Environment Protection Authority v Hochtief; Thiess Pty Ltd

Environment Protection Authority v Hochtief; Thiess Pty Ltd - [2005] NSWLEC 506 - NSWLEC 2005 case summary — Zoe

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4 The terms "pollute" and "waters" are expansively, defined in the Dictionary to the PEO Act. Additionally, the evidentiary provisions contained in ss 257 and 258 of the PEO Act deem the Defendants as co-licensees under the PEO Act to be the occupiers of the licensed premises from which pollution occurs "to have caused the pollution". 5 Section 123 of the PEO Act prescribes a maximum penalty of $250,000 where the offence is committed by a corporation. 6 Each Defendant has pleaded guilty to the offence charged and by consent the hearing on sentence in respect of each charge was conducted concurrently. As will appear the hearing, which was considerably facilitated by the joint tender of an Agreed Statement of Facts (Exhibit 1), yielded only one significant difference in the competing cases. 7 That single difference however raised an important matter of sentencing principle in the present cases where the Defendants are clearly co-offenders in the sense that each Defendant was a principal offender but where each offence was committed by the agency of the Joint Venture, which is not a separate legal entity and hence cannot be charged with the offence with which each principal is charged. 8 The Prosecutor submitted that the penalty to be imposed upon each Defendant should be determined independently of the penalty imposed on the other (except for application of the parity principle which on the facts of the present cases would require equality of penalty since the culpability of each Defendant is indistinguishable one from the other). 9 The competing submission of Senior Counsel for the Defendants was that having regard to the Joint Venture, the penalty to be imposed upon each Defendant should be determined by first determining the appropriate penalty for the water pollution incident founding each offence having regard to its objective gravity and thereafter by allocating 50 percent of that penalty to each Defendant having regard to the indistinguishable culpability of each Defendant. 10 Since the competing submissions were made without either elaboration or citation of supporting authority I invited the parties to make further considered submissions on the disputed question. 11 Thereafter the parties filed further written submissions supported by citation of relevant case law. Although the result of these further submissions (supported by evidence of the terms of the Joint Venture Agreement) appeared to bring the parties' respective positions into much closer alignment than had been the case at the hearing, nonetheless at the end of the argument what should be the appropriate sentencing principle to be applied in the present cases remained in doubt. 12 It will be necessary to return to this matter after I have recorded the relevant facts. B. THE RELEVANT FACTS 13 The relevant facts concerning the admitted offences, the circumstances in which the water pollution incident occurred, the environmental consequences of the water pollution incident and the clean up action taken by the Defendants are found in the Statement of Agreed Facts (Exhibit 1). 14 Additional evidence in mitigation of penalty was given by Mr Stephen Burns, Project Director for the Joint Venture. 15 The following abbreviated summary of relevant facts is extracted from the Statement of Agreed Facts. 16 In July 2002 the Joint Venture was awarded by the NSW Government's Transport Infrastructure Corporation the contract for the construction of the Epping to Chatswood component of the Parramatta Rail Link Project. The contract required the design and construction of two tunnels, each 13 kilometres in length, and 4 railway stations. 17 In order to undertake the contract works the Defendants were granted as joint licensees an environment protection licence (No.11735) under the PEO Act which specifies over 60 sites in and about the suburbs of Epping, Macquarie Park and Chatswood as relevant "premises" to which the licence applies. 18 As part of the contract works, water treatment plants (WTPs) were required to be installed for treating sediment laden waters including ground water and construction generated water and in 2002 the Joint Venture commissioned Liquitek Pty Ltd (Liquitek) to design, supply, install and commission 2 WTPs, one of which was located near Wicks Road Macquarie Park (the Macquarie Park WTP) from which the pollution incident emanated. 19 The Macquarie Park WTP was designed to receive waste waters generated by the construction process and treat them by way of settlement and chemical treatment (by applying caustic soda and a flocculent) before being discharged into Porters Creek via the licensed discharge point. (The licence does not permit discharge of any pollutant containing phosphorous or nitrogen). 20 At approximately 10.15am on 27 October 2003 Joint Venture personnel became aware that a discharge of white sludgy liquid into Porters Creek was occurring from the premises otherwise than via the licensed discharge point. Thereupon environmental officers of the Joint Venture took action by placing sandbags and geofilter fabrics in Porters Creek to prevent the sludge from flowing further downstream. The Environment Protection Authority was informed of the incident and one of its officers, Mr Gathercole, attended the site, made relevant observations, took photographs and collected samples of the discharge and the waters of Porters Creek upstream and downstream the point of discharge into it. 21 Prior to Mr Gathercole's arrival the Joint Venture had engaged a remediation company to remove the pollutants and sludge from Porters Creek and from the bunded area around the WTP. 22 The following day Mr Gathercole again attended the site and made observations of Porters Creek. He was satisfied that the clean up undertaken by the Joint Venture had been effective. 23 According to paragraph 4 of the Statement of Agreed Facts the cause of the pollution incident was as follows:

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24 It is not known precisely how much sediment was discharged into Porters Creek as a result of the pollution incident although the experts' estimate was "no more than 4.5 tonnes". 25 No actual environment harm is known to have been caused by the pollution incident either to Lane Cove River or to Porters Creek. The latter water body was at the time of the pollution incident "a moderately impacted system, impaired by anthropogenic land uses" which water contained a variety of invertebrate taxa dominated by pollution tolerant species. 26 The water quality test results of the collected samples revealed levels of nutrients (mainly phosphorous) within the range of variability already existing in Porters Creek, although the pollution incident would have raised the cumulative concentrations of nutrients. 27 Following the pollution incident the Joint Venture commissioned GHD Pty Ltd to undertake an independent audit of the WTPs and the resulting recommendations of that audit (including interlocking safety devices being installed in the WTPs) have been implemented by the Joint Venture. 28 Prior to the commission of the admitted offence there have been two occasions when a penalty infringement notice under the PEO Act has been issued on the Defendant Theiss Pty Ltd in respect of a breach of a condition of the relevant environment protection licence. The first notice involved a breach on 11 March 2003 by virtue of the failure to install sediment and erosion controls for a topsoil stockpile. The second notice involved a breach on 2 October 2003 by virtue of a discharge of the contents of a sedimentation pond caused by an excessive injection of a surfactant "Biosolve". 29 Although the penalty infringement notices were issued only in respect of one of the Defendants it is not suggested to be otherwise than that the breaches of the conditions of licence were committed by the Joint Venture in the course of carrying out the contract works for which construction activity commenced in late 2002. (Apparently however, and unlike the present charges, only one of the Joint Venture Companies was issued with the penalty infringement notices.) 30 The affidavit of Mr Stephen Burns, Project Director for the Joint Venture, sworn 26 April 2005 deposes to the following facts:

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31 The Defendants entered their guilty plea on 25 January 2005, in circumstances where each Summons had been twice previously before the Court - on 2 November 2004 (first return date) when the proceedings were adjourned to 14 December 2004 to allow the Prosecutor to serve additional affidavits, when on that occasion the Defendants sought an adjournment to 25 January 2005 to give them the opportunity to obtain expert evidence on matters concerning sampling methodology, sampling results and environmental harm (being matters raised by the Prosecution evidence). 32 The Defendants have agreed to pay the Prosecutor's costs in the sum of $21,000. C. THE COMPETING CASES ON SENTENCE 33 As previously noted the competing submissions on sentence only diverged on the single issue of principle that I have earlier outlined. 34 That issue arises, not because the Defendants are co-offenders or principal offenders whose respective culpabilities in respect of the same offence are indistinguishable from one another, but because the offence was, from a practical viewpoint, committed by the Joint Venture that the two Defendants had created for the purpose of undertaking the contract works. Since that Joint Venture does not possess a legal personality, it cannot be charged with the offence because it is not relevantly "a person who pollutes waters" within the meaning of s 120(1) of the PEO Act. It is as a result of the Joint Venture's lack of legal personality (which also explains why the environment protection licence was granted to the two Defendants as co-licensees rather than to the Joint Venture) that the Defendants as the constitutive members of the Joint Venture incur liability for the offence committed by the Joint Venture. (Liability may also arguably be separately imposed by virtue of the operation of ss 257 and 258 of the PEO Act which are evidentiary provisions that deem the holder of an environment protection licence to be "the occupier of the premises" at or from which any pollution occurs to have caused that pollution). 35 In my opinion the appropriate sentence to be imposed upon each of the Defendants for the admitted offences (and the competing cases did not recognise any other sentencing outcome than that each Defendant be convicted and fined) is one that takes into account the fundamental reality that the pollution incident was caused by the Joint Venture (notwithstanding the absence of legal personality of the Joint Venture), and the further reality that the admitted liability of each Defendant for the same offence only arises because the absence of legal personality of the Joint Venture precludes the Joint Venture from being charged with the offence of causing the water pollution incident. 36 The foregoing approach to sentencing the two Defendants in the present cases accords with the following statement appearing at par 40 of the judgment of Lloyd J in Environment Protection Authority v New Generation Beverages Pty Ltd & Anor [2000] NSWLEC 130:

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42 Of these competing submissions I think those advanced on behalf of the Defendants are to be preferred and accord with the realities of the case as I have described them in par 35. However, I do not think that the Defence submissions can legitimately invoke the "totality principle" of sentencing. That sentencing principle as enunciated in the decision of the High Court of Australia in Mill v The Queen (1988) 166 CLR 59 and as more recently discussed and applied (particularly in its relationship to the "parity" sentencing principle) by the High Court in Postiglione v The Queen (1997) 189 CLR 295, appears to be relevant only in relation to the sentencing of a single offender convicted of multiple offences. 43 For all the foregoing reasons I propose to proceed by determining the appropriate penalty in respect of the admitted water pollution incident by considering its objective gravity or seriousness together with the Defendants' indistinguishable levels or degrees of culpability and other relevant subjective factors and thereafter by apportioning that penalty equally between the two offenders to achieve the necessary parity of sentence between them. 44 Except for the matter just adjudicated upon, the competing submissions on sentence combined to support the imposition of a penalty which reflected an evaluation of the objective gravity at the lower end of the spectrum of gravity for the offence created by s 120(1) of the PEO Act and which also reflected a significant sentencing discount on account of mitigating factors (in the order of 40 percent considered globally). 45 These conclusions result in an ultimate penalty of $24,000 (i.e. $40,000 less 40 percent sentencing discount). This level of sentence reflects my consideration of the relevant matters specified in s 241(1) of the PEO Act and of the mitigating factors made relevant by s 241(2). 46 In respect of the relevant s 241(1) matters the relevant facts (earlier summarised) clearly address the relevant matters and need not be here repeated, except for the question of foreseeability of environmental harm caused by the commission of the offence: vide par (c). In this respect the Defence submissions were as follows: The defendants do not dispute that they could have reasonably foreseen the harm likely to be caused to aquatic life by virtue of sediment laden water discharging from the premises near Porters Creek.

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47 To the extent that the Defence submission focuses attention on the precise manner in which the pollution incident occurred, I do not, with respect, think that that is a matter that falls within the scope of "foreseeability" that is required to be considered by s 241(1)(c) cf Empress Car Co (Abertillery) Ltd v National Rivers Authority (1998) 1AllER 481 at 492 per Lord Hoffman where his Lordship held that ordinary vandalism (causing water pollution) was foreseeable although its particular form may not have been. 48 In any event, I am satisfied that an escape of pollutant from a breach in the bund wall surrounding the WTP (including a breach that has been caused by a electrical contractor working for the Joint Venture) was a reasonably foreseeable risk. 49 Finally, I should note that the penalty of $24,000 that I consider to be appropriate is within the penalty range established by the decisions of this Court referred to by the parties for similar offences against s 120(1) of the PEO Act involving the pollution of waters by the introduction of soil and/or sediment laden waters (eg EPA v Forestry Commission of NSW [2004] NSWLEC 751) and accordingly, the imposition of such a penalty satisfies the sentencing principle of "even-handedness". D. CONCLUSIONS AND ORDERS 50 For all of the foregoing reasons, I am of the opinion that it is appropriate to convict each Defendant of the admitted offence as charged and to apportion between each Defendant an equal one half share of both the appropriate penalty ($24,000) and the agreed costs ($21,000). 51 Accordingly, I make the following orders - A. In proceedings No 50067 of 2004 1. The Defendant is convicted of the offence as charged. 2. A penalty of $12,000 is imposed in respect of that conviction. 3. The Defendant shall pay the Prosecutor's legal costs in the agreed sum of $10,500. 4. The exhibits remain on the Court file. B. In proceedings No. 50068 of 2004 1. The Defendant is convicted of the offence as charged. 2. A penalty of $12,000 is imposed in respect of that conviction. 3. Defendant shall pay the Prosecutor's legal costs in the agreed sum of $10,500. 4. The exhibits remain on the Court file.

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Judgment (35 paragraphs)

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