Environment Protection Authority v Richardson; Environment Protection Authority v Behnfeld

5.2 Allied Recycling Group sites were set up in New South Wales at various times from 1995 and in various places including; Tamago, Port Macquarie, Cardiff, Quirindi, Gosford, Wagga Wagga and Tweed Heads.

5.3 Sometime in 1996 [Mr John Richardson] commenced working as a subcontractor for Austral. His role was to assist with setting up new Allied Recycling Facilities, including assisting the purchaser of Allied Recycling Group licences to obtain development consent and establish customer bases. His role also encompassed organising and effecting the transportation of used tyres at various times to a number of the Allied Recycling Group sites. [Mr Richardson] received instructions from Mr Behnfeld in respect of his work. From November 1997 [Mr Richardson] undertook this work via the company Recycle Technology Australia Pty ("Recycle Technology"). Prior to November 1997 Recycle Technology was a shelf company of Austral.

5.4 As part of the purchase of an allied Recycling Group licence from Austral, the purchasers received tyre shredding and cutting machinery that could be used to cut tyres into pieces suitable for landfilling. These machines were referred to as "stage 1" machinery. Licensees were also promised access to "stage 11" tyre crumbing machines that would enable used tyres to be crumbed so that the rubber crumb could then be sold. The development and use of the stage 11 tyre crumbing machine was a crucial part of the allied Recycling Group business.

5.5 The stage 11 crumbing machines were never finalised and the only ARG site where a partially complete crumbing machine was installed was a site at Cardiff.

5.6 From sometime in 1996 to around Christmas 1998 Austral contracted Mr Alan Foster, through his company Mariner Craft Pty Limited, to oversee the development of the stage 11 tyre crumbing machine. At that time Mr Foster was Mr Behnfeld's neighbour. In 1996 Mr Foster had some experience in researching and developing machinery to build fibreglass products and boats, but had no experience in researching or developing tyre recycling machinery. Mr Foster had no engineering qualifications.

5.7 Around the beginning of 1997 Mr Derek Orton in Queensland was contracted to build a crumbing machine for Austral. He built a prototype machine but a dispute arose over payment for the machine, there was a court case and the machine was not released to Austral till around September 1997. Mr Orton did no work for Austral after making this prototype machine.

5.8 Around December 1997 the business TW Woods of Boolaroo (NSW) built a tyre crumbing machine for Austral but the machine was not suitable and kept overheating. They did no more work on the machine after the beginning of 1998.

5.9 Around April 1998, on behalf of Austral, Mr Klaus Behnfeld entered into negotiations with Pacific Dunlop to buy their tyre recycling arm. Sometime after this Pacific Dunlop put out a tender for the sale of their recycling arm and Austral submitted an offer.

5.10 From around mid 1998 Mr Donald Smith of D&L Steel Fabrications Pty Ltd of Tomago was engaged by Austral to build a tyre crumbing machine. Around September 1998 Mr Donald Smith and Mr Alan Foster agreed to work on a tyre crumbing machine solely for truck tyres, not car tyres. Around mid January 1999 Mr Donald Smith informed Mr Klaus Behnfeld that the crumber he had produced was incapable of producing the amount of rubber from the tyres Mr Behnfeld had specified. Sometime towards the beginning of 1999 Mr Donald Smith ceased work on the crumbing machine as there was a dispute over payments to him. At that time he had concerns about the safety of the crumbing machine.

5.11 On 6 December 1998 Mr Daniel Blanch, who had paid Austral $255,000 for an Allied Recycling Group franchise at Tweed Heads and for allied Recycling Group stage 1 tyre processing machines, was asked by Mr Behnfeld to take over the development of the stage 11 crumbing machine from Mr Alan Foster.

5.12 When Mr Blanch took over development of the tyre crumber in December 1998 the crumber was still at a very infant stage of design. From this time Mr Blanch worked mainly at the Allied Recycling Group Cardiff site and visited the Tomago site from time to time.

5.14 On 8 March 1999 the crumber on the Cardiff site exploded within itself.

5.15 Recycle Technology Australia Pty Ltd was deregistered on 11 October 2000.

5.16 [Mr Richardson] was declared bankrupt on 21 February 2001. 5 It is further stated in an Agreed Statement of Facts filed in matter No. 50003 of 2002 as follows:- 5.17 On 1 July 1999 Austral went into liquidation and the company was deregistered on 1 January 2000.

6 At all times between 15 January 1999 and 14 May 1999 the storage of more than 50 tonnes of used tyres on site at any time required the occupier to hold a licence in respect of the facility as a controlled waste facility as specified in the Regulations to the Waste Minimisation Act. 7 It is agreed that at all times between 15 January 1999 and 13 April 1999 there were more than 50 tonnes of used tyres stored at the Tomago site. There was no licence issued under the Waste Minimisation Act for the storage of waste at that site. 8 It is also agreed that at all times between 15 January 1999 and 14 May 1999 there were more than 50 tonnes of used tyres stored at the Port Macquarie site and that no licence had been issued in respect of that site. 9 There was no relevant development consent applicable to either site during the periods specified for each charge.

Transport to the Port Macquarie Site 10 Between the beginning of January 1999 and the end of March 1999 Terry Smith and his son, John Smith, transported 20 truck loads of used tyres to the site under instruction from the defendant Mr Richardson. Bill Bicket was employed by Terry Smith to transport tyres to the site on six occasions during January, February and March 1999. Mr Bicket also took tyres to the site in April, as directed by Mr Richardson. On 11 occasions Dean Veal delivered tyres to the site during March, April and May 1999. He was employed by the defendant, Mr Richardson. About 15 per cent of the tyres left on the site weighed 52.2 tonnes.

Transport to the Tomago Site 11 Between 15 January 1999 and 13 April 1999 the defendants caused a total of approximately 29,700 used tyres to be transported to the site at Tomago. 12 Terry Smith was instructed to transport approximately 6,000 used tyres to the site by both defendants between January 1999 and March 1999. Mr Veal estimates that in the course of his employment by Mr Richardson he delivered a total of approximately 3,000 tyres to the site on at least six occasions between February 1999 and April 1999. Mr Richardson also employed Sean Stapleton and Darren Anderson to take tyres to the site during the period stated in the charge. 13 Mr Richardson received the payments made for the tyres collected and Mr Behnfeld provided money to cover the costs of transport, including money for the operation and maintenance of the truck's petrol, wages for the truck drivers and travelling expenses.

Seriousness of the Offences 14 The defendant, Mr Behnfeld, gave evidence for almost seven hours, over six of which involved cross-examination by Mr Buchanan SC, on behalf of the prosecution. Mr Richardson also gave oral evidence, although not to the same extent. 15 The object of cross-examining both witnesses, Mr Behnfeld in particular, was to demonstrate to the Court that the whole of the circumstances of the offences show that the degree of disregard by the defendants of the requirements of the law was "consummate and wanton". 16 In this regard, the Court accepts the following essential facts for the purpose of assessing an appropriate penalty:- (1) Mr Behnfeld was the principal entrepreneur behind the Austral Recycling Group. The primary object of the enterprise was to promote the sale of licences; (2) The capital resources were not sufficient to enable recycling or disposal of used tyres to be carried on as a viable business;

(3) The group did not have available to it the necessary expertise to enable the machinery required to be made operational to an extent needed to dispose of the volume of tyres collected;

(4) Mr Behnfeld was, in the Court's view, well aware that the EPA licences were required for the premises where tyres were stored. His evidence, namely that he believed development consents under the Environmental Planning and Assessment Act 1979 were sufficient authority to operate and that others had sole responsibility to obtain those consents, is not accepted. His oral evidence in this regard conflicts with his statements in a record of interview. The other persons were not required for cross-examination notwithstanding their evidence to the contrary;

(5) Mr Behnfeld did not pay sufficient heed to the obvious problems that were occurring at the Tomago site. While concentrating on the financial aspects of the business, and in particular the prospect of securing a deal with Pacific Dunlop, he disregarded the accumulation of tyres. This was a fact about which he had been kept well informed;

(6) Mr Behnfeld provided financial assistance to Mr Richardson to cover the cost of transporting tyres;

(7) The transport of discarded tyres continued and fees were collected notwithstanding that there were no feasible means available for disposal of the tyres either by recycling or as scrap material. It is reasonable to infer that the tyres were not sent to land fill because the costs of doing so was not acceptable, even if there were funds available;

(8) The business was promoted as addressing concerns about environmental harm caused by tyre dumping. However, having the tyres collected and deposited at Tomago and Port Macquarie in the manner that occurred virtually amounted to dumping in itself;

(9) The failure of the investment options is not proffered as an excuse for the offence. There is no substance in the claim made by Mr Behnfeld that there was a prospect the purchase from Pacific Dunlop would proceed. An alternative buyer was selected by Pacific Dunlop in December 1998 and the transaction settled by February 1999. Mr Behnfeld accepted in cross-examination that the failure to conclude the investment transaction with Pacific Dunlop was no excuse for committing the offence. Mr Richardson on the other hand laboured under the impression that the arrangements, he understood were being made by Mr Behnfeld, would resolve the difficulty and provide an avenue for ultimately disposing of the tyres. Mr Behnfeld, after all, continued to provide direct financial support to enable Mr Richardson to continue with the activity of collecting tyres from various sources, including other group sites;

(10) Although denied by the defendants, the Court infers that the primary motive for continuing to collect the tyres and storing them at an unlicensed facility without any realistic prospect of an economical disposal, was the opportunity to derive income without taking the responsibility for meeting the costs inherent in complying with the law, either by disposing of the tyres legitimately or obtaining the necessary approvals for the Tomago and Port Macquarie sites. In particular, they avoided the regulatory conditions that reasonably could be expected to be attached to relevant consents and licences to enable either of the sites to be lawfully used as a waste facility. The ultimate financial losses incurred by both defendants does not preclude this conclusion; and

(11) Although, to some extent, Mr Richardson carried out the bidding of Mr Behnfeld, he nevertheless was complicit in the transport of tyres and exercised his own discretion in relation to many matters particularly in respect of the Port Macquarie site. However, his actions in transporting tyres to the two sites are rightly to be regarded as part of a single course of conduct. Not only were the acts of transportation directly contemporaneous, they were related events tied up in the same overall business enterprise. 17 Both defendants have committed serious breaches of the legislation. They each acted irresponsibly by having regard to their own financial interests ahead of the regime imposed by the statute. Although charged only with the offence in respect of the Tomago premises, Mr Behnfeld must bear the brunt of a heightened responsibility having regard to his major entrepreneurial role and managerial responsibility. His was the motivating force behind the business enterprise that was allowed to develop and continue notwithstanding there was no realistic expectation that the ultimate lawful disposal of the tyres could take place. 18 The Court adopts the final submission made by Mr Buchanan as follows:- The wilful disregard by the Defendants of the requirements of the legislation for regulatory control of waste facilities which received used tyres takes this case out of the realm of that level of seriousness of offending referable to the need to ensure that the cost of preventing pollution is absorbed into the costing of the relevant industries ( Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 at 359). A significant income stream for the Defendants was the payments they received from tyre retailers and service stations for relieving them of the environmental cost of disposal. Messrs Behnfeld and Richardson committed their offences as a way of exploiting the retail industry's knowledge of the burden on the environment posed by their waste product. By reason of their motive for their offences and their contumacious disregard of the law, the sentences to be imposed upon these Defendants need to reflect high levels of general deterrence, individual deterrence and punishment.

Mitigation 19 Both defendants have expressed contrition in their statements to the Court. At least it is clear they now recognise the seriousness of their actions even though their behaviour at the time was not indicative of remorse. Notwithstanding the constraints imposed by lack of sufficient funds to meet the ultimate objective of the business and the failure to achieve other commercial goals, they pressed on relentlessly so that in the end the stockpile of used tyres became unmanageable. 20 Mr Richardson is entitled to have the Court take into account his position in the hierarchy of the business, relative to Mr Behnfeld. 21 Both defendants entered an early plea of guilty and are therefore entitled to the benefit of a full discount, which recognises the utilitarian benefits of those pleas (R v Thomson (2000) 49 NSWLR 383 at 418 [151]). 22 Furthermore, both defendants co-operated with the prosecutor in its preparation of the case even to the extent of compiling a comprehensive Agreed Statement of Facts in each matter. This resulted in a significant saving of Court time and expense. 23 Mr Behnfeld has agreed to pay the legal costs of the prosecution in respect of all three charges, agreed in the sum of $40,000. Moreover, the following orders were made by consent in matter No. 50003 of 2002 (the proceedings against Mr Behnfeld) on 25 September 2002:- 1. That,

s consequent upon the conviction of the Defendant for the offence that between 15 January 1999 and 13 April 1999 at Tomago in the State of New South Wales he caused or permitted waste to be transported to a place that could not lawfully be used as a waste facility for that waste, contrary to s63(1) of the Waste Minimisation Act 1995, · and pursuant to s14(2) of the Environmental Offences and Penalties Act 1989, the Defendant be ordered to pay to Williams River Steel Pty Limited ("WRS") the sum of $41,567 being the costs incurred by WRS by reason of the commission of the offence in respect of loss of or damage to property and as expenses in preventing or mitigating, or in attempting to prevent or mitigate, any such loss or damage. 2. That, s consequent upon the conviction of the Defendant for the offence that between 15 January 1999 and 13 April 1999 at Tomago in the State of New South Wales he caused or permitted waste to be transported to a place that could not lawfully be used as a waste facility for that waste, contrary to s63(1) of the Waste Minimisation Act 1995, · and pursuant to s14(2) of the Environmental Offences and Penalties Act 1989, the Defendant be ordered to pay to the Environment Protection Authority ("the EPA") the sum of $27, 127.66 for the express purpose of payment into the Waste Fund, being the costs and expenses incurred by the State of New South Wales by reason of the commission of the offence in respect of loss of or damage to property and as expenses in preventing or mitigating, or in attempting to prevent or mitigate, any such loss or damage. Environmental harm Port Macquarie site 24 Following unsuccessful negotiations between Boral, as owner of the site and the defendant, the used tyres remained on site until June 2000. The defendant or Recycle Technology did not remove any tyres from the site. The cost of removing the tyres from the site and disposing of them was subsidised by the Hunter Waste Planning and Management Board. Boral also incurred some costs in having the tyres removed from the site and disposed of. 25 The following matters are agreed as the risks of environmental harm:- (1) A serious fire risk; (2) Water pollution, particularly in the event of a fire which would likely result in the release of toxic fire, water and oil;

(3) The possibility, although not scientifically established, of toxical release to water bodies;

(4) Health concerns arising from smoke levels in the event of fire;

(5) Leaking of chemicals and metals including cadmium, lead and zinc to the environment can occur as tyres weather and the oily residue left after a tyre fire can be a problem for the environment; (6) Tyres can be a breeding ground for pests including rodents, snakes and mosquitos that spread diseases;

(7) Mosquitos that are known to be vectors of Ross River Fever and Barmah Fever are effective colonisers of tyres;

(8) Used tyres provide a good breeding ground for mosquitos especially if they have accumulated some water, dirt, leaf-mould and other potential nutrients as is likely when tyres are stored in the open; and

(9) Ross River Fever is common in coastal areas in New South Wales, including the Hastings area. Ross River Fever is a notifiable disease. 26 It is agreed by the defendant that he was, at all relevant times, aware of the environmental harm involved in transporting tyres to and storing tyres at the site.

Tomago site 27 The same conditions applied at the Tomago site with identical risks to those posed at Port Macquarie. 28 Once again, the cost of removing the tyres was borne by the owner and Hunter Waste Planning and Management Board. 29 The defendants were both aware of the environmental harm associated with the transportation to and storage of the tyres at the site. In his record of interview, Mr Behnfeld, in respect of the risks posed to the environment by tyre storage, stated, "any amount of tyres of a reasonable quantity represents a problem…any large quantity of tyres, depending on how large, you know, would pose as a certain danger". Penalty 30 In the case of Mr Richardson there should be a downward adjustment of the penalty in respect of the second offence, following an assessment of the overall criminality involved in the two offences. This will be done by considering whether the aggregate penalty is just and appropriate (R v Holder and Johnston [1983] 3 NSWLR 245 and Mill v The Queen (1988) 166 CLR 59). 31 The penalty imposed on each defendant must take account of the need for general deterrence having regard to the recognised prevalence of tyre dumping and the potential environmental consequences. 32 Both defendants present with an enhanced degree of culpability although, as I have already said, Mr Behnfeld must be regarded as playing the leading role in the enterprise. 33 The maximum penalty of $60,000 for each offence has since been doubled to $120,000 following amendments made by the Protection of the Environment Operations Act 1997. The doubling in itself does not entitle the Court to increase the penalty on that account, but it does serve to demonstrate the ongoing serious concern expressed by the Parliament about this type of offence. 34 Having regard to the whole of the circumstances, an appropriate penalty for the offence committed by Mr Behnfeld, after allowing a discount for the utilitarian value of the plea of guilty, the contrition of the defendant (to the extent it was expressed at the trial), the acceptance of liability for the costs of the clean up of the site and co-operation with the prosecutor, is $30,000. Mr Behnfeld has also agreed to pay the whole of the prosecutor's costs in the sum of $40,000. 35 The appropriate penalty for each offence proved against Mr Richardson is $20,000. Applying the totality principle an aggregate penalty, taking into account the overall criminality in respect of both offences, is $30,000. 36 Accordingly, the proper penalty to be imposed on Mr Richardson in matter No. 50001 of 2002 in respect of transportation to the Port Macquarie site is $20,000. In matter No. 50002 of 2002 the appropriate penalty in respect of the Tomago site is $10,000.

Formal orders 37 The Court makes the following formal orders:- (1) In matter No. 50001 of 2002 the defendant is convicted of the charge in the summons. (2) In matter No. 50001 of 2002 the defendant is ordered to pay a fine in the sum of $20,000.

(3) In matter No. 50002 of 2002 the defendant is convicted of the charge in the summons. (4) In matter No. 50002 of 2002 the defendant is ordered to pay a fine in the sum of $10,000.

(5) In matter No. 50003 of 2002 the defendant is convicted of the charge in the summons. (6) In matter No. 50003 of 2002 the defendant is ordered to pay a fine in the sum of $30,000.

(7) In matter No. 50003 of 2002 the defendant is ordered to pay the prosecutor's costs in the agreed sum of $40,000. (8) No order as to costs in matter No. 50001 of 2002 or matter No. 50002 of 2002.

(9) The exhibits, except exhibit A and exhibit B, may be returned.

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