Environment Protection Authority v HTT Huntley Heritage Pty Ltd

Land and Environment Court (NSW)|2003-06-20|Before: Pearlman J

Introduction 1 On 11 April 2003, the Court found the defendant, HTT Huntley Heritage Pty Ltd, had contravened condition L5.3 of its environment protection licence - see Environment Protection Authority v HTT Huntley Heritage Pty Ltd [2003] NSWLEC 76 ("the principal judgment"). 2 The proceedings were adjourned so that submissions could be made on conviction and penalty. At the adjourned hearing, the defendant was unrepresented by counsel or solicitors, and Mr D Hickie, a director of the defendant, was authorised by the defendant to adduce evidence and make submissions on its behalf. 3 The facts as found appear in the principal judgment, and need not be repeated here in any detail. Suffice it to say that the defendant was engaged in the rehabilitation of the Huntley Colliery at Avondale ("the site") and it held an environment protection licence ("the licence") in respect of its activities. Condition L5.3 of the licence limited the nature of waste material that could be brought upon the site to virgin excavated natural material (VENM) or non-hazardous bulk agricultural or crop waste that is not putrescible. It was found that the defendant had accepted at the site approximately 37,000 tonnes of waste, being construction and demolition material, commencing from 15 March 2001 and continuing until 29 August 2001. 4 Contravention of a condition of a licence is an offence under s 64(1) of the Protection of the Environment Operations Act 1997 ("the POEO Act"). In the case of a corporation, it attracts a maximum penalty of $250,000, and a further maximum penalty of $120,000 for each day the offence continues. 5 The prosecutor seeks the imposition of a penalty, together with a daily penalty. In addition it seeks orders under pt 8.3 of the POEO Act requiring the removal of the waste under s 245 and the publication of the offence under s 250.

(a) The original proposal for rehabilitation of the site included a proposal to have the site licensed as a controlled waste facility under the Waste Minimisation and Management Act 1995 ("the WMM Act"). For that purpose, a landfill environmental management plan ("LEMP") was prepared in 1997 by Gutteridge Haskins and Davey Pty Ltd, by whom, at the time, Mr Hickie was employed. Mr Hickie was involved in the preparation of the LEMP.

(b) Mr Hickie stated, in cross-examination, that, in 1997/1998, there had been discussion between the Department of Mineral Resources and the Environment Protection Authority ("the EPA") at a ministerial level, as a result of which it had been agreed that, if the site was to be licensed under the WMM Act, development consent under the Environmental Planning and Assessment Act 1979 would be required. Corroboration of this is to be found in a letter dated 12 May 1998 from the Department of Mineral Resources to Mr B Hulley (who became a director of the defendant) in which it was stated that, if material was used which would require a licence under the WMM Act, "… a separate Development Consent would be required" .

(c) Mr Hickie also stated in cross-examination that he was aware in 1997/1998 that the local community was opposed to the site being used as a licensed waste facility, and that the local council was also opposed to that proposal, and was especially opposed to the importation to the site of industrial material, including BHP slag. Mr Hickie said that, as a consequence, the defendant (or its predecessors) "did not have a chance" of obtaining development consent for the use of the site as a waste facility.

(d) On 28 January 1999, the EPA wrote to Land Enviro Corp Pty Ltd, a company then in control of the site and its proposed rehabilitation and of which both Mr Hickie and Mr Hulley were directors, stating, amongst other things, as follows: In previous discussion with the EPA, you have indicated that the rehabilitation of the site could be undertaken without need for licensing as a CWF (controlled waste facility) by restricting the imported material to VENM and that therefore site would be exempt from the licensing provisions of the WMMR (Waste Minimisation and Management Regulation) and not liable to pay the waste levy…

(e) Mr Hickie stated that the defendant abandoned the proposal to seek licensing as a waste facility, not because of the waste levies involved, but because of the likelihood that development consent could not be obtained.

(f) In January 2001, the licence was issued to the defendant. Condition L5.3 limited the importation of waste material to the site to VENM and non-hazardous bulk agricultural or crop waste that is not putrescible.

(g) Despite condition L5.3, in January 2001 the defendant prepared, and distributed to over 20 major construction and demolition companies, an information memorandum stating that it operated a recycling facility capable of receiving construction and demolition material, and soliciting customers. Its offer was taken up by companies such as Collex Pty Ltd ("Collex") and Dial-a-Dump. It proceeded to receive construction and demolition material, for each load of which it charged a fee. 7 In response to the prosecutor's claim, Mr Hickie submitted that the defendant believed at all times that it was entitled to import construction and demolition material as "engineering material" for the purpose of crushing, grinding and separating, and for ultimate use in rehabilitation of the site, and that this was permitted under the licence. He pointed to examples of that belief. In section 4.2 of the Site Rehabilitation Plan and Emplacement Management Plan prepared in February 2001, it was stated that selective sorting, cleaning and crushing of materials, including "imported building demolition rubble", would be carried out. That statement was repeated in section 4.2 of the Supplementary Report No 1 prepared in July 2001. 8 Mr Hickie's evidence was that the defendant held that belief up until the delivery of the primary judgment in which the finding was made that the acceptance of construction and demolition material at the site was not authorised by the licence. He maintained that the defendant held that belief despite, first, a warning on 18 July 2001 from Ms A Kennedy, an officer in the employ of the EPA, that the construction and demolition material might be in contravention of a condition of the licence, despite, secondly, her formal statement to that effect during a site visit on 10 August 2001, and despite, thirdly, a formal letter dated 20 August 2001 from the EPA requiring the importation of construction and demolition material to cease. Mr Hickie said that the defendant considered the EPA "to be wrong" and he did not raise this as an issue with the EPA because, he said, his experience was that the EPA did not reply to correspondence from the defendant. 9 Furthermore, Mr Hickie submitted that the defendant did not import the construction and demolition material for commercial purposes. He said that the defendant made no net commercial gain from the importation of the construction and demolition material. He pointed to the statement made by Mr Hulley to Ms Kennedy on her site visit on 29 August 2001 that "the waste is being accepted on a cost neutral basis". 10 I am unable to accept that the defendant believed that the construction and demolition material it accepted was not waste, and that it was authorised by its licence to accept it. I say that for these reasons. First, as Mr Howard submitted, the construction and demolition material looked like waste. Ms Kennedy described the main stockpile (called by the defendant stockpile A or the Collex stockpile) as containing "… bricks, concrete, wood and other materials such as buckets and plastics … PVC pipe, plastic coated wires and metal such as concrete reinforcement…". Secondly, Mr Hulley called it waste, at his interview with Ms Kennedy on 16 July 2001. Thirdly, Mr Barnes, a manager in the employ of Collex, called it "primary sorted waste". Fourthly, at a site meeting on 30 August 2001 (referred to in Ms Kennedy's affidavit), Mr R Renshall, a director of the defendant, stated that "I was against the decision to continue to accept C&D waste, but I was overruled". Fifthly, and most importantly, the defendant supplied notices under s 143(3) of the POEO Act to Collex upon a weekly basis. The defendant agreed to do so in heads of agreement with Collex, cl 8 of which stated that the defendant agreed to "… provide a declaration under Section 143 of the POEO Act confirming that the site is legally entitled to receive such material for each load". (Section 143 does not refer to a "declaration", but I infer that an approved notice under s 143(3) was intended, since that is a notice which is specified as including a statement that "the place could lawfully be used as a waste facility for the waste"). According to Mr Barnes' evidence, "certificates" to this effect were signed by Mr Hulley and furnished to Collex on a weekly basis. Mr Hickie sought, in cross-examination, to explain these s 143(3) notices simply as a procedure "to keep Collex happy". And, finally, although for the purposes of determining if the offence had been proved, the Court was required to make a finding that the construction and demolition material was "waste" within the meaning of the POEO Act on its proper construction, condition L5.3 uses the expression "waste material" and the defendant could have been in no doubt, on the plain and ordinary meaning of those words, that it was importing "waste material." 11 Furthermore, the defendant knew that the licence limited the importation of material to VENM and non-hazardous bulk agricultural or crop waste that is not putrescible because, in the light of the history of the matter I have outlined in par 6, the defendant knew that the importation of any other type of waste material would have required a development consent, licensing as a controlled waste facility and the payment of levies. Condition L5.3 states exactly that. 12 The defendant might have believed that construction and demolition material, with further processing, might be converted into recycled, non-waste material: a submission to this effect was made by Mr Hickie when, as I have set out in par 26, he spoke of standards or specifications for recycled material. But the defendant intended to, and did, carry out reprocessing on the site, not before the material arrived at the site, and hence it could not have held the belief that the construction and demolition material accepted on the site was recycled, non-waste material at the time it was accepted. 13 Accordingly, I am satisfied beyond reasonable doubt that the defendant's contravention of its licence was deliberate and culpable, and I take that conclusion into account in imposing a penalty for the offence. 14 It has long been held in this Court that a contravention of an environment protection licence involves a breach of public trust (see Environment Protection Authority v Port Kembla Copper Pty Ltd (2001) 115 LGRA 391 at 398 - 399, and the cases there cited). Such a licence permits the holder to carry out activities that might have environmental impacts, and accordingly the holder is placed in a special category over other corporations and persons. The consequence of the privilege conferred upon the holder is a public trust reposed in the holder to carry out its operations within the limits specified in its licence. A deliberate breach of the limits so specified amounts to a breach of that trust and must be regarded as serious. In this case, I take into account the defendant's breach of that trust as a factor in the imposition of a penalty for the offence.

Statutory considerations 15 Section 241(1) of the POEO Act requires the Court, when imposing a penalty, to take into consideration a number of matters. I deal with each in turn.

(a) the extent of the harm caused or likely to be caused to the environment by the commission of the offence

The prosecutor concedes that no actual harm was caused to the environment, but claims that harm was likely to be caused by reason of concentrations of both lead and asbestos found in the Collex stockpile. 16 I deal first with lead. Mr A Dixon, an officer in the employ of the prosecutor who has experience in the regulation of landfill facilities, gave evidence that, based on studies in the United States which he considered were applicable to New South Wales, the construction and demolition material brought on the site was likely to contain a number of contaminants. One of those, namely, lead, was produced in the tests of the waste material in the Collex stockpile carried out by the prosecutor. The material was found to have a concentration of lead at 0.4 mg/L and 0.5 mg/L being the uppermost end of the range for classification as inert waste. Mr Dixon observed sulphidic soils and decomposing organic matter mixed in the Collex stockpile. In Mr Dixon's opinion, those components would be likely, in a rainfall event, to leach lead of a similar concentration to the concentration produced by the tests. A concentration at this level exceeds the acceptable limits set out in the relevant guidelines, is likely to leach into ground and surface water at the site, and is likely to have a negative impact on aquatic life. 17 In questions put to Mr Dixon in cross-examination, Mr Hickie challenged the applicability of the United States studies to the actual waste brought on the site by the defendant, and the capacity of the leachate produced by that waste to reach a concentration similar to that of the leachate produced in the tests. Mr Dixon did not, however, resile from his opinion, and Mr Hickie adduced no countervailing evidence. I am satisfied beyond reasonable doubt therefore that the contravention of condition L5.3 was likely to cause environmental harm as a consequence of leaching of lead into ground and surface water on the site. 18 The next issue is asbestos. Mr P C C Choi, an officer in the employ of the prosecutor who has a particular expertise in the provision of technical advice on waste generated by industry, found that the Collex stockpile contained asbestos fines and asbestos sheeting fragments. This was confirmed by Mr G C Pickford, an occupational hygienist with an expertise in asbestos, who was engaged by the defendant. Mr Pickford estimated that the total amount of asbestos cement in the Collex stockpile was between 50 and 200 kg, which is approximately equal to 2 - 5 sheets of asbestos cement, each one 1.2m wide x 3m long x 6mm thick. 19 However, the defendant contended that the asbestos in the Collex stockpile came from material produced by the demolition of buildings on the site, and that there was no evidence that the asbestos came from the waste brought upon the site in contravention of condition L5.3. The Mine Rehabilitation Plan relating to the site (extracts of which are appended to the Site Rehabilitation Plan and Emplacement Management Plan tendered in evidence) indicates that a number of buildings on the site were to be demolished, and identifies at least one of those, building 10, which contained tilux asbestos. Furthermore, Mr Hickie's evidence (unchallenged on this aspect) was that demolition material from the demolition of buildings on the site was mixed with waste in the Collex stockpile. Hence, in Mr Hickie's submission, it has not been established that any harm from the presence of asbestos on the site was likely to be caused by the commission of the offence, that is, it has not been established that asbestos was contained in the waste brought on to the site. 20 In response, Mr Howard first contended that the defendant's claim as to the source of the asbestos was not credible. It depended upon an assertion that the Collex stockpile contained both demolition waste from buildings on the site and waste brought on to the site, an assertion not made by the defendant until late in the proceedings. Moreover, Mr Pickford made no statement about the source of the asbestos, an statement which could have been expected had he believed it came from on site material. Mr Howard secondly pointed to the fact that Mr Choi found fragments of asbestos widely dispersed and evenly distributed throughout the Collex stockpile. Furthermore, Mr Pickford took a number of representative samples and found asbestos in each of them. Thirdly, Mr Howard pointed to the fact, initially admitted by Mr Hickie, that most of the material in the Collex stockpile was waste brought on to the site, and that was likely to be the case, even though estimates of the quantity of material in the Collex stockpile were not made, because about 37,000 tonnes of waste had been brought on site. Hence, in Mr Howard's submission, it can be inferred that the waste brought on to the site contained asbestos, although neither the defendant nor the prosecutor sampled waste from trucks as it arrived at the site. 21 Based on the fact that there was asbestos distributed throughout the Collex stockpile, and the fact that the Collex stockpile contained at least the majority of the waste brought on to the site, I think it more likely that asbestos was contained in the waste imported to the site. But I am not satisfied of that fact beyond reasonable doubt, and that is the standard of proof I am required to apply for the fact to be taken into account adversely to the defendant (see R v Olbrich (1999) 199 CLR 270 at 281). Sufficient doubt is created in my mind by the fact that there was asbestos in at least one of the buildings on the site and perhaps in others, and from the finding, which I make, that the Collex stockpile contained demolition material from those buildings as well as waste brought upon the site. I am not therefore prepared to take into account the possibility of harm from asbestos (as to the extent of which, in any event, there was a dispute between Mr Choi and Mr Pickford) as being caused by the commission of the offence.

(b) the practical measures that may be taken to prevent, control, abate or mitigate that harm

Obviously, the likelihood of environmental harm could have been prevented by the defendant refusing to accept waste on the site. 22 That would have required verification that waste accepted at the site was VENM or non-hazardous bulk agricultural or crop waste that is not putrescible. The licence required a system of verification. It contained a number of special requirements in condition E.1 relating to verification procedures to ensure that all waste material accepted at the site fell within the limit imposed by condition L5.3.

(c) the extent to which the person who committed the offence could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence

As I have said in par 15, there is no evidence of actual harm caused to the environment by the commission of the offence, but I have found that harm was likely to be caused by the presence of lead found in the Collex stockpile. 23 I accept Mr Howard's submission that it was reasonably foreseeable that contaminants would be present in construction and demolition material. That, of course, is the whole basis for the statutory regulation of the management of waste and the statutory requirements for the minimisation of the environmental impacts of waste. The history that I have set out in par 6 shows that the defendant was contemplating licensing of the site as a waste facility, and Mr Hickie stated in cross-examination that he was familiar with the provisions of the POEO Act. He, (and through him as a director, the defendant) must be taken to have understood that licensing of the site as a waste facility would have required an environmental assessment of the site and the imposition of requirements to minimise the risk of environmental harm. In these circumstances, the likelihood of harm to the environment was reasonable foreseeable.

(d) the extent to which the person who committed the offence had control over the causes that gave rise to the offence

There is no doubt that the defendant had control over the importation of waste to the site. It owned the site, and was engaged in its rehabilitation. It held the licence, and was in a position to control the nature of the material brought on the site.

Matters in mitigation 24 Mr Hickie raised a number of matters which he submitted should be taken into account in mitigation of any penalty to be imposed upon the defendant. 25 He noted at the outset the defendant's belief that the importation of construction and demolition material was authorised by the licence. For the reasons I set out in pars 10 - 12, I do not accept that the defendant genuinely held such a belief. 26 The other matters he raised are not mitigating factors. He pointed first to the fact that the EPA had failed and has still failed to produce a standard or specification acceptable, in the defendant's opinion, for the processing of construction and demolition material into a recycled non-waste material; secondly, to the fact that the defendant had not received any monetary benefit from the importation of construction and demolition waste; thirdly, to the financial failure incurred by the defendant as a consequence of its inability to accept construction and demolition material; fourthly, to the adverse financial consequences foisted upon the defendant's 25 shareholders; and, finally, to the fact that, absent rehabilitation, the site will be "orphaned", which I understood to mean "abandoned". 27 The defendant adduced no evidence to support these claims, and they are unconvincing to establish that any penalty imposed upon it should be reduced from what might otherwise be appropriate. They are not, for example, of the same character as contrition or remorse; or an exemplary environmental record; or steps put in place to ensure that the defendant would never again offend by contravening its licence. There is no evidence whatsoever of any matters of this character. 28 There are, however, two matters relevant to mitigation of penalty. Although the defendant was incorporated apparently solely for the purpose of rehabilitating the site and although it has been in existence only since 1999, it has no prior conviction for any environmental offence. Furthermore, the prosecutor has estimated that its costs, for which the defendant will be liable, are in the vicinity of $50,000, although no final figure has been arrived at or agreed.

The appropriate penalty 29 As I indicated in par 5, the prosecutor seeks a monetary penalty (the maximum available being $250,000), a daily monetary penalty (the maximum available being $60,000 for each day the offence continued) and the making of orders under pt 8.3 of the POEO Act. 30 Taking into account all the matters I have outlined, I consider that an appropriate penalty for the offence of contravention of condition L5.3 is $60,000, which is 24% of the maximum penalty. 31 As to a daily penalty, I found in the primary judgment that the defendant's contravention of condition L5.3 was continuous over the period from 15 March 2001 until 29 August 2001. It did not accept waste on every single day of that period, but it was accepted on most days. I do not consider, however, that a penalty is appropriate for every day of that whole period, but there was a period when the defendant's contravention of condition L5.3 was flagrant. 32 That was the period between 11 August 2001 to 29 August 2001 inclusive, a period of 19 days. As I have set out in par 8, on 10 August 2001 Ms Kennedy (and other representatives of the EPA) warned the defendant that the continuing acceptance of construction and demolition material was a contravention of the licence. The EPA confirmed that position clearly in the letter it sent to the defendant on 20 August 2001. Yet the defendant continued, over that 19 days, to receive construction and demolition waste. The only explanation proffered on behalf of the defendant was that it thought the EPA was wrong in its view. 33 In those circumstances, I consider it appropriate to impose a daily penalty of $3000 for each of those 19 days during which the defendant continued to accept construction and demolition waste in contravention of its licence. 34 Section 245 of the POEO Act, which falls within pt 8.3, relevantly empowers the Court to order an offender to take specified steps to prevent, control, abate or mitigate any harm to the environment caused by the commission of the offence or to make good any resulting environmental damage. The prosecutor seeks orders under s 245 that in substance require the removal to a licensed waste facility of the waste brought on to the site in contravention of the licence. 35 I do not propose to make the orders sought under s 245 for two reasons. The first reason is that those orders would preclude the exploration and implementation of options for dealing with the waste other than by its removal. I raised this issue with the prosecutor during closing submissions. Mr Howard conceded that there was no middle ground - the Court should make the orders for removal or it should not make them. But, taking into account that the whole purpose of the defendant's occupation of the site is to rehabilitate it, it would seem unjustified to preclude the defendant from exploring options for using the waste for that purpose. Any option would, of course, require environmental assessment and the imposition of regulatory controls, such as development consent, or another environment protection licence, and, ultimately, removal may be the only feasible option. I would not wish to make orders which would have the effect of shutting out other options. 36 The second reason is the impossibility of compliance with, or at least the uncertainty of the terms of, the s 245 orders as framed. Two facts emerged during the hearing. One is that the defendant mixed waste accepted on the site in contravention of the licence ("the illegal waste") with material from the demolition of buildings on the site ("the building waste") to form the Collex stockpile. The second fact is that asbestos (which is likely to cause environmental harm to some extent) is evenly distributed throughout the Collex stockpile, with the consequence that, if it was the fact that the illegal waste was not contaminated with asbestos at its point of entry to the site (as to which I make no finding), it is now so contaminated. The orders as framed pertain to the removal of the illegal waste. It is uncertain as to what is now the precise amount and location of the illegal waste; it may be impossible to separate the illegal waste from the building waste; and it may be necessary, in order to make good any resulting damage (to adopt the terms of s 245(b)), to remove the whole of the Collex stockpile. 37 I turn now to the order sought under s 250 of the POEO Act. Section 250 is headed "Additional orders". It permits the Court to do a number of specified things, one of which is set out in sub-cl (a) as follows: (a) order the offender to take specified action to publicise the offence and its environmental and other consequences and any other orders made against the person. 38 The prosecutor seeks an order in the following terms: Within four months of the date of these orders, the defendant is to cause an advertisement in the form of Annexure B to these orders to be placed in the Illawarra Mercury and the Sydney Morning Herald. A notice in the same terms is also to be sent to all shareholders of the defendant within six months of the date of these orders. 39 The annexure referred to is in the following terms: Prosecution for Contravention of Licence

On … the Land and Environment Court of NSW found HTT Huntley Heritage Pty Ltd guilty of contravening a condition of its environment protection licence by bringing 42,000 tonnes of building and demolition waste on to the premises of Huntley Colliery. HTT Huntley was fined … and ordered to remove the waste to a licensed landfill by …

This advertisement is placed by order of the Land and Environment Court and is paid for by HTT Huntley Heritage. 40 Mr Hickie made no submission in relation to the proposed s 250 order or to the content of the proposed advertisement, and I can see no reason why it should not be imposed. Obviously, of course, it should not contain any reference to an order for the removal of the waste, because that order will not be imposed. Furthermore, it should contain a reference to "approximately 37,000" tonnes of waste, because, on the evidence given by Mr J G Felicetti, an officer of the prosecutor as noted in the primary judgment, approximately 42,536 tonnes of material was accepted at the site of which 37,052 tonnes was construction and demolition material.

Orders 41 In accordance with the foregoing, I make the following formal orders:

(1) The defendant is convicted of the offence with which it has been charged.

(2) I order the defendant to pay a fine in the sum of $60,000, and a further penalty of $3000 for each of the 19 days from and including 11 August 2001 to 29 August 2001 during which the offence continued, making a total sum of $117,000. The total amount is to be paid to the Registrar of the Court within one month of the date of these orders.

(3) I order the defendant, within four months of the date of these orders, to cause an advertisement in the form of annexure A to these orders to be placed in the Illawarra Mercury and the Sydney Morning Herald and, within six months of the date of these orders, to cause a notice in the same terms as annexure A to be sent to all shareholders of the defendant.

(4) I order the defendant to pay the costs of the prosecutor as determined in accordance with the Land and Environment Court Act 1979.

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.

CITATION : Environment Protection Authority v HTT Huntley Heritage Pty Ltd [2003] NSWLEC 142 PROSECUTOR Environment Protection Authority PARTIES : DEFENDANT HTT Huntley Heritage Pty Ltd FILE NUMBER(S) : 50066 of 2002 CORAM: Pearlman J KEY ISSUES: Environmental Offences :- breach of licence conditions - continuing offence - mitigation - penalty - restoration and prevention order - publication order Environmental Planning and Assessment Act 1979 LEGISLATION CITED: Protection of the Environment Operations Act 1997 s 64, s 241, s 245, s 250 Waste Minimisation and Management Act 1995 Environment Protection Authority v HTT Huntley Heritage Pty Ltd [2003] NSWLEC 76; CASES CITED: Environment Protection Authority v Port Kembla Copper Pty Ltd (2001) 115 LGRA 391; R v Olbrich (1999) 199 CLR 270 DATES OF HEARING: 12/06/2003; 13/06/2003 DATE OF JUDGMENT: 06/20/2003

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