Environment Protection Authority v Metalcorp Recyclers Pty Limited

JUDGMENT: IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES 50012 of 2003

6 February 2004 Environment Protection Authority Prosecutor v Metalcorp Recyclers Pty Limited (ACN 002 707 262) Defendant Judgment

1 By summons filed on 17 February 2003 the defendant was charged with an offence against s 64(1) of the Protection of the Environment Operations Act 1997 ("the PEO Act") in that it contravened a condition of its Environment Protection Licence Number 872 ("licence 872") between 23 November 2002 and 3 December 2002 at Chipping Norton. 2 The condition of licence 872 which was contravened was condition L6.6 which provided:- L6.6 This condition is in force from 8 April 2002 until 7 December 2002. The licensee must cease the operation of the shredder if the licensee's monitoring results indicate that in a sixty day period four explosions have occurred at the premises which have exceeded the air blast overpressure criteria of 123dB(lin peak) measured in accordance with condition L6.3.

In this condition the "sixty day period" comes to an end either: a) at the completion of sixty days with no more than three explosions; or b) on commencement of the "ceasing of operation" which has occurred as a result of four explosions in excess of 123dB(lin peak). 3 Clause L6.9 of licence 872 provided:- L6.9 In conditions L6.6, L6.7 and L6.8 "ceasing operation" means not operating the shredder for 5 working days within ten days of the fourth, third or second (respectively) explosion. The five working days must include two Saturdays. 4 The prosecutor alleges that the defendant did not cease operation of the shredder for five working days (including two Saturdays) after four explosions exceeding 123dB(lin peak) occurred in a sixty day period commencing from 6 October 2002. The explosions occurred on 23 October 2002, 24 October 2002, 28 October 2002 and 21 November 2002. 5 The defendant has pleaded guilty to the charge and accordingly the Court is required to assess the penalty. The maximum penalty for failure to comply with a condition of an environment protection licence where the offence relates exclusively to noise is $60,000 for a corporation.

Agreed facts 6 The agreed facts establish that the defendant operates a metal recycling facility at 53-57 Riverside Road, Chipping Norton ("the premises"). The premises is zoned Industrial 4(a) pursuant to the Liverpool Local Environmental Plan 1997. 7 The metal processing facility has been in operation at the premises for approximately twenty-seven years and has been operated by the defendant since 1996. Since the activities conducted at the premises are included in Sch 1 to the PEO Act, the defendant was granted licence 872 for the purpose of conducting scheduled activities described as "Mineral Process or Metallurgical" and "Waste Facilities - store/transfer/sep". 8 Part of the equipment used at the premises comprises a 2000hp shredder ("the shredder") for processing light scrap and a 500hp shear and flame-cutter for processing heavy scrap and cutting, baling and sorting of non-ferrous metals. The shredder shreds scrap metal such as cars and whitegoods into small pieces, which are then sold to steel mills as feedstock for processing into reconstituted steel. Explosions occur when the shredder strikes an object such as liquid petroleum gas cylinders that may have become concealed in the scrap. Such explosions may exceed 140dB(lin peak). The defendant finds that it is not possible to eliminate the explosions despite the adherence to practices which were introduced specifically to minimise them. 9 The explosions from the shredder have become more noticeable in recent years as a consequence of the development of lands adjacent to the premises for residential purposes. In 1983 Liverpool Council altered the zoning of such land from industrial to residential. When metal recycling operations by means of a shredder first commenced at the premises in 1976, a distance of 1,000m separated residential dwellings and the premises. As a result of the recent zoning changes, residential development exists approximately 60m from the boundary of the premises. As a consequence residents have experienced substantial inconvenience in consequence of the shock of the explosions. In 2000 the prosecutor received over two hundred complaints concerning such explosions. 10 The defendant has adopted measures to reduce the incidence of explosions to a level considered to be industry best practice. Such measures include regular communication between sales managers of the defendant and suppliers of scrap about the dangers of explosion risk material in scrap; inspections of incoming trucks and of other sites generating input scrap for operations at the premises to remove explosion risk material; the removal of highly flammable liquid containers from scrap prior to it entering the shredder stream; and the removal of combustible materials from scrap where practical. These procedures are strengthened by staff education programs and remuneration incentives for inspectors of scrap metal. 11 In consequence of the conflict of land use that has arisen at Chipping Norton the defendant will open a new shredder at a purpose built metal recycling facility at Hexham in June 2004 enabling the shredder to cease operation at the premises.

The offence 12 In the sixty day period commencing 6 October 2002 explosions occurred in excess of 123dB(lin peak) as recorded at the boundary of the premises. On 23 October 2002 a reading of 133.1dB was recorded, on 24 October 2002 139.3dB was recorded on 28 October 2002 135.3dB was recorded and on 21 November 2002 135.9dB was recorded. To comply with condition L6.9 of licence 872 the defendant was required to shut down the shredder for five working days within ten working days of the fourth explosion, that is five working days between 23 November 2002 and 3 December 2002.

13 The agreed facts include the following expert evidence of Mr John Wassermann, the former Manager Noise Assessments of the prosecutor:- 'The estimated overpressure levels from the four explosions on the Metalcorp Recyclers Pty Ltd premises range from 129 dBLin (peak) to 136 dBLin (peak) at the closest residential receivers. The levels exceed the ANZECC guideline of 120 dBLin (peak) and fall in moderate to high risk of noise from the noise guidelines used by the US military. Comparing these levels with existing guidelines and research for overpressure events suggests, in my opinion 1. the level of community response to Metalcorp Recyclers Pty Ltd explosions is in-line with what is reported in the literature; and 2. that these levels have the potential to interfere with the comfort or repose of the closest residential receivers and should be considered offensive noise.' 14 The breaches were reported by the defendant to the prosecutor. On 21 November 2002 an officer of the prosecutor advised the defendant that condition L6.6 had been triggered, requiring it to shut down its operations. However the defendant advised the prosecutor that it could not cease its operations because three of its customers, namely OneSteel, Comsteel and BHP needed a supply of scrap. Four letters have been tendered from customers of the defendant, namely Fidax Foundry Pty Ltd, Warman International Ltd, OneSteel NSW Pty Limited and Comsteel. Each letter establishes that an interruption of supply would have been harmful to each of their businesses. 15 On 21 November 2002 the defendant offered to cease operation on 23 December 2002, 24 December 2002, 27 December 2002, 28 December 2002 and 30 December 2002. On 22 November 2002 an officer of the prosecutor advised the defendant that it expected the defendant to comply with licence 872. The defendant replied and stated that although it wanted to comply with licence 872 it was not possible for it to cease operation of the shredder within the next ten working days. The defendant said it would forward a submission to the prosecutor to vary licence 872 to include an exceptional circumstances clause.

16 Officers of the prosecutor attended the premises and observed that the shredder continued to operate on 23 November 2002, 25 November 2002, 26 November 2002, 27 November 2002, 28 November 2002, 29 November 2002, 30 November 2002, 2 December 2002 and 3 December 2002. The defendant ceased its operations on 24 December 2002, 27 December 2002, 28 December 2002, 30 December 2002 and 31 December 2002. Findings

Sentencing considerations pursuant to s 241 of the PEO Act 17 The impact of the explosions which occurred between 23 October 2002 and 21 November 2002 are not the subject of the offence. The offence is confined to the breach of condition L6.6 of licence 872 between 23 November 2002 and 3 December 2002. There is no evidence of harm caused or likely to be caused to the environment, practical measures that may have been taken to prevent harm, and foreseeability of environmental harm. Accordingly s 241(1)(a), s 241(1)(b) and s 241(1)(c) of the PEO Act are not applicable. 18 In relation to s 241(1)(d) of the PEO Act which requires the Court to consider the extent of control the defendant had over the causes of the offence, the Court finds that compliance with condition L6.6 of licence 872 was entirely within the defendant's control despite the fact that the explosions may have been very difficult to eliminate. It is apparent that the defendant deliberately chose not to comply with condition L6.6 of licence 872 solely for commercial gain. The Court takes note of the letters from the customers of the defendant but in doing so observes that at least one of those letters was written by a company associated with the defendant. None of the letters refer to the lawfulness of the defendant's conduct in continuing operations in breach of the conditions attaching to the licence. Additionally the defendant's submission that it "was under considerable pressure by its customers to supply scrap processed in its shredder at Chipping Norton to meet a shortfall in supply at their steel mill operations" is not an appropriate mitigating factor. 19 The Court acknowledges that the defendant ceased production for a period of five days approximately three weeks after the commission of the offence. However since such closure occurred during the Christmas holiday period, the Court discounts this period as compensation for the defendant's failure to cease operations on 21 November 2002. The Court is mindful that the defendant's operations have been made more difficult since the change in zoning by the Liverpool Council. This however does not exempt the defendant from complying with the conditions of licence 872. 20 The Court does not know whether the insertion of condition L6.6 into licence 872 and the requirement that operations at the premises cease for a period of five days was intended to provide respite for the residents or a sanction for the explosions giving rise to the activation of a condition. It is obvious however, that a condition contained in a licence of the kind held by the defendant is to be observed and that the holder must organise its business to ensure that a breach should not occur: see Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 at p 359. 21 Section 241(1)(e) of the PEO Act is not relevant to these proceedings. Section 241(2) of the PEO Act provides that the Court may take into consideration other matters that it considers relevant. Such matters are addressed below. Plea of guilty 22 The Court is required to take into account the defendant's plea of guilty pursuant to s 22 of the Crimes (Sentencing Procedure) Act 1999 ("the Sentencing Procedure Act"). The defendant submits that it should be entitled to a full discount of 25 per cent in respect of its plea of guilty. Such plea resulted from negotiations between the prosecutor and the defendant which resulted in the defendant pleading guilty in these proceedings on the condition that the prosecutor make an application to withdraw its summons in proceedings 50058 of 2003. 23 The summons for these proceedings was originally returnable on 8 April 2003. It was then adjourned until 10 June 2003 when a plea of not guilty was entered. Dates were allocated for a contested hearing for 16 September 2003, 17 September 2003 and 18 September 2003. On 10 July 2003 proceedings 50058 of 2003 were instituted which alleged that on 12 February 2003 the defendant contravened another condition of licence 872. Such summons was returnable on 21 August 2003 and a plea of not guilty was entered. As a result of the negotiations the defendant notified the Court by facsimile on 10 November 2003 of its intention to change its plea to guilty in these proceedings as it was agreed between the parties that proceedings 50058 of 2003 would be withdrawn. 24 Although the defendant did not formally enter a plea of guilt until the first day of the hearing, the parties and the Court were aware of this fact on 10 November 2003. The defendant submits that it entered a plea of guilty at the first reasonable opportunity. It relies upon the observations of the New South Wales Court of Criminal Appeal in Regina v Dib [2003] NSWCCA 117 where Hodgson JA stated at par 3:- In my opinion, the amount of any discount to be allowed by reason of the utilitarian benefit of a plea of guilty should not be reduced on the ground that the plea was offered in association with the abandonment by the Crown of a greater charge; and if in such a case the plea is offered as soon as the Crown indicates willingness to accept a plea to the lesser charge, it should be regarded as being made at the earliest opportunity. To hold otherwise would be inconsistent with the presumption of innocence of the greater charge, which in those circumstances must stand unaffected.

Dowd J observed at par 29:- I do not agree that the discount should be reduced by reason of is a benefit in the acceptance of a plea to a lesser charge. A person in the position of the applicant comes with a presumption of innocence and no assumptions can be made as to the basis for the acceptance of the plea. The plea should be treated as one made at the earliest opportunity (Cameron v R (2002) 76 ALJR 382, R v Atkinson [2001] NSWCCA 135). 25 An early plea demonstrates that the defendant has expressed a degree of remorse or contrition which warrants a reduction in penalty. In Cameron v The Queen (2002) 209 CLR 339 Kirby J observed at p 357:- In many cases such feelings of repentance will continue and manifest themselves in an early plea of guilty that is adhered to at the trial. Obviously, the timing of any plea has a large bearing on the credit that should be given to the prisoner [R v Holder [1983] 3 NSWLR 245; R v Bulger [1990] 2 Qd R 559]. A plea of guilty at the last moment (as on the day set down for trial) will ordinarily attract a smaller discount in sentence than one that is entered at the first reasonable opportunity [cf Dodge (1988) 34 A Crim R 325 at 331; Heferen (1999) 106 A Crim R 89 at 92 [12]; R v Thomson (2000) 49 NSWLR 383 at 414-15 [132]; 115 A Crim R 104 at 134]. But even a belated plea will normally attract a discount.

26 It is difficult for the Court to discern any substantial remorse arising out of the defendant's plea. The plea of guilty only arose in consequence of a plea bargain relating to proceedings 50058 of 2003 which were not instituted until three months after the institution of these proceedings. In these circumstances the Court infers that the plea has arisen as a result of the successful negotiations relating to these proceedings. Taking into consideration the fact that the offence occurred almost seven months previously it could not be said that the plea was entered at an early stage. The observations of the New South Wales Court of Criminal Appeal in Regina v Dib do not appear to be relevant especially since the offence giving rise to proceedings 50058 of 2003 was also made pursuant to s 64(1) of the PEO Act and not a greater charge. 27 The Court acknowledges that a plea of guilty warrants a reduction in penalty from a utilitarian perspective. As Spigelman CJ in R v Thomson; R v Houlton (2000) 49 NSWLR 383 at p 415 observed that an early plea of guilty "offers distinctive and substantially greater benefits over a plea that occurs at the commencement, let alone during, a trial." Such benefits include reducing costs and time incurred by the parties and by the Court which should be acknowledged in this instance. The plea of guilty was entered approximately four weeks before the hearing. It is not known whether the prosecutor incurred costs between the setting down of hearing dates on 28 August 2003 and the commencement of the hearing. Certainly the length of the hearing has been substantially reduced as a result of the plea of guilty.

28 Accordingly the Court will not grant a discount of 25 per cent as claimed by the defendant but will permit a lesser discount. Co-operation with the prosecutor 29 The defendant submits, and the prosecutor acknowledges, that the defendant has co-operated fully with the prosecutor concerning its investigations of the offence. The defendant has agreed to pay the prosecutor's costs of these proceedings in the agreed sum of $9,000 and the agreement concerning the facts surrounding the offence have substantially reduced the length of the Court hearing. These are mitigating factors pursuant to s 23 of the Sentencing Procedure Act. 30 The defendant has made an application in class 1 proceedings, namely 10491 of 2003, to vary conditions of licence 872. The Court does not consider the defendant's co-operation with the prosecutor in those proceedings as constituting a relevant mitigating factor in these proceedings.

Prior offences 31 Section 21A(2)(d) of the Sentencing Procedure Act provides that the Court must take into consideration the defendant's record of previous convictions as an aggravating factor. The defendant has previously been charged with offences due to similar explosions which have given rise to the present offence. In Environment Protection Authority v Metalcorp Recyclers Pty Limited [2000] NSWLEC 259 Lloyd J delivered judgment in respect of offences that occurred during October 1998. The defendant, pleaded guilty to the charges and was convicted and fined $5,000 together with costs in the sum of $4,500. In Environment Protection Authority v Metalcorp Recyclers Pty Ltd (2001) 117 LGERA 56 the Court found the defendant guilty of seven charges resulting from explosions that had occurred between 28 April 2000 and 8 September 2000. In respect of those offences the defendant was fined a total of $22,000 plus costs: see Environment Protection Authority v Metalcorp Recyclers Pty Limited [2001] NSWLEC 253. 32 The Court acknowledges that since those offences the defendant has implemented protocols to reduce the incidence of explosions and will cease operating the shredder in June 2004. Other considerations 33 The defendant says that while it has been convicted of offences arising out of its operations at the premises, it is exceptionally difficult to eliminate that risk. However such difficulty will be overcome by the relocation of the defendant's premises in June 2004.

34 The defendant submits that the activities carried out at the premises should be considered as one which is of benefit to the community of the kind considered by the Court in Environment Protection Authority v Orange City Council [1995] NSWLEC 103. In that decision Stein J, when assessing penalty in respect of an environmental offence created by Orange City Council arising out of an overflow of chlorine from a public swimming operated by it, took into consideration the fact that the swimming pool constituted a community benefit. The Council had co-operated with the prosecutor and had taken pride in its environmental duties and responsibilities. The defendant submits that metal recycling constitutes an important contribution to the economy and environment by removing recyclable scrap from waste. 35 The Court affords minimal weight to this submission. Stein J's description of the swimming pool was "a community benefit" but his Honour also stated that it "was not a business enterprise". Whilst the defendant may claim that its activities benefit the community it is primarily operating a business which is bound to comply with laws that seek to protect the environment. Summary 36 The Court has taken into consideration all other matters raised by way of litigation, including the co-operation with the prosecutor and of the circumstances surrounding the use of the shredder. The Court takes consideration of the factors referred to in s 241(1) of the PEO Act and s 21A of the Sentencing Procedure Act, including the plea of guilty, the fact that the harm caused by the offence was not substantial, and the acceptance of the prosecutor's costs. However the Court considers that the overriding consideration is the fact that the licence condition was deliberately ignored.

The Court imposes a penalty of $20,000 which will be reduced to the sum of $15,000 in view of the plea of guilty. Publication order 37 The prosecutor submits that the Court should make a publication order pursuant to either both s 250(1)(a) and s 250(1)(b) of the PEO Act or one of those provisions which state as follows:- (1) Orders

The court may do any one or more of the following: (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, (b) order the offender to take specified action to notify specified persons or classes of persons of the offence and its environmental and other consequences and of any orders made against the person (including, for example, the publication in an annual report or any other notice to shareholders of a company or the notification of persons aggrieved or affected by the offender's conduct),

38 The prosecutor says that a publication order is appropriate to act as a deterrent. Deterrence is a primary purpose for prosecuting offences as recognised by s 3A(b) and s 3A(e) of the Sentencing Procedure Act and by the New South Wales Court of Criminal Appeal in Axer. The prosecutor submits that fines may not always act as a deterrent especially if the defendant is a corporation. Furthermore the prosecutor submits that it is difficult to know how general deterrence will be ineffective if members of the public are not aware of the conviction and punishment of the defendant. 39 The Court agrees with the prosecutor's submissions. The defendant has already come twice before the Court to answer charges against s 64(1) of the PEO Act, and it is now appropriate that its conduct become public. The community also needs to be made aware of the need to comply with environment protection licences. Accordingly the Court will impose a publication order pursuant to s 250(1)(a) of the PEO Act. Such notice is to be published once in the Liverpool Leader by the defendant. Orders 40 The Court orders that:

1. The defendant is convicted of the offence as charged;
2. The defendant is fined the sum of $15,000;
3. The defendant pay the prosecutor's costs in the sum of $9,000;

4. The defendant publicise forthwith notification of its conviction once in the Liverpool Leader in the following form:- On 9 December 2003 in the Land and Environment Court of New South Wales Metalcorp Recyclers Pty Limited ("Metalcorp") pleaded guilty to breaching a condition of its environment protection licence. Metalcorp failed to temporarily cease operating the metal shredder at its premises at Chipping Norton, as required by Environment Protection Licence Number 872, after 4 explosions exceeding 123dB had occurred in a 60 day period. Metalcorp was convicted and was fined $15,000 for this offence. Metalcorp was ordered to place this notice and to pay the Environment Protection Authority's costs of $9,000.

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.