Fairfield City Council v Quality Handling Systems Pty Ltd

[2013] NSWLC 7

Local Court

New South Wales

Medium Neutral Citation:	Fairfield City Council v Quality Handling Systems Pty Ltd [2013] NSWLC 7
Hearing dates:	19/12/2012
Decision date:	08 February 2013
Jurisdiction:	Criminal
Before:	Magistrate van Zuylen
Decision:	The defendant is fined the sum of $75,000
Catchwords:	CRIMINAL LAW - environmental offence - permit/cause pollution to waterway - washing of acidic 'pickling paste' into stormwater drain - sentence - matters to be considered in imposing penalty - early plea of guilty - admissions that conduct had occurred for at least 18 months - extent of harm to environment not known but potential for harm reasonably foreseeable - no practical measures taken to mitigate potential harm - flagrant breach of environmental laws - importance of general deterrence
Legislation Cited:	Protection of the Environment Operations Act 1997
Cases Cited:	Environment Protection Authority v Moolarben Coal Operations Pty Ltd [2012] NSWLEC 65 Environment Protection Authority v Moolarben Coal Operations Pty Ltd (No 2) [2012] NSWLEC 80 Environment Protection Authority v Straits (Hillgrove) Gold Pty Ltd [2010] NSWLEC 114 Environment Protection Authority v Transfield Pty Ltd [2001] NSWLEC 45 R v Doan (2000) 50 NSWLR 115 R v Thompson: R v Houlton (2000) 49 NSWLR 383 Wollondilly Shire Council v Brogan Box Pty Ltd (unreported, NSWLEC, 28/03/2002)
Category:	Sentence
Parties:	Fairfield City Council (prosecutor) Quality Handling Systems Pty Ltd (defendant)
Representation:	Mr Salama for Quality Handling Systems Pty Ltd Ms Law for Fairfield City Council
File Number(s):	2012/00360776

Judgment

1. The defendant Quality Handling Systems Pty Ltd pleaded guilty to one charge of permit and/or cause pollution of waters pursuant to section 120 of the Protection of the Environment Operations Act 1997. The date of the offence was 26 April 2012. The prosecution was brought by Fairfield City Council.

1. An offence under section 120 carries a maximum monetary penalty of $1,000,000 pursuant to section 123 of the Protection of the Environment Operations Act. The maximum monetary penalty that can be imposed in the Local Court is $110,000 pursuant to section 215. The principles stated by the Court of Criminal Appeal in R v Doan (2000) 50 NSWLR 115 apply in that the jurisdictional maximum is not a maximum penalty for any offence triable within that jurisdiction.

1. Section 215 was most recently amended by the Protection of the Environment Legislation Amendment Act 2011, which was assented to on 16 November 2011. The relevant schedule (Sch 2 [14]) commenced on 6 February 2012. Prior to this amendment the maximum fine under section 215 was 200 penalty units ($22,000).

1. The defendant pleaded guilty on 19 December 2012, which was the second time the matter was before the Local Court. I am satisfied that the plea was entered into at the earliest opportunity and there was utilitarian benefit in the plea. I allow a 25% discount for the entry of the plea of guilty: R v Thompson: R v Houlton (2000) 49 NSWLR 383.

Facts

1. The Facts were tendered. In summary, they state that employees of Fairfield City Council carried out an inspection of an address in Wetherill Park after receiving a complaint from a member of the community that washing activities had been conducted in the external area of the business premises.

1. The Council officers observed a large quantity of pooled water on the unsealed ground of the adjoining premises at Wetherill Park, a high pressure gurney close to an open factory doorway with a hose from the gurney connected to a tap just outside the factory building. There were numerous stainless steel items raised off the ground on pallets and wet ground around them. There was a stormwater drain located underneath one of the stainless steel items and water in the drain even though it had not rained for 2 days. The officers spoke with the Workshop Manager and the Operations Manager of Quality Handling Systems Pty Ltd at the address and they said that cleaning of stainless steel products had been undertaken in the external area of the premises for the last 18 months or so.

1. The stainless steel products have a gel applied to remove welding marks before being washed off with a gurney. The gel was a product called "Wurex PP 14 Stainless Steel Pickling Paste". Information about this product states that it is hazardous and dangerous. It contains nitric acid and hydrofluoric acid and should not be discharged into sewers or waterways, and that action by any means should be taken to prevent spillage of the products entering drains or watercourses.

1. The Court had tendered to it as Exhibit 'G', the Material Safety Data Sheet for Wurex PP14 Stainless Steel Pickling Paste, which was 18 pages in length and contained a great deal of detailed information about hazards identification, first aid measures, accidental release measures for minor and major spills handling and storage and toxicological information. More specifically, section 2 says it is very toxic by inhalation, in contact with skin and if swallowed. It causes severe burns and there is risk of serious damage to eyes. Section 3 says the Pickling Paste's composition is; nitric acid 25-30% and hydrofluoric acid 5-10%. Section 13 on disposal considerations includes the following information, "DO NOT allow wash water from cleaning or process equipment to enter drains...in all cases disposal to sewer may be subject to local laws and regulations and these should be considered first."

1. Fairfield City Council issued Prevention Notices which provided for extensions of time for compliance with preventative actions.

1. Subsequently, Mr Derek Meachan a director of the Company, was interviewed on 28 June 2012. Mr Meachan confirmed that washing pickling paste off the stainless steel equipment had been occurring for approximately 18 months and that management knew this activity was being conducted in external areas of the premises and no instructions had been given to staff in relation to how the activity should be undertaken. He said that some of the washing waters would have washed onto the neighbouring soil at the adjoining premises and some down the stormwater drain. Mr Meachan also said that neutralising spray should have been applied before washing the pickling paste off the stainless steel.

1. In addition to the Statement of Facts, the Court had a number of other documents tendered, which gave further details of the circumstances surrounding the offence. A Statement from Judith Stones, a senior environmental officer with Fairfield City Council, said that whilst carrying out the initial inspection she had a conversation with Mr Roger Pierce, the Operations Manager. During the conversation and after conceding they had been cleaning the stainless steel with the passivating gel (or acid), the following was said:

Judith Stones: "Where have you been doing the cleaning?"

Roger Pierce: "Out there in the corner on the concrete outside the building [referring to the eastern boundary of the subject premises]. We have a bath where we do all the small stuff; it's just the big stuff we have a problem with."

Judith Stones: "How long have you been doing this washing process?"

Roger Pierce: "Two years. Before we could handle it but now we have such demand. We've got a tank to do a wash bay but we've been falling behind so we haven't done it...."

Later on this conversation occurs:

Trevor Wintle [another Senior Environmental Health Officer with Fairfield City Council]: "Have you ever done anything to neutralise it [the washing off the pickling paste or acid from the stainless steel - my insertion] after you've done it?"

Roger Pierce: "Well that's what the water's for."

1. Shortly after the abovementioned exchange between Mr Wintle and Mr Pierce, Mr Wintle realised that he had come into contact with the pickling paste and was experiencing an acid burn. Ms Stones and Mr Wintle then immediately attended the Emergency Department at Fairfield Hospital, following advice from Poisons Information.

1. Ms Stones also saw the label on the product called "Wurex PP14 Stainless Steel Pickling Paste" and on this label it had, "Dangerous Goods Classification 6 (toxic) and Class 8 (corrosives)".

1. Ms Stones' statement goes on to state that the pickling paste washed off the stainless steel items using water enters a nearby stormwater drain, which drains to Council's stormwater drainage system, which drains into Prospect Creek. My own further investigation shows that Prospect Creek drains into Chipping Norton Lake and then into the Georges River.

1. Her statement also says that it is believed that discharging matter into the stormwater system with such a low pH level (even though diluted by water) has the potential to alter the pH of the aquatic ecosystem into which it will drain, namely Prospect Creek. In regard to the nitric acid, it is associated with oxides of nitrogen and can contribute to acid rain and also the formation of photochemical smog. As to the hydrofluoric acid, there are two chronic toxic effects associated with fluoride - dental and skeletal fluorosis. It is understood that fluoride can be toxic to aquatic life and also have harmful effects on plant life.

1. At the time of investigation, there was an inadequate quantity of water remaining in the stormwater drain which could be analysed. It was not possible to clearly demonstrate the specific impacts of the washing activity upon Prospect Creek. However in considering that the washing activity had occurred during a period of 18 months it is considered likely that the discharge of potentially acid waters into Prospect Creek could have impacted upon the environmental values for the ecosystem in terms of pH levels, levels of oxides of nitrogen and levels of fluoride.

Defendant's Explanation for the Offence and Subjective Circumstances

1. Quality Handling Systems Pty Ltd specialises in the design and manufacture of Mechanical Sampling Systems. These systems are supplied for collecting representative samples from streams of bulk materials and slurries. Materials sampled include coal, mineral ores, processed minerals, aggregates, concentrates, fertiliser, mineral sands, process by-products, limestone, cement, grains and woodchips. The company has been operating for 20 years and at the time of the incident had 55 employees and operated at 4 sites. It has a gross turnover of $11.6 million, and a net turnover of $6.7 million. It has never been previously prosecuted for an offence of this type.

1. Mr Salama, on behalf of the company, submitted that they offered no excuse. They co-operated with the investigation of the incident. He further asked the court to take into account the positive steps the company has taken to rectify the situation. The company has had the wash bay repaired, and applied to Sydney Water for a licence/permission to have a waste storage facility present which captures the water. They have spent:

- $25,000 rectifying the wash bay

- $10,000 on reports

- $10,000 for retaining a business analyst

- $4,000 (so far) paid to Sydney Water in relation to a waste/storage facility.

1. Whilst the Court acknowledges the amount spent in rectifying the wash bay and on the other matters, it also notes that this work was only carried out after the Council discovered the offending behaviour, and the repair of the wash bay should have been carried out much earlier.

Matters of General Principle

1. Section 241 of the Protection of the Environment Operations Act 1997, contains a number of matters to be considered on the question of imposing penalty. These matters include: the extent of the harm caused or likely to be caused to the environment; practical measures that may be taken to prevent, control, abate or mitigate that harm; the extent to which the person committing the offence could reasonably foresee harm caused or likely to be caused by the offence; the control that person has over the causes; whether the person was complying with orders from their employer; and any other matter considered relevant.

1. The Prosecutor tendered 4 cases which it submitted were of relevance in determining the appropriate sentence in this case. The first case in date order is Wollondilly Shire Council v Brogan Box Pty Ltd, an unreported judgment of the Land and Environment Court of New South Wales dated 28 March 2002. Bignold J imposed a fine of $12,500 for paint from the Defendant's premises getting into the stormwater grate. At paragraph [15] Bignold J quotes Sheahan J in Environment Protection Authority v Transfield Pty Ltd [2001] NSWLEC 45 stating, "While this is indeed a relatively minor breach of the law it should attract a monetary penalty as industry must be vigilant to meet the community's expectations and aspirations for the environment." Bignold J went on to evaluate the objective gravity of the offence and the subjective culpability as at the very low end of the spectrum of overall gravity.

1. In Environment Protection Authority v Straits (Hillgrove) Gold Pty Ltd [2010] NSWLEC 114, a fine of $50,000 was imposed for a gold antimony miner carelessly allowing slime containing high levels of antimony, arsenic and lead amongst other minerals to escape to a distance of 300 metres. The defendant cleaned up the slime and the offence was considered to be of low to medium gravity. In Environment Protection Authority v Moolarben Coal Operations Pty Ltd [2012] NSWLEC 65, discharge of sediment laden water into Bora Creek, was assessed as medium to mid range objective gravity and the Court imposed a fine of $105,000. In Environment Protection Authority v Moolarben Coal Operation Pty Ltd (No 2) [2012] NSWLEC 80, for discharge of sediment laden waters, a fine of $112,500 was imposed.

Remarks and Conclusion

1. In the Court's view, general deterrence is extremely important in a case of this type. The Court was advised by the solicitor for the Council, that there are 3000 businesses in the area, and the Council regularly receives complaints of substances/smells/odours in Prospect Creek. These complaints are difficult to trace back to source. Therefore, when a large company is found to have committed what the Court considers a very serious breach of the Protection of the Environment Operations Act, the community would expect heavy penalties to be considered. The Court also notes that the maximum penalty which could be imposed in the Local Court for an offence such as this, was recently increased by a factor of 5.

1. The Court is unable to precisely determine the extent of harm to the environment, but notes that there were admissions by persons from the company that the washing of the pickling paste into the stormwater drain had been occurring for either 18 months or 2 years. So there was considerable potential for harm to the environment.

1. The Court finds that the defendant had taken no practical measures to prevent, control, abate or mitigate the potential harm to the environment from the washing of the pickling paste into the stormwater system. Although it accepts that after discovery of the offence by Fairfield City Council, Quality Handling Systems took action to prevent any further harm occurring. The Court gives credit to the defendant for the money spent to rectify the wash bay and obtain reports.

1. The Court further finds that the defendant could have reasonably foreseen that harm was likely to be caused by the discharge of pickling paste into the stormwater drain. There was ample information available to the defendant as to the toxic and corrosive properties of the pickling paste and the clear directions not to discharge the pickling paste into drains. Notwithstanding this clear advice, the company simply washed the pickling paste into the stormwater drain for a period of either 18 months or 2 years. It was a flagrant breach of the environmental laws.

1. After taking into account all the material submitted by Fairfield City Council, the submissions of the prosecution and the defendant, the early plea of guilty and all the other matters referred to earlier, the Court comes to the conclusion that a fine of $75,000 is the appropriate penalty in this case.

1. The Court notes that there has already been agreement between the parties for the defendant to pay the costs of the prosecution in the sum of $5,000 payable within 7 days. The defendant is to pay court costs of $83.00.

Magistrate van Zuylen

Parramatta Local Court

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Decision last updated: 13 September 2013