Environment Protection Authority v Eco Cycle Materials Pty Limited; Environment Protection Authority v Scanlan

Land and Environment Court (NSW)|2003-02-04|Before: Talbot J, Mr P

Introduction 1 HIS HONOUR: In matter No. 50091 of 2002 the company, Eco Cycle Materials Pty Limited ("Eco Cycle"), is charged that between 2 November 1999 and 21 March 2000 at Wetherill Park it committed an offence against s 48(2) of the Protection of the Environment Operations Act 1997 ("the PEO Act") in that it was the occupier of premises in which a scheduled activity was carried on and, at the time that activity was carried on, it was not the holder of a licence that authorised that activity to be carried on.

2 The scheduled activity is generally described in the particulars as crushing and grinding or separating works. 3 In matter No. 50092 of 2002 the defendant, Maxwell John Scanlan, is charged that between 2 November 1999 and 17 December 1999 at Wetherill Park he committed an offence against s 48(2) of the PEO Act in that, being a director of Eco Cycle, being a corporation that contravened the provision he contravened the same provision as a result of the operation of s 169(1) of the PEO Act. 4 The scheduled activity is defined in Sch 1 to the PEO Act in sub-paragraphs 1 and 2 under the heading "Crushing, grinding or separating works". There is no dispute that the activities, which the company carried on while Mr Scanlan remained a director, fall within that description. 5 The Environment Protection Authority ("the EPA") was first notified by the company's consultant on 30 October 1998 that the company proposed to develop the site as a road materials recycling transfer station, including crushing and screening of materials in the order of 500 to 1,000 tonnes per day and the environmental impact statement was presented on 6 May 1999. On 6 September 1999 the EPA issued general terms of approval to Fairfield City Council ("the council") and the company was informed of this fact. 6 Thereafter steps were taken to establish the necessary infrastructure on the site and machinery was delivered. By 2 November 1999 operations had commenced. The council granted development consent on 5 January 2000. 7 There was no formal application for a licence to the EPA until 23 February 2000. The Court is informed, and it is agreed, that a licence was subsequently granted to the company in May 2000. 8 In the meantime, the recycling operation continued at least during the periods specified in the summons. Mr Scanlan ceased to be a director of the company on 17 December 1999. That fact explains the discrepancies in the dates particularised in the respective summons. 9 Both the company and Mr Scanlan were aware that they were operating without a licence. On 28 October 1999 the council issued a notice of proposal to serve an order to cease activity on the site. 10 On 29 November 1999 a prevention notice, pursuant to s 96 of the PEO Act, was served on the company. Both of these notices referred to the carrying on of activities contrary to statutory requirements. 11 Although he ceased to be a director in December 1999 as I said, at all times up to February 2000 Mr Scanlan performed the role of general manager. In a record of interview conducted on 9 March 2000 he said as follows:- …I would like to say that we are eternally sorry that we started off on the wrong foot, because it was definitely not our corporate policy or intention. We invested a lot of money, and we got into the situation because of the elongated time span of getting the EIS prepared and getting everything done, that the money ran out and we got ourselves into an economic situation whereby, I guess, I'd have to take the rap for it. I made a decision to let a little bit of material into the site. Unfortunately, due to the comments of Mr Glen Apps at Fairfield Council, and the pending DA consent coming at any moment, that trickle of material started to develop into a stream, and I would be the first to admit that probably I did not control the situation as well as I should have…I can only apologise. I feel contrite…we are very conscious we have been in breach. We have done the wrong thing. We have been very poor performers. We are now in the processes of changing that all around. We apologise to all the statutory authorities.

12 Mr Scanlan further said in a letter written on behalf of the company addressed to the EPA as follows:- In mid October Eco Cycle made one very poor decision, that was to start limited trading, stockpiling and internal infrastructure works. While we can cite a range of reasons that prompted our decision like:- (a) the state of our balance sheet (b) delay in processing a difficult DA (c) the DA's imminent approval (d) Eco Cycle had committed to contracts in anticipation of approval (e) the need to reach critical mass stockpiles prior to processing etc etc. However these in hindsight were not justifiable. Eco Cycle Materials Pty Limited unreservedly apologises to the EPA, Fairfield City Council and to the general public for our actions and gives a guarantee that all conditions placed on us in both our EIS and DA will be carried out prior to any commencement of trading.

13 The sentiments expressed by Mr Scanlan in the record of interview and in the formal correspondence are reiterated in a joint submission made to the Court by Mr O'Connell, on behalf of the company, and by Mr Scanlan. 14 Mr Barley, who appears on behalf of the EPA, concedes there was no actual environmental harm as a consequence of carrying on the scheduled activity without a licence. 15 Since 1993, Environmental and Earth Sciences Pty Limited has conducted ongoing environmental monitoring of the site. Environ Australia Pty Limited prepared a Site Summary Audit report on behalf of Eco Cycle. Johnstone Environmental Technologies undertook an on-site review of the operations of Eco Cycle in March 2002. 16 The Johnstone report concludes at p 5 that observations and chemical analyses of soil, stock piles and surface water support the view that the current operations, that is a commercial recycling business, are not contaminating the site beyond unacceptable levels for commercial/industrial usage. 17 The EPA makes a number of submissions, all of which are pertinent and relevant to the Court's consideration in relation to sentencing. Firstly, the objective gravity of the offences that have been committed are reflected in the maximum penalties prescribed by Parliament. In the case of the company a fine for the offence which it has committed is $250,000, whereas for Mr Scanlan as an individual the maximum fine is $120,000. 18 The amount of those maximum penalties is a reflection of the regard that Parliament has to the seriousness of the offences which are before the Court. Clearly, there is a need for the public to be aware that the courts regard these types of offences seriously and that a message needs to be sent in terms of general deterrence that they will not be tolerated. 19 I accept the submission made by Mr Barley in regard to the application of s 241 of the PEO Act. In so far as s 241(1)(a) is concerned, as I mentioned a moment ago, Mr Barley recognises there was no actual harm. However as he points out, I think quite fairly, that there is a risk, even an invitation, for environmental harm to be caused by commencing a schedule activity without all of the necessary statutory controls that flow through a licence being in place. 20 The practical measures which may have been taken to prevent, control, abate or mitigate the potential for harm that the Court is required to take into account in accordance with s 241(1)(b) is clearly, firstly, not to commence without obtaining a licence but, more particularly, to ensure that the types of controls that are imposed by a licence are applied as they should be before the activity commenced, thereby constraining the prospect of potential harm. 21 It is clear from the Statement of Agreed Facts, and of course from the plea of guilty that both defendants have entered, that they were aware that they needed a licence and furthermore that the purpose of the licence was to ensure that all environmental and protection measures were taken into account before the operations commenced. 22 The company and Mr Scanlan clearly had control over the activities of the company. The fact that the operation commenced without the requisite licence was obviously a matter which they could have prevented by their own actions. 23 The sole remaining matter that arises under s 241(1)(e) has no relevance to the present case. 24 It is a serious matter for any person, as I have said, to carry out scheduled activities without first obtaining the requisite statutory licence. 25 The consequence of allowing development that is recognised as having the potential to cause serious environmental harm to proceed unregulated by relevant authorities can be dire. Fortunately, in this case, apart from some deposit of materials from truck tyres onto public roads in the absence of a truck wheel wash, there has been, at least so far as the evidence goes, no direct environmental harm. 26 The plea of economic necessity on the part of the company is not a circumstance which gives rise to mitigation at least in the circumstances of this case where the formal application for a licence was not even made until some months after the activity commenced. However, the company and Mr Scanlan are entitled to a discount in the actual penalty as a consequence of their unchallenged co-operation with the prosecutor in the conduct of its enquiries, the early pleas of guilty which were made on the first return of the summons in each case and the assistance provided to the prosecutor, and indeed to the Court, by the preparation of a Statement of Agreed Facts. 27 The seriousness of the offence and the culpability of the company demand a penalty of at least $40,000. Having regard to the prior good record of the company and the matters in mitigation, including the absence of actual environmental harm this can be reduced to $26,000. Having regard to the extent of overlapping referred to by Stein J in Environment Protection Authority v Capdate Pty Ltd and Phillips (1992) 78 LGERA 349 at 354, an appropriate penalty for Mr Scanlan is, in the whole of the circumstances, $5,000. 28 The defendants have agreed to pay the costs of the prosecutor and that is a further matter which counts in their favour in terms of mitigation. The costs that they have jointly agreed to pay are in the sum of $9,000. 29 The formal orders of the Court are as follows:- (1) In matter No. 50091 of 2002 the Court finds the offence proved against the company.

(2) In matter No. 50091 of 2002 the company is convicted of the offence charged in the summons and fined the sum of $26,000. (3) In matter No. 50092 of 2002 the Court finds the offence proved against Maxwell John Scanlan.

(4) In matter No. 50092 of 2002 the defendant, Maxwell John Scanlan, is convicted and fined the sum of $5,000.

(5) By consent the Court orders the defendants in matter No. 50091 of 2002 and matter No. 50092 of 2002 to pay the costs of the prosecutor in respect of both matters in the total sum of $9,000.

(6) Each of the exhibits, except exhibit A, may be returned.

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CITATION : Environment Protection Authority v Eco Cycle Materials Pty Limited; Environment Protection Authority v Scanlan [2003] NSWLEC 63 PROSECUTOR Environment Protection Authority PARTIES : DEFENDANTS Eco Cycle Materials Pty Limited Maxwell John Scanlan FILE NUMBER(S) : 50091; 50092 of 2002 CORAM: Talbot J KEY ISSUES: Prosecution :- mitigation - overlapping for offence by director LEGISLATION CITED: Protection of the Environment Operations Act 1997 s 48(2), s 96, s 169(1), s 241(1), s 241(1)(a), s 241(1)(b), s 241(1)(e) CASES CITED: Environment Protection Authority v Capdate Pty Ltd and Phillips (1992) 78 LGERA 349 DATES OF HEARING: 04/02/2003 EX TEMPORE JUDGMENT DATE : 02/04/2003

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