Environment Protection Authority v Rethmann Australia Environmental Services Pty Ltd

Land and Environment Court (NSW)|2003-12-19|Before: Talbot J

Introduction 1 By summons issued in matter No. 50006 of 2003 in the class 5 jurisdiction of the Court, Rethmann Australia Environmental Services Pty Ltd ("the defendant") is charged that on or about 15 February 2002 at or near 3 Distillers Place, Huntingwood ("the Huntingwood premises") it committed an offence against s 64(1) of the Protection of the Environment Operations Act 1997 ("the PEO Act") in that it was the holder of an environment protection licence, a condition of which was contravened. In matter No. 50008 of 2003 the defendant faces the same charge that on the same day it committed the same offence at or near 238 Prospect Highway, Seven Hills ("the Seven Hills premises"). 2 Environment Protection Licence No. 7356("the EPL"), issued by the Environment Protection Authority ("the EPA") in respect of a tanker truck registered No. PQZ 374, contains condition 4.01.1 which provides as follows:- Licensed activities must be carried out in a competent manner. 3 Effectively, what the prosecutor alleges is that the defendant failed to provide any instructions, or any sufficient instructions, to its employees in relation to dealing with odour incidents arising from the use of the tanker truck. Further, after being notified of an odour being omitted from the tanker truck at the nominated premises the defendant continued, through its employees, to operate the pumping equipment on the tanker truck, thereby causing an odour and/or gas to vent to the atmosphere at the two premises. 4 The defendant has entered a plea of guilty to each charge. 5 The parties have agreed on a statement of facts relevant to each offence.

(iv) Max Sparkes, a Sheet Metal Worker, who was in the factory; and

(v) Edward John Cullen, a Manufacturing Engineering Manager, who was about 80 metres from the wash down bay. 14 Mr Tran described the initial odour as not very strong and like "a chemical or plastic burning". The odour made him feel sick in the stomach and made it hard to breathe but later, when he was in the fresh air, he felt better. 15 Following conversations with fellow workers, Neville Baldwin, a Leading Hand and a Union Delegate, walked towards the wash down bay and detected an odour. He said the odour was "a really strong acrid smell…[it] was hard to describe, it was just a putrid smell". It "gave me an ill feeling, like when you smell something rotten you feel like chucking up". He saw the tanker truck outside but did not speak to Mr Struthers. 16 Paul Madsen, a Production Manager, was working in the warehouse towards the north corner of the building. He detected an odour that he referred to as "a stench". He had a conversation with Mr Struthers who told him that the pumping would take another five minutes. When Mr Madsen walked back into the factory, he found that the odour was twice as bad as it was outside. He could see that most of the workers in the factory had walked out. He went to a couple of them and said "come on its not that bad". However, they told him they disagreed with him. The smell did not affect him as much as he believed it affected the employees on the factory floor. 17 Mr Cullen, who is also the Occupational Health and Safety Officer for Air International, was in the proto-type area some 80 metres from the wash down bay. He noticed a pungent odour, similar to the breaking down of foodstuffs and fermentation. He saw workers from the factory floor had stopped working and were in the process of leaving the factory. Mr Cullen described the odour as "a bit like a rotten food waste smell". He had worked in the food industry and had spent approximately eight months as Project Manager at Frito Lay, in charge of overhauling its liquid waste system. The odour from the tanker truck reminded him of the smell from the wastewater system at Frito Lay in the sense of it being a smell from a food waste. However, he had not smelt that particular smell before or since. 18 Mr Prasad initially detected a faint odour in the factory. He described it as a "rotten type of smell". He continued to work but then left the factory when the other workers were evacuated. At first he went outside the sheet metal area but the odour was bad there so he went to the service bay at the opposite side of the factory. When he got to the service bay he could not smell the odour anymore. He said the odour made him feel bad and it was hard to breathe. 19 Mr Sparkes' work place was about 50 feet from the wash down bay. He describes the odour as "terrible" and "just like rotten egg gas but it was worse than that". It made his stomach "a little bit upset" and "churning". 20 After Mr Baldwin became concerned for the safety of the workers, he caused the whole factory to be evacuated. Between 80 and 100 people were evacuated. 21 Mr Struthers collected approximately three tonnes of liquid waste from Air International. Whilst pumping, Mr Struthers detected an odour from the tanker truck, which he described as "slight" and that there was "a little bit" of a smell. He checked the exhaust system of the vacuum pump and detected that it was "a little bit fumy, but not excessively to what I have smelled before". He could not smell anything extremely offensive. The smell did not seem to indicate, to his knowledge, the presence of toxic fumes. He said "It didn't seem to me as a toxic content. If it was really strong, I would have noticed it". He was not affected by the odour. 22 Although employees at the Huntingwood premises left the factory building because of the odour, no one became ill or vomited. As Mr Struthers was leaving the Huntingwood premises he saw the workers outside the factory and that some of them were eating food. At the time it occurred no one from Air International notified the EPA or emergency services about the odour incident. No one from Air International advised Mr Hill on 15 February 2002, or subsequently, that there had been an odour incident involving Mr Struthers and the tanker truck at the Huntingwood premises. 23 At approximately 9:20am Mr Struthers called Mr Hill on the telephone. Mr Hill directed Mr Struthers to go to the Seven Hills premises and collect some wastewater from a construction site. Neither Mr Struthers nor Mr Hill can recall whether or not the odour event at the Huntingwood premises was discussed during that telephone conversation. Mr Struthers then drove to the Seven Hills premises. 24 The Seven Hills premises are located between the Prospect Highway and a side street. There is a two-storey office building next to the premises and the side street is located between the office building and the premises. Office workers occupy the office building. 25 The Seven Hills premises are a disused petrol station. The site is approximately 1,000m2 to 1,100m2 in size. The old petrol station had been demolished and a new petrol station was being constructed. In charge at the Seven Hills premises was Kieran Cosgrove. He was employed by Aspect Design & Development Pty Ltd ("Aspect") as a site foreman for the construction of the new petrol station. There were nine men working on the Seven Hills premises on 15 February 2002. During the three weeks prior to 15 February 2002, when earthworks were undertaken, Mr Cosgrove smelt odours that he associated with an old petrol station. Others also smelt odours from the former site in the months, weeks and days before 15 February 2002. 26 On Thursday 14 February 2002 a footing for a retaining wall on the site had been constructed on the Seven Hills premises. Groundwater was seeping into the trench. Mr Cosgrove contacted the defendant to arrange for the disposal of the construction groundwater. Mr Struthers arrived at the Seven Hills premises at approximately 9:30am on 15 February 2002. Mr Cosgrove showed Mr Struthers the groundwater that was required to be collected. 27 Mr Struthers could not collect the groundwater immediately because there was a truck in the side street between the Seven Hills premises and the two-storey office building, unloading mattresses. He waited until approximately 10:10am for the truck to leave. Then he reversed the tanker truck down the side street. He parked approximately adjacent to the footing and the groundwater. Mr Struthers operated the vacuum pump on the truck and Mr Cosgrove handled the hose attached to the truck and stood in the footing to direct the hose. Mr Struthers told the EPA that he had a conversation with Mr Cosgrove at some stage after he had started the vacuum pump, in the following terms. Referring to the tanker, words to the following effect were spoken:- Mr Struthers said: "Is it offensive? Any fumes from that?" Mr Cosgrove said: "No, it doesn't seem to be a problem to me. I don't notice it" . 28 Mr Struthers told the EPA he asked this because of the comments made by the Air International staff. If Mr Cosgrove had said it was offensive, Mr Struthers says he would not have continued and would have left the site. Mr Struthers detected the odour from the vacuum part of the tanker. He described it as "fumy". He said this was another reason he asked Mr Cosgrove the above question. 29 It took Mr Struthers about 15 minutes to collect 1.5 tonnes of groundwater from the Seven Hills premises. 30 The smell of petrol had been reported around the site since digging had commenced at the site, prior to the arrival of Mr Struthers. The fumes and odours had caused discomfort and illness to workers at adjoining premises. 31 As a result of the release of an odour from the tanker truck at the Seven Hills premises there were direct effects on a number of people. The impacts included headache, nausea, shortness of breath, light-headedness, vomiting, tightening of the chest, burning to the back of the throat, difficulty with breathing, coughing, burning to the tongue and mouth, throat closure and dry retching. 32 A number of people were inconvenienced for several days. Others went to Blacktown or Mount Druitt Hospital where they underwent tests and received treatment. A temporary hospital was established outside the nearby premises of K-Mart Tyres where a number of people were treated on the spot by Ambulance Officers and then taken to Blacktown Hospital for further treatment. As a result of the release of an odour from the tanker truck at the Seven Hills premises, approximately 23 people attended Blacktown, Westmead or Mr Druitt Hospitals. Mr Struthers did not attend any hospital, although he was checked by ambulance officers at the Lidcombe Liquid Waste Plant ("the LLWP"). 33 Mr Struthers was not aware of the incident at the Seven Hills premises until he received a telephone call from Mr Hill when he arrived at the LLWP, where he provided a sample of the contents of the tanker truck to officers of the waste service. 34 In interviews conducted by the EPA with various employees of the defendant, including Mr Struthers and Mr Hill, it was accepted that if a driver of a tanker truck detects an offensive odour being emitted or a complaint is made during the collection of liquid waste, the following process should be followed:- (i) turn off the vacuum pump to immediately cease the further emission of odours;

(ii) ensure the safety of any persons in the vicinity;

(iii) contact the St Marys depot, specifically the Operations Manager, to report the event; and

(iv) follow any instructions given by the Operations Manager. 35 In addition, Mr Struthers thought instructions from the Operations Manager would include not collecting more waste and taking steps to dispose of the load. 36 However, he did not follow this process at either the Huntingwood or Seven Hills premises. 37 The prosecutor retained a consultant Mechanical Engineer, Richard Frost, for the purpose of determining the manner of operating the collection system on the tanker truck. In his opinion, it is inevitable that the normal operation of the liquid collection tanker system as it was installed on 15 February 2002 will result in the discharge to the atmosphere of significant quantities of vapour which are chemically the same as or similar to the liquid contents of the tank. The discharge of vapour to the atmosphere will occur when the vacuum pump is actually operating. Accordingly, the defendant could not have avoided, and cannot avoid, the emission of odours or vapours which are chemically the same or similar to the liquid content in the tanker whilst the tanker truck is pumping waste into its tank. However, it could arrest the discharge of odours to the atmosphere by turning off the pump. In the opinion of Mr Frost, the vacuum system cannot produce a vacuum in the tank when caps or vents in the tank are open. Under these conditions it would not be possible to create a usable level of vacuum in the tank. 38 The fact that Mr Struthers was able to operate the tanker truck to pump up liquid waste at the Huntingwood and Seven Hills premises would indicate that the tank on the tanker truck was substantially sealed and the tanker's caps and vents could not have been left open. 39 The precise chemical sources of the odour and gases released from the tanker truck, causing the harm set out above, are not known. 40 A number of experiments with the samples of the liquids typical of the waste pumped on 15 February 2002 at the Quest and Air International premises were conducted on behalf of the prosecutor. An Environmental Chemist who conducted the experiments on behalf of the EPA concludes as follows:- (a) the liquid waste inside the tanker on 15 February 2002 would have released strong and unpleasant odours which would have the potential to make humans feel ill;

(b) on the assumption, having regard to the time of year, of elevated temperatures inside the vacuum tank, the primary cause of the unpleasant odour was probably the volatility of the volatile organic compounds in the waste collected from Quest; and (c) reactions between the nitric acid, an admittedly strong acid, collected from Air International and the organic compounds in the waste collected from Quest would have made little, or at least less of a contribution to the unpleasant odours. 41 The defendant has not previously been prosecuted by the EPA.

The seriousness of the offences 42 The defendant is liable for the vicarious acts of it employees. The category of offence with which the defendant is charged is objectively a serious one attracting strict liability. The degree of subjectiveness seriousness in this case for the purpose of determining penalty is enhanced by the actual harm caused to a significant number of persons. The licence condition the subject of the breach is no more than a statement of a very general common sense rule or duty to conduct a hazardous task in a competent manner. It is an overarching requirement without being specific. 43 The prosecutor contends that the offences were the "result of a combination of lack and failure of systems which the legislation requires that those entrusted with licenses to conduct environmentally risky activities have in place to ensure such events do not occur". The practical measure that the prosecutor submits could have been taken to prevent, control, abate or mitigate the harm were as follows:- s turning off the pump whenever any odour is detected during pumping s training drivers to turn off the pump whenever any odour is detected s requiring as a condition of employment as a driver of a liquid waste tanker a sense of smell of no less than average acuity s regularly testing the sense of smell of drivers who convey liquid waste s turning off the pump whenever a complaint is received about an odour in relation to the pumping s training drivers to turn off the pump whenever a complaint is received about an odour in relation to the pumping s reporting to operations manager whenever any odour is detected during pumping or complaints are received of an odour s training drivers to report to operations manager whenever any odour is detected during pumping or complaints are received of an odour s specific training of employees beyond merely producing and presenting a manual for general information s mitigating the exposure to harm and investigating the problem when complaints are received s taking steps in circumstances where harm is foreseeable 44 According to the prosecutor, all that the defendant was required to do was switch off the pump, through its employees, in this case Mr Struthers and possibly Mr Hill, as soon as it became aware of the problem. 45 Section 241 of the PEO Act requires the Court to take the above matters into account. 46 General deterrence and specific deterrence are both matters to be reflected in the penalty imposed in this case. The prosecutor places strong emphasis on the defendant's failure to investigate the cause, an alleged tardiness in reporting the incidents to the EPA and an inadequate response with measures to guard against re-occurrence. The inferences and facts relied upon by the prosecutor in submissions are not, in the Court's view, indicative of a situation where the defendant has totally ignored what occurred and has taken no steps to guard against future events or failed to understand its responsibilities. On the other hand, its reactions are not so positive that it is entitled to mitigation on that account. The sentence will not be reduced by reference to the express unlikelihood of the defendant re-offending (Veen v The Queen (No 2) (1987-1988) 164 CLR 465 and Weininger v R (2003) 196 ALR 451 (HCA)). 47 The Court takes into account the utilitarian value of the defendant entering a plea of guilty at an early date. The plea of guilty itself, however, cannot be the sole indication of an expression of remorse given the facts which effectively made conviction inevitable and where strict liability applies. 48 The utilitarian value of the early plea of guilty is enhanced by the co-operation with the prosecutor in completing a comprehensive SOAF, thereby reducing the hearing time to a considerable extent. 49 The Court accepts the submission by the defendant that the prosecutor has not proved beyond reasonable doubt that the defendant was in effect derelict of its duty to take adequate steps to inform employees about appropriate procedures in the event of an odour event. The evidence is that Mr Struthers knew there was a manual that in fact has since been updated and reviewed since the incidents on 15 February 2002. The defendant relies on a common sense approach being in place at the time of the incident to support its argument that its employees were aware of the procedures required to be followed in the event of odour emitting from one of the trucks. Although Mr Struthers was not on a frolic of his own nevertheless he paid little regard to whatever guidance or instruction he had received and appeared curiously unaware of the chaos occurring around him. Although not quite a rogue employee, he certainly may be characterised as irresponsible or at least oblivious to any responsibility for the safety and comfort of others. It is as a result of those failings that the defendant has been charged. 50 It is appropriate to evaluate the overall criminality involved in both offences and to impose an aggregate sentence to achieve an appropriate relativity between the sentences and the offences looked at as a whole (R v Holder; R v Johnston (1983) 3 NSWLR 245). 51 The defendant has an exemplary record of having committed no earlier offence nor is there any evidence of irresponsible conduct before 15 February 2002. 52 The company commenced operating in NSW in 1982. It is wholly owned by a German company, which was founded in 1934. It commenced business in Penrith and now has branches in Sydney, Melbourne and Port Macquarie with its headquarters at St Marys. The Finance Director, Frank Siegfried Klostermann, gave the following evidence:- The Defendant focuses on domestic, commercial and industrial waste management as well as recycling and processing. In the field of waste collection the Defendant is one of the top six in the combined markets of Sydney and Melbourne, with an annual volume exceeding 100,000 tonnes collected. The Defendant currently employs more than 170 people in its operation in New South Wales and Victoria. Regular training with the Australian Institute of Management and the Defendant's membership of the Waste Contractors and Recycling Association ensure that its employees are at the forefront of industry knowledge and technology. … The Defendant provides a wide range of waste management services, with one of its key competencies being waste removal. The Defendant currently employs approximately 80 fully trained and licensed drivers available to undertake the tasks required for the Defendant's waste services. The Defendant has a fleet of more than 110 vehicles in service, with a comprehensive range of other equipment suitable for the collection and processing of waste and recyclable materials. The RETHMANN Group has pioneered processing waste into new products. Through intensive research and development work, the RETHMANN Group developed sensible applications and opened reliable future sales areas for the primary materials processed in its own plant. The RETHMANN Group's branded products are known and sold worldwide. They find applications in different industries such as construction, agriculture, landscaping, paper, wood and plastic processing, medicine, aluminium, the chemical industry and more. … The Defendant is proud of its exceptional environmental reputation overseas and in Australia and its reputation as being at the cutting-edge in waste management. It is remorseful for the commission of the offences and fully understands their seriousness, particularly given that over twenty people from the premises in Seven Hills were required to be hospitalised. This remorse and contribution is reflected in the following: (a) The Respondent [sic] fully co-operated with the Prosecutor during its investigation before and after the charges were laid;

(b) From the time the proceedings commenced it was the Defendant's intention to plead guilty to the offences the subject of these proceedings;

(c) Following the offences, the Defendant has reviewed and updated its manual and policies including its OH&S Communications and Consultation Procedures document which was last updated in July 2003. …

53 The maximum penalty provided for the offence in the case of a corporation is $250,000. The defendant is not brought to account for a more serious offence provided by s 116 of the PEO Act that involves negligence and environmental harm as a consequence. The elements of the offences as charged are directed solely at incompetence. The issue of environmental harm arises only pursuant to s 241(1)(a) for the purpose of determining an appropriate sentence. 54 The EPA seeks a publication pursuant to s 250(1)(a) of the PEO Act by requiring the defendant to cause a notice of the offence and the conviction in a trade journal and the two Sydney daily newspapers. The Court is entitled to make such an order in addition to imposing a penalty. The Court agrees with Mr Lloyd QC that the consequences of appearing in Court and pleading guilty are sufficient public approbation in the case of a company that has an impeccable record in an industry that carries out an essential service to the community generally in a responsible way, albeit for profit. The general public notice is unnecessary where the company has taken steps to overcome what deficiencies there were in operation that inherently depend upon the reliability of employees to be faithful to the principles of common sense in order to protect the environment as far as practicable. Nonetheless, a formal letter of apology to the owners of the premises at Huntingwood and Seven Hills is appropriate for distribution to their employees and neighbours or otherwise as they see fit to members of the community. A formal order to this effect will be made on the basis that the suggestion made by Mr Lloyd to do so was presumably on the basis of his instructions. Notwithstanding any lack of formal instructions, the Court is of the view it is appropriate that such letters be sent and would have made an order to that effect in any event. 55 A substantial penalty is warranted having regard to the whole of the circumstances. The message that can be transmitted to employees of this company and other companies carrying on similar types of business is that careless or inattentive behaviour will not be tolerated and that the law regards this type of incident as a serious matter. 56 The overall seriousness of the two offences, together with the matters referred to in s 241, already dealt with in general but nevertheless apposite terms, attracts a penalty in the range of $100,000. The matters that can be taken into account by way of mitigation include the antecedents of the defendant, the early plea of guilty, its remorse and to some extent its reaction to the perceived flaws in its processes reduce that sum to $70,000. The most serious offence is the one that occurred at Seven Hills as the company, through its employee, was, or should have been, already aware of a problem following what had occurred immediately beforehand at Huntingwood. 57 Notwithstanding a rather nebulous offer by the defendant to conduct a seminar on the subject of environmental safety, the Court is doubtful about the extent of power to make an order to that effect pursuant to s 250.

Determination 58 The Court makes the following orders:-

(1) The Court finds the offence proved in matter No. 50006 of 2003. (2) The defendant is convicted of the charge in the summons in matter No. 50006 of 2003.

(3) In matter No. 50006 of 2003 the defendant is ordered to pay a monetary penalty by way of a fine in the sum of $20,000.

(4) The Court finds the offence proved in matter No. 50008 of 2003.

(5) The defendant is convicted of the charge in the summons in matter No. 50008 of 2003.

(6) In matter No. 50008 of 2003 the defendant is ordered to pay a monetary penalty by way of a fine in the sum of $50,000.

(7) Pursuant to s 250 of the Protection of the Environment Operations Act 1997, the defendant is ordered to write a letter to the companies, Air International Transit Pty Ltd and Aspect Design & Development Pty Ltd, in the form annexed to these orders with an authority by the defendant to distribute copies of the letter as they see fit. (8) The defendant is ordered to pay the prosecutor's costs as agreed or assessed.

ANNEXURE A Draft letter to Air International Transit Pty Ltd and Aspect Design & Development Pty Ltd On 19 December 2003 the Land and Environment Court of New South Wales found Rethmann Australia Environmental Services Pty Limited guilty of two offences against the Protection of the Environment Operations Act 1997, in that it breached a condition of its environment protection licence by not carrying out the transport and collection of waste competently. Rethmann entered pleas of guilty to the two charges and the Court found that, among other things: 1. on 15 February 2002, a Rethmann driver released an odorous gas from a waste tanker truck whilst collecting liquid waste, evacuating some 80 to 100 people from a factory at Huntingwood;

the driver then continued on to a construction site at the corner of the Prospect Highway and Federal Street at Seven Hills for the purpose of collecting more liquid waste; and

by operating the tanker truck at those premises, the driver released the same odorous gas, resulting in some people getting headaches and vomiting, with more than 20 people going to hospital. Rethmann was fined a total of $70,000, ordered to pay the prosecutor's costs and to make this notification. Rethmann regrets any illness or inconvenience caused to any person as a consequence of the incident.

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 Rethmann Australia Environmental Services Pty Ltd [2003] NSWLEC 351 PROSECUTOR Environment Protection Authority PARTIES : DEFENDANT Rethmann Australia Environmental Services Pty Ltd FILE NUMBER(S) : 50006; 50008 of 2003 CORAM: Talbot J KEY ISSUES: Prosecution :- totality - penalty where liability vicarious LEGISLATION CITED: Protection of the Environment Operations Act 1997 s 64(1), s 116, s 241, s 241(1)(a), s 250 R v Holder; R v Johnston (1983) 3 NSWLR 245; CASES CITED: Veen v The Queen (No 2) (1987-1988) 164 CLR 465; Weininger v R (2003) 196 ALR 451 (HCA) DATES OF HEARING: 1/12/2003 DATE OF JUDGMENT: 12/19/2003

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