Environment Protection Authority v Yolarno Pty Limited

50108-12 of 2003 ENVIRONMENT PROTECTION AUTHORITY V YOLARNO PTY LIMITED

JUDGMENT HIS HONOUR: 1 The Defendant has pleaded guilty to three separate charges of an offence against the provisions of the Protection of the Environment Operations Act 1997, s 126. That section provides in sub-section (1) - The occupier of any premises who deals with materials in or on those premises in such a manner as to cause air pollution from those premises is guilty of an offence if the air pollution so caused or any part of the air pollution so caused is caused by the occupier's failure to deal with those materials in a proper and efficient manner. 2 The Dictionary to the Act contains relevant definitions of "air pollution", (meaning any emission into the air of any air impurity) and defines "air impurity" (as including smoke, dust, including fly ash, cinders, solid particles of any kind, gases, fumes, mists, odours and radioactive substances). 3 The offence created by s 126 of the Act is one of a number of offences created in Part 5.4 of the Act dealing with air pollution. A number of discrete offences dealing with that subject matter are created by the provisions of 5.4 of the Act and s 132 prescribes the maximum penalty for air pollution offences, not discriminating between the offences, imposing a maximum penalty of $250,000 in the case of a corporation and $120,000 in the case of an individual. 4 The three separate offences were committed during three separate periods of time specified in each of the summonses. The first offence was committed between 10 and 11 December 2002. The second offence was committed between the period 16 December and 19 December 2002, and the third offence was committed on or about 22 January 2003. All three offences were committed at the Defendant's abattoir premises situate in Clergate Road, Orange, on the outskirts of the Orange town centre some five or six kilometres distant. 5 In each case, the summons specifies that the relevant "materials" (and that term is defined in of s 126(2) to include "raw materials, materials in the process of manufacture, manufactured materials, by products or waste materials)" was in each case effluent waste water generated from the abattoirs, and in each case the relevant failure to deal with those materials in a proper and efficient manner are particularised as the overloading of the anaerobic and/or aerobic ponds that form part of the effluent treatment system at the abattoirs, and in each case the relevant air pollution is particularised as the emission of odours and/or gases into the atmosphere. 6 It is agreed by the Prosecutor that the three separate offences are related offences in every conceivable sense of relationship and that any sentence to be imposed in respect of the admitted charges is to reflect the sentencing principle of totality. 7 The essential facts pertaining to each of the admitted charges have been conveniently agreed in the Statement Of Agreed Facts, (Exhibit 1). The Defendant, which is part of a family company network, purchased the premises in 1993. An abattoir use of the premises had operated at the site for some 40 years prior thereto. Upon acquiring the premises in 1993, the Defendant carried out extensive plant renovation at a cost of some $30 million. 8 It obtained development consent from the Orange Council in 1995 to conduct an abattoir with a daily slaughter of 450 head of cattle, and in 1998 obtained a revised development consent to increase the daily throughput to 1500 head of cattle. 9 The installation of the new plant (which is technologically advanced) having been completed, the Defendant commenced to use the premises for boning operations in 1998. That activity did not involve the use of the premises as an abattoir. What is called "weak effluent" was generated by the boning operations activity and the liquid effluent was stored in ponds located on the subject premises (which comprise a total area of 127 hectares). 10 In the week commencing 22 July 2002, the Defendant commenced the use of the premises as an abattoir. The waste-water effluent system installed at the premises comprised a number of ponds, the first receival pond being designed to operate as an anaerobic pond connected to three aerobic ponds. 11 Soon after the abattoir activity began, the Defendant experienced odour problems which manifested themselves in the neighbouring rural/residential community, generating a number of complaints from a number of residents both directed to the Environment Protection Authority and to the Company itself. Those complaints were investigated by the Environment Protection Authority and the Defendant itself called in expert assistance. It also conducted at the premises public meetings to discuss with complaining neighbours the problems being experienced in the commissioning process with the plant, and assuring the residents that it was doing all that it could to solve the problem. 12 Affidavit evidence of five residents living generally in rural/residential or rural properties situate at distances between one and four kilometres from the abattoir was received in which the deponents described their experience of nauseating odours which they traced to the abattoir premises. They were encouraged by the Environment Protection Authority to keep a log of their experiences, and the evidence that they give both individually and collectively is of experiences of grossly disagreeable odours variously described as "vile" or "rotten", or "rotting flesh", resulting in significant personal and social discomfiture for the residents for protracted periods of time, especially with the onset of summer at the end of 2002. 13 Investigating officers from the Environment Protection Authority who attended the premises at various times (including times on or about the dates upon which three offences were committed) confirmed the experience of the residents of the grossly disagreeable odours being generated from the effluent waste water system. 14 The Defendant, as I earlier mentioned, took prompt action following resident complaints and its own realisation that the effluent waste-water system was not functioning properly, and these remedial actions are set forth in the affidavit of Mrs Belbeck (Exhibit A) who is the general manager of operations at the Orange abattoir. She is the daughter of Mr John McDonald, who established the family companies and has been involved in the abattoir or meat industry himself for something like 50 years. The Defendant family company has been engaged in the industry for something like 25 years. 15 In her Affidavit (paragraphs 24 to 30) Mrs Belbeck sets out extensively the action taken by the Company following its realisation early in the piece that significant odour problems were being created at the abattoir premises via the waste water treatment system. 16 Those actions involved ordering plant and apparatus to assist the biological processes for which the pond waste water system was designed, installing covers over the anaerobic pond, obtaining and installing mechanical aerators for the aerobic ponds, and commissioning the advice of a number of experts including Mr Mitchell, who provided advice in January 2003. 17 His investigation of the problem led him to the thesis that the problem experienced with odours had been caused by virtue of the fact that the anaerobic pond contained existing waste waters received over the years from the boning operation, which had caused the anaerobic pond to malfunction or not function efficiently, once it began to receive the more heavily polluted effluent generated from the abattoir usage. He recommended remedial action in terms of inoculating the anaerobic pond by importing from another of the Company's abattoir premises situate at Inverell some of the contents of its anaerobic pond system, and upon further investigation this remedy proved to be effective, and the anaerobic pond commenced to behave in the manner for which it had been designed. It was whilst the anaerobic pond was malfunctioning or not functioning as designed, that the odour problems were generated not only from it, but also from the flow on aerobic ponds as part of the overall waste-water treatment system at the abattoirs. 18 The Defendant ceased to operate the abattoir premises in March 2003 and the abattoir usage has not since been recommenced. The Defendant, which in addition to the Orange abattoir, operates a larger throughput abattoir at Inverell and another one of similar size in Queensland, does intend to recommission the Orange plant. However, acting upon expert advice, it proposes to install a different or modified waste-water treatment system which will involve spray irrigation of treated effluent. All this, of course, is subject to Council approval and approval of the Environment Protection Authority, now functioning as the extended Department, and the Company has commissioned Mr Mitchell to undertake the necessary environmental impact statement in relation to the irrigation proposal. 19 These after-events following upon the commission of the offences charged in the present case in December 2002 and January 2003, of course indicate that since the offences, no recurrence of them is of course possible whilst the premises remain decommissioned, and the proposal of the Defendant to recommission them with a different or modified waste water disposal system indicates that there is no likelihood or probability of the offences being committed in the future. 20 During the very short initial life of the abattoir from July 2002 to March 2003, during which time much of the problem with odour generation was experienced, the Defendant was employing between 250 and 290 persons, and they were processing the slaughter of some 400 cattle per day. 21 The total amount of money expended by the Company in response to the realisation, upon commission of the plant, of the odour problems was some $2 million, of which some $750,000 to $1 million dollars was spent on the action taken by the Defendant to solve the problem. The solution, as I have earlier noted, was not forthcoming until late in January after Mr Mitchell's diagnosis of the problem and his prescribed remedy proved to be efficacious. 22 Evidence was given by Mr Mitchell and by Mr Court, whose expert evidence was not the subject of cross-examination, and I do not find a great deal of conflict in the expert testimony. Mr Court came on the scene at the behest of the Prosecutor much later in the day than was Mr Mitchell's involvement, and in large measure Mr Court's report represents his investigation after the event, at a time of course when the abattoir was not operating. 23 Nonetheless, on the basis of his investigation of the relevant history including the various documents, including documents produced by the Defendant to the Prosecutor pursuant to notice given under the Protection of the Environment Operations Act, Mr Court, in his affidavit and accompanying report expresses his views as to how the odour problem manifested itself and what action might have been taken to have reduced or mitigated or prevented the odour generation problem from manifesting itself in the first place and, secondly, once having manifested itself, what might have been done more effectively to mitigate the ongoing manifestation of the problem. 24 In his report he does not dissent from the diagnosis of the problem given by Mr Mitchell as being, in the absence of any other plausible theory, the probable cause of the problem, that is, the problem of the anaerobic pond containing within it at the time the abattoir started to function, some existing effluent from the meat boning operation. 25 The experts conferred and helpfully presented the Court with a joint report. There is some residual difference of opinion between Mr Court and Mr Mitchell recorded in the joint report (Exhibit 9) especially on the question of whether mechanical aerators operating in the aerobic ponds would have significantly mitigated the odour creation problem. As I say, there was no cross-examination of the witnesses and I am left to read their respective reports (which are quite extensive) with the benefit of their summary of points of agreement and points of disagreement in their joint report. 26 Ultimately, on the question of the installation of mechanical aerators in the aerobic ponds, I am satisfied that Mr Mitchell's opinion should be accepted. That is, that the problem having been identified as sourced exclusively in the malfunctioning anaerobic pond, until that problem was adequately dealt with, as it happened to be following Mr Mitchell's advice in January 2003, the problem of unacceptable odours would have continued to manifest themselves no matter how many mechanical aerators had been installed in the aerobic ponds, which were observed to be operating anaerobically because of the problems passed on from the malfunctioning anaerobic pond. 27 It is true that the observations of the aerobic ponds operating with and without the mechanical aerators indicates that the problems in those ponds would have been mitigated by mechanical aeration, but nonetheless the overall problem would not have been eliminated. In any event, as I have noted earlier, the Defendant installed many mechanical aerators in the aerobic ponds as part of the solution, but the true solution was not found until the true problem was diagnosed and, as I say, that was sourced exclusively in the anaerobic pond. 28 The other matters agreed between Mr Court and Mr Mitchell contained in Exhibit 9 indicate that the Company should not have continued to send to the anaerobic pond the high strength waste, paunch liquor and blood, once it was realised that the anaerobic pond was not properly functioning. The final matter discussed in their joint report concerns the fact that the discharge into the anaerobic pond should have been below the existing water level and not above it, but at that point the experts part company. 29 Overall, I am satisfied on the evidence (including the expert evidence) that the plant when commissioned with the existing waste water contained in the anaerobic pond should not have been so operated, but the evidence satisfies me entirely that that realisation did not arrive on the scene until Mr Mitchell's investigation of the matter which immediately followed the commission of the third offence in January 2003. This evidence of course is relevant on the question of foreseeability and culpability on the part of the Defendant in operating and continuing to persevere with the commissioning of the plant for those six months or so that it operated between July and January when the problem of odour manifested itself generally throughout that period. 30 I have said sufficient I think about the facts to now come to the competing submissions on sentence. Prosecuting Counsel invited the Court to evaluate the gravity of these particular offences at the mid-range of seriousness, as is perhaps reflected in a number of the decided cases involving air pollution offences. It is perhaps significant that there have not been many charges of the offences charged in this case. As I indicated earlier, Part 5.4 of the Act contains a number of discrete air pollution offences including that in s 129 being the offence of an occupier of premises at which scheduled activities are carried out under the authority of an environmental protection licence causing emissions of offensive odours from the premises. 31 But that, of course, is not the present charge and there are few cases involving this particular charge, that is of the occupier of premises failing to deal with materials on the premises in a proper and efficient way so as to cause air pollution to be generated from those premises. As I have mentioned, s 132 of the Act does not differentiate separate penalties for the separate offences but prescribes the same maximum penalty for each of the various offences so created. 32 When one goes to the factors enumerated in s 241 of the Act (what the Court is required to consider in relation to sentence), it is not in dispute that in this particular case the offence did create harm as defined by the Act to the environment. As I have said, the evidence of the resident witnesses and the investigating officials of the EPA leave me in no doubt that the nature and extent of the odour generated was grossly unpleasant, and was to the point of being both personally and socially inhibiting for persons subjected to its influence. Of the five resident witnesses, it is to be remembered that some live as far afield as four kilometres from the abattoir. 33 It is true that the "harm" to the environment was a harm to personal and social amenity, but that in my view is not a matter of little significance. Each of the residents is well accustomed to country life and the odours that one naturally and generally experiences in country life, but each powerfully attested to an experience of nauseating and unpleasant odour generated from the abattoir's malfunctioning waste water system to be far beyond (in nature and kind and degree) any odours commonly experienced in country life. 34 Concerning considerations (b) I am satisfied, of course, that practical measures could have been taken to have prevented that environmental harm, namely for the Defendant to have operated the waste water effluent system efficiently by realising that the pre-existing effluent from the previous boning operation which remained in the anaerobic pond, would cause that pond to not operate according to its design capacity. 35 Although the wastewater system in the present case was noted by Mr Court to be different from that which was propounded in the environmental impact statement which supported the development application to the Council in 1995, the evidence satisfies me that for this abattoir, the wastewater system proposed was in terms of design and concept perfectly acceptable. What went wrong with it was that rather simple matter that Mr Mitchell's investigations ultimately revealed. Accordingly, with that knowledge (which is not esoteric knowledge by any measure) had it been recognised up front, the plant would not have been commissioned with that inherent problem associated with the anaerobic pond. As I have noted earlier, this plant is technologically advanced plant, the Defendant having spent some $30 million following acquisition to prepare it for the abattoir use, which of course occurred some nine years after acquisition and some seven years after the development consent for the abattoir use was granted by the Council. 36 The third factor (para (c)) is concerned with foreseeability of harm, and again it must be held that the problem created was, clearly foreseeable. 37 The fourth factor (par (d)) the extent to which the person who committed the offence had control over the causes, again without doubt the Company had control and indeed Mrs Belbeck's affidavit clearly acknowledges that, and clearly accepts responsibility for the harm, involved in the commission of the offences. 38 The offences should be regarded as related as earlier conceded by the Prosecutor, and the total punishment should reflect the principle of totality, so that the overall sentence should reflect commensurately the overall responsibility in the commission of the offences. There is nothing in the evidence to indicate that anything happened between the offences, that is the three offences, which rendered the next committed offence an aggravated or more serious than the earlier one. 39 It is clear in respect of the subsequent offences that the plant was still under commission, it was still processing about 400 head of cattle a day, still employing the full complement of staff and employees, but the problems were being experienced and the Defendant was doing all that it could do to solve the problem. There is no suggestion in the evidence that the plant should have been closed down or been directed to close pending solution, although soon after the commission of the last offence, the abattoir use came to an end in March 2003 and has not since been revived. 40 There are a number of mitigating factors that should be noted in favour of the Defendant. The Defendant is, as I have said, part of a family company structure, the head of the family having been involved in the industry for some 50 years and the company itself for some 25 years. It is, as Defence Counsel pointed out, engaged in an offensive industry (that is the nature of an abattoir industry) and it is significant that the Defendant has no prior record of any environmental offence. 41 The Defendant entered pleas of guilty to the three charges at the first return date, and not only by that action but in the evidence of Mrs Belbeck the company has expressed profound contrition and remorse that the offences were committed. The company has freely and candidly stood up and been counted for its responsibility in the offence, fully co-operating with the investigating officials of the Prosecutor, and it is also to the Defendant's credit that it seeks to attain the best relations with neighbours. That is not I think a mere pious hope, as the evidence indicates that the public meetings that the company arranged including tours and inspections of the premises for interested and affected residents indicates the bona fides of the company to have good relations with its neighbours and to genuinely seek to remedy the problems which it realised the neighbours were suffering with the operation of the abbatoir. 42 I have already mentioned the considerable sum of money that the Defendant expended on seeking to solve the problem once it was realised something was not functioning properly at the plant, and I have also earlier referred to the fact that since the abattoir has been non-operational since March 2003 the Company has engaged environmental consultants to propound a different system for waste water effluent disposal which, subject to approval of the local Council and the Department under the Protection of the Environment Operations Act, should ensure a more efficient system of handling wastewater effluent at the plant, and enable the abattoir use to be resurrected. No doubt, the fact that the abattoir, when operational for that brief period of time following commissioning, employed up to 300 people and has since ceased to employ that many (but only employs 30) is a matter of significance in the local community in Orange. 43 No doubt, it was all these matters that led Defence Counsel at the end of his submission to put to the Court a submission that the Court should consider as an appropriate sentence in the present case not the imposition of a fine following conviction, but an order under s 250(1) par (c) of the Protection of the Environment Operations Act, that is an order that the offender carry out a specified project for the restoration or enhancement of the environment in a public place or for the public benefit. 44 In putting that submission, Defence Counsel indicated that he was not seeking the exercise of the discretion favourable to the Defendant conferred by the Crimes (Sentencing Procedure) Act 1999, s 10 nor was he opposing the registering of a conviction for the offences as admitted. However, the submission was necessarily incomplete inasmuch as it did not postulate a specific project for restoration or enhancement of the environment, and it did not, of course, commit the Company to a pecuniary or financial obligation. Instead, the submission proceeded along the lines and conformably to recent decisions in this Court whereby such orders have been made, not only in lieu of penalty but by suspending the penalty otherwise imposed upon conviction. 45 An example of that is to be found in the decision of Cowdroy J in Environment Protection Authority v Hines [2004] NSWLEC 107, a decision on 13 February 2004. In that case, the Environment Protection Authority requested, and the Defendant did not demur, to such orders being made. Today, although the matter had been given little prior notice, Prosecuting Counsel, upon instructions, formally opposed the making of an order pursuant to s 250(1)(c) of the Act. 46 I should also have noted that the Defendant had earlier indicated a preparedness to submit to a publication order also made pursuant to s 250, this time subsection (1)(b) of the Act, notifying the public of the consequences of these proceedings. The form of order handed up contemplated an outcome of the imposition of a fine, and Prosecuting Counsel recognised the need for that to be appropriately amended, if in lieu of fine, an order pursuant to s 250(1)(c) is favoured. 47 In all of the circumstances as I have related them, I am satisfied that it is appropriate in the present case to register a conviction in respect of the admitted offences. This is because of my assessment of the seriousness of the offences and the gravity both in terms of objective and subjective factors in the case. 48 The Defendant's culpability is nonetheless significantly mitigated. My finding would be that it ultimately was not well advised to commission the abattoir while this anaerobic pond, an essential integer in the wastewater effluent system, had in it diluted waste waters from the boning operation. This is not to be wise after the event, but recognises that a series of biological ponding systems for the treatment of wastewaters is a well known phenomenon, and the evidence does not lead me to conclude that the discovery of the problem or the cause of the odour problem by Mr Mitchell was some form of scientific breakthrough. It was to me simple good sense which ought to have been appreciated itself before the plant was commissioned, not six months after it had been operating, manifesting acute odour problems for the community. 49 However, all of the mitigating factors that I have mentioned operate in favour of the Defendant, including the early pleas to the charges, the contrition, the total co-operation with the Environment Protection Authority investigators, the responsible way in which the Defendant attempted to solve the problem, did not run away from it or seek to conceal it but faced its complainants openly and in a spirit of co-operation and attempted to solve the problem, failed to do so until Mr Mitchell came on the scene. All these factors together with its outstanding record in the industry, the fact that it was employing up to three hundred people in the Orange township when operational. It has been operating in the industry for 25 years. The founder of the family Company has been involved in the industry for 50 years. Its proud environmental record and its proud record in the industry - note that it is one of the fourth or fifth largest players in the industry - all these facts significantly mitigate the sentence to be imposed, as does the principle of totality of sentence which applies to the three admitted offences. 50 In my view, the totality of criminality to be reflected in the overall penalty in this case, putting aside for the moment the mitigating factors, would be a penalty in the order of $60,000. However, that should, for all of the mitigating factors that I have indicated, lead to an overall reduction of the penalty for the overall three offences to $30,000 (ie an overall reduction of 50 percent). If I were to impose a fine for the three offences, the total fine for all three offences for the reasons given, would be in the order of $30,000. 51 In so deciding, I also note the preparedness of the Defendant to pay the Prosecutor's costs in this matter in the sum agreed or as assessed in accordance with the Act. I have been informed that those costs are likely to be in excess of $40,000, a sum which in my view is considerable but is no doubt reflective of the significant amount of paperwork that has gone into not only the three present charges but the two allied charges which I have been informed at the beginning of the day are not to be proceeded with. 52 In the circumstances, I am of the opinion that the Defendant should have the benefit, if it chooses, of an order under section 250(1)(c) of the Act in lieu of the penalty that I would otherwise impose, that is $30,000. Since any such order would need to be fleshed out in a specific way, I have decided that the appropriate way to proceed, is for me to register in each of the three cases my decision of conviction, suspend the question of penalty to give the Defendant the opportunity within the next 28 days to come forth with a proposal which may or may not meet with the approval of the Prosecutor for an order under section 250(1)(c), and the Prosecutor the opportunity to reformulate the order under section 250(1)(b) if such order is also to be sought. 53 For all of the foregoing reasons, I should apportion the fine in each case. For simplicity's sake I will impose the same fine of $10,000. I would impose the fine of $10,000 in each of the three cases if I were to proceed to impose a penalty. However, for the reasons given, the question of penalty is reserved. In the three cases I simply make the following:-

1. The Defendant is convicted of the offences charged.
2. The question of penalty is reserved.
3. The Defendant to have liberty to apply to the Court within 28 days for the making of an order pursuant to section 250(1)(c) of the Protection of the Environment Operations Act 1997. Such order to be made in lieu of the imposition of any fine, and the Prosecutor within the same period to have liberty to apply for any order as considered appropriate pursuant to section 250(1)(b) of the same Act.
4. In each case the order is made that the Defendant pay the Prosecutor's reasonable legal costs in the sum agreed or otherwise in accordance with the provisions of the Criminal Procedure Act 1986, s 253(2).
5. I think that the exhibits should at least for the present remain with the Court papers. Do you want me to dispose of these other two cases now while we're here, that is 50108 and 50109?

HOWARD: Your Honour, I'd ask that those matters be disposed of on final orders in relation to these matters.

HIS HONOUR: Is that convenient, Mr Robson, for those matters to also be stood over for final disposal when final orders are made in this case?

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