that the summons be dismissed.

7. In proceedings 2015/158256, 2016/158257, 2016/158258 (50010, 50011 and 50012 of 2013) I order that the proceedings be stood over to Friday 24 June 2016 for directions and to fix a date for hearing on sentence.

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Amendments

06 June 2016 - Coversheet typo

Decision last updated: 06 June 2016