Environment Protection Authority v Sydney Ship Repair and Engineering Pty... [2005] NSWLEC 236 | Case summary

JUDGMENT CORAM: HIS HONOUR A. INTRODUCTION 1 The Defendant has pleaded guilty to two separate charges of offences against the Protection of the Environment Operations Act 1997, s 64(1) (PEO Act) (which by consent were heard together) which were committed at Goat Island on or about 13 and 14 October 2003 in that being the holder of an environment protection license, the Defendant did contravene a condition of the licence. 2 The PEO Act, s 64(1) provides as follows: (1) Offence If any condition of a licence is contravened by any person, each holder of the licence is guilty of an offence. Maximum penalty (except where it is an offence relating exclusively to noise): • in the case of a corporation - $250,000 and, in the case of a continuing offence, a further penalty of $120,000 for each day the offence continues, or • in the case of an individual - $120,000 and, in the case of a continuing offence, a further penalty of $60,000 for each day the offence continues. Maximum penalty (where it is an offence relating exclusively to noise): • in the case of a corporation - $60,000 and, in the case of a continuing offence, a further penalty of $6,000 for each day the offence continues, or • in the case of an individual - $30,000 and, in the case of a continuing offence, a further penalty of $600 for each day the offence continues. 3 According to the particulars endorsed on the Summons filed in proceedings No 50069 of 2004, the relevant environment protection licence is numbered 11517 and the relevant condition is Condition E1 which is in the following terms: This Condition authorises the management of liquid waste containing organotin associated with works on the Waratah Towage Tugs only. The works on the Waratah Towage Tugs must be carried out in accordance with the letter from the licensee dated 31 October 2001 and the proposals detailed in the report attached to that letter titled Goat Island Slipways Waste Management Preliminary Advice to address EPA ` Stop Work Notice' at 650T Slipway, produced by Gary Blumberg and Associates Pty Ltd on 30 October 2001. The results of the monitoring detailed in the above report must be submitted to the EPA on request. Until such time that the EPA is satisfied with the liquid waste collection and management facilities at the Slipways, the Licensee must seek written permission from the EPA prior to the commencement of any future works at the Goat Island Slipways that may involve the generation of liquid waste containing organotin. 4 The relevant particulars of contravention of this condition of the licence are - Works involving the generation of liquid waste containing organotin were carried out at Goat Island Slipways on the vessel Amorena without the appropriate permission. 5 According to the particulars endorsed on the Summons filed in proceedings No 50070 of 2004, the relevant environment protection licence is numbered 11517 and the relevant condition is Condition U2 which is in the following terms: The Licensee must install impervious bunding around all bulk liquids storage containers, including drums, at the premises. Note: The bunded areas must be roofed to prevent rain access to the bund. Compliance date: 1 March 2002. 6 The particulars of the contravention of this condition of the licence are: Bulk liquid storage containers and drums were stored in unbunded and unroofed areas. B. THE RELEVANT FACTS 7 The relevant facts concerning the admitted offences are principally set forth in the Agreed Statement of Facts (Exhibit 1). In addition to these agreed facts, the Defendant relies, principally as matters in mitigation of penalty, upon the facts deposed to by its Solicitor Russell Craig Byrnes in his affidavit sworn 10 March 2005 (Exhibit A). 8 The following summary of relevant facts is derived from the Agreed Statement of Facts. 9 The Defendant operates conventional slipway and shipyard facilities at Goat Island in Sydney Harbour at premises it holds on lease from the National Parks and Wildlife Service. The premises were formerly occupied by the Maritime Services Board which operated for many years the slipway and shipyard to service its vessels. After the Board's use of the premises ceased in the 1990's the management of Goat Island was taken over by the National Parks and Wildlife Service which in 1998 granted a long term lease of the slipway facilities to Starkstrom Pty Ltd which in 2001 assigned the lease to the Defendant. The slipway facilities, though of heritage value, were in a poor state of repair by the time the Maritime Services Board ceased operations and the lease granted to Starkstrom imposed considerable and ongoing responsibilities upon the lessee to repair and improve the facilities. 10 The Defendant's operation of the facility has been the subject of an environment protection licence (No 11517) granted under the PEO Act since 10 September 2001. 11 The licence authorises the carrying out at the Goat Island premises of "scheduled activities" (in terms of the PEO Act) namely "marina and boat repair facilities". The Licence is subject to a number of conditions, including (i) Condition L1.1 which requires the licensee to comply with the provisions of the PEO Act, s 120 ("a person must not pollute any waters or cause or permit waters to be polluted"); (ii) Conditions L5 and O4 imposing obligations on the licencee for the management and disposal of "waste" generated at the premises; and (iii) Condition O1 requiring licensed activities to be carried out in a competent manner. 12 As earlier noted, the two admitted offences involved contravention of two specific conditions of the license, namely Condition U2 and Condition E1, the terms of each of which have earlier been recited. 13 Condition U2 is one of two conditions authorised pursuant to the PEO Act, s 68 requiring "pollution reduction programs" to be instituted where the stipulated compliance date for each such condition was 1 March 2002. 14 Condition E1 is the only condition included in the licence as a "Special Condition", the first paragraph of which relates exclusively to works being undertaken on vessels owned by Waratah Towage Tugs. It is the second part of Condition E1 that was contravened in the present case, the "Amorena" not being a vessel owned by Waratah Towage Tugs. 15 An aspect of the work undertaken by the Defendant at its Goat Island slipway premises involves the removal and application of anti fouling paint to ships' hulls. Several antifouling paints are either used currently in the vessel maintenance industry or have been used in the past to prevent marine growth - one of which is tributylin (TBT), otherwise known as organotin. TBT paint is no longer available for application in NSW but many vessels over a certain length had it applied to their hulls in the past. All waste materials from antifouling paints containing TBT or other organotin compounds have been declared chemical wastes under the Environmentally Hazardous Chemicals Act 1985. The Defendant previously held licence number 78 issued under the Environmentally Hazardous Chemicals Act 1985 in respect of the Goat Island premises. This licence expired on the 8 November 2002 and after this incident was renewed. The licence authorised, subject to stipulated conditions, the manufacturing, keeping and disposing of organotin wastes. 16 On 13 October 2003, the Prosecutor became aware (via a telephone call from an employee of a trade competitor of the Defendant) that the vessel "Amorena" was on the Defendant's slipway and that the vessel was known (by the informant) to have been previously treated with anti fouling paint containing TBT. 17 In response to this call, Mr Marr, an officer of the Prosecutor attended the Defendant's premises the next day and observed the "Amorena" on the slipway. 18 He then spoke to a person, Gary Grant who identified himself as the Defendant's Operations Manager who admitted that the "Amorena" had TBT paint on its hull. However, he had only been working for the Defendant for a couple of months and he was not aware of the condition of the licence (Special Condition E1) requiring that the permission of the Environment Protection Authority (EPA) be obtained before undertaking works that involved the generation of liquid waste containing organotin. 19 Thereafter, the Defendant's Production Manager, Col McPherson, spoke to Mr Marr and informed him that that the work on the Amorena involved a spot repair where five percent of the hull had rust spots and these needed painting. That work entailed a water blast of the whole underwater area of the hull to remove the slime (which Mr McPherson stated was done on the 13 October), dry blasting using slag and then repainting of the spots with a copper based paint called Interspeed. When told about the licence condition requiring permission from the EPA before TBT painted vessels such as the Amorena are worked on, Mr McPherson said he was not sure about the licence but the Company follows procedures when working on TBT ships by filtering the wash-water through hay-bales, fabric and garnet. 20 During the inspection Mr Marr questioned both Mr Grant and Mr McPherson regarding the collection and storage of liquid waste material associated with activities at the shipyard. He was shown a 1000 Litre polythene container, otherwise known as an Intermediate Bulk Container (IBC) encased in a wire cage. He subsequently observed other such containers on the wharf. Mr Marr noticed that the IBCs were neither enclosed in a bund nor in a roofed area. 21 According to Mr John McPherson the routine procedure was to remove oily waste and bilge from slipped vessels into the 1000 litre containers adjacent to the slipped vessel. Such containers were then moved by forklift to the wharf to be then loaded onto a barge for transport to a nearby wharf for collection by a licensed waste disposal company. 22 The three men then walked towards the stern of the Amorena. Mr Marr observed that some hay bales enclosed in a cage constructed of pipe had been installed between the slipway rails across a section of the slipway the Amorena was on. He also observed that wooden bunds were installed between the slipway rails across the remainder of the width of the slipway area. Hay bales were placed against this wooden bund. Mr Marr observed grit and slurry collected behind these hay bales. He also observed a secondary filter consisting of similar wooden bunds covered by geo-textile material placed between the slipway rails. Slurry material had collected behind the geo-textile material which contained garnet sediment. 23 Mr Marr took a sample of paint from the hull of the Amorena by scraping loose paint from the hull with a knife. The loose paint was placed in a bottle specifically for TBT samples. He then took a sample of slurry from behind the primary filter, using an EPA authorised sample bottle. 24 On 16 October 2003, Mr John McPherson who was the Managing Director of the Defendant telephoned Mr Marr. Mr McPherson apologised for overlooking the PEO Act licence condition which requires notification of the EPA prior to work on TBT vessels and said he had been remiss. In a letter to the EPA dated 17 October, 2003 he again apologised for not advising the EPA of the work on this vessel and said this had been an oversight. 25 No written permission had been requested or granted by the EPA before work on the "Amorena" was commenced. Such permission would have been dealt with by Lara Gallagher (the allocated officer for this licence), who at no stage received such a request. The EPA would not have granted any further approval under Condition E1 whilst the Defendant relied on the measures/controls which were basically the same measures/controls in place at the time of this incident which did not have a total capture collection system in place. 26 There is no evidence of any actual environmental harm but it is an agreed fact that there was potential for harm to be caused to the marine environment. The nature and extent of that potential harm is the subject of two expert reports incorporated in the statement of Agreed Facts. 27 In his affidavit sworn 15 November 2004 Dr John Chapman, Director of the Ecotoxicology and Environmental Contaminants Section of the Department of Environment and Conservation, expressed the following opinions in respect of the laboratory results of the two samples that had been collected by Mr Marr on 14 October 2003: - The EPA analytical report numbered 200300720 reported organotin analysis results for two " solid " samples, with sample reference numbers 200306130 and 200306131. The former (6130) was of paint from the hull and had very high levels of TBT, as expected. The latter (6131) was of slurry on the ground below the boat and contained TBT at 110 ìg Sn/kg (or ng/g) and lesser amounts of the decomposition products. If the slurry was washed into nearby sediments of the Harbour without mixing with clean sediments, the levels would be above the ISQG-high, quoted in paragraph 26 above. As there were few analytical data resulting from this incident, it is only possible to state the general environmental effects of TBT on marine life in Sydney Harbour. TBT is a very highly toxic chemical with both acute and chronic effects at low microgram per litre levels. It was its severe effects on oysters and marine snails at extremely low levels (in the nanogram per litre range) that resulted in the restrictions of TBT usage in the late 1980s and more recent international restrictions, yet to come into force. Studies as late as 1999 have shown that, even with the earlier restrictions, continuing low levels of TBT in Sydney Harbour were having prolonged effects on the reproductive organs of local marine snails. If any TBT was released into the water column, this would add to the burden of TBT in Sydney Harbour, which was already having prolonged effects on marine snails, as well as possibly other marine life. 28 Mr Paul Annick, an environmental scientist specialising in marine and freshwater aquatic environments, expressed the following opinions: - From the description of containment measures provided by Mr Marr at paragraph 21 of his evidence I infer that any slurry arising from this particular slipway operation and which passed the primary filter would have been intercepted by the secondary filters which contained grit material. That is, the slurry arising from the subject works would most probably have been intercepted, contained and mixed with clean sediments within the set of downstream filters. From this I infer that: (i) There would have been far less fouling material plus residual paint material removed from the hull of this vessel during this operation than the amounts of fouling and paint material removed during the full antifoul and repaint operation I witnessed and sampled in November 2001, and as reported by me in April 2002. (ii) Under the circumstances of this particular slipway operation it is most probable that a significant proportion of the sediment material arising from the washing and blasting operation would have been contained by the combined filter system in place. (iii) The most probable outcome of the operation was that there was no significant input of TBT contaminated sediments to the waters of Sydney Harbour at the bottom of the subject slipway arising from this particular incident. C. SENTENCE 29 The parties' competing submissions on sentence range between the Prosecutor's submission that a penalty reflecting 20 percent of the maximum penalty provided is appropriate for the admitted contravention of Condition E1 and a penalty reflecting 10 percent of the maximum penalty provided is appropriate for the admitted contravention of Condition U2 and the Defence submission that the penalty in respect of the contravention by Condition E1 should reflect 5 to 10 percent of the maximum penalty and that the Defendant should be discharged pursuant to the Crimes (Sentencing Procedure) Act 1999, s 10 in respect of the contravention of Condition U2 because that contravention should properly be regarded as merely a technical breach. 30 The Prosecutor accepts that there are a number of mitigating factors that justify a substantial reduction of the penalty to be imposed on conviction for both offences but submits that discharge pursuant to the Crimes (Sentencing Procedure) Act, s 10 in respect of the contravention of Condition U2 is not justified. 31 The agreed mitigating factors may be summarised as follows: (i) the Defendant has no previous convictions; (ii) the Defendant has expressed contrition for the commission of the offences; (iii) the Defendant entered a plea of guilty to each charge at an early stage in the proceedings; (iv) the Defendant fully co-operated with the investigation and responded to that investigation with complete candour; and (v) the Defendant has taken subsequent remedial action rendering unlikely any repeat offences in respect of Conditions U2 and E1 - in particular, the Defendant has installed the requisite bunding and has introduced further water treatment to ensure total capture of TBT resulting in the EPA granting permission for the Defendant to undertake treatment of TBT coated vessels. 32 These mitigating factors are also relevant to the Defendant's application under the Crimes (Sentencing Procedure) Act 1999, s 10. Also relevant for that purpose (vide subsection (3)(d)) are the following additional facts - (i) the Defendant provides one of only a few available ship repair facilities and services to the boating industry in Sydney; and (ii) the slipway facilities at Goat Island are public assets in respect of which the Defendant pursuant to lease objections has expended considerable funds in repairing and improving those assets and those obligations are of a continuing nature. Included in the improvements to the existing facilities is the Defendant's proposal (which is awaiting approval from relevant authorities, including Sydney Water) for a pollution control system which, if installed, will provide for the discharge into Sydney's sewerage system of the final filtered fluids, as occurs with the Garden Island slipway facility. 33 The Directors of the Defendant are three tradesmen who have never previously conducted business for themselves. 34 According to the Defendant's tax returns for the years 2001, 2002 and 2003 its taxable net income has been very modest. 35 In determining the Defendant's submission for an order dismissing the charge pursuant to s 10(1)(a) of the Crimes (Sentencing Procedure) Act 1999, the Court is required to consider the factors outlined in subsection (3) which provides as follows: In deciding whether to make an order referred to in subsection (1), the court is to have regard to the following factors: (a) the person's character, antecedents, age, health and mental condition, (b) the trivial nature of the offence, (c) the extenuating circumstances in which the offence was committed, (d) any other matter that the court thinks proper to consider. 36 The Defendant has submitted that the offence involved only a 'technical breach" having regard to the manner in which the Defendant collected and disposed of liquid waste material collected from vessels while they were on the slipway. However, although it may be accepted that this method of collection and disposal does not involve a prolonged presence at the premises of the filled storage containers (and hence lessens the risk of a spillage or leakage from the containers), nonetheless the relevant condition U2 required bunding of all bulk liquid storage containers, including drums, and subsequent to the commission of the admitted offence the Defendant has provided temporary and permanent bunding and roofing for all containers as required by the condition. 37 The obvious object of the requirement for bunding is to contain any spillage from the bulk liquid containers with obvious benefits to the marine environment which would otherwise be at risk from spillage or leakage. 38 On the agreed facts I am unable to accept the Defence submission that the contravention of Condition U2 involved only a technical breach. The offence is not trivial and there are no relevant extenuating circumstances. 39 It is also to be noted that the Defendant's case invoking the Crimes (Sentencing Procedures Act, s 10) in respect of the offence involving the contravention of Condition U2 is obviously weakened by virtue of the fact of its admission of the contemporaneous contravention of Condition E1. This fact relevantly is included in its "antecedents" (subsection (3)(a)). 40 The Defendant's contravention of Condition U2, having regard to all relevant circumstances, does not, in my judgment, warrant relief pursuant to the Crimes (Sentencing Procedure Act) s 10(1)(a). 41 This brings me finally to consider the question of what is the appropriate penalty to be imposed for the admitted offences in view of my decision that it is appropriate in each case to record a conviction of the admitted offences. 42 The extent of the maximum penalty provided by the PEO Act, s 64(1) indicates that the offence of contravening a condition of an environment protection licence is treated by the legislature as a serious offence. Of course, some conditions of licence will in the nature of things be more important than others and accordingly, the maximum penalty should be understood as accommodating the full spectrum of gravity of possible contraventions of licence conditions. 43 In the present case, it is important to bear in mind that the licence does not permit any water pollution and the two conditions that are the subject of the admitted offences are obviously conditions designed to help to secure or achieve that outcome of zero tolerance of water pollution. In this respect, it is also important to note that the admitted offences have not resulted in the occurrence of any water pollution, although the contravention of Condition U2 involved some risk (that has not been quantified in any way and may on the facts only have been theoretical). 44 The essence of the contravention of Special Condition E1 simply involved the Defendant's failure to obtain the requisite permission of the EPA before commencing work on the "Amorena". Although according to the agreed facts, this failure was principally caused by the Defendant's oversight, that fact alone does not fully explain the failure to obtain the requisite provision because another agreed fact is to the effect that the EPA would not have granted its permission whilever the filtration system in place at the slipway failed to achieve "total capture" of TBT residue or particles (an object that has subsequently been achieved by the Defendant to the satisfaction of the EPA). This appears to be the case notwithstanding the fact that the Defendant employed the same safety filtration system in undertaking the work on the "Amorena" as it usually employed when working on vessels owned by Waratah Towage Tug conformably to Special Condition E1. 45 In imposing a penalty for the admitted offences the PEO Act, s 241 requires the Court to consider the matters therein stipulated. So far as concerns the particular matters enumerated in subsection (1) paragraphs (a), (b), and (c) since environmental harm (actual or likely) has not been established by the Prosecutor to the requisite criminal standard of proof (see R v Olbrich (1999) 199 CLR 270 and cf Environment Protection Authority v Norco Cooperative Limited (2000) 108 LGERA 137) those matters are not here relevant. 46 Although I would regard the two conditions of the licence which have been contravened in the present cases to be serious and important obligations imposed upon the Defendant as licence holder, each of the conditions involved some element of difficulty or obscurity of application to the Defendant. I am here referring to the fact that although Condition E1 expressly provided for ongoing works by the Defendant on vessels owned by "Waratah Towage Tugs" involving the management of liquid waste containing organotin, the Condition contemplated other works being undertaken by the Defendant on other vessels where liquid wastes containing organotin were generated subject to the Defendant obtaining express permission from the EPA for such works "until such time that the EPA is satisfied with the liquid waste collection and management facilities at the slipway". 47 The apparent difficulty or obscurity with Special Condition E1 lies in part with its apparent stipulation of differential requirements in relation to work undertaken by the Defendant on vessels owned by Waratah Towage Tugs (which appears to reflect some ongoing historical maintenance contract) compared with work in relation to other vessels. Another source of difficulty or obscurity lies in the contemplation by the Condition that permission may be obtained from the EPA to work on other vessels at times occurring before the EPA is satisfied with the liquid waste collection and management facilities at the slipway. 48 These difficulties (real or potential) do not of course eliminate the obligations imposed upon the licensee, but they do create some doubt as to the intended meaning and application of the obligations. For example if it were intended that the Defendant not be authorised to undertake work on vessels which generated liquid waste containing organotin until the EPA was satisfied with the efficacy of the liquid waste collection and management facilities that should have been plainly stipulated in the condition without recognising even the possibility of the EPA's permission being otherwise obtained, even though such a stipulation would appear to sit ill at ease with the apparently contrary stipulation in respect of work undertaken and vessels owned by Waratah Towage Tugs. 49 My assessment of the gravity of each of the admitted offences is that the contravention of Condition E1 was the more serious offence because of the creation in a marine environment of liquid waste containing organotin than was the offence comprising the contravention of Condition U2 and but for the substantial discount of 50 percent reflecting the cumulative impact of all mitigating factors that I have earlier noted, the contravention of Condition E1 should be evaluated at a level of 20 percent of the maximum penalty within the overall spectrum of gravity of offences comprising contraventions of conditions of an environment protection licence and the contravention of Condition U2 should be evaluated at a level of 10 percent of the maximum penalty in the overall spectrum of gravity of such offences. 50 This ultimate evaluation of all relevant circumstances pertaining to the admitted offences will result in the imposition of a penalty of $25,000 for the contravention of Condition E1 and the imposition of a penalty of $12,500 for the contravention of Condition U2. 51 Such penalties should provide commensurate degrees of general deterrence for all licence holders of environment protection licences to ensure compliance with their licence obligations and likewise they should provide the appropriate level of specific deterrence to the Defendant in its ongoing obligations under its environment protection licence. D. ORDERS 52 For all of the foregoing reasons, I make the following orders:

The Defendant is convicted of the two offences as charged.
In respect of the conviction in proceedings No 50069 of 2004, a penalty of $25,000 is imposed.
In respect of the conviction in proceedings No 50070 of 2004 a penalty of $12,500 imposed.
The Defendant is to pay the Prosecutor's legal costs in the agreed sum of $13,000.
Exhibits be returned.

Environment Protection Authority v Sydney Ship Repair and Engineering Pty Limited

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Judgment (12 paragraphs)

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