Ebacarb Pty Ltd v Environment Protection Authority

Introduction 1 HIS HONOUR: These proceedings are by way of an appeal against the decision in the local court at Wollongong when the defendant company was convicted of an offence against s 120 of the Protection of the Environment Operations Act 1997 ("the PEO Act") for the act of causing the pollution of water. There is a history of how the matter proceeded in the local court, which is not altogether clear but it is apparent that the defendant company, represented by a director, appeared on the first occasion and indicated that the company intended to plead guilty. As a consequence of what passed between the defendant's representative and the magistrate on that occasion it appears that the magistrate rejected that plea. When the matter was ultimately listed for hearing I think it is fair to say that the matter proceeded as if there had been a plea of guilty and indeed the transcript makes it plain that the representative of the defendant may well have persuaded the magistrate that his client was maintaining a plea of guilty. 2 This is a re-hearing pursuant to the appropriate legislation under Pt 5B of the Justices Act 1902 which, notwithstanding its repeal by the Crimes (Local Courts Appeal and Review) Act 2001, is maintained at least for the purposes of this appeal. I have granted leave pursuant to s 133AE of the Justices Act to bring the appeal out of time. Furthermore, I have granted leave pursuant to s 133AM to allow the defendant to give new evidence at this hearing. In both cases the application for leave was not opposed. 3 The facts that were placed before the magistrate are reiterated here by way of a statement of facts incorporated in the papers submitted to this Court by the local court. The defendant company carried on the business of a service station, or petrol station as it is described, at Barrack Heights on 9 October 2001. An independent workman or contractor was carrying out a process of pumping liquid from one of the storage tanks at the petrol station under instruction from the company's secretary, namely Nick Kolevski. As I understand it, Mr Kolevski is also a director of the company. 4 Up to the time of the intervention by the Environment Protection Authority ("the EPA"), the evidence is that approximately 200 litres of liquid described as effluent had been pumped from the tank by means of a hand pump. The water discharged from the tank was directed into the grated drain at the forecourt of the petrol station and then flowed from the grated drain into the road gutter. It followed the road gutter along Shellharbour Road and ultimately discharged through a drain under Shellharbour Road into Oakley Creek. The water had a distinct rusty colour. The EPA intervened as a consequence of two telephone calls from various members of the public. 5 The EPA officers took samples of the liquid from several locations. It has been explained to me, and there was some documentary support for it in the form of a submission made to the magistrate on the first occasion, that the defendant experienced some difficulty in obtaining results of the laboratory tests undertaken in respect of the liquid samples taken on 9 October 2001. 6 It has been explained to me and it was submitted to the magistrate that the defendant elected not to deal with the matter by responding to a penalty infringement notice issued by the EPA by paying the sum of $1,500. The appellant elected to have the matter dealt with by a court, as a consequence of frustration in gaining access to the results of the laboratory testing, on the basis that Mr Kolevski believed that all that was being pumped was water, that water having been placed in the tank as a type of ballast to prevent the tank popping when empty of fuel. Be that as it may, the matter came before the magistrate and was dealt with. 7 As I have said throughout the hearing, today this is a re-hearing. Apart from the Court informing itself in respect of the evidence from the material before the magistrate, what the magistrate actually decided and whether or not he made an error in so deciding is not what I have to decide. At a re-hearing the sentencing process is undertaken afresh having regard to all of the evidence, the law and of course the submissions made on behalf of the prosecutor and the defendant. 8 Mr Stanton, who appears for the appellant, makes a submission that the court below and this Court should take account of the approach taken by the EPA as prosecutor when there was an administrative decision to deal with the incident by way of a penalty infringement notice. Furthermore, in taking that into account, if I understand the submission correctly, the Court should have regard to the assessment of the objective seriousness of the offence made by the EPA when deciding to proceed in that way. That submission is rejected. True it is that the fine payable pursuant to an infringement notice is $1,500 and there is no in-between or scale which allows the matter to be dealt with in any other way other than a payment of a fine for that amount. It is no more than an administrative procedure available to the statutory authority as a matter of convenience, cost saving and no doubt other administrative considerations that are taken into account and enable the matter to be dealt with without the expense, inconvenience and time that would be incurred by the matter proceeding to a court hearing. 9 Having elected not to respond to the penalty infringement notice by way of a payment in the amount specified a defendant is then faced with whatever an appropriate outcome may be in the context of a court hearing. In the court below, that context is that the defendant is, as in this case, charged with an offence that attracts a maximum penalty in the sum of $250,000. Where the proceedings are taken in a local court the jurisdictional limit imposed is a penalty equivalent to 200 penalty points which at present and at the relevant time equates to $22,000. The jurisdictional limit does not however affect the assessment of the seriousness of the penalty that is appropriate in the circumstances of each case by having regard to a maximum prescribed penalty of $250,000. That is the maximum penalty prescribed against a corporation in the present case. 10 So rather than, as was put to me originally in submissions, the magistrate imposing the maximum penalty, the maximum must be understood in the context of the jurisdiction of the magistrate rather than in the context of the overall maximum to which a defendant can be exposed. In other words, if the prosecutor elects to proceed in the local court and a magistrate, after hearing the evidence assesses the penalty as being in the medium to high range, the magistrate might conclude that an appropriate penalty could be say $80,000. However, frustrating as that might be for the learned magistrate, the jurisdiction in those circumstances is nevertheless limited to imposing a penalty in the sum of $22,000. The Court of Appeal has said that the only obligation that the magistrate has in those circumstances is to take care not to exceed the jurisdictional limit. 11 There is specific authority for the manner in which I have just explained the circumstances, which is found in R v Doan (2000) 50 NSWLR 115 at [35]. This Court starts with a clean sheet and must approach the process of sentencing on the basis of the facts and circumstances as they are before this Court. 12 Section 3A of the Crimes (Sentencing Procedure) Act 1999 ("the Crimes (Sentencing Procedure) Act") deals with the purposes of sentencing which include adequate punishment, personal and general deterrence, protection of the community and other matters which may not necessarily apply in the case of environmental offences but nevertheless give some guidance to a court imposing a sentence as to the purpose of the procedure. Section 21A of that same Act directs that the Court is to take into account aggravating factors, mitigating factors and other objective or subjective factors that affect the relative seriousness of the offence. 13 In terms of personal deterrence there seems to be a fundamental misunderstanding on the part of the representatives of this defendant as to the seriousness of the actions undertaken on the relevant day. The actions, as Mr Jordan, who appears for the prosecutor, has pointed out, were deliberate. A contractor or workman was instructed to extract some liquid from a tank used for the purpose of storing petroleum products. Now the offence under the PEO Act contemplates that pollution of water can occur in far less telling circumstances than where there is a deliberate act of pumping liquid from a petrol storage tank. In this case the colour of the liquid alone should have been enough to alert the defendant's representatives to the fact that any receiving waters might be significantly changed by the introduction of the yellow rust coloured water. In this case, it was Oakley Creek. 14 There has been a lot of discussion before the magistrate and today as to the relative cost of extracting the amount of liquid that was extracted, said to be approximately 200 litres. There was some extraordinary mathematics undertaken in front of the magistrate which established the cost at approximately 11 cents per litre. I find that incredulous. I accept that there would have been an amount significantly more than $22.00 incurred for what I consider to be an appropriate procedure such as pumping the water into a suitable receptacle and then arranging for the liquid to be transported to an approved disposal facility. It would have been considerably more than $22.00. But even so that is no justification for simply lifting it out with a hand pump and directing it into the road gutter. Everybody knows that a road gutter must ultimately lead to some water or other. In this case it is to be assumed that the representatives of the company were well aware of where water drained to. I do not know that specifically, but there is evidence that the business had been carried on for quite some years. I find it difficult to accept that there would have been a lack of awareness in respect of the ultimate destination of the subject water. Even so, the gutter itself technically is a place where material such as this cannot be discharged. 15 It is well documented in the cases, the typical example being the decision of the Court of Criminal Appeal in Axer Pty Limited v Environmental Protection Authority (1993) 113 LGERA 357 that the element of general deterrence is a matter that the Court must take into account. The legislature identified the seriousness of such an offence by nominating a maximum penalty of $250,000. This shows that the object of the legislation is to ensure that the public generally are not encouraged to dispose of anything in such a way that pollution of waters occurs, at least without the appropriate licence. 16 A number of matters are called up for consideration pursuant to s 241 of the PEO Act. Those matters are dealt with in the copy of the submission made in writing to the magistrate below and reiterated and embraced by Mr Jordan before me. They do not need to be repeated except to say in summary that although there was no actual environmental harm to organisms as such the likelihood of harm was agreed in a statement of facts before the magistrate as being the possibility of direct ingestion of the oil, as it is described, which may then prove toxic or indirectly by the organisms being physically trapped or smothered in the floating oil. The toxicity of oil products on biological species varies widely as the statement of facts goes on to say. The Court recognises the prosecutor's submission that there was indeed a prospect that there could have been harm to aquatic organisms. 17 Section 241(1)(b) of the PEO Act requires the Court to consider what practical measures could have been taken to prevent, control, abate or mitigate that harm. As I have said, less than 200 litres was actually discharged but that was perhaps fortuitous. I really do not know but it is clear that the EPA intervened and presumably the amount of 200 litres was a limit imposed by that intervention. But even so 200 litres is a not insignificant amount and it is an amount that justifies taking some steps of the type that I mentioned a moment ago, which would have ensured the proper disposal of this material. 18 I have already dealt with the matters raised pursuant to s 241(1)(c) about reasonable foreseeability and I do not need to reiterate that except to say by way of emphasis that the colour of the liquid alone quite apart from its chemical composition indicated any other water into which it flowed could be affected in a material way. 19 The provisions of s 241(1)(d) and s 241(1)(c) do not come directly into play so far as the circumstances of this case are concerned. 20 There remains still the matter of the submission put by Mr Stanton following evidence given in the Court today regarding the means of the company. Mr Kolevski has sworn an affidavit and produced balance sheet material which seeks to show that the defendant is a company of moderate means. The shareholders are relatives. According to the evidence of Mr Kolevski, the company is effectively owned by himself and his wife. Its assets, according to the balance sheet in 2002, are moderate. However, in the course of cross-examination it became apparent that there was another related company that had been involved in some financial transaction associated with this company, namely the purchase of a dwelling for personal occupation by Mr and Mrs Kolevski. The submission itself leaves unanswered the question of the real means of the company in terms of the individuals who are behind it and who has the capacity to provide capital as and when required and to take the benefit of profits. 21 The bare accounting figures are not always an indication of the fact that a company is necessarily in poor circumstances. I note, however, that retained profits were achieved in both 2001 and 2002. Clearly the business operated at a profit, at least in those years. 22 I do not know that I get a great deal of benefit out of the balance sheet material in terms of the submission that there would be an unbearable financial impost in the terms of a penalty in the order of $22,000. However, I do consider that for the purpose of determining an appropriate amount of fine under the provisions of s 6 of the Fines Act (1996), the means of the accused, the company, have been reasonably and practically demonstrated by the production of the balance sheet. However, I am not persuaded that a fine in the order imposed by the magistrate is unreasonable. 23 There is one further matter that needs to be taken into account. That is, what is a reasonable fine in the whole of the circumstances taking into account that the Court must be shown to be even-handed in the way it deals with offences of this type. I have been referred to a number of decisions by the prosecutor, which might provide some guidance. It is apparent not only from those decisions but from the way in which the Court generally approaches the imposition of the fine where the charge is polluting waters and the maximum penalty is $250,000 that the low to medium range is in the order of $25,000 up to $30,000 at least. I would assess an appropriate fine for this defendant to be at the upper end of that range. 24 The Court takes into account a number of matters that are put in mitigation, including that effectively there was an early plea of guilty. This Court is prepared to give the defendant the full benefit of that early plea of guilty not only pursuant to R v Thomson; R v Houlton (2000) 49 NSWLR 383 but also in accordance with the provisions of the Crimes (Sentencing Procedure) Act. 25 It is also appropriate to take into account that the defendant has an unblemished record in relation to environmental offences in that nothing has been drawn to the attention of the Court in that respect. I take into account that prima facie the company is a family business rather than a large corporation with numerous trading outlets with a massive turnover. 26 Allowing for those matters it draws the Court back to a penalty in the order of $22,000. In the circumstances, therefore, I propose to impose a fine in the sum of $22,000 that being the jurisdictional limit on the one hand against a maximum penalty of $250,000 but nevertheless, in my view, coincidentally an appropriate fine that the defendant might have expected to incur in this Court freed of the jurisdictional limit applicable in the local court. 27 The appeal to this Court is only in relation to sentence, therefore, the conviction as found in the court below stands. I order that the defendant pay a penalty in the sum of $22,000. The exhibits may be returned. 28 JORDAN: Your Honour, I seek firstly an order confirming the order for the prosecutor's costs of $500 in the local court. 29 HIS HONOUR: Do I deal with that?