Environment Protection Authority v Allied Industrial Services Pty Ltd

Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357; Cameron v The Queen (2002) 209 CLR 339; Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683; (1993) 82 LGERA 21; Environment Protection Authority v Attard [2000] NSWCCA 242; CASES CITED: Environment Protection Authority v Excel Fuels Pty Limited [2002] NSWLEC 160; Neal v The Queen (1982) 149 CLR 305; R v Thomson; R v Houlton (2000) 49 NSWLR 383; Thorneloe v Filipowski (2001) 116 LGERA 56

DATES OF HEARING: 17/08/2005 EX TEMPORE JUDGMENT DATE : 08/18/2005

PROSECUTOR S Wright (solicitor) SOLICITORS Environment Protection Authority LEGAL REPRESENTATIVES: DEFENDANT I Hemmings SOLICITORS Access Business Lawyers

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

ENVIRONMENT PROTECTION AUTHORITY Prosecutor

ALLIED INDUSTRIAL SERVICES PTY LTD Defendant

JUDGMENT 1 Cowdroy J: By summons filed on 4 March 2005 the prosecutor alleges that the defendant polluted waters contrary to s 120(1) of the Protection of the Environment Operations Act 1997 ("the POEO Act"). The defendant has pleaded guilty to the charge and accordingly the Court is required to determine penalty.

2 The defendant operates the business of chemical and ultrasonic cleaning of machinery parts for local industry at premises located in between Chapman Street, Princes Highway and Jardine Street at Fairy Meadow near Wollongong ("the premises"). The defendant holds a licence issued by the Environment Protection Authority ("the EPA") which authorises it to store hazardous chemicals on the premises. The chemicals are used for the purpose of industrial cleaning.

3 A water treatment system has been installed at the premises as part of the plant used in the defendant's cleaning operations. Contaminated liquid resulting from the washing down operations drains to a grated pit. Once the liquid passes through the grate it falls into a bay box located within the pit. The bay box is designed to delay the flow of liquid into the base of the pit to allow suspended solids or particles to fall to the bottom of the bay box. A pipe is installed vertically in the bay box and once a certain volume of liquid has reached the bay box, it can flow into the pipe which leads to the base of the pit. Another pipe ("the treatment pipe") at the base of the pit then transfers liquid to the treatment system.

4 A second pipe connects into the pit at a higher level and leads to the stormwater drain on Jardine Street ("the stormwater pipe"). During the hours of operation of the business the stormwater pipe is not intended to be used, and all of the liquid which is washed into the drain from the cleaning area is intended to exit the pit through the treatment pipe. However, the pit mechanism can be changed so that the pit operates as a "first flush system". When the first flush system is in operation the treatment pipe accepts only 2000 L of liquid. After the first 2000 L of liquid enters the pit, the pit fills until the liquid reaches the height of the stormwater pipe and is released into Jardine Street.

5 Once in Jardine Street waters flow generally in an easterly direction. Between the Jardine Street discharge and the Northern Distributor, the waters flow through an unnamed creek and through stormwater drains. They ultimately drain through Puckey's Estate and the Fairy Creek Lagoon, located approximately 3 km from the end of Jardine Street.

6 The first flush system is activated only outside of the business hours of the defendant namely, at nights and on weekends. Such restriction is a requirement of Sydney Water and is intended to prevent excessive amounts of clean rainwater entering the treatment system, which would place an unnecessary burden upon Sydney Water's treatment operations. The initial 2000 L which flows through into the treatment pipe is expected to absorb any residual pollutants in the wash bay area. Any additional rainwater is considered sufficiently clean to enter into the stormwater system.

7 At approximately 4 pm on 31 March 2004 the EPA received a complaint. An EPA officer, Tracy Hyland, visited the premises at approximately 5.10 pm on that day to investigate the complaint. She observed the gutter on the northern side of Jardine Street adjacent to the Allied premises contained a yellow-green liquid which pooled into the gutter, starting at the stormwater pipe and extending approximately 100 m east along the road to a stormwater drain located near the intersection of Jardine Street and Hurley Avenue ("the stormwater drain"). The gutter along this section of road also contained a fine grey sediment. The liquid had entered the stormwater drain and Ms Hyland observed a white stain or residue in the gutter around the drain.

8 At approximately 5.25 pm Ms Hyland entered the premises and spoke to a person who provided her with the telephone number of an employee. Ms Hyland attempted unsuccessfully to contact that person on two occasions. Ms Hyland took samples and observed that there was an odour of diesel from the sample. The sample also contained small black globules on the surface of the sample.

9 Ms Hyland made no contact with the defendant on the morning of 1 April 2004. She and another officer of the EPA, Ms Wakenshaw, attended the premises at approximately 12.50 pm. Ms Hyland observed that the gutter on the northern side of Jardine Street contained a yellow-green liquid and dark grey sediment. Samples were taken from the gutter and Ms Hyland made similar observations concerning its odour as on the preceding night.

10 At approximately 1.05 pm, whilst each of the EPA officers were taking samples of the gutter, a dark grey slurry containing black globules gushed out of a discharge pipe in front of the Allied premises and flowed fast down the gutter on the northern side of Jardine Street. The gush lasted for approximately five minutes. Samples of this discharge were also taken.

11 Whilst the two EPA officers were taking samples, employees of the defendant came out to the street where a conversation ensued. It is not known how much liquid had discharged from the premises but it is agreed that it was between 300 and 450 litres.

12 Ms Hyland and Ms Wakenshaw entered the premises and took a sample from the wastewater treatment system. They observed that at the bottom of the pit there was a black or grey coloured slurry and that the bay box was full of sediment.

13 On 2 April 2004 Ms Wakenshaw and Ms Hyland visited several businesses and residential premises in Jardine Street. They observed children in the street. They also took samples of the liquid in the wash bay area.

14 Both officers observed pollutants from the defendant's premises 200 m downstream in the unnamed creek, and saw an oil sheen on the water near the vicinity of the Northern Distributor. Samples were taken at that point.

15 It is agreed between the parties that the cause of the discharge was a blockage in the treatment pipe between the bay box and the wastewater treatment system which occurred after a cleaning process which had begun on the morning of 1 April 2004.

16 It is also agreed that it is likely that a partial blockage of the treatment pipe occurred on 31 March 2004 causing the discharge on that date. The parties agree that the sediment which accumulated in the treatment pipe during the hosing out of the tank on 1 April 2004 probably added the final material to completely block the treatment pipe on 1 April 2004.

17 The treatment pipe had been in operation without blockage since 1992. The defendant did not regularly flush or clean the treatment pipe to ensure that it was not blocked and had no checklist or logbook of its cleaning.

18 As at 1 April 2004 the defendant's procedure with respect to cleaning the bay box was contained in a manual prepared in 1996 entitled 'Training Instruction Handout - Operation of Cleaning Bay Fairy Meadow Workshop'. The manual provided that the bay box was to be emptied on a Tuesday and a Friday. In fact the practice of the defendant was to check the bay box during shifts on an ad hoc basis and at the end of each shift and to clean it if necessary.

19 The Court observes that on 1 April 2004 the defendant was engaged in cleaning out one of its own tanks. It is apparent from the evidence that a considerable amount of sludge was removed during this operation. It would have been prudent for the bay box to have been checked on that occasion.

20 The pollutants discharged contained high concentrations of phosphorus, nickel, zinc, cobalt and copper, as well as carcinogens including several polyaromatic hydrocarbons. The samples contained solvents, phenols and other chemicals including a high concentration of petroleum hydrocarbons. Such chemicals were highly toxic to the water flea and a marine bacteria.

21 The Australian and New Zealand Guidelines for Fresh and Marine Water Quality contain trigger values for 95% species protection, against which water quality can be evaluated. The samples taken from the gutter contained concentrations above the trigger values for phosphorous (more than 120,000 times); nickel (more than 50,000 times); zinc (more than 36,000 times), copper (more than 7,000 times), cobalt (more than 11,000 times), aluminium (818 times), arsenic (10 times), manganese (52 times), chromium (more than 2,400 times) and cadmium (340 times). These concentrations were substantially diluted in the creek samples, however the concentrations of in particular phosphorus (7,333 times), nickel (2,273 times) and cobalt (429 times) remained high.

22 The substances found in the samples were harmful to the environment. Phosphorous is a nutrient that promotes growth and can cause an increase in the levels of nuisance algae in waterways, which can lead to toxic effects on aquatic life. The samples also contained chemicals substances which were included in the International Agency for Research on Cancer list of suspected human carcinogens. A number of heavy metals present in the solid and liquid samples, cadmium, chromium and lead, present a danger to human health particularly if ingested. There was a substantial risk that children may have come into contact with the higher concentration of chemicals contained in the gutter, as children were observed playing on the street at the time.

23 It is agreed that the pollutants travelled as far as the Northern Distributor. There is no evidence that the pollutants travelled beyond to Puckey's Estate or to Fairy Creek Lagoon.

24 Between 9 am on 4 April 2004 and 8 am on 5 April 2004, 174 mm of rain fell in the area surrounding the premises. It is expected that the rainfall would have carried pollutants further down the waterways. Whilst the concentration of the pollutants would have been diluted when they reached deeper waters, pollutants may remain in the water bodies or within sediments for many years.

25 The defendant's evidence is contained in the affidavits of Geoffrey Hugh O'Donnell, the managing director of the defendant and of Steven William Waples, a supervisor employed by the defendant.

26 The evidence establishes that the current operations have continued since approximately 1992 at the premises. Mr O'Donnell says that when the incident leading to this charge was brought to the defendant's attention, a risk analysis was immediately prepared. A system of regular inspection has been instituted and the company has budgeted an amount of almost $250,000 for alterations to its premises to avoid a recurrence of a pollution incident of this type. It will undertake extensions to an existing roof over the yard where the cleaning operations take place which will allow the stormwater pipe to be rendered inoperative.

27 Section 123(a) of the POEO Act provides a maximum penalty for this offence of $250,000.

28 The Court is required to consider s 241 of the POEO Act when imposing penalty. Section 241(1)(a) requires the Court to consider the extent of the harm caused or likely to be caused to the environment by the commission of the offence. The Court has considered the harm resulting from the offence above. There is no evidence of actual harm to any humans. Similarly, whilst there is evidence of a dead worm having been seen in the unnamed creeks, the Court cannot be satisfied on the evidence that it was in fact the pollutants that caused its demise. However, the Court accepts that the concentrations of chemicals were very high and clearly created a risk of harm.

29 Section 241(1)(b) of the POEO Act requires the Court to determine the practical measures that may be taken to prevent, control, abate or mitigate harm. The Court notes the modifications proposed to the defendant's premises which will prevent contaminated water escaping the premises in future.

30 The defendant was critical of the EPA for failing to contact the defendant on 31 March 2004 using the emergency number which had been provided to the EPA in February 2003. The defendant submitted that, had the EPA contacted it on its listed number on 31 March 2004, the pollution may have been prevented. Whilst there is no explanation for the EPA's failure to use the emergency telephone numbers, the EPA's conduct does not provide any basis for mitigation of penalty.

31 Under s 241(1)(c) of the POEO Act the Court is required to consider whether the defendant could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence. The defendant stores and uses highly toxic chemicals in its daily operations. It was clearly foreseeable that if they escaped from the premises there was the real likelihood that harm could result.

32 Section 241(1)(d) of the POEO Act requires the Court to consider the extent to which the person who committed the offence had control over the causes which gave rise to it. The defendant had control over its operations and over all aspects of the first flush system and water treatment system installed on its premises.

33 The defendant pleaded guilty at an early stage of the proceedings. As such, it is taken to have accepted responsibility for the incident and to have expressed its willingness to facilitate the course of justice: see Cameron v The Queen (2002) 209 CLR 339 per Gaudron, Gummow and Callinan JJ. The affidavit of Mr O'Donnell also expresses the defendant's contrition and remorse for the incident.

34 Pursuant to s 22 of the Crimes (Sentencing Procedure) Act 1999 the Court may award a lesser penalty where a plea of guilty is entered (see also R v Thomson; R v Houlton (2000) 49 NSWLR 383 which identifies the same principle at common law). If the defendant shows genuine remorse, the Court can also take that matter into consideration: see Cameron per Kirby J; see also Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 700; (1993) 82 LGERA 21 at 38; see also Neal v The Queen (1982) 149 CLR 305 at 315.

35 The defendant has requested that the Court extend to it the benefit of s 10 of the Crimes (Sentencing Procedure) Act 1999. There have been various authorities which have considered the application of s 10 in relation to environmental offences: see for example Environment Protection Authority v Excel Fuels Pty Limited [2002] NSWLEC 160; Thorneloe v Filipowski (2001) 116 LGERA 56 and Environment Protection Authority v Attard [2000] NSWCCA 242. In Thornloe, the Court of Criminal Appeal considered the scope of judicial discretion conferred by s 10 of that Act and observed that decided cases had consistently declared that the discretion under s 10 would rarely be exercisable in respect of pollution offences.

36 The Court is mindful of the considerations which must be taken into account when determining penalty as referred to in Camilleri at 699. The Court is satisfied that the offence in this case, although unintended, was foreseeable. The Court also takes into consideration the fact that the plant used by the defendant was under its sole control and that the defendant used highly toxic chemicals in its daily operations. For these reasons, the Court rejects the application of s 10.

37 In this case, the defendant has co-operated fully with the prosecutor from the outset and promptly investigated and cleaned up the discharge. The defendant has also taken actions designed to prevent a recurrence of the incident. The Court finds that there is no need for any element of specific deterrence: see Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357.

38 The Court has considered the penalties imposed by this Court in similar cases and observes that normally, where an offence of pollution by hazardous chemicals arises, a heavy penalty is involved. Were it not for the mitigating circumstances, the Court would impose a penalty of $35,000. However, in view of the early plea of guilty, the co-operation afforded to the prosecutor, the prompt clean-up and the hitherto unblemished record of the defendant, the Court considers that the penalty should be reduced to $25,000.

1. The defendant is convicted of the offence as charged and fined $25,000.
2. The defendant is to pay the costs of the prosecutor as agreed in the sum of $19,000.
3. Pursuant to s 248(1) of the Protection of the Environment Operations Act 1997, the defendant is to pay the prosecutor's costs and expenses of investigation of the offence in the amount of $12,000.
4. The exhibits be returned.

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