Environment Protection Authority v Rixa Quarries

Land and Environment Court (NSW)|2017-07-25|Before: Pain J

SOLICITORS: Office of Environment and Heritage (Prosecutor) No appearance (Defendant) File Number(s): 2016/297634

Evidence

The Prosecutor relies on the evidence set out in the conviction judgment at [8]. This includes Exhibits B, C and D which were exhibits to the affidavit of Mr Cramb regional operations officer at the EPA affirmed on 22 September 2016. The Prosecutor also relied on a further affidavit of Mr Cramb affirmed on 6 July 2017.
In his affidavit Mr Cramb stated inter alia that the Defendant applied for an EPL on 22 May 2013 in relation to the extraction, processing and storing of material from the quarry at the Premises. The EPA assessed the application on 4 June 2013 and advised the Defendant that the application was insufficient and required further detail. The Defendant provided further information but the EPA wrote to the Defendant on 28 January 2014 stating that there remained insufficient information to determine the application including in relation to acid sulfate soils. Mr Cramb affirmed that at no stage did the Defendant supply the information requested and consequently the EPL application was not determined by the EPA.
Exhibited to Mr Cramb's affidavit of 6 July 2017 were three folders which became Exhibit F. It contained an Australian Securities and Investment Commission (ASIC) search showing that the Defendant was a registered company as of 8 June 2017. Exhibit F also contained invoices and delivery dockets from Sydney Quarry & Haulage Group Pty Ltd, a company with the same directors as the Defendant trading as "Rixa Contractors", to the joint venture project which received the Defendant's main supply of sand during the charge period, see conviction judgment at [26].

Purposes of sentencing

Section 3A of the Crimes (Sentencing Procedure) Act 1999 (CSP Act) identifies the purposes of sentencing. It states: 3A Purposes of sentencing The purposes for which a court may impose a sentence on an offender are as follows: (a) to ensure that the offender is adequately punished for the offence, (b) to prevent crime by deterring the offender and other persons from committing similar offences, (c) to protect the community from the offender, (d) to promote the rehabilitation of the offender, (e) to make the offender accountable for his or her actions, (f) to denounce the conduct of the offender, (g) to recognise the harm done to the victim of the crime and the community.
The Prosecutor submitted that factors (a), (b), (e), (f) and (g) are most pertinent to these proceedings.
Section 21A of the CSP Act identifies numerous matters which a court must take into account when sentencing including in relation to aggravating (s 21A(2)) and mitigating (s 21A(3)) factors.
The objective and subjective circumstances of the offence must also be weighed up in the context of the legislative framework under the POEO Act.

Statutory scheme

A fundamental consideration of relevance to environmental offences is the degree to which a defendant's conduct would offend against the legislative objectives expressed in the offence. The objects of the POEO Act include: 3 Objects of Act (a) to protect, restore and enhance the quality of the environment in New South Wales, having regard to the need to maintain ecologically sustainable development, … (d) to reduce risks to human health and prevent the degradation of the environment by the use of mechanisms that promote the following: (i) pollution prevention and cleaner production, (ii) the reduction to harmless levels of the discharge of substances likely to cause harm to the environment, … (f) to improve the efficiency of administration of the environment protection legislation, ...
Offences that undermine the integrity of the regulatory system are objectively serious, Director-General of the Department of Environment & Climate Change v Rae (2009) 168 LGERA 121; [2009] NSWLEC 137 at [19]. The Defendant in this case operated an unregulated quarry without any pollution reduction measures or monitoring systems in place in deliberate contravention of the regulatory requirements of the POEO Act.

Maximum penalty

The maximum penalty for the offence is $1,000,000 for a corporation, s 48(2)(a) of the POEO Act. The gravity of any particular offence should be measured by reference to its maximum penalty. A maximum penalty is a public expression by Parliament (and, by extension, the general community) of the seriousness of the offence, Camilleri's Stock Feeds Pty Limited v Environment Protection Authority (1993) 32 NSWLR 683 at 698.

Section 241(1) POEO Act

Section 241(1) of the POEO Act sets out the following factors that a court is required to take into account when imposing a penalty for offences under the Act: (a) the extent of the harm caused or likely to be caused to the environment by the commission of the offence, (b) the practical measures that may be taken to prevent, control, abate or mitigate that harm, (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, (d) the extent to which the person who committed the offence had control over the causes that gave rise to the offence, (e) whether, in committing the offence, the person was complying with orders from an employer or supervising employee.

Extent of harm caused or likely to be caused to the environment by the commission of the offence (s 241(1)(a))

"Harm to the environment" is defined in the Dictionary of the POEO Act to include: ... any direct or indirect alteration of the environment that has the effect of degrading the environment and, without limiting the generality of the above, includes any act or omission that results in pollution.
As was held by Preston CJ in Environment Protection Authority v Waste Recycling and Processing Corporation (2006) 148 LGERA 299; [2006] NSWLEC 419 at [145], "[h]armfulness needs to not only be considered in terms of actual harm, the potential or risk of harm should also be taken into account".
The offence caused actual environmental harm in relation to noise and air pollution. Mr Lynch operations officer at the EPA affirmed an affidavit dated 21 April 2017 in which he recorded hearing industrial noise from an excavator, dredge and screening plant operating on the Premises. The noise resulted in complaints from members of the community to Richmond Valley Council. These were reported in a letter from the Council to the then lawyers for the Defendant dated 14 June 2013 contained in Exhibit B at Tab 5. Exhibit C at Tab 59 was a report titled "noise impact assessment" prepared by GHD for the Defendant for its application for an EPL. The report identified several residential dwellings that were in close proximity to the Premises and were likely to be affected by noise disturbance during the operation of the quarry.
Air pollution caused by dust generation along the haul road adjacent to the stockpiles from loader movements was observed by Mr Lynch and recorded in his affidavit. An "air quality management plan" was prepared by GHD and provided to the EPA as part of the Defendant's application for an EPL (Exhibit B at Tab 53). The plan predicted that quarry operations would result in air pollution being primarily dust and exhaust emissions that would impact on nearby residential dwellings during periods of northerly winds.
The offence also caused the potential for environmental harm in relation to noise, air, water and soil pollution given the absence of any measures on the part of the Defendant to monitor or address that potential. The risks to soil and water were set out in a report prepared by GHD for the Defendant and submitted as part of its application for an EPL (Exhibit B at Tab 56). These were: a) Sediment runoff from disturbed area entering waterways; b) Disturbance during the dredging and processing of the sand that would release sediments in the water; c) Significant volumes of water extracted from the excavation which could alter the local groundwater regimes; d) Disturbance of acid sulphate soles, creating the potential for oxidation of these soils and subsequent generation of acidic runoff; e) Alteration of the topography that changes the local drainage; f) Intercepting groundwater and creating a permanent excavation that exposes the groundwater. This may alter the local groundwater regime; g) Contamination of soils, surface water and groundwater from accidental spills of chemicals or hydrocarbons; and h) Flooding for the site may erode stockpiles and flood equipment.
I agree with the Prosecutor that the level of environmental harm is moderate.

Practical measures that may have been taken to prevent, control, abate or mitigate that harm (s 241(1)(b))

The practical measures that the Defendant could have taken to prevent, control, abate or mitigate environmental harm were clearly outlined in the reports prepared by GHD and submitted by the Defendant as part of its application for an EPL.
Several noise mitigation measures were outlined in the "noise impact assessment" provided by the Defendant to the EPA for its EPL application (Exhibit C at Tab 59). There is no evidence that these measures were taken to mitigate noise disturbance on nearby residential dwellings. Measures to mitigate air pollution were outlined in the "air quality management plan" (Exhibit B at Tab 53). There is no evidence that these measures were implemented. The "soil and water management plan" (Exhibit B at Tab 56) also provided measures to mitigate potential harm. There is no evidence these were implemented.
The Prosecutor submitted and I accept that had the necessary information been provided by the Defendant during its application for an EPL (see par 6 above) and an EPL been issued then it is likely that controls would have been imposed to mitigate any actual or potential environmental harm.

Extent to which the person who committed the offence could reasonably have foreseen the harm caused or likely to be caused by the offence (s 241(1)(c))

The harm caused or likely to be caused to the environment by the commission of the offence was reasonably foreseeable. The Defendant was aware of its obligation to obtain an EPL as evidenced by the submission of its application to the EPA on 22 May 2013.

The extent to which the person who committed the offence had control over the causes that gave rise to the event (s 241(1)(d))

The Defendant had control over the causes of the commission of the offence, see conviction judgment at [11]-[13].

Whether, in committing the offence, the person was complying with orders from an employer or supervising employee (s 241(1)(e))

This factor is not relevant to this offence.

Reasons for commission of offence

An offence that is committed for financial gain increases its objective seriousness, Bentley v BGP Properties Pty Ltd (2006) 145 LGERA 234; [2006] NSWLEC 34 at [246]-[247], Pittwater Council v Scahill (2009) 165 LGERA 289; [2009] NSWLEC 12 at [82] and CSP Act s 21A(2)(o).
The offence was committed for financial gain occurring in the course of a commercial operation. Substantial quantities of material were recovered during the charge period and supplied to customers, see conviction judgment at [27]-[31]. The amount recovered in the charge period of 7 months was well over 30,000 tonnes.

State of mind

The offence is strict liability so that no element of the offence has a mental component. The Defendant was clearly aware of the requirement to obtain an EPL given that one was applied for but not finalised during the charge period as identified in the affidavit of Mr Cramb. The Defendant's actions in commencing sand extraction and continuing knowing that an EPL was required suggest deliberate behaviour in committing the offence.

Conclusion on objective seriousness

I find that the offence is at the high end of medium objective seriousness having regard to the nature of the offence within an important regulatory scheme, the extent of actual harm to the environment and the potential for environmental harm, the potential for financial gain and that it appears to have been committed deliberately.

Subjective factors

As noted in par 1 above the Defendant has not appeared or been represented in court at any stage of these proceedings of which it is well aware. No subjective factors that may otherwise mitigate the sentence imposed have been placed before the Court by the Defendant.

General deterrence

The Prosecutor submitted that there is a need for general deterrence in relation to the offence. The Defendant is a quarrying company and over-extraction was undertaken for commercial gain. Others may be emboldened to conduct themselves in a similar manner unless a clear message is sent that conduct of this nature will result in heavy penalties being imposed by the Court. In Environment Protection Authority v Port Stephens Council [2011] NSWLEC 209 at [77] Craig J relevantly held: …the POEO Act was enacted by the legislature to reflect the community's concern for the environment and the expectation that those who breach its requirements will be appropriately punished. By reason of the legislation, the community is entitled to expect that the environment will be protected conformably with legislation that includes observance of the licensing regime whereby the statutory regulator is afforded the opportunity to prevent or control the environmental impacts of those forms of land use to which the legislation applies, either by refusing a licence or imposing conditions. This opportunity so to do is denied when a form of land use, requiring an application for a license, is carried out without any application being made for the issue of such a licence. That omission is potentially no less serious than an act of commission, involving a breach of licence conditions. As Lloyd J observed in Environment Protection Authority v Robinson [2004] NSWLEC 629 (at [30]): ... a penalty for a breach must be sufficient to compel attention to the environmental issues to ensure that the defendant, and others, are encouraged to comply with the law and that the environment is not exposed to risk of harm.
General deterrence is an important sentencing consideration in the present case.

Specific deterrence

The Prosecutor submitted that the Defendant showed a blatant disregard for compliance with the relevant provisions of the POEO Act. During the investigation of the offence Mrs Cauchi director was nominated as the representative of the Defendant for the purposes of s 203 of the POEO Act and then subsequently failed to attend the date specified for the interview with the Prosecutor (see Cramb affidavit 6 July 2017 at [38]-[41]). Mrs Cauchi and Mr Cauchi directors of the Defendant were also personally directed to attend interviews pursuant to s 203 of the POEO Act and neither were in attendance at the allocated interview time (see Cramb affidavit 22 September 2016 at [148]-[152]). The Prosecutor also submitted that the failure of the Defendant to be represented at the prosecution hearing and breach of associated prevention notices (see Cramb affidavit 6 July 2017 at [14]-[15]) suggests that the Defendant is likely to reoffend.
I accept these submissions and note further that there is no evidence the Defendant has obtained an EPL since the offence or understands the importance of doing so.
Specific deterrence is warranted in these circumstances.

Retribution and denunciation under the CSP Act

Subsections 3A(a), (e) and (f) of the CSP Act set out retribution and denunciation as part of the purposes of sentencing and as such the Court needs to take them into account. This consideration applies equally to strict liability offences.

Even-handedness

The principle of even-handedness requires that the Court consider if there is any sentencing pattern for like offences in order to determine a consistent approach to penalty, R v Visconti [1982] 2 NSWLR 104. This principle must always be applied subject to the particular circumstances of the case before the Court, Hoare v R (1989) 167 CLR 348; [1989] HCA 33.
There are few cases involving a breach of s 48(2) of the POEO Act since the maximum penalty for a corporation was increased from $250,000 to $1 million in 2006. In Environment Protection Authority v Port Stephens Council [2011] NSWLEC 209 the defendant council pleaded guilty and was sentenced for carrying on a waste facility without a licence. The offence occurred over 10 years but was not intentional. There was no actual environmental harm. Contrition and remorse was demonstrated by the defendant in part by the repayment of substantial levies that it would otherwise have paid pursuant to s 88 of the POEO Act for depositing waste on the site. The defendant fully cooperated with the prosecutor and there was little need for specific deterrence. The penalty imposed was $40,000 which included a 20% discount for an early guilty plea. Payment of the prosecution and investigation costs of $71,000 and a publication order were also ordered. The circumstances of that matter are quite different to this case. Another case in which a penalty was imposed for a breach of s 48(2) is Environment Protection Authority v Land Foam Australia Pty Ltd [2013] NSWLEC 128 which involved "extraordinary circumstances" (at [16]) and also does not provide any assistance in this case.

Ability to pay fine

A letter from the Defendant's previous solicitors made a bare assertion that there were insufficient funds within the Defendant company to instruct solicitors and the prosecution would result in winding up of the Defendant. The letter is annexure E to an affidavit of Mr Davey solicitor dated 2 February 2017. As the Prosecutor submitted, as at 8 June 2017 the date of the latest ASIC search, the Defendant was a registered company (Exhibit F at Tab 1) and should be assumed to be solvent. No basis for considering the Defendant's ability to pay a penalty is before me.

Penalty

When sentencing the Court must apply the instinctive synthesis approach by identifying all the relevant factors, discussing their importance and making a "value judgment as to what is the appropriate sentence given all the factors of the case", Muldrock v The Queen (2011) 244 CLR 120; [2011] HCA 39 at [26] unanimously following Markarian v The Queen (2005) 228 CLR 357; [2005] HCA 25 at [51] per McHugh J. The sentence must reflect all the relevant objective circumstances of the offence and subjective circumstances of the defendant, see Veen v The Queen (1979) 143 CLR 458; [1979] HCA 7 at 490 and Veen v The Queen (No 2) (1988) 164 CLR 465; [1988] HCA 14 at 472-473, 490-491. The sentence should not exceed what is "justified as appropriate or proportionate to the gravity of the crime considered in the light of its objective circumstances", per Veen (No 2) at 472, 485-486, 490-491, 496 and Hoare at 354 per Mason CJ, Deane, Dawson, Toohey and McHugh JJ.
A penalty of $350,000 is imposed in light of the medium objective seriousness of the offence, committed deliberately, and the matters relevant to sentencing such as deterrence and the maximum penalty identified above. As already identified there are no mitigating factors which arise for consideration.

Additional orders

The Prosecutor also submitted that a publication order pursuant to s 250(1)(a) of the POEO Act would be appropriate in the circumstances of the case. I agree given the seriousness of the offence.
I note that the offence was committed in the course of a commercial operation, suggesting a basis may exist for making a monetary benefit order provided by s 249 of the POEO Act. In the absence of the Prosecutor providing a basis to the Court no such order has been made. The Prosecutor should consider making such an application in similar matters in future.

Costs

Costs can be awarded to a prosecutor under s 257B of the Criminal Procedure Act 1986. These will be awarded as agreed or assessed.
As an administrative matter, penalty and costs payments should be paid to the Registrar of the Land and Environment Court.

Orders

The Court makes the following orders: 1. The Defendant is convicted of the offence against s 48(2) of the Protection of the Environment Operations Act 1997 in that it was the occupier of premises at which a scheduled activity was carried out when it did not hold an environment protection licence that authorised that activity to be carried on at the premises between 25 March 2013 to 10 October 2013. 2. The Defendant is fined $350,000. 3. The Defendant must pay the Prosecutor's costs as agreed or assessed. 4. The Defendant is, at its expense and within 28 days of the date of this order, to cause a notice in the form of Annexure A to this judgment to be placed within the first five pages of the following publications, at a minimum size of 9 cm x 12 cm, pursuant to s 250(1)(a) of the Protection of the Environment Operations Act 1997: 1. Sydney Morning Herald; 2. Coffs Advocate (Coffs Harbour); 3. Northern Star (Lismore); 4. Daily Examiner (Grafton); 5. Byron Echo (Byron Bay); and 6. Tweed Daily (Tweed Heads). 1. Within 35 days of the date of this order, the Defendant must provide to the Prosecutor a complete copy of the pages of the publications in which the notice appears. 2. The exhibits be returned.

ANNEXURE A Rixa Quarries (No. 2) Pty Ltd convicted and fined $350,000 for unlawful sand processing at the Doonbah Quarry. Rixa Quarries No. 2 Pty Ltd ("the Company") has been convicted and fined $350,000 by the Land and Environment Court of New South Wales of an offence against s 48(2) of the Protection of the Environment Operations Act 1997. The Company was prosecuted by the Environment Protection Authority ("EPA") for carrying out a scheduled activity when it did not hold an Environment Protection Licence ("EPL") authorising the activity at the Doonbah Quarry. The offence involved the Company processing more than 30,000 tonnes of sand for sale when it did not hold an EPL from the EPA enabling it to do so. The Company was aware that it required an EPL to undertake this quarrying activity and went ahead despite not having been granted an EPL by the EPA. On 27 July 2017, the Land and Environment Court convicted Rixa Quarries (No. 2) Pty Ltd and ordered them to:

pay a fine of $350,000;
pay the EPA's legal costs; and
place and pay for this publication notice.

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. Decision last updated: 07 August 2017

(2006) 145 LGERA 234

(2009) 168 LGERA 121

(2006) 148 LGERA 299

(2009) 165 LGERA 289

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