Slade v Kempsey Shire Council

Court of Appeal (NSW)|2017-11-17|Before: McColl JA, Macfarlan JA, Biscoe J, Sheahan J

Solicitors: Self-represented Appellants Higgins & Dix Lawyers & Conveyancers (Respondent) File Number(s): CA 2017/87015 Decision under appeal Court or tribunal: Land and Environment Court Jurisdiction: Class 4 Citation: [2015] NSWLEC 135 and [2017] NSWLEC 10 Date of Decision: 21 August 2015 27 February 2017 Before: Biscoe J (21 August 2015)Sheahan J (27 February 2017) File Number(s): 2014/40313 and 2016/165114

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE [This headnote is not to be read as part of the judgment] In 2011 Mr Michael Slade (the first appellant) became the lessee of part of a Crown reserve at Kempsey, managed by Kempsey Shire Council (the respondent). Mr Slade conducted a recycling business on the site, with his father, Mr Barry Slade (the second appellant). Their company, Mid Coast Skip Bins & Metal Recycling Pty Ltd, took over the lease in 2011. The site was vacated in early 2012 and the lease was terminated by the Council later that same year. In 2012 the Environment Protection Authority issued a Clean-Up Notice to the company and each of the appellants under s 91 of the Protection of the Environment Operations Act 1997 (NSW). As satisfactory clean-up did not occur, in 2013 the EPA issued a notice to the Council under s 92(1) of the PEO Act requiring it to clean up the site. Accordingly, the respondent effected the clean-up, and served notices on each of the appellants under s 104(2) of the PEO Act requiring them to pay the respondent's reasonable clean-up costs and expenses. In Class 4 proceedings commenced in the Land and Environment Court, the respondent sought to recover the expenses owed by the appellants as a statutory debt under s 105(1) of the PEO Act. Following a hearing on 21 August 2015, Biscoe J determined the issue of liability in favour of the respondent and entered judgment for it in an amount to be assessed by the Court, or as agreed by parties: [2015] NSWLEC 135. After a subsequent hearing before Sheahan J in June 2016, his Honour quantified the amount for which the respondent was entitled to judgment against the appellants: [2017] NSWLEC 10. In this Court, the appellants contended that, for the respondent to be entitled to recover its clean-up costs and expenses, it was necessary for the respondent to have effected that clean-up pursuant to the Clean-Up Notice issued by the EPA. The appellants claimed that this did not occur because the EPA's notice required the respondent to provide an Asbestos Assessment Report and this was, allegedly, not complied with. The Court held: 1. The respondent's right to recover its clean-up expenses owed from the appellants as a statutory debt under s 105 was not dependent on its compliance with the EPA's notice to it. 2. Contentions relating to an Asbestos Assessment Report submitted by the respondent to the EPA were not raised before Biscoe J and were not permitted to be raised on appeal. Accordingly the Court dismissed the appeal with costs.

Judgment

McCOLL JA: I agree with Macfarlan JA.
MACFARLAN JA: In 2011 Mr Michael Slade, the first appellant, became the lessee of part of a Crown reserve at Kempsey managed by Kempsey Shire Council, the respondent. Mr Slade conducted a recycling business on the site, with the assistance of his father, Mr Barry Slade, the second appellant. On 21 June 2011 the business was incorporated and the company, Mid Coast Skip Bins & Metal Recycling Pty Ltd, took over the lease. The company vacated the site on 30 April 2012 and the lease was terminated by the respondent on 16 May 2012.
On 10 August 2012 the Environment Protection Authority ("EPA") issued a Clean-Up Notice to the company under s 91 of the Protection of the Environment Operations Act 1997 (NSW) (the "PEO Act"). As well, the respondent issued Clean-Up Notices under s 91 to each of the appellants.
As satisfactory clean-up did not occur, on 17 January 2013 the EPA issued a notice to the respondent under s 92(1) of the PEO Act requiring it to clean up the site. A variation of 17 April 2013 extended the time for compliance with the notice.
After it undertook substantial clean-up work at the site, on 7 November 2013 the respondent served notices on each of the appellants under s 104(2) of the PEO Act requiring them to pay to the respondent the respondent's reasonable clean-up costs and expenses of $1,291,728.26.
When the appellants failed to pay this amount, the respondent commenced Class 4 proceedings against them in the Land and Environment Court seeking to recover it as a statutory debt under s 105(1) of the PEO Act.
In accordance with an order of the Court, and as agreed by the parties, a hearing on all issues other than the quantum of the alleged debt took place before Biscoe J. By judgment of 21 August 2015 his Honour determined the issue of liability in favour of the respondent and entered judgment for it against the appellants in an amount to be assessed by the Court, or as agreed by the parties ([2015] NSWLEC 135). The outstanding issue of quantum was dealt with at a hearing before Sheahan J in June 2016. By his judgment of 27 February 2017, his Honour quantified the amount for which the respondent was entitled to judgment against the appellants as $1,286,452.62 ([2017] NSWLEC 10). The appellants were represented by counsel before Biscoe J but appeared without representation before Sheahan J.
The appellants' appealed to this Court pursuant to s 58(1) of the Land and Environment Court Act 1979 (NSW), against both decisions. The respondent initially contended that the appellants required leave to appeal against Biscoe J's decision but did not press that contention. Although Biscoe J's decision was interlocutory and the appellants would have needed leave to appeal against it prior to final judgment in the proceedings (Supreme Court Act 1970 (NSW), s 101(2)(e)), challenges to interlocutory judgments may be made, without leave, in the course of an appeal from a final judgment (Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478; [2002] HCA 22). Accordingly, the appellants may challenge Biscoe J's decision in the course of their appeal against the final judgment of Sheahan J, without the need to obtain leave to appeal.
On the appeal, the appellants, who were unrepresented, contend that, for the respondent to be entitled to recover its clean-up costs and expenses from the appellants, it was necessary for the respondent to have effected that clean-up pursuant to the Clean-Up Notice that the EPA issued to the respondent. The appellants contend that this did not occur because the EPA's requirement in its notice for the respondent to provide an Asbestos Assessment Report was not complied with. They submit that the report provided, that of Mr William Ellis, was not one, as required by the notice, "prepared by a qualified and experienced Occupational Asbestos Hygienist".
For the reasons given below, I consider that these contentions should be rejected and that the appeal should be dismissed with costs.

Protection of the Environment Operations Act 1997

Section 6 of the Act, relevantly for this case, defines the EPA as the "appropriate regulatory authority" for the purposes of the Act.
Relevant sections of the Act are as follows: "91 Clean-up by occupiers or polluters (1) Notices The appropriate regulatory authority may, by notice in writing, do either or both of the following: (a) direct an owner or occupier of premises at or from which the authority reasonably suspects that a pollution incident has occurred or is occurring, (b) direct a person who is reasonably suspected by the authority of causing or having caused a pollution incident, to take such clean-up action as is specified in the notice and within such period as is specified in the notice. Note. pollution incident and clean-up action are defined in the Dictionary. (2) Notices by EPA in emergency The EPA may, if it considers that it is necessary to do so because of an emergency, give the clean-up notice even if it is not the appropriate regulatory authority with respect to the pollution incident. (3) Reports The clean-up notice may require the person to whom the notice is given to furnish reports to the appropriate regulatory authority regarding progress on the carrying out of the clean-up action. (4) Recovery by person given notice If the person given a clean-up notice complies with the notice but was not the person who caused the pollution incident, the cost of complying with the notice may be recovered by the person who complied with the notice as a debt in a court of competent jurisdiction from the person who caused the pollution incident. … 92 Clean-up by public authorities (1) Directions to public authorities to take clean-up action If the EPA reasonably suspects that a pollution incident has occurred or is occurring, the EPA may, by notice in writing, direct a public authority to take such clean-up action as is specified in the notice. The public authority is authorised and required to take that action. (2) Voluntary clean-up action by public authorities If a public authority reasonably suspects that a pollution incident has occurred or is occurring, the public authority may take such clean-up action as it considers necessary. The public authority is authorised to take that action, whether or not it is directed to take clean-up action under subsection (1). (3) Operation of section Notices may be given, and action may be taken, under this section: (a) whether or not the EPA is the appropriate regulatory authority with respect to the pollution incident, and (b) whether or not a clean-up notice has been given under section 91, and (if such a notice has been given) whether or not the period specified in the notice under that section has ended. … 104 Compliance cost notices … (2) Clean-up by public authority A public authority that takes clean-up action under section 92 may, by notice in writing, require: (a) the occupier of the premises at or from which the authority reasonably suspects that the pollution incident occurred, or (b) the person who is reasonably suspected by the authority of having caused the pollution incident, or both, to pay all or any reasonable costs and expenses incurred by it in connection with the clean-up action. 105 Recovery of amounts (1) Recovery of unpaid amounts A regulatory authority or public authority may recover any unpaid amounts specified in a compliance cost notice as a debt in a court of competent jurisdiction. (2) Recovery by person given notice If the person given a compliance cost notice complies with the notice but was not the person who caused the pollution or pollution incident, the cost of complying with the notice may be recovered by the person who complied with the notice as a debt in a court of competent jurisdiction from the person who caused the pollution or pollution incident."
The respondent is a "public authority" for the purposes of ss 92, 104 and 105.

The relevant notices

The relevant part of the EPA's Clean-Up Notice to the respondent dated 17 January 2013 is as follows: "DIRECTION TO TAKE CLEAN-UP ACTION The Environment Protection Authority (the EPA) directs KEMPSEY SHIRE COUNCIL under s 92(1) of the POEO Act to take the following clean-up action: 1. Immediately secure the Premises to prevent unauthorised access. 2. Immediately take action to ensure that dust generation at the Premises is prevented and suppressed. 3. By 5pm 8 February 2013 submit a written report to Unit Head, EPA Waste Operations, Locked Bag 914, Coffs Harbour NSW 2450 detailing the results of a volumetric survey of the Waste and a characterisation and classification survey and assessment of the Waste. 4. By 5pm 8 February 2013 submit a written Asbestos Assessment Report to Unit Head, EPA Waste Operations, Locked Bag 914, Coffs Harbour NSW 2450 detailing a sampling and analysis methodology and the nature and extent of asbestos and asbestos contaminated material which are, or have the potential to be, hazardous to human health or the environment. The Asbestos Assessment Report must: i. Be prepared by a qualified and experienced Occupational (Asbestos) Hygenist. ii. Contain details of the nature and extent of asbestos and asbestos contaminated material at the Premises. iii. Must be sufficient in scope to provide a statistically valid assessment of the area where asbestos waste was stored and land applied at the Premises. 5. By 8 March 2013 remove all waste unlawfully stored and applied to land at the Premises to a place that can lawfully receive the waste. 6. By 15 March 2013 remove and/or remediate soils where it is evident soils have been potentially contaminated by the Waste. 7. By 22 March 2013 rehabilitate disturbed ground at the Premises including the capping to the old landfill. …" (emphasis added and other emphasis removed).
The recitals to the respondent's notice dated 7 November 2013 to Mr Michael Slade requiring payment of the respondent's reasonable costs and expenses included the following: "AA. On or about 10 August 2012, the EPA issued the Company with a clean-up notice, being clean-up notice No. 1506482. BB. The Company failed to comply with clean-up notice No. 1506482 in that the stockpile of waste containing asbestos remained at the Site. CC. On or about 7 November 2012, the Company was deregistered with the Australian Investment and Security Commission. DD. On or about 18 January 2013, the EPA issued Council, as a public authority, with clean-up notice No. 1510385. The clean-up notice was issued for the Site in accordance with section 92 (1) of the POEO Act. EE. Council complied with clean-up notice No. 1510385 at the Site, which included the use of Council staff and contractors for the assessment of the waste at the Site, treatment of the waste at the Site, removal of the waste from the Site, transportation of the waste from the Site to an appropriate location for the disposal of the waste. FF. Council incurred costs and expenses complying with the clean-up notice. GG. As: a. Michael Phillip Slade indemnified Council for any breach of Environmental Law in accordance with the First Lease; and b. Michael Phillip Slade was a director of the Company that indemnified the Council for a breach of Environmental Law; and c. Michael Phillip Slade was a person in control of the Site at times when waste was unlawfully transported and applied at the Site; Michael Phillip Slade is held responsible for the deposit of and stockpiling of the waste that resulted in Council being issued with clean-up notice No. 1510385. HH. As Michael Phillip Slade is responsible for the deposit of and stockpiling of Special Waste at the Site that gave rise to the issuing of clean-up notice No. 1510385, and in accordance with the indemnity provided in the First Lease and the Second Lease, Michael Phillip Slade is responsible for the costs and expenses incurred by Council complying with clean-up notice No. 1510385 in accordance with section 104(2) of the POEO Act" (emphasis added).
The recitals to the notice to Mr Barry Slade were in relevantly identical terms.

Mr William Ellis' report

Mr William Ellis, an environmental engineer, prepared for the respondent a report dated April 2013 entitled "Expert Report Relating to Asbestos Contamination and Waste Classification". The report concerned the subject property. It stated that it might be "used in litigation between KSC and the former leaseholder to the Site Mid Coast Skip Bins & Metal Recycling Pty Ltd" and that it was prepared in conformity with the Expert Witness Code of Conduct set out in Schedule 7 to the Uniform Civil Procedure Rules. The report identified the results of detailed investigations of material on the site, including suspected asbestos.
In his curriculum vitae attached to the report, Mr Ellis described his education as follows: "Education • Master of Engineering (Management), University of Technology Sydney, (2005). • Bachelor of Engineering (Honours), Newcastle University, 1997. • 24-hour Hazardous Waste Operations Occupational Health & Safety Training (February, 2002). • Asbestos Awareness Course, August 2005. • Certificates C and D in French, TAFE, NSW, November 2000."
Articles of which Mr Ellis was stated in the report to be a co-author included articles with the following titles: "Risk-Based Remediation of a Site Contaminated with Agent Orange Precursors" "Landfilling Biologically Hazardous Materials" "Review of Landfill Practice, Past and Present, in the Hunter Valley".

The judgments at first instance

In his 55 page judgment of 21 August 2015 Biscoe J considered the meaning of the expression "reasonably suspects" which is used in ss 92 and 104 of the POEO Act and also considered the concept of causation of a pollution incident referred to in those sections. Having made findings of relevant facts, his Honour concluded that the appellants were liable to pay to the respondent the amount of its clean-up costs.
In his judgment of 27 February 2017 Sheahan J quantified the amount to which the respondent was entitled as the amount to which I have earlier referred. His Honour said the following in relation to the point that the appellants did not raise before Biscoe J but seek to raise in this Court: "50 Relying on unspecified external information, of which no evidence was produced, the Slades criticised Ellis's involvement in the matter because he was not an asbestos hygienist or auditor, but his qualifications had been accepted by the EPA, and he disagreed about his needing others (Tp60, L22)."

Grounds of Appeal

The grounds of the appellants' appeal are as follows: "Justice Biscoe erred in finding at [82] that Mr Ellis' report appeared to be an Asbestos Assessment Report and at [83] the Respondent had complied with the clean-up notice issued by the Environment Protection Authority in circumstances where the clean-up notice required an assessment of waste to be undertaken by a qualified hygienist. Justice Sheahan erred in concluding that the Respondent was entitled to reimbursement of its costs in circumstances where it had not incurred such costs in accordance with s 92 of the Protection of the Environment Operations Act 1997 (POEO Act) (Judgment at [85]). In particular: (a) The clean-up action the subject of the costs compliance notice issued to the appellants under s 104 of the POEO Act was purported to be issued consequent upon a clean-up notice issued by the Environment Protection Authority (EPA) to the Respondent on 17 January 2013 (the s 92(1) Notice) (Judgment at [36]). (b) The purported Asbestos Assessment Report was undertaken by a person, Mr Ellis, who admitted he was not a qualified and experienced asbestos hygienist, contrary to the requirements of the s 92(1) Notice (Judgment at [89]). (c) The assessment of asbestos waste undertaken by Mr Ellis was not undertaken for the purposes of determining the scope and nature of clean-up action to be taken in connection with the s 92(1) Notice, but for a different purpose. (d) The Ellis report could not be used to determine liability or the reasonableness of the costs and expenses incurred by the Council in connection with the s 92(1) Notice in circumstances where the report was not prepared in connection with that Notice. Justice Sheahan erred in awarding costs associated with the preparation of the Ellis Report in circumstances where the report was not prepared in connection with compliance with the s 92(1) Notice."

DETERMINATION OF THE APPEAL

As noted earlier, the appellants argued on appeal that the respondent was not entitled under s 105(1) to recover its clean-up costs because it did not incur those costs in the course of its compliance with the notice issued to it by the EPA on 17 January 2013 (see [14] above). The appellants contended that this was so because the EPA's notice required the respondent to provide to the EPA a report by "a Qualified and Experienced Occupational (Asbestos) Hygienist". The appellants submitted that Mr Ellis' report, which was provided by the respondent to the EPA, was not such a report because Mr Ellis did not have relevant qualifications or experience.
The first answer to these contentions is that, for the following reasons, the respondent's rights under ss 104 and 105 were not dependent upon compliance with the EPA's notice to it.
Section 104(2), which authorises a public authority to issue a notice to the person responsible for pollution to pay clean-up costs, is, by its terms, conditioned upon the public authority having taken "clean-up action under s 92".
Section 92 has two limbs. First, under s 92(1) the EPA may direct a public authority to take clean up action. The public authority is authorised and required to act on the notice. Secondly, under s 92(2) a public authority may take clean-up action if it reasonably suspects that a pollution incident has occurred or is occurring. As the heading to s 92(2) indicates, action taken in accordance with that subsection is voluntary and not responsive to a notice.
As a result, even if the appellants' argument that the respondent did not comply with the EPA's notice to it is correct, the respondent's clean-up action was taken of its own volition and thus in accordance with s 92(2). Accordingly, the clean-up action was taken under s 92 and the rights conferred by s 104(2) and s 105(1) were attracted.
The appellants argued that the respondent should not be permitted to assert that its clean-up work was authorised by s 92(2) because it had elected to rely upon s 92(1). The respondent's notices to the appellants under s 104(2) asserted that the Council's clean-up occurred pursuant to the EPA's notice to it and therefore, by inference, pursuant to s 92(1), rather than s 92(2) (see [14] and [15] above). However, in my view the respondent is not thereby precluded from relying on s 92(2). Its reliance in the notices on s 92(1) did not constitute an election between inconsistent rights or remedies (Agricultural & Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570; [2008] HCA 57 at [56]-[58]). Rather, the respondent chose to call in aid one source of power rather than another. An analogy may be drawn with the decision in Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359; [1931] HCA 21 where in a contractual context the following established principle was confirmed: "It is a long established rule of law that a contracting party, who, after he has become entitled to refuse performance of his contractual obligations, gives a wrong reason for his refusal, does not thereby deprive himself of a justification which in fact existed, whether he was aware of it or not" (at 378).
A second reason that the appellants' argument fails is that even if the requirement in the EPA's notice to the respondent that a particular type of report be provided was not complied with, that would not have the consequence that the respondent's clean-up action was not taken pursuant to the notice. On this assumption, the respondent complied with some but not all parts of the notice. There is no reason why its assumed non-compliance with the report requirement in the notice should deprive the clean-up action of that character. In particular, s 104(2) does not stipulate that the public authority must have complied fully with a notice under s 92(1) for s 104(2) to be applicable. It simply requires the clean-up action to have occurred under s 92.
The third reason that the appellants' argument fails is that, for the following reasons, it is founded upon a proposition (that Mr Ellis' report provided to the EPA did not comply with the EPA's notice) that was not raised at the appropriate time at first instance and should not be permitted to be raised on appeal.
The respondent's point concerning Mr Ellis' report was relevant to the question of liability that Biscoe J dealt with. No objection was taken before Biscoe J to the admission of Mr Ellis' report, nor any argument put to the effect of that now sought to be raised. As the respondent submitted on appeal, if the point had been raised before Biscoe J, evidence might have been led to deal with it. The respondent referred in this regard, inter alia, to evidence as to what an "Occupational (Asbestos) Hygienist" is and how qualifications and experience as such are obtained. As well, evidence might have been led as to the EPA's apparent acceptance of Mr Ellis' report as conforming with the requirement in its notice, with a view to arguing that its conduct amounted to an implicit variation of the terms of the notice. Section 110 of the PEOA permits the variation of notices and, whilst it provides that that may be done by "a subsequent notice or notices", it does not in my view limit the methods by which a variation may be effected.
The point now sought to be raised was raised at the quantum hearing before Sheahan J when Mr Ellis said in evidence that he did not consider himself to be an "Occupational (Asbestos) Hygienist" but the appellants did not seek leave to re-open the liability issue determined by Biscoe J. If they had, the respondent would no doubt have opposed the grant of that leave on the basis that further evidence, and therefore a further hearing, would have been required. That the appellants were not entitled to re-open the issue determined by Biscoe J as of right, but had to seek leave to do so, is indicated by O'Toole v Charles David Pty Ltd (1991) 171 CLR 232; at 245, 260 and 298; [1991] HCA 14 from which it is made clear that a party to proceedings in which an issue is determined separately is, subject to appeal, bound by that determination and, in particular, cannot challenge it at a later stage of the proceedings at first instance.
Whilst Biscoe J's decision was interlocutory when made, Sheahan J's subsequent delivery of the judgment on quantum finalised the proceedings and rendered Biscoe J's judgment part of the means by which the proceedings were finally determined at first instance. The established principles relating to the raising of new points on appeal accordingly apply to the appellants' attempt to raise their point referrable to liability that was not raised before Biscoe J. In accordance with authorities such as Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438; [1950] HCA 35, leave to raise a new point should not be given where "evidence could have been given [in the court below] which by any possibility could have prevented the point from succeeding". For the reasons I have given, that is the case here.
One remaining matter raised by the appellants to which reference needs to be made is their assertion that, as an expert witness, Mr Ellis breached his duties to the Court by not disclosing his alleged lack of expertise to Biscoe J.
In my view, there is no evidence that such a breach occurred. Mr Ellis' qualifications and experience were clearly identified in his report (see [18] and [19] above). They entitled him to give expert evidence before Biscoe J. That he may not have fitted the description in the EPA's notice of an "Occupational (Asbestos) Hygienist", an occupation that was unexplained and undefined by the evidence, did not disentitle him to do this, particularly where no objection to him giving evidence was taken before Biscoe J.
Finally, I add that I do not consider there to be any substance in the appellants' argument that the respondent should not have relied on Mr Ellis' report before Biscoe J because that report was allegedly not prepared for the purposes of assisting compliance with the EPA notice. If, as Biscoe J accepted, the report contained relevant expert evidence, the purpose for which it was prepared was irrelevant.

Order

I propose that the appeal be dismissed with costs.
BARRETT AJA: For the reasons stated by Macfarlan JA, the appeal should be dismissed with costs. I would only add, in relation to the matter canvassed by his Honour at [26]-[28], that the Council's action was sustainable by reference to s 92(2) on the footing that the powers or remedies created by the two limbs of s 92 are not inconsistent and that receipt by the Council of the EPA's notice of 17 January 2013 cannot but have caused it to suspect that a pollution incident had occurred.

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. Decision last updated: 23 February 2018

Environment Operations Act 1997(NSW)

(Supreme Court Act 1970(NSW)

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