Environment Protection Authority v Sell and Parker Pty Ltd

Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357; Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 ; Environment Protection Authority v Metalcorp Recyclers Pty Limited [2001] NSWLEC 253; CASES CITED: Environment Protection Authority v Metalcorp Recyclers Pty Limited [2004] NSWLEC 14; Environment Protection Authority v Sell and Parker Pty Limited [2006] NSWLEC 626; R v Thomson; R v Houlton (2000) 49 NSWLR 383; R v Sharma (2002) 54 NSWLR 300

PROSECUTOR Mr R Verzosa (solicitor) SOLICITOR LEGAL REPRESENTATIVES: Department of Environment and Conservation DEFENDANT Mr N Hemmings SOLICITOR Allens Arthur Robinson

THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

50032 of 2006 Environment Protection Authority v Sell and Parker Pty Ltd

JUDGMENT 1 Her Honour: The Defendant operates a scrap metal shredder at 45 Tattersall Road, Blacktown (the premises). The Defendant is the holder of an environment protection licence. The offence charged is that the Defendant committed an offence against s 64(1) of the Protection of the Environment Operations Act 1997 (POEO Act) in that it was the holder of a licence, condition L8.1 of which was breached on or about 15 October 2005. Condition L8.1 of the Licence states that: The airblast overpressure level from explosions on the premises must not exceed 120dB (Lin Peak) when measured at the boundary of the premises. 2 The Defendant pleaded guilty to the offence so that the essential legal elements of the offence are admitted by the Defendant. This is a determination of sentence. 3 The maximum penalty applicable to offences under s 64(1) of the POEO Act at the time of the offence is $60,000 for a corporation (where it is an offence relating exclusively to noise). Facts 4 The parties agreed on a Statement of Agreed Facts (SOAF) as follows. The Defendant self-monitors the level of explosions at the facility via a Blastronics blast meter. The Incident Report shows that the explosion measured 133.4dB (Lin Peak) on the blast meter, which exceeds the level set by condition L8.1 of the Licence.

5 The maximum shredding capacity of the shredder is metal no greater than 15mm thick. The most common types of metal products shredded at the facility are galvanised roof sheeting, white goods, cars, car parts, metal fencing, domestic hot water heaters and metal cooking utensils. 6 When metal arrives at the facility it is weighed and placed into a stockpile. The metal is then inspected by one of two inspection teams (both comprised of an inspector and a crane operator) one "grab" at a time to remove any potentially explosive materials, such as petrol tanks in cars and gas bottles. Metal approved for shredding is then placed into a second stockpile for further inspection by a crane operator not involved in the initial inspection. 7 Once the metal has been inspected and approved for shredding, it is then fed into the shredder via the in-feed conveyor belt. Upon entering the shredder, the metal comes into contact with large rotors within the hammer mill which form part of a rotating cylinder. As a consequence of this contact, the metal is broken into pieces about the size of a cricket ball and fed from the shredder on a second conveyor belt into a machine that cleans and sorts the processed metal. Throughout this process air is drawn out of the shredder by a fan which pulls the air from within the shredder through metal ductwork into a cyclone. The extracted air is then cleaned through a wet scrubber before being discharged into the atmosphere. 8 The purpose of the cyclone and the wet scrubber is to remove dust and very small metal particles from the air extracted from the shredder. In order to prevent damage to the shredder, the ductwork leading to the cyclone and the wet scrubber is fitted with a number of sacrificial wooden and rubber discs which are designed to blow open and provide relief should an explosion occur. An investigation undertaken by the Defendant did not establish the likely cause of the explosion.

Defendant's evidence 9 Mr Parker, Director of the Defendant, gave written and oral evidence concerning the measures taken to implement improvements to reduce explosions at the site. His evidence was in similar terms to that recorded by Jagot J in Environment Protection Authority v Sell and Parker Pty Limited [2006] NSWLEC 626 (Sell and Parker 2006) at par [9] - [12] which concerned a more serious explosion at the same premises from the same shredder on 24 June 2005 (the first offence).

10 Mr Parker's evidence concerned firstly, the efforts made by the company to install a shredder which would meet Environment Protection Authority licence requirements including condition L8.1 and secondly, subsequent efforts made to reduce the likelihood of a recurrence. From 29 April 2002 customers of the facility were made aware that they could not deposit materials that were potentially explosive. In November 2002 this policy was upgraded to include the requirement that customers supplying the facility sign a declaration stating that they will not supply the facility with any potentially explosive materials.

11 The company also considered that the installation of a pre-shredder would reduce the likelihood of explosions in the future. To this end Mr Parker travelled to a metal processing facility in Birmingham, England, which, to Mr Parker's knowledge, had the first and only large, high-powered pre-shredder in use at a similar processing plant anywhere in the world. The pre-shredder pre-processed large pieces of metals and items with higher risk of explosion into smaller pieces of metal that are then fed into a shredder. This pre-processing reduces the risk of explosion. Upon determining that this particular pre-shredder did not have the required strength and power to be used optimally at the Defendant's premises, Mr Parker negotiated with the manufacturer of this pre-shredder to determine if the desired machine could be built. These negotiations were unsuccessful. In early January 2005 upon returning to Australia Mr Parker spoke to the original designer of the Birmingham Pre-Shredder, Material Recycling Engineering of Taiwan (MRE), to determine whether a more powerful version of the Birmingham pre-Shredder could be built. Correspondence ensued until confirmation of the request was received on 26 January 2005. A written contract for the purchase of the pre-shredder was signed on 17 March 2005 with an initial deposit of $70,818 being paid on 1 April 2005. With the signing of the contract Mr Parker requested that the pre-shredder be installed as quickly as possible with the response being complete construction within five months of the completed final drawings with delivery and installation within a further four months. On numerous occasions Mr Parker emphasised the need for haste (I note the first offence occurred on the 24 June 2005; this offence on 15 October 2005). Due to delays in constructing and delivering the pre-shredder it was not commissioned until 7 March 2006. The installation of the pre-shredder at the facility cost $2.6 million was for the sole purpose of minimising the risk of future explosions. According to Mr Parker it is the only pre-shredder of its size in the world that is fully integrated into the shredding process.

12 The Defendant is also taking steps to install a water injection system. In early June 2006 Mr Parker travelled to a metal processing facility in Capetown, South Africa, to view the operation of a water injection system and determine whether such a system would reduce the risk of future explosions at the Defendant's premises. The system, built by Metso Texas Shredders of San Antonio, USA, is designed to reduce the risk and size of explosion by injecting pressurised water into the shredder creating a "steam room" environment which minimises the risk of combustion.

13 Upon determining the suitability of the system a written contract for its purchase was signed on 29 June 2006. The system is currently being installed at the facility and will be commissioned by the end of March 2007. The total cost of the system is approximately $150,000 with its sole purpose being to minimise the risk and size of future explosions. It is believed that the system upon installation will be the first water injection system built for an Australian scrap metal processing facility. Evidence in relation to other matters 14 Section 241 of the POEO Act specifies factors to be taken into consideration in imposing a penalty (so far as they are relevant):

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

15 The environmental harm caused is distress and anxiety to the employees of a business operating next door to the Defendant's facility as outlined in par 9 - 12 of the SOAF and to the Defendant's employees, according to the affidavit of Mr Parker.

16 Several people from the adjoining premises of Dexion (Australia) Pty Ltd (Dexion) at 23 Tattersall Road, Kings Park gave statements to Mr Durrington, Environment Protection Authority officer, as to how the explosion affected them. 17 Mr Rubin Biasin, a maintenance fitter with Dexion, stated that he was in the fitters shop on the Dexion site when he heard and felt a very large explosion. The explosion caught him completely by surprise and he ducked down as a precautionary reaction. He stated that the explosion made the whole building shake. When he looked into the facility he saw smoke coming from equipment at the facility and an employee hosing down that equipment. 18 Mr John Ketteringham, Engineering Manager with Dexion, was working on a platform carrying out maintenance and inspection work on the Dexion site when he heard and felt a "tremendous bang". According to Mr Ketteringham the explosion caused the platform he was working on to move and all of the walls and windows of the building shook. The explosion made him feel nervous and uncomfortable. 19 Mr Bolek Pilch, an electrician with Dexion, was walking through the breezeway of the Dexion factory when he heard a massive explosion. Mr Pilch states that the metal roofing of the breezeway vibrated and the metal cross straps slapped against this roofing. He also stated that the explosion scared him and this fright made his heart race, causing him discomfort. He was also concerned that if the Dexion factory collapsed, he would have no way of getting out.

Prosecutor's submissions 20 The Prosecutor submitted that the offence caused direct and immediate harm to the environment, namely harm to the safety and health of employees of both the Defendant and the neighbouring business, Dexion. The level of interference to those working at Dexion was more than a trivial annoyance and represents a significant and genuine disturbance with the explosion sufficient to cause the whole of the Dexion building to vibrate. The Prosecutor further submitted that regard should be had not only to actual harm caused to the environment, but also to the likely harm. The force of the explosion was 20 times greater than that allowed by the Licence. A force that had the potential to cause significant harm and had the potential to prejudice the amenity and safety of those working at the Defendant's premises, and at Dexion.

Defendant's submissions 21 The only environmental impact was the short term amenity impact caused by the explosion. There is no evidence of health or safety impacts or potential for this, as submitted by the Prosecutor. Finding 22 It is clear that there was short term harm to the amenity of the Defendant's employees and those at Dexion. A table in the SOAF records sound pressure levels of 130dB being at the pain threshold and equivalent to a civil defence siren sounding at a distance of 30m. The recorded level of the explosion was 20 times greater than the licence limit suggesting there is some potential for some harm to health. 23 No evidence in relation to safety was relied on by the Prosecutor and whether there was any likelihood of harm to the safety of employees is unknown. (b) the practical measures that may be taken to prevent, control, abate or mitigate that harm 24 According to the SOAF, as a result of the explosion, the Defendant has made a number of improvements to the facility to further reduce the risk of explosions. These improvements include: (a) installing a pre-shredder to pre-process metal to be fed into the shredder (b) re-emphasising the importance of vigilant inspection procedures to employees (c) increasing the cubic capacity of the shredding mill of the shredder in accordance with directions from Lynxs Shredder Technology, the new designers of the shredder (d) installing a new computer control system that provides the operator of the shredder with greater control over the shredding process (e) ordering a water injection system from Metso Texas Shredders of San Antonio Prosecutor's submissions 25 The Prosecutor submitted that had the Defendant prevented explosive material entering the shredder in the first place the explosion would have been avoided, as would the resultant harm. There was a failure in the Defendant's inspection system which resulted in explosive material entering the shredder. This was a practical measure the Defendant could have taken but did not. Defendant's submissions 26 Mr Parker gave written evidence set out above in par 11 - 13, and oral evidence, about the equipment purchased for the shredder to reduce the likelihood of explosions. Sources of explosions are combustible items particularly drums (especially if containing thinners) barbecue gas bottles and butane gas bottles, which come in a variety of sizes including very small sizes. He also gave oral evidence about the difficulty in locating all sizes of portable gas bottles in the metal sent to the premises as some were deliberately hidden, being difficult to dispose of. Despite investigation the source of this explosion is unknown. Relying on this evidence the Defendant argued there had not been a failure in the inspection process at the premises on the day of the offence. Finding 27 There are practical measures which can be taken to reduce the likelihood of explosion. The efforts made by the Defendant to reduce explosions are identified in Mr Parker's affidavit set out above, and I accept that the Defendant has taken and is continuing to take, significant steps to reduce the likelihood of explosion. 28 Prevention of items likely to cause explosions entering the shredder is clearly a significant way to prevent explosions. Mr Parker outlined in oral evidence the difficulties in finding all potentially explosive material. While that does not excuse the Defendant from needing to apply greater diligence when sorting metal and I consider greater practical measures could have been taken before the explosion, I also accept that these measures were in the process of being implemented at the time of the offence and that further measures have since been implemented.

(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 Prosecutor's submissions 29 The Prosecutor submitted that the conditions of the Licence anticipate the possibility of explosions occurring at the premises. Combined with the fact that this is a metal processing plant, harm to the environment is foreseeable. It was admitted that the harm to the environment was foreseeable. (d) the extent to which the person who committed the offence had control over the causes that gave rise to the offence 30 This is admitted. (e) whether, in committing the offence, the person was complying with orders from an employer or supervising employee. 31 Not applicable.

Gravity of the crime 32 Regard must be had to the culpability of the Defendant and the individual circumstance which led to the commission of the offence. These have been considered in part in relation to the s 241 factors. 33 The Prosecutor submitted that in addition to the matters referred to above under s241 of the POEO Act, the seriousness of the offence should be determined having regard to: (a) The objectives of condition L8.1 Condition L8.1 aims to protect the quality of the environment both in terms of amenity and safety. The Prosecutor submitted that the explosion should be viewed as serious, breaching both the amenity and safety objectives of condition L8.1.

(b) The magnitude of the explosion The Prosecutor submitted that the matter should be viewed as serious given the magnitude of the explosion. The explosion measured 133.4dB (Lin. Peak) at the boundary, well in excess of the 120dB (Lin. Peak) set by condition L8.1 of the Licence. A 133dB explosion represents an explosion 20 times the power or intensity of a 120dB explosion and therefore the breach should be viewed as significant and not merely a technical breach.

(c) The explosion was caused by a failure in the Defendant's inspection process The Prosecutor submitted that the explosion was caused by a failure of the Defendant's inspection process. The root cause of the explosion has not been discovered, however by virtue of the fact that an explosion took place evidences the fact that explosive or "non-shreddable" material had been missed during the inspection process and had been fed into the shredder. 34 I have considered these matters in relation to s 241. I consider this matter is reasonably serious although not as serious as the Prosecutor submitted. 35 The Court is also to have regard to the maximum penalty applicable, as this is an expression of the seriousness Parliament attributes to the offence: see Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698. It stated at 698 and 701 respectively that: The task of a court is to assess the relative seriousness of the offender's particular offence in relation to a worst case for which the maximum penalty is provided… ..the more serious the lasting environmental harm involved the more serious the offence and, ordinarily, the higher the penalty. General deterrence 36 Sentences made in relation to environmental offences must embrace powerful considerations of general deterrence: see Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357, per Badgery-Parker J at 367. In Axer, Mahoney JA stated at 359: The quantum of the fines which the legislation allows to be imposed has no doubt been fixed not merely to indicate the seriousness with which such pollution is regarded but also to deter those engaged in such activities and to procure that they will take the precautions necessary to ensure that it does not occur. Specific deterrence 37 The Prosecutor argued that specific deterrence was necessary given that this was a second similar offence, and the steps taken after the first offence as identified in Mr Parker's affidavit at par 29 were not sufficient to prevent a second occurrence. While the Prosecutor submitted that there was a need to reflect specific deterrence in the penalty because of the first offence, in light of the measures in train at the date of this offence and continuing since to reduce the likelihood of a recurrence, I do not consider that is necessary.

Other submissions 38 The Defendant argued that the totality principle should be applied to reduce the penalty due to the similarity to the 24 June offence, this one being far less serious, and given that the explosions were very close together in time. The two offences were investigated together and could have been prosecuted at the same time. The totality principle is a well-established principle of sentencing to be applied by the court when sentencing an offender for more than one offence. It requires a judge to determine an appropriate sentence for each offence, consider questions of cumulation or concurrence and then, when reviewing the aggregate sentence, consider whether it is "just and appropriate". 39 The offences are four months apart and are different in character from each other. I do not consider the totality principle should be applied in these circumstances and will consider this offence as a second offence albeit markedly less serious in scale than the first.

40 The Defendant also submitted that the penalty should be reduced because the Prosecutor instituted separate proceedings for this offence when it could have been prosecuted at the same time as the 24 June 2005 offence dealt with by Jagot J in Sell and Parker 2006. That has resulted in more costs being incurred by the Defendant. I have already held that the Prosecutor was entitled to choose to take this prosecution separately from the first offence and do not therefore accept that submission. Evenhandedness 41 The Prosecutor handed up five cases it considered relevant on even handedness but submitted that the most relevant matter was that before Jagot J, Sell and Parker 2006. That prosecution involved a more serious explosion from the same shredder at the same premises on 24 June 2005. An explosion of 144 dB was recorded and there was a substantial impact on neighbouring premises including shaking of the windows and walls of the factory to the east; an employee getting a fright which caused his heart to race, and another feeling a tremor or ground shock, which startled him. A metal plate, weighing 68kg and approximately 1.5m in diameter, was blown out of the Defendant's premises and landed in the adjoining premises to the west. Her Honour imposed a penalty of $10,000 reduced after mitigating factors were taken into account to $7,500. The maximum penalty available to her Honour under s64(1) of the POEO Act was $60,000. The facts of the case are set out in her Honour's decision and I adopt [5] - [11] thereof. 42 In Environment Protection Authority v Metalcorp Recyclers Pty Limited [2001] NSWLEC 253 the defendant operated a metal processing facility. It was charged with seven offences under s64(1) of the POEO Act resulting from explosions from the defendant's metal shredder. The explosions occurred on 28 April 2000; 23 May 2000; 31 May 2000 (two charges); 14 July 2000; 7 September and 8 September 2000. 43 The defendant entered a plea of not guilty for the purpose of raising a statutory defence contained in s64(2) of the POEO Act, submitting that the explosions were caused by unknown persons who had hidden explosive materials within containers such as car bodies and scrap metal such as white goods; that those persons were not associated with the defendant and that the defendant had taken all reasonable steps to prevent the contravention of the condition. Cowdroy J found that the statutory defence was not made out as the Court was not satisfied on the balance of probabilities that the explosions were caused by the acts of others, nor that all "reasonable measures" were in operation at the date of the offences. 44 The defendant was convicted and fined $10,000; $5,000; and 5 x $2,500, for the seven offences. The Court imposed penalties in the lower range because the procedures adopted by the defendant were designed to address the risk of explosion; the defendant had taken active steps to improve its existing measures designed to prevent explosions, and there was no permanent environmental effect. The Court further reduced the penalties by 20 per cent to reflect the co-operation of the defendant with the prosecutor on these charges, meaning that the imposed fines were $8,000; $4,000; and 5 x $2,000. 45 In Environment Protection Authority v Metalcorp Recyclers Pty Limited [2004] NSWLEC 14 concerning the same defendant and same metal processing plant as the previous decision, the defendant was charged pursuant to s 64(1) of the POEO Act with failing to comply with a condition of its licence. Four explosions, over 123dB, from the defendant's shredder occurred over a 60 day period, measuring 133.1dB, 139.3dB. 135.3dB and 135.9dB. As a term of its licence the defendant was required to shut down the shredder for five working days within ten working days of the fourth explosion, which it did not do. 46 The maximum penalty the Court could impose was $60,000. The penalty of $20,000 was reduced to $15,000 taking into consideration that the defendant had adopted measures considered to be at a level of best industry practice for the reduction/elimination of explosions; the defendant co-operated fully with the prosecutor, and the defendant pleaded guilty to the charge, although the Court found it difficult to discern any substantial remorse arising out of the defendant's plea. The penalty also included a publication order under s 250(1)(a) of the POEO Act. 47 While it is of assistance to consider all three cases, Sell and Parker 2006 is most relevant and I consider that in particular in relation to the facts of this case a second, less serious offence.

Penalty 48 In my opinion, the circumstances of this second offence warrant that a penalty of $12,000 representing 20 percent of the maximum penalty, should be imposed.

Mitigating factors 49 There are a number of mitigating factors which should be taken into account to reduce that penalty. 50 The Defendant pleaded guilty at the earliest opportunity. A plea of guilty entitles the Defendant to a discount in penalty under s 22 of the Crimes (Sentencing Procedure) Act 1999 in the range of 10-25 per cent: R v Thomson; R v Houlton (2000) 49 NSWLR 383; R v Sharma (2002) 54 NSWLR 300. The Prosecutor accepts that there was a guilty plea at the earliest opportunity. 51 The Defendant has expressed contrition and remorse through the affidavit of Mr Parker and I accept his statements to that effect. 52 There has been full cooperation with the Prosecutor in relation to the investigation of the incident and in relation to the preparation for this hearing. 53 The Defendant has agreed to pay the Prosecutor's costs of $6,000.

54 In all the circumstances I think that the Defendant's penalty should be discounted by a total of 30 per cent and consider that a fine of $8,400 is appropriate.

Orders 55 The Court makes the following orders:

1. The Defendant is convicted of the offence with which it is charged.
2. The Defendant is fined the sum of $8,400 to be paid to the Registrar of the Court within 28 days of today's date.
3. The Defendant must pay the Prosecutor's costs of the proceedings of $6,000.
4. The exhibits may be returned.

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