Environment Protection Authority v Signium Pty Ltd - [2018] NSWLEC 126 - NSWLEC 2018 case summary — Zoe

NSWNSWLEC

Environment Protection Authority v Signium Pty Ltd

[2018] NSWLEC 126

Land and Environment Court (NSW)|2018-06-07|Before: Moore J

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At a glance

Source facts

Court

Land and Environment Court (NSW)

Decision date

2018-06-07

Before

Moore J

Catchwords

[2013] NSWLEC 51 Environment Protection Authority v Waste Recycling and Processing Corp (2006) 148 LGERA 299
[2006] NSWLEC 419 EPA v Barnes [2006] NSWCCA 246 Markarian v The Queen (2005) 228 CLR 357
[2005] HCA 25 Newcastle City Council v Pace Farm Egg Products [2002] NSWLEC 66 R v Thomson
R v Houlton (2000) 49 NSWLR 383

Source

Original judgment source is linked above.

Catchwords

[2013] NSWLEC 51 Environment Protection Authority v Waste Recycling and Processing Corp (2006) 148 LGERA 299[2006] NSWLEC 419 EPA v Barnes [2006] NSWCCA 246 Markarian v The Queen (2005) 228 CLR 357[2005] HCA 25 Newcastle City Council v Pace Farm Egg Products [2002] NSWLEC 66 R v ThomsonR v Houlton (2000) 49 NSWLR 383[2000] NSWCCA 383 Veen v The Queen (No 2) 164 CLR 465

Judgment (60 paragraphs)

[1]

Solicitors: Environment Protection Authority (Prosecutor) Hunt & Hunt (Defendant) File Number(s): 229320, 229321, 229322, 229323 of 2017 Publication restriction: No

[2]

TABLE OF CONTENTS Introduction The Company's recent interactions with the EPA The charges Introduction Charge 1 Matter 229320 of 2017 Charge 2 Matter 229321 of 2017 Charge 3 Matter 229322 of 2017 Charge 4 Matter 229323 of 2017 The Company's guilty pleas and the procedural history of the charges The sentencing hearing Satisfaction of guilt Introduction Strict liability offences The Company's environmental management deficiencies The legislation relevant to sentencing Matters for consideration on sentencing The maximum penalty Harm to the environment Mitigating subjective factors Introduction Prior convictions (s 21A(3)(e)) Likelihood of reoffending (s 21A(3)(g)) Contrition and remorse (s 21A(3)(i)) Entry of the guilty pleas (s 21A(3)(k)) Cooperation with the Prosecutor (s 21A(3)(m)) Deterrence Introduction General deterrence The proposed environmental services order Introduction The cost of the ESO The scope of the ESO The appropriate statutory basis for imposing the ESO Introduction The Prosecutor's position The Company's position Consideration Imposition of penalties in addition to the cost of implementing the ESO Introduction The Prosecutor's position The Company's financial position The Company's financial position Conclusion on the imposition of penalties The Company's guilty pleas Introduction The Prosecutor's submissions concerning the guilty pleas The Company's submissions concerning the guilty pleas Conclusion on sentencing Characterisation of the offending conduct The starting penalties Discount for the early guilty pleas Totality and accumulation Disposal of Charges 2 and 3 Orders In Matter 229320 of 2017 In Matter 229323 of 2017 In Matter 229321 of 2017 In Matter 229322 of 2017 Costs The Environmental Service Order Annexure A

[4]

The Company's recent interactions with the EPA

Officers of the EPA have undertaken inspections of the Company's piggery on a number of occasions. Since at least 2013, the EPA has been concerned about what that organisation considered to be the environmental inadequacy of the Company's activities. The history of the interaction between the Company and the EPA over that period requires setting out in some little detail. This appears below:

On 20 December 2013, the EPA issued a clean-up notice to the Company.
On 28 February 2014, the Company sent the EPA a remedial action plan.
On 24 December 2014, the EPA varied the EPL and issued a variation notice to the Company.
On 7 January 2015, the EPA received the Company's annual return for the period 13 November 2013 to 12 November 2014 which stated that the Company complied with all of its licence conditions during the reporting period.
On 20 March 2015, the EPA sent the Company a letter stating that the Company had failed to report non-compliances with the EPL in its annual return.
On 2 April 2015, the EPA issued the Company an official caution for an alleged breach of s 64(1) of the POEO Act for failing to comply with conditions M1.2, M2.2 and R4.1 of the EPL.
On 15 September 2015, the EPA issued a penalty notice to the Company for an alleged breach of s 64(1) of the POEO Act for failing to comply with condition U1.1 of the EPL.
On 7 January 2016, the EPA received the Company's annual return for the period 13 November 2014 to 12 November 2015 which stated that the Company complied with all of its licence conditions during the reporting period.
On 6 April 2016, the EPA sent the Company a letter identifying five alleged non-compliances with the EPL conditions and stating that the Company had failed to report non-compliances with the EPL in its annual return.
On 24 November 2016, the EPA issued the Company an official caution for an alleged breach of s 66(4) of the POEO Act for submitting a false or misleading certificate in relation to the Company's annual return for the period 13 November 2014 to 12 November 2015.
On 11 January 2017, the EPA received the Company's annual return for the period 13 November 2015 to 12 November 2016 which stated that the Company complied with all of its licence conditions during the reporting period.
On 9 February 2017, the EPA sent the Company a letter stating that the Company had failed to report non-compliances with the EPL in its annual return for the period 13 November 2015 to 12 November 2016, namely, a non-compliance with condition R4.1.

[14]

The Company's guilty pleas and the procedural history of the charges

All four charges had their first return on 8 September 2017 before the List Judge. All four charges were brought before the List Judge on five further occasions prior to the date of the sentencing hearing before me. There are two specific matters arising out of these procedural processes appropriate to be noted. The first arises from the orders made by Pain J on 24 November 2017. Those orders were in the following terms: 1. The proceedings be adjourned to 16 March 2018 to allow the Defendant to make representations to the Prosecutor in relation to matters that may ultimately enable the Court to make orders at the hearing on sentence under chapter 8 of the Protection of the Environment Operations Act 1997; 2. The Defendant is to make representations to the Prosecutor in writing or before 31 January 2018; 3. The Prosecutor is to advise the Defendant by 28 February 2018 if it accepts the representations as made by the Defendant; 4. Liberty to apply on 2 days' notice. 5. Agreed Statement of Facts to be filed 9 March 2018.
It is to be noted that, consistent with (1) of the orders made by Pain J set out above, the parties have agreed on the terms of an Environmental Service Order (the ESO) to be incorporated in the orders finalising these proceedings. A summary of the obligations imposed by the ESO are set out later in this decision, whilst a copy of the full terms of the order is reproduced as Annexure A to this decision. Although the terms of the ESO have been agreed between the parties, the basis upon which it can be imposed pursuant to the POEO Act was a matter of dispute between the parties. The resolution of this dispute (of a purely jurisdictional and not merit nature) is dealt with later.
Second, it is appropriate to note that, on 24 November 2017, the Company entered guilty pleas to each of Charges 1 and 4 earlier set out. These two factors require further consideration as part of my sentencing deliberations.

[19]

The legislation relevant to sentencing

There are two pieces of legislation requiring consideration in these proceedings. The first is the POEO Act, whilst the second is the Sentencing Procedure Act. It is appropriate to set out the legislative elements requiring consideration on sentencing for the remaining offences to which the Company has entered a guilty plea.
First, the objectives of the POEO Act include, in s 3, the following relevant elements: 3 Objects of Act The objects of this Act are as follows: (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, (b) …, (c) ..., (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, (iia) the elimination of harmful wastes, (iii) the reduction in the use of materials and the re-use, recovery or recycling of materials, (iv) the making of progressive environmental improvements, including the reduction of pollution at source, (v) the monitoring and reporting of environmental quality on a regular basis, (e) …, (f) …, (g) ….
In addition, with respect to offences committed in breach of this Act, s 241 mandates matters that are required be taken into account when sentencing for such offences. This provision is in the following terms: 241 Matters to be considered in imposing penalty (1) In imposing a penalty for an offence against this Act or the regulations, the court is to take into consideration the following (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, (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. (2) The court may take into consideration other matters that it considers relevant.
The Sentencing Procedure Act operates in parallel with the POEO Act. There are three provisions of the Sentencing Procedure Act that have relevance to these proceedings. The first element is the provision, s 3A, that contains the objects of the sentencing process. This provision is in the following terms: 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 second provision of the Sentencing Procedure Act that requires consideration, to the extent that it is engaged as dealt with in my subsequent detailed discussion, is s 21A of this Act. This provision sets out a range of topics that potentially require consideration as aggravating or mitigating circumstances in the context of the particular offence. It is unnecessary to set out the whole of the section, as a number of the elements contained in it are clearly irrelevant to the Company and to these offences. However, there are two observations to be made concerning this provision.
First, any matter said by the Prosecutor (as is here the case, as later discussed) to be an aggravating factor is required to be proved beyond reasonable doubt, whilst those factors potentially favourable to the Company are required to be demonstrated by the Company only on the balance of probabilities.
Second, the various elements of s 241 of the POEO Act, as set out above, also find parallel elements of s 21A of the Sentencing Procedure Act that are to the same effect. In my subsequent analysis, it is convenient to use the framework set out by this provision of the Sentencing Procedure Act but, as I do so, I have had appropriate regard to the relevant element arising from s 241 of the POEO Act.
The final provision of the Sentencing Procedure Act that is relevant is s 22 of that Act. This provision requires that I make an allowance for the utilitarian value of the guilty pleas that have been entered by the Company and the timing of the entry of those pleas. This provision is in the following terms: 22 Guilty plea to be taken into account (1) In passing sentence for an offence on an offender who has pleaded guilty to the offence, a court must take into account: (a) the fact that the offender has pleaded guilty, and (b) when the offender pleaded guilty or indicated an intention to plead guilty, and (c) the circumstances in which the offender indicated an intention to plead guilty, and may accordingly impose a lesser penalty than it would otherwise have imposed. (1A) A lesser penalty imposed under this section must not be unreasonably disproportionate to the nature and circumstances of the offence. (2) When passing sentence on such an offender, a court that does not impose a lesser penalty under this section must indicate to the offender, and make a record of, its reasons for not doing so. (3) Subsection (2) does not limit any other requirement that a court has, apart from that subsection, to record the reasons for its decisions. (4) The failure of a court to comply with this section does not invalidate any sentence imposed by the court.

[21]

Harm to the environment

The Sentencing Procedure Act, in s 2IA, and the POEO Act, in s 241, both require me to take into consideration the extent of the harm caused, or likely to be caused, to the environment by the offences.
There is a little difficulty in assessing precisely what should be regarded as the actual or potential environmental harm arising out of the failure of the company to undertake its activities in the fashion required by its EPL. This arises as a consequence of the fact that much of the evidentiary material, on my reading of it, intermingles factual material relating to the deficiencies giving rise to Charge 1 (which has been pressed) and with respect to Charges 2 and 3 (which are no longer pursued by the EPA and are thus to be dismissed).
In the Company's written submissions on penalty, Ms Duggan wrote: 13 The subject matter of the offence goes to the daily management of the piggery. It is apparent that whilst the piggery was being operated in a generally acceptable manner in that the appropriate management infrastructure (such as effluent ponds and systems for waste management had been implemented) the day to day upkeep of that infrastructure and the utilisation of appropriate methods of management had slipped such that the general upkeep of the piggery fell below the standards expected of it. 14 It appears accepted that the consequences of the Defendant's failures have not resulted in actual harm to the environment (Prosecutor's submissions at [30]). 15 Whilst it is suggested that there is a likelihood of harm or potential harm (see Prosecutor's submissions at [31]-[33]) such factors are required to be proven beyond reasonable doubt and there is insufficient material before the Court for it so find that the risks identified are real having regard to the circumstances of this case or that there is any vulnerable receiving environment that has been identified. It is notable that notwithstanding that the Prosecutor contends that the unsatisfactory situation has been in place for some years, in that time none of the risks that it identifies have come to fruition. This indicates at the very least that the risks are low. If there is a risk (which is not admitted) it can only be isolated to the Defendant's own land. 16 This is not a case where the Defendant did nothing to attempt to meet its obligations. It is apparent that the Defendant had sought advice from appropriately qualified persons to undertake some of the work (such as the effluent pond survey, the diversion drains from the effluent dam to dam 2) and had sought to carryout appropriate nutrient removal (by grazing). The Defendant has also constructed bunding around the pig carcass pits to prevent surface water entering the pits. Such that attempts were made to address the issues relating to the management of the piggery. These actions, however, were insufficient or unacceptable to the EPA.
The reference in (14) above in Ms Duggan's submissions is a reference to what is said in the Prosecutor's submissions at (30), where Ms Shahnawaz wrote: 30 A lack of baseline data and ongoing monitoring means that there is limited evidence of actual environmental harm. However, soil samples taken by the EPA indicate that the concentration of phosphorus in the soil was an order of magnitude (10 times) higher than pasture requirements, indicating Utilisation Area 1 has no capacity to receive further nutrients
In (31) of her submissions, the Prosecutor proposed that I should conclude that it is likely that a range of adverse environmental consequences have been occasioned to the Company's land. In this context, the Prosecutor relies on Newcastle City Council v Pace Farm Egg Products [2002] NSWLEC 66 at [44].
It is to be observed, first, that this potentiality cannot be taken into account as a factor of aggravation for the purposes of s 2IA(2) of the Sentencing Procedure Act, as any circumstance relied upon for such a purpose is required to be proved by a Prosecutor to the criminal standard. A mere likelihood of harm, in the sense used by the Prosecutor in (31) of her submissions, cannot be said to give rise to such proof.
As to the future potential for more risk of harm to the environment, the failure of the Company to implement the Remedial Action Plan agreed to in 2014 (a plan developed as a consequence of the Company engaging consultants to assist it improve its operations and respond to concerns expressed by the EPA) means that such risk as existed at that time has continued unaddressed until the present.
However, the ESO now agreed to by the Company is to be imposed as an order of the Court and a failure to abide by the obligations contained in it would have significant potential consequences for the Company.
As a consequence, although I am not satisfied that there has been significant actual harm to the environment, but there has been significant past potential for harm to the environment, the imposition of the ESO and it addressing a wide range of environmental issues concerning the operation of the piggery and the state of the piggery's site means that, for sentencing purposes of these two charges, I should not regard the past harm or potential future for harm as being substantial.

[32]

The scope of the ESO

The ESO (reproduced in full as Annexure A to this decision and more fully summarised in a later table) comprises the following elements and the timeframe within which each element is to be achieved. These are:

Effluent irrigation and utilisation The ESO provides immediate and staged measures concerning effluent reuse by irrigation, with regard had to soil moisture and saturation, primarily in Utilisation Areas 1 and 2.
Monitoring and management A Farm Management Plan that documents environmental measures and procedures must be prepared and a tamper-proof monitoring system to record the volume of irrigated effluent installed.
Modifications Modifications are ordered in relation to the effluent dam, Clean Water Dam 3, the carcass pits and Anaerobic Ponds 1 and 2. These implement specific changes to manage flows and remove all woody weeds, replacing some with stoloniferous grass. Written and photographic confirmation is required to be given to the EPA for certain works.
Repairs The ESO calls for repairs to be undertaken in relation to the seepage of effluent through the northern section of the effluent dam embankment wall and the pipeline from the piggery shed to Anaerobic Pond 2.
Waste Several orders set out requirements and steps to be undertaken in relation to the disposal or reuse of waste, including manure, carcasses and other waste. Onsite application areas must be an appropriate distance from water courses and capable of accommodating the nutrient loads from the waste.

More detail is contained in the following summarising table: Agreed Environmental Services Order Topic Timeframe Para Summary of order Particulars Effluent irrigation and utilisation Immediate and ongoing [2] When irrigating effluent onto the Utilisation Areas, the Defendant must keep more than 40m gap or buffer zone between the outer edge of irrigation spray reach and any drainage line. Effluent irrigation and utilisation Immediate and ongoing [5] The Defendant must irrigate 7 days a week, whenever soil moisture is low enough. (c)(v), (c)(vi) Waste Immediate and ongoing [6] The Defendant must dry manure and other waste and lawfully dispose of or reuse it. If used onsite, the Defendant must demonstrate in the FMP that the application areas can accommodate the nutrient loads from the water and are an appropriate distance from water courses. (c)(vi) Waste Immediate and ongoing [11] The Defendant must always slit open pig carcass stomachs and fill in pits with soil when less than 1m depth available. Waste Immediate and daily [11] The Defendant must cover exposed carcasses and other animal material. Effluent irrigation and utilisation Within 90 days of the date of this order [3] On Utilisation Areas 1 and 2 the Defendant shall implement a system of rotating irrigation, commence to grow a suitable 'cut and cart' crop over the pasture and ensure there are no cattle on any part of the Utilisation Areas for three weeks after effluent irrigation. Monitoring and management Within 90 days of the date of this order [1] A Farm Management Plan (FMP) must be prepared by a suitably qualified and experienced environmental consultant and provided to the EPA. The FMP must document environmental measures and address management of sludge and manure, the effluent dam, carcass and tissue disposal, water and soil monitoring and procedures including record keeping systems and standard operation procedures. (c)(i), (c)(ii), (c)(v), (c)(vi) Monitoring and management Within 90 days of the date of this order [7] The Defendant must install a tamper-proof monitoring system to record the volume of irrigated effluent and provide a written confirmation of the meter/system to EPA. Modifications Within 90 days of the date of this order [11] The Defendant must either move or adequately bund carcass pits. Repairs Within 180 days of the date of this order [20] The Defendant must submit a report to EPA detailing methodology and timeframes for repairing the effluent dam embankment. (c)(ii) Modifications Within 270 days of the date of this order [14] The Defendant must modify the irrigation suction pipe in the effluent dam and provide written and photographic confirmation of such works to EPA. Modifications Within 365 days of the date of this order [12] The Defendant must remove or spray woody weeds from the effluent dam wall, replace with stoloniferous grass and provide written and photographic confirmation of such works to EPA. (c)(iii), (c)(iv) Modifications Within 365 days of the date of this order [15] The Defendant must remove or spray woody weeds from areas downslope of the piggery sheds and replace with productive pasture. Modifications Within 365 days of the date of this order [19] The Defendant must replace woody weeds around clean water dam 3 with stoloniferous grass. Modifications Within 365 days of the date of this order [13] The Defendant must install a stable outlet for clean water dam 3. Modifications Within 365 days of the date of this order [18] The Defendant must divert water flow away from clean water dam 3. Waste Within 365 days of the date of this order [9] The Defendant must remove sludge from Anaerobic Pond 2, lawfully dispose of or reuse it and provide written confirmation of the sludge removal and methods of disposal to EPA. Modifications Within 365 days of the date of this order [10] The Defendant must install a stable outlet system for Anaerobic Pond 2 and provide written and photographic confirmation of installation to EPA. Repairs Within 730 days of the date of this order [8] The Defendant must repair and reset the pipeline from the piggery shed to Anaerobic Pond 2, install a headwall and provide written confirmation of such works to EPA. Modifications Within 730 days of the date of this order [16] The Defendant must install a rock pad interceptor at the inflow point of Anaerobic Pond 1 and provide written confirmation of installation to EPA. Modifications Within 730 days of the date of this order [17] The Defendant must redesign and replace the Anaerobic Pond 1 outflow chute Effluent irrigation and utilisation Within 730 days of the date of this order [4] The Defendant must implement a 'cut and cart' system for the crop for the pasture on the Utilisation Areas, requiring the pasture to be cut, baled and removed offsite periodically. (c)(v), (c)(vi) Repairs Within 1095 days of the date of this order [20] The Defendant must repair the effluent dam embankment wall. (c)(ii) Modifications Within 1095 days of the date of this order [20] The Defendant must install an emergency spillway at the effluent dam.

[37]

Consideration

In addressing this dispute, I should make several preliminary observations. First, these two provisions are contained in Pt 8.3 of the POEO Act, one which gives this Court power to make a wide range of orders that can be made in addition to any penalty imposed for offending conduct giving rise to a specific breach of the POEO Act.
For this reason, the power to make these additional orders has been imported by express reference into other statutes (for example, as has been the case by the operation of s 9.56(2A) of the Environmental Planning and Assessment Act 1979).
It is clear that the various types of order for the imposition of which the power is invested in a court by Pt 8.3 of the POEO Act are ones which can be imposed as a consequence of conviction for an offence but they are not necessarily ones which need be imposed in addition to a monetary penalty. They may be imposed on a freestanding basis, as it were, consequent upon conviction for an offence.
This aspect, a matter of separate contest between the Prosecutor and the Company, requires further, subsequent consideration.
The Prosecutor submitted, when it became clear that the process for imposition (rather than the substance) of the ESO was in dispute (Transcript, 6 June 2018, page 42, lines 20 to 25): Now finally on the nature of the appropriate sentence the defendant urges the Court not to impose any fine in addition to the ESO and they refer to the EPA's guidelines in support of that proposition. Now I don't know to what level of detail your Honour has had regard to those guidelines but the reliance on the guidelines are misplaced. First of all they are EPA guidelines and they have no application to the task before this sentencing court but secondly the position of the EPA is as always communicated was that the EPA was not going to concede that there would be no agreement as to no fine even if an ESO was forthcoming so that has always been made abundantly clear but in any case the guidelines themselves make very clear that orders under 245(c) are not viewed as a punishment which is what these proposals are whereas s 250 orders would be an appropriate punishment. Section 250 of course refers to public environmental works for the public benefit so above and beyond whatever was discussed inter parties the order should not be seen as a punishment at all. The benefits of the order flow to the defendant, they are not works of a public nature and I refer to the CCA decision of Dyno Nobel which is also in the prosecutor's bundle at tab 15 and what the CCA said at 44 was that the defendant is not entitled to credit for complying with its obligations under the POEO Act essentially and that's effectively what the defendant is urging this Court to do to give it credit for getting its operations into a state where it complies with its licence obligations and that must be incorrect at law.
On the other hand, the position advanced on behalf of the Company was that the statutory pathway advanced by it was not merely more appropriate, but was, as I understood the position, the sole pathway legally available. Ms Duggan submitted (Transcript, 7 June 2018, page 22, line 18 to page 23, line 9): DUGGAN: We accept that at 1C, that we are not a public place, but we are for the public benefit. You will see in almost every authority in relation to the EPA either licensing cases or prosecutions, that the purpose of this legislation is for the public benefit. The control and protection of the environment is for the public benefit. When we look at the additional orders that the Court may make we see that there are for the purposes of these considerations activities which are personal to the defendant. For example undertake an environmental audit, D. Attend a training course, F and G. Each of these matters and what we say is the concept of the legislative scheme is that financial penalty should not be seen as the be all and end all in relation to punishment. Your Honour sees that in relation to 244, where it says: "One or more order may be made under this Part against the offender. (2) Orders may be made under this part in addition to any penalty that may be imposed or any other action that may be taken in relation to the offence. (3) Orders may be made under this part regardless of whether any penalty is imposed or other action taken in relation to the offence." So what it is trying say is that there are in relation to this legislative scheme not the fine, the financial penalty being the be all and end all. Relation to 245 we see that there are orders in relation to circumstances where an event has occurred and the defendant is required to take action to clean up that event. One asks rhetorically, how can fixing the problem you caused be an appropriate penalty or punishment for the offence, but taking action to make sure an event doesn't happen is not. When one considers the -- HIS HONOUR: Can I cut to the chase, it seems to me, is it the position that you are saying to me that that which is agreed and is behind tab 2 because it- DUGGAN: Tab 2. HIS HONOUR: Tab 17 rather. Is it the position that you are putting to me that because a number of things that are contained in the ESO go beyond matters that you say arise out of what is permitted by 245(c), that being the provision upon which the prosecutor relies for the making of the ESO, that it is not appropriate to make the ESO pursuant to 245(c) but that it ought be made pursuant to 250(c) because the scope of things in the ESO go significantly beyond, as you've been taking me through matters that are particularised in either of the charges to which your client has pleaded guilty. DUGGAN: Yes.
The correct position with respect to the imposition of the ESO is that which emerges from the above exchange between me and Ms Duggan; namely, that the only available jurisdictional basis to impose the ESO in these circumstances is contained in s 250(1)(c) of the POEO Act. That arises because the environmental improvements that are proposed by the ESO (as earlier outlined) not only act as an operational benefit for the Company, but also, because of their broader prophylactic effect, operate as anticipatory protective measures to ensure that there will be no future adverse environmental impacts from any of the operational aspects addressed by the ESO. This, I am satisfied, satisfies the public benefit test in s 250(1)(c).
On the other hand, the provision of the POEO Act that the Prosecutor proposes should provide the basis for the ESO (s 245 of the POEO Act) can only operate with respect to conduct which gave rise to the commission of an offence charged or any environmental damage arising from it.
There is, therefore, a necessity for a specific link for each element of the ESO to the conduct giving rise to either of the offences to which the Company has pleaded guilty for there to be a proper foundation to use this provision to impose the ESO.
As can be seen from the detailed provisions of the ESO earlier summarised, a significant number of matters that are mandated to be carried out by the Company within the three-year period set by the ESO are not ones which arise directly and specifically out of the conduct giving rise to the charged offences to which the Company has pleaded guilty. Absent such a linkage, s 245 cannot provide a jurisdictional basis for the making of the ESO.
On the other hand, s 250(1)(c) is of a broader discretionary nature and does not require linkage to the offending conduct.
The consequence is that, given the breadth of the matters covered by the ESO, there is no sufficient jurisdictional foundation to impose the ESO in the provision advanced by the Prosecutor and, therefore, it follows that the position advanced by Ms Duggan on behalf of the Company is not merely preferable but constitutes the only jurisdictional avenue available to me to impose the ESO.

[40]

The Prosecutor's position

During the course of her oral submissions, however, the Prosecutor said (Transcript, 6 June 2018, page 42, line 20 to page 43, line 8): Now finally on the nature of the appropriate sentence the defendant urges the Court not to impose any fine in addition to the ESO and they refer to the EPA's guidelines in support of that proposition. Now I don't know to what level of detail your Honour has had regard to those guidelines but the reliance on the guidelines are misplaced. First of all they are EPA guidelines and they have no application to the task before this sentencing court but secondly the position of the EPA is as always communicated was that the EPA was not going to concede that there would be no agreement as to no fine even if an ESO was forthcoming so that has always been made abundantly clear but in any case the guidelines themselves make very clear that orders under 245(c) are not viewed as a punishment which is what these proposals are whereas s 250 orders would be an appropriate punishment. Section 250 of course refers to public environmental works for the public benefit so above and beyond whatever was discussed inter parties the order should not be seen as a punishment at all. The benefits of the order flow to the defendant, they are not works of a public nature and I refer to the CCA decision of Dyno Nobel which is also in the prosecutor's bundle at tab 15 and what the CCA said at 44 was that the defendant is not entitled to credit for complying with its obligations under the POEO Act essentially and that's effectively what the defendant is urging this Court to do to give it credit for getting its operations into a state where it complies with its licence obligations and that must be incorrect at law. Now finally just on the costs of the ESO well that's already been ventilated extensively earlier this morning. We would simply say that the agreed position is that the costs were in the vicinity of 147,000 and that's where I leave that submission. Now in terms of exhibit 1 I thank my friend and I will if I need to return to that particular issue tomorrow. My instructor has found the correction to my submissions, para 45 so I withdraw the submission where it says that ..(not transcribable).. acknowledged in the process.

[42]

The Company's financial position

The material available for analysis in the taxation returns is far more limited than that which is contained in the 2016/2017 balance sheet.
The 2016/2017 balance sheet discloses that, whilst the Company pays some of the outgoings on the site (council rates) that would otherwise fall on the owner of the site, the value of the site (whatever it might be) is not recorded in the balance sheet as an asset of the Company.
Ms Duggan confirmed that the Company did not own the site. As there is no entry in the outgoings in the 2016/2017 balance sheet for rental, it is reasonable to infer, I am satisfied, that whatever entity is the owner of the site, it is in some fashion associated with the Company.
As I have no indication of the value of the land which comprises the site, this position provides no assistance in my financial assessment of whether the ESO is sufficient a burden to impose or, if it is not, what might an appropriate fine be.
Exhibit 1 comprised, as earlier noted, the Company's taxation returns for the 2015 and 2016 financial years and the Company's financial statements for the year ended 30 June 2017. They provide limited financial information. That which is relevant, it seems to me, is the fact that the gross income of the Company for each of these years was:

2014/15 - $1, 298,692.00
2015/16 - $1,203,233.00
2016/17 - $1,656,956

It is to be concluded, from these numbers, that the Company is in a strong cash flow position. It is also to be observed that, as at 30 June 2017, the Company had current assets of $263,910, which, when combined with the non-current assets of $138,028, led to a total asset position of $401,938.
Finally, it is to be observed that, in the expenses' details provided for 2016 and 2017 (set out in the profit and loss statement for the year ended 30 June 2017), there are some numbers that have quite significant variations between the years and for which I have no explanation. For example, in 2017, the Company spent nearly $270,000 on consultants, whilst it was less than $20,000 the year before. On the other hand, wages for 2017 were less than $40,000, whilst the previous year they had been nearly $180,000. It is also to be observed that, although, in 2016, the profit and loss statement shows that a significant loss was made, in 2017 that position had been turned round and the Company made a modest profit.
The overall conclusion to be drawn from this, I am satisfied, is that the Company has an asset base which would permit the imposition of a financial penalty on it; sufficient cash flow to be able to manage payment of such a financial penalty (even if an application to pay by instalments might need to be made); and, at least, for the most recent year, about which I have information, the Company is trading profitably.
In addition to all of these matters satisfying me that the Company has the financial capacity to pay a financial penalty, there is no basis, therefore, on the limited financial information available to me, that would permit me to conclude that the invocation of s 6 of the Fines Act would be appropriate in these circumstances.
However, I have earlier explained why the appropriate basis to found the making of the ESO is in s 250(1)(c) of the POEO Act because of the public benefit, in a broader sense, to be obtained from implementation of the ESO. Although, in a risk avoidance sense, the Company will also obtain a significant benefit from the implementation of the ESO, I consider it appropriate to have regard to the broader environmental benefit in assessing the financial penalty which it is appropriate to impose.
I have also had regard to the agreement between the Prosecutor and the Company as to the not insubstantial costs to be paid by the Company as set out in the orders at [123] (EPA v Barnes [2006] NSWCCA 246).

[46]

The Company's submissions concerning the guilty pleas

The Company's written submissions on the benefit to be afforded to the Company were: (21) The Defendant pleaded guilty to the offence on the first reasonable occasion and would therefore be entitled to the full discount for the utilitarian value of the early entry of the plea.
In her oral submissions, Ms Duggan said (Transcript, 7 June 2018, page 19, lines 4 to 37): Now the other matters which the Court is entitled or required to take into account is the subjective considerations. The first matter that we identify for which we are criticised is the plea of guilty and the assistance to the prosecutor. Now your Honour in relation to the matter you were taken to Turnbull, and Turnbull is quite a different circumstances to this one. What your Honour will see from the court file is that after my instructing solicitors were retained an adjournment was sought because the expert that had been retained by the applicant to advise him suffered an illness that meant that he could no longer continue and a new expert was required to be retained, and my instructing solicitor asked the court to note that on the file. The next occasion it was adjourned was because the parties were engaging in discussions for the purposes of the preparation of the environmental services order to see whether or not that could be agreed, and if that could be agreed the consequence would be potentially a change in the plea. This is not a case where my client was randomly adjourning the matter to try and put it off, nor was it a circumstance where there was any inconvenience to the prosecutor, for example we didn't adjourn it and require them to put on more evidence or something along those lines. So when we are looking at the utility of the early plea the question of utility is, has the Court allocated time for a hearing on a not guilty plea, that's not the case here. Were the adjournments so that further work or particulars or requirements could be made from the prosecutor in order for the defendant to determine whether or not he should or it should plead guilty, not the circumstance in this case. Was the adjournment as a consequence of an action undertaken by the defendant in relation to the first one, the answer to that is clearly, no. So we may not have pleaded guilty on the first occasion, but what we say is that it was the first reasonable occasion and the utility of the plea is still one that warrants if not the full discount, close to the full discount for utilitarian value of the plea.
I am satisfied that I should regard these guilty pleas as having been entered at the earliest reasonable occasion. I so conclude for the reasons advanced by Ms Duggan. The reasonableness of this approach is reinforced by the beneficial nature (both public and private) to arise from implementation of the terms of the agreed ESO. This means that a sentence discount of 25% is appropriate to be applied to the penalty for each of Charge 1 and Charge 4.

Environment Protection Authority v Signium Pty Ltd

At a glance

Court

Decision date

Before

Catchwords

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Catchwords

Judgment (60 paragraphs)

Parties

Cases Cited (12)

Cited By (6)