Environment Protection Authority v Warringah Golf Club Limited

30 September 2003 Environment Protection Authority Prosecutor v Warringah Golf Club Limited Defendant Judgment

The Charge 1 By summons issued 30 November 2001 Warringah Golf Club Limited ("WGC") was charged with the Tier 1 offence that on or about 12 February 2001 at North Manly it committed an offence against s 116(2) of the Protection of the Environment Operations Act 1997 ("the PEO Act") in that being the occupier of the Warringah Gold Club ("the club") on which a poisonous substance, Gusathion, with the active ingredient azinphos-ethyl, was located it contributed to the conditions that gave rise to the commission of an offence under s 116(2) of PEO Act by Craig Coggins in that he negligently caused the substance to escape in a manner that harmed or was likely to harm the environment. On 19 June 2003 the Court found the offence proved against WGC. 2 Mr Coggins has been convicted and sentenced separately by Cowdroy J. 3 The maximum penalty for the offence is $1million. The offence

4 It is contextually appropriate to repeat my primary findings on guilt at [71] and [72] of the judgment delivered on 19 June 2003:- 71 The primary offence was caused by either the wilful or negligent act of Mr Coggins in hosing the poisonous substance off the concrete slab under conditions where there were no adequate measures in place to prevent a discharge to the creek. The evidence before the Court in this case reveals that Mr Coggins deliberately dispersed the spilled liquid in a manner which harmed or was likely to harm the environment. 72 The conditions that gave rise to the commission of the offence by Mr Coggins insofar as they relate to the run-off from the concrete slab into the stormwater pits, which have an outlet to Brookvale Creek, are the state of the greenkeepers compound and associated buildings, including, in particular, a workshop, chemical store and concrete slab where substances, including poisonous chemicals, were stored, handled and mixed from time to time. Furthermore, the concrete slab was frequently used for the wash down of vehicles and equipment used in connection with the maintenance of the golf course, including the application of insecticides, fertilisers and herbicides. The concrete slab was used from time to time as a place to repair plant and equipment, including in particular, the spray unit for the application of chemicals. A tap was located at the northern wall of the workshop to facilitate, inter alia, the use of water for the purpose of washing down machinery and for the mixing of chemicals to be used in the spray unit. There was no bunding or other protective devices around the concrete slab or the stormwater pits. There were materials such as soil, sand and proprietary fuel absorbent products available in or adjacent to the compound but there was no specific provision of absorbent materials or clean up utensils designed to contain liquids, including chemicals, on the site to prevent them from entering into the stormwater system or Brookvale Creek in the event of either a deliberate act or an accident causing a spill. 5 The Court found that a significant number of fish, in the order of 10,000, and numerous ducks and other wildlife died as a consequence of poisoning from the Gusathion introduced into Brookvale Creek and Manly Lagoon. The deaths occurred over a wide area. The seriousness of the offence 6 Section 3A of the Crimes (Sentencing Procedure) Act 1999 ("the Crimes (Sentencing Procedure) Act") commenced operation on 1 February 2003. Section 3A provides as follows:- 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. 7 The prosecutor's submission, that the condition of the greenkeepers compound made it "the site of an accident waiting to happen", which is supported by the evidence, is adopted by the Court. 8 Having regard to the definition of "environment" in the dictionary to the PEO Act, which includes any living organism, Mr Rushton SC submits, on behalf of the prosecutor, that the extent of the "kill" entitles the Court to regard the offence as being in the most serious category and that, accordingly, the Court's discretion would not miscarry if the maximum penalty is imposed. 9 Recognising that the maximum penalty is intended for cases falling into the worst category of cases (Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698), Mr Miller QC submits, on behalf of the defendant, that the subject offence is not an offence in the worst category for the following reasons:- (a) Whilst there was significant short-term environmental harm, there was little or no lasting environmental harm. (b) The defendant's offence was one of omission, rather than commission. Nothing that the defendant did was deliberate, knowing or calculated to cause harm. To the contrary, the defendant was concerned to protect the environment in other aspects of its operations.

(c) Whilst the defendant was negligent, Mr Coggins was the prime cause of harm to the environment.

(d) The defendant did not profit from the commission of the offence. This is not an offence such as EPA v Gardiner , in which the defendant committed the offence for financial gain. 10 The Court does not accept that death to 10,000 fish, together with birds and other wildlife, does not cause lasting or permanent environmental harm. Admittedly, there is only evidence of short-term harm to the actual waters of the creek and lagoon and affected fish populations appear to have recovered within 12 months. However, the destruction of wildlife on this scale cannot be regarded as temporary or short-term. 11 The section makes no distinction between wilful and negligent conduct. They both attract the maximum penalty. The Court found that WGC was negligent in material respects by omitting to take reasonable steps to prevent the escape of a dangerous substance from its premises and thereby contributed to the conditions that gave rise to the commission of the offence by Mr Coggins. The contribution by WGC is the essential ingredient of the offence. The conduct of Mr Coggins is relevant to assessing the appropriate sentence for WGC but it plays only a subsidiary role to the objective seriousness of the offence itself. 12 The contribution to the conditions at the greenkeepers compound had direct consequence for the environment. If appropriate and effective physical barriers, systems and procedures had been in place the discharge of the poison would not have occurred. It was the sole responsibility of WGC to provide the conditions that prevent escape of dangerous substances from its premises. In that sense the club's negligent omission was the prime cause of harm to the environment.

13 The evidence shows that a draft environmental policy and a master plan for the golf course were essentially not acted upon. Furthermore, the President has given evidence that the board had in recent years focussed on other matters in the belief that they had no responsibility in respect of environmental matters and that it was entitled to delegate such responsibilities to management employees. 14 The absence of a deliberate course of action by the defendant knowing that it would, or was calculated to, cause harm removes the offence from the very worst category of cases. However, the description of the defendant's failure to appreciate its obligations cannot be confined to gross incompetence. The actions were more heinous than that. It was emphatically and utterly foreseeable that the conditions were totally inadequate to deal with even sporadic handling of dangerous toxic compounds in close proximity to a sensitive waterway. The Court has found that it was clearly negligent to a criminal degree to allow those conditions to exist. 15 There was a blatant disregard of a responsibility to conduct the club's affairs in a manner that paid due regard to the protection of the environment. The level of culpability is high but not extreme. The legislation envisages that proper precautions must be taken to ensure that pollution does not happen at all by providing for strict liability in certain cases. However, it places wilful or negligent pollution in the special class of a Tier 1 offence thereby attracting significantly more substantial penalties. 16 The Court agrees with the submission that WGC did not profit from the commission of the offence and that its inaction was not calculated to cause harm. 17 The Court is convinced that a clear message must be sent to non-profit entities operating public facilities that they are equally liable to punishment under the law as entities motivated by profit carrying on business on private land. Non-profit entities should not think they can escape significant penalties if they fail to maintain the environmental standards set by legislation solely because they provide a service to the general public. A primary purpose of the sentencing procedures is the deterrence of subsequent crimes by both the offender and other parties from committing similar offences. The general deterrent aspect of this sentence is important because the elements of this offence are not exclusive to golf clubs. Numerous entities utilise herbicides and pesticides in the course of their business. Most settled areas in New South Wales contain cricket fields, bowling greens, sporting ovals, parks and golf clubs. These facilities regularly employ staff to maintain their grounds through the use of potentially toxic materials. Regardless of the profit motive of the entities that manage these facilities, they are all liable under the legislation if they fail to ensure their facilities are operating appropriately. 18 The Court therefore agrees with the prosecutor that the Court should send a powerful message to sporting club operators, and in particular, golf clubs, that mismanagement or, particularly as in this case, abandonment of environmental responsibility will lead to condign punishment. 19 There is justification for specific deterrence in this case. The club, through its board and management, never seriously addressed the issue of environmental responsibility. Some preliminary positive steps have now been taken in that regard but future, as well as present, board members must be made aware that the consequences of a re-occurrence could be catastrophic to the financial viability of the club. 20 Pursuant to s 21A(1) of the Crimes (Sentencing Procedure) Act the Court is required to take into account aggravating factors, mitigating factors and other objective or subjective factors that affect the relative seriousness of the offence. 21 Section 241 of the PEO Act lists specific matters to be considered as aggravating in imposing penalty. These matters are each dealt with as follows:-

(a) The extent of harm caused to the environment was gross. 4.6 tonnes of dead fish were recovered. The actual damage would obviously extend beyond this figure;

(b) The practical measures that may have been taken to prevent, control or mitigate the harm are so fundamentally self evident they do not require restatement here; (c) I have already referred to the fact that the harm was emphatically and utterly foreseeable; (d) WGC had complete control over the cause that gave rise to the offence; and (e) No question of complying with orders from an employer arises. 22 The Court determines that the objective seriousness of the offence warrants a penalty at the higher end of the range. It is not appropriate to adopt a two-tiered approach of determining an objective sentence and then adjusting it (AB v The Queen (1999) 198 CLR 111). I therefore pass on to take account of the various factors the Court has been urged to consider before deciding what is an appropriate sentence.

Special orders 23 The Court has power to order the defendant to reimburse the costs and expenses incurred in the abatement of harm to the environment and the making good of any resulting environmental damage pursuant to s 246(1) of the PEO Act. Investigation costs are recoverable pursuant to s 248. 24 A total amount of $50,500.88, including investigation costs, is claimed by Manly Council and Warringah Council, the two councils involved in the clean-up. The defendant consents to an order under s 246 and s 248 of the PEO Act for payment of the total amount to the respective councils in the sum of $24,270.63 to Manly Council and $26,230.25 to Warringah Council. 25 The defendant has obtained advice from Mr Harvey-Walker of Patterson Britton that the installation of the following works should be carried out in the short-term:-

(b) Installation of a pumped connection to the sewer; and (c) Construction of a dedicated roofed and bunded chemical filling and emergency storage facility.

26 The estimated cost of carrying out these works is $73,789. This amount does not include approval and administration costs of about $25,000. Although not formally required by the prosecutor, the defendant nevertheless agrees to the making of an order pursuant to s 245 of the PEO Act that it carry out the works specified by Mr Harvey-Walker. 27 It is submitted by Mr Miller that the willingness of the defendant to make reparation to Manly Council and Warringah Council and to carry out the works recommended by Mr Harvey-Walker are respectively an indication of remorse and a recognition that improvements must be made to the WGC premises and therefore are matters that can be taken into account in mitigation of sentence. 28 Furthermore, the defendant has paid out $6,614.59 to date for the cost of installing a bund around the concrete slab, raising retaining walls around soil storage bays and constructing a new diesel storage area as part of the physical measures against a re-occurrence. 29 Finally, the club has agreed to an order requiring WGC to publish a notice in its regular Newsletter under s 250 of the PEO Act.

Mitigating factors 30 Section 6 of the Fines Act 1996 provides as follows:- 6 Consideration of accused's means to pay (cf Crimes Act 1900 sec 440AB and Justices Act 1902 sec 80A) In the exercise by a court of a discretion to fix the amount of any fine, the court is required to consider: (a) such information regarding the means of the accused as is reasonably and practicably available to the court for consideration, and (b) such other matters as, in the opinion of the court, are relevant to the fixing of that amount. 31 The costs of works to date and those proposed, which the defendant has and will undertake voluntarily, are claimed to be an indication of a resolve to take steps to ensure that the likelihood of a future offence is remote. However, at the same time, in the Court's view, they are indicative of the measure that the club could have, and should have, introduced before the incident on 12 February 2001 occurred. In that sense they are not in the nature of a penalty. They do, however, impact upon the defendant's ability to pay a fine. 32 The burden of the cost of reparation will also have an adverse effect on the means of WGC and hence have a bearing on the exercise of the Court's discretion to fix the amount of an appropriate fine. 33 Similarly, the defendant will be liable for the prosecutor's costs of the proceedings assessed and agreed at $190,000. 34 The total outlays disclosed to the Court as referable to the offence will be at least $320,903.92 ranging up to $350,000 when overhead and administration costs are taken into account. 35 The General Manager of WGC, David Airey, has given evidence that the club has traded at a loss over the last three financial years and that a further trading loss of $190,000 is expected for the 2003 financial year. The club has a deficit of current assets to current liabilities. The financial difficulties originate from the years 1999 and 2000 when the club carried out reconstruction of several holes on the golf course and renovations to the clubhouse at a cost of approximately $400,000. According to Mr Airey, the options available for the club to finance the payment of a fine, provided it continues to operate, are a general levy applied to all members or a loan charged over the club's assets.

36 Clearly, the board and members of the club face a financial dilemma. 37 WGC is a company limited by guarantee and managed by directors who perform their tasks on a voluntary basis. The public use the course for over 51,600 rounds of golf compared to 20,000 member rounds annually. There are 890 members made up of men playing (436), women playing (177), junior playing (70), non-playing (123) and social (84). Mr Airey told the Court that members' fees are the lowest for an 18-hole golf course on the northern peninsula with discounts for older members. Public green fees are also the cheapest for an 18-hole course on the peninsula and discounts are offered to juniors/students and seniors/pensioners. 38 The club contributes to charities by direct donation and subsidised promotions. Mr Miller submits the extent of its public works entitles the club to a significant reduction by reason of its good character (s 21A(3)(f) of the Crimes (Sentencing Procedure) Act). In 1997, the defendant adopted a Bush Regeneration Project, including a Vegetation Management Plan and in 1998 formed a volunteer group to carry out work on the course and around creeks. The club took a proactive approach with Warringah Council in the carrying out of a rehabilitation project in Brookvale Creek. 39 The Court has been presented with an array of testimonials from course users and supporters. It is obvious that the club has been heretofore highly regarded by a wide range of persons and organisations within the community. Significant weight appears to be placed on the low fee structure for social groups. However, it is appropriate to regard the club as being of good character and for that to be taken into account in assessing penalty. 40 In addition to the works already referred to, the club has adopted a site-specific environmental strategy, a Machine Washdown Policy, a Chemical Use Policy, a Machine Repair Policy and an Occupational Health and Safety Policy managed by a new committee formed specifically for that purpose. A chemical spill kit has been purchased and staff trained in its use. 41 There has been a degree of co-operation with the prosecutor, such as complying with EPA directions, making employees available for interview and providing records to the EPA. 42 The club employs 21 people and provides work to others through its contracts for professional golf services, catering and cleaning.

43 The Treasurer of the club is Allan Joseph Stevens, a retired bank manager. As a member of the board of directors he expressed regret for the occurrence of the event on 12 February 2001 and the environmental harm that resulted. A corporation should be deemed to possess an equivalent attribute to contrition (Ampol Ltd v Environment Protection Authority (Grove, Newman and Dunford JJ, NSWCCA, 26 October 1995 unreported)). 44 The evidence of Mr Stevens is to be contrasted with the following comment by the club's President, Ronald Newell, in the WGC Newsletter published after final submissions on 23 May 2003 before judgment on 19 June 2003:- This has all come about by drainage pits being installed not to a standard nor with the Boards knowledge and a stupid series of events carried out by a member of our greens staff. It has been said many times, by intelligent people, that in a lot of cases the law is an "arse".

45 Previously, in evidence, Mr Newell made it clear that before the offence occurred the board of directors considered environmental safeguards to be outside their responsibility and took little or no account of them. In general terms, Mr Stevens agrees with this earlier evidence. 46 Following the tender of the Newsletter by the prosecutor, ten directors have signed a written statement addressed to the Court disassociating Mr Newell's comments from their own and asserting that they were made without the approval of the board. There is no evidence that any director moved to publish a retraction or a disavowal of Mr Newell's view until it was presented to the Court. Obviously, lessons are still being learned. Although the Court is satisfied the defendant is unlikely to re-offend to the same degree, it has not yet developed a clear insight into its environmental responsibilities and needs to develop greater awareness for the future. 47 The defendant has no prior record for an offence. 48 Any hardship imposed on any class of member or the public does not constitute extreme and exceptional hardship as contemplated in T v R (1990) A Crim 29.

Determination 49 Having regard to the whole of the circumstances, including the serious nature of the offence, the extent of environmental harm, the need for general and specific deterrence and after giving due weight to the matters raised in mitigation, the means of the defendant and the orders to be made under ss 245, 246, 248 and 250 of the PEO Act by consent, the Court determines that an appropriate monetary penalty is a fine in the sum of $250,000. 50 The Court realises that the total financial burden imposed on the club as a consequence of the offence will be approximately $600,000. Appreciating that a significant proportion of that amount represents expenditure that the club should have incurred in any event the Court is satisfied it is not unreasonable for the club to organise its future financial affairs in a way that deals with a situation which, to a large extent, has been brought about by historical business and financial decisions that did not take account of the full impact of the cost of implementing environmental safeguards. 51 It may be altruistic to provide a prestigious recreational activity at a comparative low cost for people of limited means but such ideals nevertheless carry with them the overarching obligation to comply with a duty to protect the environment. The ultimate penalty reflects the failure of the defendant to recognise that obligation.

52 The orders in relation to the publication order, reparation and the carrying out of future works within a reasonable time will be made and the defendant will be ordered to pay the prosecutor's costs in the amount agreed.

53 Nonetheless, as I have already said, I appreciate that it will be necessary for the club to re-organise its finances to meet the monetary obligations arising from the commission of the offence. A reasonable period of time should be allowed to enable new fee structures to be developed for members of the club and the playing public. However, even with a modest increase in the playing cost by direct charge and through members' subscriptions, the commitment should be significantly reduced to a manageable level within two years and wholly discharged over three years at the most.

54 The fine is payable within 28 days. It will be necessary, therefore, to make an application to the Registrar for further time to pay the fine. 55 The question of time to pay the costs of the prosecutor is a matter the Court will leave to the parties. However, the reparation costs payable to Manly Council and Warringah Council must be paid within a period of 12 months although the Court will grant leave for the defendant to make an application in that regard if the commitment cannot be reasonably met within that time. 56 The work to be carried out in accordance with the advice from Mr Harvey-Walker will require approval from relevant statutory authorities. The terms of the order under s 245 will recognise this contingency. 57 The publication order pursuant to s 250 of the PEO Act must be complied with by a notice in the next edition of the WGC Newsletter.

Orders 58 The Court makes the following formal orders:- (1) The defendant is convicted. (2) The defendant is ordered to pay a monetary penalty of a fine in the sum of $250,000.

(3) The defendant is ordered to make the following payments pursuant to s 246 and s 248 of the PEO Act within 12 months of the date of this order or such further time as the Court allows upon application made before the expiration of 12 months:- (i) Manly Council - $24,270.63; and (ii) Warringah Council - $26,230.25. (4) The defendant is ordered to carry out the undermentioned works pursuant to s 245 of the PEO Act in accordance with the following programme:- (a) Construction of a wash bay, a pumped connection to the sewer and a dedicated roofed and bunded chemical filling and emergency storage facility generally in accordance with specification by Patterson Britton and quote by JW Building Systems;

(b) Application for the consent of any relevant authority shall be made within 12 weeks from the date of this order; and

(c) Construction shall be completed in accordance with the approval of any relevant authority within nine months of the date of a final approval.

(5) Pursuant to s 250 of the PEO Act the defendant is ordered to publish a notice in the form annexed hereto marked "A" in the next edition of the Warringah Golf Club Newsletter.

(6) The defendant is ordered to pay the prosecutor's costs in the agreed sum of $190,000.

ANNEXURE A PUBLICATION ORDER WARRINGAH GOLF CLUB CONVICTED OVER FOUR TONNE FISH KILL On 19 June 2003, the Land and Environment Court of New South Wales found Warringah Golf Club Limited guilty of an offence against the Protection of the Environment Operations Act 1997, in that it negligently contributed to the conditions that gave rise to the escape of a pesticide into Brookvale Creek from the Warringah Golf Course.

On 20 June 2003, the same Court convicted the former Course Superintendent of negligently causing the escape of the pesticide on Monday 12 February 2001 in a manner that harmed the environment. The harm included water pollution, leading to the deaths of at least 4.16 tonnes of fish, ducks and geese in Brookvale Creek and Manly Lagoon.

The Club entered a plea of not guilty but the Court found the Club guilty of criminal negligence in that, among other things:

1. poisonous chemicals, including pesticides, were frequently handled and mixed on a concrete slab in its greenkeepers' workshop area;
2. the slab was near Brookvale Creek and adjacent to stormwater pits that lead to Brookvale Creek;
3. the slab was not surrounded by a bund or other protective devices.
4. little or no precautions had been taken by the Club to prevent the escape of dangerous substances from the greenkeepers' workshop area; and
5. the escape of the pesticide and the potential harm were foreseeable and it was an accident waiting to happen.

The Club was fined $250,000 and ordered to pay Manly and Warringah Council's clean-up costs incurred as a result of the offence, carry out remedial and preventative works on the Course and to make this notification. This notice is placed by order of the Land and Environment Court.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.