Environment Protection Authority v CollexPty Ltd

A. INTRODUCTION

1. The Defendant has pleaded guilty to a charge of an offence against the Protection of the Environment Operations Act 1997, s 64(1) (PEO Act) in that on or about 13 March 2000 at Camellia, it was the holder of an environmental protection licence in force under that Act when a condition of that licence was contravened.
2. The PEO Act, s 64(1) relevantly provides as follows: (1) Offence

If any condition of a licence is contravened by any person, each holder of the licence is guilty of an offence.

Maximum penalty (except where it is an offence relating exclusively to noise): · in the case of a corporation - $250,000 and, in the case of a continuing offence, a further penalty of $120,000 for each day the offence continues, or · in the case of an individual - $120,000 and, in the case of a continuing offence, a further penalty of $60,000 for each day the offence continues. 3. The offence so created is a status offence in that it imposes liability for a contravention of a condition of licence on "the holder of the licence" in respect of which liability subsection (2) provides a composite statutory defence (to be established by the holder of the licence). The offence is classified as a Tier 2 offence: vide s 114(2) and is an offence of strict liability: cf State Pollution Control Commission v Broken Hill Prop. Corp Ltd (No 1) (1991) 74LGRA 351. 4. The relevant particulars of the offence (as endorsed on the Summons) are as follows: (i.) the relevant licence held by the Defendant is Licence No 0005418 issued pursuant to the Pollution Control Act 1970 in force for one year from 17 April 1999; (ii.) the relevant condition of the Licence is Condition S2 which provides as follows:

All activities carried out on the premises must be carried out in a competent manner

In this condition activities includes: (a) the processing, handling, movement and storage of materials and substances; and (b) the treatment, storage and disposal of wastes (including solid and liquid wastes); and (iii.) the relevant contravention of that Condition is

the failure to handle and/or store a load of caustic soda solution received on 13 March 2000 from Orica Australia Pty Ltd in a competent manner in a number of ways including; (i) causing it to be unloaded in an unbunded area and/or; (ii) storing it in an unbunded area and/or; (iii) storing it in a tank which was unsuitable for that purpose and which corroded, causing the solution to spill. B. THE RELEVANT FACTS 5. The parties have greatly assisted the Court by providing a Statement of Agreed Facts (Exhibit 1) from which I extract the following summary:

1. The Defendant, which was incorporated on 12 March 1991, conducts a waste management business with operations in all Australian States and in New Zealand and, through its parent company (Vivendi Universal SA) in over 70 other countries.
2. Since 1991, the Defendant has conducted business, including a liquid waste treatment facility at premises known as No 37A Grand Avenue, Camellia (the Camellia premises) in respect of which premises the Defendant holds licences in force under the Waste Minimisation and Management Act 1995 and the PEO Act.
3. The Licence in force under the PEO Act, at the date of the admitted offence was the licence issued on 17 April 1999 under the Pollution Control Act 1970. Although the last mentioned Act was repealed on 1 July 1999 (when the PEO Act came into force) the Licence "is taken to be a Licence issued under this Act, subject to the regulation under this schedule" by virtue of cl 4 of Pt 3 of Schedule 5 to the PEO Act: see also cl 6(1) of Pt 2 of the Protection of the Environment Operations (Savings and Transitional) Regulation 1998.
4. The Camellia premises comprising an area of 16,000 m2 are, in common with surrounding lands, zoned "Industrial 4(c) Special" under the relevant environmental planning instrument and are located on the Camellia Peninsula with a frontage to Parramatta River, which area has a long history of industrial use which has left a legacy of heavily contaminated land (especially with chromium).
5. On 13 March 2000, the Defendant was asked by Orica Australia Pty Ltd (Orica), the largest chemical company operating in the Australasian Region, if it would receive a liquid waste product (comprising water and caustic soda) created by the decommissioning by Orica of its Chlorine Plant located at Matraville (the waste product not being suitable for resale by Orica). The Defendant, through its Branch Manager for the Camellia Liquid Treatment Plant accepted the offer for a charge of $80 per tonne of the liquid waste product on the basis that it might be able to use the caustic solution to break down grease trap waste rather than have to dispose of it. A subordinate employee of the Defendant was informed that a load of "wastewater containing some caustic" would be delivered by Orica later that afternoon and arrangements were made by subordinate employees of the Defendant to receive the product by placing it in a 20,000 litre capacity ISO Tank which is designed to store and transport waste.
6. Later that day (at approximately 7 pm) the Defendant received the consignment of waste material from Orica. That consignment according to the paperwork, indicated that the load was 16 tonnes. However the load had not been weighed by Orica prior to consignment to the Defendant's premises and it was not weighed by the Defendant. The Defendant estimates that the load was some 8 - 10 tonnes in weight based upon markings in the ISO tank into which the material was transferred upon receival of the consignment. The transfer operation into the ISO tank took 20 minutes. The ISO tank was not placed in a bunded area. This manoeuvre was contrary to a condition of the Defendant's Licence under the Waste Minimisation and Management Act.
7. Later the following morning (at 2.30 am on 14 March) an employee of the Defendant observed the ISO tank was steaming. This observation was reported to two superior employees (who were at their respective houses) within 60 minutes of the observation. They immediately set forth for the Camellia premises.
8. Later that morning (at 4.30 am) another employee (Angelo Lopez) a liquid waste truck driver, observed the ISO tank to be leaking its contents. About the same time the Defendant's Branch Manager had arrived. He too observed the ISO tank to be leaking. He immediately arranged for the isolating of the tank area and a clean-up operation.

The leaking contents apparently entered the stormwater system installed at the Camellia Premises which is designed as a first flush stormwater system to ensure that spills on site are contained within the premises by being collected and processed via the plant instead of flowing off site where the stormwater system ultimately discharges into Parramatta River. 9. The stormwater system installed at the Camellia premises comprises a number of pits, a pipe network, a below ground tank with weir arrangement, an above ground tank and a series of pumps. The system is designed to collect stormwater runoff in the below ground tank containing the weir mechanism. When the water level rises to a certain height (before overtopping the weir) a float switch automatically detonates the pump which pumps the contents to the aboveground tank. Thereafter, the contents of the aboveground tank can be directed to the ultimate stormwater discharge point into Parramatta River or back to the wastewater treatment plant. On the day of the admitted offence (and the days immediately preceding that day) the control valves were set to redirect the contents of the aboveground tank to the wastewater treatment plant. 10. As part of the clean-up operation conducted by the Defendant in response to the leaking tank, the contents of the below ground tank forming part of the stormwater system were pumped into the aboveground tank. Another action was to pump out the remaining contents of the ISO tank. After this had occurred, the ISO tank was hosed down to cool and thereafter was physically relocated to a bunded area. 11. At approximately 6.00 am, two of the Defendant's senior employees proceeded to the river weir (the ultimate feature of the stormwater system from which discharge occurs to the Parramatta River) to observe whether any of the leaked contents had escaped from the Camellia premises. They observed no evidence of the material at this point or of it having escaped from the Camellia premises. However, Mr Lopez reported that he observed liquid overtopping the weir of the below ground tank and leaking out towards the ultimate discharge point at the bank of the Parramatta River. 12. To ensure that none of the leaked contents remained in the stormwater system, the pipework was flushed with hose water while the Defendant's employees monitored various features of the stormwater system. 13. Later that morning, the Defendant began to transfer the collected leaked material as diluted by the water flushing to premises at Lidcombe. Two loads (containing 1.98 tonnes and 8.76 tonnes respectively) were transferred on the day of the admitted offence and another load weighing 4.48 tonnes was similarly transferred on the following day. 14. The Defendant's two senior employees went to the Rivercat Wharf at 7.00 am on 14 March located directly opposite the Camellia premises to make observations of the Parramatta River. They observed no evidence of leakage. 15. At about the same time, the Defendant arranged for water to be pumped from the mangrove area in the Parramatta River adjacent to the Camellia premises. This was a precautionary action. 16. EPA test results of samples taken from various locations at the Defendant's premises and at the culvert in the bank of the Parramatta River showed similar strong levels of sodium hydroxide solution, with particularly high aluminium and sodium concentrations. 17. Based upon these sample results and Mr Lopez's observations of the contents overtopping the weir, the EPA "believe" that some "indeterminable amount" of the leaked contents entered Parramatta River. Opposing this "belief" is the Defendant's "belief" based upon the contrary observations of its two senior employees that none of the leaked material entered Parramatta River and offering an alternative reasonable hypothesis for the laboratory results of the sampled materials (namely that it had been known by the EPA since at least 1993 that the Camellia premises were characterised by high pH levels and chromium detected in soil and groundwater sampling and that the high sodium content is typical of blackish sea water). 18. Following receipt of an anonymous complaint at 3.36 pm on 14 March on the EPP Pollution Line, two officers of the EPA attended the Camellia premises at 5.00 pm that day. They interviewed the Defendant's Branch Manager and discussed the pollution incident. Photographs were taken and liquid samples collected. Instructions were given to the Defendant to flush the discharge point and the mangrove area in the Parramatta River. On the following day, the Defendant cleaned the stormwater system by utilising a high pressure water jet process. 19. On 17 March 2000, the EPA issued the Defendant with a Clean-Up Notice pursuant to s 91 of the POE Act requiring specified action to be taken by 5.00 pm 20 March 2000. The Notice was complied with by the Defendant. 20. Subsequently the EPA issued the Defendant with three separate Notices pursuant to the POE Act, s 193 requiring the provision of information in relation to the incident. These notices were complied with by the Defendant. 21. On 16 April 2000, the Defendant submitted to the EPA an Incident Report of the leaking ISO tank. The information included a video of a simulated re-creation of the incident whereby a tank was loaded with 16 tonnes of water which was released therefrom and flowed into the stormwater system within the Camellia premises without any discharge of the released water occurring to Parramatta River. 22. Subsequently, the EPA investigating officers conducted dye tests to verify the integrity of the stormwater system within the Camellia premises. The dye testing revealed that it took 20 minutes for the dye to move from the drain in the location of the leaking ISO tank to the upstream side of the weir installed in the below ground tank and another 60 minutes for the dye to move from the downstream side of the weir into the Parramatta River discharge point.

C. SENTENCE 6. The parties' competing submissions on sentence are based upon the common assumption that notwithstanding the existence of mitigating circumstances (presently to be mentioned) the admitted offence justifies both the recording of a conviction against the Defendant and the imposition of an appropriate penalty. 7. The competing submissions involve a slight divergence on the question of the gravity of the offence (both in terms of objective and subjective relevant considerations) - the Prosecutor submitting that the admitted offence is properly assessed "at the lower to mid range" of the overall spectrum of gravity and the Defendant submitting that the admitted offence is more appropriately assessed at the "low end" of the spectrum of gravity. 8. The divergence in the competing submissions as to the most apt assessment or appraisal of the overall gravity of the admitted offence is, I think chiefly to be explained by two matters (of aggravation or reduced mitigation) that the Prosecutor has asserted but which the Defendant disputes, namely: (i.) that some "indeterminate amount" of the leaked waste material escaped into Parramatta River; and (ii.) that some problem (of lack of certainty or indecision) was initially experienced with the Defendant's responses to statutory notices issued by the EPA investigating the incident. 9. The first- mentioned matter goes to aggravation in the sense that whereas the offence charged (namely a contravention of a condition of Licence) does not involve any element of causing harm to the environment (eg by virtue of water pollution), if the contravention of the Licence Condition results in harm to the environment, the contravention is thereby an aggravated offence (cf the POE Act, s 241(a) which requires the Court to take into consideration the "extent of the harm caused or likely to be caused by the commission of the offence" and see also Environment Protection Authority v Norco Co-operative Limited (2000) 108 LGERA 137 at 144 and 145). 10. The second mentioned matter goes to the question of mitigation in the sense that if, as the Prosecutor asserts, the Defendant was not as direct and as responsive as it could have been, in initially answering the statutory notices served upon it, the Defendant would not be entitled to the full mitigating benefit that would otherwise arise from its co-operation with the EPA in its investigations into the incident and follow-up action. 11. I shall separately consider the two matters in dispute between the parties. 12. Firstly, has the Prosecutor established that the contravention of the Licence Condition involved the waters of Parramatta River being polluted by virtue of some of the leaked waste liquid entering those waters?. 13. In my judgment, the agreed facts are incapable of supporting a finding beyond reasonable doubt that an indeterminate amount of the leaked waste waters entered the waters of Parramatta River. In so concluding, I apply the principle established by the decision of the High Court of Australia in R v Olbrich (1999) 199 CLR 220 where the Court, at 281 adopted the following statement of principle from the majority judgment of the Victorian Court of Appeal in R v Storey (1998) 1 VR 359 at 368:

….a sentencing judge may not take facts into account in a way that is adverse to the interests of the accused unless those facts have been established beyond reasonable doubt. On the other hand, if there are circumstances which the judge proposes to take into account in favour of the accused, it is enough if these circumstances are proved on the balance of probabilities. (Original Emphasis.) 14. Not only is there direct conflict between the observations made by different employees of the Defendant, which is incapable of resolution, either directly or indirectly, but the circumstantial evidence constituted by the EPA laboratory results of the various samples collected on and about the Camellia premises is capable of yielding a reasonable alternative hypothesis to the competing inference of water pollution have occurred that the Prosecutor seeks to be drawn from the circumstantial evidence. 15. Accordingly, I have not been satisfied beyond reasonable doubt that some of the leaked wastewaters escaped or leaked into Parramatta River. 16. As to the second matter asserted by the Prosecutor against the Defendant, I am both unable and unwilling, as a finding beyond reasonable doubt, to draw the inference from the agreed facts that "the Defendant's Senior Management ensured that all staff co-operated with the investigations but that the early flow of completely frank information was inhibited by the same sort of management problems at the Camellia Plant which caused the offence": vide p 6 of the Prosecutor's written submissions. 17. Accordingly, the Prosecutor having failed to establish each of the assertions adverse to the Defendant that undergird its submission that the Court should assess the gravity of the admitted offence as falling within the "low to mid" range of the overall spectrum of gravity, I am of the opinion that the apt assessment or evaluation of the gravity of the admitted offence (considering both objective and subjective factors) is that of "low range" gravity ie up to 20 per cent of the maximum range. 18. Before considering the relevant mitigating factors, which combine to justify a significant reduction in penalty, I should make a few observations about the nature of the admitted offence. Firstly, it is to be noted that the offence charged is a contravention of a condition of the Licence in force under the PEO Act, held by the Defendant, and it is no element of that offence that the contravention caused environmental harm cf Norco Co-Operative at 144 to 145. 19. Secondly, unlike the conditions of licence contravened in Norco Co-Operative, the contravention of the Condition of Licence in the present case does not readily fit within the concept of "breach of trust" that has been consistently recognised and applied by a number of decisions of this Court (some of which are cited in Norco Co-Operative) in cases involving the prosecution of a licensee for a breach of conditions of licence. 20. Those cases were concerned with licences permitting pollution to be created but which imposed conditions limiting the extent or amount of that permitted pollution. The Court, in punishing contraventions of such limiting conditions developed and applied the doctrine that the licensee had thereby, in effect, breached a public trust by polluting beyond the stipulated levels of pollution that were permitted by the relevant licence. 21. However, in the present case, the relevant licence does not permit any water pollution to be created, and the condition contravened does not permit the creation of any level or degree of pollution. On the contrary, its clear object is to eliminate the risk of pollution being caused by requiring all activities undertaken upon the licensed premises to be undertaken by the licensee "in a competent manner". 22. The true nature of the obligation imposed by this type of condition of licence was extensively considered in the Court of Criminal Appeal's judgment in Genkem Pty Ltd v Environment Protection Authority (1994) 85 LGERA 197 where the relevant condition stipulated as follows:

L6 Matter and substances on the premises shall be processed, handled, moved and stored in a proper and efficient manner.

23. The then Chief Justice, in giving the principal judgment of the Court, expressed at 204/205 the following views on the true nature and purpose of this type of condition in the context of the grant of a licence under the Pollution Control Act: -

When regard is had to the legislative power pursuant to which condition L6 was imposed, and to the preamble to the licence conditions quoted above, as well as to the immediate context of the condition, it becomes reasonably apparent that the reference to matter and substances is a reference to matter and substances capable of polluting the environment. I would reject the submission, advanced on behalf of the appellant, that there would be a contravention of condition L6 if the appellant failed to store office stationery and paper clips in an efficient manner. For the same reason, an issue as to whether there had been failure to deal with matter and substances in a proper and efficient manner would fall to be considered according to the possible environmental consequences of the acts or omissions in question. Conduct which had no possible environmental consequences, but was related solely to the profitability of the appellant's business, would be outside the purview of the condition. 24. I would respectfully apply this understanding of the true nature of the obligation imposed by the Licence Condition that has been contravened in the present case. This means that it is the possible environmental consequences of the contravention that give content and colour both to the obligation and to the consequences of breach of that obligation. 25. For the foregoing reasons, I would regard the contravention of the Condition of Licence in the present case as not falling within the scope of the doctrine of "breach of public trust" established by decisions of this Court concerning contraventions of conditions of licence, but rather, and consistently with the approach taken in Genkem, I would regard the contravened condition as a condition imposing requirements on the Licensee to guard against the risk of creating possible adverse environmental consequences by the manner in which activities on the licensed premises were undertaken. 26. In the present case, where there is no evidence of actual environmental harm (vide par 103 of the Statement of Agreed Facts) and where it is also an agreed fact that if any environmental harm had been caused it "would have been temporary, localised to the vicinity of the discharge point and confined to aquatic life which was incapable of sensing or avoiding the plume" (par 103), there is no adverse finding that can relevantly be made in terms of the factors enumerated in the POE Act, s 241(1) (a), (b) and (c) on the basis (established in Norco Co-Operative at 146) that any adverse findings thereon could only operate by way of aggravation of an offence involving contravention of a condition of licence (for which offence the causing of environmental harm is not an essential element) and that if no such findings are made, the effect of s 241(1) does not affect the Court's conclusions based upon the POE Act, s 241(2). (I note that it is conceded by the Defendant that it had full control over the causes that gave rise to the commission of the offence within the meaning of s 241(1)(e).) 27. In respect of the POE Act, s 241(2), I regard the following factors as relevant: (i) the nature and extent of the obligation created by the condition which has been contravened; (ii) the object or purpose of that condition, namely to impose a requirement of competence in the manner to which activities are carried out on the licensed premises; and (iii) the seriously defaulting conduct of the Defendant, especially in the manner in which it received and stored the liquid waste materials, namely (a) without the receiving receptacle being bunded; (b) the choice of a receptacle being unsuitable for holding a caustic solution which caused the receptacle to physically fail; and (c) the resulting risk of environmental harm by virtue of the installed stormwater system providing the only safeguard against the risk of pollution escaping from the Camellia premises and the risk of that stormwater system failing to cope with the leaked material. 28. The fact that the Defendant was engaged in a flurry of activity in containing the spill and in clean-up immediately it was observed that the ISO tank was steaming and leaking its contents, attests to the significant risk involved in relying upon the stormwater system to cope with a spillage of liquid waste materials from a storage receptacle which would otherwise have been contained if the storage receptacle had been placed in a bunded area. Not only was the requirement for the storage tank to be located in a bunded area a condition of the Defendant's Licence held under the Waste Minimisation and Management Act, but it is a most obvious and elementary environmental safeguard for the storage of environmental waste materials to be in a bunded area. The Defendant's default in this respect is both serious and unexplained. 29. In all of the circumstances, I would regard the admitted offence as falling within the low range of the overall spectrum of gravity for an offence against the PEO Act, s 64(1), justifying the imposition of a penalty representing 20 per cent of the maximum penalty prescribed ie $50,000. 30. However, because of the mitigating factors operating in favour of the Defendant, I would reduce that penalty by 40 per cent, resulting in a penalty of $30,000 (representing 12 per cent of the maximum penalty). 31. The mitigating factors can be summarised as follows:

1. This is the first environmental offence committed by the Defendant which enjoys a high reputation in the important industry of waste treatment and minimisation in which it is actively engaged in many countries and throughout Australia.
2. The Defendant has expressed genuine contrition. Its high reputation in the waste treatment industry is likely to be diminished by a conviction of the offence charged.
3. The Defendant entered a plea of guilty at the earliest stage in the proceedings.
4. The Defendant has actively co-operated with the EPA's investigation into the incident, including compliance with clean-up requirements.
5. Following the incident, the Defendant has considerably upgraded its resources - both human and plant, to ensure that materials received at the Camellia Plant are properly quantified and tested before final acceptance to ensure employment of best environmental practice in conducting the liquid waste treatment facility. Additionally, the Defendant has sought development consent from Parramatta City Council for the substantial upgrade of the stormwater system installed in the Camellia premises employing latest and best technology.
6. It is unlikely that the Defendant will re-offend.

D. CONCLUSIONS AND ORDERS 32. For all the foregoing reasons, I make the following orders -

1. The Defendant is convicted of the offence as charged.
2. A penalty of $30,000 is imposed in respect of that conviction.
3. The Defendant to pay the Prosecutor's reasonable costs in the agreed sum of $10,500.
4. Exhibits (other than Exhibit 1) be returned.

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