Environment Protection Authority v Grafil Pty Ltd; Environment Protection Authority v Mackenzie

Catchwords

[2014] NSWLEC 152 Bulga Underground Operations Pty Ltd v Nash (2016) 93 NSWLR 338[2010] NSWCCA 194 Director-General of the Department of Environment and Climate Change v Rae (2009) 168 LGERA 121Environment Protection Authority v Mackenzie [2018] NSWLEC 99 Environment Protection Authority v Grafil Pty LtdEnvironment Protection Authority v Mackenzie (2019) 101 NSWLR 245[2019] NSWCCA 174 Environment Protection Authority v Grafil Pty LtdEnvironment Protection Authority v Mackenzie (No 3) [2020] NSWLEC 90 Environment Protection Authority v Grafil Pty Ltd[2006] NSWLEC 419 Garrett v Freeman (No 5) (2009) 164 LGERA 287[2009] NSWLEC 1 Garrett v Williams (2006) 160 LGERA 115[2006] NSWLEC 785 Hili v The QueenJones v The Queen (2010) 242 CLR 520[2010] HCA 45 Hoare v The Queen (1989) 167 CLR 348[1989] HCA 33 Hunter Quarriers Pty Ltd v Morrison (2017) 96 NSWLR 658[2017] NSWCCA 326 Kenny v R [2010] NSWCCA 6 Latoudis v Casey (1990) 170 CLR 534[1990] HCA 59 Lim Chin Aik v The Queen [1963] AC 160 Magaming v The Queen (2013) 252 CLR 381[2013] HCA 40 Markarian v The Queen (2005) 228 CLR 357

Judgment (111 paragraphs)

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119 Environment Protection Authority v Grafil Pty Ltd; Environment Protection Authority v Mackenzie [2018] NSWLEC 99 Environment Protection Authority v Grafil Pty Ltd; Environment Protection Authority v Mackenzie (2019) 101 NSWLR 245; [2019] NSWCCA 174 Environment Protection Authority v Grafil Pty Ltd; Environment Protection Authority v Mackenzie (No 3) [2020] NSWLEC 90 Environment Protection Authority v Grafil Pty Ltd; Environment Protection Authority v Mackenzie (No 2) [2019] NSWCCA 202 Environment Protection Authority v Laison [2015] NSWLEC 89 Environment Protection Authority v Mouawad (No 2) [2020] NSWLEC 166 Environment Protection Authority v N (1992) 26 NSWLR 352 Environment Protection Authority v Rixa Quarries (No.2) Pty Ltd (No 2) [2017] NSWLEC 93 Environment Protection Authority v Robinson [2004] NSWLEC 629 Environment Protection Authority v Robinson [2011] NSWLEC 14 Environment Protection Authority v Waste Recycling and Processing Corporation (2006) 148 LGERA 299; [2006] NSWLEC 419 Garrett v Freeman (No 5) (2009) 164 LGERA 287; [2009] NSWLEC 1 Garrett v Williams (2006) 160 LGERA 115; [2006] NSWLEC 785 Hili v The Queen; Jones v The Queen (2010) 242 CLR 520; [2010] HCA 45 Hoare v The Queen (1989) 167 CLR 348; [1989] HCA 33 Hunter Quarriers Pty Ltd v Morrison (2017) 96 NSWLR 658; [2017] NSWCCA 326 Kenny v R [2010] NSWCCA 6 Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59 Lim Chin Aik v The Queen [1963] AC 160 Magaming v The Queen (2013) 252 CLR 381; [2013] HCA 40 Markarian v The Queen (2005) 228 CLR 357; [2005] HCA 25 Maxwell v The Queen (1996) 184 CLR 501; [1996] HCA 46 Milne v Attorney-General for the State of Tasmania (1956) 95 CLR 460; [1956] HCA 48 Morrison v Defence Maritime Services Pty Ltd (2007) 156 LGERA 365; [2007] NSWLEC 552 Moseley v Queanbeyan-Palerang Regional Council (No 2) [2017] NSWLEC 52 Muldrock v The Queen (2011) 244 CLR 120; [2011] HCA 39 Newcastle City Council v Pace Farm Egg Products Pty Limited (No 3) [2005] NSWLEC 423 R v Anderson [1981] VR 155 R v Donald [2013] NSWCCA 238 R v Olbrich (1999) 199 CLR 270; [1999] HCA 54 R v Paris [2001] NSWCCA 83 R v Peel [1971] 1 NSWLR 247 R v Taouk (1992) 65 A Crim R 387 R v Visconti [1982] 2 NSWLR 104 R v Wran [2016] NSWSC 1015 R v Wright (2013) 229 A Crim R 245; [2013] NSWCCA 82 Silvano v The Queen (2008) 184 A Crim R 593; [2008] NSWCCA 118 Thorneloe v Filipowksi (2001) 52 NSWLR 60; [2001] NSWCCA 213 Veen v The Queen (1979) 143 CLR 458; [1979] HCA 7 Veen v The Queen (No 2) (1988) 164 CLR 465; [1988] HCA 14 Walden v Hensler (1987) 163 CLR 561; [1987] HCA 54 Texts Cited: ANZECC September 1999, Guidelines for the Assessment of On-Site Containment of Contaminated Soil and the National Environment Protection (Assessment of Site Contamination) Measure 1999 ANZECC, Australian and New Zealand Guidelines for Fresh and Marine Quality Water (August 2018) ANZG, Water Quality Guidelines - Accounting for Local Conditions (accessed 27 July 2021) Australian and New Zealand Guidelines for Fresh and Marine Water Quality - Default Guidelines for Toxicants, default guideline values for arsenic, cadmium, chromium (CrIII), chromium (CrVI), copper, lead, mercury, nickel and zinc (accessed 27 July 2021) NSW Department of Environment and Conservation, Guidelines for the Assessment and Management of Groundwater Contamination (March 2007) NSW EPA Contaminated Land Management: Guidelines for the NSW Site Auditor Scheme (3rd ed, 2017) NSW Judicial Commission Sentencing Bench Book (as at 28 October 2021) Solid Waste Landfill Guidelines (2nd ed, 2016) Western Australian Department of Health, Guidelines for the Remediation and Management of Asbestos-Contaminated Sites in Western Australia (May 2009) Category: Sentence Parties: Proceedings 2016/157886 Environment Protection Authority (Prosecutor) Grafil Pty Ltd (Defendant)

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Proceedings 2016/157995 Environment Protection Authority (Prosecutor) Robert Mackenzie (Defendant) Representation: Counsel: P English (Prosecutor) T Howard SC and C Ireland (Defendants)

[3]

Solicitors: Environment Protection Authority (Prosecutor) Johnson Winter & Slattery (Defendants) File Number(s): 2016/157886, 2016/157995

[4]

TABLE OF CONTENTS Crimes Sentencing Procedure Act 1999 Objective circumstances Protection of the Environment Operations Act 1997 Protection of the Environment Operations (Waste) Regulation 2005 Waste Avoidance and Resource Recovery Act 2001 Resource recovery exemptions Excavated Natural Material exemption 2012 extract Continuous Process Recovered Fines exemption 2010 Summary of Grafil No 1 Summary of Grafil CCA Material in the stockpiles was "waste" as defined, questions 2, 5 Activity was the scheduled activity of waste disposal (application to land), questions 3, 4 Activity was the scheduled activity of waste storage, questions 6, 7 Activity was not exempt, questions 1, 8, 11, 12 Legal consequence of the presence of asbestos in the material, questions 9, 10 Activity without lawful authority of a development consent, question 15 A continuing offence proved, question 13 Offences not time barred, question 14 Summary of Grafil No 3 Particular facts relied on by Defendants for sentencing hearing Documentary evidence relied on by the Defendants from Grafil No 1 Additional evidence on sentence EPA Affidavit of Mr Matthews Defendants Affidavit of Mr Mackenzie Mr Mackenzie oral evidence Affidavit of Mr Hannam Character references for Mr Mackenzie Affidavit of Dr Allnutt Hydrological evidence Evidence of Dr Martens Evidence of Mr Lau Oral evidence of Dr Martens and Mr Lau Hydrological evidence on surface and groundwater contamination Presence of asbestos Cap and contain remediation strategy Statutory scheme for recovered fines problematic in application to consumers (i) Asbestos and the operation of the recovered fines exemptions Source of asbestos Defendants' submissions EPA's submissions Prosecutor's submissions on practical matters relating to asbestos and recovered fines Consideration of asbestos and recovered fines (ii) Compliance with certain conditions of the exemptions by consumer Defendants' submissions EPA's submissions Consideration of compliance with conditions of the exemptions by consumer (iii) Record keeping requirements of the exemptions Defendants' submissions EPA's submissions Consideration of record keeping requirements of exemptions (iv) Deemed disposal of waste Defendants' submissions Consideration of deemed disposal of waste Consideration of the statutory scheme for recovered fines Nature of offence State of mind Reasons for offence Consideration Maximum penalty Factors in s 241(1) Protection of the Environment Operations Act 1997 Extent of environmental harm caused or likely to be caused, s 241(1)(a) Practical measures that may be taken to prevent or mitigate harm, s 241(1)(b) Foreseeability of harm by the defendant, s 241(1)(c) Control over causes of the offence, s 241(1)(d) Complying with orders, s 241(1)(e) Presence of asbestos in the environment, s 241(1)(f) Finding on objective seriousness Application of s 10(1)(a) Crimes Sentencing Procedure Act 1999 Mr Mackenzie's submissions on s 10(1)(a) order Character and antecedents of the defendant, s 10(3)(a) Trivial nature of the offence, s 10(3)(b) Extenuating circumstances, s 10(3)(c) Any other matters appropriate to consider, s 10(3)(d) EPA's submissions on s 10(1)(a) order Consideration of s 10(1)(a) order Extra-curial punishment Subjective considerations for Grafil Injury, loss or damage caused by offence not substantial, s 21A(3)(a) Prior convictions, s 21A(3)(e) Good character, s 21A(3)(f) Contrition and remorse, s 21A(3)(i) Assistance to authorities, ss 21A(3)(m), 23 Sentencing principles Deterrence Even-handedness/parity Further orders under Pt 8.3 of the POEO Act Cap and contain order, s 245 Publication order, s 250(1)(a) Legal costs Defendants' submissions on legal costs Apportionment of costs of these proceedings EPA's submissions on legal costs Legal principles Application of the legal principles Trial and remitter Sentence Finding on legal costs Investigation costs Defendants' legal costs Conclusion on penalty for Grafil Orders Proceedings 2016/157886 - Environment Protection Authority v Grafil Pty Ltd Proceedings 2016/157995 - Environment Protection Authority v Mackenzie

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Judgment

The Defendant Grafil Pty Ltd (Grafil) has been charged with an offence under s 144(1) of the Protection of the Environment Operations Act 1997 (NSW) (POEO Act) of using land it occupies at Salt Ash in the Port Stephens local government area (LGA) being Lot 8 DP 833768 (Lot 8) as a waste facility without an environment protection licence (EPL). One of its directors Mr Robert Mackenzie was also charged under the special executive liability provision in s 169(1) of the POEO Act. The charge period was 29 October 2012 to 15 May 2013. After a four-week trial the Defendants were found not guilty in Environment Protection Authority v Grafil Pty Ltd; Environment Protection Authority v Mackenzie [2018] NSWLEC 99 ("Grafil No 1"). A stated case by the Environment Protection Authority (EPA) to the Court of Criminal Appeal (CCA) resulted in legal findings in Environment Protection Authority v Grafil Pty Ltd; Environment Protection Authority v Mackenzie (2019) 101 NSWLR 245; [2019] NSWCCA 174 ("Grafil CCA") with the consequence that the Defendants were found guilty of the offences on remitter from the CCA: Environment Protection Authority v Grafil Pty Ltd; Environment Protection Authority v Mackenzie (No 3) [2020] NSWLEC 90 ("Grafil No 3"). Mr Mackenzie was found guilty by virtue of the operation of s 169(1) because Grafil was guilty. The matters are now before the Court again for sentencing.
The offences are strict liability and therefore none of the elements of the offences have a mens rea element. When sentencing, any matter adverse to a defendant must be proved by a prosecutor beyond reasonable doubt, R v Olbrich (1999) 199 CLR 270; [1999] HCA 54 at 281 ("R v Olbrich"). Any contested matter relied on by a defendant must be established on the balance of probabilities, R v Olbrich at 281.

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Crimes Sentencing Procedure Act 1999

Relevant sections of the Crimes (Sentencing Procedure) Act 1999 (NSW) (CSP Act) state: Part 1 Preliminary … 3A Purposes of sentencing The purposes for which a court may impose a sentence on an offender are as follows - (a) to ensure that the offender is adequately punished for the offence, (b) to prevent crime by deterring the offender and other persons from committing similar offences, (c) to protect the community from the offender, (d) to promote the rehabilitation of the offender, (e) to make the offender accountable for his or her actions, (f) to denounce the conduct of the offender, (g) to recognise the harm done to the victim of the crime and the community. … Part 2 Penalties that may be imposed … Division 3 Non-custodial alternatives 10 Dismissal of charges and conditional discharge of offender (1) Without proceeding to conviction, a court that finds a person guilty of an offence may make any one of the following orders - (a) an order directing that the relevant charge be dismissed, (b) an order discharging the person under a conditional release order (in which case the court proceeds to make a conditional release order under section 9), (c) an order discharging the person on condition that the person enter into an agreement to participate in an intervention program and to comply with any intervention plan arising out of the program. … (3) In deciding whether to make an order referred to in subsection (1), the court is to have regard to the following factors - (a) the person's character, antecedents, age, health and mental condition, (b) the trivial nature of the offence, (c) the extenuating circumstances in which the offence was committed, (d) any other matter that the court thinks proper to consider.
The sentence must reflect all the relevant objective circumstances of the offence and subjective circumstances of a defendant: Veen v The Queen (1979) 143 CLR 458; [1979] HCA 7 at 490 (Jacobs J) and Veen v The Queen (No 2) (1988) 164 CLR 465; [1988] HCA 14 ("Veen No 2") at 472-473 (Mason CJ, Brennan, Dawson and Toohey JJ), 490-491 (Deane J). The sentence should not exceed what is justified as appropriate or proportionate to the gravity of the crime considered in light of its objective circumstances: Veen No 2 at 472, 485-486, 490-491, 496 and Hoare v The Queen (1989) 167 CLR 348; [1989] HCA 33 ("Hoare") at 354 (Mason CJ, Deane, Dawson, Toohey and McHugh JJ).

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Objective circumstances

A number of matters must be considered in determining the objective circumstances of these offences. Detailed consideration of the legal regime for waste management under the POEO Act and the (former) Protection of the Environment Operations (Waste) Regulation 2005 (NSW) (Waste Regulation) for building and demolition material, considered during the four-week trial on liability in Grafil No 1 and in Grafil CCA, is necessary to address the significant issues that arise from the operation of that scheme in the circumstances of the Defendants relevant to sentencing. It is therefore necessary to set out again that statutory regime in large part and consider parts of Grafil No 1 at length, the findings in Grafil CCA and the findings in Grafil No 3.

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Protection of the Environment Operations Act 1997

All references to legislation are to the version in force during the charge period as follows: Chapter 1 Preliminary … 3 Objects of Act The objects of this Act are as follows: (a) to protect, restore and enhance the quality of the environment in New South Wales, having regard to the need to maintain ecologically sustainable development, … (d) to reduce risks to human health and prevent the degradation of the environment by the use of mechanisms that promote the following - (i) pollution prevention and cleaner production, (ii) the reduction to harmless levels of the discharge of substances likely to cause harm to the environment, (iia) the elimination of harmful wastes, (iii) the reduction in the use of materials and the re-use, recovery or recycling of materials, (iv) the making of progressive environmental improvements, including the reduction of pollution at source, (v) the monitoring and reporting of environmental quality on a regular basis, (e) to rationalise, simplify and strengthen the regulatory framework for environment protection, … (g) to assist in the achievement of the objectives of the Waste Avoidance and Resource Recovery Act 2001. … 5 Scheduled activities (1) Listing of activities The activities listed in Schedule 1 are scheduled activities for the purposes of this Act. … Chapter 3 Environment protection licences Part 3.1 Introduction … 48 Licensing requirement - scheduled activities (premises-based) (1) Application of section This section applies to scheduled activities where Schedule 1 indicates that a licence is required for premises at which the activity is carried on. (2) Offence A person who is the occupier of any premises at which any such scheduled activity is carried on is guilty of an offence, unless the person is, at the time that activity is carried on, the holder of a licence that authorises that activity to be carried on at those premises. Maximum penalty: (a) in the case of a corporation - $1,000,000 and, in the case of a continuing offence, a further penalty of $120,000 for each day the offence continues, or (b) in the case of an individual - $250,000 and, in the case of a continuing offence, a further penalty of $60,000 for each day the offence continues. … Chapter 5 Environment protection offence … Part 5.6 Land pollution and waste … Division 3 Waste offences 143 Unlawful transporting or depositing of waste (1) Offence If a person transports waste to a place that cannot lawfully be used as a waste facility for that waste, or causes or permits waste to be so transported: (a) the person, and (b) if the person is not the owner of the waste, the owner, are each guilty of an offence. … (2) Proof of lawfulness In any proceedings for an offence under this section the defendant bears the onus of proving that the place to which the waste was transported can lawfully be used as a waste facility for that waste. … 144 Use of land as waste facility without lawful authority (1) A person who is the owner or occupier of any land and who uses the land, or causes or permits the land to be used, as a waste facility without lawful authority is guilty of an offence. Maximum penalty: (a) in the case of a corporation - $1,000,000 and, in the case of a continuing offence, a further penalty of $120,000 for each day the offence continues, or (b) in the case of an individual - $250,000 and, in the case of a continuing offence, a further penalty of $60,000 for each day the offence continues. (2) In any proceedings for an offence under this section the defendant bears the onus of proving that there is lawful authority to use the land concerned as a waste facility. … Part 5.9 General offences … 169 Liability of directors etc for offences by corporation - offences attracting special executive liability (1) If a corporation contravenes, whether by act or omission, a provision of this Act attracting special executive liability, each person who is a director of the corporation or who is concerned in the management of the corporation is taken to have contravened the same provision, unless the person satisfies the court that: (a) (Repealed) (b) the person was not in a position to influence the conduct of the corporation in relation to its contravention of the provision, or (c) the person, if in such a position, used all due diligence to prevent the contravention by the corporation. (1A) For the purposes of this section, each of the following provisions attract special executive liability: … (p) section 144 (1), …

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Protection of the Environment Operations (Waste) Regulation 2005

Clause 3B of the Waste Regulation prescribes the following for the purpose of par (d) of the definition of "waste" in the Dictionary of the POEO Act set out above: Part 1 Preliminary … 3B Definition of "waste" (1) For the purposes of paragraph (d) of the definition of waste in the Dictionary to the Act, the following circumstances are prescribed: (a) in relation to substances that are applied to land, the application to land by: (i) spraying, spreading or depositing on the land, or (ii) ploughing, injecting or mixing into the land, or (iii) filling, raising, reclaiming or contouring the land, (b) in relation to substances that are used as fuel, all circumstances. (2) Subclause (1) (a) does not apply where the substances concerned are either bulk agricultural crop materials or manure. …
Other relevant clauses of the Waste Regulation provide: Part 4 Management of special wastes 42 Special requirements relating to asbestos waste (1) This clause applies to any activity that involves the transportation, disposal, re-use or recycling of any type of asbestos waste, regardless of whether the activity is required to be licensed. (2) A person who carries on an activity to which this clause applies must comply with the requirements specified in this clause in relation to the activity concerned. Maximum penalty: 400 penalty units in the case of a corporation, 200 penalty units in the case of an individual. … (4) The requirements relating to the off site disposal of asbestos waste are as follows: (a) asbestos waste in any form must be disposed of only at a landfill site that may lawfully receive the waste, … (5) A person must not cause or permit asbestos waste in any form to be re-used or recycled. (6) In this clause: bonded asbestos material means any material (other than friable asbestos material) that contains asbestos. friable asbestos material means any material that contains asbestos and is in the form of a powder or can be crumbled, pulverised or reduced to powder by hand pressure when dry. … Part 6 Miscellaneous … 51 General provisions relating to exemptions (1) The EPA may grant an exemption under this clause if authorised to do so by any provision of the Act or by another provision of this Regulation. (2) An exemption may be granted in relation to: (a) any person or class of persons, or (b) any premises or class of premises, or (c) any area or class of areas, or (d) any activity or class of activities, or (e) any other matter or thing or class of matters or things. (3) An exemption granted under this clause may be a general exemption or a specific exemption. (4) A general exemption may be given by way of notice published in the Gazette. A specific exemption may be given after an application is made to the EPA. … (6) An exemption under this clause is subject to such conditions as may be imposed by the EPA. (7) In giving an exemption under this clause, the EPA may, in relation to a general exemption, and must, in relation to a specific exemption, identify a person (or class of persons) to whom the exemption relates (the responsible person). (8) A general exemption may be amended or revoked by the EPA by way of notice published in the Gazette. … (10) If an exemption is given under this clause for which a responsible person is identified, the responsible person must comply with the conditions to which the exemption is subject. Maximum penalty: 400 penalty units in the case of a corporation, 200 penalty units in the case of an individual. 51A Exemptions relating to certain waste (1) This clause applies to: (a) waste that is waste by virtue of paragraph (d) of the definition of waste in the Dictionary to the Act, and (b) any other waste that is used in connection with a process of thermal treatment, and (c) coal washery rejects (within the meaning of Part 2). (2) The EPA may from time to time grant an exemption under clause 51 that exempts a person or class of persons from any one or more of the following provisions in relation to an activity or class of activities relating to waste to which this clause applies: (a) the provisions of sections 47-49 and 88 of the Act, (b) the provisions of Schedule 1 to the Act, either in total or as they apply to a particular type of activity, (c) the provisions of Part 3 and clauses 45 and 47 of this Regulation. …

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Waste Avoidance and Resource Recovery Act 2001

Relevant sections of the Waste Avoidance and Resource Recovery Act 2001 (NSW) (WARR Act) are extracted in Grafil No 1 at [19]. The WARR Act is aimed at avoiding waste by facilitating re-use and recycling. The Defendants referred to the following three waste strategy documents created under the WARR Act, identified in Grafil No 1 at [21]-[23].
The Waste Avoidance and Resource Recovery Strategy 2003 (Ex 35 in Grafil No 1) was developed by Resource NSW to reduce waste generated and increase use of renewable and recovered resources. It identified that products and materials commonly called "waste" by the community must be seen as resources that can be reused (pp 1, 7). A diagram of "key parts" in the materials recovery system identified disposal facility operators, material re-processors and re-users, transporters, consumers (individuals, households, businesses, state and local government), inter alia (p 59).
The NSW Waste Avoidance Resource Recovery Strategy 2007 (Ex 36 in Grafil No 1) updated the waste strategy document published in 2003. It identified the need for a supportive policy and regulatory framework to enable exemptions for waste materials used as fuel or applied to land and that industry should be provided with regulatory certainty (pp 33-34). The document identified that contamination of demolition waste with asbestos was an was an issue driving reduced construction waste recycling (p 43).
The Waste Avoidance and Resource Recovery Strategy Progress Report 2012-13 (Ex 37 in Grafil No 1) identified that the regulatory framework for waste was under the POEO Act, WARR Act and the Waste Regulation (p 28).

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Resource recovery exemptions

Resource recovery exemptions have been gazetted by the EPA under cl 51 and cl 51A of the Waste Regulation. These exemptions were promulgated by the EPA under the Waste Regulation to implement the objects of the WARR Act, see Grafil No 1 at [313]. The exemptions apply to exempt a class of persons from obligations under the POEO Act, including a requirement to hold an EPL for an activity identified in Sch 1, such as storage of more than 2,500 tonnes or 2,500 m3 of waste, whichever is the lesser. Three resource recovery exemptions were referred to in Grafil No 1 and are set out therein at [16]-[18]. Two exemptions in force in the charge period, the Excavated Natural Material (ENM) Exemption 2012 (ENM exemption) and the Continuous Process Recovered Fines (CPRF) Exemption 2010 (CPRF exemption), are the most relevant to the facts and submissions in this sentencing hearing. The Batch Process Recovered Fines (BPRF) Exemption 2010 (BPRF exemption) need not be referred to in this judgment as it has no application to the circumstances of the offences. To understand the issues on sentence the CPRF exemption is set out again in full and the ENM exemption in part.

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Excavated Natural Material exemption 2012 extract

Relevant extracts of the ENM exemption are set out below (the notes to the ENM exemption being omitted): PROTECTION OF THE ENVIRONMENT OPERATIONS (WASTE) REGULATION 2005 - GENERAL EXEMPTION UNDER PART 6, CLAUSE 51 AND 51A The Excavated Natural Material Exemption 2012 Name 1. This exemption is to be known as "The excavated natural material exemption 2012". Commencement 2. This exemption commences on 19 October 2012. "The excavated natural material exemption 2008" which commenced 25 July 2008 is revoked from 19 October 2012. Duration 3. This exemption is valid until revoked by the Environment Protection Authority (EPA) by notice published in the New South Wales Government Gazette. Legislation 4. Under the Protection of the Environment Operations (Waste) Regulation 2005 (the Regulation): 4.1. Clause 51 (2) authorises the EPA to grant an exemption in relation to any matter or thing including an activity or class of activities, and 4.2. Clause 51A authorises the EPA to exempt a person from any of the following provisions in relation to an activity or class of activities relating to certain waste that is to be land applied or used as a fuel: • the provisions of sections 47 to 49 and 88 of the Protection of the Environment Operations Act 1997 (the Act), • the provisions of Schedule 1 to the Act, either in total or as they apply to a particular activity, and • the provisions of Part 3 and clauses 45 and 47 of the Regulation. Exemption 5. In this Notice of Exemption: 5.1. The responsible person listed in Column 1 of Table 1 is exempt from the provision/s listed in Column 2 of that table but only: • in relation to activities involving the relevant waste, and • where the responsible person complies with the conditions referred to in Column 3 of the table, and • in the case of a consumer, in relation to the premises where the waste is applied to land as permitted by clause 7.2. However, this Notice of Exemption does not exempt the responsible person from the provisions specified in Column 2 where the relevant waste is received at premises that are, despite this exemption, required to be licensed for waste disposal (application to land) activities under the provisions of the Act. 5.2. Where a responsible person complies with the conditions of this Notice of Exemption, the activity referred to in Schedule 1 from which that person is exempt is taken to be a non-scheduled activity for the purposes of the Act. Table 1 Column 1 Column 2 Column 3 Responsible person Provisions from which the responsible person is exempt Conditions to be met by the responsible person Generator section 48 of the Act in respect of clause 39 of Schedule 1 to the Act all requirements specified in section 7 and 8 section 48 of the Act in respect of clauses 39 and 42 of Schedule 1 to the Act Consumer section 88 of the Act all requirements specified in section 7 and 9 clause 47 of the Regulation

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This Notice of Exemption is a general exemption for the purposes of clause 51(3) of the Regulation. Definitions 6. In this Notice of Exemption: Bgl means below ground level, referring to soil at depth beneath the ground surface. Characterisation means sampling and testing that must be conducted on the material for the range of chemicals and other attributes listed in Column 1 of Table 2. Composite sample means a sample that combines 5 sub-samples of equal size into a single sample for the purpose of analysis. Consumer means a person who applies, causes, or permits the application to land of excavated natural material within the definitions of "application to land" in accordance with the Act. The consumer may be the landholder responsible for the land to which excavated natural material is applied. Discrete sample means a sample collected and analysed individually that will not be composited. Excavated natural material is naturally occurring rock and soil (including but not limited to materials such as sandstone, shale, clay and soil) that has: (a) been excavated from the ground, and (b) contains at least 98% (by weight) natural material, and (c) does not meet the definition of Virgin Excavated Natural Material in the Act. Excavated natural material does not include material located in a hotspot; that has been processed; or that contains asbestos, Acid Sulfate Soils (ASS), Potential Acid Sulfate soils (PASS) or sulfidic ores. Generator means a person who generates excavated natural material for supply to a consumer. Hotspot means a cylindrical volume which extends through the soil profile from the ground surface to the proposed depth of excavation, where the level of any contaminant listed in Column 1 of Table 2 is greater than the absolute maximum concentration in Column 3 of Table 2. In situ material means material that exists on or below the ground level. It does not include stockpiled material. In situ sampling means sampling undertaken on in situ material. Relevant waste means excavated natural material that meets the requirements of Section 7. Stockpiled material means material that has been excavated from the ground and temporarily stored on the ground prior to use. Systematic sampling means sampling at points that are selected at even intervals and are statistically unbiased. Validation means ensuring that test results comply with the conditions of this exemption prior to material being supplied to a consumer. General conditions 7. This Notice of Exemption is subject to the following conditions: 7.1. The chemical concentration or other attribute of the excavated natural material listed in Column 1 of Table 2 must not exceed any of the following: 7.1.1. For characterisation tests, the maximum average (based on the arithmetic mean) concentration or value listed in Column 2 of Table 2, and 7.1.2. The absolute maximum concentration or value listed in Column 3 of Table 2. 7.2. The excavated natural material can only be applied to land as engineering fill or used in earthworks. Generator responsibilities 8. The following conditions must be met by the generator for this exemption to apply: 8.1. The generator must prepare a written sampling plan which includes information on sample preparation and storage. The plan must be kept for a period of three years; 8.2. The generator must undertake sampling and analysis of the material for Acid Sulfate Soil (ASS) and Potential Acid Sulfate Soil (PASS), in accordance with the NSW Acid Sulfate Soil Manual, Acid Sulfate Soils Management Advisory Council, 1998 and the updated Laboratory Methods Guidelines version 2.1 - June 2004 where: 8.2.1. the pH measured in the material is below 5, and/or 8.2.2. the review of the applicable Acid Sulfate Soil Risk Maps (published by the former Department of Land and Water Conservation and available at . htm) indicates the potential presence of Acid Sulfate Soils (ASS). 8.3. For stockpiled material, the generator must: 8.3.1. undertake sampling in accordance with Australian Standard 1141.3.1-1996 Methods for sampling and testing aggregates - Sampling - Aggregates (or equivalent); 8.3.2. undertake characterisation according to the requirements listed in Columns 1 and 2 of Table 3 for the range of chemicals and other attributes listed in Column 1 of Table 2; and 8.3.3. store the excavated natural material appropriately until the characterisation test results are validated (i.e. obtained and assessed as compliant with this exemption). 8.4. For in situ material, the generator must: 8.4.1. undertake characterisation for the range of chemicals and other attributes listed in Column 1 of Table 2 according to the requirements listed in Columns 1, 2, and 3 of Table 4. When the ground surface is not comprised of soil (e.g. concrete slab), samples must be taken at the depth at which the soil commences. 8.4.2. undertake sampling at depth according to Column 1 of Table 5. 8.4.3. collect additional soil samples (and analyse them for the range of chemicals and other attributes listed in Column 1 of Table 2), at any depth exhibiting discolouration, staining, odour or other indicators of contamination inconsistent with soil samples collected at the depth intervals indicated in Table 5. 8.4.4. segregate and exclude hotspots identified in accordance with Table 4, from material excavated for reuse under this exemption. 8.5. For both stockpiled and in situ material the generator must: 8.5.1. keep a written record of all characterisation test results, volume of excavated material, and detected hotspot material for a period of three years; and 8.5.2. provide a written statement of compliance to the consumer with each transaction, certifying that the excavated natural material complies with the relevant conditions of this exemption. Consumer responsibilities 9. The following conditions must be met by the consumer for this exemption to apply: 9.1. The consumer must ensure that the excavated natural material is fit for purpose and poses minimal risk of harm to human health or the environment. 9.2. The consumer must keep records of the quantity of the excavated natural material received as well as the suppliers' name and address, for a period of three years. 9.[3] The consumer must land apply the relevant waste within a reasonable period of time. Chemical and other material property requirements 10. This Notice of Exemption only applies to excavated natural material where the chemical and other attributes listed in Column 1 of Table 2 comply with the chemical concentrations and other values listed in Column 2 and Column 3 of Table 2, when analysed according to test methods specified in Column 4 of Table 2. … Sampling requirements 11. This Notice of Exemption only applies to excavated natural material sampled according to the requirements in Tables 3, 4 and 5. 11.1. Stockpiled excavated natural material must be sampled as per the requirements in Table 3. 11.1.1. Composite sampling must be undertaken for analysis of attributes 1 to 10 and 18 in Column 1 of Table 2. Discrete sampling must be undertaken for analysis of attributes 11 to 17 in Column 1 of Table 2. 11.1.2. Sampling must be undertaken in a manner that ensures all parts of the stockpile are equally accessible for representative sampling. 11.1.[3] For stockpiles greater than 4,000 tonnes the number of samples described in Table 3 must be repeated. Table 3 Sampling of Stockpiled Material Column 1 Quantity (tonnes) Column 2 Column 3 Number of samples Validation <500 3 Required 500-1,000 4 1,000-2,000 5 2,000-3,000 7 3,000-4,000 10

[14]

11.2. In situ material must be sampled by collecting discrete samples as per the requirements of Tables 4 and 5. 11.2.1. Sites larger than 50,000 m2 should be subdivided into smaller areas and sampled as per Table 4. … Test method 12. All testing must be undertaken by analytical laboratories accredited by the National Association of Testing Authorities (NATA), or equivalent. All chemicals and other attributes listed in Column 1 of Table 2 must be measured in accordance with the test methods specified below: … [Notes omitted]

[15]

Continuous Process Recovered Fines exemption 2010

The CPRF exemption is set out below in full: PROTECTION OF THE ENVIRONMENT OPERATIONS (WASTE) REGULATION 2005 - GENERAL EXEMPTION UNDER PART 6, CLAUSE 51 AND 51A The "continuous process" recovered fines exemption September 2010 Name 1. This exemption is to be known as "The continuous process' recovered fines exemption September 2010". Commencement 2. This exemption commences on 13 September 2010. "The continuous process' recovered fines exemption April 2010" which commenced 1 April 2010 is revoked from 13 September 2010. Duration 3. This exemption is valid until revoked by the Environment Protection Authority (EPA) by notice published in the Government Gazette. Legislation 4. Under the Protection of the Environment Operations (Waste) Regulation 2005 (the Regulation): 4.1. Clause 51 authorises the EPA to grant an exemption in relation to any matter or thing including an activity or class of activities, and 4.2. Clause 51A authorises the EPA to exempt a person or class of persons from any of the following provisions in relation to an activity or class of activities relating to certain waste that is to be land applied or used as a fuel: • the provisions of sections 47 to 49 and 88 of the Protection of the Environment Operations Act 1997 (the Act), • the provisions of Schedule 1 to the Act, either in total or as they apply to a particular activity, and • the provisions of Part 3 and clauses 45 and 47 of the Regulation. Exemption 5. In this Notice of Exemption: 5.1. The responsible person listed in Column 1 of Table 1 is exempt from the provision/s listed in Column 2 of that table but only in relation to activities involving the relevant waste and only where the responsible person complies with the conditions referred to in Column 3 of the table. However, this Notice of Exemption does not exempt the responsible person from the provisions specified in Column 2 where the relevant waste is received at premises that are, despite this exemption, required to be licensed for waste disposal (application to land) activities under the provisions of the Act. 5.2. Where a responsible person complies with the conditions of this Notice of Exemption, the activity referred to in Schedule 1 from which that person is exempt is taken to be a non-scheduled activity for the purposes of the Act. Table 1 Column 1 Column 2 Column 3 Responsible person Provisions from which the responsible person is exempt Conditions to be met by the responsible person Processor section 48 of the Act in respect of clause 39 of Schedule 1 to the Act all requirements specified in section 7, 8, 10 and 11 section 48 of the Act in respect of clauses 39 and 42 of Schedule 1 to the Act Consumer section 88 of the Act all requirements specified in section 7,9,10 and 11 clause 47 of the Regulation

[16]

This Notice of Exemption is a general exemption for the purposes of clause 51(3) of the Regulation. Definitions 6. In this Notice of Exemption: Characterisation means sampling and testing that must be conducted on the "continuous process" recovered fines for the range of chemicals and other attributes listed in Column 1 of Table 2. "Continuous process" recovered fines means a soil or sand substitute with a typical particle size of less than 9.5 mm that is derived from the processing of mixed construction and demolition waste including residues from the processing of skip bin waste. Composite sample means a sample that combines 5 discrete sub-samples into a single sample for the purpose of analysis. Consumer means a person who applies, causes, or permits the application to land of "continuous process" recovered fines within the definitions of "application to land" in accordance with the Act. The consumer may be the landholder responsible for the land to which recovered fines are applied. Processor means a person who processes, mixes, blends, or otherwise incorporates "continuous process" recovered fines into a material for supply to a consumer. Relevant waste means "continuous process" recovered fines that meet the requirements of Section 7. Routine sampling means sampling and testing that must be conducted on the "continuous process" recovered fines on an ongoing and regular basis. Validation means ensuring that test results comply with the conditions of this exemption prior to supply to a consumer or another processor who does not blend or alter the nature of the "continuous process" recovered fines. General conditions 7. This Notice of Exemption is subject to the following conditions: 7.1. The chemical concentration or other attribute of the "continuous process" recovered fines listed in Column 1 of Table 2 must not exceed any of the following: 7.1.1. the absolute maximum concentration or other value listed in Column 4 of Table 2, 7.1.2. for characterisation tests, the maximum average (based on the arithmetic mean) concentration or other value listed in Column 2 of Table 2, and 7.1.3. for routine tests, the maximum average (based on the arithmetic mean) concentration or other value listed in Column 3 of Table 2. 7.2. The "continuous process" recovered fines can only be applied to land for the purposes of construction or landscaping. This approval does not apply to any of the following applications: 7.2.1. Construction of dams or related water storage infrastructure, 7.2.2. Mine site rehabilitation, 7.2.3. Quarry rehabilitation, 7.2.4. Sand dredge pond rehabilitation, 7.2.5. Back-filling of quarry voids, 7.2.6. Raising or reshaping of land used for agricultural purposes, and 7.2.7. Construction of roads on private land unless: (a) the relevant waste is applied to land to the minimum extent necessary for the construction of a road, and (b) a development consent for the development has been granted under the relevant Environmental Planning Instrument (EPI), or (c) it is to provide access (temporary or permanent) to a development approved by a Council, or (d) the works undertaken are either exempt or complying development. Processor responsibilities 8. The following conditions must be met by the processor for this exemption to apply: 8.1. Sampling must be undertaken in accordance with Australian Standard 1141 Methods for sampling and testing aggregates (or equivalent). Sampling and information on sample storage and preparation must be detailed in a written sampling plan. A record of weekly sampling times and other operational information should be kept on-site. 8.2. The "continuous process" recovered fines must be sampled according to the requirements listed Column 1 and Column 2 of Table 3. 8.3. Where there is a change in inputs that is likely to affect the properties of the "continuous process" recovered fines, characterisation must be repeated. Blending of any materials into "continuous process" recovered fines after sampling as required in Table 3 would be regarded as a change in inputs. 8.4. Characterisation samples can be used for routine testing and subsequent calculations. 8.5. Processors must keep a written record of all characterisation and routine test results for a period of three years. 8.6. Records of the quantity of "continuous process" recovered fines supplied to the consumer and either the consumer's name and address or the registration details of the vehicle used to transport the "continuous process" recovered fines, must be kept for a period of three years. 8.7. The processor of "continuous process" recovered fines must provide a written statement of compliance to the consumer with each transaction, certifying that the "continuous process" recovered fines complies with the relevant conditions of this exemption. 8.8. The processor of "continuous process" recovered fines must make information on the latest characterisation and routine test results available to the consumer or the EPA upon request. 8.9. The processor of "continuous process" recovered fines must use due diligence to ensure that the relevant waste is utilised in applications that are consistent with the conditions of this exemption. Consumer responsibilities 9. The following conditions must be met by the consumer for this exemption to apply: 9.1. Records of the quantity of the "continuous process" recovered fines received by the consumer and the suppliers' name and address must be kept for a period of three years. 9.2. The relevant waste must not be applied in or beneath water including groundwater. 9.3. The consumer must land apply the relevant waste within a reasonable period of time. Chemical and other material property requirements 10. This Notice of Exemption only applies to "continuous process" recovered fines where the chemical and other attributes listed in Column 1 of Table 2 comply with the chemical concentrations and other values listed in Column 2, Column 3 and Column 4 of Table 2, when analysed according to test methods specified in Column 5 of Table 2. Table 2 Column 1 Column 2 Column 3 Column 4 Column 5 Maximum average Test Maximum average concentration for characterisation concentration for routine Absolute maximum concentration method Chemicals and other attributes (mg/kg "dry weight" unless otherwise specified) testing (mg/kg "dry weight" unless otherwise specified) specified (mg/kg "dry weight" unless otherwise specified) within Section

[17]

*Note: The ranges given for pH are for the minimum and maximum acceptable pH values in the "continuous process" recovered fines. Sampling and testing requirements 11. This Notice of Exemption only applies to "continuous process" recovered fines sampled according to the requirements in Table 3. Table 3 Column 1 Column 2 Column 3 Column 4 Characterisation frequency Routine sampling frequency Once off sampling frequency Validation One composite sample per fortnight. One composite sample to be collected each week. Not applicable. Not required. 5 composite samples to be collected in a 5 week period for assessing "Maximum average concentrations" (in Table 2, Column 3).

[18]

Test methods 12. All testing must be undertaken by analytical laboratories accredited by the National Association of Testing Authorities, or equivalent. All chemicals and other attributes listed in Column 1 of Table 2 must be measured in accordance with the test methods specified below: 12.1. Test methods for measuring the mercury concentration in "continuous process" recovered fines: 12.1.1 Particle size reduction & sample splitting may be required. 12.1.2 USEPA SW-846 Method 7471B Mercury in solid or semisolid waste (manual cold vapour technique), or an equivalent analytical method with a detection limit < 20% of the stated absolute maximum concentration in Table 2, Column 4 (i.e. 0.3 mg/kg dry weight). 12.1.3 Report as mg/kg dry weight. 12.2. Test methods for measuring chemicals 2-8 in "continuous process" recovered fines: 12.2.1 Particle size reduction & sample splitting may be required. 12.2.2 Sample preparation by digestion using USEPA SW-846 Method 3051A Microwave assisted acid digestion of sediments, sludges, soils, and oils (or an equivalent analytical method). 12.2.3 Analysis using USEPA SW-846 Method 6010C Inductively coupled plasma - atomic emission spectrometry, or an equivalent analytical method with a detection limit < 10% of the stated absolute maximum concentration in Table 2, Column 4 (i.e. 25 mg/kg dry weight for lead). 12.2.4 Report as mg/kg dry weight. 12.3. Test methods for measuring the total organic carbon content in "continuous process" recovered fines: 12.3.1 Method 105 (Organic Carbon). In Schedule B (3): Guideline on Laboratory Analysis of Potentially Contaminated Soils, National Environment Protection (Assessment of Site Contamination) Measure 1999 (or an equivalent analytical method). 12.3.2 Reporting as % total organic carbon. 12.4. Test methods for measuring the electrical conductivity and pH in "continuous process" recovered fines: 12.4.1 Sample preparation by mixing 1 part recovered fines with 5 parts distilled water. 12.4.2 Analysis using Method 103 (pH) and 104 (Electrical Conductivity). In Schedule B (3): Guideline on Laboratory Analysis of Potentially Contaminated Soils, National Environment Protection (Assessment of Site Contamination) Measure 1999 (or an equivalent analytical method). 12.4.3 Report electrical conductivity in deciSiemens per metre (dS/m). 12.5. Test method for measuring PAHs and benzo(a)pyrene in "continuous process" recovered fines: 12.5.1 Analysis using USEPA SW-846 Method 8100 Polynuclear aromatic hydrocarbons (or an equivalent analytical method). 12.5.2 Calculate the sum of all 16 PAHs for total PAHs. 12.5.3 Report total PAHs as mg/kg dry weight. 12.5.4 Report benzo(a)pyrene as mg/kg. 12.6. Test method for measuring TPHs in "continuous process" recovered fines: 12.6.1. Method 506 (Petroleum Hydrocarbons). In Schedule B (3): Guideline on Laboratory Analysis of Potentially Contaminated Soils, National Environment Protection (Assessment of Site Contamination) Measure 1999 (or an equivalent analytical method). 12.6.2. Report C6 - C9 as mg/kg. 12.6.3. Report C10 - C36 as mg/kg. 12.7. Test methods for measuring chlorinated hydrocarbons in "continuous process" recovered fines: 12.7.1. Analysis using USEPA SW-846 Method 8021B Aromatic and halogenated volatiles by gas chromatography using photoionization and/or electrolytic conductivity detectors (or an equivalent analytical method). 12.7.2. Measure the following chlorinated hydrocarbons: carbon tetrachloride, chlorobenzene, chloroform, 1,2-dichlorobenzene, 1,4-dichlorobenzene, 1,2-dichloroethane, 1,1-dichloroethene, 1,2-dichlorothene, dichloromethane (methylene chloride), 1,1,1,2-tetrachloroethane, 1,1,2,2-tetrachloroethane, 1,2,4-trichlorobenzene, 1,1,1-trichloroethane, 1,1,2-trichloroethane, trichloroethene, vinyl chloride and hexachlorobutadiene concentrations. 12.7.3. Report individual listed chlorinated hydrocarbons as mg/kg. 12.8. Test methods for measuring organochlorine pesticides in "continuous process" recovered fines: 12.8.1. Analysis using USEPA SW-846 Method 808IB Organochlorine pesticides by gas chromatography (or an equivalent analytical method). 12.8.2. Measure the following organochlorine pesticides: aldrin, alpha BHC, beta BHC, gamma BHC (lindane), delta BHC, chlordane, DDT, DDD, DDE, dieldrin, endrin, endrin aldehyde, heptachlor, heptachlor epoxide, hexachlorobenzene, methoxychlor and endosulfan (includes endosulfan I, endosulfan II and endosulfan sulphate). 12.8.3. Report individual listed organochlorine pesticides as mg/kg. 12.9. Test methods for measuring the PCBs in "continuous process" recovered fines: 12.9.1. USEPA SW-846 Method 8082A Polychlorinated Biphenyls (PCBs) by gas chromatography (or an equivalent analytical method). 12.9.2. Measure the following PCBs: Aroclor 1016 (CAS Registry No. 12674-11-2), Aroclor 1221 (CAS Registry No. 11104-28-2), Aroclor 1232 (CAS Registry No. 11141-16-5), Aroclor 1242 (CAS Registry No. 53469-21-9), Aroclor 1248 (CAS Registry No. 12672-29-6), Aroclor 1254 (CAS Registry No. 11097-69-1), Aroclor 1260 (CAS Registry No. 11096-82-5). 12.9.3. Report individual listed PCBs as mg/kg. 12.10. Test method for measuring 19-20 in "continuous process" recovered fines: 12.10.1. NSW Roads & Traffic Authority Test Method T276 Foreign Materials Content of Recycled Crushed Concrete (or an equivalent method), using a 2.36 mm sieve. 12.10.2. Report as %. 12.11. Test method for measuring 21-23 in "continuous process" recovered fines: 12.11.1. NSW Roads & Traffic Authority Test Method T106 Coarse particle distribution in road construction materials (by dry sieving) and T107 Fine particle distribution in road construction materials (or an equivalent method). 12.11.2. Report as %. Exemption Granted Mark Gorta, Manager, Waste Management Section Environment Protection Authority by delegation Notes The EPA may amend or revoke this exemption at any time. It is the responsibility of the generator, processor and consumer to ensure that they comply with all relevant requirements of the most current exemption. The current version of an exemption will be available on the EPA website: In gazetting this general exemption, the EPA is exempting the relevant waste from the specific requirements of the Act and Regulations as stated in this exemption. The EPA is not in any way endorsing the use of this substance or guaranteeing that the substance will confer benefit. The use of exempted material remains subject to other relevant environmental regulations within the Act and Regulations. For example, a person who pollutes land (s142A) or water (s120), or does not meet the special requirements for asbestos waste (clause 42), regardless of having an exemption, is guilty of an offence and subject to prosecution. For the purposes of arrangements between a generator, a processor and a consumer, a "transaction" is taken to mean the contractual agreement between the two parties which specifies the exchange of waste material from one party to another. A "statement of compliance" must be in writing and be provided with each transaction. The conditions set out in this exemption are designed to minimise the risk of potential harm to the environment, human health or agriculture, however, neither this exemption nor these conditions guarantee that the environment, human health or agriculture will not be harmed. The consumer should assess whether or not the exempted material is fit for the purpose the material is proposed to be used and whether this use will cause harm. The consumer may need to seek expert engineering or technical advice. This exemption does not apply to any material received at a premises that is required to be licensed for waste disposal (application to land) activities under the provisions of the Act. This exemption does not remove the need for a site at which processing occurs to be licensed, if required under Schedule 1 of the Act. This exemption does not alter the requirements of any other relevant legislation that must be met in utilising this material, including for example, the need to prepare a Material Safety Data Sheet (MSDS). Regardless of any exemption provided by the EPA, the person who causes or permits the application of the substance to land must ensure that the action is lawful and consistent with the development consent requirements of the land. All records required to be kept under this exemption must be made available to authorised officers of the EPA upon request. Failure to comply with the conditions of this Notice of Exemption may constitute an offence under clause 51 of the Regulation and the responsible person will be required to comply with the normal regulatory provisions.

[19]

Summary of Grafil No 1

In Grafil No 1 the liability of Grafil under s 144(1) of the POEO Act for use of land as a waste facility without an EPL was in issue over a four-week hearing. The three elements of the charge are set out at [3]-[5]. Grafil admitted the first element, that it was the occupier of Lot 8. The second element is that Grafil used Lot 8 as a waste facility. Third, that the use of Lot 8 as a waste facility was without lawful authority. The extensive evidence relied on by the EPA to prove the offence beyond reasonable doubt was set out at [25]-[233]. The list of 24 affidavits read by the EPA is at [27].
Additional documents were tendered in relation to the development history of Grafil's sand mining operations together with an affidavit of Mr Holm Department of Planning NSW officer and Mr Wickham Port Stephens Council (the Council) officer. The development history of Grafil's sand mining operations was set out at [28]-[38].
The affidavit of Mr Jamieson EPA officer was read and summarised at [39]-[46] concerning Grafil's dealings with the EPA and the Council from 2009 to March 2013.
The EPA's investigation of Grafil on Lot 8 through carrying out Operation Trojan is summarised at [48]-[61]. Operation Trojan commenced about October 2012 and involved following trucks from various recycling centres in Sydney to ascertain where outgoing material was being sent. EPA officers conducted surveillance from adjoining bushland at the rear of Lot 8 on 12, 15, 27, 28 November 2012 and 7, 8 and 9 May 2013. The EPA disclosed images obtained from two static cameras placed outside Lot 8 dated 13 and 14 May 2013.
The search and seizure operation by various EPA officers on Lot 8 on 15 May 2013 is described at [62]-[84]. Documents were seized from Grafil's office as set out at [85]-[89]. A verbal and written clean-up notice was issued to Grafil, at [90]-[91]. Mr Mackenzie's accountant's office was also the subject of a search and seizure operation on 15 May 2013. No documents from that operation were before the Court, at [92]. A search and seizure operation was also carried out at Bingo Group's (Bingo) premises on the same day, according to the affidavit and cross-examination of Mr Wade investigator with the Office of Environment and Heritage, further details about which are at [94]-[98].
Interviews carried out by various EPA officers between 15 November 2013 to 11 September 2015 are identified at [99]-[101]. Five transporters, Mr Gilder of Bulk Logistics Pty Ltd (Bulk Logistics), Mr Sneddon of AH & PJ Sneddon Bulk Haulage Pty Ltd (Sneddons), Mr Maddox of Maddox Haulage Pty Ltd (Maddox), Mr Mulligan of Mullown Pty Ltd (Mullown) and Mr Papworth of BD & RA Papworth Pty Ltd (Papworth) were interviewed by various EPA officers. Six processors, Mr Ryan, Mr Sarkis and Mr Butler of Bingo, Mr Foxman of Botany Building Recyclers Pty Ltd (BBR) (in liquidation), Mr Scarlis of KLF Holdings Pty Ltd (KLF) and Mr Ulizzi of Aussie Skips (NSW) Pty Ltd (Aussie Skips) were interviewed by various EPA officers. Mr Robert Mackenzie was interviewed twice by EPA officers. Mr Bruce Mackenzie his father was interviewed once by EPA officers.

[20]

Summary of Grafil CCA

The EPA submitted 15 questions of law to the CCA. Two questions were unnecessary to answer. As a result of Grafil CCA the following legal findings are relevant to the operation of the two resource recovery exemptions and the statutory waste regime for this sentencing hearing.

[21]

Material in the stockpiles was "waste" as defined, questions 2, 5

The application of par (d) of the definition of "waste" in the Dictionary of the POEO Act does not exclude other definitions of "waste" in (a)-(c), (e) from also applying, Grafil CCA at [95]-[132].
The application of waste to land occurs when processes specified in the Dictionary to the POEO Act definition of "waste" in (b) which includes "deposited on the land" are undertaken. There was deposition of materials in the two stockpiles on Lot 8 within the meaning of cl 3B(1)(a) of the Waste Regulation, Grafil CCA at [133]-[157].

[22]

Activity was the scheduled activity of waste disposal (application to land), questions 3, 4

Similarly in relation to the scheduled activity of waste disposal (application to land), considered at [159]-[173], the material deposited in the two stockpiles on Lot 8 involved application by a method specified in par (a) of cl 39(1) of the Waste Regulation. It constituted the application to land of waste received from off-site within the meaning of the defined activity of "waste disposal by application to land", Grafil CCA at [173].

[23]

Activity was the scheduled activity of waste storage, questions 6, 7

The stockpiling of material on Lot 8 was the scheduled activity of "waste storage" in cl 42 of Sch 1 to the POEO Act, Grafil CCA at [175]-[197].

[24]

Activity was not exempt, questions 1, 8, 11, 12

The onus of proving that the resource recovery exemptions applied rested on Grafil not the EPA, Grafil CCA at [221]-[229].
The ordinary principles of statutory construction applied to construction of the notices of exemption granted under cll 51 and 51A of the Waste Regulation, Grafil CCA at [257]-[273].
A failure to comply with the record keeping requirements in Condition 9.1 of the CPRF exemption and Condition 9.2 of the ENM exemption meant that the exemptions did not apply, Grafil CCA at [286]-[297].
Grafil was found to be a consumer in Grafil No 1 for the purposes of the two resource recovery exemptions, Grafil CCA at [299]-[307]. It was unnecessary to answer the question on whether Grafil was a consumer for the purposes of each exemption, Grafil CCA at [308].

[25]

Legal consequence of the presence of asbestos in the material, questions 9, 10

The legal consequence of the presence of asbestos in the material on Lot 8 was that the material was asbestos waste, Grafil CCA at [309]-[330]. The amount of asbestos in the material or its relative proportion to the volume of material was not relevant to whether the material contained asbestos, at [329].
It was unnecessary to answer the question on the relationship between the CPRF exemption and cl 42 of the Waste Regulation, Grafil CCA at [331]-[335]. Grafil was not charged with committing an offence against cl 42 of the Waste Regulation. The presence of asbestos in the stockpiles was irrelevant to whether the CPRF exemption applied. Satisfying the CPRF exemption does not affect the operation of cl 42 of the Waste Regulation which applies to any activity involving, amongst other things, the disposal of asbestos waste.

[26]

Activity without lawful authority of a development consent, question 15

The stockpiling of material on Lot 8 was not ancillary or subordinate to the development authorised by the 1977 development consent (which authorised sand extraction on Lot 8 and related activities such as road construction) or the original Pt 3A approval for access roads, Grafil CCA at [363]-[378]. Only when the Pt 3A approval was modified to approve the construction of an access road across the other land could the use of Lot 8 become ancillary to the use of that other land for road construction. Such a modification of the Pt 3A approval did not occur until months after the charge period. The fact that the route changed after the charge period was not immaterial, Grafil CCA at [377].

[27]

A continuing offence proved, question 13

A continuing offence was proved by the EPA, Grafil CCA at [388]-[394].

[28]

Offences not time barred, question 14

The charged offences were not time barred pursuant to s 216(1) of the POEO Act, Grafil CCA at [395]-[409].

[29]

Summary of Grafil No 3

Following Grafil CCA the proceedings were remitted to this Court for redetermination in light of the findings of law in Grafil CCA. Grafil No 3 applied the findings of fact in Grafil No 1 and the legal findings in Grafil CCA. The Defendants accepted they should be found guilty in relation to the respective offences under ss 144(1) and 169(1) of the POEO Act, Grafil No 3 at [3].
A summary of the evidence from Grafil No 1 is found in Grafil No 3 at [14]-[27]. The development history of Grafil's operations is summarised at [14]-[16]. Evidence of the EPA's investigation of Grafil concerning the deposition of material in stockpiles 1 and 2 on Lot 8 is summarised at [17]-[18], sources of the material is summarised at [19]-[20] and the nature of the material is summarised at [21]-[25]. The CPRF and ENM exemptions are discussed at [26]-[27].
The first element of the offence under s 144(1), that Grafil was the occupier of Lot 8, was not disputed, Grafil No 3 at [28]. The second element, that Grafil used Lot 8 as a waste facility, required proof beyond reasonable doubt that the material placed in stockpiles 1 and 2 was waste and that Grafil used Lot 8 as a waste facility, Grafil No 3 at [29]. As a result of findings in Grafil CCA identified at [32] the second element was established by the EPA.
The third element of the offence, whether Grafil had lawful authority to use Lot 8 for the deposition of waste required consideration of whether and how the CPRF exemption applied, Grafil No 3 at [34]. Issues that arose as a result of Grafil CCA in relation to authority under the POEO Act are identified at [41] including that Grafil's failure in record-keeping meant the CPRF exemption could not apply. As a consequence of the findings in Grafil CCA, Grafil was not exempt from the provisions of s 48 of the POEO Act in relation to cll 39 and 42 of Sch 1 to the POEO Act. An EPL under the POEO Act was required by Grafil during the charge period and Grafil did not have one, Grafil No 3 at [42]. The third element of the offence also required that Grafil demonstrate that it had lawful authority under the EPA Act to temporarily stockpile material in stockpiles 1 and 2 during the charge period, Grafil No 3 at [43]. As a result of findings in Grafil CCA, Grafil did not have the required development consent needed under the EPA Act, Grafil No 3 at [44]. The third element of the offence was held to have been established by the EPA at [45].

[30]

Particular facts relied on by Defendants for sentencing hearing

I observe that the EPA appeared from its written submissions which contained virtually no reference to any findings of fact in Grafil No 1 to assume that sentencing would occur on a very limited factual basis. No mention was made of the operation of the resource recovery exemptions, which were a substantial part of the statutory scheme considered at trial. The EPA submitted, in legally correct submissions, that the material in the two stockpiles on Lot 8 the subject of the charges was waste and its written submissions were solely directed to that context. A far greater understanding of the circumstances of these offences is necessary to do justice in at least two senses of that word to the objective circumstances. The facts relevant to sentencing are largely facts found in Grafil No 1 applying legal findings in Grafil CCA as identified by the Defendants with some amendment to reflect comments by the EPA (identified as MFI-1) as set out below.
The EPA submitted correctly that Grafil CCA at [221]-[229] overturned my finding that the onus of proof of the application of the CPRF exemption lay with the EPA. That does not undermine any of the findings of fact that I made, nor did the EPA explicitly identify any that should be affected by that finding in Grafil CCA, simply making a broad assertion to that effect.
The following relevant factual findings made in Grafil No 3 are extracted from the Defendants' submissions and as commented on by the EPA (see brackets): 1. Grafil traded under the name "Macka's Sand & Soil Supplies" and operates from land including Lot 8 the subject of the charge. It benefited from a 1977 consent for the extraction of sand. It already had the benefit of an EPL permitting it to carry out "land-based extractive activity" and "crushing, grinding or separating works" and to operate as a sand mine, Grafil No 3 at [14]. 2. Grafil's operations involved processing sand extracted on Lot 218 and Lot 220 and Grafil had the benefit of a Pt 3A approval issued on 20 September 2009 for major project 08-0142 for the extraction of sand on those two lots and the creation of access roads on other lots including Lot 8, Grafil No 3 at [15]. (During the charge period the Pt 3A approval made provision for an access road across Lot 8 to Lot 220.) 3. The source of material in stockpiles 1 and 2 brought by various transporters was principally from four processors of building waste in the Sydney Metropolitan area, Grafil No 3 at [19]. 4. The material stored in the stockpiles was suitable to be compacted and used for a road, Grafil No 3 at [23]. (The EPA agreed subject to the issue of the material being asbestos waste which prevented its re-use or recycling by operation of cl 42 of the Waste Regulation.) 5. The four processors were "generators" under the ENM exemption and "processors" under the CPRF exemption. They were forbidden to receive asbestos. They had asbestos management plans directed to the removal of asbestos. They were required to conduct detailed sampling and testing for certain chemicals and particle size for the purposes of the exemptions. They were required to certify to consumers that the processed material was recovered fines or ENM and satisfied the exemptions, Grafil No 3 at [27]. 6. Grafil occupied Lot 8, the land on which the offence occurred, Grafil No 3 at [28]. 7. Material had been brought onto Lot 8 during the charge period by transporters paid by principally four processors of building waste namely Aussie Skips, Bingo, BBR and KLF. The volume of material delivered to Lot 8 was in the range of 24,000-44,000 tonnes, Grafil No 3 at [29]. (The EPA submitted that the "material" was "waste" as defined in the POEO Act and as found in Grafil No 3 at [32].) 8. The material stockpiled was technically "waste" within the meaning of that term in the POEO Act, notwithstanding that it was recycled product (having regard to the construction of the definition of "waste" in the POEO Act adopted by Grafil CCA, see Grafil No 3 at [32]. (The EPA submitted that Grafil No 3 at [32] does not refer to the material being found to be "technically" waste or the latter statement commencing with the word "notwithstanding". The EPA submitted that the waste was principally comprised of recovered fines and ENM, Grafil No 1 at [81]. The waste also included dark brown soil mixed with bricks, concrete, glass, plastic, wood, timber and tiles, Grafil No 1 at [65], [76], [81], [248], [461]. The waste was also asbestos waste, Grafil CCA at [323]-[329].) 9. According to Grafil CCA, the scheduled activity of application of waste to land occurred during the charge period, as did the activity of waste storage, Grafil No 3 at [32]. 10. In Grafil No 1, it was found that the Defendants did not comply with the record-keeping requirement in Condition 9.1 of the CPRF exemption, Grafil No 3 at [37]. (The EPA submitted that Condition 9.2 of the ENM exemption was also found to be breached, Grafil No 1 at [440].) 11. As a matter of statutory construction, Grafil CCA found that a failure to comply with Condition 9.1 of the CPRF exemption concerning record-keeping by consumers meant that the CPRF exemption did not apply at all to Grafil's benefit, Grafil No 3 at [41]. (The EPA submitted that the CCA's conclusion also related to Condition 9.2 of the ENM exemption, Grafil CCA at [294]-[295]. The Court was obliged to find on remitter that Grafil was not exempt from the provisions of the POEO Act in relation to waste, Grafil No 3 at [42] and Grafil CCA at [388]. As a result of the CCA's conclusions on the onus regarding the application of the exemptions and the construction of Condition 7.2.7 of the CPRF exemption, Grafil could not establish that it complied with that condition, Grafil CCA at [265]-[272].) 12. Grafil CCA found that temporary stockpiling of material on Lot 8 was not ancillary to either the 1977 development consent or the (original) Pt 3A approval because the subjective intention of the Defendants was to use the material for a modified Pt 3A approval, Grafil No 3 at [44], [45]. (The modification of the Pt 3A approval after the charge period related to an alternative access road over land other than Lot 8, Grafil CCA at [372].)

[31]

Documentary evidence relied on by the Defendants from Grafil No 1

The Defendants relied on the following documentary evidence from Grafil No 1: 1. a copy of the consolidated Pt 3A approval for the "Macka's Sand Project" (Ex 34 in Grafil No 1); 2. an aid memoire showing proposed corrections to the transcript of the walk-around interview conducted on 15 May 2013 (MFI 49 in Grafil No 1); 3. an extract from Ms Moore's notes dated 15 May 2013 which recorded Mr Mackenzie stating that he thought Mr Jamieson EPA officer had been to Lot 8 in the last six months and had not mentioned any problems (Ex 6 in Grafil No 1); 4. an extract of Ms Moore's notes dated 16 May 2014 which recorded Mr Mackenzie stating that he did not believe he was doing anything wrong (Ex 7 in Grafil No 1); and 5. the three waste strategy documents described above in [16]-[19].
The Defendants referred to two certificates of compliance provided by processors. The KLF certificate dated 1 July 2013 stated: This is to certify the we have reviewed the NATA‑certified laboratory analysis of the recovered fines produced at our Strathfield South recycling facility. The material produced complies with the chemical property requirements as detailed in the New South Wales EPA (Former NSW DECCW) Protection Environment Operations 2005 General Exemption pt 6 cl 51 and 51A of the continuous process recovered fines exemption
The Aussie Skips certificate dated 1 March 2013 stated: This is to certify that the recovered fines represented in this load have been fully tested and meet strict Australian standard methods, and as a result had been classified as exempt material and can be used for the purpose of construction or landscaping according to the Protection of the Environment Operations Waste Regulation 2005 General Exemption under pt 6 s 51(a).

[32]

EPA

The EPA tendered correspondence between the EPA and the Defendants' counsel in which the Defendants refused Dr Martens further access to Lot 8 by letter dated 25 January 2021 (Ex B).

[33]

Affidavit of Mr Matthews

The EPA read the affidavit of Mr Gregory Matthews, Associate Director at AECOM, dated 2 October 2020 affirming that the investigation costs incurred by URS/AECOM charged to the EPA between 20 June 2013 and 6 April 2016 amounted to $187,088.03.

[34]

Defendants

The Defendants tendered the EPA's written opening and closing submissions from Grafil No 1, transcript of the EPA's opening address in Grafil No 1 dated 12 February 2018 at pp 1-26 and transcript of the cross-examination of Ms Moore in Grafil No 1 dated 13 February 2018 at pp 83-96 (Ex 9).

[35]

Affidavit of Mr Mackenzie

The Defendants read the affidavit of Mr Mackenzie sworn 4 May 2021 and tendered the accompanying exhibit "RBM-1" (Ex 7). As a director for Grafil, Mr Mackenzie spoke in this affidavit for himself and the company. Mr Mackenzie is 52 years old, married and the father of three adult children. He is the son of Mr Bruce Mackenzie, the other director of Grafil. Mr Mackenzie left high school in year nine and commenced working in various businesses. He founded Macka's Sand & Soil Supplies in 1991 and since then built up the business and client base. Macka's Sand & Soil Supplies is primarily in the sand business but also operates in the agricultural sector.
A s 143 notice dated 17 July 2008 signed by Mr Mackenzie authorised the receipt of less than 15,000 tonnes of inert waste, shale, bricks, clay and sandstone. Another section 143 notice dated 17 July 2008 signed by Mr Mackenzie authorised the receipt of less than 15,000 tonnes of clay, sandstone, soil and fines. Mr Mackenzie remembered filling out and signing these forms referring to material as "fines" or "inert waste". The material was used to construct internal roads including driveways and laneways within his property. A letter dated 13 July 2008 addressed to Mr Mick Mulligan stated that Macka's Sand & Soil Supplies was happy to continue to receive "inert fill".
Grafil obtained a Pt 3A approval on 20 September 2009 which approved the construction of an access road to a new sand extraction facility on Lot 218 via Lavis Lane, across lots owned by the Towers family and the Worimi Local Aboriginal Land Council (Worimi LALC). One of the roads was approved to run across Lot 8 from Nelson Bay Road to Lot 220. Difficulties arose in negotiations for access to Lot 218 from the west across the Towers family land. In about early to mid-2011 Mr Mackenzie began exploring other options for access to Lot 218 from the north. Based on discussions with Mr Howard Reid, an officer of the Department of Planning, Mr Mackenzie was very confident that a modification of the Pt 3A approval for northern access would be granted.
On 18 October 2012, Mr Mackenzie lodged an application with the Department of Planning to modify the Pt 3A approval to accommodate the northern access road. In the last quarter of 2012, Mr Mackenzie started to receive and stockpile loads of clean fill on Lot 8 from EPA-licensed waste facilities in Sydney. The bulk of the material was recovered fines. ENM was also accepted.

[36]

Mr Mackenzie oral evidence

Mr Mackenzie gave oral evidence that he would not have accepted the recovered fines had he known they might contain asbestos. Mr Mackenzie intended to use the recovered fines and ENM material on the northern access route, confident that the modified route would be approved. Mr Mackenzie was asked if the northern access route was not approved and he had been required to access Lot 218 via Lavis Lane, would that route have required road base for the purpose of access road construction. Mr Mackenzie replied "yes, most definitely". Mr Mackenzie stated that all access roads that he proposed to use needed a substantial amount of base material because they were in low-lying areas.
Mr Mackenzie stated that he had not gotten over feeling bullied and belittled from the events of 15 May 2013. Since the commencement of these proceedings, Mr Mackenzie's family business has suffered reputational harm. It has struggled to maintain customers in the Sydney region due to bad publicity. Its relationship with the local Aboriginal community has been strained. Mr Mackenzie's children have had to deal with the proceedings. The proceedings continue to be mentioned in what would otherwise be "good news stories" for his business. Negative things come up when "Macka's" is put into search engines. The negative publicity is impacting Grafil's ability to do business with major companies.
Mr Mackenzie stated that the EPA has never provided an explanation as to why he was singled out in relation to the receipt of the fill material. The EPA has not explained why they watched the stockpiles grow from November 2012 to May 2013 without expressing any concerns to Mr Mackenzie. As an EPL holder Mr Mackenzie felt let down by the authority that normally visits his site about twice a year, that oversees and assists his company in its operations. Mr Mackenzie stated that it is very important that he and his family have closure because they have been living with these proceedings for a long time.
In cross-examination Mr Mackenzie agreed that he was the site manager for Lot 8 in 2012. He was in charge of environmental management of Lot 8 and worked in conjunction with environmental consultants from Umwelt (Australia) Pty Ltd (Umwelt) on this but had no environmental training himself. In 2012 Grafil held an EPL in relation to Lot 8 that permitted activities relevant to its operation as a sand mine. The EPL did not concern any activities involving waste. Mr Mackenzie did not consider that the material brought to Lot 8 was waste.

[37]

Affidavit of Mr Hannam

The Defendants read the affidavit of Mr Angus Hannam solicitor affirmed on 27 April 2021. Mr Hannam's affidavit contained a history of the proceedings briefly summarised here. The EPA conducted a search and seizure operation on 15 May 2013. The EPA commenced proceedings on 11 May 2016 in relation to conduct during the charge period of 29 October 2012 to 15 May 2013. Grafil No 1 was heard between 12 February and 16 March 2018 and the Defendants were found not guilty on 28 June 2018. The EPA's stated case to the CCA was finalised on 6 February 2019. It contained 15 questions of law, was heard from 9-10 July 2019 and judgment was delivered on 2 August 2019. The proceedings were remitted to this Court for redetermination. The EPA was awarded its costs in the CCA on 28 August 2019. On 29 August 2019, the Defendants filed an application for special leave to appeal the whole of the CCA's judgment to the High Court. This was declined on 14 February 2020. On 15 July 2020, the Defendants were found liable for the offences charged in Grafil No 3.
The bundle of documents exhibited to Mr Hannam's affidavit (Ex 5) included copies of EPLs held by processors (skip bin facilities) KLF (dated 5 October 2012), BBR (dated 16 May 2014), Auburn Recycling Centre Pty Ltd (dated 8 June 2012), St Peters Recycling Centre Pty Ltd (due for review on 23 April 2015) and Homebush Bay Recycling Centre Pty Ltd (dated 19 December 2012). These EPLs were related to scheduled activities of waste storage and waste processing and included general conditions and special conditions. Under "E2 Environmental Obligations of License" (included in all five EPLs), a licensee must remove and lawfully dispose of any waste unlawfully disposed of on their premises. Under the heading "Asbestos" the EPLs stated that where no specific conditions are outlined in the licence, the licensee must comply with the Waste Regulation.
Mr Hannam outlined legal and expert fees that have been incurred by the Defendants. The Defendants have paid more than $1,650,000 in legal and expert fees from the commencement of these proceedings to 31 March 2021. Mr Hannam outlined the EPA's costs of the proceedings as known to him. On 26 April 2021 the EPA provided the Defendants' with a "rough estimate" of its legal costs being $1,142,172.00.

[38]

Character references for Mr Mackenzie

The Defendants read the following four affidavits in support of Mr Mackenzie. All deponents stated they understood Mr Mackenzie was to be sentenced by the Court after being found guilty of an offence of using land as a waste facility without lawful authority.
Mr Paul LeMottee, a councillor of the West Ward of the Council and a practising surveyor, affirmed an affidavit dated 23 April 2021 attesting to his personal and professional relationship with the Mackenzie family since the 1980s. Mr LeMottee undertakes the vast amount of surveying for Macka's Sand and gave evidence of Mr Mackenzie's contributions to the community, including to local sporting clubs.
Mr Peter Black, who spent most of his career as a heavy vehicle driving instructor and is chairman of the Newcastle Hunter Road Safety Awareness Group, affirmed an affidavit dated 26 April 2021 attesting to Mr Mackenzie's time and financial contributions to the annual truck show, which raises money for the Westpac Rescue Helicopter.
Mr Peter Stephenson, who is the coordinator of landfill operations at Canterbury Bankstown City Council and has worked extensively in the waste and resource recovery industry, affirmed an affidavit dated 23 April 2021. Mr Stephenson gave evidence of observing Mr Mackenzie over a period of 40 years, from when he used to be his rugby coach. Mr Stephenson gave evidence of Mr Mackenzie's contributions to the community and long-lasting relationship with the Worimi LALC.
Mr John Kelly, who works for disability services provider Castle Personnel Services Pty Ltd, affirmed an affidavit dated 22 April 2021 attesting to Mr Mackenzie's assistance over many years in securing work placements for disabled persons, some 43 individuals over the past 11 years.

[39]

Affidavit of Dr Allnutt

Dr Stephen Allnutt forensic psychiatrist affirmed an affidavit dated 29 April 2021 and exhibited a copy of his report dated 26 August 2020 diagnosing Mr Mackenzie with a major depressive disorder (Ex 6). Mr Mackenzie had not reported any symptoms of mental health illness before May 2013. Dr Allnutt opined that the EPA's investigation and the proceedings had been substantial contributing factors to his depression. Dr Allnutt recorded that Mr Mackenzie felt a sense of injustice at what has happened to him, his personal relationships have suffered and his performance at work diminished.

[40]

Hydrological evidence

At the outset of the sentencing hearing the EPA was seeking an order that the material in the two stockpiles be removed entirely to a licensed landfill at a cost of about $15-20 million because it submitted there was actual environmental harm being caused to groundwater and surface water. At the end of the expert evidence the EPA accepted that there was no evidence of actual environmental harm and relied only on there being a likelihood of environmental harm. It ultimately did not press for a removal order but rather the parties' experts discussed a cap and contain option. As to whether there was a likelihood of environmental harm, the issues in dispute were narrowed down to, first, whether there was potential for groundwater and surface water contamination and, second, whether there was potential for harm caused by the presence of asbestos. Third, the appropriate cap and contain option was in dispute.

[41]

Evidence of Dr Martens

The EPA read the affidavit of Dr Daniel Martens, civil and environmental engineer, dated 17 December 2020 and tendered the accompanying exhibit "DM-2" (Ex A) containing his supplementary report dated 17 December 2020. Dr Martens undertook a site inspection on 20 November 2020 but did not collect any samples. Dr Martens observed that the stockpiles were largely vegetated with grass. Drainage within the site discharged to a perimeter drain located along the southern and eastern site boundaries of Lot 8. The perimeter drain flowed in a northerly direction before reaching a tributary of Tilligerry Creek. Tilligerry Creek was mapped as containing a coastal wetland north of the site.
Dr Martens observed that the eastern batter of stockpile 1 was located at the edge of the perimeter drain so that waste material would be directly in contact with water flowing in the drain. Dr Martens observed groundwater levels close to the surface in the area to the east and south of the stockpiles.
Stormwater runoff from the stockpiles and leachate generated by the stockpiles had the potential to be contaminated with a range of pollutants contained within the waste material including sediment, nutrients, heavy metals and hydrocarbons. The stockpiles had the potential to generate at least 2.0ML/year of leachate in average rainfall. Discharge was likely to pollute waters within the site and within Tilligerry Creek and the associate wetland.
Potential for groundwater pollution arises from the transmission of polluted surface water to groundwater (directly or through the perimeter drain), the transmission of polluted leachate to groundwater and direct contact of groundwater with waste within the stockpiles, particularly stockpile 1. Given the potential for groundwater pollution there is potential for harm to ecological functions of nearby groundwater dependent ecosystems.
In respect of the presence of asbestos within stockpiles 1 and 2, Dr Martens had regard to the results in the AECOM report dated 9 June 2016 (Ex 8) which identified that both stockpiles contained asbestos. The AECOM report indicated there was no pattern to the distribution of asbestos within or on the stockpiles, but rather, asbestos was likely to be uniformly distributed throughout and over the stockpiles. AECOM conducted a bulk sampling exercise where a 10-litre bucket sample was taken from a stockpile and then sieved to produce items recorded in Table 3 of Appendix D of the AECOM report. Asbestos was detected in 11 samples weighing between 5.07-20 grams using the 10-litre bucket sampling method. Asbestos was detected in 16 other samples weighing between 1.3-79.9 grams that were derived using a different sampling method.

[42]

Evidence of Mr Lau

The Defendants read the affidavit of Mr Andrew Lau, site auditor and environmental engineer, dated 29 April 2021 and tendered the accompanying exhibit "AL-1" (Ex 1) containing a letter to the Defendants' legal representatives dated 29 April 2021 and site investigation report by his company JBS&G Australia Pty Ltd dated 27 April 2021 (JBS&G report) addressing the characteristics, environmental impact and appropriate management measures for the stockpiles. Mr Lau concluded the stockpiles do not have the potential to cause harm to the environment or human health and safety. Any potential harm would have occurred in the time elapsed since the stockpiles' placement in about 2013 or would be occurring and would be evidenced in his company's testing results.
Between 15-17 February 2021 Mr Lau's company used a mechanical drill to install 12 new groundwater monitoring wells on and around stockpiles 1 and 2 based on Mr Lau's plan. MW1, MW3, MW10 and MW15 were north of the stockpiles. MW5, MW6, MW7, MW8 and MW11 were within the stockpiles, noting that MW7 and MW8 were placed as close to the eastern side of stockpile 1 as possible. MW9, MW12 and MW13 were between and to the south of the stockpiles.
Groundwater sampling was conducted seven days after the installation of the new wells. Tabulated values for the measured depths to groundwater during the sampling event and corresponding relative groundwater levels were recorded. Surface water samples at four locations near stockpiles 1 and 2 collected along the perimeter drain near the southern and eastern boundaries of Lot 8 (SW1 to SW4) were also collected. No observations indicated that the stockpiled fill was placed within the perimeter drain.
The inferred direction of groundwater flow was to the south-southeast. Groundwater samples from MW1, MW3 and MW10 were up gradient of the stockpiles and provided background water quality levels for the site.
Groundwater and surface water samples were tested for contaminants including heavy metals (arsenic, cadmium, chromium, copper, lead, nickel, mercury and zinc). Concentrations of contaminants were compared against derived trigger assessment values for toxicants based on ANZECC, Australian and New Zealand Guidelines for Fresh and Marine Quality Water (August 2018) (ANZECC guidelines). (I note that an updated version of the ANZECC guidelines published in October 2020 was tendered during oral evidence as Ex 3.) A summary table of the adopted assessment criteria adjusted for hardness was included.

[43]

Based on the investigations of Mr Lau's company removal is not warranted. Mr Lau estimated off-site disposal of the stockpiles would cost between $15.9-$25 million. Dr Martens' option 4 to cap and contain was broadly a good approach subject to minor modifications including use of a 300 mm capping layer of natural sand from the site instead of clay and excavation and relocation of a two-metre strip along the eastern end of stockpile 1. Mr Lau estimated a cap and contain strategy would cost between $250,000 (assumes use of materials available on site for capping) to $530,000 (assumes capping requires importation of off-site materials).

[44]

Oral evidence of Dr Martens and Mr Lau

Dr Martens and Mr Lau also gave oral evidence over the first and second days and part of the third day of the sentencing hearing.

[45]

Hydrological evidence on surface and groundwater contamination

Mr Lau gave oral evidence that based on water samples collected in the JBS&G report and those recorded in a report prepared by URS, "Project Trojan - Waste Investigation Hunter Region - Salt Ash Site" dated 25 September 2015 (URS report) (Ex 2), there was no evidence of leachate impacting groundwater or surface water at the site.
Mr Lau was cross-examined on the method used to derive trigger assessment values in the JBS&G report. Background concentration levels of contaminants such as heavy metals were higher than trigger value guidelines, so they became the trigger assessment levels. These values were adjusted for hardness adopting a formula in the ANZECC guidelines (Ex 3). Local conditions were accounted for following ANZG, Water Quality Guidelines - Accounting for Local Conditions (accessed 27 July 2021) (ANZG guidelines on local conditions) (Ex D). Mr Lau agreed the calculation to adjust for water hardness was not identified in the JBS&G report but stated that it was standard practice.
Mr Lau accepted he could not rely on a derived trigger assessment level for arsenic in the JBS&G report because there was not a hardness criterion for arsenic in the ANZECC guidelines. In this case he had to rely on the higher background level that had been recorded. Adopting this, groundwater samples for MW6, MW7 and MW8 exceeded the background concentration for arsenic, not just MW8 as recorded in the JBS&G report. Mr Lau considered this still did not raise any potential for environmental harm.
It was put to Mr Lau that there were problems with the analysis of groundwater samples considering specific guidance in the following documents: NSW Department of Environment and Conservation, Guidelines for the Assessment and Management of Groundwater Contamination (March 2007) (Ex C); ANZG guidelines on local conditions (Ex D); and Australian and New Zealand Guidelines for Fresh and Marine Water Quality - Default Guidelines for Toxicants, default guideline values for arsenic, cadmium, chromium (CrIII), chromium (CrVI), copper, lead, mercury, nickel and zinc (accessed 27 July 2021) (Ex E). Mr Lau disagreed that these criticisms impacted the results.
Dr Martens was critical that Mr Lau's groundwater and surface water samples were only taken on one day. Mr Lau thought it was fine to conduct sampling over one day given how long the stockpiles had been on the site. Dr Martens stated that there had not been a sufficiently extensive sampling program to inform a proper understanding of the site, including that there were no wells on the eastern side of stockpile 1. Dr Martens was critical of sampling techniques and differences between concentrations reported for primary samples and duplicate samples. Mr Lau disagreed with these criticisms.

[46]

Presence of asbestos

Dr Martens and Mr Lau referred to the asbestos sampling and testing undertaken in the AECOM report dated 9 June 2016 (Ex 8). Dr Martens stated that based on the AECOM results the asbestos was random and widespread within the two stockpiles.
Applying an equation in the WA DOH guidelines (Ex 4) to the asbestos samples recorded in the AECOM report, Dr Martens agreed in cross-examination that the highest concentration of asbestos from the samples detected using the 10-litre bucket sampling method was 0.03%, based on a 20.0 gram sample. This would satisfy criteria for residential use of the premises applying the soil asbestos investigation criteria extracted above in [143]. Mr Lau and Dr Martens agreed that asbestos concentrations in soil for samples from the AECOM report using the 10-litre bucket sampling method were below the criteria for commercial and industrial premises. Mr Lau stated that the asbestos concentrations in soil were generally below the criteria for preschools.
Mr Lau was cross-examined on the application of the WA DOH guidelines and the NEPM guidelines (Ex F) to asbestos waste in the stockpiles. Mr Lau agreed that the WA DOH guidelines and NEPM guidelines did not formally apply to the assessment of asbestos concentration in demolition waste in NSW noting that this was "quite a contradiction". Mr Lau stated that under relevant legislation regard must be had to these guidelines as they relate to remediation as distinct from assessment of asbestos in the stockpiles. Dr Martens accepted the WA DOH guidelines were commonly applied in NSW and agreed with Mr Lau's interpretation.
Mr Lau gave oral evidence that when his company conducted mechanical drilling on the stockpiles from 15-17 February 2021 no airborne asbestos was detected. Dr Martens agreed with Mr Lau's testing methodology for airborne asbestos. Mr Lau concluded that the absence of any asbestos detection for those three days of mechanical drilling provided conclusive evidence that the current condition of asbestos present in the stockpiles did not present any unacceptable risk to human health.

[47]

Cap and contain remediation strategy

Mr Lau agreed broadly with Dr Martens' cap and contain strategy (option 4) subject to certain modifications. Dr Martens' proposed strategy included further geotechnical testing to identify and then relocate the portion of stockpile 1 placed in contact with the aquifer and then reshaping, capping and retaining the stockpiles. Mr Lau disputed the need for any further geotechnical investigation to identify the extent of stockpile 1 placed in direct contact with the aquifer based on his evidence that the aquifer was not in contact with the stockpiles.
Mr Lau stated that placement of a clean capping layer at least 300 mm thick across both stockpiles using sand from onsite was the most appropriate option since this was a commercial industrial site and taking into account cost. Dr Martens accepted that clean sand capping could be used but stated that it should be 500 mm thick rather than 300 mm.
Dr Martens agreed with Mr Lau's suggestion that a two-metre strip from the eastern side of stockpile 1 should be excised off and removed to another part of the stockpile for contouring purposes. Dr Martens suggested that the strip should be three metres wide to provide better access for vehicles, equipment, machinery and persons.

[48]

Statutory scheme for recovered fines problematic in application to consumers

The Defendants submitted that the statutory scheme for the creation, distribution and use of recovered fines made and administered by the EPA is broken because of the significant legal and financial risks to consumers in four identified areas. Each of these identified areas will now be considered.

[49]

(i) Asbestos and the operation of the recovered fines exemptions

A significant matter to note is that neither of the two recovered fines exemptions considered in Grafil No 1 required processors to test the material received from building sites in skip bins for asbestos. Under Condition 10 (chemical and other property requirements), Condition 11 (sampling and testing requirements) and Condition 12 (test methods) in the CPRF exemption 2010 asbestos is not mentioned before material processed in accordance with the CPRF exemption can be supplied to consumers. The only reference to asbestos in the CPRF exemption is in the note section at the end referring to the existence of cl 42 of the Waste Regulation.
Under the ENM exemption 2012, ENM is defined in Condition 6 as not to include asbestos. In Condition 10 ENM must meet chemical concentrations and other values listed in Column 2 and Column 3 of Table 2, applying testing methods in Column 4 of Table 2. Asbestos is not included in Condition 10. In Grafil No 1 the supply of ENM to Lot 8 was not ultimately alleged by the EPA to contain asbestos, Grafil No 1 at [239].
I note that the latest recovered fines exemptions, made in 2014, also do not require processors to test for the presence of asbestos.

[50]

Source of asbestos

Asbestos was present in the recovered fines delivered to the Defendants in the charge period, about which they had no knowledge. In Grafil No 1 at [343] I found that the source of the asbestos was unknown and identified possible sources at [527]. That finding is strictly correct in that the precise source of the asbestos is unknown. It was agreed in the sentencing hearing consistently with Grafil No 1 that the vast bulk of the material on Lot 8 came from four processors, one of which supplied ENM. The evidence of the presence of asbestos in the stockpiles identified in the AECOM report is set out in Grafil No 1 at [185]-[189]. Given the evidence of Dr Martens at the sentencing hearing that the asbestos is random and widespread throughout the two stockpiles on Lot 8 the EPA accepted at the sentencing hearing that one or more of the three processors of recovered fines were the most likely source. The Defendants accepted it was probable the source was one or more of these three processors. I will therefore proceed on the basis that an unknown amount of material delivered to Lot 8 largely from three processors (leaving aside ENM delivered from a fourth processor Bingo which the EPA accepted did not contain asbestos) contained asbestos.
The legal consequence of the asbestos being present on Lot 8 in the stockpiles was the subject of extensive consideration in Grafil No 1. At the trial on liability the EPA argued that cl 42 of the Waste Regulation (Special requirements relating to asbestos waste) applied to the Defendants meaning they could not have the benefit of the recovered fines exemptions because of the presence of asbestos, regardless that the CPRF exemption permitted by cll 51 and 51A of the Waste Regulation had no requirement for testing for asbestos. That submission was rejected in Grafil No 1 at [351]. The EPA's stated case to the CCA included the question of whether cl 42 of the Waste Regulation applied to the Defendants regardless of the application of the CPRF exemption. Grafil CCA rejected that submission at [333], no separate charge having been made in relation to cl 42.

[51]

Defendants' submissions

The Defendants submitted that asbestos is not visible in recovered fines due to the processing of the material to the constituent particle size, Grafil No 1 at [369]. All of the recovered fines material provided to Grafil was certified to meet physical and chemical properties of the recovered fines exemption. Mr Mackenzie had no idea when he received the recovered fines that it might contain asbestos. Had he known that he would not have received the material. He assumed that contaminated material could not be permitted to leave the processors under the terms of their EPLs. The EPA accepted in closing submissions that for a consumer to be able to identify asbestos in recovered fines was like looking for a needle in a haystack.
Any fault for the presences of any asbestos in the recovered fines supplied to Grafil by the waste processors lies at the feet of any one or more of the processors who supplied material contaminated with asbestos and the regulator the EPA. The processors were prohibited by law from causing or permitting asbestos waste in any form to be re-used or recycled under cl 42(5) of the Waste Regulation. It is possible that if any of the processors supplied material with asbestos, they may not have known that asbestos contamination was present in the material because they were not required to test for it. Despite the fact that asbestos is ubiquitous in building and demolition waste (Grafil No 1 at [353]) the recovered fines exemptions promulgated by the EPA did not require the processor to test the material for asbestos and did not contain any specifications regarding asbestos. That is, even if there was asbestos present in processed recovered fines, the material can still comply with all of the physical and chemical parameters specified in the exemption and can be certified as complying. Consumers were not required to test for asbestos either.
Although the waste processors had asbestos management processes in place, the EPLs held by the processors attached to Mr Hannam's affidavit, for KLF, BBR, Auburn Recycling Centre Pty Ltd, St Peters Recycling Centre Pty Ltd and Homebush Bay Recycling Centre Pty Ltd did not contain any requirements of the processors in relation to the management of asbestos. Under the heading "Asbestos" there is a referral to complying with the Waste Regulation. The asbestos management plans implemented by the processors were not a result of EPA oversight through the EPLs held by the processors. This is plainly inadequate in addressing the production by the licensed waste facilities of recovered fines from skip bin waste both generally and in respect of asbestos.

[52]

EPA's submissions

At the sentencing hearing the EPA submitted that: 18. … cl 42 of the Waste Regulation has no effect on the operation of the Fines Exemption, in so far as it operates to exempt a person from the consequences of the relevant licence based activities listed under Sch 1 of the POEO Act: Grafil CCA at [333]. 19. ENM that contains asbestos is not ENM for the purposes of ENM Exemption: Condition 6. However, given the properties of ENM, being naturally occurring rock and soil (including but not limited to materials such as sandstone, shale, clay and soil) that (a) has been excavated from the ground, (b) contains at least 98% (by weight) natural material, (c) does not meet the definition of Virgin Excavated Natural Material in the POEO Act (as opposed to a product derived from building and construction materials), it is unlikely for ENM to contain asbestos. 20. It is only the reuse or recycling of asbestos waste that is prohibited under cl 42(5) of the Waste Regulation, and it is only the person who causes or permits such re-use or recycling that is liable to the maximum penalty prescribed by cl 42(2), namely 400 penalty units in the case of a corporation or 200 penalty units in the case of an individual. As Pain J held in DECC v Olmwood Pty Ltd (2010) 173 LGERA 366 at [351]-[359], permitting or causing an offence involves mens rea of, respectively, knowledge or an intention to secure a particular outcome. On the basis of this authority, in the absence of knowledge or sufficient foresight that the waste contained asbestos, a consumer would not be liable for an offence against cl 42(5).
I interpose that putting to one side that the last paragraph is hardly a guarantee that the EPA will not investigate an unwitting consumer who receives recovered fines with asbestos unbeknownst to them for potential breaches of cl 42(5), missing from this explanation is what the presence of asbestos for consumers of recovered fines, including the Defendants, means practically. That is what the Defendants' submissions largely addressed.
The EPA provided the following further response to questions raised by the Court and to the Defendants' submissions on the EPLs held by the processors on the sixth day of the sentencing hearing:

[53]

Prosecutor's submissions on practical matters relating to asbestos and recovered fines 1. The Defendants have made submissions on sentence that the environment protection licences (EPL) of the processors of the recovered fines sent to Lot 8 DP 833768 (Lot 8) contained no targeted conditions in relation to asbestos, and that the EPA is "not doing much at all" to address the carrying out of activities involving the processing of this substance (T425-427). That submission is not accurate. 2. The relevant processors' EPLs permitted them to receive building and demolition waste: Condition L2 of the EPLs for KLF Holdings Pty Ltd CB 377; Botany Building Recyclers Pty Ltd CB 398; also, Auburn Recycling Centre Pty Ltd (aka Bingo) CB 417. 3. "Building and demolition waste" is defined by cl 50 of Sch 1 of the Protection of the Environment Operations Act 1997 (POEO Act) to mean "unsegregated material (other than material containing asbestos waste) that results from …". The building and demolition waste received by these processors, which was converted into recovered fines, should therefore not have contained asbestos. Furthermore, the processors were required to take steps to ensure that their activities complied with the POEO Act and the Protection of the Environment Operations (Waste) Regulation 2005 (Waste Regulation), including taking steps to ensure they did not cause or permit the reuse or recycling of asbestos waste (cl 42(5) Waste Regulation) or supply, or cause the supply, of waste containing asbestos to a place that could not lawfully be used as a waste facility for that waste (s 143(1) POEO Act). 4. To ensure these legal requirements were met, the processors implemented their own asbestos management plans: Grafil (No 1) at [353].

I interpose that part of my finding in Grafil No 1 at [353] that the processors' EPL's required them to deal with asbestos is incorrect in light of the evidence concerning EPLs in the sentencing hearing. The EPLs held by five processors in evidence attached to Mr Hannam's affidavit contain no effective requirements in relation to asbestos management as the Defendants have identified. The Defendants submissions are correct that the EPLs have no specific requirements in relation to the management of asbestos by processors.
The EPA submissions continued: 5. The Notes to the Continuous Process Recovered Fines Exemption 2010 (Fines Exemption) provide the following guidance to consumers in relation to their obligations under this instrument and the product they may be contemplating receiving: In gazetting this general exemption, the EPA is not exempting the relevant waste form the specific requirements of the [POEO] Act and [Waste] Regulations. The EPA is not in any way endorsing the use of this substance or guaranteeing that the substance will confer benefit. For example, a person who pollutes land (s 142A) or water (s 120), or does not meet the special requirements for asbestos waste (clause 42), regardless of having an exemption, is guilty of having [committed] an offence and subject to prosecution. … The conditions [set out in] this exemption are designed to minimise the risk of potential harm to the environment, human health and agriculture, however, neither this exemption nor these conditions guarantee that the environment, human health or agriculture will not be harmed. The consumer should assess whether or not the exempted material is fit for purpose for which the material is proposed to be used and whether this will cause harm. The consumer may need to seek expert engineering advice or technical advice. … Regardless of any exemption provided by the EPA, the person who causes or permits the application of the substance to land must ensure that the action is lawful and consistent with the development consent requirements of the land. 6. It is clear from the above that a consumer's receipt and land application of recovered fines pursuant to the Fines Exemption does not operate as an automatic approval of that activity by the EPA. The EPA also expressly does not endorse the use of recovered fines or guarantee that the substance will confer a benefit. 7. If having read the Notes to the Fines Exemption, a consumer has concerns in relation to the potential for any environmental and/or human health risks posed by the substance, it is open to them to speak directly to a processor to discuss the appropriateness of the product (which did not happen in this case: T251.50-T252.9 (Mackenzie)). 8. Assuming the substance is accepted on site, it may also be in a consumer's best interests to receive recovered fines from the one processor. Should any foreign or irregular material be detected in the recovered fines, having one processor avoids the potential for a problem arising with respect to ascertaining the provenance of the unwanted substance. 9. A consumer who receives recovered fines from more than one processor may be at a greater risk of bearing clean-up costs when that waste is mixed on the consumer's premises. This is because it may not be possible to accurately identify the source of any contaminants, so as to justify the exercise of the power under s 91 (1)(b) of the POEO Act, for clean-up against any particular processor, as opposed to the occupier of the premises at or from which the EPA reasonably suspects that a pollution incident has occurred or is occurring. 10. If recovered fines are received from multiple processors, a consumer can reduce the risks of receiving unwanted materials by visually checking the contents of each load deposited on their site to ensure there are no visible contaminants before combining that waste with loads from other sources. A checking procedure of this nature would have presumably detected the impurities visible in the photo exhibited to Mr Mackenzie's affidavit (at CB 770). Conversely, having an open gate with no inspections of incoming loads, as occurred in this case (Mackenzie affidavit at [45]-[46]; CB 742-743), poses elevated risks to a consumer. 11. For completeness, it is noted that since the offence period, cl 42 of the Waste Regulation 2005 has been repealed, and the following provisions inserted into the POEO Act on 25 January 2019 deal with asbestos waste: (a) s 144AAA of the POEO Act provides that a person disposing of asbestos waste off the site at which it is generated must do so at a place that can lawfully receive the waste; and (b) s 144AAB provides that a person must not cause or permit asbestos waste in any form to be re-used or recycled.

[54]

Consideration of asbestos and recovered fines

The legal and practical difficulties of an unwitting consumer receiving material with asbestos unbeknownst to them, as has occurred for these Defendants, and the ramifications for consumers being required to remove such material was discussed in Grafil No 1 at [368]-[370]. At trial the EPA indicated that due to the presence of asbestos, it would be seeking an order for removal of the stockpiles which at that stage for disposal costs alone was estimated to cost between $5.5 and $12.1 million, Grafil No 1 at [370]. The EPA's position on the legal responsibility of consumers in relation to asbestos delivered in recovered fines has changed since Grafil No 1.
I observe that the submissions of the EPA in this sentencing hearing can provide no comfort that consumers seeking to obtain material under the recovered fines exemption scheme will not be subject to investigation and possibly a criminal charge for waste offences in relation to the presence of asbestos depending on the exercise of prosecutorial discretion, and/or be subject to onerous clean-up obligations being imposed on them for asbestos the receipt of which they could not be expected to have knowledge. A number of substantial challenges both legal and practical for consumers arise from the way the prosecution in Grafil No 1, in Grafil CCA and in this sentencing hearing has been approached by the EPA some of which are as follows: 1. There are obvious practical problems with the submission that consumers can visually check for visible contaminants, which most relevantly in this part of the sentencing case is asbestos. Checking for asbestos is patently impractical if not impossible not least because the evidence in Grafil No 1 at [369] was that once fines are reduced to the required particle size of less than 9.5 mm to satisfy the definition of "continuous process" recovered fines in Condition 6 of the CPRF exemption asbestos is not visible to the naked eye. 2. The EPA seems to have in mind a very sophisticated consumer who would be alert to the possibility that there might be asbestos in recovered fines and therefore think to look out for it, as well as assuming that such a consumer would be able to see it. Given that the waste strategy documents, recorded above in [17], identify consumers as including individuals, households and businesses inter alia, in other words the general public, this is highly concerning for unwitting consumers. It seems obvious that a coherent system allowing the distribution throughout NSW of recovered fines from building and demolition material would not result in asbestos being delivered to consumers who are simply unaware that this is something they may receive and therefore have to be alert to. 3. The measure the EPA proposes in addition to a consumer attempting to check each load as it is delivered, presumably as the loads are tipped onto the consumer's land at which point they become the consumer's problem, are not identified in the CPRF exemption namely that material should only be received from one processor. Once again a sophisticated consumer will somehow have to be aware of this desirable operational approach if criminal investigation and prosecution and/or liability for clean-up costs for asbestos waste is to be avoided, through the appropriate exercise by the EPA of its prosecutorial and regulatory discretion. 4. How talking to a processor will help a consumer work out if recovered fines material is fit for purpose if it is otherwise certified by a processor as compliant with the chemical and other testing requirements in an exemption, over which a consumer has no control, is not apparent (see below in [190]). 5. The EPA's submissions on what a consumer could do changed over time, accepting early in the sentencing hearing that the position for consumers unknowingly receiving asbestos was "difficult" and not able to be cured by viewing test results of processors. There is no obligation that consumers view test results in any event under the CPRF exemption and, as asbestos is not required to be tested for, doing so would not assist in its detection. 6. Similarly the certificates of compliance, which consumers do not have to keep according to the CPRF or ENM exemptions, will provide no assistance in alerting consumers to the presence of asbestos. These certify compliance with the chemical and other values recovered fines or ENM must meet. Asbestos testing is not required by Condition 8 of the CPRF exemption or Condition 8 of the ENM exemption. 7. The other matter not referred to expressly by the EPA is what does the consumer do once material with asbestos is on their land through no fault on their part, as occurred for the Defendants. In the submissions above in [175] at par 9, the EPA suggests the possible use of s 91(1)(b) of the POEO Act whereby a regulatory authority (the EPA) may direct a person who is reasonably suspected by the authority of causing or having caused a pollution incident to take clean up action, referring to a processor as a possible recipient of such a notice. Whether the EPA would issue such a notice seems to depend on whether a single source of material with asbestos can be identified by a consumer, hence the EPA's submission that only one source of recovered fines should be utilised by a consumer. Relying on the EPA issuing a clean-up notice to the source of the asbestos now on their land is a risky and uncertain strategy for a consumer hoping to avoid costly clean up obligations being imposed upon them.

[55]

(ii) Compliance with certain conditions of the exemptions by consumer

[56]

Defendants' submissions

Another basis for the Defendants arguing that the recovered fines exemption system is broken and unworkable for consumers is the application of the conditions in the exemptions to consumers in light of findings in Grafil CCA. The CCA has held that the chemical and other properties of recovered fines required under Conditions 7 and 10 and the testing obligations of the processors under Condition 11 applies equally to consumers, as listed in Table 1 in Column 3 under consumer responsibilities of the CPRF exemption. Consumers have no control over the testing and certification carried out by processors of continuous fines, yet the exemption will not apply to them if those chemical and other properties are not met for material in a consumer's hands. Under the CPRF exemption the testing by processors is carried out on a continuous basis by a rolling, five-week testing of material as it effectively progresses along the assembly line so that it is tested before the loading of material into particular batches and trucks. It is impossible for a consumer to carry out this kind of testing.
The Defendants referred to the finding in Grafil No 1 that all material supplied by the processors to Grafil was certified as required by the CPRF exemption. The certificates of compliance were provided to transporters. Because of the testing regime under Condition 8.7 of the CPRF exemption a certificate is required for each transaction, which does not equate to each individual load. Transaction is referred to in the Notes as "a contractual agreement between the two parties which specifies the exchange of waste material from one party to another". Under Condition 8.7 of the CPRF exemption one certificate would cover all loads in a contractual arrangement because of the continuous process testing, a matter ultimately accepted by the EPA. The certificates of compliance are express in stating that results of laboratory analysis of recovered fines have been undertaken, see a certificate from KLF above in [78] and from Aussie Skips in [79]. The KLF certificate went with each load, the Aussie Skips certificate covered each transaction. These certificates are legitimate documents and it is reasonable for consumers to expect they can rely on them.

[57]

EPA's submissions

The EPA submitted that: 7. … his Honour observed [in Grafil CCA] that liability arises if, notwithstanding that there is a notice of exemption made pursuant to s 286 of the POEO Act that exempts a person from the requirement to be the holder of a licence authorising the carrying out of the scheduled activity on premises, "the person does not comply with all requirements specified in the notice of exemption" (at [36]; see also at [294]). 8. Both the Continuous Process Recovered Fines Exemption 2010 (Fines Exemption) and the Excavated Natural Material Exemption 2012 (ENM Exemption) apply to a processor/generator or a consumer "only in relation to the activities involving the relevant waste ["relevant waste" being defined in each exemption] and only where the responsible person complies with the conditions referred to in Column 3 of the table": Condition 5.1. 9. Where a processor/generator or consumer complies with those conditions, the activity referred to in Schedule 1 from which that person is exempt "is taken to be a non-Scheduled activity for the purposes of the Act": Condition 5.2. 10. As Preston CJ LEC observed in Grafil CCA at [45], the conditions with which a responsible person must comply in order to be exempt from, inter alia, s 48 of the POEO Act in respect of cll 39 and 42 of Schedule 1 are, for a consumer under the Fines Exemption (to take an example), "all requirements specified in section 7, 9, 10 and 11". For a processor, the requirements are those "specified in section 7, 8, 10 and 11". As the notes to the Fines Exemption state, failure to comply with those conditions may constitute an offence under cl 51 of the [Waste] Regulations "and the responsible person will be required to comply with the normal regulatory provisions". 11. Taking the Fines Exemption (the ENM exemption is similarly structured), Condition 7 (applying to both processors and consumers) states that the Notice of Exemption "is subject to the following conditions", the first of which imposes limits on the chemical concentrations of the recovered fines (Condition 7.1), and the second of which limits the purposes for which the recovered fines may be applied to land (Condition 7.2). 12. Condition 7.1 refers to Table 2 of the Exemption, which is also the subject of Condition 10. As with Condition 7.1, the focus of Conditions 10 and 11 (which apply to processors and consumers) is the "continuous process" recovered fines. Condition 10 provides that the Exemption only applies to recovered fines, the chemical and other attributes of which satisfy the chemical concentrations and other values in Table 2. Condition 11 provides that the Exemption only applies to recovered fines sampled in accordance with the requirements in Table 3. 13. Condition 8 is titled "Processor responsibilities" and imposes a range of requirements, including with respect to sampling (Conditions 8.1-8.4), the keeping of records in relation to the results of the sampling and supply (Conditions 8.5-8.6), and the provision of information to consumers. Condition 8.7 specifically requires a processor to provide "a written statement of compliance to the consumer with each transaction, certifying that the 'continuous process' recovered fines complies with the relevant conditions of this exemption". The notes to the exemption explain the reference to transactions, stating: For the purposes of arrangements between a generator, a processor and a consumer, a 'transaction' is taken to mean the contractual agreement between the two parties which specifies the exchange of waste material from one party to another. A 'statement of compliance' must be in writing and be provided with each transaction. Condition 8.8 also requires the processor to make information on the latest characterisation and routine tests available to the consumer or EPA on request. 14. Condition 9 is titled "Consumer responsibilities" and imposes requirements first as to record keeping (Condition 9.1) and then as to how the relevant waste is to be applied (Condition 9.2 stipulating no application in or beneath water including groundwater, Condition 9.3 requiring land application within a reasonable period of time). 15. Having regard to the onus requirement in s 144(2) of the POEO Act, to establish compliance with the CPRF Exemption a consumer would need to: a. First, demonstrate that the "recovered fines" are recovered fines to which the CPRF Exemption applies (Conditions 7, 10 and 11). This could be done by establishing: i. in relation to Conditions 7.1, 10 and 11, that the "recovered fines" satisfied the chemical and other attributes in Conditions 7.1 and 10, and were sampled in accordance with Condition 11, through production of the compliance certificates that the processors are required to provide the consumer with each transaction pursuant to Condition 8.7 (provided that those certificates do certify compliance, in accordance with Conditions 7.1 and 10, of samples taken in accordance with Condition 11); and ii. in relation to Condition 7.2, that the consumer applied the recovered fines to land for the purpose of construction or landscaping (and not for any of the applications which are excluded in Condition 7.2.1 through to 7.2.7). b. Second, produce the records the consumer is expressly required to keep in Condition 9.1, namely as to the quantity of the "continuous process" recovered fines received by the consumer and the supplier's name and address. c. Third, demonstrate that the consumer land applied the waste within a reasonable period of time. This could be done by keeping a record of the date and location of the land application of the relevant fines. The consumer may also thereby demonstrate compliance with Condition 9.2, that the consumer did not apply the relevant waste in or beneath water including groundwater. 16. Noting that a s 144 offence is a strict liability offence, it is possible that a consumer may not be able to meet its onus in relation to lawful authority if, for example, recovered fines on its land had been previously sampled and found to contain exceedances of one or more of the chemical components identified in Condition 10 but was still supplied to the consumer. Subject to the prosecutor being able to establish use of the land for one or both of the activities in cll 39 and 42 of Schedule 1 to the POEO Act, liability may be established in that instance even if a consumer was able to produce certificates of compliance for the recovered fines it had received, which showed compliance. However, if liability were established in that instance, a consumer's production of the compliance certificates and records required to be kept by Condition 9.1 (which may potentially be the one document: for example EPA v Grafil Pty Ltd & Mackenzie [2018] NSWLEC 99 at [154]) would be highly relevant to matters on penalty including objective seriousness, and specific and general deterrence. Of course, if a consumer could and did produce those records to the EPA, and could otherwise demonstrate compliance with the other consumer responsibility conditions, there would be a question as to whether the consumer would be charged at all (that being a matter for the prosecutor). 17. The fact that there is not an express requirement for a consumer to keep the additional records created by producers under Conditions 8.7 and/or 8.8, in comparison to the separate record Condition 9.1, does not countermand the significance for the consumer of maintaining records. Condition 9.1 is a minimum - if a consumer keeps those records the EPA can at least approach the relevant processors to seek relevant testing records. However, given the onus on consumers (and processors) individually to demonstrate compliance with the exemptions (which is how the exemptions are themselves formulated), consumers need to consider and make provision for the records that evidence what they have done to ensure compliance.

[58]

Consideration of compliance with conditions of the exemptions by consumer

Some of the findings in Grafil CCA adopting the position of the EPA in relation to consumer obligations under the exemptions have substantial legal and practical ramifications for consumers. The submissions of the EPA immediately above should raise a number of concerns for current and potential consumers in terms of their inability to avoid investigation by the EPA and being subject to the exercise of prosecutorial discretion in considering criminal enforcement for a number of reasons.
Firstly, consumers bear the onus on the civil standard of demonstrating that they are compliant with the relevant exemption, Grafil CCA at [228].
Secondly, the practical difficulty (impossibility) of complying with the consumer obligations under the CPRF exemption particularly in relation to the sampling and testing obligations of the processors are identified by the Defendants above and were identified in Grafil No 1. Routine sampling under Condition 11 of the CPRF exemption required one composite sample to be collected each week with five samples collected in a five-week period. The extensive testing requirements imposed on the processor are identified in Condition 12 of the CPRF exemption. There is no practical way for a consumer to participate in or check the continuous process sampling and testing required by the CPRF exemption in Conditions 11 and 12 as the Defendants have identified.
Thirdly, the position outlined above by the EPA in [184] at par 15(a)(i) for how consumers can demonstrate compliance with Conditions 7.1, 10 and 11 of the CPRF exemption whereby consumers must ensure they obtain and keep certificates of compliance provided by processors if they are to rely on the CPRF exemption is not how the EPA conducted these prosecutions at trial as follows: 1. No legal issue was raised by the EPA in Grafil No 1 that Grafil failed to keep compliance certificates. No such obligation is contained in Condition 9.1 or any other condition of the CPRF exemption, similarly for the ENM exemption. 2. In Grafil No 1 the EPA's then construction of the exemptions required that the deposited material from the processors in-situ on Lot 8 had to meet the chemical and other composition requirements of the CPRF exemption in Conditions 10 and 11 in the hands of the consumer Grafil. This position was adopted regardless of the provision of certificates of compliance provided by the processors to the transporters, which were in evidence. At trial the EPA sought to demonstrate that the material in stockpiles 1 and 2 on Lot 8 did not meet the chemical and other requirements of the CPRF exemption, which I considered at [455]-[500]. Voluminous evidence on this issue was adduced, identified at [185]-[232], being the AECOM report dated 9 June 2016 about what was in the stockpiles from a geotechnical and chemical perspective and analysis of this by Ms Blefari, Mr Dean, Mr Fifield, Dr Prifti and Dr Martens. Ms Blefari accepted in cross-examination that it was not possible to recreate the sampling and testing required of processors under the CPRF exemption for material deposited on land. This approach is not taken in the EPA's submissions on sentence above. 3. In Grafil No 1 the EPA also sought to prove that the sampling and testing requirements of Conditions 8, 10, 11 and 12 were not complied with by the processors as matters relevant to Grafil's liability, matters I found at [471] that a consumer has no control over. Once again voluminous evidence was called by the EPA on this issue in Grafil No 1, including results of searches for test results of processed material undertaken on behalf of all four processors for the purposes of complying with the CPRF exemption, records of interview with the processors and expert reports prepared on the topic inter alia. I identified at [455] that this issue was said not to be an important part of the EPA's case in closing. It still remained as an issue and I considered aspects of the evidence of processors concerning their testing regimes, the AECOM report and Dr Martens' conclusions about the stockpiles from [456]-[466] and extensive evidence from EPA officers and other experts which occupied many days of court time. The EPA's position set out above no longer includes requiring a consumer to investigate what sampling and testing a processor has undertaken but the submissions above in [184] at par 16 suggest that consumers are still legally vulnerable. 4. All the legal costs and investigation costs relied on to support the EPA's case at trial which are apparently not the view of the EPA now are claimed by the EPA in this sentencing hearing, as I consider below in [317]-[356]. The AECOM report is the subject of the investigation costs claim by the EPA of $187,088.03. The legal costs claimed by the EPA are substantial, over $1 million.

[59]

(iii) Record keeping requirements of the exemptions

The Defendants failed to keep the records required by Condition 9.1 of the CPRF exemption and Condition 9.2 of the ENM exemption. As a result, as found in Grafil CCA at [286] they did not have the benefit of these exemptions at all and therefore required an EPL in order to avoid a charge of operating as a waste facility without lawful authority.

[60]

Defendants' submissions

The Defendants submitted that the basic records the consumer is required to keep under Condition 9.1 of the CPRF exemption overlap with records the processor is independently required to keep under Condition 8.6. There is nothing that the consumer is required to keep that would fill some kind of lacuna of the type suggested by the EPA. The consumer is required to keep records of the quantity of the recovered fines received and the supplier's name and address. The processor is required to keep records of the quantity of recovered fines supplied to the consumer and either the consumer's name and address or the registration details of the vehicle used to transport the recovered fines. Even if the processor was to keep the registration details of the vehicle, the consumer of the recovered fines could still be identified using the processor's records. Records required to be kept by the consumer are not filling any gap. Condition 8.6 of the CPRF exemption covers the field. A consumer's failure to keep records is only a technical breach.
The EPA has placed very belated reliance on the importance of record keeping in the overall scheme. This was not a focus of the EPA's case at trial. All that the consumer is required to keep are records of the quantity of the recovered fines and the supplier's name and address. There is no logical or proportionate connection between the culpability that may be attached to a defendant for not complying with the requirement to keep records (of the quantity of the recovered fines and the supplier's name and address) and the posited objective seriousness of the offence, particularly referrable to the volume of the material and to the presence of asbestos in it. Those matters have no connection with a failure by Grafil to keep records of the quantity of recovered fines and of the suppliers' names and addresses.
Grafil CCA found that a failure to keep records means a defendant is outside the exemptions and therefore needs an EPL. The declaration of the legal position by the CCA has very significant consequences for the workability of this system, and it is a position which the EPA promoted at all times. This is the system the EPA has implemented: if you obtain recovered fines from a waste processor that meet every chemical and physical requirement under the CPRF exemption, if you as consumer (and the processor) otherwise comply with every letter of the exemption, but you as a consumer fail to keep the records, you are disqualified from the exemption and, consequently, you require an EPL to use the land as a waste facility.

[61]

EPA's submissions

The record keeping requirement imposed by Condition 8.6 of the CPRF exemption on processors is in respect of recovered fines supplied to the consumer. That reinforces the importance of the consumer's compliance with Condition 9.1. The records required to be kept under Condition 9.1 are filling a gap. It is not just a technical requirement. What drives the requirement for record keeping is the need for the regulator, consumers and processors to be able to backtrack and cross-check the quantity of waste received and its supplier.
It is important that consumers record the volume of waste received because once it is in the ground it is very difficult to tell how much went into the ground. The EPA has to rely on consumers to comply with these recordkeeping conditions to know how much material has been land-applied. It cannot seek this information from the processor who does not necessarily have to keep this information in relation to the consumer. These record keeping requirements are an important part of the regulatory chain to be able to effectively assess and regulate where material has been spread and what its impacts may be.

[62]

Consideration of record keeping requirements of exemptions

Consumers are required to keep records as identified in Condition 9.1 of the CPRF exemption and Condition 9.2 of the ENM exemption. The requirement is to keep a record of the quantity of recovered fines/ENM received and the supplier's name and address for a period of three years. Unlike the other two areas of concern for consumers identified above, being the presence of asbestos and the prudent practice according to the EPA of keeping compliance certificates, which matters are not apparent in the exemptions in issue, the record keeping requirement is set out in the exemption and is readily understandable. I agree with the Defendants that the obligations on a consumer are onerous in the sense that the legal consequence of not complying with this condition in full is that they do not have the benefit of an exemption, with potentially grave legal and financial consequences.
The significance of keeping these records is emphasised in the EPA's submissions immediately above. I agree with the Defendants' submission that this is a belated reliance on the importance of this requirement by the EPA considering the case run at trial by the EPA in which this issue played a relatively minor role. Whether these records are necessary to fill a lacuna because the information required to be kept by processors under Condition 8.6 of the CPRF exemption does not cover the same scope was not considered definitively in Grafil No 1. As the Defendants submitted a processor must keep records of the quantity of recovered fines supplied to a consumer and either the consumer's name and address or the registration details of the vehicle used for transportation of the fines for three years. The information keeping requirements of processors and consumers overlap.
I accept the EPA's submission that a consumer doing what is required aids in the regulatory task but a consumer's failure to do so does not mean such information is not available. The EPA could have found out the same information required to be kept by Grafil from the processors.

[63]

Defendants' submissions

Another pitfall for consumers according to the Defendants is the likelihood they will be found to have disposed of waste if they temporarily stockpile it before final use for building a road. This submission was in response to the EPA stating that the offences before the Court were for the storage and disposal of waste. An extended concept of "disposal" of waste now applies for the purposes of cl 39 of Sch 1 to the POEO Act so that placement of waste on land temporarily for storage before final application is deemed to be disposal as found by Grafil CCA at [159]-[173]. If the usual meaning of disposal being "to get rid of it" applies, see Environment Protection Authority v N (1992) 26 NSWLR 352 at 355, the Defendants did not dispose of recovered fines and ENM when they stockpiled it for use in the short-term on a road to the sand extraction facility. The EPA is only able to submit that the Defendants disposed of waste because of the deemed disposal arising under cl 39 of Sch 1, see Grafil CCA at [159] and following. There is no culpability in the sense of actual disposal of waste by the Defendants.

[64]

Consideration of deemed disposal of waste

The Defendants submitted that temporary stockpiling of recovered fines, which are waste, require an EPL for the reasons outlined above. The EPA did not make submissions on this issue at the sentencing hearing. In par 15(c) in [184] above the EPA submitted that a consumer could demonstrate compliance with the requirement to land apply relevant waste within a reasonable time as required in Condition 9.3 of the CPRF exemption and Condition 9.3 of the ENM exemption by keeping a record of what material was applied to land and when, and thereby satisfy the exemption requirements in this regard (and therefore not require an EPL). I am not sure the EPA's submission is correct if the Defendants' submissions set out immediately above are correct. If the Defendants' submissions are correct, it appears possible that no temporary stockpiling of material otherwise covered by the exemptions can be undertaken without an EPL being required.
The ability to temporarily stockpile material before its final use as a road or in landscaping would seem to be a practical necessity for consumers. The practical consequence of the findings in Grafil CCA may not be fully comprehended by the parties and is not by me in terms of whether the scheme created by the exemptions permits temporary stockpiling of material at all without an EPL being obtained.

[65]

Consideration of the statutory scheme for recovered fines

The findings in Grafil CCA clarify for the first time a number of aspects of the operation of the resource recovery exemptions scheme provided for under the POEO Act and Waste Regulation. It is apparent that further clarification of the legal operation of the recovered fines exemption scheme remains if there is to be certainty for consumers. How the exemptions operate in relation to consumers is continuing to evolve given the conduct of the prosecutions in Grafil No 1, the findings in Grafil CCA and the EPA's submissions in this sentencing hearing. The prosecution of these Defendants highlights some of the very real legal and financial risks for consumers under the statutory scheme the subject of the charges under the POEO Act as identified above in relation to the matters identified by the Defendants.
It is now appropriate to turn to the usual sentencing considerations to consider the objective seriousness of the offences informed by all relevant legal and factual matters. The following considerations in relation to objective seriousness deals collectively with Grafil and Mr Mackenzie.

[66]

Nature of offence

A fundamental consideration for environmental offences is the extent to which the defendant's conduct offends against the legislative objectives expressed in the offence, R v Peel [1971] 1 NSWLR 247 at 262; Garrett v Williams (2006) 160 LGERA 115; [2006] NSWLEC 785 at [89]; Garrett v Freeman (No 5) (2009) 164 LGERA 287; [2009] NSWLEC 1 at [52]; and Director-General of the Department of Environment and Climate Change v Rae (2009) 168 LGERA 121; [2009] NSWLEC 137 ("Rae") at [15]. The objects of the POEO Act are extracted as relevant above in [7].
The EPA submitted that by failing to land apply and store the waste on a site licensed for such activities or waiting for approval for the northern access route and not land applying the relevant waste directly to those parcels of land to which the modified Pt 3A approval ultimately applied, the Defendants undermined the statutory scheme under the POEO Act for environmental protection, licensing assessment and approval, as well as the regime for exempting waste-based activities that would otherwise require an EPL, Bankstown City Council v Hanna (2014) 205 LGERA 39; [2014] NSWLEC 152 at [56] per Preston CJ.
The Defendants submitted that the offending did not undermine the regulatory system or system of licensing by EPL at all. Grafil had an EPL. The Defendants had an honest belief that they were properly and fully regulated by the EPA under this EPL to the extent required, and did not require an EPL for their receipt of the stockpiled recycled material from processors that they knew were already licensed by the EPA and what they thought to be the EPA managed regulatory regime. They were transparent to the regulator and were not seeking to conceal any conduct from it. They expected to be promptly informed and pulled up by the EPA should they be found to be doing anything that did not comply with the regulatory regime. Instead the opposite occurred, and they were the subject of covert surveillance and a deliberate choice by the EPA to let the stockpiled material accumulate under its supervision. Lot 8 was regularly inspected by the EPA, but no issue was raised with the presence of the stockpiles.
The Defendants submitted they were respecting the planning system under the EPA Act by not proceeding to construct the alternative access road despite having stockpiled large quantities of recovered fines, but rather storing that material until it could be lawfully used (in circumstances where a Pt 3A approval was already in place that included Lot 8 and approved the construction of an access road, albeit a different alignment to that which was ultimately constructed pursuant to the modification). The case is akin to storing a delivery of bricks and mortar on one's land until the development application for the final modification to the design of the already approved house comes through. It is hard to imagine a more trivial and innocent breach of the requirements of the EPA Act.

[67]

State of mind

An offence under s 144(1) of the POEO Act, if committed intentionally, recklessly or negligently, will serve to increase the objective seriousness of the offence, Rae at [42].
The EPA submitted that Mr Mackenzie's acts in using Lot 8 as a waste facility without lawful authority was intentional, see Mr Mackenzie's evidence above in [87]-[88].
The Defendants submitted that the EPA's submission that the acts were intentional does not adequately address the factor going to objective seriousness. To the extent that submission is intended to refer to the acts of stockpiling the material as voluntary rather than involuntary, it is true, but of no significance. What is important is that the offending or breach of the CPRF exemption and the EPA's regulatory regime, and the planning regime, were not intentional - Mr Mackenzie was in fact of the view he was being careful to comply with the regulatory regime by specifying that only clean fill would be received, receiving from reputable EPA licensed facilities, opening up his premises for regular EPA inspection, and specifically storing the stockpiled material until the Department of Planning modified the extant Pt 3A approval to formally authorise the alternative access road.
In my view, the EPA relying on intentional stockpiling as relevant to state of mind in relation to a strict liability offence needs to be carefully considered. Such a submission has the danger of impermissibly inflating the seriousness of the strict liability offence in s 144(1). No culpability arises from identifying that the Defendants had recovered fines brought to Lot 8 for free and stockpiled them with the intention of using them on an access road through utilisation of the recovered fines exemptions and I accept the Defendants' submissions in the immediately preceding paragraph in this regard.

[68]

Reasons for offence

The EPA submitted that the offences were committed for financial gain being an aggravating factor under s 21A(2)(o) of the CSP Act. Mr Mackenzie admitted in cross-examination that stockpiling the material was a good opportunity to save money. The costs saved would have been about $200,000. By stockpiling the material Mr Mackenzie was able to avoid delay in building the road (Mr Mackenzie's affidavit evidence above in [87]) and that also resulted in financial gain. The offence was committed in the course of a commercial operation amounting to financial gain, Environment Protection Authority v Rixa Quarries (No.2) Pty Ltd (No 2) [2017] NSWLEC 93 ("EPA v Rixa") at [28]-[29].
The Defendants submitted that the EPA's contention that the offences were committed for financial gain is based on the incorrect assumption that delay to construction of the northern access road was impeding Macka's Sands' ability to sell extracted sand and transport it to the market. There is no evidence that the stockpiling of material produced any particular financial gain. The Worimi LALC's income stream depended on the modification application being granted, not the stockpiling of material. The purpose of stockpiling the material was for the construction of the access road for which Pt 3A approval was granted.
The Defendants submitted that the fact that the proper completion of the northern access road rather than undue delay would have benefited the Defendants and also third parties (the Worimi LALC), does not demonstrate that the offence was carried out for financial gain. The purpose of stockpiling was specifically to ensure compliance with planning law pending approval of the modified Pat 3A approval, see Mr Mackenzie's affidavit (par 44) above in [87]. No assertion of financial gain has been established to the required standard. EPA v Rixa involved quarrying and the sale onsite of material to customers and its facts are far removed from the present case.

[69]

Consideration

A defendant's reasons for committing an offence can be relevant in determining the appropriate penalty, Chief Executive, Office of Environment and Heritage v Merriman [2018] NSWLEC 96 at [34] citing Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 at 366. Commission of an offence for financial gain is also an aggravating factor under s 21A(2)(o) of the CSP Act. I do not accept the EPA's submission that because the offence was conducted in the course of operating a commercial business that it was committed for financial gain.
The EPA's submission does not recognise the recovered fines distribution system that has occurred and continues to occur throughout NSW enabled by the recovered fines exemption system it gazetted. This system allowed and continues to allow consumers to obtain material from processors of building and demolition material for use in landscaping and construction such as roads in defined circumstances. They are provided free to many consumers, essentially as part of the state-wide scheme administered by the EPA which aims to reduce material being sent to landfill, as identified in the waste strategy documents noted above in [16]-[19]. Saving money in this context by these Defendants is not relevant to the objective seriousness of these strict liability offences. Nor does the fact that Grafil was carrying out a commercial operation have any relevance to culpability. That is simply what Grafil as a consumer of recovered fines was doing at the time of the offences. The EPA also submitted that the offences were carried out for financial gain at least insofar as delay to the construction of the northern access road was impeding Grafil's ability to sell extracted sand and transport it to markets. This submission is speculative in my view and is not a mater established beyond reasonable doubt. As the Defendants' submitted the facts in EPA v Rixa are far removed from this matter and is irrelevant to these Defendants. The defendant in EPA v Rixa acted deliberately without an EPL when it knew one was required (at [30]).

[70]

Maximum penalty

The maximum penalty for any offence is relevant to determining the objective gravity of the offence. The maximum penalty reflects the public expression by Parliament of the seriousness of the offence, Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698. It also provides a sentencing yardstick for the case before the court. As the High Court noted in Markarian v The Queen (2005) 228 CLR 357; [2005] HCA 25 at [31]: It follows that careful attention to maximum penalties will almost always be required, first because the legislature has legislated for them; secondly, because they invite comparison between the worst possible case and the case before the court at the time; and thirdly, because in that regard they do provide, taken and balanced with all of the other relevant factors, a yardstick.
The maximum penalty for an offence in contravention of s 144(1) of the POEO Act during the charge period is set out above in [7].
The Defendants submitted that s 144(1) of the PEO Act captures a wide spectrum of conduct. It falls into the category of a provision in respect of which the maximum penalty has been set at a high catch-all level. The Defendants submitted that the maximum penalty for an offence under s 144(1) provides virtually no assistance in determining the appropriate penalty. That is particularly so by reason of the low moral culpability of the Defendants.

[71]

Factors in s 241(1) Protection of the Environment Operations Act 1997

As the Defendants submitted, the breaches they have been found guilty of in relation to s 144(1) concern, firstly, the failure to keep records as required by Condition 9.1 of the CPRF exemption and Condition 9.2 of the ENM exemption. Secondly, a development consent under the EPA Act was required by Condition 7.2.7 of the CPRF exemption. At the time of the offences the Defendants had in place a Pt 3A approval including for an access road. The Defendants were seeking a modification of the Pt 3A approval for an access road in a different location at the time of the offences. The failure to have in place the modified Pt 3A approval for the road for which the material was intended to be used resulted in the Defendants being unable to have the benefit of the exemptions. Thirdly, it appears that temporarily stockpiling the material because it was waste was also a breach of the POEO Act because that was applying it to land (as noted above in [204]-[205] the implications of such a finding are unclear). Those are the factors in relation to which s 241(1) of the POEO Act should be addressed.

[72]

Extent of environmental harm caused or likely to be caused, s 241(1)(a)

For the sentencing hearing, the parties tendered a number of documents and the Court heard extensive hydrological evidence over more than two days from hydrological engineers Dr Martens and Mr Lau summarised above in [126]-[161]. In closing submissions the EPA did not allege actual harm to the environment arose from the offences. It maintained there was potential for harm in relation to the possibility of leachate entering into groundwater and surface water, relying on Dr Martens' evidence summarised above in [127]-[130]. It also maintained that the material had been placed within or in contact with water underlying the stockpiles, relying on Dr Martens' evidence summarised above in [153].
The Defendants submitted that there was no likelihood of environmental harm arising from the technical breaches outlined above in [228]. The issue of environmental harm arising from the facts of the offence as found must be assessed as compared to the situation that would have existed had there been no offence committed. If records had been kept sufficient to comply with Condition 9.1 of the CPRF exemption and if the Pt 3A approval under the EPA Act had satisfied Condition 7.2.7 and the modification of the access route had been in place during the charge period, there would have been no offence as there would have been no absence of lawful authority by reason of the absence of a planning approval. The physical circumstances being the presence of two stockpiles on Lot 8 would have been exactly the same. For this reason, apart from any other, the Defendants submitted that this is a technical offence not associated with any environmental harm.
The Defendants submitted that the stockpiled material has not been proved beyond reasonable doubt to have not complied with the laboratory testing or contaminant level standards in the exemptions, Grafil No 1 at [192], [477], [483], [500]. These facts having not been proved beyond reasonable doubt cannot be taken into account against the Defendants at the sentencing hearing, R v Olbrich at [27]. This finding is highly significant for sentencing and Pt 8.3 orders. What it means is that, in substance, the material that was deposited was not shown to have breached the chemical standards and limits set out in Condition 10 of the CPRF exemption. There is merit in these submissions given the circumstances outlined extensively above.

[73]

Practical measures that may be taken to prevent or mitigate harm, s 241(1)(b)

There was nothing these Defendants could have done to prevent asbestos coming onto Lot 8 in the recovered fines received from the processors.
As to any further harm related to the location of material which was being temporarily stockpiled for a road, no actual harm has been proved. I have held the material was not placed in or on water in Grafil No 1 at [454] and there is no evidence in this sentencing hearing to suggest otherwise. It is difficult to see how any further practical measures could have been taken by the Defendants given their intention was temporary stockpiling of the material until it was used for an access road.
The Defendants submitted that there is a stand-out practical measure that could have been taken by the EPA to prevent the commission of the offences, namely raising its concerns about what was happening with Mr Mackenzie. Then the receipt of the material would have immediately ceased. Instead the EPA chose to monitor in secret the generation, supply, transportation, delivery and stockpiling of this material on Lot 8. During the whole period that the EPA monitored delivery of material to Lot 8 it did nothing to alert the Defendants, the processors or transporters to any concern it may have had in relation to the generation, supply, transportation, receipt or stockpiling of the material on Lot 8. The EPA cannot shy away from its own responsibility for its decision to sit on its hands and let the stockpiles grow while it watched in secret, doing nothing to stop it. The EPA cannot shy away from its responsibility for deciding not to communicate any concerns about the transactions either to Grafil, the holder of the EPL or to the processors who were the licence holders of the facilities which generated and supplied the material, or to the transporters who transported it by trucks up a public road to Lot 8.
The Defendants submitted that given the regular inspections and the compliant attitude of the Defendants, the amazement recorded in Mr Mackenzie's affidavit above in [97] is well justified. It has not been adequately explained why the EPA felt the need to conduct clandestine surveillance of Lot 8 when, if there had been any concern at all, all the EPA needed to do was knock on the Defendants' front door. All activities were being carried out by the Defendants in the open and on display, the material was transported on public roads and the stockpiles were in plain view.

[74]

Foreseeability of harm by the defendant, s 241(1)(c)

The EPA submitted in writing that it was reasonably foreseeable that the depositing, spreading and compacting of between 24,000-44,000 tonnes of waste in the form of recovered fines and ENM at Lot 8 which was unlicensed for use as a waste facility, lies on highly permeable sands and contains an aquifer and watercourses, had the potential to cause environmental harm. Such a finding was reached by Sheahan J in Environment Protection Authority v Foxman Environmental Development Services (No 2) [2016] NSWLEC 120 ("EPA v Foxman No 2") at [79], a case which involved the illegal land application of asbestos containing waste materials partly comprised from recovered fines albeit without the potential water aspect.
I have included the submissions of the EPA immediately above as these demonstrate the failure of the EPA's case on sentence to reflect the statutory scheme in issue and the facts found in Grafil No 1. As already identified the Defendants were not responsible in any way for asbestos being delivered to Lot 8 so reliance on EPA v Foxman No 2 is misguided. These submissions bear no relation to found facts in Grafil No 1 relevant to the circumstances of these offences. The extent to which there was potential for harm has been considered above. But for these prosecutions the material on Lot 8 the subject of the charges would have been used in a road by the Defendants and it would not have been permanently on Lot 8.
Given my findings on likelihood of harm arising only in relation to asbestos, the presence of which was not foreseeable by the Defendants, there was no harm arising from these offences which the Defendants could have foreseen.

[75]

Control over causes of the offence, s 241(1)(d)

Considering the three areas of breach established, firstly, the Defendants could have kept the records required by Condition 9.1 of the CPRF exemption and Condition 9.2 of the ENM exemption.
Secondly, the Defendants submitted that as a result of Grafil CCA at [363], [373], the Defendants could not rely on any Pt 3A approval, whether modified in a timely manner or not, as Condition 7.2.7 can only apply if development consent under the EPA Act is obtained.
I do not consider that Grafil CCA made that finding and that was not the issue it was asked to address in relation to question 15 in the stated case. The Defendants did have approval under the EPA Act under Pt 3A for an access road along Lavis Lane which they had not yet built. They were seeking a modification for the location of the access road at the time of the offences for another location. Approval for the modified route was obtained after the charge period had elapsed. The CCA found at [366]-[374] that because Grafil did not have approval for the modified access road for which the material was intended it had not complied with Condition 7.2.7(b) of the CPRF exemption. The Defendants did have control over obtaining approval in a timely manner.
Thirdly, the Defendants submitted that if any stockpiling of waste on land including temporary stockpiling is disposal of waste on land then any recovered fines received by a consumer must be applied immediately to a road or landscaping project to avoid being in breach of the POEO Act. Condition 9.3 of the CPRF exemption and Condition 9.3 of the ENM exemption state that the consumer must land apply the relevant material within a reasonable period, suggesting immediate application of material for final use is not required under the exemption. As already identified above in [204]-[205] it is unclear how this scheme is intended to work in practice and how these Defendants could have had control over the causes giving rise to the offence in relation to this aspect namely temporary stockpiling of material before its final application.

[76]

Complying with orders, s 241(1)(e) Subsection (e) is not relevant.

[77]

Presence of asbestos in the environment, s 241(1)(f)

Subsection (f) was introduced into s 241(1) on 20 December 2019. The EPA stated that it did not rely on subs (f) concerning asbestos in light of Environment Protection Authority v Mouawad (No 2) [2020] NSWLEC 166 at [28].

[78]

Finding on objective seriousness

No failure in moral culpability of either Defendant arises from the circumstances giving rise to the strict liability offence under s 144(1) of the POEO Act and the special executive liability provision in s 169(1). The complexity of the statutory waste scheme under the POEO Act and Waste Regulation for consumers has been discussed above in [162]-[206]. The legal and financial risks to consumers of the statutory scheme concerning the operations of the exemptions are substantial. It is reasonable to describe the breaches giving rise to the offences as not substantial in the context of the regulatory scheme, namely the failure to keep records in Condition 9.1 of the CPRF exemption and Condition 9.2 of the ENM exemption. Similarly, the failure to wait for approval for the modified access road under the Pt 3A approval which was obtained after the charge period is also fairly described as not a substantial breach. As identified in [204] above, the implications of the finding in Grafil CCA concerning temporary stockpiling on land being disposal of waste to land, possibly preventing reliance on the exemptions at all, are yet to be fully understood. Expecting Grafil to have been aware that temporary stockpiling of material was disposal of waste on land was not a matter Grafil could or should have been aware of before Grafil CCA.
The extensive evidence adduced on environmental impacts has not established any actual environmental harm, as the EPA conceded. Nor did the evidence demonstrate beyond reasonable doubt any likelihood of harm other than in relation to the presence of asbestos. The presence of asbestos in the material deposited on Lot 8 did not arise from any action or inaction of the Defendants.
The circumstances of the offence under s 144(1) are in the low range of objective seriousness.

[79]

Application of s 10(1)(a) Crimes Sentencing Procedure Act 1999

Mr Mackenzie seeks an order under s 10(1)(a) of the CSP Act that no conviction be recorded and no other penalty be imposed on him. The factors to be considered in making such an order are identified in subs (3). These are the person's character, antecedents, age, health and mental condition, the trivial nature of the offence, the extenuating circumstances in which the offence was committed, and any other matter that the court thinks it is proper to consider. The four factors in subs (3) must be considered but it is not necessary to satisfy all of these before a court exercises its discretion to make an order, R v Paris [2001] NSWCCA 83 at [42] (Simpson J, Wood CJ at CL and Ipp AJA agreeing) cited in Moseley v Queanbeyan-Palerang Regional Council (No 2) [2017] NSWLEC 52 at [53].

[80]

Mr Mackenzie's submissions on s 10(1)(a) order

Mr Mackenzie submitted that such an order is warranted in the circumstances of this case given the need for a court to provide individualised justice. The EPA undertook covert surveillance over the whole time the recovered fines were delivered to Lot 8 when Mr Mackenzie's evidence quite sensibly was that he would have stopped receiving the material immediately if approached by the EPA. The EPA systematically monitored, in secret, the growth of the subject stockpiles from the first load delivered there in October 2012 right through to the time of the EPA's raid on Grafil, Mr Mackenzie and Lot 8 on 15 May 2013. This was done by covert surveillance by EPA officers from adjacent bushland and also by the placement of static automated cameras in the national park outside Lot 8, Grafil No 1 at [182].
As recorded in Grafil No 1 at [239] the Defendants came to the attention of the EPA in the course of Operation Trojan, a surveillance operation which observed that trucks carrying recovered fines were going to sites other than Lot 8, Grafil No 1 at [49]. It was a clandestine operation, with the principal EPA witness in the trial having been directed not to mention Operation Trojan in her affidavit, Grafil No 1 at [50]. The only prosecutions arising from Operation Trojan are of the Defendants. There was a nil response to the Defendants' notice to produce dated 24 February 2021 as amended on 26 May 2021 requesting all documents comprising court initiating processes and penalty notices from 1 March 2012 arising from Operation Trojan against persons other than the Defendants. There is no evidence that at any time the EPA ever stopped to sample a single load from the Sydney recyclers which was transported to Lot 8. Mr Mackenzie submitted there is no evidence the EPA has taken any punitive action against any consumer of recovered fines exported from waste facilities in Sydney apart from the Defendants. Mr Mackenzie feels unfairly targeted by the EPA.
Numerous other properties received the same kind of material from the processors delivered by transporters during the period of the offences. On the day after the EPA arrived at Lot 8 on 15 May 2013 after which no further material was able to be received by Grafil, trucks from the processors delivered material to other properties in the Salt Ash area. There continues to be a demand for this material. Evidence in the trial confirmed that at least nine other sites were the subject of deposition of recovered fines.

[81]

Character and antecedents of the defendant, s 10(3)(a)

Mr Mackenzie's antecedents are identified in his affidavit, summarised above in [83], [103]-[104]. As emphasised by his counsel he has lived and worked in his community for many years building up the business of Macka's Sand & Soil Supplies and a client base. Four references for Mr Mackenzie's good character are summarised above in [120]-[124]. Dr Allnutt's report summarised above in [125] goes to Mr Mackenzie's diminished mental condition since the EPA's investigation and court proceedings commenced.

[82]

Trivial nature of the offence, s 10(3)(b)

Mr Mackenzie submitted the offence in the circumstances was trivial. It involved a failure of record-keeping. It involved the storage of material in anticipation of being authorised to use the material pursuant to an approval applied for and expected imminently. Mr Mackenzie was charged under the special executive liability provision of the POEO Act and that is the sole basis of his liability for the offence committed by Grafil, as Grafil is guilty so is he. While in this sentencing hearing the EPA has attempted to attribute moral culpability to Mr Mackenzie for the offence committed by Grafil as the directing heart and mind of the company the Court should not consider he is morally culpable in any way.

[83]

Extenuating circumstances, s 10(3)(c)

The extenuating circumstances relied on by Mr Mackenzie are: 1. His mistaken belief that the EPA was in control of the production and distribution of recycled material from the processors licenced by it and would not allow non-compliant material to be distributed. 2. The Defendants had a Pt 3A approval in place for one road and were just altering the route and pending that modification, storing material in anticipation of the go ahead. 3. The breaches were unintentional - Mr Mackenzie had no awareness of the record keeping requirement. 4. The same recovered fines material was commonly deposited and used in the Salt Ash area by others, without any enforcement action by the EPA, to Mr Mackenzie's knowledge. 5. The EPA's submission concerning Mr Mackenzie's lack of frankness with the EPA officer Mr Jamieson as to the receipt of recovered fines would be rejected. Such a serious allegation is not to be established by reliance on the EPA's own submissions at trial, which were not accepted by the Court at [571] in Grafil No 1. 6. The facts of Environment Protection Authority v Robinson [2004] NSWLEC 629 ("EPA v Robinson 2004") referenced by the EPA below in [305] are distinguishable from the present. There was no harm or potential environmental harm arising from the record keeping and modification of the Pt 3A approval, mistakes being the circumstances of Mr Mackenzie's offending in the present case.

[84]

Any other matters appropriate to consider, s 10(3)(d)

The matters discussed in the section above can be considered under s 10(3)(d).

[85]

EPA's submissions on s 10(1)(a) order

The EPA opposed the making of a s 10(1)(a) order in the circumstances of this case, referring to the NSW Judicial Commission's Sentencing Bench Book (as at 28 October 2021) which identifies at [5-020] that the section is designed as a "safety valve" to operate in extenuating circumstances or where matters are trivial. The circumstances giving rise to the offence are not trivial, particularly in relation to the amount of material received, being in the order of 24,000-44,000 tonnes. The licensing and exemptions statutory scheme under the POEO Act was significantly undermined by Mr Mackenzie's conduct, particularly given that Grafil was the holder of an EPL. Mr Mackenzie on behalf of Grafil was directly responsible for the events which resulted in the offences in personally accepting the material onto Lot 8 and manoeuvring it to form stockpiles 1 and 2. Mr Mackenzie was disinterested in keeping records (he says he was unaware that he had to). The EPA also submitted that "he knew the project in connection with which Grafil was accepting the waste had yet to receive approval". The EPA submitted that Mr Mackenzie was less than frank with EPA officer Mr Jamieson, citing [43]-[46], [552], [559]-[561] in Grafil No 1.
The EPA submitted that the Defendants' stockpiling actions were voluntary, and it was under no obligation to warn Mr Mackenzie that if he continued to do so he may be committing an offence. There can be no mitigation on sentence when an accused engaged in uncoerced and/or uninfluenced voluntary actions. R v Taouk was a police entrapment case where Badgery-Parker J on the CCA stated at 400 (Clarke JA and Abadee J agreeing): A helpful discussion of the relevance to sentence of the fact that a crime was committed as the result of the setting of a police trap is to be found in Mandica (1980) 24 SASR 394; 4 A Crim R 34. King CJ said (at 402; 40-41), after referring to Birtles: This ground for leniency does not exist, however, where the effect of the police trap is not to encourage a person to commit an offence which he [or she] would not have otherwise committed, but merely to detect and obtain evidence against an offender who is only too ready to commit the offence.
The EPA submitted that a prosecutor's discretion to lay charges as it sees fit has been recognised in many cases, Maxwell v The Queen (1996) 184 CLR 501; [1996] HCA 46 at 534 (Gaudron and Gummow JJ) endorsed in Magaming v The Queen (2013) 252 CLR 381; [2013] HCA 40 at [20] (French CJ, Hayne, Crennan, Kiefel and Bell JJ).

[86]

Consideration of s 10(1)(a) order

Mr Mackenzie is charged under s 169(1) of the POEO Act. He is guilty because the EPA has established, following Grafil CCA, that Grafil is guilty of an offence under s 144(1).
In considering whether to make an order under s 10(1)(a), subs (3) identifies matters that may be taken into account. In relation to subs (3)(a), I take into account Mr Mackenzie's antecedents as a man devoted to his family and operating for a lengthy period, together with his father, the family business of sand mining in the Salt Ash area, where he is well known. His exemplary character and substantial contribution to his local community are clearly articulated in the character references he has provided, summarised above in [120]-[124].
In relation to s 10(3)(b), Mr Mackenzie's liability arises under s 169(1) by virtue of the offence by Grafil under s 144(1). The s 144(1) offence is not trivial, nor is it particularly serious given the essentially technical breaches of the POEO Act established by the EPA as a result of the Grafil CCA findings. I have found the offence to be of low objective seriousness. I do not accept the EPA's submission that the breach of the POEO Act it did manage to establish following Grafil CCA substantially undermines the regulatory system in the POEO Act given all the circumstances of this case. The EPA's submissions just do not reflect all the circumstances relevant to the offence in failing to acknowledge the pitfalls of the resource recovery exemption scheme for consumers. No failure in moral culpability by Mr Mackenzie has been proved by the EPA. I note also that the EPA did not ultimately press that actual environmental harm arose from the s 144(1) offence and likely environmental harm arising from the stockpiling by Grafil was not generally proved beyond reasonable doubt during the sentencing hearing. The only area of potential for harm is the presence of asbestos, over which the Defendants had not control.
I consider there is a very strong basis established by Mr Mackenzie for finding there are extenuating circumstances, as provided in subs (3)(c). These are outlined above in [265].
In addition to [265(1)] which concerns Mr Mackenzie's belief about the distribution of recycled material, the unsatisfactory and incoherent statutory scheme for the use of recovered fines under the statutory exemptions created by the EPA for a consumer such as Grafil, which applied to the circumstances of the s 144(1) charge on which the s 169(1) charge is based, is highly relevant to consider whether under subs (3)(c) or (d). These matters have been identified and discussed above in [162]-[206]. The statutory scheme for recovered fines administered under the POEO Act enabling the distribution of material is particularly concerning in relation to the presence of asbestos, a circumstance over which Grafil and Mr Mackenzie had no control.

[87]

Extra-curial punishment

A court can take into account extra-curial punishment that is, "loss or detriment imposed on an offender by persons other than the sentencing court, for the purpose of punishing the offender for his [or her] offence or at least by reason of the offender having committed the offence", Silvano v The Queen (2008) 184 A Crim R 593; [2008] NSWCCA 118 at [29]. The Sentencing Bench Book identifies at [10-520] that media coverage and professional ramifications may be taken into account as extra-curial punishment.
Several matters warrant a finding that Mr Mackenzie has been subject to extra-curial punishment as a result of the EPA's decision to prosecute him under s 169(1). Firstly, the heavy emotional toll on Mr Mackenzie and his family, in his case as highlighted by the report of Dr Allnutt summarised above in [125]. Dr Allnutt gave evidence on Mr Mackenzie's reduced work capacity. That emotional toll included the prospect of having a multi-million-dollar removal order made in relation to the stockpiles being sought by the EPA since May 2013, until the fifth day of the sentencing hearing on 6 August 2021, a matter already canvassed above in [180]. The EPA accepted that Mr Mackenzie is suffering from a major depressive disorder. The Sentencing Bench Book at [10-460] identifies that the fact an offender is suffering from a mental disorder at the time of sentencing may be taken into account, see R v Anderson [1981] VR 155.
Secondly, the impact of the very significant delay in finalisation of the matter given the chronology identified in Mr Hannam's affidavit. The sentencing hearing was conducted eight years since the offence period in 29 October 2012 to 15 May 2013, the proceedings were commenced at the last possible time by the EPA on 11 May 2016, the lengthy time taken to finalise the stated case, inter alia, as recorded in Mr Hannam's history of proceedings are summarised above in [117]. As already noted immediately above part of this delay has meant that Mr Mackenzie has been facing a possible multi-million-dollar removal order because of the presence of asbestos. The Sentencing Bench Book at [10-530] identifies that delay may be considered in combination with other relevant sentencing factors as favourable to the exercise of discretion in relation to an offender, citing R v Donald [2013] NSWCCA 238 at [49].
Thirdly, the negative publicity Mr Mackenzie and his family business has suffered as a result of the EPA's decision to prosecute him personally in addition to his company Grafil. Search engine results for Grafil include references to "dumping of waste" inter alia which Mr Mackenzie states above at [102], [106] has negatively impacted the company's ability to do business with major companies. Mr Mackenzie gave evidence on the impact of media coverage the result of these proceedings. I accept Mr Mackenzie's counsel submission that while the reporting was not of a similar scandalous nature compared with R v Wran, a case referred to by the EPA as the kind of sensational coverage which warrants consideration on sentencing, I consider there was and is serious stigma associated with these publications given Mr Mackenzie's position in his local community. I accept his evidence that the publicity referred to by Mr Mackenzie in his affidavit summarised above in [102] and oral evidence summarised above in [106] has caused significant reputational harm to Mr Mackenzie personally and to his business, straining his relationship with the Worimi LALC and impacting his ability to do business with other companies.

[88]

Subjective considerations for Grafil

Subjective matters relevant to the sentencing of Grafil identified in s 21A(3) of the CSP Act follow.

[89]

Injury, loss or damage caused by offence not substantial, s 21A(3)(a)

Grafil submitted and I agree that the absence of environmental harm is a mitigating factor.

[90]

Prior convictions, s 21A(3)(e)

Grafil has no prior convictions.

[91]

Good character, s 21A(3)(f)

In relation to s 21A(3)(f), Mr Mackenzie's affidavit summarised above in [104] highlights contributions to various community organisations by himself and Macka's Sands. The EPA submitted that there is no evidence that Grafil, as opposed to Macka's Sand, has participated in any charitable or community-based activities in discharge of its onus in respect of this consideration. Mr Mackenzie's good character and his contributions to the community can be attributed to Grafil since he is one of the directors of the family business. I accept that Grafil is of good corporate character.

[92]

Contrition and remorse, s 21A(3)(i)

Under s 21A(3)(i) remorse can be considered in mitigation where an offender provides evidence that they have accepted responsibility for their actions. Mr Mackenzie on behalf of Grafil has expressed contrition and remorse for the failures for which the company was found guilty in his affidavit summarised above in [100], namely a failure in record-keeping and the early commencement of the receipt of material prior to the modification of the Pt 3A approval. I do not accept the EPA's submission that this was a qualified expression of remorse, rather it was an acceptance of what the Defendants were at fault for.

[93]

Assistance to authorities, ss 21A(3)(m), 23

Grafil submitted that Mr Mackenzie's participation in a voluntary record of interview and walk-around provided significant assistances to the authorities pursuant to ss 21A(3)(m) and 23 of the CSP Act. Mr Mackenzie on behalf of Grafil was open and honest and sought advice from the EPA and even before the charge period had cooperated with the EPA, welcomed and facilitated the regulation of Grafil's sand mining operation by the EPA.
I consider that Mr Mackenzie on behalf of Grafil co-operated with the authorities as much as he was able to in the circumstances he found himself in.

[94]

Deterrence

Section 3A(b) of the CSP Act extracted above in [3] provides that one of the purposes of sentencing is deterrence. I considered the meaning of general deterrence in Environment Protection Authority v Abbas [2021] NSWLEC 57 ("EPA v Abbas") at [104] as follows: 104 General deterrence is an important aspect of sentencing in environmental crime. As held by Preston CJ in Bentley v BGP Properties Pty Limited (2006) 145 LGERA 234; [2006] NSWLEC 34 at [139]-[140]: The sentence must serve the purpose of general or public deterrence. It is the duty of the Court to see that the sentence which is imposed will operate as a powerful factor in preventing the commission of similar crimes by those who might otherwise be tempted by the prospect that only light punishment will be imposed: R v Rushby [1977] 1 NSWLR 594 at 597-598. This factor is particularly relevant to environmental offences. Persons will not be deterred from committing environmental offences by nominal fines: Environment Protection Authority v Capdate Pty Limited (1993) 78 LGERA 349 at 354 and Director-General, National Parks and Wildlife v Wilkinson [2002] NSWLEC 171 (27 September 2002) at [85] and [93] per Lloyd J.
As submitted by the Defendants, in relation to general deterrence, the frequency with which recovered fines are deposited elsewhere in this locality and generally without action by the EPA suggests that any significant element or portion of any fine referable to the general deterrence purpose of sentencing would run contrary to Walden v Hensler (1987) 163 CLR 561; [1987] HCA 54 by requiring the Defendant to shoulder an unfair burden of community education, at 570 per Brennan J. The Defendants submitted that this case does not present comfortably as an appropriate vehicle for general deterrence including because of Grafil's low moral culpability and because of the incoherent regulatory regime that exposed it to liability.
The Defendants submitted that any fine imposed would be minimal and proportionate to the very low objective seriousness of the offending and strong subjective case of the Defendants, including the extra-curial punishment they have already suffered.
I agree with these submissions in relation to general deterrence.
I also considered the meaning of specific deterrence in EPA v Abbas at [105]-[106] as follows: 105 Specific or personal deterrence is applicable where an offender has a prior criminal record which manifests a continuing attitude of disobedience, such that more weight should be given to retribution, personal deterrence or protection of the community: Veen (No 2) at 477; R v Abboud [2005] NSWCCA 251 at [33]; R v McNaughton (2006) 66 NSWLR 566; [2006] NSWCCA 242 at [54]. 106 Specific deterrence has particular relevance where an offender continues to operate in the same area of operation in which the offence occurred: Environment Protection Authority v Ardent Leisure Ltd (ACN 104 529 106) [2018] NSWLEC 36 at [135] per Robson J citing Preston CJ in Environment Protection Authority v Ravensworth Operations Pty Ltd [2012] NSWLEC 222 at [48].

[95]

Even-handedness/parity

The principle of even-handedness requires that the Court consider if there is any sentencing pattern for like offences in order to determine a consistent approach to penalty, R v Visconti [1982] 2 NSWLR 104 at 107 (Street CJ, Lee and Maxwell JJ agreeing). This principle must always be applied subject to the particular circumstances of the case before the Court, Hoare at 354. The principle of even-handedness in sentencing so that like offences receive like sentences is recognised, but each case must be determined on its own facts: Hili v The Queen; Jones v The Queen (2010) 242 CLR 520; [2010] HCA 45 at [42]. A history of sentencing in other cases does not limit my sentencing discretion.
The EPA referred to EPA v Abbas where after the application of a 15% discount for a plea of guilty and the application of the principle of totality, the individual offender was fined $30,000 for one offence against s 144(1) of the POEO Act. The offender was fined a total of $100,000 including for additional offences against ss 143(1) and 142A(1) of the POEO Act. The waste the subject of the offences was 21,990 tonnes and contained asbestos. No aggravating features were found. The offender was also ordered to pay investigation costs, professional costs and agreed to fund a remediation plan.
In Environment Protection Authority v Gilder [2018] NSWLEC 119 ("EPA v Gilder") the individual offender was convicted and fined $37,500 after the application of a 25% discount for an offence against s 144(1) of the POEO Act in respect of unlawful storage of 20,000 m3 of waste material including asbestos. The offender's relatively limited capacity to pay a large fine was taken into account at [178].
In EPA v Foxman No 2, after trial, the individual offender was ordered to pay $100,000 for his offence against s 144(1) of the POEO Act involving 15,900 tonnes of waste including recovered fines. A linked corporate defendant was ordered to also pay $100,000 in respect of the same offence and conduct.
In Environment Protection Authority v Robinson [2011] NSWLEC 14 ("EPA v Robinson 2011") the individual offender was convicted and fined $10,050 after the application of a 25% discount for a guilty plea in relation to an offence against s 144(1) of the POEO Act concerning 2,230 m3 of waste. The corporate offender was convicted a fined $13,400 for the same conduct.

[96]

Cap and contain order, s 245

The parties have submitted competing cap and contain orders. The issues in dispute has been reduced to what is the applicable guideline the order should refer to. The EPA submitted that the order should refer to the EPA's Solid Waste Landfill Guidelines (2nd ed, 2016). The EPA submitted that guidelines relied on by the Defendants were outdated and only dealt with contaminated soil where the soil originated from the same site at which the waste is to be disposed.
The Defendants submitted that the order should be carried out in accordance with the ANZECC September 1999, Guidelines for the Assessment of On-Site Containment of Contaminated Soil (ANZECC guidelines 1999) and the National Environment Protection (Assessment of Site Contamination) Measure 1999 (as amended) (NEPM guidelines). The Defendants' expert Mr Lau recommended relying on the ANZECC guidelines 1999 and NEPM guidelines as relevant.
The ANZECC guidelines 1999 are included in the list of further guidance documents for site auditors to reference under the NSW EPA Contaminated Land Management: Guidelines for the NSW Site Auditor Scheme (3rd ed, 2017) and therefore they are appropriate to be included if, as proposed by the Defendants, the remedial action plan (RAP) and its implementation have its critical stages approved by a site auditor under that scheme. The ANZECC guidelines 1999 distinguish between managing contaminated soil on site and designing and off-site landfill, see for example s 3.1. The ANZECC guidelines 1999 reference the POEO Act (p A2).
The NEPM guidelines are approved by the EPA and contain guidance in relation to remediation methods for asbestos contaminated soils (see Vol 2, Sch B1, s 4). The NEPM guidelines are approved by the EPA under s 105(3) of the Contaminated Land Management Act 1997 (NSW). This approval is for any purpose connected to the objects of that Act which include managing the remediation of contaminated land in accordance with the principles of ecologically sustainable development (ESD). Restoring the environment in accordance with the principles of ESD is part of the first object of the POEO Act, see above in [7].
The Solid Waste Landfill Guidelines sought to be relied on by the EPA are not applicable as they expressly apply to landfills rather than the management and containment of incidental contamination in soil or in a stockpile that is not being placed in a dedicated landfill (see Pt A). The EPA's Solid Waste Landfill Guidelines are incompatible with the evidence in this case from both experts. Dr Martens accepted that a 500 mm sand cap was acceptable and Mr Lau's opinion was that 300 mm was suitable and no more, see above in [160]. By contrast the Solid Waste Landfill Guidelines at s 9.1 suggest a cap of 1.9 m in thickness, including an engineered seal bearing surface, a compacted clay layer of 600 mm and a revegetation layer of 1 m.

[97]

Publication order, s 250(1)(a)

The EPA seeks a publication order pursuant to s 250(1)(a) of the POEO Act. The rationale for making such orders is to identify to the community the importance of complying with the POEO Act.
This is opposed by Grafil as not justified by the particular circumstances of this case.
The making of a publication order is discretionary. As I observed in Chief Executive, Office of Environment and Heritage v Kyluk Pty Limited (No 4) (2014) 212 LGERA 1; [2014] NSWLEC 74 at [102], the purpose of a publication order is to alert the public to the offence and to improve the effectiveness of sentences as a deterrent, citing Environment Protection Authority v Waste Recycling and Processing Corporation (2006) 148 LGERA 299; [2006] NSWLEC 419 at [242]. A publication order is not warranted in the unusual and unfortunate circumstances that Grafil a family business finds itself in as a result of the s 144(1) offence. No publication order will be made.

[98]

Legal costs

The EPA seeks virtually all of its legal costs on a joint and several basis as agreed or assessed pursuant to s 257B of the Criminal Procedure Act 1986 (NSW) (CP Act), set out below. On 26 April 2021, the EPA wrote to the Defendants providing a "rough estimate" of the legal costs it had incurred up until that date of $1,142,172.00. 257B When costs may be awarded to prosecutor A court may, in and by a conviction or order, order an accused person to pay to the registrar of the court, for payment to the prosecutor, such costs as the court specifies or, if the conviction or order directs, as may be determined under section 257G, if - (a) the court convicts the accused person of an offence, or (b) the court makes an order under section 10 of the Crimes (Sentencing Procedure) Act 1999 in respect of an offence.

[99]

Defendants' submissions on legal costs

The Defendants submitted that the EPA should be entitled to the payment of only 25% of its legal costs. The sum of the EPA's legal costs will have increased considerably since April 2021. The Court's power to award costs to a prosecutor in s 257B of the CP Act is discretionary, as indicated by the word "may". The Court may order a defendant to pay all or some of a prosecutor's costs, which is made clear by the words "such costs as the court specifies or … as may be determined under section 257G …" That being the case, this Court has on numerous occasions ordered that defendants pay only a portion of a prosecutor's costs.
In Newcastle City Council v Pace Farm Egg Products Pty Limited (No 3) [2005] NSWLEC 423 ("Pace") at [41], the Court ordered the defendant to pay 30% of the prosecutor's costs of the proceedings, as agreed or assessed, pursuant to the now repealed s 253 of the CP Act. Section 253 of the CP Act was identical in all material respects to the current ss 257B and 257G of the CP Act. That order in Pace was made on the basis that: 1. The prosecution involved a charge under s 120 of the POEO Act of polluting waters known as Warabrook Lagoon by placing egg waste in a position where it was likely to fall or descend into the lagoon. Although the bulk of the time was spent by the prosecutor at hearing seeking to prove that egg waste had reached the lagoon, the defendant was found guilty on a less serious basis than the principal case argued by the prosecutor that there had been actual pollution of the lagoon, Pace at [3], [5], [39]. 2. The prosecutor submitted that the likely harm to the environment was significant, but it was ultimately found to be likely that only a small amount of egg waste would have reached Warabrook Lagoon, suggesting the harm likely to be caused was minimal, Pace at [6], [9]. 3. The Court rejected the evidence of the prosecutor's expert suggesting that the quantity of the spill was in the range of 1,000 to 4,000 litres, finding instead that the spill was likely to be small, somewhere between 300 to 1,000 litres: Pace at [8]. 4. The prosecutor was not successful in its application to amend the summons and its particulars, save for an amendment to the description of the pollutant which was uncontested. The application occupied approximately one of the seven days of the hearing, Pace at [37], [39].
In Morrison v Defence Maritime Services Pty Ltd (2007) 156 LGERA 365; [2007] NSWLEC 552 ("Morrison"), the Court ordered the defendants in each matter to pay 50% of the prosecutor's costs, as agreed or assessed, other than costs attributable to the reports of two prosecution experts (which were excluded entirely), Morrison at [30], [36]. Morrison was a case involving charges of oil pollution of Sydney Harbour waters. The prosecutor's pre-hearing particulars of the volume, duration and locations of oil discharged included that between 40 and 85 litres of oil were discharged on the day in question over a minimum distance of 4.85 km within Sydney Harbour, and that the oil discharge would have a high likelihood of causing oil to coat intertidal habitats and associated flora and fauna, Morrison at [9]-[10]. The Court held that there was a discharge of between five and 15 litres at one location, and a very small amount at another, Morrison at [15]. The Court held that the issue of a continuous discharge of oil was a large, strongly contested and discrete issue which vitally affected findings as to the quantum, duration and locations of oil discharge, environmental harm and culpability, and that a great deal of evidence went to that issue, Morrison at [28]. Given that two of the prosecution's expert reports were based on the assumption of a continuing discharge, the Court excluded the prosecutor's costs attributable to those reports, Morrison at [30].

[100]

Apportionment of costs of these proceedings

The Defendants submitted on the question of apportionment of costs that the EPA should not be entitled to any of the costs that it has incurred in relation to the following categories of evidence and/or legal submissions which collectively occupied a considerable portion of the 20-day trial: 1. The evidence of Ms Moore, senior operations officer with the EPA, which sought to assess the tonnages of loads delivered by transporters to Lot 8 during the charge period. The Court held at [243] in Grafil No 1 it could not rely on any of the primary documents exhibited to Ms Moore's affidavit, nor on the subsequent spreadsheets prepared and produced during the course of the hearing. 2. The evidence of Ms Blefari, senior environmental scientist with AECOM, dealing with whether the stockpiles on Lot 8 were compliant with the physical and chemical criteria set out in the exemptions. The AECOM report was based on sampling conducted in October 2015 and Ms Blefari did not apply the CPRF exemption to the results in her report given that the CPRF exemption applied to a production process rather than to the analysis of an in situ stockpile, Grafil No 1 at [185]-[186], [192], [476]. Furthermore, adopting the CPRF testing regime meant that it was futile to determine whether material was compliant with the exemption by testing at a later time at a stockpile where the material was placed, Grafil No 1 at [475]. 3. The evidence of Mr Walker, senior engineering geologist with AECOM, dealing with whether the stockpiled material was suitable for use in a road based on the NSW Roads and Maritime Services Material Specification R44 Earthworks Specification. That report was also based on bulk sampling conducted in October 2015, Grafil No 1 at [199]-[200]. The Court held in Grafil No 1 at [424] that this expert evidence was irrelevant and even if relevant, Mr Walker considered an RMS specification which was not proven by the prosecutor to have any application to the type of road in question. Mr Walker also had no relevant experience in road design or building, Grafil No 1 at [425]. 4. The evidence of Dr Martens, civil and environmental engineer, which was conducted on a desktop basis and dealt with the matters recorded, Grafil No 1 at [205]. The Court held in Grafil No 1 at [424] that the expert evidence of Dr Martens that the material was not fit for the purpose of private road construction was irrelevant. Even if relevant, it was observed that the Council Infrastructure Specification 242 Flexible Pavements (November 2016) Policy to which Dr Martens referred had not been proven to be a relevant assessment criterion by the EPA, Grafil No 1 at [426]. 5. The evidence of Mr McClenahan, registered surveyor with Brunskill McClenahan & Associates (BMA). The Court could not rely upon the calculations of volume presented in the BMA 2013 and 2015 surveys, Grafil No 1 at [245]. 6. The evidence of Dr Prifti, unit head with the EPA, dealing with the subject matters recorded in Grafil No 1 at [217]. In assessing whether the material in stockpiles 1 and 2 complied with the exemptions, Dr Prifti had regard to the chemical and physical properties of the material based on the results from the AECOM report, Grafil No 1 at [217]-[218]. The quantities assumed by Dr Prifti were derived from the analysis of Ms Moore which was later found to be incorrect, Grafil No 1 at [224]. 7. Evidence regarding the deposition of material in or beneath water during the charge period (Grafil No 1 at [454]) whether there was a failure to apply material within a reasonable time (Grafil No 1 at [434]-[435]) and seeking to prove that the sampling and testing requirements in the CPRF exemption were not complied with by the processors. With regards to the latter, the Court stated in Grafil No 1 at [455] that the evidence on this topic was voluminous and complicated, yet in closing submissions the EPA stated that this issue was not an important part of its case. At [467], the Court also stated that a large part of the EPA's evidence was directed to establishing that the material in the stockpiles did not meet the chemical concentrations in Condition 10, Table 2 of the CPRF exemption, but it was held that the general conditions in Condition 7.1 could only be relevant to processors given their obligation to sample and test in accordance with Conditions 10, 11 and 12 as required by Condition 8, Grafil No 1 at [472]. 8. Submissions directed to the question of whether the CPRF exemption should be construed as if it contained a condition about asbestos (Grafil No 1 at [351], [365], [371]-[372]) as well as extensive submissions directed to whether a processor or consumer has any responsibilities in relation to the exclusion of asbestos under the CPRF exemption, about which the Court noted in Grafil No 1 at [352] the EPA had adduced much evidence.

[101]

EPA's submissions on legal costs

The Court would not make an apportionment in any order for payment of the EPA's legal costs at trial. The specific matters upon which the Defendants rely in [325] above concern evidence, rather than issues, and on the authorities do not justify an order for apportionment.
In relation to sentence, it would be open to the Court to consider making some reduction in the payment of the EPA's legal costs on account of the fact that the EPA no longer presses for an order for the removal of the stockpiles.

[102]

Legal principles

An order for costs is made to indemnify the successful party as to the expense to which it has been put by reason of the legal proceedings. It is not awarded as punishment against the unsuccessful party, Latoudis v Casey at 543 per Mason CJ; Morrison at [22] per Biscoe J. Ordinarily, a successful party should not be deprived of costs unless there is material to justify a contrary order being made, Milne v Attorney-General for the State of Tasmania (1956) 95 CLR 460; [1956] HCA 48 at 477; Bulga at [226] per Bathurst CJ, Hidden and Davies JJ.
As a condition precedent to apportioning costs, there must be a finding that a prosecutor has succeeded "only on a portion of its case", Morrison at [17] per Biscoe J. In applying this principle, a distinction is commonly drawn between cases which involve clearly discrete issues for determination, and those in which all issues are inseparable, or at least sufficiently linked, with respect to the overall disposition of the particular matter: Bulga at [220].
In criminal proceedings especially, where a prosecutor has a public duty to put all material issues before the court, a balance has to be maintained between not discouraging litigants from canvassing all material issues and not rewarding them for unreasonable conduct in the pursuit of issues, Morrison at [20]; Bulga at [221].

[103]

Trial and remitter

In relation to proof of the Defendants' criminal liability, on remitter following Grafil CCA, the EPA has been successful. There was no portion of the case on liability in respect of which the EPA failed.
Pace is of limited assistance to the Defendants. In that case, the Court made an order for payment of 30% of the prosecutor's costs on the basis that the defendant was found guilty of a water pollution offence against s 120 of the POEO Act "albeit on a less serious basis than the primary case argued by the Prosecutor", Pace at [26]. That is not the case in these proceedings, in respect of which the Court has found that between 24,000-44,000 tonnes of waste was imported onto Lot 8, Grafil No 1 at [247]. Furthermore, the concurrent evidence adduced over the course of the sentencing proceedings has confirmed that the asbestos fragments within stockpiles 1 and 2, being widespread and randomly distributed, came with the waste delivered to the premises. The waste accordingly is, and was during the charge period, asbestos waste, Grafil No 1 at [527]. Unlike in Pace, there has been no unsuccessful application by the EPA to amend the summonses.
Morrison is of limited assistance to the Defendants. The defendant in that case had issued offers in accordance with the principles from Calderbank v Calderbank [1975] 3 All ER 333 on factual bases that were more objectively serious than those found by the trial judge, at [11]-[12], [15]. There have been no such offers or concessions made in this case. Furthermore, in Morrison, the Court at [26], [36], made an order for a 50% apportionment of costs on the basis that the prosecutor had failed to prove the continuing offence alleged in the summons, whereas the EPA in this case has proved the offences particularised in the summonses without amendment or waiver. Although the CCA rejected the submission the EPA advanced at trial with respect to the invalidating effect of cl 42 of the Waste Regulation on the operation of the resource recovery exemptions (Grafil CCA at [333]), this error did not affect the finding of liability in relation to the lawful authority element of the charge against s 144(1) of the POEO Act, Grafil No 3 at [34]-[45]. Proof of the offences against the Defendants was not dependent on a finding that the stockpiles are asbestos waste.
The matters referred to in support of the Defendants' application for an apportionment of costs in respect of the trial relate to evidence (in [325] above) and not issues. The present state of the authorities does not support the apportionment of costs by reference to evidence. Even if this were an available approach, the following responses demonstrate why no apportionment of costs is justified in reliance on these factors: 1. As to [325(1)] above, the evidence of EPA officer Ms Moore in relation to waste tonnages was necessary because Grafil failed to comply with the record keeping requirements under Condition 9.1 of the CPRF exemption and Condition 9.2 of the ENM exemption. Evidence of this nature in relation to waste mass was necessary for proving exceedances of the limit thresholds under cll 39 and 42 of Sch 1 to the POEO Act. Given the Court's finding that 24,000-44,000 tonnes of waste was stored at Lot 8, the summary tonnage evidence assembled by Ms Moore was sufficient for this purpose. There was no failure by the EPA on this issue at trial. 2. Contrary to the suggestion (in [325(2)] above), the evidence of Ms Blefari of AECOM was relevant to the process of characterising the composition of stockpiles 1 and 2, including in so far as concerns asbestos, and was not limited to assessing the composition of the stockpiles against the CPRF exemption. In so far as a finding of five tonnes of asbestos waste is necessary to trigger cl 42(3)(a) of Sch 1 to the POEO Act, this evidence was directly relevant to liability on the basis of the EPA's case in relation to waste storage, Grafil CCA [180], [189]. The AECOM report was also relied on by all expert witnesses called in the case, including for the purposes of opining in relation to the specific consequences arising from the contaminant composition of the waste materials, for example, Grafil No 1 at [218], [477] (Dr Prifti); Grafil No 1 [339]-[340] (Mr Mostyn); Grafil No 1 [465], [477] (Dr Martens); Mr Lau and Dr Martens in the sentencing hearing. 3. In relation to the Salt Ash Waste Assessment - Geotechnical Investigation Report of Mr Walker engineering geologist with AECOM, the Defendants' reliance in [325(3)] on the finding in Grafil No 1 at [424] is misplaced in circumstances where the finding was based on the application of the incorrect onus and standard of proof, and is contrary to the CCA's conclusion regarding the proper construction of the CPRF exemption, Grafil CCA at [289]-[292]. Mr Walker's evidence as to particle sizes was also relied on by both Dr Martens (Grafil No 1 at [464]) and Mr Mostyn (Grafil No 1 at [399]). 4. The submission immediately above also applies in response to the Defendants' submission above in [325(4)] in relation to Dr Martens' evidence on the fitness of the waste materials comprising stockpiles 1 and 2 for the construction of a road, Grafil No 1 at [424]. 5. In relation to the Defendants' submissions in [325(5)] above, while Pain J may have found that the surveying evidence of Mr McClenahan was unreliable on account of an assumption that the ground beneath the stockpiles was flat, like all of the evidence referred to in the Defendants' costs submissions above in [325], the surveying evidence was material and of a nature that an investigating authority would ordinarily be expected to present to the Court. 6. As to [325(6)] above and the evidence of Dr Prifti, the submissions made in [336(3)] are repeated. Whether the material taken to Lot 8 during the charge period complied with the CPRF and ENM exemptions based on the documents supplied by the four processors about their testing regimes was relevant to the application of those exemptions, Grafil No 1 at [217], Grafil CCA at [289]-[292]. 7. The submissions made in [325(7)] above in relation to various aspects of the CPRF exemption are based on the application of the incorrect onus and standard of proof, Grafil CCA at [228]. The submissions made in [(3)336(3)] are repeated. 8. In relation to submission made as to asbestos and cl 42 of the Waste Regulation in [325(8)] above, see above in [335].

[104]

Sentence

The EPA's case on sentence and the basis for the findings of guilt are not now heavily focused on the failure to keep records and the failure to obtain the modification to the Pt 3A approval in time. First, these are not new aspects of the EPA's case, EPA's submissions at trial at pars 124, 127 (Ex 9). Secondly, the EPA's case is broader than these two failings, particularly in so far as the stockpiling of recovered fines on Lot 8, in conjunction with a Pt 3A approval, was not authorised by Condition 7.2.7 of the CPRF exemption (Grafil CCA at [290]), and neither the stockpiling of recovered fines or ENM would have been ancillary to the activities authorised by the modified Pt 3A application even once approved, Grafil CCA at [372].
On sentence, the only apparent issue in respect of which the EPA has not succeeded is in relation to the original order it sought for removal of the waste materials comprising stockpiles 1 and 2. The position that both parties are now taking in relation to the need for a capping solution has involved a compromise: the EPA has had to accept that it has only been proved that the stockpiles are causing the potential for environmental harm to receiving groundwaters, while the Defendants have resiled from their original position being that there was no need for any remediation of the stockpiles.
In the course of a five-year proceeding, this discrete issue could only justify a minor apportionment of costs, in the order of 5%.
For the sake of completeness, and without conceding it is open to be made, an order for a dismissal of the charge against Mr Mackenzie would not justify an apportionment of costs, s 257B(b) of the CP Act.

[105]

Finding on legal costs

The Court has discretion whether to award costs in whole or in part to a prosecutor pursuant to s 257B of the CP Act. The statements of principle identified by the parties, albeit with varying emphases, the Defendants above in [322]-[324] and the EPA in [330]-[332], are correct.
While both parties have referred to the facts in Pace and Morrison in some detail neither case can be a strict guide to any particular approach to whether costs should be awarded in a criminal matter as each case must inevitably depend on its own facts, and these vary markedly from case to case. As the parties submitted, costs were considered in those cases under former s 253 of the CP Act. Section 257B is in similar terms. Those cases are examples of where the Court has in criminal sentencing exercised its discretion not to award the whole costs of a prosecutor as it was not successful on a portion of its case which was a dominant or separable issue and the Court considered an award of costs in relation to those aspects was not warranted.
In Pace, following the prosecutor successfully proving guilt for water pollution at trial, the issue of whether all the prosecutor's costs should be ordered to be paid by the defendant arose in sentencing. As summarised above in the Defendants' submissions in [319], only a third of the prosecutor's costs were awarded because the prosecutor failed to prove a substantial part of its case on sentence, namely that actual environmental harm had occurred because egg waste entered a certain lagoon. The situation here for the EPA is arguably similar given the large number of parts of its case at trial in relation to which it was not successful, taking into account the legal findings in Grafil CCA. In Morrison, a sentencing matter where the defendants pleaded guilty, relevant considerations as at [17]-[25] included that, as agreed by the parties, where a prosecutor has succeeded only on a portion of its case, the circumstances may make it reasonable that it bear the expense of litigating that portion on which it had failed. That observation is essentially applicable to the EPA here. There were a number of discrete issues in relation to which the EPA was unsuccessful at trial and which were the subject of extensive evidence.
I do not therefore agree with the EPA's submission that because it succeeded following Grafil CCA in having the Defendants found guilty that there are no severable issues with attendant evidence relied on at trial unsuccessfully by the EPA relevant to this costs consideration. The three issues on which the EPA succeeded have been identified above, firstly, the failure of the Defendants to keep the records specified in Condition 9.1 of the CPRF exemption and Condition 9.2 of the ENM exemption (see Grafil No 1 at [440]-[445]), secondly, the failure to have in place a development consent under the EPA Act for the planned access road (see Grafil No 3 at [44]), and thirdly, temporary stockpiling of material resulting in the application of waste to land Grafil CCA at [175]-[197] finding that any stockpiling of material on land is the application of waste to land. These issues had a very short factual compass compared to the many other matters the EPA chose to raise at the lengthy trial.

[106]

Investigation costs

Pursuant to s 248(1) of the POEO Act the EPA seeks an order that the EPA's investigation costs and expenses are payable on a joint and several basis in the amount of $187,088.03. These costs are identified in the affidavit of Mr Matthews summarised above in [81] and are largely the costs of the AECOM report relied on in Grafil No 1. The EPA submitted that the AECOM report was essential to the evidence prepared in the case at trial, being referred to by a number of witnesses, and for the sentencing hearing being referred to by Mr Lau. Such an order is opposed by the Defendants.
None of the legal bases on which the EPA has been successful in establishing liability required the AECOM report to be prepared. Its use was largely directed to issues which the EPA was not able to prove at trial, namely whether the stockpiles complied with the testing requirements of the CPRF exemption or the presence of asbestos. Accepting that obtaining such a report may have had some relevance to understanding what material had been deposited on Lot 8 for the purposes of the sentencing hearing, I will require Grafil to pay 25% of the investigation costs being $46,772.

[107]

Defendants' legal costs

I observe that in a matter that has essentially been a "test case" on the operation of the resource recovery exemptions in relation to s 144(1), a strict liability offence under the POEO Act, the legal and other costs incurred by the Defendants has been very large indeed. Legal costs incurred by the Defendants as at 31 March 2021 were more than $1,650,000 as identified in Mr Hannam's affidavit above in [119].

[108]

Conclusion on penalty for Grafil

When sentencing, the Court must apply the instinctive synthesis approach by identifying all the relevant factors, discussing their importance and making a "value judgment as to what is the appropriate sentence given all the factors of the case", Muldrock v The Queen (2011) 244 CLR 120; [2011] HCA 39 at [26] unanimously following Markarian v The Queen at [51] per McHugh J.
Given the low objective seriousness of the offence, the absence of actual environmental harm, the potential for environmental harm from the presence of asbestos not arising from Grafil's actions, subjective factors as identified above in [286]-[291], its liability for legal costs of the EPA at 25% likely being well over $285,543, its liability for 25% of investigation costs of $46,772 and the cost of the cap and contain order being a minimum liability of $250,000, amounting to a total minimum liability of $582,315, no additional penalty will be imposed on Grafil.

[109]

Proceedings 2016/157886 - Environment Protection Authority v Grafil Pty Ltd

In proceedings 2016/157886, the Court orders that: 1. The Defendant Grafil Pty Ltd is convicted of the offence with which it has been charged under s 144(1) of the Protection of the Environment Operations Act 1997 (POEO Act). 2. The Defendant Grafil Pty Ltd is ordered to pay 25% of the Environment Protection Authority's (EPA) legal costs of the proceedings in a quantum as agreed or assessed, but subject to the costs order made by the Court in Environment Protection Authority v Grafil Pty Ltd; Environment Protection Authority v Mackenzie (No 2) [2018] NSWLEC 210. 3. The Defendant Grafil Pty Ltd is ordered to pay 25% of the EPA's investigation costs being $46,772 pursuant to s 248(1) of the POEO Act. 4. Pursuant to s 245 of the POEO Act, the Defendant Grafil Pty Ltd is ordered to take such steps as are specified below within such time as is specified (or such further time as the Court on application may allow): 1. By no later than four weeks after the making of these orders, engage an environmental consultant who is certified under the Certified Environmental Practitioner (CEnvP) Scheme or Registered Environmental Assessment Practitioner (REAP) Scheme to develop a remedial action plan (the RAP) that provides for the capping and retention of the waste referred to in the judgment of the Court as Stockpiles 1 and 2 present on Lot 8 DP 833768 (the Premises) in accordance with these orders. 2. The RAP is to include provisions considered by the environmental consultant retained pursuant to order 4(a) above to be reasonably required in order for the capping and retention of Stockpiles 1 and 2 to be in accordance with the ANZECC September 1999 Guidelines for the Assessment of On-Site Containment of Contaminated Soil and the National Environment Protection (Assessment of Site Contamination) Measure 1999 (as amended). The RAP is to be prepared in consideration of the findings of the Site Investigation Report prepared in respect of the Premises by JBS&G Australia Pty Ltd dated 27 April 2021. In particular, the RAP is to provide for: 1. the controlled excavation of a 2 m strip along the eastern end of Stockpile 1 adjoining the perimeter drain and the relocation of this excavated material onto the western end of Stockpile 1 or the northern end of Stockpile 2; 2. the reshaping of the area excavated in accordance with order 4(b)(i) above and the area on which excavated material is relocated in accordance with order 4(b)(i) above; 3. the installation of a 300 mm capping layer comprised of natural sand soils present on the Premises; 4. the placement of a visual marker layer to visually distinguish between the materials stockpiled in Stockpiles 1 and 2, and the overlying capping material; 5. the re-seeding of the surface of Stockpiles 1 and 2 with grass, to the extent that any areas are not already grassed over; and 6. the preparation of a long-term Environmental Management Plan. 1. By no later than 12 weeks after the making of these orders, the RAP is to be submitted to a site auditor accredited under the Contaminated Land Management Act 1997 (the Site Auditor). 2. The Defendant Grafil Pty Ltd, by itself and/or through its consultant retained pursuant to order 4(a) above, is to engage with the Site Auditor in good faith to meet the reasonable requirements of the Site Auditor for approval of the RAP by no later than 18 weeks after the making of these orders. 3. Within 8 months of the RAP being approved by the Site Auditor, the Defendant Grafil Pty Ltd is to implement the actions required under the RAP. 4. By no later than 10 weeks after the implementation of the actions required under the RAP, the Defendant Grafil Pty Ltd is to arrange for the Site Auditor to inspect Stockpiles 1 and 2 and seek the Site Auditor's written confirmation that the RAP has been satisfactorily implemented. 5. The Defendant Grafil Pty Ltd by itself and/or through its consultant retained pursuant to order 4(a) above, is to engage with the Site Auditor in good faith to meet the reasonable requirements of the Site Auditor in order to obtain written confirmation of the satisfactory implementation of the RAP by the Site Auditor under order 4(f) above. 6. Within 21 days of receiving written confirmation from the Site Auditor of the satisfactory implementation of the RAP in accordance with order 4(g) above, the Defendant Grafil Pty Ltd is to provide a copy of the Site Auditor's written confirmation to the New South Wales EPA of the satisfactory implementation of the RAP. This may be provided by email to . 1. In the event the Defendant Grafil Pty Ltd exercises its entitlement under s 245 of the POEO Act to apply to the Court for further time to take the steps specified in order 4, the Defendant Grafil Pty Ltd has liberty to so apply on three days written notice.

[110]

Proceedings 2016/157995 - Environment Protection Authority v Mackenzie

In proceedings 2016/157995, the Court orders that: 1. The charge against the Defendant Robert Mackenzie be dismissed pursuant to s 10(1)(a) of the Crimes (Sentencing Procedure) Act 1999 without proceeding to conviction.

[111]

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 08 November 2021

At a glance

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Judgment (111 paragraphs)

Legislation Cited (7)

Cases Cited (85)

Cited By (8)