Environment Protection Authority v Sydney Water Corporation

[2023] NSWLEC 119

Land and Environment Court

New South Wales

Medium Neutral Citation:

Environment Protection Authority v Sydney Water Corporation [2023] NSWLEC 119

Hearing dates:

22 August 2023

Date of orders:

03 November 2023

Decision date:

03 November 2023

Jurisdiction:

Class 5

Before:

Moore J

Decision:

See orders at [211]

Catchwords:

SUBPOENA – Prosecutor serves subpoena to produce on Defendant – subpoena lists documents sought – Defendant files Notice of Motion seeking to have the subpoena set aside – Defendant seeks to have subpoena set aside on the basis that the documents all result from voluntary environmental audits – Prosecutor provided with the documents subject to a confidentiality undertaking for the purposes of this set-aside application – application made on the basis that the documents are protected documents within the scope of s 181(1) of the Protection of the Environment Operations Act 1997 (POEO Act) – Prosecutor proposes that for documents to have been produced as a consequence of a voluntary environmental audit, the process and purpose to constitute such an audit should comply, generally, with ISO19011: 2018 – Defendant submits process for a voluntary environmental audit, understood in its proper statutory context within Part 6 of the POEO Act, did not need to mimic requirements of ISO19011 – Defendant says documents were produced for the sole purpose of environmental audits – Prosecutor’s approach to the concept of voluntary environmental audit too narrow and prescriptive – Defendant’s approach is appropriate basis upon which to consider each of the documents set out – examination of the individual documents establishes that all but two were created for the sole purpose of voluntary environmental audits – two documents (being logs describing pipe cam footage) were not documents on their face which were produced for the sole purpose of a voluntary environmental audit – subpoena set aside with respect to the protected documents – Defendant ordered to produce the two pipe cam log documents and any associated documents and video footage to the Prosecutor

Legislation Cited:

Contaminated Land Management Act 1997

Protection of the Environment Operations Act 1997, Chapter 6

Protection of the Environment Operations (General) Regulation 2009

Protection of the Environment Operations (General) Regulation 2021

Cases Cited:

Environment Protection Authority v McMullen [2020] NSWLEC 87

Ex parte MacKaness and Avery Pty Ltd; Re Royce (1943) 43 SR (NSW) 239

Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705

Marine Power Australia Pty Ltd v Comptroller-General of Customs (1989) 89 ALR 561

Pepsi Seven-Up Bottlers Perth Pty Ltd v Commissioner of Taxation (1995) 62 FCR 289

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28

Sea Shepherd Australia Ltd v Federal Commissioner of Taxation and Another [2013] FCAFC 68

State of New South Wales v Kaiser [2022] NSWCA 86

Taylor v The Owners of Strata Plan 11564 and Others (2014) 253 CLR 531; [2014] HCA 9

Uber BV v Federal Commissioner of Taxation (2017) 247 FCR 462

Texts Cited:

ISO 19011: 2018

Category:

Procedural rulings

Parties:

Environment Protection Authority (Prosecutor and Respondent on the Motion)
Sydney Water Corporation (Defendant and Applicant on the Motion)

Representation:

Counsel:
H El-Hage/G Marsden, barristers (Prosecutor and Respondent on the Motion)
S Free SC/J Caldwell, barristers (Defendant and Applicant on the Motion)

Solicitors:
Environment Protection Authority (Prosecutor and Respondent on the Motion)
Maddocks (Defendant and Applicant on the Motion)

File Number(s):

392931-392933 of 2022

Publication restriction:

No

JUDGMENT

Introduction

Matter 392931 of 2022

Matter 392932 of 2022

Matter 392933 of 2022

The Prosecutor’s subpoena

Sydney Water’s Notice of Motion

Introduction

The procedural background to this hearing

The directions hearing on 2 June 2023

The directions hearing on 7 July 2023

The hearing of Sydney Water’s Further Amended Notice of Motion

Relevant statutory provisions

The evidence

Sydney Water's evidence

Introduction

Mr Schaeper’s evidence

Mr Sunarho’s evidence

The Prosecutor's evidence.

The issues

A random observation

The submissions for Sydney Water

Introduction

Sydney Water’s written submissions

Sydney Water’s oral submissions

The submissions for the Prosecutor

Introduction

The Prosecutor’s written submissions

The Prosecutor’s primary position

The Prosecutor’s oral submissions

The submissions in reply for Sydney Water

Consideration

The proper basis for evaluating the status of the documents

Consideration of the individual documents

Introduction

Sydney Water’s descriptions of the documents

Sydney Water’s written submissions on the individual documents

Document sought in paragraph 2(a) of the subpoena

Document sought in paragraph 2(b) of the subpoena

Document sought in paragraph 2(c) of the subpoena

Document sought in paragraph 2(d) of the subpoena

Document sought in paragraph 2(e) of the subpoena

Document sought in paragraph 2(f) of the subpoena

Document sought in paragraph 2(g) of the subpoena

Document sought in paragraph 2(h) of the subpoena

Document sought in paragraph 2(i) of the subpoena

Document sought in paragraph 2(j) of the subpoena

Document sought in paragraph 2(k) of the subpoena

Document sought in paragraph 2(l) of the subpoena

The CCTV footage

The Prosecutor’s submissions on the individual documents

Introduction

Document in paragraph 2(a) of the Subpoena

Document in paragraph 2(b) of the Subpoena

Document in paragraph 2(c) of the Subpoena

Document in paragraph 2(d) of the Subpoena

Document in paragraph 2(e) of the Subpoena

Document in paragraph 2(f) of the Subpoena

Document in paragraph 2(g) of the Subpoena and the CCTV footage

Document in paragraph 2(h) of the Subpoena

Document in paragraph 2(i) of the Subpoena

Document in paragraph 2(j) of the Subpoena

Document in paragraph 2(k) of the Subpoena

Document in paragraph 2(l) of the Subpoena

Consideration of the individual documents

Protected documents

Documents not to be categorised as being “voluntary environmental audits”

Orders

JUDGMENT

Introduction

1. On 30 December 2022, the Environment Protection Authority (the Prosecutor) commenced three prosecutions against Sydney Water Corporation (Sydney Water) alleging breaches of the Protection of the Environment Operations Act 1997 (the POEO Act). The charges and particulars in each of the summonses as set out below:

Matter 392931 of 2022

… from about 5.00pm on 11 November 2022 and continuing until about 9 December 2022, it committed an offence against s 211(1) of the Protection of the Environment Operations Act 1997 (POEO Act) in that it, without lawful excuse, neglected or failed to comply with a requirement made of it under Chapter 7 of the POEO Act.

Particulars

a. Chapter 7 Requirement

The Environment Protection Authority (EPA) required the Defendant to furnish information and records to the EPA, that requirement being made by the Notice for Information and Records No. 3503941 issued to the Defendant on 21 October 2022 (the Notice) pursuant to s 191(1) of the POEO Act, which stated at s 12.a.:

Sydney Water's response to question 14 of the Second Notice stated that a CCTV inspection was undertaken in a s of the Rising Main in November 2016. In relation to this inspection address the following:

a.   Provide all of the CCTV footage from the CCTV inspection

The Notice required the Defendant to furnish to the EPA the information and records specified in s 12.a. of the Notice by 5:00pm on 11 November 2022 (the Chapter 7 Requirement).

b.   Manner of breach

The Defendant, without lawful excuse, neglected or failed to comply with the Chapter 7 Requirement from about 5.00pm on 11 November 2022 and continuing until about 9 December 2022.

Matter 392932 of 2022

… between about 24 November 2016 and about 6 January 2022 inclusive, at or near the Southern Suburbs Sewage Treatment System reticulation system (Premises), including the 750mm pressurised rising main (Rising Main) leading from sewage pumping station SP0041 (Pumping Station) at or near Elva Street, Strathfield, in the State of New South Wales, it committed an offence against s 64(1) of the Protection of the Environment Operations Act 1997 (POEO Act) in that it was the holder of a licence, a condition of which was contravened by a person.

Particulars

a.   Licence

Environment Protection Licence number 372.

b.   Licence Condition

Condition 01.1 of the Licence, which states:

"01.1 Licensed activities must be carried out in a competent manner. This includes:

a) The processing, handling, movement and storage of materials and substances used to carry out the activity; and

b) The treatment, storage, processing, reprocessing, transport and disposal of waste generated by the activity."

c.   Licensed activities

The licensed activities that were carried out by the Defendant were the operation of the Pumping Station and Rising Main in the course of sewage treatment.

d.   Manner of breach

The Defendant failed to carry out licensed activities, being the operation of the Pumping Station and Rising Main in the course of sewage treatment, in a competent manner in that:

i.   The Rising Main consisted of a mild steel cement lined pipe (with an internal cement lining) in the vicinity of Elva Street, Strathfield;

ii.   The Pumping Station was not operated to consistently reach the velocities required to limit the build up of solids and to minimise slime growth on the internal cement lining of the Rising Main in the vicinity of Elva Street, Strathfield, contrary to the s 10.3.5 of the WSA 04-2005-2.1: Sewage Pumping Station Code of Australia;

iii.   The Rising Main was not regularly cleaned to manage the build up of solids and to minimise slime growth on the internal cement lining of the Rising Main in the vicinity of Elva Street, Strathfield;

iv.   There was no proactive asset inspection or maintenance program to monitor the condition and integrity of the internal cement lining of the Rising Main in the vicinity of Elva Street, Strathfield;

v.   There was no comprehensive forensic investigation or risk assessment following previous failures of the Rising Main in the vicinity of Elva Street, Strathfield;

vi.   The operation of the Pumping Station and Rising Main relied on inaccurate and outdated information;

vii.   The Pumping Station and Rising Main were not otherwise operated in a manner which prevented the failure of the Rising Main in the vicinity of Elva Street, Strathfield.

As a consequence of which, on about 6 January 2022, the Rising Main failed in the vicinity of Elva Street, Strathfield causing untreated sewage to discharge to the environment.

Matter 392933 of 2022

… on about 6 January 2022, at or near the Southern Suburbs Sewage Treatment System reticulation system (Premises), including the 750mm pressurised rising main (Rising Main) leading from sewage pumping station SP0041 (Pumping Station) at or near Elva Street, Strathfield in the State of New South Wales, it committed an offence against s 64(1) of the Protection of the Environment Operations Act 1997 (POEO Act) in that it was the holder of a licence, a condition of which was contravened by a person.

Particulars

a.   Licence

Environment Protection Licence number 372.

b.   Licence Condition

Condition 02.1(a) of the Licence, which states:

"02.1 All plant and equipment installed at the premises or used in connection with the licensed activity: a) must be maintained in a proper and efficient condition... "

c.   Manner of breach

The Defendant failed to maintain the Rising Main in a proper and efficient condition in that it was not maintained in such a condition that allowed sewage flows to be transported from the Pumping Station via the Rising Main to the Malabar Sewage Treatment Plant, thereby causing untreated sewage to discharge to the environment.

2. Each summons also sought, relevantly, that Sydney Water pay the Prosecutor's costs and that the Court make:

… such orders pursuant to Part 8.3 of the POEO Act as the Court in its discretion sees fit to make.

3. As can be seen, the second and third of the above charges arise from an incident involving a 750mm pressurised rising main leading from sewage pumping station SP0041 at or near Elva Street, Strathfield.

The Prosecutor’s subpoena

4. On 26 May 2023, the Prosecutor filed and served a Subpoena to Produce on Sydney Water. For the purposes of this application by Sydney Water to set aside the subpoena, the functional elements of the subpoena were in paragraphs 2 to 5, being paragraphs in the following terms:

2   A copy of the following documents, each of which is a report (or similar document) containing details of an inspection, condition assessment or an investigation undertaken on the 750mm rising main which transfers sewage from sewage pumping station SP0041, located at or near Elva Street, Strathfield:

a.   Report on Linear Polarisation Technique (December 2006)

b.   Report on Linear Polarisation Technique (May 2009)

c.   Water main pipe condition inspection relating to Malta Street, North Strathfield (23 November 2012)

d.   Failure report of SP0041 Rising Main, Pomeroy Street (12 March 2013)

e.   Report on in-line leak and gas pocket detector tool called Smartball (June 2013)

f.   Report on in-line leak and pipe anomaly (defect) (November 2014)

g.   Report on CCTV Inspection (November 2016)

h.   Pressure sewer pipe inspection report relating to Elva Street, Strathfield (7 December 2016)

i.   Report on K9 (dog) odour detection trial (July / August 2020)

j.   Water main/pressure sewer pipe inspection report relating to Allen Street, Homebush (29 April 2021)

k.   Report on CCTV Inspection (2021)

l.   Report on acoustic leak detection survey (2021)

3   A copy of any communications containing any instructions (or requests) for the preparation of any of the following documents, each of which is a report (or similar document) containing details of an inspection, condition assessment or an investigation undertaken on the 750mm rising main which transfers sewage from sewage pumping station SP0041, located at or near Elva Street, Strathfield:

a.   Report on Linear Polarisation Technique (December 2006)

b.   Report on Linear Polarisation Technique (May 2009)

c.   Water main pipe condition inspection relating to Malta Street, North Strathfield (23 November 2012)

d.   Failure report of SP0041 Rising Main, Pomeroy Street (12 March 2013)

e.   Report on in-line leak and gas pocket detector tool called Smartball (June 2013)

f.   Report on in-line leak and pipe anomaly (defect) (November 2014)

g.   Report on CCTV Inspection (November 2016)

h.   Pressure sewer pipe inspection report relating to Elva Street, Strathfield (7 December 2016)

i.   Report on K9 (dog) odour detection trial (July / August 2020)

j.   Water main/pressure sewer pipe inspection report relating to Allen Street, Homebush (29 April 2021)

k.   Report on CCTV Inspection (2021)

l.   Report on acoustic leak detection survey (2021)

4   A copy of the CCTV footage recorded during the CCTV inspection of the 750mm rising main located at or near Elva Street, Strathfield during November 2016.

5   A copy of any communication containing any instructions (or requests) to undertake a CCTV inspection of the 750mm rising main located at or near Elva Street, Strathfield during November 2016.

Sydney Water’s Notice of Motion

Introduction

5. On 1 June 2023, Sydney Water filed a Notice of Motion seeking to set aside the subpoena issued to it by the Prosecutor. On 2 June 2023, Sydney Water filed an Amended Notice of Motion in court. The Amended Notice of Motion sought that the subpoena issued at the request of the Prosecutor on 26 May 2023 be set aside on the ground that the documents sought in paragraphs 2 to 5 of the schedule to the subpoena were:

… protected documents within the terms of s 181 of the Protection of the Environment Operations Act 1997, which may not be inspected, copied, seized or otherwise obtained by the prosecutor for any purpose connected with the administration or enforcement of the environmental protection legislation.

6. On 7 July 2023, Sydney Water filed a Further Amended Notice of Motion. The Further Amended Notice of Motion sought the relief noted above as set out in the Amended Notice of Motion (proposed order 1 of the Amended Notice of Motion becoming proposed order 1 in the Further Amended Notice of Motion). The Further Amended Notice of Motion added, as proposed order 2, the following as an alternative outcome:

2. In the alternative, no access to the documents produced to the court in answer to paragraphs 2 to 5 of the subpoena be granted to the prosecutor on the ground that they are protected documents within the terms of section 181 of the Protection of the Environment Operations Act 1997, which may not be inspected, copied, seized or otherwise obtained by the prosecutor for any purpose connected with the administration or enforcement of the environmental protection legislation.

7. It is upon this Further Amended Notice of Motion that Sydney Water moved at the hearing on 22 August 2023.

8. To provide contextual background to the circumstances for, and events leading up to, the procedural application made by Sydney Water giving rise to these proceedings, it is appropriate to set out (2) to (14) of the written submissions provided by Sydney Water in support of its Further Amended Notice of Motion. This extract is in the following terms (footnotes omitted):

2. Sydney Water has 24 wastewater networks that are the subject of environment protection licences (licences) issued by the EPA. Those networks consist of approximately 26,350 kilometres of pipes, 29 water resource recovery facilities and 695 pumping stations. They service approximately 5,161,000 people in the areas of Greater Sydney, the Blue Mountains, Wollongong and Kiama.

3. One of the wastewater networks owned and operated by Sydney Water is the Southern Suburbs Sewage Treatment System, of which the Malabar Sewage Treatment Plant and the Malabar Wastewater System form part. The Malabar Wastewater System includes a number of assets, including sewage pumping station SP0041 (the Pumping Station), the Western Branch Main Submain and a 750mm rising main (the Rising Main). The Rising Main, which was installed in sections in 1965, 1981 and 2013, carries wastewater from the Pumping Station to the Western Main Branch Submain. It is 3.2 kilometres in length and travels under retail stores, residential houses, a tributary of the Parramatta River, rail corridors between Homebush and Strathfield, the M4 motorway, Parramatta Road and other freeways and roads. Unlike a gravity main, which carries wastewater downstream under the influence of gravity, the Rising Main conveys wastewater under pressure.

4. Since 25 May 2000, Sydney Water has been the holder of environment protection licence 372 (the EPL), which has been varied on several occasions. The EPL authorises the scheduled activity of “sewage treatment”, with a maximum volume of discharge of more than 30,000 ML annually, at the Southern Suburbs Sewage Treatment System, including the Malabar Sewage Treatment Plant and the reticulation system owned and operated by Sydney Water that is associated with the Malabar Sewage Treatment Plant (the premises). “Sewage treatment” is defined in cl 36(1) of Schedule 1 to the POEO Act to mean “the operation of sewage treatment systems (including the treatment works, pumping stations, sewage overflow structures and the reticulation system) that involve the discharge or likely discharge of wastes or by-products to land or waters”.

5. Condition O1.1 of the EPL has, at all times, stipulated that licensed activities must be carried out in a competent manner. Condition O2.1 of the EPL has, at all times, provided that all plant and equipment installed at the premises or used in connection with the licensed activity must be maintained in a proper and efficient condition.

6. On 11 May 2022, the EPA issued a notice to produce information and records to Sydney Water pursuant to s 191 of the POEO Act (the first notice) relating to a sewage overflow at Elva Street, Strathfield on 5 January 2022, which was alleged to be caused by a longitudinal split in the Rising Main (the Strathfield incident). The information and records sought by the first notice were required to be produced by 1 June 2022.

7. On 1 June 2022, Sydney Water provided a range of information and records to the EPA in response to the first notice. In its covering letter, Sydney Water stated that it had also identified eight documents that were protected documents within the terms of s 181 of the POEO Act. In those circumstances, Sydney Water declined to provide the EPA with those documents or answer any questions in respect of them. In a letter in response dated 1 July 2022, the EPA asserted that no lawful excuse had yet been provided by Sydney Water for failing to produce those documents and that Sydney Water should provide it with detailed information specific to each document.

8. On 9 August 2022, Sydney Water provided the eight documents to the EPA in a sealed envelope for the purpose of the EPA satisfying itself that the documents were protected documents. Sydney Water also included a further four documents in the envelope which were captured by the first notice and which it had identified as protected documents. In the covering letter, Sydney Water sought the EPA’s undertaking that it would not inspect or utilise the 12 documents (the subject documents) for any other purpose at that stage.

9. On 26 August 2022, the EPA advised Sydney Water that it had inspected the subject documents and was not satisfied that Sydney Water had discharged its onus of establishing they were protected documents. The parties attempted to resolve that question through correspondence, but without success.

10. The EPA issued a further three notices to Sydney Water pursuant to s 191 of the POEO Act seeking information and records relating to the Strathfield incident. The fourth notice dated 21 October 2022 (the fourth notice) required, by paragraph 12, that all CCTV footage from a CCTV inspection undertaken on a section of the Rising Main in November 2016 (the CCTV footage) be produced by 11 November 2022. One of the subject documents analysed that CCTV footage in detail.

11. On 11 November 2022, Sydney Water advised the EPA that it considered the CCTV footage to be a protected document with the terms of s 181 of the POEO Act and that it would not be producing it. On 28 November 2022, the EPA sent a show cause letter to Sydney Water in relation to its purported failure to comply with paragraph 12 of the fourth notice. On 9 December 2022, in response to the show cause letter, Sydney Water provided the EPA with the CCTV footage on the basis that it did not waive the protections that applied to it.

12. On 30 December 2022, the EPA commenced proceedings against Sydney Water for three offences contrary to the POEO Act relating to the Strathfield incident. This included a charge of allegedly contravening s 211(1) of the POEO Act for failing, without lawful excuse, to provide the CCTV footage to the EPA by 11 November 2022 in accordance with paragraph 12 of the fourth notice. The other two charges concerned alleged contraventions of s 64(1) of the POEO Act for failing to conduct licenced activities (being the operation of the Pumping Station and the Rising Main) in a competent manner, and for failing to maintain the Rising Main in a proper and efficient condition, in purported contravention of conditions O1.1 and O2.1 of the EPL respectively.

13. On 14 April 2023, the Court made timetabling orders, including an order that the EPA give Sydney Water notice in accordance with s 247E of the Criminal Procedure Act 1986 (NSW) by 31 May 2023. On 26 May 2023, three working days before the EPA’s s 247E notice was due to be filed, the subpoena was issued at the EPA’s request. Paragraph 2 of the subpoena seeks the production of the subject documents and paragraph 4 of the subpoena seeks the production of the CCTV footage. Paragraphs 3 and 5 of the subpoena seek the production of communications containing any instructions (or requests) for the preparation of the subject documents and the undertaking of the inspection that produced the CCTV footage respectively.

14. The EPA subsequently filed the motion seeking the orders set out at [1] above. As is apparent from this chronology, the motion arises in unusual circumstances where the EPA has sought to compel production, by subpoena, of the subject documents notwithstanding that it already has such documents in its possession. The evident purpose is for the EPA to obtain those documents free of the undertakings that it has otherwise given limiting the use that can be made of the documents. By the motion, Sydney Water seeks to crystallise the real dispute between the parties, which is whether or not the subject documents are protected documents under the POEO Act.

The procedural background to this hearing

The directions hearing on 2 June 2023

9. The initiating Summonses and Sydney Water’s Notice of Motion were listed for directions before Pritchard J on 2 June 2023. Relevant for present purposes, her Honour made directions with respect to Sydney Water's Amended Notice of Motion (which had been filed in court that day) in the following terms:

1   The Defendant is to file and serve the evidence on which it seeks to rely in support of its Amended Notice of Motion by 30 June 2023.

2   The Prosecutor is to file and serve the evidence on which it seeks to rely in respect of the Amended Notice of Motion by 17 July 2023.

3   The Defendant is to file and serve any evidence in reply by 31 July 2023.

4   The Defendant is to file and serve its submissions in support of the Amended Notice of Motion by 31 July 2023.

5   The Prosecutor is to file and serve its submissions in respect of the Amended Notice of Motion by 14 August 2023.

6   The Defendant is to file and serve any submissions in reply by 18 August 2023.

7   The Amended Notice of Motion is listed for hearing on 22-23 August 2023.

The directions hearing on 7 July 2023

10. A further directions hearing took place before Pepper J on 7 July 2023. On that occasion, her Honour granted Sydney Water leave to rely on a Further Amended Notice of Motion – that Further Amended Notice of Motion being filed on that day. Her Honour also made amending directions to prepare Sydney Water's Further Amended Notice of Motion for hearing. The hearing date set by Prichard J was not disturbed.

The hearing of Sydney Water’s Further Amended Notice of Motion

11. Although listed for two days, counsel conducted the hearing efficiently and it was completed in a single day. This process was significantly assisted by the fact that each side had provided, prior to the hearing, helpful written submissions.

Relevant statutory provisions

12. The relevant statutory provisions for the purposes of this judgment are those sections contained in Chapter 6 - Environmental Audits of the POEO Act. These provisions (omitting those not relevant) are in the following terms:

Chapter 6 Environmental audits

Part 6.1 Preliminary

171   Relationship of this Chapter to other provisions

(1)  This Chapter does not affect other provisions of this Act, which provide for—

(a)  conditions on environment protection licences requiring—

(i)  monitoring or testing, or

(ii)  reporting on monitoring or testing, and

(b)  functions exercisable by the appropriate regulatory authority or authorised officers for the purpose of auditing compliance with this Act, the regulations and conditions of licences.

(2)  This Chapter does not affect provisions of this or any other Act relating to pollution reduction programs or industry waste reduction programs.

172   Nature of environmental audit

An environmental audit is a documented evaluation of an activity (including an evaluation of management practices, systems and plant) for either or both of the following purposes—

(a)  to provide information to the persons managing the activity on compliance with legal requirements, codes of practice and relevant policies relating to the protection of the environment,

(b)  to enable those persons to determine whether the way the activity is carried on can be improved in order to protect the environment and to minimise waste.

173   Accreditation and regulation of environmental auditors

The regulations may make provision for or with respect to either or both of the following—

(a)  the accreditation of environmental auditors for the purposes of this Chapter,

(b)  the carrying out of environmental audits by environmental auditors.

Part 6.2 Mandatory environmental audits

174   Conditions for mandatory environmental audits

(1)  The conditions of a licence may require a mandatory environmental audit to be undertaken to the satisfaction of the appropriate regulatory authority.

(2)  Such a condition must specify the purpose of the audit.

(3)  Such a condition may require—

(a)  appointment of an environmental auditor to undertake the audit, and

(b)  approval by the appropriate regulatory authority of the environmental auditor before being appointed, and

(c)  preparation of written documentation during the course of the audit, and

(d)  preparation of an audit report, and

(e)  production to the appropriate regulatory authority of the audit report.

(4)  Such a condition may—

(a)  specify the format and level of detail required for the audit, or

(b)  require the environmental auditor to submit the proposed format and level of detail to the appropriate regulatory authority for approval.

175   Circumstances in which mandatory environmental audit can be imposed

Conditions requiring the undertaking of a mandatory environmental audit may only be imposed if—

(a)  the appropriate regulatory authority reasonably suspects—

(i)  that the holder of the licence has on one or more occasions contravened this Act, the regulations or the conditions of the licence, and

(ii)  that the contravention or contraventions have caused, are causing or are likely to cause, harm to the environment, or

(b)  the appropriate regulatory authority reasonably suspects that an activity has been or is being carried out by the holder of the licence in an environmentally unsatisfactory manner (within the meaning of s 95).

176   Certification of audit report

The audit report for a mandatory environmental audit is taken not to have been duly produced to the appropriate regulatory authority unless it is accompanied by—

(a)  a declaration signed by the holder of the licence certifying that the holder has not knowingly provided any false or misleading information to the environmental auditor and has provided all relevant information to the auditor, and

(b)  a declaration signed by the environmental auditor—

(i)  setting out the auditor’s qualifications, and

(ii)  certifying that the report is accurate, and that the auditor has not knowingly included any false or misleading information in it or failed to include any relevant information in it.

177   Offences

(1) – (5) ….

178   Self-incriminatory information not exempt

Information must be supplied by a person in connection with a mandatory environmental audit, and this Part applies to any such information that is supplied, whether or not the information might incriminate the person.

179   Use of information

(1)  Any information in an audit report or other documentation supplied to the appropriate regulatory authority in connection with a mandatory environmental audit may be taken into consideration by the appropriate regulatory authority and used for the purposes of this Act.

(2)  Without limiting the above, any such information is admissible in evidence in any prosecution of the holder of a licence for any offence (whether under this Act or otherwise).

Part 6.3 Voluntary environmental audits

180   Nature of voluntary environmental audit

(1)  A voluntary environmental audit is an environmental audit commissioned or carried out or being carried out voluntarily, whether or not in relation to activities licensed under this Act.

(2)  An environmental audit is not voluntary if there is a contemporaneous requirement for a mandatory environmental audit in relation to the same or substantially the same activity.

181   Protected documents

(1)  Documents prepared for the sole purpose of a voluntary environmental audit are protected documents for the purposes of this Act.

(2)  Such documents include the final report of the audit and any documents prepared during the course of the audit, so long as the documents are prepared for the sole purpose of the audit.

(3)  Without affecting the generality of the above, documents are not protected if they are prepared wholly or partly in connection with monitoring that is required by any conditions attached to a licence or by an environment protection notice.

182   Nature of protection

(1)  A protected document—

(a)  is not admissible in evidence against any person in any proceedings connected with the administration or enforcement of the environment protection legislation, and

(b)  may not be inspected, copied, seized or otherwise obtained by the EPA, any other regulatory authority, any authorised officer or any other person for any purpose connected with the administration or enforcement of the environment protection legislation,

and the EPA or any such authority, officer or other person may not, for any such purpose, require a person to answer any question or provide any information about the existence of the document or about what it contains.

(2)  The onus of establishing that a document is a protected document lies on the person asserting that it is protected.

(3)  A court may inspect any document that is claimed to be a protected document for the purpose of determining whether it is or is not a protected document.

(4)  The regulations may prescribe procedures for making and determining claims that a document is a protected document.

183   Lifting of protection

(1)  Documents prepared in relation to a voluntary environmental audit cease to be protected if the person asserting or relying on the protection uses or relies on (or attempts to use or rely on) the whole or any part of one or more of the documents, whether directly or indirectly, in any proceedings connected with the administration or enforcement of the environment protection legislation.

(2)  This does not apply where the person is using or relying on (or attempting to use or rely on) a document for the purpose of establishing that the document is protected.

13. It is not necessary to set out the sections of the POEO Act providing the statutory foundations of each of the three charges laid against Sydney Water. It is also to be noted that the relevant regulations at the dates of the alleged offending conduct (either the Protection of the Environment Operations (General) Regulation 2009 or the Protection of the Environment Operations (General) Regulation 2021) contained no provisions made pursuant to s 182(4) of the POEO Act.

The evidence

Sydney Water's evidence

Introduction

14. Sydney Water sought to read two affidavits. These were from:

1. Mr Norbert Schaeper, Sydney Water’s Engineering Manager. No objection was taken to this affidavit, and Mr Schaeper was not required for cross-examination; and

2. Mr Jerry Sunarho, Sydney Water’s Lead Networks Program Engineer. The Prosecutor objected to elements of this affidavit (discussed below). Mr Sunarho was required for cross-examination. The nature of his evidence is also later discussed (noting that nothing relevant arises from his oral evidence).

Mr Schaeper’s evidence

15. Exhibited to the affidavit of Mr Schaeper were two folders of documents. These were tendered, becoming Exhibits A and B. Although comprising 1017 folios of material in total across 22 tabs in these exhibits, I was only taken to one item (of 8 folios) in these exhibits. The document to which I was taken was entitled Framework Condition Assessment (Tab 22, folios 1010 to 1017) – this document is relevant in the context of (65) to (67) of Mr Schaeper’s affidavit, paragraphs set out below. However, it is not necessary to quote from the document itself.

16. Paragraphs (65) to (67) of Mr Schaeper’s affidavit were in the following terms:

Purpose of condition assessments of rising mains

65. The only way that Sydney Water is able to evaluate the condition and operation of rising mains is by undertaking condition assessments. It is particularly important that condition assessments are undertaken on rising mains given that, if a rising main fails, there is a heightened risk to the environment than would not be expected if a gravity main of similar diameter were to fail. This is because rising mains convey sewage under pressure, such that if there is a failure of a rising main, the wastewater is likely, at least initially, to escape under pressure into the environment.

66. The purpose of a condition assessment of a rising main is to evaluate the condition and operation of the asset. It provides valuable information to the asset manager about whether the rising main is being maintained properly and is functioning efficiently in accordance with Sydney Water's legal obligation to maintain its plant and equipment in a proper and efficient condition. This includes consideration of whether, and/or to what extent, there is a risk of failure of the rising main. A condition assessment informs decisions as to whether there is a need to take action through further assessment, repairs, renewal or changes to Sydney Water's operational practices to protect the environment at that time or in the future.

67. Where an opportunistic condition assessment is undertaken in response to a failure of a rising main, the condition assessment is likely to be more targeted, in that one of its key purposes will be to identify the cause of the failure and what actions need to be taken to ensure that the rising main returns to its proper functioning. Where possible it will also assess whether there are defects in other segments of the rising main in the vicinity of the failure. An opportunistic condition assessment thereby provides asset managers with the necessary information to determine what improvements need to be made to ensure that Sydney Water is complying with its legal obligation to maintain the asset in a proper and efficient condition and to protect the environment in the future.

Mr Sunarho’s evidence

17. In his affidavit, Mr Sunarho addressed each of the documents falling within the scope of paragraph 2 of the subpoena. With respect to each of the documents, he stated what he understood to be the purpose for which each of the documents had been generated. The Prosecutor objected to each of these paragraphs on the basis that Mr Sunarho was expressing an opinion concerning the purpose for which the document, in each instance, had been commissioned with these opinions being expressed in circumstances where he had neither undertaken the work giving rise to the document nor had commissioned the work giving rise to the document. After hearing submissions from Mr Free and the Prosecutor, I ruled that each of the relevant paragraphs to which objection had been taken on the above basis was rejected.

18. However, it later emerged that the three documents [identified as (2(j)), (2(k)) and (2(l))] in the subpoena were not within the scope of the objections pressed on behalf of the Prosecutor and upon which I had ruled. This was because document (2(j)) had been generated as a result of work personally undertaken by Mr Sunarho whilst documents (2(k)) and (2(l)) had been generated as a result of work commissioned by Mr Sunarho. As a consequence, I retracted my ruling rejecting the paragraphs concerning these three documents to which objection had been taken by the Prosecutor. It will later be appropriate to reproduce what Mr Sunarho identified as the purposes for which these three documents were produced.

19. Also provided with Mr Sunarho's affidavit was a document entitled Confidential Exhibit JS – 2. This comprised a folder containing all the documents which Sydney Water was seeking to protect by its Further Amended Notice of Motion. The parties agreed that it was not appropriate that this confidential exhibit be tendered but that it be made available to me on a confidential basis for the purposes of my understanding of (and later, if necessary, ruling on) each of the documents to which the Prosecutor sought access for the purposes of the proceedings against Sydney Water.

The Prosecutor's evidence.

20. The Prosecutor sought to rely on an expert report prepared by Dr Wickremeratne, the Prosecutor’s Head, Environmental Audit. Sydney Water objected to the tender of this document on the basis of relevance. The body of this report was 15 pages in length. Dr Wickremeratne’s report set out, in some detail, his expert opinion as to what was required for a document properly to be regarded as constituting an environmental audit.

21. His report set out the matters upon which he was requested to provide his expert opinion. These matters were:

1. What is an “environmental audit”?

2. What are the key features of an “environmental audit”?

3. What are the key principles (if any) of an “environmental audit”?

4. What steps are usually involved with carrying out an “environmental audit”?

22. He then noted that he had also been asked to discuss any relevant industry standards for “environmental auditing”.

23. His expert opinion was expressed as being dominantly based on ISO 19011 of 2018 (entitled “Guidelines for Auditing Management Systems”) with, to a considerably lesser extent, reliance on ISO 14001 of 2015 (entitled “Environment Management Systems – Requirements with guidance for use”).

24. In order to enable the efficient progressing of the hearing, I provisionally admitted the report – indicating that I would provide a ruling on its relevance and admissibility in this judgment. My ruling on, and reasons for not rejecting, Dr Wickremeratne’s report are addressed below.

25. As I have already noted, Sydney Water objected to the affidavit of Dr Wickremeratne on the grounds of relevance. I later explain why the material relied upon in that affidavit as derived from ISO 19011 (and its slipstreaming of, and minor references to, ISO 14001) was of no assistance in achieving an understanding of how the concept of a voluntary environmental audit as addressed in Part 6.3 of Chapter 6 of the POEO Act was to be obtained.

26. In that context, discussion of Dr Wickremeratne’s affidavit is in fact relevant in these proceedings – but relevant in the negative sense of demonstrating why ISO 19011 is not a proper basis upon which to assess whether or not any or all of the processes undertaken by Sydney Water, in providing the genesis for the various documents which are sought by the Prosecutor’s subpoena, are to be judged by having regard to that standard. To permit the drawing of this negative conclusion, Dr Wickremeratne’s affidavit is not rejected.

The issues

27. The issues requiring consideration are both general and specific. The general issue, one applying globally to all the documents which Sydney Water seeks to have ruled as being protected pursuant to s 182 of the POEO Act is what is to be understood as being the necessary broad nature of what is encompassed by the concept of a “voluntary environmental audit” for the purposes of s 181 the POEO Act.

28. The positions adopted by the parties on this point are markedly divergent as later discussed in detail. It is sufficient, for present purposes, to note that Sydney Water proposes that such documents do not require adherence to any prescriptive formula as to their purpose, conduct and outcome. In contrast, the Prosecutor advances the proposition that a more formalised and defined regime is necessary to be followed – one based on the structure of ISO 19011.

29. If the general issue is resolved in the fashion advanced for Sydney Water, it is then necessary to consider each of the twelve documents encompassed by (2) of the subpoena issued to Sydney Water in order to enable me to make a determination as to whether each of them is a voluntary environmental audit attracting the statutory protection that arises for such a document. If the general issue is resolved in the fashion advanced by the Prosecutor, none of the documents falling within (2) of the subpoena are capable of triggering the protective provisions attaching to voluntary environmental audits.

30. As a consequence of my conclusion (for reasons later explained in detail) that the position advanced for Sydney Water concerning the nature of documents potentially capable of being afforded the statutory protections to be given to voluntary environmental audits is correct , this judgment is structured as being in two distinct parts – the first dealing with the broad proposition and the second addressing each of the twelve documents encompassed by (2) of the subpoena.

31. In this context, it is also to be noted that the material which is encompassed by (3) to (5) of the subpoena can be regarded as “slipstreaming”, as appropriate, the relevant item encompassed by (2) of the subpoena to which those items relate. The consequence of my determination concerning the status of each of the items encompassed by (2) of the subpoena necessarily derivatively determines the fate of any related material falling within the scope of the other paragraphs of the subpoena.

A random observation

32. I also observe – only as a matter of curiosity rather than a matter of relevance for this preliminary hearing – that there is no evidence that the Prosecutor has ever sought to publish any guidance (if in only an advisory sense) about what it considered might be an appropriate process for the conducting of voluntary environmental audits.

33. In this context, it is to be noted that ISO 19011 advanced by Dr Wickremeratne is a more than modestly prescriptive document. If the Prosecutor, as the competent regulatory agency and employing an expert as highly qualified in the environmental auditing area as Dr Wickremeratne, considered that (in the absence of regulations for which statutory provision has been made) it was desirable to provide some guidance of a purely advisory nature on voluntary environmental audits, the Prosecutor has not chosen to do so.

The submissions for Sydney Water

Introduction

34. Sydney Water provided comprehensive written submissions in support of its broad proposition that all the documents sought by the Prosecutor’s 26 March 2023 subpoena were documents to be regarded as voluntary environmental audits and thus falling within the scope of s 181 of the POEO Act and, therefore, afforded the protection granted by s 182 of that Act. For the purposes of these proceedings, it is appropriate to reproduce summaries of the written and oral submissions advanced by Sydney Water in support of its Further Amended Notice of Motion seeking to invoke the protections afforded by s 182 of the POEO Act for the documents nominated in the Prosecutor’s subpoena.

Sydney Water’s written submissions

35. I now turn to setting out a summary of Sydney Water's written submissions in support of its Further Amended Notice of Motion.

36. Sydney Water suggested that the scheme for environmental audits in Chapter 6 of the POEO Act was to be contrasted with the highly regulated scheme for “site audits” in Part 4 of Contaminated Land Management Act 1997 (the CLM Act). He submitted that while the in force version of the CLM Act contains comparable requirements, it also contains additional requirements, including that a site auditor conducting a site audit must make a site audit report in writing containing a critical review of the information collected in relation to the site audit that clearly states the reasons for the findings (ss 53B(1) and 53B(2)) (Written Submissions, paragraph 28).

37. Sydney Water submitted that the scheme for “environmental audits” established by Chapter 6 of the POEO Act is less prescriptive and affords greater flexibility than the scheme established by the CLM Act (Written Submissions, paragraph 30). The submissions advanced this proposition in the following terms (Written Submissions, paragraph 31):

31. The POEO Act does not require a voluntary environmental audit to be undertaken by a particular class of persons, that the auditor be accredited, that there be an audit report (although s181(2) appears to assume that there will be a “final report of the audit”) or that the audit have a particular format or contain a particular level of detail. Moreover, in contrast to some of the regulations made under the POEO Act, which contain provisions regarding audits of particular subject matters, there is no requirement that the audit be “independent” or conducted by an “independent person”, that be it “arranged by the EPA” or “approved by the EPA”, that it be conducted in respect of a period specified in a written notice, or that a report on the audit be provided to the EPA.

38. Sydney Water outlined what it advanced must be established to satisfy the definition of “voluntary environmental audit” in s 180 of the POEO Act (read together with the definition of “environmental audit” in s 172) (Written Submissions, paragraph 32):

1. that there is a “documented evaluation”;

2. of an “activity (including an evaluation of management practices, systems and plant)”, whether or not in relation to activities licensed under the POEO Act;

3. for either or both of the purposes set out in s 172; and

4. that is commissioned or carried out or being carried out voluntarily.

39. Sydney Water proposed that the list of activities capable of coming within the meaning of environmental audit was not exhaustive (Written Submissions, paragraph 33).

40. Sydney Water then addressed what Sydney Water proposed was necessary to establish that a document is a “protected document” for the purposes of s 181 of the POEO Act (Written Submissions, paragraph 35):

In order to establish that a document is a “protected document” within the terms of s 181 of the POEO Act, it must be established that the document:

a) was prepared for the sole purpose of a voluntary environment audit;

b) was not prepared wholly or partly in connection with monitoring that is required by any conditions attached to a licence or by an environment protection licence; and

c) has not ceased to be protected by being used or relied on by the person asserting or relying on the protection in any proceedings connected with the administration or enforcement of the environment protection legislation, except where it is used or relied on for the purpose of establishing that the document is protected (see s 183).

41. Norbert Schaeper, Engineering Manager at Sydney Water, swore an affidavit dated 5 July 2023. Mr Schaeper had formulated a Condition Assessment Framework. This framework, it was submitted by Sydney Water, comprised two types of condition assessments: programmed condition assessments and opportunistic condition assessments. The difference between the two types of assessments was submitted to be that programmed condition assessments are planned and should, in accordance with Sydney Water’s Sewer Pressure Main Renewal Decision Framework, be conducted on a rising main every 2, 3, 5 or 10 years. The latter, on the other hand, are opportunistic. These types of assessments were submitted to be unplanned and generally only occur where operational or maintenance activities require or permit a pipe to be exhumed or accessed internally, including where there has been a failure of a pipe or where works are being undertaken on adjoining pipes (Written Submissions, paragraph 37).

42. The twelve documents the subject of the subpoena consist of six programmed condition assessments and six opportunistic condition assessments. It was observed by Mr Schaeper that undertaking a condition assessment of a rising main was a complex task requiring the diverting of wastewater to an alternative asset or taking the wastewater away using tankers; opening scour valves at the low points in the rising main; and cleaning the rising main manually or with water. It was put to me, by Sydney Water, to highlight the complexity of undertaking a condition assessment of a rising main, that requiring a person to simply enter the rising main, for example, could not be undertaken during periods of high wastewater flow, as it would be hazardous to do so (Written Submissions, paragraph 42).

43. Sydney Water submitted that the documents sought in the subpoena are “voluntary environmental audits” within the terms of s 180 of the POEO Act for the following reasons (Written Submissions, paragraphs 44 to 49):

44. First, the subject documents all evaluate the condition of “plant” — the Rising Main — the function of which is to carry wastewater from the Pumping Station to the Western Main Branch Submain without any loss of wastewater to the surrounding environment. They also evaluate the operation of plant, given that an assessment of the condition of the Rising Main necessarily involves an assessment of whether it is functioning properly and is likely to continue doing so in the future. Through such evaluation of plant, the subject documents are all documented evaluations of the activity of “sewage treatment” (which is defined in cl 36(1) of Schedule 1 to the POEO Act to include the operation of sewage treatment systems, including the reticulation system) in part of the premises, namely, the reticulation system associated with the Malabar Sewage Treatment Plant.

45. Secondly, the condition assessments were all undertaken for one or both of the purposes set out in s 172 of the POEO Act: to provide information to the persons managing the Rising Main on whether the asset was being maintained in a proper and efficient condition in accordance with condition O2.1 of the EPL, and/or to enable those persons to determine whether and how the condition and operation of the asset could be improved to protect the environment from future spillages.

46. Thirdly, the condition assessments were all undertaken voluntarily. There is no legislative requirement, or condition in the EPL, requiring Sydney Water to undertake programmed or opportunistic condition assessments.

47. Moreover, there is no contemporaneous requirement for a mandatory environmental audit of the Rising Main or the Malabar Wastewater System more generally, such that s 180(2) of the POEO Act is not engaged.

48. The subject documents are also “protected documents” within the terms of s 181 of the POEO Act. They were all prepared for the sole purpose of a voluntary environmental audit and were not prepared wholly or partly in connection with monitoring required by conditions attached to the EPL or by an environment protection notice.

49. The documents have not ceased to be protected by virtue of s 183 of the POEO Act. Sydney Water has made no use of the subject documents in any proceedings, aside from for the purpose of establishing that the documents are protected documents.

44. Sydney Water submitted that, if each of the documents sought in the subpoena were found to be protected documents, the subpoena would have no legitimate forensic purpose because the documents cannot be inspected, copied, seized or otherwise obtained by the EPA, least of all admitted into evidence in any proceedings connected with the administration or enforcement of the POEO Act (Written submission, paragraph 94).

45. Sydney Water drew my attention to the decision of the Full Court of the Federal Court in Kizon v Palmer & Ors (No 2) (1998) 82 FCR 310, at [95], a paragraph in the following terms (Written Submissions, paragraph 95):

95. A Full Court of the Federal Court came to a similar conclusion in Kizon v Palmer & Ors (No 2) (1998) 82 FCR 310, which was an appeal from a decision to set aside a subpoena on the ground that no purpose could be served by the subpoena remaining on foot where it sought information to which s 63(2) of the Telecommunications (Interception) Act 1979 (Cth) applied. Northrop and Branson JJ found that “the appellant and his legal advisers would be unable to make use of the designated warrant information contained therein or give such information in evidence in the proceeding in this Court. No purpose will thus be served by the subpoena remaining on foot” (at 325C). Similarly, French J concluded that it was “the inability of the parties, by virtue of [s 63(2)] to make use of the ‘designated warrant information’ that would be produced under the subpoena that in the opinion of the Court, deprives the subpoena of forensic legitimacy” (at 325-326). Thus, the appeal was dismissed.

46. If the documents sought by the subpoena are found to be protected documents, the subpoena may also be regarded as improper or an abuse of process, providing further support for making the order sought in prayer 1 of the motion.

47. The written submissions for Sydney Water concluded by suggesting that all documents sought in the subpoena were protected documents and that the order sought in either prayer 1 or 2 of the motion should be made (Written Submissions, paragraph 98).

Sydney Water’s oral submissions

48. The submissions for Sydney Water commenced with Mr Free outlining to me what he understood to be the cases advanced, in the alternative, for the Prosecutor as to what constituted an environmental audit, Mr Free saying (Transcript 22 August 2023, page 11, lines 14 to 31):

FREE: On our reading of our learned friend's submissions they've got, as you will have seen, a primary argument and an alternative argument. The primary argument deriving from the expert evidence is effectively a shopping list of things missing, because they say in order to be an environmental audit--

HIS HONOUR: It doesn't comply with ISO.

FREE: Yes, that's so. There's multiple things. The alternative submission to which I will come in detail is more a qualitative criticism it seems to say well the alternative interpretation is in order to be an environmental audit it has to be of sufficient quality to enable decisions to be made, and that's what's said to be missing from some of these documents. So that's not quite the same checklist approach.

One of the points we will address in submissions about the statute is that that's a gloss on the statute. But that seems to be the criticism of the deficiency rather than it's not an external person or it doesn't have criteria, which is more the primary opener.

49. Mr Free then took me through the various provisions in Chapter 6 of the POEO Act – the portion of the Act dealing with environmental audits. I set out, below, a comparatively brief summary of his oral submissions – oral submissions that addressed and expanded upon Sydney Water's written submissions summarised above.

50. He argued that the structure of, and provisions in, Chapter 6 answer both the primary and secondary argument of the Prosecutor. There is an express statutory definition in s 172 of the POEO Act, although set out in the general statutory framework. The definition is in the following terms:

172   Nature of environmental audit

An environmental audit is a documented evaluation of an activity (including an evaluation of management practices, systems and plant) for either or both of the following purposes—

(a)  to provide information to the persons managing the activity on compliance with legal requirements, codes of practice and relevant policies relating to the protection of the environment,

(b)  to enable those persons to determine whether the way the activity is carried on can be improved in order to protect the environment and to minimise waste.

51. Mr Free proposed that the flaw in the Prosecutor’s reliance on the expert evidence was to give “environmental audit” a general technical meaning drawn from standards postdating the Act. That approach was at odds with the express statutory definition.

52. He noted that s 173 provided that the regulations may make provisions for environmental auditors and the carrying out of environmental audits. No such regulations have been made. The definition in s 172 does not dictate that such an audit be prepared by any particular type of person. It is an optional requirement under the statute where mandatory environmental audits can be required. In s 174, the Act sets out conditions for mandatory environmental audits and then s 174(3) deals with the options for such mandatory audits. He further noted that these are not essential even of a mandatory audit, only that they may be required. He pointed to the fact that s 179 explained the distinction between mandatory and voluntary environmental audits because of the potential prosecution use of data from the former.

51. He then turned to Part 6.3 Voluntary environmental audits – observing that there is nothing prescriptive about who performs such an audit, including whether they are internal or external to the entity being audited. Mr Free next took me through the various elements in s 181 which is the conferral of protection provision and then, in s 183, as to what can cause the protection to be lost. Mr Free submitted that nothing to be said in his submissions will mean the protection is to be lost.

52. He pointed to Sydney Water’s written submissions having referred to statements from the parliamentary debates and the Second Reading Speech on the Bill which became the POEO Act and that there were relevant extracts at (26) of the written submissions. The POEO Act was introduced around the same time as the CLM Act and there is signficant distinction between how site audits are regulated under that Act and the prescriptive regime in that Act when compared to mandatory environmental audits and voluntary audits under the POEO Act. The Minister was concious of that in the debates and made relevant comments in her Second Reading Speech. The Hansard extract goes to the distinction between mandatory and voluntary audits.

53. Mr Free pointed to the fact that one purpose of the legislation is to encourage voluntary audits as they promote self-regulation and compliance with good environmental standards. Another purpose is to avoid raising concerns that in doing so an entity could create incriminating evidence which may be used against it - resulting in tension between encouraging such auditing and giving people comfort that they can do it without putting themselves at risk. This gave rise, he submitted, to the protection conferred on voluntary audits – noting that the Minister talked about bringing forward innovative provisions in the Bill to encourage industry to undertake voluntary audits. Audits were a useful tool to be used in working for continuous improvement with only poor performers being those who should fear mandatory requirements.

54. He noted that (29) of Sydney Water’s written submissions set out the distinction between the CLM Act regime and the POEO Act regime regarding audits. The POEO Act allowed the government to set up an accreditation scheme for environmental auditors. However, it did not propose to do so at that stage, as flexibilty was required to choose auditors familiar with specific operational issues across different sectors. Under the CLM Act, auditors perform a special role in assessing contamination level of sites. There was a clear legislative choice made on the topic of how prescriptive to be about auditors.

55. The key point of the statutory scheme, he said, was that there is a baseline definition of what constitutes an environmental audit. In the scheme dealing with mandatory audits some things can be made part of the conditions but are not essential or definitional elements. It is really up to the regulator.

56. Mr Free submitted that, in paragraph 47 of the Prosecutor’s submissions, they sought to replace the statutory definition with an entirely different definition. They draw on a definition from the 2018 standard (ISO 19011) so even if there wasn’t a fundamental inconsistency with the statute, there is an issue with timing as the Standard post-dated the Act.

57. He noted that the Prosecutor’s suggested definitional approach was a systematic independent and document-based process for obtaining objective evidence and determining if the audit criteria were fulfilled. The Prosecutor’s evidence had set out what were claimed to be the necessary elements which can be described as best practice of audits rather than a definition of them.

58. Mr Free addressed the cases and principles of construction on which the Prosecutor seeks to rely which were set out in paragraphs 39 and following of the Prosecutor’s submissions. According to the Prosecutor, it relies on cases where the Parliament intended to use a word or phrase with a technical meaning.

59. If the Prosecutor says environmental audit has a different technical or specialised meaning, by definition it must depart from the statutory definition in s 172. Mr Free suggested that applies to this case (citing Jordan CJ in Ex parte MacKaness and Avery Pty Ltd; Re Royce (1943) 43 SR (NSW) 239 - Ex parte MacKaness).

60. Mr Free noted that the Prosecutor referenced Uber BV v Federal Commissioner of Taxation (2017) 247 FCR 462 (Uber) in paragraph 44 as an example of a case that allowed expert evidence as to the meaning of the word “taxi”. Mr Free noted that, in that case the word “taxi” formed part of the statutory definition of itself, thus making it appropriate to rely on an alternative definition.

61. Mr Free also noted that, in paragraph 45, the Prosecutor seeks to rely on Pepsi Seven-Up Bottlers Perth Pty Ltd v Commissioner of Taxation (1995) 62 FCR 289 (Pepsi), at 298-9 where, in sub paragraph 5 it was noted that trade usage gives necessary context to the construction of a word used. He drew attention to the fact that the Prosecutor says s 172 provides no guidance on the qualitative characteristics of an environmental audit (such as who should conduct the audit or whether it should meet a standard). That is just an observation that those things are not part of the clear statutory concept and the Prosecutor assumes that, as those qualitative characteristics are not covered by the statutory definition, they are able to prove that they are part of the industry practice of an enviornmental audit.

62. Mr Free submitted that there was enormous inconsistency between what the Act defines and the Prosecutor’s expert evidence relied on here, with the whole purpose of the exercise being to suggest that environmental audit should mean something other than its definition in s 172. Mr Free proposed that if I reject the expert evidence of Dr Wickremeratne, I would also reject the Prosecutor’s primary submission.

63. The Prosecutor’s alternative submission contends that the audit involves a level of analysis that must be of a sufficient standard to enable decisions to be made about legal compliance or determine if the activity can be improved to protect the environment. Mr Free said that, in s 172, the words “including an evaluation of … systems and plant” are important. Both parties accept that those words are read disjunctively so in evaluation of plant is a form of evaluation of an activity - not necessarily all three things in combination. The first purpose in (a) is to inform the persons managing the activity of legal compliance.

64. Mr Free submitted there is no notion that the audit has to provide sufficient information or be of quality that enables decisions to be made. That misunderstands the operation of systems and the way information can feed ongoing management. The other problem with this notion, he said, is that it suggests that a bad audit is not an audit. There is nothing in the statutory definition to suggest that a deficient audit is not an audit.

65. I proposed that (Transcript 22 August, Page 17, lines 33 to 39):

“It also begs the proposition as to whether an environmental audit could lead to a negative conclusion with respect to the activites being auditied as, in the many decades ago instance I gave you, those who were accompanied on their inspection, reported to their supervisor at the end of the inspection that nothing was detected that required any further activity to be undertaken.”

68. Mr Free agreed, saying the two levels of constructional argument inform the approach the Prosecutor have taken to each of the documents. He suggested that, if I am against the Prosecutor, their challenge to the characterisation of the documents falls away entirely.

69. Mr Free then directed me again to the affidavit of Mr Schaeper which he said provided important matters of context. Mr Schaeper explains a change in Sydney Water’s approach between the early 2000s and after then. Before the early 2000s, the management approch was one of “run to fail” and evaluations of risk of failure were not often undertaken. An “avoid fails” strategy was adopted in the early 2000s. He explained that this involved a system that undertook condition assessments more regularly which included programmed condition assessments and opportunistic assessments. The affidavit referenced the Sewer Main Asset Management Plan 2015 through to 2020 which describes the role of condition assessments as providing information to enable decisions to be made about environmental performance improvements. That lead to a more specific condition assessment framework being created. Mr Schaeper described the purpose of the framework as being a central point of reference for condition assessment processes and methodologies. He then explained what distinguished programmed from opportunistic condition assessments.

70. He explained, Mr Free noted, that Sydney Water’s only means of evaluating the condition and operating of rising mains was by undertaking condition assessments. Particularly important condition assessments were undertaken on rising mains given that, if one fails, there is a heightened risk to the environment. He expanded on their purposes, being to evaluate the condition of the asset. This provides information on the maintanance and functioning efficiency of rising mains in accordance with Sydney Water’s legal obligations.

71. Mr Free noted that the written submissions referenced the fact that there was an EPL condition in those terms applying to plant and equipment, including consideration of whether there was any risk of failure of the rising main. A condition assessment indicates whether there is a need for further assessment, repairs, renewal or changes to operational practices.

72. Mr Free moved on to say that the framework and context of asset management was an important factor when assessing the purpose of each condition assessment document. The documents were either programmed condition assessments or opportunistic condition assessments. 

73. There is also CCTV footage caught by the subpoena which would stand or fall with the characterisation of the related document.

74. In (67) of his affidavit earlier reproduced, Mr Schaeper acknowledges “Where an opportunistic … of the failure”, which the Prosecutor seems to rely on as a purpose that makes those documents fall outside an environmental audit. If an employee of Sydney Water is aware of a fault with a rising main; inspects the cause of the fault; and is aware of that – this being an opportunistic condition assessment, the exercise of identifying the cause of the fault is part of the process of providing managing persons with information on compliance with legal obligations. It was a false dichotomy to say that identifying fault and how to repair it was separate from the purposes of an environmental audit. 

75. Mr Free then reminded me of the two critical conditions of the EPL summarised in Mr Schaeper’s affidavit.

76. It was assumed for the purposes of condition 02.1, their monitoring would need to be something indicating the dissolved oxygen levels at certain intervals but that inspections undertaken for use monitoring would not fall within s 181. Mr Free confirmed that that was his submission.

77. His position was that the lack of recommendations was irrelevant in construing whether it is an audit. If it did contain recommendations, it would reinforce the point, but it still informed management as to how to manage these assets.  To the extent that the first conclusion leads to a negative outcome, this is not something that interferes with it being an environmental audit. An audit could be conducted where the result is 100% reassuring but that can still be part of an environmental audit and part of the system that is encouraged. 

78. The Prosecutor argues there is insufficient evidence that the documents were prepared for the sole purpose of an environmental audit. They were created to record inspections and conclusions, which satisfied the sole purpose test.

79. Mr Free proposed, in practical terms, that at some point there is a burden shift. If, prima facie, it satisfies the relevant statutory proposition, it shifts to demonstrate what other purpose infects it for the purpose of non-compliance with s 181(1). It is a shift of the burden of the argument. If the purpose has been demonstrated and it is a sole purpose test, the question is, Mr Free posed rhetorically, what is the other purpose to which the Prosecutor alludes?

The submissions for the Prosecutor

Introduction

80. The Prosecutor also provided comprehensive written submissions in support of its broad proposition that all the documents sought by the Prosecutor’s 26 March 2023 subpoena were not documents to be regarded as voluntary environmental audits falling within the scope of s 181 of the POEO Act and, therefore, were not afforded the protection granted by s 182 of that Act. As with Sydney Water’s submissions, it is appropriate to reproduce summaries of the written and oral submissions advanced in opposition to Sydney Water’s Further Amended Notice of Motion.

The Prosecutor’s written submissions

The Prosecutor’s primary position

81. The primary position taken by the Prosecutor was that the motion should be dismissed as none of the documents sought in paragraphs 2 to 5 of the schedule to the subpoena issued by the Prosecutor on 26 May 2023 are “protected documents” for the purposes of s 181 of the POEO Act. The Prosecutor came to this position on the basis that none of the documents sought in the subpoena constituted a “voluntary environmental audit” within the technical meaning of the phrase “environmental audit”.

82. The Prosecutor submitted that neither the extrinsic materials to the POEO Act nor judicial analysis of s 172 of the POEO Act provide further guidance as to the meaning of “environmental audit”. His interpretation of the phrase “environmental audit” was one that was submitted to encompass a technical meaning in the environmental context. The technical meaning of the phrase was discussed in the expert report of Dr Wickremeratne dated 27 July 2023. This report was relied upon by the Prosecutor to assist with the interpretation of the phrase “environmental audit” as it is used in the POEO Act.

83. The Prosecutor addressed me on several principles of statutory interpretation that the Prosecutor submitted were relevant to the interpretation of non-legal technical words. One of these involved the presumption of statutory interpretation arising from the decision of Lockhart J in Marine Power Australia Pty Ltd v Comptroller-General of Customs (1989) 89 ALR 561 at 572. The Prosecutor submitted (Prosecutor’s Written Submissions, paragraph 39):

39. As a matter of interpretation, where a statute deals with the field in which a word or phrase has a technical or specialised meaning, it is presumed that the word or phrase is used with its technical or specialised meaning unless the context indicates a different meaning.

84. Other principles that were submitted to be relevant to my consideration of the technical meaning of non-legal words included (Prosecutor’s Written Submissions, paragraph 40 to 41):

40. The principles relating to the interpretation of non-legal technical words have been collected and discussed on a number of occasions and are conveniently set out in Collector of Customs v Bell Basic Industries Ltd (1988) 20 FCR 146 at 157 (French J). Relevantly, whether there is a common commercial or trade usage in relation to a particular word or phrase is a fact to be proved by evidence.

41. The technical meaning of words used is a question of fact: Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 287.

85. The Prosecutor then addressed me on the decision of Jordon CJ in Ex parte MacKaness, at 244, quoting (Prosecutor’s Written Submissions, paragraph 42):

[A]lthough as a general rule evidence is not admissible as to the proper construction of a document, evidence may always be received to interpret the meaning of any technical expressions which may be found in it … there are three conditions precedent to such evidence being accepted – (1) it must not conflict with a statutory definition, (2) it must be of a usage common to the place in question, and (3) it must expound and not contradict the terms of the document.

86. The proposition that evidence can be given of the meaning and usage of a word in trade was considered by Hill J in Pepsi. The following circumstances in which evidence of such a nature can be admitted were summarised by his Honour in Pepsi at 298-9 (Prosecutor’s Written Submissions, paragraph 43):

(1)   Where it is clear that a word in the statute is used in a specialised or trade sense and that usage differs from the ordinary English usage of the word. The courts will be more ready to conclude that the word is used in a specialised or trade usage where the statute to be construed is a revenue law directed to commerce.

(2)   Where the word is used in a specialised or trade sense in the statute, the word has an accepted trade usage and it is necessary to determine whether that trade usage differs from the ordinary English usage.

(3)   Where the word is used in a specialised or trade sense in the statute and it is necessary to determine whether there is an accepted trade usage as a preliminary to showing that that usage differs from the ordinary English usage.

(4)   Where the word used in the statute is directed to a particular trade and there has not been occasion for a widespread adoption by the general public of the word or a particular denotation of the word.

(5)   Where the trade usage assists in supplying the context or background of surrounding circumstances necessary to the construction of a word used in the statute.

(6)   Where the trade usage may assist the court by way of background to determine whether the word used in the statute is used in a specialised or trade usage or in accordance with ordinary English usage.

87. The Prosecutor drew my attention to the decision of Griffiths J in Uber, where expert evidence as to the meaning of “taxi” was admitted in accordance with proposition (6) on the basis that the term elicited a trade meaning rather than an ordinary meaning.

88. The Prosecutor further submitted that, at a minimum, proposition (5) in Pepsi was applicable to the present case. The Prosecutor argued that s 172 does not provide any guidance as to the qualitative characteristics of an “environmental audit”, such as whether the evaluation should be undertaken by a person with a certain expertise or whether the evaluation should be done by reference to any applicable standards (Prosecutor’s Written Submissions, paragraph 45).

89. The Prosecutor addressed me on the contents of the report of Dr Wickremeratne. The Prosecutor submitted that it was evident from the report that the expression “environmental audit” bears an accepted technical meaning within the environmental context.

90. Dr Wickremeratne is a certified Master Environmental Auditor and is the Environmental Audit Head at the Prosecutor. His expert evidence suggested that the key features of an audit include evaluating evidence against audit criteria and that the audit is completed systematically, independently and objectively (Prosecutor’s Written Submissions, paragraph 48).

91. Other key principles of environmental auditing were submitted to include integrity, fair presentation, independence, an evidence-based approach, audit planning, collecting background information, preparing and reviewing documented information, and undertaking an audit inspection (Prosecutor’s Written Submissions, paragraphs 49 to 54).

92. It was submitted by the Prosecutor that an environmental audit inspection entails a number of formal steps. According to Dr Wickremeratne, these steps included:

An opening meeting with the auditee;

Collection of audit evidence pursuant to sampling techniques to determine whether the auditee is in compliance with audit criteria;

Consideration

139. The proposition advanced by the Prosecutor as to how the concept of voluntary environmental audits are to be approached is to be rejected. There are several reasons why the technical approach advocated by having regard, primarily, to ISO 19011 (and, to a significantly lesser extent, ISO 1400) is not appropriate.

140. As is clear from the Hansard extract of the Minister’s second reading speech in the Legislative Assembly to which Sydney Water had referred me, the observation was made that regulatory power could be exercised to provide a framework for voluntary environmental audits (if that was later felt to be appropriate). However, no such framework has been promulgated. As a consequence, how the concept of a voluntary environmental audit is to be approached is to be understood, first, by considering the language itself and the context within which it is used.

141. Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 (Project Blue Sky), at [70] and [71], made it clear that the meaning of the provisions of a statute is to be ascertained by examining the context in which the language of those provisions is used and seeking to give effect to the purpose and language of the provisions.

142. For this purpose, it is also appropriate to set out some further relevant commentary as to how the task envisaged in Project Blue Sky is to be approached. Relevantly (and comparatively recently), the Court of Appeal addressed this in State of New South Wales v Kaiser [2022] NSWCA 86 (Kaiser), at [57], where Simpson AJA (Bell CJ and Beech-Jones JA agreeing) said:

57. The relevant principles of statutory construction are well established and may be stated briefly. They are:

1. It is the duty of the Court to give the words of the statutory provision under consideration the meaning that the legislature is taken to have intended them to have. While, ordinarily, the grammatical meaning and the intended meaning will coincide, it is not always so: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 335; [1998] HCA 28at [78];

2. In the interpretation of a statute the Court is to prefer a construction that would promote the purpose or object underlying the Act to one that would not achieve that purpose: Interpretation Act 1987 (NSW), s 33;

3. The starting point is always the text of the provision to be construed. But the text of the provision to be construed is not to be taken in isolation. It is to be read “in the context” of the legislation as a whole. “Context” is not to be treated as something to which resort may be had when consideration of the text alone fails to yield a satisfactory answer: K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309 at 315; [1985] HCA 48 per Mason J; CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408; [1997] HCA 2 per Brennan CJ, Dawson, Toohey and Gummow JJ, both quoted by Gageler J in SZTAL v Minister for Immigration & Border Protection; SZTGM v Minister for Immigration & Border Protection [2017] HCA 34 at [37]; The Queen v A2; The Queen v Magennis; The Queen v Vaziri (2019) 269 CLR 507; [2019] HCA 35;

4. Courts must strive to give meaning to every word of the provision to be construed (Project Blue Sky at [71]) and should “strain against a construction which gives no work whatsoever to legal language”: Day v Harness Racing New South Wales (2014) 88 NSWLR 594; [2014] NSWCA 423 at [77] per Leeming J; if possible, some meaning and effect should be given to all the words used in a statute: The Commonwealth v Baume (1905) 2 CLR 405; [1905] HCA 11, cited by Mason CJ in Chu v Kheng Lim v Minister for Immigration (1992) 176 CLR 1 at 12-13; [1992] HCA 64 (“the presumption against surplusage”). The rule is subject to the qualification that it may be displaced if there is good reason to do so: Lim, at 13.

143. Two further general observations are appropriate to be made before turning to the text and context of the use of “voluntary environmental audit” in s 180 of the POEO Act.

144. First, although it is possible to read in additional words for the purposes of statutory construction. If there is an obvious lacuna existed in a provision so that, to give it proper effect, additional words must be read as if present in the provision, the need to do so would be clear and arise only in circumstances of obvious necessity (Taylor v The Owners of Strata Plan 11564 and Others (2014) 253 CLR 531; [2014] HCA 9 - Taylor).

145. Second, when considering a composite expression (as is here the case for consideration of “environmental audit”), it is not generally appropriate to deconstruct such a composite expression unless doing so is necessary for the purposes of being able to give meaning to the whole by considering the separate meanings of the constituent parts of the expression (Sea Shepherd Australia Ltd v Federal Commissioner of Taxation and Another [2013] FCAFC 68 - Sea Shepherd).

146. It is appropriate to set out what the Full Court said, relevantly, in Sea Shepherd, at [34]:

34. The general principles of construction of a statute were not in dispute. For present purposes, it is sufficient to record that they were identified by the Tribunal and may be summarised as follows:

1. The task is to construe the language of the statute, not individual words: St George Bank Ltd v Federal Commissioner of Taxation (2009) 176 FCR 424 at [28]; see also XYZ v Commonwealth (2006) 227 CLR 532 at [102]; R v Brown [1996] 1 AC 543 at 561 quoted in Agfa-Gevaert at 397 and Metropolitan Gas Co v Federated Gas Employees’ Industrial Union (1924) 35 CLR 449 at 455.

2. The task is not to pull apart a provision, or composite phrase within a provision, into its constituent words, select one meaning, divorced from the context in which it appears, and then reassemble the provision: Lorimer v Smail (1911) 12 CLR 504 at 508–10; R v Carter; Ex parte Kisch (1934) 52 CLR 221; Biga Nominees Pty Ltd v Commissioner of Taxation (1991) 104 FLR 74 at 85–6. Indeed, it is rare that resort to a dictionary will be of assistance in searching for the legal meaning of a provision in a statute: R v Campbell (2008) 73 NSWLR 272 at [49].

3. As Gleeson CJ said in XYZ v Commonwealth at [19]:

There are many instances where it is misleading to construe a composite phrase simply by combining the dictionary meanings of its component parts. See also General Accident Fire & Life Assurance Corporation Ltd v Commissioner of Pay-roll Tax [1982] 2 NSWLR 52 referred to by Gleeson CJ where Lord Wilberforce remarked, in the course of argument, that an Australian who looked up the words “commission” and “agent” in a dictionary would probably be surprised to be told that, in England, a commission agent is a bookmaker.

4. The text of the provision is to be construed according to the context “by reference to the language of the instrument viewed as a whole”: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69] (citations omitted). In the present case, the word “care” is to be construed in the context of the composite phrase of which it forms part, being “short-term direct care”, in the context of the rest of the specific paragraph and in the context of para (b) of Item 4.1.6. Similarly, the phrase “animals without owners” is to be construed in context.

147. I now turn to consider the Prosecutor’s reliance on the material set out in the affidavit of Dr Wickremeratne, this being based on how he considers that the concept of environmental audit should be not only informed by, but effectively defined by the prescriptions in, ISO 19011 (and, to a significantly lesser extent, by ISO 14001). In his affidavit, the nature of ISO 19011 was explained and how he considered environmental auditing should be approached in its framework. I set out below what I consider are the relevant aspects of his evidence.

148. At 5.1 of Dr Wickremeratne’s expert report, he cited three earlier international standards (ISO 14001:2015; ISO 9001:2015 and ISO 45001:2018 as standards providing the basis upon which ISO 19011: 2018 was founded. These standards were described as having:

… a common structure, identical core requirements and, in terms Amcor definitions.

149. He then continued to address the history of ISO 19011: 2018, saying:

Considering the above, the International Organisation for Standardisation (ISO) developed a generic international standard for auditing management systems including environment, quality and occupational, health and safety management systems:

ISO 19011: (2018 – Guidelines for Auditing Management System. In Australia and New Zealand. This standard has been adopted as AS/NZS/ISO 19011:2019 -Guidelines for Auditing Management Systems. The standard provides guidance on how organisations can plan and conduct internal or external audits of management systems, or manage individual audits and audit programs.

Therefore, audits relating to Environmental management (environmental audit) are undertaken using the standard ISO 19011:2018.

150. Dr Wickremeratne then sets out what he proposed were relevant key features of an environmental audit – doing so by reference to ISO 19011. In 5.10 Key principles of an environmental audit, he set out what he considered were the seven key principles of environmental auditing. It is not necessary to repeat these.

151. What is here relevant is what was set out next, in 5.11 Steps usually involved with carrying out an “environmental audit”. The preliminary elements of this were set out by citing what were, in his opinion, the relevant elements of ISO 19011.

152. He next set out, in 5.11.4 Conducting the audit inspection, what are highly prescriptive processes for the carrying out of such an audit (one he would consider constituted a proper environmental audit). It is not necessary to set out the entirety of this material. It is sufficient to note that he proposes a highly formalised process – one which would not readily permit opportunistic assessments of the nature of those conducted (as described by Mr Schaeper in his affidavit) ever comprising an environmental audit – let alone a voluntary environmental audit.

153. Dr Wickremeratne then addressed, in 5.11.5, what he proposed was necessary as being derived from ISO 19011 for the evaluation of audit evidence. It is also to be noted that his assumption is that all such environmental audits would be carried out externally to the body being audited and notes, by necessary inference, that such audits are potentially ones commissioned by a third party.

154. It is, finally, appropriate to set out what Dr Wickremeratne says in 5.11.6 Preparing Audit Reports (page 14 of his report). This section is in the following terms:

The audit report communicates audit conclusions and recommendations to the client and auditee. The lead auditor should bring together the audit team's findings to prepare the report. Immediately [sic] after the audit site inspection, once an evaluation of audit findings and audit conclusions has been made.

The format and structure of the report will depend upon the audit objectives and the auditors mandate, client’s requirements etc. it [sic] is important that the format is clear, concise and easy to read. As the audit is a ‘snapshot’ of the company/organisation being audited at a particular moment in time, the audit report should be prepared as soon as the audit site inspection is completed. There is no rule of thumb for a specific timeframe in which the report should be prepared and distributed, although, the sooner the report is produced, it will provide the reader with up-to-date information.

The draft audit report is sent to the auditee for feedback. The feedback received is considered and taken into account and attached to the final audit. The final report is issued to the licensee with an action plan with timeframes for completion of actions required to address issues of non-compliance identified.

155. The above material from Dr Wickremeratne’s report makes it clear that his concept of management system audits as derived from ISO 19011 is one of very broad application and certainly not one referable specifically to environmental audits – “environmental audit” being used in Pt 6 of the POEO Act as a composite term. To rely on ISO 19011 as a mechanism for prescribing how the element “audit” in environmental audit is to be understood unnecessarily approaches the composite term in a disaggregating fashion which is impermissible as it is contrary to what I have cited above from Sea Shepherd.

156. It is also contrary to what is to be understood from Project Blue Sky – in that the total context of Chapter 6 of the POEO Act is one which makes a distinction between the two types of environmental audit. To try to shoehorn the provisions setting requirements for mandatory audits into the voluntary audit provisions – forcing provisions from one Part into a separate and different Part, is also quite outside anything explicable in the context of the guidance discussed in Kaiser.

157. There is also no obvious lacuna (in a Taylor sense) that would warrant insert all the necessary verbiage required to import Dr Wickremeratne’s approach into Part 6.3 to have it effect the approach he proposes should be required for voluntary environmental audits.

158. It is also to be noted that there has been no promulgation of any regulation establishing requirements for voluntary environmental audits despite the POEO Act itself, in s 173(b), permitting this to be done.

159. Therefore, for all the above reasons in combination, I reject the approach advocated by the Prosecutor.

The proper basis for evaluating the status of the documents

160. Having reached the conclusion that the highly prescriptive, structured and formalised approach to what should be the nature of a process falling within the scope of the concept of “voluntary environmental audit” - as advanced by Dr Wickremeratne and embraced by the Prosecutor - should be rejected in the context of the proceedings which the Prosecutor has commenced against Sydney Water, it is necessary to describe, briefly, how I should approach my examination of each of the individual documents sought by the Prosecutor. This examination, I am satisfied, should have me assess whether each of the documents satisfies the following relevant but less formalised tests:

1. was the activity giving rise to the creation of the document one which involved an examination of part of Sydney Water's sewage reticulation system? and

2. was the examination undertaken for the sole purpose consistent with determining the status of the asset examined in the context of the requirement for Sydney Water to be compliant with the terms of its EPL? and

3. does the resultant document evidence that an evaluation of this nature was undertaken as part of the inspection (whether or not the resultant document expressed any firm conclusion and/or recommendation framed by explicit reference to the requirements of Sydney Water's EPL)?

161. If a document satisfies all of these criteria, it should be regarded as meeting and passing the necessary threshold to be regarded as a voluntary environmental audit of the type embraced by s 181(1) of the POEO Act. It follows from this, if such a document falls within the scope of that provision, it is afforded the protection in s 182(1) of the POEO Act (unless such protection has been waived in some fashion as a consequence of some disclosure by Sydney Water of the nature falling within the scope of s 183(1) of the POEO Act).

162. In the context of the documents which are the subject of my consideration in this Notice of Motion hearing, there is no suggestion that Sydney Water has, in any fashion, potentially compromised the protection which Sydney Water proposes I should determine applies to each of the documents (ones disclosed to the Prosecutor subject to the confidentiality regime enabling me to make the determinations necessary to adjudicate on each of the documents).

Consideration of the individual documents

Introduction

163. As earlier noted, I have been provided, on a confidential basis, with a folder containing each of the documents which Sydney Water proposes should be regarded as being characterised as voluntary environmental audits and, therefore, subject to the statutory protection arising from s 181(1) of the POEO Act.

164. In two instances, the documents were one arising from video footage derived by the insertion of a camera into the asset being examined. In these instances, I have also been provided with an electronic copy of the video footage on a USB thumb drive. I note that, having carefully examined the documents derived from such footage, it has not been necessary for me to view the videos.

165. There is no suggestion pressed by the Prosecutor that, to the extent relevant, each document derived from such video footage does not reflect what is shown on that footage.

Sydney Water’s descriptions of the documents

166. The affidavit deposed by Mr Sunarho provided descriptive material concerning each of the documents to which the Prosecutor seeks access. To the extent that the affidavit sought to ascribe a purpose for which each activity was undertaken resulting in a contested document being produced, his opinions as to such purpose, as earlier noted, were rejected by me unless the work giving rise to the document had been commissioned by him or personally undertaken by him.

167. At my request, Sydney Water identified portions of this affidavit which Sydney Water accepted were capable of being reproduced in this judgment without me inadvertently compromising the protections pursuant to s 182(1) of the POEO Act which Sydney Water asserted applied and sought to protect in these proceedings.

Sydney Water’s written submissions on the individual documents

168. Sydney Water’s written submissions addressed each of the documents the subject of the subpoena. It is not necessary for me to set out the title of each document as they were noted in the terms of the subpoena earlier set out.

Document sought in paragraph 2(a) of the subpoena

169. The document sought in paragraph 2(a) of the subpoena concerns a programmed condition assessment. The assessment was submitted by Mr Free to have been carried out voluntarily and to be a documented evaluation of the condition and operation of the rising main. This assessment document was considered by Mr Free to have been undertaken for both purposes in s 172 of the POEO Act and, in his submission, ought to be characterised as a “protected document” within the terms of s 181 of the POEO Act (Defendant’s Written Submissions, paragraphs 54 to 55).

Document sought in paragraph 2(b) of the subpoena

170. For the same reasons set out in Mr Free’s position in relation to the document sought in paragraph 2(a) of the subpoena, the document sought in paragraph 2(b) was submitted to be a “voluntary environmental audit” and a “protected document” under the POEO Act (ss 172 and 181 respectively).

Document sought in paragraph 2(c) of the subpoena

171. The document sought in paragraph 2(c) of the subpoena concerns an opportunistic condition assessment. Mr Free submitted that the assessment is a “voluntary environmental audit” within the terms of s 172 of the POEO Act because it was carried out voluntarily and is a documented evaluation. He advanced that the assessment is a “protected document” within the terms of s 181 of the POEO Act because it was prepared for the sole purpose of a voluntary environmental audit and was not prepared wholly or partly in connection with monitoring that is required by any conditions attached to the EPL.

Document sought in paragraph 2(d) of the subpoena

172. For the same reasons set out in Mr Free’s position in relation to the document sought in paragraph 2(c) of the subpoena, the document sought in paragraph 2(d) was submitted to be a “voluntary environmental audit” and a “protected document” under the POEO Act (ss 172 and 181 respectively).

Document sought in paragraph 2(e) of the subpoena

173. For the same reasons set out in Mr Free’s position in relation to the document sought in paragraph 2(a) of the subpoena, the document sought in paragraph 2(e) was submitted to be a “voluntary environmental audit” and a “protected document” under the POEO Act (ss 172 and 181 respectively).

Document sought in paragraph 2(f) of the subpoena

174. For the same reasons set out in Mr Free’s position in relation to the document sought in paragraph 2(a) of the subpoena, the document sought in paragraph 2(f) was submitted to be a “voluntary environmental audit” and a “protected document” under the POEO Act (ss 172 and 181 respectively).

Document sought in paragraph 2(g) of the subpoena

175. For the same reasons set out in Mr Free’s position in relation to the document sought in paragraph 2(a) of the subpoena, the document sought in paragraph 2(g) was submitted to be a “voluntary environmental audit” and a “protected document” under the POEO Act (ss 172 and 181 respectively).

Document sought in paragraph 2(h) of the subpoena

176. For the same reasons set out in Mr Free’s position in relation to the document sought in paragraph 2(c) of the subpoena, the document sought in paragraph 2(h) was submitted to be a “voluntary environmental audit” and a “protected document” under the POEO Act (ss 172 and 181 respectively).

Document sought in paragraph 2(i) of the subpoena

177. For the same reasons set out in Mr Free’s position in relation to the document sought in paragraph 2(a) of the subpoena, the document sought in paragraph 2(i) was submitted to be a “voluntary environmental audit” and a “protected document” under the POEO Act (ss 172 and 181 respectively).

Document sought in paragraph 2(j) of the subpoena

178. For the same reasons set out in Mr Free’s position in relation to the document sought in paragraph 2(a) of the subpoena, the document sought in paragraph 2(j) was submitted to be a “voluntary environmental audit” and a “protected document” under the POEO Act (ss 172 and 181 respectively).

179. In this context, because there was no validity in the Prosecutor’s objection to Mr Sunarho’s description of the purpose for which this document came into being, it is, in addition, appropriate for me to have regard to the fact that it was Mr Sunarho’s evidence that the purpose he identified in his affidavit was the sole purpose for the creation of this document.

Document sought in paragraph 2(k) of the subpoena

180. For the same reasons set out in Mr Free’s position in relation to the document sought in paragraph 2(a) of the subpoena, the document sought in paragraph 2(k) was submitted to be a “voluntary environmental audit” and a “protected document” under the POEO Act (ss 172 and 181 respectively).

181. In this context, because there was no validity in the Prosecutor’s objection to Mr Sunarho’s description of the purpose for which this document came into being, it is, in addition, appropriate for me to have regard to the fact that it was Mr Sunarho’s evidence that the purpose he identified in his affidavit was the sole purpose for the creation of this document.

Document sought in paragraph 2(l) of the subpoena

182. For the same reasons set out in Mr Free’s position in relation to the document sought in paragraph 2(a) of the subpoena, the document sought in paragraph 2(l) was submitted to be a “voluntary environmental audit” and a “protected document” under the POEO Act (ss 172 and 181 respectively).

183. In this context, because there was no validity in the Prosecutor’s objection to Mr Sunarho’s description of the purpose for which this document came into being, it is, in addition, appropriate for me to have regard to the fact that it was Mr Sunarho’s evidence that the purpose he identified in his affidavit was the sole purpose for the creation of this document.

The CCTV footage

184. The CCTV footage was submitted by Mr Free to have been taken for the sole purpose of a voluntary environmental audit that was conducted following the failure of the Rising Main the subject of the document sought in paragraph 2(g) of the subpoena. The CCTV footage was, therefore, in Mr Free’s submission, a “protected document” within the terms of s 181.

The Prosecutor’s submissions on the individual documents

Introduction

185. The Prosecutor then addressed me on whether each of the documents sought in the following paragraphs of the subpoena are “protected documents” for the purposes of s 181 of the POEO Act:

• Paragraph 2(a) of the Subpoena;

• Paragraph 2(b) of the Subpoena;

• Paragraph 2(c) of the Subpoena;

• Paragraph 2(d) of the Subpoena;

• Paragraph 2(e) of the Subpoena;

• Paragraph 2(f) of the Subpoena;

• Paragraph 2(g) of the Subpoena and the CCTV footage;

• Paragraph 2(h) of the Subpoena;

• Paragraph 2(i) of the Subpoena;

• Paragraph 2(j) of the Subpoena;

• Paragraph 2(k) of the Subpoena; and

• Paragraph 2(l) of the Subpoena

Document in paragraph 2(a) of the Subpoena

186. The Prosecutor accepted that the “Preliminary Condition Assessment of SPS41 Sewer Rising Main Mason Park, Homebush for SWC” dated 11 December 2006 is capable of being a “documented evaluation of an activity” for one or both purposes in s 172(a) and (b). The information within the Document was accepted by the Prosecutor to include an assessment of matters concerning the condition or integrity of the Rising Main.

187. It was nonetheless submitted by the Prosecutor that there was insufficient evidence to establish whether the assessment was prepared for the “sole purpose of an environmental audit” within s 181(1). The effect of this submission is that Sydney Water would be deemed to have failed to discharge its onus in establishing that the assessment is a “protected document” (Prosecutor’s Written Submissions, paragraph 77).

Document in paragraph 2(b) of the Subpoena

188. The Prosecutor submitted that the document sought in paragraph 2(b) titled “Sydney Water Long Term Condition Assessment Contract Condition Assessment Strathfield SPS41-S2 Main” and dated 11 May 2009 cannot be considered a “protected document” for the same reasons set out above in relation to the document in paragraph 2(a) of the subpoena (Prosecutor’s Written Submissions, paragraph 79).

Document in paragraph 2(c) of the Subpoena

189. The Prosecutor submitted that the “Water Main Pipe Condition Inspection” dated 23 November 2023 cannot be described as a “documented evaluation of an activity” for one or both of the purposes in ss 172(a) and (b). It was submitted that the inspection did not include any assessment of relevant matters and that there was nothing in the content of the inspection that would enable persons managing the activity to make decisions regarding compliance with legal requirements, codes of practice or relevant policies, nor would the inspection enable such persons to determine, on the face of the inspection alone, whether the way the activity is carried out can be improved to minimise waste and protect the environment (Prosecutor’s Written Submissions, paragraph 80).

190. The Prosecutor further suggested that it could not properly be said that the inspection was prepared for the sole purpose of a “voluntary environmental audit” (Prosecutor’s Written Submissions, paragraph 81).

Document in paragraph 2(d) of the Subpoena

191. The Prosecutor submitted that the document sought in paragraph 2(d) titled “Sydney Water Long Term Condition Assessment Contract Year 3 Failure Report of SP0041 Rising Main, Pomeroy Street” and dated 12 March 2013 cannot be considered a “protected document” for the same reasons set out above in relation to the document in paragraph 2(c) of the subpoena (Prosecutor’s Written Submissions, paragraphs 82 to 83).

Document in paragraph 2(e) of the Subpoena

192. The Prosecutor submitted that the document sought in paragraph 2(e) titled “SmartBall Inspection Report” and dated 28 June 2013 cannot be considered a “protected document” for the same reasons set out above in relation to the document in paragraph 2(a) of the subpoena (Prosecutor’s Written Submissions, paragraphs 84 to 85).

Document in paragraph 2(f) of the Subpoena

193. The Prosecutor submitted that the document sought in paragraph 2(f) titled “PureEM Report SP0041 Sewer Rising Main – 750mm MSCL PipeDriver Inspection (AUS0012PD)” and dated 28 June 2013 cannot be considered a “protected document” for the same reasons set out above in relation to the document in paragraph 2(a) of the subpoena (Prosecutor’s Written Submissions, paragraphs 86 to 87).

Document in paragraph 2(g) of the Subpoena and the CCTV footage

194. The Prosecutor submitted that the document sought in paragraph 2(g) titled “Inspection Report” and dated 28 November 2016 cannot be considered a “protected document” for the same reasons set out above in relation to the document in paragraph 2(c) of the subpoena (Prosecutor’s Written Submissions, paragraphs 88 to 89).

195. The Prosecutor proposed that if I accepted the submissions above, I would also conclude that the CCTV footage was not prepared in the course of an environmental audit (s 181(2)) (Prosecutor’s Written Submissions, paragraph 90).

Document in paragraph 2(h) of the Subpoena

196. The Prosecutor submitted that the document sought in paragraph 2(h) titled “Pressure Sewer Pipe Inspection Report” and dated 7 December 2016 cannot be considered a “protected document” for the same reasons set out above in relation to the document in paragraph 2(c) of the subpoena (Prosecutor’s Written Submissions, paragraphs 91 to 92).

Document in paragraph 2(i) of the Subpoena

197. The Prosecutor submitted that the document sought in paragraph 2(i) titled “K9 Leak Inspection Request and Report” and dated 24 August 2020 cannot be considered a “protected document” for the same reasons set out above in relation to the document in paragraph 2(c) of the subpoena (Prosecutor’s Written Submissions, paragraphs 93 to 94).

Document in paragraph 2(j) of the Subpoena

198. The Prosecutor submitted that the document sought in paragraph 2(j) titled “Water Main / Pressure Sewer Pipe Inspection Report” and dated 24 March 2021 cannot be considered a “protected document” for the same reasons set out above in relation to the document in paragraph 2(c) of the subpoena (Prosecutor’s Written Submissions, paragraphs 95 to 96).

Document in paragraph 2(k) of the Subpoena

199. The Prosecutor submitted that the document sought in paragraph 2(k) titled “Inspection Report” and dated 29 April 2021 cannot be considered a “protected document” for the same reasons set out above in relation to the document in paragraph 2(c) of the subpoena (Prosecutor’s Written Submissions, paragraphs 97 to 98).

Document in paragraph 2(l) of the Subpoena

200. The Prosecutor submitted that there were some features of the document sought in paragraph 2(l) titled “Leak detection of SP0041 SRM Strathfield” and dated 22 July 2021 which make it a “documented evaluation of an activity” for one or both of the in ss 172(a) and (b). The Prosecutor submitted that, on the other hand, the circumstances in which the document was recorded were not conducive to enabling persons managing the activity to make an evaluation. The Prosecutor qualified this submission on the basis that some parts of the Rising Main were inaccessible, there were significant difficulties in making a “reliable connection”, and the authors of the document warned that the contents of the document should not be considered reliable and recommended that re-testing be conducted (Prosecutor’s Written Submissions, paragraph 100).

201. In this context, the Prosecutor suggested that Sydney Water did not discharge its onus in establishing that the document is a “documented evaluation of an activity”. The Prosecutor also submitted that there was insufficient evidence to establish whether the document was prepared for the “sole purpose of an environmental audit” within s 181(1) (Prosecutor’s Written Submissions, paragraphs 101 to 102).

Consideration of the individual documents

Protected documents

202. At my request, Sydney Water identified portions of this affidavit which Sydney Water accepted were capable of being reproduced in this judgment without me inadvertently compromising the protections pursuant to s 182(1) of the POEO Act which Sydney Water asserted applied and sought to protect in these proceedings.

203. However, although it would have been possible to incorporate the descriptive material provided by Sydney Water considered not to be compromising of the information in any of the documents sought to be protected in this judgment, I am satisfied that it is not necessary for the purpose of this judgment and, therefore, for abundant caution, I have not done so. This is because the process during the hearing of addressing the various documents coupled with my being taken to those documents at that time, together with my subsequent re-reading of those documents for the purposes of preparation of this judgment, enables me to provide generic rulings with respect to those documents.

204. I have concluded that, where I am satisfied that any document falls squarely within the concept of voluntary environmental audit in s 181(1) of the POEO Act – having arisen in the fashion I have earlier discussed, I can do so without providing any detail. I have carefully read each of those documents and assessed them against the less formalised criteria I have earlier set out as those appropriate for conducting an enquiry as to whether a document can be regarded as being an environmental audit document created solely as such an audit and solely for this purpose. For nine of the documents, I have only relied on the document – for the three that were created by, or under the supervision of, Mr Sunarho, I have also relied upon his description of its purpose together with his attestation that that was the sole purpose for the creation of that document.

205. In this context, I have concluded that all the documents sought by paragraph 2 of the subpoena, other than the two documents specifically addressed in the following section of this judgment – documents not to be categorised as being “voluntary environmental audits” – are properly to be characterised as documents arising from the carrying out of processes that satisfy a proper understanding of the concept of voluntary environmental audit in s 181(1) as it is to be understood and each of them discloses the necessary and compelling inference (based on Mr Schaeper’s evidence of the processes giving rise to the foundation for such documents) were solely carried out for that purpose. For the three documents where Mr Sunarho was able to give evidence of purpose, his evidence can only add to the conclusions I have drawn from those documents themselves.

206. These ten documents are thus protected from open disclosure to the Prosecutor and are, self-evidently, not available to the Prosecutor for evidentiary purposes in these or any other proceedings.

Documents not to be categorised as being “voluntary environmental audits”

207. However, there are two documents (documents identified as 2(g) and 2(k)) which I have concluded do not satisfy the criteria I have earlier set out as prerequisites to being within the scope of voluntary environmental audits for the purpose of s 181(1) of the POEO Act.

208. The each of these documents comprises, in effect, a log of a “pipe cam” investigation of a portion of Sydney Water's sewage reticulation system. The log, at relevantly nominated temporal and/or distance identified points, reproduced a small image of what the video footage in the pipe disclosed in the direction which the inserted camera was facing. Each of these documents (and, therefore, their associated video footage) contains no explanation of the purpose for which the examination was undertaken and, critically for the purposes of my determination, contains no evaluation of what might potentially be drawn from consideration of that footage or any recommendations for actions proposed to arise from the footage (or the necessity for any further examination of, or intervention with, the portions of the pipe within which the camera had been inserted).

209. Even on the less formalised approach I have determined is appropriate by which to determine whether any of the confidentially provided documents should be regarded as constituting a voluntary environmental audit and therefore to be afforded the protection from disclosure provided by ss 181(1) and 182(1) of the POEO Act, these two documents (and their foundational video footages) are not appropriate to be protected in the fashion sought by Sydney Water.

210. As a consequence, it is appropriate to order that these documents and their associated video footage be produced to the Prosecutor in the fashion sought by it and be available to it for potential evidentiary purposes.

Orders

211. The orders of the Court are:

1. The relief sought in the Defendant’s Further Amended Notice of Motion is granted in part;

2. The subpoena issued at the request of the Prosecutor on 26 May 2023 is set aside, in part, on the basis that the documents sought in paragraphs (a), (b), (c), (d), (e), (f), (h), (i), (j) and (l) (and any documents specified in the remaining paragraphs of the subpoena relating to these documents) are protected documents within the terms of s 181 of the Protection of the Environment Operations Act 1997;

3. The documents specified in paragraphs 2 (g) and (k) in the subpoena issued at the request of the Prosecutor on 26 May 2023 are not protected documents within the terms of s 181 of the Protection of the Environment Operations Act 1997 and are to be produced to the Prosecutor; and

4. Documents associated with the documents in order (3) that are specified in paragraphs 3, 4 and 5 of the subpoena issued at the request of the Prosecutor on 26 May 2023 are also not protected documents within the terms of section 181 of the Protection of the Environment Operations Act 1997 and are to be produced to the Prosecutor.

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Decision last updated: 06 November 2023