Gosford City Council v Build Max Developments Pty Ltd

[2000] NSWLEC 224

Land and Environment Court

of New South Wales

CITATION:	Gosford City Council v Build Max Developments Pty Ltd and Ors. [2000] NSWLEC 224
PARTIES:	PROSECUTOR: Gosford City Council DEFENDANTS: Build Max Developments Pty Ltd and Ors.
FILE NUMBER(S):	50104; 50105; 50106; 50107 of 1999
CORAM:	Bignold J
KEY ISSUES:	Environmental Offences - Prosecution :- polluting waters - Corporate Department and Director charged - plea of guilty - mitigating factors.
LEGISLATION CITED:	Protection of the Environment Operations Act 1997, s 120
CASES CITED:
DATES OF HEARING:	26 June 2000
EX TEMPORE JUDGMENT DATE :	06/26/2000
LEGAL REPRESENTATIVES:	PROSECUTOR: Mr M Fraser, Barrister SOLICITORS P J Donnellan & Co. DEFENDANT: Mrs J Slape, Solicitor SOLICITORS Conditsis & Associates

JUDGMENT:

IN THE LAND AND Matter No . 50104 to 50107 of 1999

ENVIRONMENT COURT OF Coram : Bignold J.

NEW SOUTH WALES 26 June 2000

50104 of 1999

GOSORD CITY COUNCIL

Prosecutor

v

BUILD MAX DEVELOPMENTS

Defendant

50105 of 1999

GOSFORD CITY COUNCIL

Prosecutor

v

BUILD MAX DEVELOPMENTS

Defendant

50106 of 1999

GOSFORD CITY COUNCIL

Prosecutor

v

SARA, M.

Defendant

50107 of 1999

GOSFORD CITY COUNCIL

Prosecutor

v

CILIEGI, D.

Defendant

JUDGMENT

Bignold J:

1. These are related prosecutions brought by the Gosford City Council against the company Build Max Corporation Pty Ltd and Dominic James Ciliegi, a Director of that Company, alleging an offence against the Protection of the Environment Operations Act 1997, s 120 (the Act) in that waters were polluted on or about 14 July 1999 at Gosford.

2. Each Defendant has today changed the earlier plea of not guilty to a plea of guilty to the offences charged having notified the Prosecutor of the intention to change the plea some two weeks ago.

3. In the Summons alleging the offence, the particulars indicate that the nature of the polluting material was soil, rock, sand and other materials which had been placed on a development site known as Lot 101 Deposited Plan 801858 situated at John Whiteway Drive, Gosford in positions from which they fell, descended or washed into a drain or gutter used or designed to receive or pass rainwater which drain then finally discharges into Brisbane Waters. The particulars indicate that the drain, the gutter and Brisbane Waters each constitute waters as defined by the Act.

4. The Defendant Ciliegi is charged with the same offence by virtue of his directorship of the Defendant Company. His liability is founded upon the provisions of s 169 of the Act which provides in subsection (1):

If a corporation contravenes, whether by act or omission, any provision of this Act each person who is a director of the corporation is taken to have contravened the same provision unless that person satisfies the Court that a) the corporation contravened the provision without the knowledge, actual, imputed or constructive of the person, or b) the person was not in a position to influence the conduct of the corporation in relation to the contravention and c) the person if in such a position, used all due diligence to prevent the contravention by the corporation.

5. Subsection (2) provides that such a person may be proceeded against and convicted pursuant to this section whether or not the corporation has been proceeded against or has been convicted under the Act.

6. The maximum fine for the offence created by s 120 in the case of a corporation is $250,000 and in the case of an individual, $120,000. The offence created by s 120 is, an offence of strict liability and the section simply provides that a person must not pollute any waters or cause or permit them to be polluted.

7. The circumstances giving rise to the offence committed by each of the Defendants have been collected in a statement of facts prepared by the Prosecutor which became Exhibit 1 in the proceedings subject to the evidence called by the Defence by Mr Ciliegi himself and by Mr Touma, the Project Manager for this particular development site. The facts indicate that the development site comprises an area of some 4,000 m2 in respect of which development consent and building approval have been granted for the development of the site by a high-rise residential flat development comprising some 48 units. Development works on the site apparently was commenced in March 1999, some three or four months before the offence was committed. The site is a hillside site which, at the time of the commission of the offence, had been cleared of vegetation and contained an enormous amount of spoil which was required to be removed from the development site in order that the development might be undertaken, or in the course of the undertaking of the development.

8. Mr Ciliegi, in evidence which was not challenged, indicated a number of things pertinent to the question of the degree of culpability to be assigned to the Defendants in relation to the offence admitted by each of them, namely, the realisation at the time of commencing the development of the existence on the development site of a very large volume of fill and spoil material which apparently had been deposited on the subject land over a period of some 40 or 50 years theretofor in the nature of a landfill site. This was an unexpected phenomenon which had not been anticipated by the Defendants based upon geological technical advice that had been received. Instead of the anticipated three to four to five metres of excavation to found piers on bedrock, the development required piers extending to 14 m in depth, totally unexpected by the Defendant and reflecting the unexpected amount of spoil and fill material required to be removed from the development site in order to carry out what is, on all accounts, an extensive residential flat development.

9. The second matter, again upon which Mr Ciliegi’s evidence was not challenged or rebutted, is the fact that almost from the beginning of operations on the site, from March 1999 until the end of 1999, vast quantities of rainfall were experienced in the area, making the development of the site intrinsically difficult, but more particularly creating particular problems for the removal from the site of the vast quantity of spoil which would have to be extracted in the course of establishing the three tiered platform arrangements required for the development. The effect of the sustained rain, according to Mr Ciliegi’s evidence (and corroborated by Mr Touma’s evidence) was that as the excavation starting in the mid-section of the site proceeded to create a volume of spoil of some magnitude, heavy rain rendered the spoil sodden and difficult to work upon and, in particular, difficult to transport ex the site. Of course, these facts exposed the site to particular vulnerability of runoff and sediment and siltation runoff in particular in the event of rainfall, particularly rainfall of some significant intensity. That forms the background to a series of almost continuous requirements issued by the Council to the developer generally involving consultation with Mr Touma, the Project Manager, for the proper erosion sedimentation control of the site.

10. The evidence of Mr Ciliegi and that of Mr Touma has satisfied me that the difficulties posed by the unanticipated enormous volumes of spoil, combined with the exceptional wet period experienced in 1999 created genuine problems for the developer to comply with the Council’s requirements. I note, however, that no complaint is made by or on behalf of the Defendants against the Council’s several requirements for sedimentation and erosion control measures to be undertaken.

11. This indicates to me that this is not a case of a developer being obstructive or recalcitrant or uncooperative with the Council in the undertaking of a major development. Rather, the evidence of Mr Ciliegi and Mr Touma which was unrebutted, satisfies me that the Defendant was genuinely seeking to comply with the Council’s requirements which tended to develop in scope and comprehensiveness as time went on, no doubt reflecting the proper anxiety emerging in the Council’s mind of the dangers that the site posed without proper erosion sediment controls. However, although the Council’s requirements developed and expanded, in the main, the Defendants sought to comply and achieved a level of compliance, but not at 100 per cent. At the date when the offence took place, 14 July 1999, when 82 mm of rain fell in the 24 hour period, some of the required works had not been undertaken and in particular the sedimentation basin, though excavated by the Defendant, had not been completed.

12. It is somewhat problematic whether even if the sedimentation basin did exist it would have avoided the sediment and siltation runoff from the site as a result of the heavy downpour on 14 July, but certainly if it had existed together with the other sedimentation erosion control measures, less sediment and siltation would have been generated from the site than was generated on that occasion. The volume of runoff and movement of siltation and sediment from the subject site entering the stormwater system drain, gutter and ultimately discharging into Brisbane Water (situated about 700 m from the site downslope) was not calculated, but the photographic evidence indicates a substantial movement of silt and sediment from the site.

13. The statement of facts observes that discoloured water was seen passing along the drain into the Brisbane Water and suggests that it emanated entirely from the subject site (see par 43). However, the evidence of Mr Ciliegi and Mr Touma satisfies me that that statement in the Statement of Facts requires modification in that at least three other sites, separate from the Defendant’s site, discharged muddy water from unprotected sites upslope and within the same catchment as the Defendant’s site. Accordingly, I am satisfied by this evidence that not all of the sediment and siltation and muddy water observed on that day had emanated from the Defendant’s site.

14. The effect of the entry into Brisbane Waters of sediment laden and charged waters is dealt with in the affidavit of Miah Hughes (being Annexure O to the Statement of Facts) a person employed by the Gosford Council as an environmental officer. According to that affidavit, the pollution event involving, but not confined to, the Defendant’s site was likely to have adversely affected the ecology of Brisbane Water and the Affidavit goes on to explain the effects of sedimentation entering the waters of Brisbane Water and the adverse effects upon the waterway including the seagrasses and aquatic life in the Brisbane Water.

15. The Deponent of the Affidavit considered the volume of sediment entering Brisbane Water as a result of the pollution event on 14 July 1999 to be “extreme” and described the event as a “major pollution event”. However no samples appear to have been taken and as I say no estimate or quantification of the amount of silt and sediment entering Brisbane Waters is provided in the evidence. However I accept, simply by virtue of the extreme rainfall event, that a considerable amount of sediment charged waters entered the waters of Brisbane Water, although, as par 6 of the Affidavit notes, the heavier sediment and rock would have fallen out of suspension along the path of the stormwater drain and what was discharged into Brisbane Water would have been the lighter sediment fraction including clay particles giving the water a milky or muddy colouring.

16. Those being the essential facts of the case, it is necessary to have regard to the objective seriousness or gravity of the offence together with the subjective culpability or responsibility of each of the Defendants. In this respect, Counsel for the Prosecutor, Mr Fraser, submitted that the Defence should be regarded at the lower end of the spectrum of potential gravity of the offence charged because the pollutant in this case was sediment, a natural phenomenon, in other words not chemicals or poisonous substances. That obviously requires an evaluation of the pollution event as that of a natural substance, which potentially adversely impacted upon the waters of Brisbane Water.

17. The subjective culpability is a little more difficult to assess because of the undoubted fact that the Defendant, though seeking to comply with the various instructions and requirements issued by the Council for sedimentation control on the site had not reached a stage of full compliance at the date of the offence. As I have indicated earlier, had there been full compliance there would probably have been at the very least a substantial reduction in the amount of sediment leaving the site. However, the probability also is that because of the intensity of the rainfall, even a complete satisfaction of the Council’s requirements would not have meant that no sediment escaped from the site.

18. The explanation given by Mr Ciliegi and Mr Touma of the circumstances in which the Defendant experienced difficulty because of the wet weather to comply with the Council’s requirements, in my judgment, significantly mitigates the suggestion of significant culpability on the part of the Defendants. As I have earlier recited, the pollution incident occurred some three months after development on the site was commenced and although conventional practice is to secure a development site from sediment and siltation runoff at the earliest stages of the development project, the Defendant seemed, on the evidence, to be always responding to the Council’s requirements which, it appears to me, expanded once the apprehension of the risk caused by the presence on site of a large amount of spoil, unprotected as it were, was apprehended.

19. I am satisfied that but for the inclement weather, the Defendant would have undertaken the measures required by the Council when required. I do not think that there is to be attributed to either Defendant a heavy degree or level of subjective responsibility or culpability for the commission of the offence. Having said that, I of course acknowledge the seriousness with which the legislature treats environmental offences including offences such as those with which each of the Defendants is here charged, namely polluting waters. The liability created is strict. No proof of guilty mind, negligence or anything like that is required to establish liability and the sheer magnitude of the maximum penalties provided for such an offence is indicative of the seriousness with which the legislature, on behalf of the community regards, the commission of environmental offences.

20. The Defendants are also entitled, in my view, to the mitigating effect upon sentence of their plea of guilty, albeit belatedly made and the fact that this is the first offence for an environmental offence brought against them. (In respect of the latter observation, I take it that the Protection of the Environment Operations Act, s 225 requires me to ignore the fact that the Defendant has, in the course of carrying out this development, received two penalty notices and has satisfied them by the payment of the fine therein required.)

21. I should say a little more about the relationship between the Defendants and something of Mr Ciliegi’s character and standing in the development industry. He has participated in the development industry for some 25 years, being employed earlier on in his career by companies like Lend-Lease and Civil & Civic and graduating in more recent times to conducting his own building business and since 1997 conducting that business in part under the corporate name of the other Defendant charged in the present case. His record in the industry appears to be exemplary and I was impressed by the candour of his evidence in the witness box.

22. It was suggested, I think, faintly, by Prosecuting Counsel that his evidence indicated a lack of contrition. I do not take his evidence or demeanour in that fashion and am satisfied that he gave credible evidence and was a witness of truth whose testimony is essentially unchallenged and which I accept. I accept the submission made on his behalf and in respect of his company that the mere recording of a conviction against each of them will be a blot on their unblemished record in the building development industry and particularly on the record of 25 years of Mr Ciliegi.

23. In all of the circumstances, I think that I must regard the offence committed by the Company as coming within the low end of the spectrum of gravity and is one that is attended with what I regard as only a small element of subjective culpability. The Defendant, that is the Corporation, is to be given the benefit of the mitigating circumstances that I have mentioned. Moreover, Mr Ciliegi as a Director of the Company is, it seems, wholly identified with the corporate Defendant. As I say, he is now conducting his building development activities through the corporate identity. This seems to me to require regarding the offences against each of the Defendants as requiring application in sentence of the totality principle. That is, it is appropriate to have regard to the totality of culpability reflected in both offences and to apportion responsibility between the corporate Defendant and the individual Defendant.

24. Prosecuting Counsel rightly drew my attention to the obvious public policy underlying s 169 of the Act which attributes liability to a director or manager of a corporation which has contravened the Act unless that person can satisfy the Court that he was not personally involved or, alternatively, used all due diligence to prevent the contravention. Mr Ciliegi has not sought to hide behind his management team or his project or site team and has candidly accepted responsibility for the overall management of the company and its activities on this particular project. He has not sought to excuse himself from liability under the exceptions provided in s 169. In so conducting himself I think that Mr Ciliegi is to be commended for taking the ultimate responsibility for the proper management of his building development projects.

25. That said, I hasten to say that in his evidence he affirmed his confidence in his project team and when asked whether he had felt that they had let him down he unequivocally said “no in all of the circumstances”. Having had the benefit of evidence from Mr Touma, I can understand Mr Ciliegi’s testimony at this point. I, too, was impressed with the candour of Mr Touma’s evidence and can well understand why Mr Ciliegi did not find fault in his project manager of the management team.

26. In all the circumstances, and giving both Defendants the benefit of the mitigating effects on sentence of a plea of guilty and a first offence situation, I am of the opinion that the total penalty to be imposed in the present case is $20,000 and I propose, for the reasons given, to apportion that between the two offences and the two Defendants as follows: the Corporation Defendant will be fined the sum of $15,000 and Mr Ciliegi, the individual Defendant, will be fined $5,000.

27. For all of the foregoing reasons, I make the following orders:
1. The Defendant Build Max Corporation Pty Ltd is convicted of the offence charged in proceedings 50105 of 1999.
2. A penalty of $15,000 is imposed in respect of that conviction.

28. I make the following orders:
3. The Defendant Dominic Ciliegi, is convicted of the offence charged in proceedings 50107 of 1999.
4. A fine of $5,000 is imposed in respect of that conviction.
5. In respect of each proceedings, I order that the Defendant pay the reasonable costs of the Prosecutor in respect of each matter and I give the direction in that behalf pursuant to s 52(1) of the Land and Environment Court Act 1979 for the determination pursuant to subs (2) of the amount of such costs.
6. The exhibits shall remain with the Court papers.
7. In respect of proceedings 50104/99 and 50106/99, the summons in each case is dismissed with no order as to costs.