Kempsey Shire Council v Slade (No 2)

[2017] NSWLEC 10

Land and Environment Court

New South Wales

Medium Neutral Citation:	Kempsey Shire Council v Slade (No 2) [2017] NSWLEC 10
Hearing dates:	28 and 29 June 2016
Date of orders:	27 February 2017
Decision date:	27 February 2017
Jurisdiction:	Class 4
Before:	Sheahan J
Decision:	See paragraph [97]
Catchwords:	ENVIRONMENT AND PLANNING: pollution – claim for recovery of costs of pollution clean-up actions as a debt under s 105(1) Protection of the Environment Operations Act 1997 – statutory scheme for clean-up of pollution and recovery of clean-up costs – council performed clean-up and sought to recover reasonable costs and expenses as a debt – liability already decided – quantum and reasonableness of costs and expenses claimed – interest.
Legislation Cited:	Civil Procedure Act 2005 Electricity Network Assets (Authorised Transactions) Act 2015 Protection of the Environment Operations Act 1997
Cases Cited:	Alphacell Ltd v Woodward [1972] UKHL 4, [1972] AC 824 Hamod v State of New South Wales and Anor [2011] NSWCA 375 Kempsey Shire Council v Slade (2015) 214 LGERA 214; [2015] NSWLEC 135 Maritime Services Board of New South Wales v Posiden Navigation Incorporated; Maritime Services Board of New South Wales v Liberian Cross Transports Incorporated [1982] 1 NSWLR 72 Ruby v Marsh (1975) 132 CLR 642
Texts Cited:	Ritchie’s Uniform Civil Procedure (NSW)
Category:	Principal judgment
Parties:	Kempsey Shire Council (Applicant) Michael Phillip Slade (First respondent) Barry Phillip Slade (Second respondent)
Representation:	Counsel: Mr M W E Maconachie, barrister (Applicant) Respondents in person, primarily the second respondent Solicitors: Higgins & Dix (Applicant) N/A (Respondents)
File Number(s):	2016/165114

Judgment

Introduction

1. This case has been brought by the applicant Council, as a “public authority”, to recover a statutory debt, pursuant to s 105(1) of the Protection of the Environment Operations Act 1997 (“the POEO Act”).

2. The amount of the debt claimed in (a) a compliance cost notice issued on 7 November 2013, (b) the summons filed 14 May 2014, (and amended on 7 August 2014), and (c) the Points of Claim (“POC”) filed 27 June 2014, (and amended 18 December 2014), was $1,291,728.26.

3. However, in the Council’s final written submissions, the claim is for $1,286,452.62 (see [45] below), being the costs and expenses Council alleges it incurred in “cleaning up” asbestos waste found on premises formerly leased by Council to one or both of the respondents or a company of which both were the only shareholders and directors.

The Statutory Regime

4. The most relevant provisions of the POEO Act are ss 92, 104, and 105, which relevantly provide:

92   Clean-up by public authorities

(1)   Directions to public authorities to take clean-up action

If the EPA reasonably suspects that a pollution incident has occurred or is occurring, the EPA may, by notice in writing, direct a public authority to take such clean-up action as is specified in the notice. The public authority is authorised and required to take that action.

(2)   Voluntary clean-up action by public authorities

If a public authority reasonably suspects that a pollution incident has occurred or is occurring, the public authority may take such clean-up action as it considers necessary. The public authority is authorised to take that action, whether or not it is directed to take clean-up action under subsection (1).

(3)   Operation of section

Notices may be given, and action may be taken, under this section:

(a)   whether or not the EPA is the appropriate regulatory authority with respect to the pollution incident, and

(b)   whether or not a clean-up notice has been given under section 91, and (if such a notice has been given) whether or not the period specified in the notice under that section has ended.

(4)   Taking of clean-up action

A public authority may take clean-up action under this section by itself or by its employees, agents or contractors.

(5)   Definition

In this section:

public authority does not include a State owned corporation or the lessor of a transacted distribution system or transacted transmission system under the Electricity Network Assets (Authorised Transactions) Act 2015.

...

104   Compliance cost notices

....

(2)   Clean-up by public authority

A public authority that takes clean-up action under section 92 may, by notice in writing, require:

(a)   the occupier of the premises at or from which the authority reasonably suspects that the pollution incident occurred, or

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

or both, to pay all or any reasonable costs and expenses incurred by it in connection with the clean-up action.

...

105   Recovery of amounts

(1)   Recovery of unpaid amounts

A regulatory authority or public authority may recover any unpaid amounts specified in a compliance cost notice as a debt in a court of competent jurisdiction.

(2)   Recovery by person given notice

If the person given a compliance cost notice complies with the notice but was not the person who caused the pollution or pollution incident, the cost of complying with the notice may be recovered by the person who complied with the notice as a debt in a court of competent jurisdiction from the person who caused the pollution or pollution incident.

5. Schedule 1 cl 50 of the Act defines “asbestos waste” as “any waste that contains asbestos”.

The Proceedings

6. In May 2014, Council commenced these proceedings by filing its summons, and POC, and the issues of liability and quantum were separated by order of the Court, pursuant to an agreement between the parties.

7. Biscoe J decided the liability question in favour of Council on 21 August 2015: Kempsey Shire Council v Slade (2015) 214 LGERA 214; [2015] NSWLEC 135.

8. As the parties have not been able to agree on quantum, the dispute concerning that issue has now been heard by me.

9. The respondents were represented before Biscoe J by learned counsel, but now appear in person, with Barry Slade the primary advocate on behalf of himself and his son Michael. The Council was represented at both stages by Mr M W E Maconachie of counsel.

10. No appeal was brought against Biscoe J’s decision, and I can find neither error nor unfairness in his judgment, but during the quantum hearing, the respondents roundly attacked and disputed His Honour’s findings on liability, which they are estopped from now re-opening. However, in fairness to them, I shall repeat a fair bit of what His Honour said and found.

11. While the respondents are also critical of some actions taken by their counsel, they are bound not only by the outcome of that liability hearing, but also by how it was conducted on their behalf (Tp9, LL15 – 24). In closing submissions (Tp123, L10) they challenged the validity of Council’s compliance notice, a challenge that should have been made before Biscoe J.

12. The Court was conscious, at all times during the quantum hearing, of its obligations to self-represented parties, as discussed by Beazley JA (as Her Honour then was) in Hamod v State of New South Wales and Anor [2011] NSWCA 375, especially at [309] to [316].

13. I commend Council’s legal team for the spirit in which they dealt with the respondents, and their material, during the hearing.

14. Much of the respondents’ material was objectionable, and not relevant to the present dispute, but none was excluded, in the context of the need for the hearing before me to focus fairly on the quantum issues, and not re-agitate those matters which Biscoe J has already decided.

15. The Court was confronted by an agreed Court Book (“CB”), and a huge amount of documentary material (more than 2,500 pages) in an 8-volume Evidence Book (“EB”), provisionally admitted (Tpp106 – 108). The transcript of the liability hearing and a copy of Biscoe J’s judgment were included in EB, Vol 7.

16. In order to be fair to the position adopted by the respondents, I have had regard to all of the EB material in determining the quantum issue.

17. For their part, the respondents relied on some affidavit evidence and extensive supporting documentation, all filed since the liability decision.

18. They also required two of Council’s witnesses for cross-examination – (1) environmental engineer William (“Will”) Ellis, employed at the relevant time by well-known environmental consultancy “ERM”, and (2) Council’s Director of Infrastructure Services, Robert John Scott – but did not really challenge those parts of their evidence that were relevant to the quantum question.

19. Council required neither respondent for cross-examination.

The Premises

20. The subject premises are located on Arakoon Road, a short distance from South West Rocks (map at EB Vol 4, tab 15, fol 26), and within a Crown Lands Act Reserve, the South West Rocks Rubbish Depot Reserve (R84045), of which Council is Trustee, and upon part of which Council operates the South West Rocks Waste Transfer Station. For convenience, the proceedings have referred to the depot reserve as “the site”, and the area of land leased to the Slades as “the yard” (Tp89, LL39 – 45).

21. The transfer station is bounded by National Park on three sides (Tp63, LL33 – 34). The total site area is 85,000 sqm (Tp64, L1). The yard was an area of 5,410 sqm (sometimes said to be 5,500 sqm, but see plan at EB Vol 2, tab 3, fol 7, aerial at Vol 4, tab 15, fol 27, and plans at Vol 4, tab 15, fols 28 – 29, and Vol 8, tab 22, fol 3 and tab 24, fol 12).

22. The yard was located on a capped, rehabilitated and grassed former landfill site on the Reserve, to the north of the waste station. It had no services. The respondents say (Tp3, L36) the old landfill was “a hard fill tip” – i.e. it had not received putrescible waste (Tp47, L50) – until, apparently, 2004. The rest of the Reserve is maintained as vacant land.

The Slades and their Operation

23. Barry Slade was born in 1949, and Michael in 1976, and the family moved to South West Rocks in 1986. (See Tp47, LL48 – 49, and EB Vol 8, tab 22, fols 8 and 9.)

24. Michael started his business, elsewhere in the area, with skip bins, and acquired two similar businesses, so he would have enough material to go into recycling. He negotiated with Council to relocate his business to the yard, including 1500 – 2000 cubic metres of accumulated material.

25. He incorporated the business in June 2011 – he says at Council’s request or suggestion – bringing Barry in as a director, because of his extensive business background (in other industries), prior to “retirement” in 2008. Barry insists that it was always Michael’s business, which Barry and his wife happily supported however they could (including lending Michael the $25,000 bond, and working for only expenses).

26. The yard area was leased to Michael as a sole trader (his business name was registered from at least July 2008), and later to the company of which he and Barry were directors.

27. The Slade operation appears to have occupied the yard from March or April 2011, until the lease was terminated by Council on 16 May 2012.

28. On 11 April 2011, Michael provided to Council a “performance guarantee” , (or “bond”) in the sum of $25,000.

29. Soon after the company vacated the premises on 30 April 2012, before the end of its lease, it was deregistered.

30. The Slades auctioned their equipment, through “Grays online” during May 2012, but realised less than they owed on it ($212,881 c.f. $225,000, see Vol 8, tab 22, fols 13 – 17), leaving no funds available to them for any clean-up. Since the April/May closure both men have been unemployed, and have had stress problems, and they now depend on welfare payments – Barry a disability pension, and Michael a “New Start” allowance.

31. The EPA allegedly found asbestos in the yard, and gave the company a “clean-up notice” in August 2012. When it was not complied with, it issued a similar notice to Council on 17 January 2013, and varied it on 17 April 2013, (EB Vol 1, tab 2, fols 330 – 350).

32. As varied, the notice required Council, under s 92(1), “to take the following clean-up action”:

DIRECTION TO TAKE CLEAN-UP ACTION

The Environment Protection Authority (the EPA) directs KEMPSEY SHIRE COUNCIL under s 92(1) of the POEO Act to take the following clean-up action:

1.   Immediately secure the Premises to prevent unauthorised access.

2.   Immediately take action to ensure that dust generation at the Premises is prevented and suppressed.

3.   By 5pm 8 February 2013 submit a written report to Unit Head, EPA Waste Operations, Locked Bag 914, Coffs Harbour NSW 2450 detailing the results of a volumetric survey of the Waste and a characterisation and classification survey and assessment of the Waste.

4.   By 5pm 8 February 2013 submit a written Asbestos Assessment Report to Unit Head, EPA Waste Operations, Locked Bag 914, Coffs Harbour NSW 2450 detailing a sampling and analysis methodology and the nature and extent of asbestos and asbestos contaminated material which are, or have the potential to be, hazardous to human health or the environment. The Asbestos Assessment Report must:

i.   Be prepared by a qualified and experienced Occupational (Asbestos) Hygenist (sic).

ii.   Contain details of the nature and extent of asbestos and asbestos contaminated material at the Premises.

iii.   Must be sufficient in scope to provide a statistically valid assessment of the area where asbestos waste was stored and land applied at the Premises.

5.   By 20 May 2013 remove all waste unlawfully stored and applied to land at the Premises to a place that can lawfully receive the Waste.

6.   By 27 May 2013 remove and/or remediate soils where it is evident soils have been potentially contaminated by the Waste.

7.   By 3 June 2013 rehabilitate disturbed ground at the Premises including the capping to the old landfill.

8.   By 3 June 2013 provide copies of all receipts, dockets and invoices regarding the removal, transport and disposal of each load of Waste removed from the Premises to the Unit Head, EPA Waste Operations, Locked Bag 914, Coffs Harbour NSW 2450. The records must include: ...

33. Council conducted a clean-up operation at the yard, pursuant to ss 92 and 104(2) of the Act, with the assistance of expert consultants, mainly ERM, and various contractors.

Council’s Claim

34. On 7 November 2013, Council issued its “compliance cost notice” (EB Vol 1, tab 2, fols 352 – 358, and 360 – 366), to the Slades personally, and they informed Council on 13 November 2013 that they (and the company, by then deregistered) were “not financially in a position to pay” it (Vol 8, tab 22, fols 36 – 37, and tab 24, fols 127 – 128).

35. The liability aspect of the Council’s claim came on for hearing before Biscoe J over three days in June and July 2015, and His Honour delivered his reserved judgment on 21 August 2015.

Biscoe J’s Decision

36. It is important to record, and bear in mind, that Biscoe J noted (at [11] – emphasis added) that:

It is common ground that:

(a)   asbestos was deposited at the Premises during the occupancy under the two leases, as a result of which there were pollution incidents;

(b) reasonably suspecting that pollution incidents had occurred at the Premises, the EPA gave Council a clean-up notice under s 92(1) of the POEO Act;

(c) Council complied with the clean-up notice, as it was obliged to do under s 92(1), and thereby incurred costs and expenses in connection with the clean-up action;

(d) suspecting (it says reasonably) that the respondents had caused the pollution incidents, Council gave the respondents compliance cost notices under s 104(2)(b) requiring them to pay reasonable costs and expenses incurred by Council in the sum of $1,291,728.26;

(e)   the respondents have not paid any of the costs and expenses.

37. It is also to be noted here that, despite the respondents’ acceptance, at trial (see (a) above), that asbestos was deposited at/on the yard during their occupancy, they continued to argue before me not only that the asbestos was found only after they left, but that it was “planted” on site at that stage, when security was poor. Anything on site after 30 April 2012 was Council’s responsibility, the respondents say, and Council left the site exposed or vulnerable to deliberate “tampering” (see Tpp125 – 129).

38. Biscoe J’s judgment continued (at [12] – [14]):

12 The issue, which arises under s 104(2)(b), is whether Council’s suspicion that the respondents caused the pollution incidents was reasonable. This largely turns on the difference between the parties as to when the pollution incidents occurred and, to an extent, their nature. Sub-issues include: whether a pollution incident could reasonably be suspected of having been caused by the respondents during the currency of the first lease to Michael Slade or during the currency of the second lease to the Company; and (if it arises) attribution of the Company’s conduct to either of the respondents such as to visit them with reasonable suspicion that they caused the pollution incidents.

SUBMISSIONS

13   In summary, Council’s main case is as follows. It was reasonable to suspect that asbestos was introduced onto the Premises during the currency of the first lease to Michael Slade and that that was when the pollution incidents occurred. The asbestos resulted in “land pollution” in two legislatively defined ways. First, the matter containing the asbestos placed on the land was of a prescribed nature, description or class, namely, asbestos waste exceeding a prescribed weight. Secondly, it caused or was likely to cause degradation of the land, resulting in potential harm to the health of human beings. Before and throughout the period of occupancy under the leases, the respondents held out to Council that they both governed and operated the business, and both were involved in asbestos management at the Premises. In the circumstances, Council’s suspicion was reasonable that the respondents caused the pollution incidents.

14   In summary, the respondents submit that only the Company could have been reasonably suspected of causing the pollution incidents and that Council’s suspicion that the respondents caused them was not reasonable. The respondents’ main argument is along the following lines. There was no pollution incident so long as the Premises were used for the authorised activity of a waste facility under the leases because asbestos deposited at that time would not degrade the land. The pollution incidents occurred when the Premises ceased to be used for that purpose; that is, when it was vacated and piles of waste containing asbestos were left on the Premises in a way that could degrade the land. As the Company was the lessee at that time, it was only the Company that could be the subject of reasonable suspicion that someone had caused the pollution incident. The corporate veil protects the respondents from liability. One of the respondents’ other contentions is that the asbestos could not have polluted the land unless it made actual physical contact with the land; there is no evidence that asbestos found in stockpiles of waste on the Premises made actual physical contact with the land; therefore to that extent no land pollution has been proved.

39. His Honour went on to deal with the relevant provisions of the POEO Act, the concept of “reasonable suspicion”, and the principles of causation, and then set out a detailed factual history (at [44] – [84]), all of which need not be repeated here, save to draw attention to the following:

78   The Company did not comply with the clean-up notice. On 5 September 2012 Michael Slade applied for voluntary deregistration of the Company. On 7 November 2012 the Company was deregistered. On 9 October 2014, on the application of its workers’ compensation insurer, the Company was restored to the register in order to defend a workers’ compensation claim.

79   In December 2012 Mr Ellis and his team carried out a detailed investigation of asbestos contamination and waste classification at the Premises, and found asbestos littered throughout the Premises. The locations of the asbestos are marked on his map annexed to this judgment. I consider his report in more detail below.

80 On 17 January 2013, the EPA issued a clean-up notice to Council under s 92(1) of the POEO Act. The notice recited that the EPA reasonably suspected that a pollution incident had occurred and/or is still occurring. It included requirements to immediately take action to ensure that dust generation at the Premises is prevented and suppressed, to submit an “asbestos assessment report”, to remove and/or remediate soils where it is evident that soils have been potentially contaminated, and to rehabilitate disturbed ground including the capping to the old landfill. Mr Ellis’ report appears to be an “asbestos assessment report”.

81   On 4 March 2013 the EPA revoked its clean-up notice to the Company.

82   On 17 April 2013 the EPA varied its clean-up notice to Council to allow more time for compliance.

83   Council complied with the clean-up notice and thereby incurred costs and expenses.

84 On 7 November 2013, Council issued a compliance cost notice to each of the respondents, pursuant to s 104(2) of the POEO Act. The notices include recitals that the result of the inspection of the Premises by EPA officers in May 2012 was that asbestos had been detected at the Premises; that the EPA had issued the January 2013 clean-up notice to Council; that Council had incurred costs and expenses in complying with the clean-up notice; and that for various reasons the respondents were responsible for the deposit and stockpiling of the waste that resulted in Council being issued with the EPA clean-up notice. The notices required the respondents to pay reasonable costs of expenses of $1,291,728.26, comprising the costs and expenses of the clean-up action less an amount of $25,000 held as a bond under the first lease and released to Council on or about 21 June 2012. Among the costs claimed were the costs of Mr Ellis’ report.

40. Biscoe J then turned to the discovery of asbestos on the premises, the relevant testing of samples, and then “pollution incidents”, in the context of which he made the following relevant comments, when dealing with the parties’ competing submissions:

91   It is common ground, and I agree, that there were pollution incidents at the Premises. That is, there were incidents during or as a consequence of which asbestos was deposited, as a result of which land pollution occurred, was occurring or was likely to occur.

92   The parties differ as to where and when land pollution occurred. ...

...

95   Asbestos, albeit in small quantities, is likely to degrade land, resulting in at least potential harm to human health that is not trivial. This is common ground but the parties differ as to when it occurred in this case.

96   The respondents’ written submission was that until the Premises were vacated on 30 April 2012 the asbestos on the Premises did not degrade and was not likely to cause degradation of the land, resulting in potential harm to human health. Whilst accepting that the presence of asbestos in small quantities may be regarded as likely to cause degradation of land is (sic) some cases, the respondents submitted that that was not so in the case of the Premises until they were vacated and ceased to be used as a waste facility because the Premises had already been degraded by its former use for land fill and subsequent use for receiving, sorting and processing of waste. ...

97   ... There is no evidence of asbestos on the Premises, certainly not above the capping, when the first lease commenced. When the Premises were vacated the following year, they were littered with actual and suspected asbestos.

...

99   A normal consequence of operating a transient waste facility such as this is that asbestos may from time to time be found in waste when it is unloaded. If not promptly removed, it will degrade the land resulting in a pollution incident. That is, it is likely to result in potential harm to human health. The asbestos pieces could become airborne if cut or broken. The potential harm to human health was underlined by the presence of vehicles and machinery working the Premises. What was done in this case was to deposit asbestos and large volumes of asbestos waste on the Premises, which had previously been an uncontaminated field, and leave it there. Contrary to the respondents’ suggestion, there was no legislative blank cheque to leave asbestos on the Premises until the lessee eventually vacated the Premises or got around to processing material containing asbestos.

...

107   In my opinion, none of the hypotheses [advanced by the respondents] are (sic) sufficiently strong to negate a reasonable suspicion that the respondents caused the pollution incidents. ...

...

115   It is convenient at this point to summarise the main aspects of the respondents’ evidence:

(a)   Barry Slade was an employee of Michael Slade during the time that the latter was the proprietor of the business:

(b)   Barry Slade drafted much of the correspondence to Council and the EPA etc and handled negotiations with those parties.

(c)   Barry Slade made all procedural manuals, including instructions for truck drivers in the handling and inspection of skip bins, including the handling of asbestos.

(d)   After Michael Slade signed the first lease, the process of the construction and implementation of the site plan in running the business was Michael Slade’s job. Over the first nine months, Barry Slade developed a large number of procedural documents including procedures for transporting and the safe handling and unloading of skip bins, and procedures for the inspection, discovery and handling of asbestos in skip bins.

(e)   Barry Slade recalled dealing with the general public for the transfer of asbestos on a couple of occasions. People other than licensed builders were usually dissuaded from bringing asbestos to the site due to the amount they were charged for dealing with it. The potential problem with asbestos came from owners on small renovation jobs. All truck drivers had instructions on what to look for on these jobs. On returning bins to the yard they were inspected on the top for anything suspicious, they were then turned over and anything on the bottom of the bin became instantly obvious. Barry Slade testified that if “we” discovered asbestos, all the material was scooped up by the bobcat and shovel and put back in the skip and returned to the client. Michael Slade operated the bobcat. Barry Slade remembered four skip bins being discovered with asbestos in them. On one of those occasions he contacted the EPA seeking advice and in relation to that occasion he said “we” took them back and the client sorted out the asbestos and “we” took the rest of the rubbish to landfill.

(f)   Barry Slade negotiated the purchase of two other businesses and provided $25,000 for the bond under the first lease.

(g)   From about August 2011 both respondents had discussions with Mr Scott of Council on the latter’s inspections of the Premises in relation to compliance with requirements of the leases.

(h)   In June 2011 Barry Slade purchased the Company and they both became directors because at that time Barry Slade thought that a company required two directors and he did not realise it only needed one until about December 2011.

(i)   Notwithstanding the formation of the Company and the second lease to the Company and the fact that the respondents were equal shareholders, Michael Slade’s evidence was that: “The business essentially remained mine”.

REASONABLE SUSPICION THAT RESPONDENTS CAUSED POLLUTION INCIDENTS

116   This case is not concerned with determining with (sic) whether the respondents caused the pollution incidents, and it is therefore inappropriate to make any findings in that regard. This case is concerned with determining whether Council’s subjective suspicion that the respondents caused the pollution incidents was objectively reasonable.

117   ... [I]n my view, it makes no difference when during the currency of the two leases the asbestos was deposited on the Premises and pollution incidents occurred because the control, responsibility and authority of the respondents in relation to asbestos was the same throughout the currency of both leases. As the legal principles on causation reviewed earlier show, the corporate veil provides no defence in this context and the status of the proprietor as incorporated or unincorporated is irrelevant where an individual is the target of liability and has control or authority and responsibility to prevent and correct the relevant act.

118   This was a small business and throughout the term of both leases the respondents were, and appeared to be, its only managers. Michael Slade was the formal owner of the business at the commencement of the first lease. The lessee of the second lease was the Company, of which the respondents were the only directors and equal shareholders. Notwithstanding that the second lease was to the Company and that letters were written on the Company letterhead, the evidence is unclear as to whether, in addition to becoming the second lessee, the Company ever did take over and operate Michael Slade’s business. According to Michael Slade’s evidence, notwithstanding the advent of the Company the business remained essentially his. The correspondence from Barry Slade to Council reviewed earlier created the impression that the respondents were both in charge of operations, and justified suspicion that they were. The respondents both had management authority and responsibility for asbestos removal practices. Barry Slade wrote the practices. They were both involved in implementing them. Michael Slade generally operated the bulldozer used to implement the practices. When an employee operated the bulldozer, they gave him instructions as to what to do.

119   The waste facility operation involved bringing waste onto the Premises which, as the respondents were well aware, from time to time included asbestos. The respondents created, adopted and were involved in the implementation of procedures for the inspection, discovery, handling and removal of asbestos. That system failed to prevent asbestos being left on the Premises, resulting in pollution incidents. Just as in Alphacell [Ltd v Woodward [1972] UKHL 4, [1972] AC 824] the failure of pumps to prevent overflow from settling tanks led to the discharge of polluted water into a stream, so in this case the failure of asbestos removal procedures to prevent asbestos from being left on the Premises led to pollution incidents. The respondents had, and it was reasonable to suspect they had, authority and responsibility to prevent or correct asbestos being left on the Premises, and failed to do so. They are accountable because of the responsibility and authority of their positions for the conditions that gave rise to the pollution incidents. It is unnecessary to go further but, in addition, Michael Slade usually operated the bulldozer that did not always return asbestos found in waste to the skip and they both gave instructions to another operator of the bulldozer that was causative of asbestos remaining on the Premises.

41. As the Act requires, Biscoe J then found (at [120]) that, on the evidence before him, it was “reasonable for council to suspect that the respondents caused the pollution incident” (emphasis mine), and he made the following relevant orders (at [122]):

(1) Judgment for the applicant against the respondents for a debt under s 105(1) of the Protection of the Environment Operations Act 1997 in an amount to be assessed by the Court or as agreed by the parties.

(2)   Order that the respondents pay the applicant’s costs of the proceedings except in relation to the issue of quantum.

...

The final claim

42. The parties having been unable to agree upon the amount to be recovered, the Council’s claim, in its final form, is made up of various items cross-referenced to the various directions in the EPA clean-up notice.

43. All expenses claimed are exclusive of GST, Council having obtained input tax credits for GST it incurred.

44. Some expenses Council incurred have not been claimed (Council’s subs pars 53, 62 and 63), including Council’s compliance with direction 3 (volumetric survey report), and some items in respect of directions 4, 5 and 6, and 7 & 8.

45. The following summary of Council’s claim is taken from its subs (par 64 at tab 9 of the Court Book, page 11: The supporting documentation for each item is found in Scott’s affidavit materials, EB Vols 2 and 3, especially in “KSC2” at tab 5, comprising some 607 pages, separately tendered before me by Council as Exhibit C1. See Council’s subs pars 46 – 63):

Direction/description

Amount

Direction 1: securing Premises

$3,081.40

Direction 2: suppress/prevent dust

$2,181.66

$3,825.00

Directions 4, 5 & 6:

Report, remove soil and remediate

$130,304.26

$3,627.05

$17,500.00

$178,312.75

Direction 5: Remove soil (disposal at landfill)

$972,620.50

(incl $256,286.80 paid for EPA levy)

Sub total

$1,311,452.62

Less

$25,000 (performance guarantee)

Total

$1,286,452.62

46. As can be seen, the largest component of the claim is that for “disposal at landfill”, in respect of which Council’s submissions say (pars 60 – 61):

60.   The waste was disposed of at a landfill facility run by Council. Council administers a fee for disposal of waste at that facility (KSC waste levy). The fee that Council charges for waste deposited at the facility is determined by reference to the classification of material deposited, and by the weight of material deposited.

61.   The fee charged by Council to deposit waste at the facility consists of a levy administered by the EPA which Council is required to pay to the EPA (EPA levy). That EPA levy is determined by the weight of material brought onto (sic) site of the facility. For the year ending 30 June 2013 the EPA levy was $42.40 per tonne.

Council’s Oral Evidence

47. As required by the respondents, Council called Ellis and Scott (see [18] above) for cross-examination.

48. Ellis adhered to his two affidavits (3 December 2014, and 16 October 2015), and to the 264-page ERM report of April 2013, for which he took continued responsibility (EB Vol 4, tabs 14 to 16). His CV appears in that material (tab 15, fols 33 – 36), but he left ERM in November 2015.

49. ERM took photographs and samples between 17 and 21 December 2012, and Ellis made a personal inspection on 19 December 2012. He relevantly found the site, but not the yard, secured (Tp21), and observed “heterogeneous fill material” (Tp48). He project-managed the clean-up of the yard, and denied making any “mistake” (Tp52).

50. Relying on unspecified external information, of which no evidence was produced, the Slades criticised Ellis’s involvement in the matter because he was not an asbestos hygienist or auditor, but his qualifications had been accepted by the EPA, and he disagreed about his needing others (Tp60, L22).

51. The ERM report and other Ellis material include truck logs regarding disposal of the asbestos waste (Exhibit “A” to the later affidavit), mapped search results (tab 15, fols 31 –31), and photographs (tab 15, fols 40 – 53).

52. His report’s conclusion (tab 15, fol 23) states:

... given that asbestos has been identified on the surface and within the material stockpiles the material is considered to be General Solid / Asbestos Special Waste in accordance with the NSW EPA (DECC) Waste classification Guildelines (2009). It is considered that the asbestos materials encountered are widespread throughout the [eight] stockpiles ...

53. Scott had extensive direct involvement with the site, and with the Slades, throughout the operation of the yard, and its aftermath. He too adhered to his affidavits (13 December 2014, 30 April 2015, and 19 October 2015), and exhibits “KSC1” (366 pages), and “KSC2” (EB Vols 1, 2, and part of 3). Exhibit KSC2 (tab 5, and Exhibit C1 before me) comprises 607 pages of ERM materials, invoices, reports, etc to support Council’s monetary claim.

54. Scott admits that asbestos was not a significant concern until the Slades had vacated the yard site, despite issues raised when Council and the EPA jointly inspected the premises on 9 and/or 19 January 2012. Council found no asbestos, and did no testing.

55. Barry Slade’s material includes (Vol 8, tab 24, fols 20 – 21) an EPA report to Council, dated 31 January 2012, indicating its concerns, and recommending improvements in a range of amenity matters, but not contamination.

56. Council gave the Slades a Notice to Quit on 22 March 2012.

57. Scott carried out regular inspections, including (with the Slades) on the day they “left” the site (30 April 2012), and again with the EPA on 9 May 2012.

58. Council terminated the lease on 16 May 2012.

59. Scott entertained the Slades’ concerns about the adequacy of hardstand for sufficient stockpiling, but had his own concerns about the extent of the material they accepted in 2011 – 2012.

60. He gave evidence of regular complaints by at least one neighbour, and conceded that it was relatively easy for people to access the yard site. He denied lying at any stage, and I accept Mr Maconachie’s submissions (Tp129) that there is no real evidence to contradict Scott’s.

61. Council drew down the Slades’ $25,000 “bond” in June 2012, but he appeared to concede that it could have been better used to secure the site, rather than clean it up. Council engaged ERM 16 November 2012 to monitor the company’s and/or respondents’ compliance with the clean-up notice served on them, and continued that engagement when the EPA gave a notice to the Council itself.

62. Scott admits knowing the parlous financial position of the Slades and their company (see Tpp77ff, 99, and 105).

The Slades’ Position on Quantum

63. I have already set out what Biscoe J said in respect of the position taken, and the evidence adduced, by the respondents at the liability hearing, and much of what was later put before me has already been dealt with above.

64. What the respondents say is that their project was always “financially marginal”, as Scott understood, but they “tried [their] best with what [they] had to establish the recycling yard. Unfortunately, time and weather conditions beat [them]” (Vol 8, tab 22, fol 37).

Defence

65. In their Defence, filed on 31July 2014, the respondents asserted (pars 27 to 30):

27.   The Respondents do not admit the matters in paragraph 52 of the APOC. In further answer thereto:

a)   The costs claimed are excessive for the work required to be carried out pursuant to the clean-up notice number 1513555 issued by the EPA; and

b)   to the extent to which the cost of clean-up asserted included the cost of removing material that was not the subject of the clean-up notice number 1513555 issued by the EPA, such costs cannot properly be the subject of a cost compliance notice.

28.   The Respondents admit the matters in paragraph 53 of the APOC, but denies that the Respondents are liable to pay the costs under the said Notices.

29.   In further answer to the whole of the claim, the Respondents are not proper respondents to the proceedings, being neither in occupation of the premises at the relevant time from which the public authority could reasonably suspect that a pollution incident has occurred, nor persons who could reasonably be suspected of having caused the alleged incident.

30.   Further, to the extent to which the proceedings have been commenced and are pursued as enforcement of the First and Second Leases, the Court has no jurisdiction to hear such claims.

Cross-claim

66. On 5 February 2016, they filed a Notice of Motion (“NOM”) purporting to seek leave of the Court to file a summons (or a cross-claim of some sort) against the Council, claiming “costs of rehabilitation” of the subject land, and “ancillary relief including costs”.

67. They assert that “Council acted illegally in the way that it conducted the cleanup” (subs par 1), and “is estopped from pursuing reimbursement of clean-up expenses from the respondents” (par 5). They seek orders that they pay “zero dollars” to Council, under s 105(1), and that Council pay their costs “of all proceedings” (par 6).

66. No form of summons or equivalent has been filed by the Slades, but they did file POC (CB, tab 6). Their “cross-claim” amounts to a claim for set-off against, or mitigation of, Council’s claim against them.

67. Pain J adjourned the respondents’ NOM to the quantum hearing, and I made clear to the Slades early in that hearing (Tp5, LL49 – 50) that “requiring the council to strictly prove its claim doesn't require you to put on a cross claim”.

Submissions

70. In closing submissions (Tpp123 – 124, and 127 – 128), Barry Slade argued that, if I lacked the power to overturn Biscoe J’s decision, I should deny any compensation to the Council, and at least award himself and Michael, on their cross-claim, an amount sufficient for them to pay their costs for both hearings.

71. The Slades’ POC summarises their position thus:

...

4. The judgement (sic) of reasonable suspicion was struck with no date for liability from which the reasonable suspicion applies.

5. The reasonable suspicion cannot arise at any time other than the date the site was vacated. That date being 30th April 2012.

6. The matter of who actually caused the pollution incident is still to be determined.

7. On 30th April the Company vacated the site at the request of Kempsey Shire Council

8. On 30 April 2012 Kempsey Shire Council was the appropriate regulatory authority for the operations on the site and the landlord. As regulator, Council had ongoing supervision of the operating protocols in place.

9. On 30th of April 2012 Kempsey shire council (sic) officer (via its agent Mr Robert Scott) inspected the site as the person responsible for the administration of the appropriate regulatory authority. No asbestos was found to be present.

10. Despite numerous site inspections, on, and prior to, the 30th April 2012. The EPA, Kempsey Shire Council, and WorkCover officers never found asbestos on the site during the occupancy of the respondents.

11. The council knew the site was regularly accessed by unauthorised persons after the company vacated the site.

12. After the company vacated the site, the council, in its capacity as the property owner.

a)   Did nothing to secure the site to prevent unauthorised persons entering onto their property.

b)   Did not discharge its duty of care to prevent the public wandering onto the site.

13. No evidence is before this court that the respondents caused a pollution incident by leaving asbestos on the site, on, or prior to 30 April 2012.

14. Council as occupier of the property after the 30th April 2012 is the person actually responsible for the asbestos pollution (as distinct from a person reasonably suspected)

15. Alternatively the Council took no, or adequate steps to mitigate cost of rehabilitation of the site.

16. We seek an order for all costs associated with this matter.

...

72. They filed written submissions on 14 June 2016 (CB, tab 13 – see [83] below), but also made the following points in a letter to Council’s solicitor on 21 June 2016 (CB, tab 12):

...

2. The respondents assert Council did not comply with the statutory cleanup notice issued by the EPA under section 92 (1). And therefore acted illegally and should not profit by their illegal actions.

3. The respondents assert the Council cannot claim costs associated with the Compliance Cost Notice under section 104 (2) because they did not take the cleanup action that is specified in the notice that they were required to take.

4 The Cost Compliance Notice calls for enforcement by the Land and Environment Court of the terms and conditions of the lease to Mid Coast Skip Bins and Metal Recycling Proprietary Limited. The lease conditions are not a statutory matter under the POEA act (sic?).

5. The respondents assert we left no asbestos on site.

6. We assert there is no evidence of asbestos being left on that site before 30th April 2012.

7. The respondents cross case is that Kempsey Shire Council is wholly responsible for asbestos pollution (at least constructively, if not actually). By its conduct after Mid Coast Skip Bins and Metal Recycling Proprietary Limited vacated the site. ...

Evidence

73. Both respondents insist that they were very firm, diligent and thorough when dealing with asbestos being brought on to the yard. Michael deposes (8 December 2015, Vol 8, tab 21, par 43):

I walked over that yard every day all day and I never found a piece of asbestos my staff never found any asbestos in all the time I worked in that yard. I had a large number of inspections from EPA, Workcover (sic) and Council. None of them found asbestos.

74. Barry deposes (8 December 2015, Vol 8, tab 23, pars 17 and 35):

17.   The EPA, Workcover (sic), and Council (usually 2 people from each) inspected the yard on many occasions. They all looked for asbestos on every inspection they always asked about it. Prior to leaving the yard on 30th April 2012 there has been NO reported asbestos findings from any of these authorities.

...

35.   About two weeks before the Company left the site I rang Mr Robert Scott. We confirmed a date for Robert to have his final site inspection on 30 April 2012. We discussed the upcoming auction. I also asked Robert “what about the fence do you want me to leave it”. He said “if it was mine I’d take it too”. The council’s external fence had several holes and the Council transfer station at the rear of the Material Recycling Facility had a couple of vandal attacks during the Company’s occupation of the site. The Material Recycling Facility (MRF) remained unsecure for the next 10 months.

75. Barry also deposes (par 52) to agreeing to a “Record of Interview” (“ROI”) on 10 July 2013, and a transcript is included in his Exhibit BPS1 (tab 24, fols 64 – 119). The Court has drawn on that ROI for some very useful background about the site and the operation of the business.

76. In the course of the ROI, Barry relevantly said, inter alia:

Q120   “... beyond my knowledge as to how any asbestos got anywhere on that site”

Q282-6   “... we left the premises in May ... As far as I’m aware there was no asbestos on the property at that time ... The only asbestos that I can recall is the asbestos that was in the office” [for staff instruction purposes]

Q337   “As far as we're concerned - and I speak for Michael and I, right - we tried to do the right thing by this operation, all the way down the line. We were supervised by Kempsey Shire Council all the way down the line on what we did. I believe that there was no asbestos on that bloody site. If there was, we didn't put it there, we have no knowledge of it, right. ...

... the oversight included the EPA ...

... I made my decision to quit as a director before that. Michael and I - our agreements were that I would become a director because of all the lease arrangements, and the arrangements with the council and the paperwork required. I'd sign all those things as a director, and also the lease as a director, and once the operation of the plant was commissioned, I would resign, it's back to his business - it has always been his business, it was always intended his business. I made no money out of the bloody thing, it's cost me money, right. And it's cost Michael money as well.

Consideration

77. As frequently occurs when a matter proceeds to a second stage, and a party, for whatever reason, elects to appear self-represented, the focus of the respondents at this quantum hearing has been their criticism of the Council, and of their loss at the liability hearing before Biscoe J.

78. As a consequence, they have paid very little attention (if any) to the reasonableness of the elements which make up the claimed amount, which, necessarily, is this Court’s focus at this stage of the matter.

79. It is not my function to adjudicate non-specific allegations of trespass or tampering, nor the wisdom of Council’s engaging ERM for any of the functions it performed, nor whether the EPA was right to accept ERM’s work as sufficient to discharge Council’s obligations under the clean-up notice, nor the fairness of Council in calling up Michael’s performance guarantee.

80. Between them, Barry and Michael Slade have sworn six affidavits (Barry tabs 6, 10, 12, and 23; and Michael tabs 8 and 21). However, the only evidence led against the claim, as such, is to be found in Barry’s affidavit of 30 March 2015 ( tab 6, at pars 51 to 53) in these terms:

51.   It is evident from reading that Notice as well as the Notice given by the EPA to the Council that it includes the costs of removing the hardstand installed on the site and rehabilitation of the site to the capping of the old landfill. This is consistent with my understanding of the basis for the EPA's Notice. When l met with the EPA in July 2013 I was told by one of the officers present, though I do not recall who, "that the clean-up Notice was based on a volumetric survey of the site from which the Council's surveyors had determined there was 4034 m³ of material on the site which included the hardstand". Given that the site was 5500 m² and the hardstand was >500mm deep, by my calculation that accounts for at least 2500 m³ of the 4034 m³ claimed in the Council's Notice.

52.   However, the hardstand was approved by the Council for the purposes of enabling the land to be used for the purpose for which it was leased. The hardstand material was clean fill. It cannot be equated with pollution. Moreover, it was authorised by the Council in the grant of the lease. Despite numerous inspections by the Council (and the EPA) no objection was raised orally or in writing to the use of concrete and bricks we were recycling to make the hardstand.

53.   When the Council served the Notice requiring payment from Michael and me, it placed a charge over other land owned by Michael and his brother Mark. This charge gave no regard to Mark's rights to sell the property. In February 2014 LJ Hooker Real Estate negotiated a sale for $105,000. The property has a mortgage of $90,000. The Council has declined to remove the charge. Mark is on a disability pension for back injuries and was looking to use some of these proceeds to undergo surgery. Exhibit at pages 40 – 41

(The exhibit at tab 7, fols 40 – 41 concerned sale of a property at Sanctuary Point, and not the clean-up, or the costs incurred.)

81. No supporting material was put to the Court to support the claim that less hardstand needed to go. As Barry said (Tp124, LL49 – 50), in respect of his attacks on the Ellis/ERM evidence:

... I can't afford to have any of these people here, your Honour.

82. On the quantum claim, Mr Maconachie filed 85 paragraphs of written submissions on 2 June 2016. They were very comprehensive, and took the Court to all the material filed to support the claim, in detail (see, especially pars 46 – 63, leading to the summary in par 64, quoted above ([45]), annotated with references to the supporting material).

83. The respondents filed their submissions in response, on 17 June 2016, and I now set them out in full:

1.   We assert that Kempsey Shire Council acted illegally in the way that it conducted the clean­up

2.   We expect oral evidence in support of our assertion. In particular reference to the cleanup notice issued by the EPA to Council

Direction 4 The Asbestos Assessment Report must:

1.   Be prepared by a qualified and experienced Occupational (Asbestos) Hygienist.

3.   Reference: The Contaminated Land Management Act "Guidelines for the NSW Site Auditor Scheme (2nd edition)”

1.3   site audits in relation to contaminated sites

reference to: “site audit statements”

reference to: “site audit report”

reference to: “statutory site audits”

4.   We assert matters referred to 2 and 3 above were not complied with.

5.   We assert Kempsey Shire Council is estopped from pursuing reimbursement of clean-up expenses from the respondents

6.   The following orders should be made:

1. Judgment for the respondents against the applicants for a debt under s. 105(1) of the Protection of the Environment Operations Act 1997 is assessed in the amount of $0

2.   Order the applicants pay the respondents costs of all proceedings.

84. Again, the respondents failed to engage with the elements of expenditure claimed by Council, as detailed in Mr Maconachie’s submissions. They continued, instead, to argue about Council’s entitlement to be paid its costs and expenses, when entitlement had already been found by Biscoe J, and my only function was to decide the amount.

85. The statute is clear. Once asbestos was found, Council could, of its own volition, undertake a clean-up, whether or not the EPA intervened, and, once the clean-up was done, Council became entitled to claim reimbursement, even if there may be some defect in its compliance with any EPA notice.

86. The Council’s entitlement is not affected by the effluxion of time between departure from site, discovery of pollution, commencement of clean-up, or completion of work. In any event, the respondents produced no evidence that the costs would have been lower, were the work done earlier (Tp113, L8).

87. At the same time, the respondents are entitled to have the performance guarantee amount credited against the claim, as Council has, and to challenge the amounts otherwise claimed.

88. The amounts claimed are amply supported by Council’s evidence, which has gone largely unchallenged.

89. Council was perfectly entitled to engage and rely upon Ellis and ERM, as “appropriately qualified experts” to “assess, project manage, and safely remove and dispose of” the asbestos-affected waste on its behalf (subs par 22). The EPA notice was not necessary.

90. Any residual concern the Court may have harboured about the “Direction 5” item, insofar as it exceeds the EPA levy by more than $700,000, was allayed by the evidence that Council claimed from the respondents at the “general solid waste” rate, rather than the special asbestos-related rate.

91. There is a loss incurred by Council when it uses up 6,000 tonnes of landfill space – whether one calls the calculation “depreciation value” (Tpp117 – 118) or, perhaps, a valuation of the “opportunity cost” of the shortened life of the landfill.

92. There is no evidence before the Court that Council acted “otherwise than reasonably” (subs par 23), in complying with the clean-up notice, and I also accept Council’s reliance on the principles laid down (in a different, but analogous, context) by Yeldham J, in Maritime Services Board of New South Wales v Posiden Navigation Incorporated; Maritime Services Board of New South Wales v Liberian Cross Transports Incorporated [1982] 1 NSWLR 72

Conclusion

93. As the contentions of the respondents, in their defence, and/or in support of their NOM and POC, either were determined against them already in these proceedings, or do not arise for determination in their favour on the quantum aspect of them, orders should be made in favour of the Council in every respect.

94. The Council’s amended summons sought also interest on the amount claimed, pursuant to s 100 of the Civil Procedure Act 2005, and the interest claim was clearly repeated in its written submissions (par 23). The respondents did not join issue on the question, in writing or orally, but strenuously opposed making any payment to the Council.

95. Section 100 is discretionary, but Ritchie’s Uniform Civil Procedure (NSW) Practice records (p2702) that “successful plaintiffs who obtain a money judgment will generally be entitled to an award of interest: Ruby v Marsh (1975) 132 CLR 642, at 644. ...”, and the section leaves the rate to be set by the Court.

96. If the Council decides to press the question, despite the apparent (and acknowledged) impecuniosity of the respondents, the Slades are entitled to be heard on both the exercise of the discretion, and the rate.

Orders

97. The Court, therefore, makes the following orders:

1. In accordance with the orders made by this Court on 21 August 2015, judgment is to be entered in favour of the Applicant and against the Respondents in the sum of $1,286,452.62.

2. In addition to Order (2) of 21 August 2015, the Respondents are ordered to pay the Applicant’s costs of these proceedings in relation to the issue of quantum.

3. The Notice of Motion brought by the Respondents on 5 February 2016 is dismissed.

4. The Respondents are ordered to pay the costs of the Applicant on that Notice of Motion.

5. The Council is granted liberty to apply on the question of interest payable by the Respondents pursuant to s 100 of the Civil Procedure Act 2005.

6. The Evidence Books, and/including Exhibit C1, are returned to the Applicant.

**********

Decision last updated: 27 February 2017