Environment Protection Authority v Encore Tissue Pty Limited

IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES 50026 of 2003

18 November 2003 ENVIRONMENT PROTECTION AUTHORITY Prosecutor

v ENCORE TISSUE PTY LTD Defendant Judgment

1. The Defendant is charged that between 18 May 2002 and 20 May 2002 at Albury in the State of New South Wales it committed an offence against s 120(1) of the Protection of the Environment Operations Act 1997 (the PEO Act) in that it did pollute waters. The particulars of the offence are that: (a) the pollutant in issue is paper by-products, clays and chalk; (b) the waters in question are the stormwater drain leading to Mungabarina Creek; and (c) the manner of the breach is said to be that the Defendant recycles waste paper and by a process produces tissue paper at premises at 83-93 Fallon Street Albury. This activity generates waste water which is collected in a trade waste system. The pollutants overflowed from the system on to land at the premises and then flowed into the waters of the unnamed stormwater drain through an unnamed pit at the premises and then into waters of Mungabarina Creek.

2. The maximum penalty applicable to a Defendant for an offence of this nature is $250,000. The Defendant has pleaded guilty so that all the essential legal ingredients of the offence have been admitted.

3. The Court had the benefit of an agreed statement of facts handed up by the parties. According to the statement of agreed facts, at all relevant times the Defendant was the occupier of the factory premises at 83-93 Fallon Street, Albury pursuant to a lease from the owner of the premises, Norton Vale Pty Limited. The Defendant carries out the business of manufacturing recycled paper products on the premises. At the time of this incident the Defendant owned and operated the machinery on the premises. Operations at the premises commenced in October 1998. The machinery on the premises operates seven days per week, twenty-four hours per day except when shut down for maintenance, breakdown or planned shutdowns. The Defendant has approval from Albury City Council for the discharge of trade waste through the sewerage system.

4. The agreed statement of facts set out the nature of the operations carried out at the premises, the incident in question and also the cause of the incident. A summary of par 5 to 22 of the statement of agreed facts follows as this sets out the relevant circumstances surrounding the incident for the purposes of this judgment:

At about 3pm on 18 May 2002, Frank Robinson, an authorised officer of the Environment protection Authority (EPA) stationed at Albury was advised of a white liquid discolouration in Mungabareena Creek at its intersection with the Riverina Highway at Albury. Along with another authorised officer, David Cook, he attended the Mungabareena Creek (the creek) at the road bridge on the Riverina Highway at Albury. The creek at this location on the northern side of the Riverina Highway is a concrete lined structure with a low flow channel in the centre. The EPA officers estimated that within the low flow channel there was a flow of about 150 - 200 litres of liquid per minute.

They observed the flow to be discoloured with an opaque white hue. The flow was coming from the area of the Albury industrial area which is located north of the Riverina Highway and to the west of the Albury Airport precinct. They traced this substance by following the flow of the creek carrying its white discharge upstream for a distance where this creek crossed the Riverina Highway. At this point they observed a barrel drain, estimated to be about 600mm in diameter, entering the creek from the west. Upstream of where this drain entered the creek the flow of water was about one to two litres per minute and appeared to be clean. The barrel drain was an underground pipe leading west from the creek to a "Y" junction with one arm of the "Y" going approximately north and the other arm of the "Y" going approximately south. They saw the same white hue as before except that it was denser in colour. The flow which was estimated to be about 50 litres per minute was coming from the south arm of the "Y" junction. The EPA officers entered the premises of Encore. At the western side of the building they observed an open top clarifier ("cyclone") attached to the building by a series of pipes. They saw a box on the side of the cyclone on top of a vertically rising pipe. Liquid was overflowing from this box onto the side of the cyclone and directly onto the ground. The colour of this discharge was white. The ground around the cyclone was covered in a layer of white liquid which according to Mr Frank Robinson varied in depth from nothing to his mid-thigh in depth. Small bubbles were seen to be rising from the material and a strong odour arose from the material. On Monday 20 May 2002, Mr Robinson, in company with Mr Wragg of the EPA and Mr Gerard of the Albury City Council again entered the Encore premises. They went to the western side of the premises. The ground around the area where the cyclone was located was covered with white discoloured liquid. Mr Wragg saw this liquid cover a large area with a depth of between 20cm and 50cm. He ascertained the depth by watching Mr Robinson walking through this liquid and saw it coming up to his (Mr Robinson's) knees. He saw that this liquid had covered the surrounding grass towards the western side of the site. … They came across a circular concrete pit cover approximately 450mm in diameter. This concrete pit cover was approximately 45m from the cyclone. This concrete pit cover appeared to be securely covering the pit.

Water discoloured with white material was observed lying on the surface of this concrete pit cover. … This discoloured water was flowing from an area under the overflowing cyclone and was flowing downward around both the pit cover and the immediate southern side of the outer of the pit housing. There was no flow leading away from the pit cover. It was not clear how the discoloured water was entering through the pit cover. Upon removal of the pit cover by Mr Frank Robinson of the EPA a flow of discoloured liquid was seen entering the pit from the immediate southern side of the pit housing. Prior to the cover being opened by Mr Robinson it is not clear how the discoloured water entered the stormwater system. At the base of the pit a stormwater pipe could be seen traversing from north to south. The water entering the pit along the stormwater pipe from the north was clear.

After further enquiries made of senior employees at the Albury Mill, Encore have now further explained that on this particular occasion a thick crust had built up in the cyclone (or clarifier) located outside the main plant. The season had been very dry and the drought had been very long. The normal flushing of rain into the clarifier had not occurred and a thick crust had built up in the top of the clarifier. Sections of this crust broke away and were jammed in the overflow tundish and this became blocked. The overflowing liquid then had nowhere to go but over the side of the tundish and onto the ground. The information in par 18 was never told to the EPA during their interviews with Mr Coleman and Mr Holckner. The stormwater pipe within the stormwater pit led to the stormwater drain where the 600mm barrel drain met Mungabareena Creek and where the white coloured discharge had been observed on 18 May 2002. It is agreed that the means by which the wastewater entered the stormwater system was through the pit which appeared to be securely covered and which ultimately led into the stormwater system. 5. The statement of agreed facts contains the evidence of Mr Paul Rendell, senior environmental scientist with the Environment Protection Authority (the EPA), in relation to the possible impact on the environment of the discharge from the premises as follows: Mr Rendell further stated that: I would expect any suspended particulate material discharging from the barrel drain to be washed down the concrete lined section of Mungabareena Creek to the section of creek beyond the Riverina Highway Bridge.

On the basis of the documents provided to me, I am unable to say that there was any actual harm to the aquatic organisms in the creek.

However, in my opinion the liquid ponded on the Encore Tissue premises had potential to cause harm to aquatic organisms because there was a large amount of suspended particulate matter associated with it and it was not confined within a dammed or bunded area.

Assuming the opaque white hue of the barrel drain waters was the result of escape of liquid ponded in the Encore Tissue premises, the various observations and laboratory results indicate that a large proportion of the suspended particulate matter in the liquid on the Encore Tissue premises had settled out or been filtered out prior to the liquid entering the stormwater system on 18 May 2002. There was however sufficient suspended particulate matter remaining in the liquid to cause discolouration of Mungabareena Creek.

This suggests potential for harm to organisms downstream of the concrete lined section of the creek but with the information available it is difficult to provide more detailed comments.

On the basis of the documents provided to me I am unable to say that there was any actual harm to aquatic organisms in Mungabareena Creek.

In my opinion there was potential for harm because the liquid ponded on the premises contained large amounts of particulate matter and was not adequately confined.

6. There was no evidence to suggest that prior to 17 May 2002, any previous failure in the system had resulted in a pollution event or that the waste products had previously flowed into the stormwater system. Prior to 17 May 2002 the EPA was not aware of any complaints of any such occurrence.

7. The Court must take into account, so far as they are relevant, the following factors specified in s 241 of the PEO Act in imposing a penalty: (a) the extent of the harm caused or likely to be caused to the environment by the commission of the offence; (b) the practical measures that may be taken to prevent, control, abate or mitigate that harm, (c) the extent to which the person who committed the offence could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence, (d) the extent to which the person who committed the offence had control over the causes that gave rise to the offence, (e) whether, in committing the offence, the person was complying with orders from an employer or supervising employee.

8. Section 241(e) does not apply and I do not need to have regard to it. My consideration of the other factors is set out below. Section 241(a) - the extent of the harm caused or likely to be caused to the environment by the commission of the offence 9. There is agreement by the parties in relation to the extent of environmental harm caused. It was agreed by the parties that harm, as defined under the PEO Act s 4, exists but that there is no evidence of any injury to any living organism as a result of the discharge from the premises.

10. The Prosecutor submitted there was potential for harm given the nature of the discharge from the Defendant's premises. I accept this submission. I also note that the material discharged was not of a toxic or hazardous nature. Section 241(b) - the practical measures that may be taken to prevent, control, abate or mitigate harm 11. There clearly were practical measures which could have been taken to prevent the incident and the harm occurring. At the time of the incident I note that immediate measures such as sandbagging around the cement pit were undertaken by the Defendant's employees under direction from the EPA officers. Later measures have been taken, such as the installation of a window to enable oversight of the cyclone to ensure that such an incident is unlikely to occur again. Section 241(c) - the extent to which the person who committed the offence would reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence 12. The Prosecutor submitted that the incident was, in the circumstances, foreseeable and also, consequentially, that the harm caused by the commission of the offence was foreseeable.

13. The Defendant submitted that the potential harm was not reasonably foreseeable and that as: (a) there was no evidence raised to show that the previous blockages of the cyclone had caused any pollution, there was no reason for the Defendant to consider that pollution would enter the waterway through the sealed pit on its premises, which appeared secure; and (b) the evidence also showed that, due to unusual weather conditions, there was crusting occurring in the cyclone which was unusual; it was not established beyond reasonable doubt that the potential harm was reasonably foreseeable.

14. I reject the Defendant's submissions in this regard. I consider that the incident and the harm caused was foreseeable in that a large volume of liquid was allowed to disperse over the Defendant's property and there appeared to be no system in place to detect if any overflow to stormwater was occurring. In my view, the fact that there had been no evidence of such pollution arising from the same circumstances on other occasions does not mean that it is not foreseeable. The fact that there were unusual weather conditions should also have alerted the Defendant to the need for greater caution. I consider that the Defendant is under an obligation to understand the relationship between its operations and the stormwater system which runs under its property. Section 241(d) - The extent to which the person who committed the offence had control over the causes that gave rise to the offence 15. There is no dispute that the Defendant had control over the causes that gave rise to the offence.

Other Matters 16. Considering other sentencing matters which I should have regard to, the Prosecutor urged on me, and I accept, that there is a need for the sentence to be proportional to the gravity of the crime. I did receive, not surprisingly, conflicting submissions as to the extent of the gravity of this particular offence.

The Court must also have regard to the maximum penalty applicable as an expression of the seriousness Parliament attributes to the offence. Camilleri Stockfeeds Pty Limited v Environment Protection Authority (1993) 82 LGERA 21 is authority applied in this Court concerning the application of this principle.

Another matter which the Prosecutor argued was relevant to the issue of gravity was that there was an aggravating factor in these circumstances in that the Defendant itself did not detect the pollution incident but rather it was left to EPA officers to identify the problem.

It was also urged on me by the Prosecutor that, under s 3A(b) of the Crimes (Sentencing Procedure) Act 1999, there should be both a penalty imposed in relation to general deterrence and also specific deterrence. I accept as a matter of general sentencing principle that I am required to take both these matters into account.

The Prosecutor argued in relation to specific deterrence that the Defendant continued to operate elsewhere. Although it did not presently operate the mill where the incident occurred, it was still necessary that there be some reflection in the penalty of the need for specific deterrence.

This is the first offence by this Defendant. I note that a penalty infringement notice was issued to this Defendant on 17 May 2002 but I do not take this into account as a prior penalty. It seems to me on the basis of Veen v Regina (No 2)(1988) 164 CLR 465 that the Prosecutor has not demonstrated this was a characteristic aberration or that the offender manifested any continuing attitude of disobedience to the law. Accordingly, I do not consider it is necessary for the penalty for this offence to reflect an element of specific deterrence for the Defendant.

Another principle which I must have regard to is that of even-handedness. As I have already said, there were contrary submissions in relation to the level of gravity of the crime. While both the Prosecutor and the Defendant agreed it was in the low range of penalty, the Prosecutor submitted that it should be in the medium to high end of the low range of penalty, whereas, the Defendant submitted it should be at the lowest end of the low range of penalties which this Court has imposed.

I was referred to a number of cases in the Defendant's written submissions which have raised similar factual circumstances to those before me. The most relevant case is my decision in Environment Protection Authority v Metziya [2003] NSWLEC 196 (26 June 2003).

Mitigating factors 24. There are a number of mitigating factors which I should take into account in the reduction of any penalty that I impose. Firstly the Defendant pleaded guilty at the earliest opportunity. As the Prosecutor correctly submitted, a plea of guilty does entitle the Defendant to a discount under the Crimes (Sentencing Procedure) Act 1999 in the range of 10 to 25 per cent relying on the guideline decision in R v Thompson ; R v Houlton (2000) 49 NSWLR 383. I consider the Defendant in this case is entitled to a substantial discount given the early guilty plea and the utilitarian value which an early guilty plea clearly has.

25. I have read an affidavit, dated 18 November 2003, prepared by Mr Holtner, the Defendant company's director, in which he expresses regret at the incident on behalf of the Defendant. I consider that the Defendant has expressed its contrition and remorse through its director in that affidavit. I also note that Mr Holtner has attended Court for this hearing today.

26. I also note that the Defendant undertakes a business which has environmental benefits and that it has expended approximately $20,000 in clean up costs. The Prosecutor submitted that there has been co-operation with the Prosecutor in relation to the incident at the time that it was brought to the Defendant's attention and subsequently and that the Defendant did respond quickly to the incident.

27. Further in relation to mitigation there has been agreement that the Defendant pay the Prosecutor's costs of $10,000.

28. In line with my decision in Environment Protection Authority v Metziya , the Defendant's penalty should be $20,000.

Orders 29. The Court makes the following orders: 1. The Defendant is convicted of the offence with which it is charged. 2. The Defendant is fined the sum of $20,000 to be paid to the Registrar of the Court within twenty-eight days of today's date. 3. The Defendant must pay the Prosecutor's costs of the proceedings against it in the amount of $10,000. 4. Exhibit A to remain on the Court file.

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