EPA v Goulburn Wool Scour Pty Limited

DATES OF HEARING: 26/04/2005 EX TEMPORE JUDGMENT DATE : 04/26/2005

PROSECUTOR Mr T G Howard (Barrister) SOLICITORS Environment Protection Authority LEGAL REPRESENTATIVES:

DEFENDANT Mr C J Leggat (Barrister) SOLICITORS Shaw Reynolds Lawyers

THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

50003 of 2003 EPA v Goulburn Wool Scour Pty Limited

JUDGMENT 1 Talbot J: Goulburn Wool Scour Pty Limited ("the defendant") is charged that on 5 February 2002 it committed an offence against s 120(1) of the Protection of the Environment Operations Act 1997 ("the PEO Act") in that it polluted waters known as Kangaroo Ponds and downstream thereof. Following a contested hearing in August 2003 I delivered judgment on 9 September 2003. The prosecutor requested that I state a case for the opinion of the Court of Criminal Appeal. Ultimately, in accordance with directions given by the Court of Appeal, a stated case was settled and referred to the Court of Criminal Appeal. 2 The findings made by the Court of Criminal Appeal necessitated the matter coming back to this Court to be finally determined. Essentially the Court of Criminal Appeal found that notwithstanding the defendant's belief to the contrary, it was not permitted under its licence to allow runoff from its property to waters as a release of the first flush of rainfall.

3 Following the decision of the Court of Criminal Appeal, the defendant made an application for special leave to appeal to the High Court. I am informed that the application for special leave to appeal has not been pursued. When the matter was called this morning, the defendant sought leave to change its plea from a plea of not guilty, to a plea of guilty. The prosecutor raised no objection to the change of plea. Leave was granted.

4 The hearing on sentence has proceeded today. The parties have jointly submitted that an appropriate course for the final determination of sentence would be for the defendant to be convicted of the charge and that an appropriate penalty would be either a fine in the vicinity of $20,000, taking account of any discount to which the defendant is entitled on the basis of utilitarian benefits arising from the ultimate conduct of the proceedings including the plea of guilty, or an environmental service order made pursuant to s 250(1)(c) of the PEO Act to the value of $20,000.

5 At or about the time of the commencement of the hearing today the parties agreed on a form of draft orders to be made pursuant to s 250(1)(c) if the Court was persuaded to exercise its discretion in the manner put to it in the joint submission. The prosecutor has not offered any further evidence specifically directed to the issue of sentencing but relies upon the circumstances that the Court is able to deduce from the evidence provided at the trial. The defendant relies upon an affidavit of its General Manager, Howard Arthur Kneebone. That affidavit was sworn on 18 April 2005 specifically for the purpose of the hearing today.

6 The prosecutor's position is that the licensee had an obligation not to pollute. Moreover, the Environment Protection Authority ("EPA") as regulator had given notice to the defendant stating its opinion that the licence was not an instrument that allowed or gave authority for the defendant to pollute waters outside the boundaries of its own lands. The prosecutor submits that the fact that the licensee had a different opinion and elected to rely upon its own view of the position, contrary to that of the regulator, is a risk that the defendant must accept and the consequences that flow from it.

7 I accept that the company held the view as expressed by Mr Kneebone that the existing first flush system used at the company's Yarra irrigation area was world's best practice and that at the time of the incident there was no other technology that could be applied at Yarra that would have prevented the discharge that occurred. Mr Howard, on behalf of the prosecutor, accepts that Mr Kneebone and hence the company may have held that opinion, but the prosecutor does not accept that there were no alternatives open to the defendant that would have prevented the discharge that occurred on the day in question.

8 Mr Leggat, who appears for the defendant, takes issue with Mr Howard in regard to that submission arguing that the alternatives to the company were to either remove all of the effluent material off site in some way or to close down the company's Goulburn operation altogether. Mr Leggat says that neither of these alternatives were regarded as practical options for a company that had an established business and plant at Goulburn.

9 Both Mr Leggat and Mr Howard looked at the relevant heads of consideration as they arise under s 241 of the PEO Act. Mr Howard submits that the commission of the offence caused actual harm to the environment by polluting the waters of Kangaroo Ponds, whereas Mr Leggat takes a slightly different view of the conclusions reached by this Court, in the judgment delivered in September 2003, to the effect that there was no evidence of actual harm. 10 I take the distinction between the two submissions to be that Mr Howard's argument is based upon the fact that the introduction of any substance to waters is to be regarded as harm in absolute terms, whereas Mr Leggat relies on the evidence that fails to disclose any physical harm to any living organism or other life. Whatever view the Court takes I agree with the description adopted by Mr Howard that, although not insignificant, the harm was of a relatively minor and transitory nature. The prosecutor, following that line of reasoning, accepts that the penalty for the offence in the circumstances of this case should be assessed at the lower end of the range contemplated by the maximum penalty of $250,000 provided for in the legislation 11 There is no question that the company had control over the causes that gave rise to the offence. I believe that I have already dealt adequately with the way in which the company regarded its actions and the explanation that is forthcoming in that respect effectively deals with the issues of what steps could or could not have been taken to avoid the incident that occurred on the day in question.

12 I have considerable evidence that persuades me that both the defendant and the prosecutor are to be congratulated for devising a scheme or programme whereby the overall operation by this company at Yarra in particular, but at Goulburn generally, can be improved with the introduction and application of modern technology which I accept to a very large extent has evolved as a consequence of the efforts of the defendant company. The recognition of the progress that is being made and has yet to be achieved is reflected in the current terms of what has been described as an interim varied licence issued to the company which in general terms and I do not propose to go into the specifics, authorises the discharge of runoff from the irrigation areas in the period immediately following specified rainfall provided that the runoff has bypassed the collection and first flush dams constructed on the irrigation area.

13 It has been explained to me that the interim licence has been issued in those terms in contemplation of the introduction of a Solar Evaporation Tube System (travelling under the acronym of "SETS"). I have the benefit of viewing a video demonstration of how the SETS system will work. My understanding is that it uses a gigantic plastic sausage like structure into which the effluent is delivered and then by means of air blown into the tube the liquid is evaporated, leaving a residue which can be utilised as a fertiliser by-product. The advantage of this system, by the way, is that it is claimed to be driven 99 per cent by solar energy. Furthermore, it is represented to me that the system can be adaptable to other industries.

14 I do not propose to go further into how the system works and what will happen at Goulburn other than to say this, that the evolution of SETS clearly is an innovation introduced by this company and to its credit it indicates that it is taking realistic steps at considerable cost to improve its environmental performance. In other words, this is not a company that gets by in the best way that it can while paying some sort of lip service to its environmental responsibilities. 15 This is further confirmed by the fact that despite operating at this site for well over twenty-odd years, it has only once previously been before this Court. That was in 1989 when it was convicted of the offence of contravention of a condition of its pollution control licence to the effect that the company was required to carry out its operations in an efficient manner. On that occasion the company was convicted and fined the sum of $7000.

16 The defendant has agreed to pay the prosecutor's costs in relation to not only the hearings in this Court but insofar as they relate to the proceedings in the Court of Appeal, the Court of Criminal Appeal, and the preparations involved in the application for special leave to appeal to the High Court. Those costs have been agreed in the sum of $125,000. In the context of a maximum fine of $250,000 and the relative seriousness of the offence, which I assess as being at the lower end of the scale, $125,000 is a significant amount.

17 In his affidavit Mr Kneebone has been at some pains to address a number of issues that go to the company's antecedents and its behaviour as a corporate citizen. I accept that there has been a significant degree of co-operation with the authorities charged with the regulation and control of pollution, not only in relation to the investigation of the incident the subject of the charge but subsequently concerning the development of the new technology, particularly SETS, where the company has involved the authorities by keeping them abreast of what is occurring in that field. 18 The s 250 orders that are proposed involve rehabilitation and restoration works to part of the creek system known as Kangaroo Ponds. Mr Kneebone demonstrates in his affidavit that the agreement to carry out these works has been reached following consultation, co-operation with and the agreement of a local Landcare group, including the owner of the land upon which the work will be carried out, who is an instrumental person in the conduct of the affairs of that group.

19 The defendant, as Mr Kneebone points out, is a company operating an important industry that not only provides employment but a service to wool producers and processors in the recovery of a resource that might otherwise be lost if the scouring process was not undertaken. There are a number of programmes in which the company has been involved as a responsible corporate citizen in addition to the development of the SETS process. It is apparent that this company takes a responsible attitude to achieving high environmental performance in what is necessarily a pollutant producing industry. Mr Kneebone explains this involvement in some detail. I accept what he says in that respect. The prosecutor does not seek to be heard contrary to that evidence. Moreover, the company involves itself in community projects and is recognised for its beneficial place in the community, as is stated in a number of testimonials brought forward by Mr Kneebone in support of the company's reputation, in respect of which it has considerable pride.

20 The Crime (Sentencing Procedure) Act 1999 Part 3 applies to sentencing procedure generally and I have had particular regard to the matters that are set out in s 21A in finding that there are no serious aggravating factors that need to be taken into account. I have briefly referred to the record of the company generally and I am satisfied that once the company became persuaded of the error of its approach to the terms of its licence it showed a reaction that indicated its concern to meet its obligations. Ultimately when faced with the situation that it was placed in by the decisions of the higher courts, it entered a plea of guilty, thereby providing a utilitarian benefit not only to the Court but to the litigants in terms of truncating what could otherwise be a lengthy hearing. That same utilitarian benefit is extended by the very commendable high level of co-operation that both the prosecutor and the defendant have shown by what is effectively a joint presentation today as to the way in which the defendant should be punished for the offence. 21 I accept that a penalty in the order of $20,000 is appropriate having regard to the whole of the circumstances including a consideration of the seriousness of the offence, the mitigating factors and the overall power of the Court to take all of those matters into account in exercising its discretion as to the appropriate penalty. This includes the power to reduce a penalty that would otherwise be imposed before mitigating and utilitarian factors are taken into account.

22 I accept that it is appropriate in the circumstances to exercise the Court's discretion in the manner suggested to me by the parties. The Court in exercising its own discretion has reached the same conclusion. It follows therefore that the company will be convicted of the offence. The only order that the Court proposes to make in relation to penalty is that drafted by the parties and submitted for consideration by the Court pursuant to s 250(1)(c) of the PEO Act.

23 The order so far as is practicable outlines the course to be taken by the company and the amount of its liability in relation thereto. It is envisaged that the company will pay an amount of $20,000 to a programme of works as recommended by a certified bush regenerator. The works are to include the removal of weeds, noxious plants and a regeneration of the area from which the weeds are removed including mulching and planting of alternative species. The number of hours of work is expressed as a minimum. The amount of money to be expended is expressed as a maximum. The number of seedlings to be introduced is specified and the identity of the noxious species is included in the order. There is a time for completion.

24 I agree with the submissions put to me that as far as practicable the works have been made the subject of a clear and concise specification. I agree that the works fall within the ambit contemplated by s 250(1)(c) of the PEO Act in that they involve a specified project for the restoration and enhancement of the environment in the area of Kangaroo Ponds. The works are not works required as a consequence of any environmental harm or damage caused by the defendant. They are what I described during submissions as a payback order in that the defendant has agreed to make a contribution to the enhancement of the environment in the immediate area of its operations, thereby providing a public benefit rather than paying a monetary penalty. The cost to the defendant of course will be significantly more than the monetary cost of the $20,000 in direct payment as the company will be involved in the organisation and implementation of the works, so that it is again showing a responsible attitude in response to the events that have occurred.

25 The formal orders of the Court are orders one to eleven in the draft orders submitted by the parties, initialled by me and the further order that either party has liberty to apply on five days notice in relation to implementation or variation of the orders.

26 The last order is made as a consequence of an issue raised by me with the parties, namely whether as a consequence of some unforeseen event there is a practical difficulty in complying with the letter of the orders made pursuant to s 250(1)(c) and is designed only to take account of any such difficulty. The matter was raised by me as I was cognisant of the provisions of s 251, as no doubt the defendant is equally aware, that a person who fails to comply with such an order is guilty of an offence against the Act, which attracts a penalty on a daily basis, so that a failure to comply with an order made pursuant to s 250 of the PEO Act attracts the very significant penalty of $120,000 for each day the failure to comply with the order prevails. 27 It is for that reason that I have made provision for the defendant to be in a position or for the prosecutor jointly with the defendant or on its own account to apply to the Court in order to insulate the defendant against an unexpected event which might otherwise not be avoided and cause it to be exposed to a very significant detriment. 28 However, having taken that course, it is not designed to allow the defendant to reapproach the underlying terms of the order but merely to deal with difficulties that might be encountered in the process of implementation of the spirit of the order. ooOoo

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.