The Hills Shire Council v Kinnarney Civil & Earthworks Pty Ltd & Kinnarney

STATUTORY MATTERS REQUIRED TO BE TAKEN INTO CONSIDERATION 3It is necessary to take into account the purposes of sentencing in s 3A of the Crimes (Sentencing Procedure) Act 1999 (CSP Act): (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. 4The Court is required to take into account the matters in s 241(1) of the POEO Act so far as they are relevant: 241 Matters to be considered in imposing penalty (1) In imposing a penalty for an offence against this Act or the regulations, the court is to take into consideration the following (so far as they are relevant): (a) the extent of the harm caused or likely to be caused to the environment by the commission of the offence, (b) the practical measures that may be taken to prevent, control, abate or mitigate that harm, (c) the extent to which the person who committed the offence could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence, (d) the extent to which the person who committed the offence had control over the causes that gave rise to the offence, (e) whether, in committing the offence, the person was complying with orders from an employer or supervising employee. 5The Court is also required to take into account the aggravating and mitigating factors identified in s 21A of the CSP Act to the extent that the facts allow and it would not be contrary to law to do so (s 21A(4)). The Court cannot have regard to an identified aggravating factor if it is encompassed by the elements of the offence (s 21A(2)). In this case the prosecutor submits that none of those mitigating factors are present and that the following aggravating factors are present: (a)in respect of Mr Kinnarney, he has a record of previous convictions (s 21A(2)(d)); (b)in respect of both defendants, the loss and damage caused by the offences was substantial (s 21A(2)(g)); and (c)in respect of both defendants, the offence was committed for financial gain (s 21A(2)(o)). 6The appropriate sentence should be determined by an "instinctive synthesis" of all the relevant objective and subjective circumstances. That is, the Court has to identify all the relevant circumstances, discuss their significance and then make a value judgment as to what is the appropriate sentence. The sentence must be proportionate to the seriousness of the offence considered in light of the objective circumstances. Within the upper limit of proportionate punishment the interplay of other relevant factors will point to what is the appropriate sentence in all the circumstances of the particular case. The objective circumstances together with the purposes of sentencing also inform the lower limit of sentencing discretion.

Maximum penalty 7The maximum penalty serves as an indication of the relative seriousness of the offence. In the present case the maximum penalties are large. The maximum penalty in the case of a corporation is $1 million and in the case of an individual is $250,000: s 143(1) POEO Act.

Harm to the environment 8The relevant environment is the rural property on which the waste was deposited. The issue of the extent of harm caused or likely to be caused to the environment concerns pollution and damage to that property. The subject land was zoned Rural 1(a). The objectives of that zone in the Baulkham Hills Local Environmental Plan 2005 are: (a)to ensure that existing or potentially productive agricultural land is not withdrawn prematurely from agricultural production, and (b)to ensure that development is carried out in a manner that minimises risks from natural hazards and does not unreasonably increase demand for public services and public facilities, and (c)to provide land on which development may be carried out that assists the operation and functioning of development in adjoining residential areas, and (d)to ensure that development is designed and carried out having regard to adjoining land uses and the natural environment, and (e)to ensure that development is designed and carried out having regard to the rural and heritage character of the surrounding area, and (f)to ensure that development of land within the zone does not hinder the proper and orderly development of any future urban land. 9These objectives are hardly compatible with this uncontrolled land fill. In the Rural 1(a) Zone, the "filling of land" with clean (uncontaminated) excavated natural, earthy material is development allowed with consent. In the present case no consent was obtained. There is no evidence as to whether or not the Council would have given consent for filling to the extent and in the manner which it was carried out. However, it is a reasonable inference that the Council would not have consented to fill containing contaminants, asbestos and other demolition material nor to fill being placed in such a way as to damage vegetation, as occurred. 10As to harm to the environment generally, I accept the evidence of an expert, Mr Nicholas Passlow, that the landfill material on the two fill bodies on the subject land had a chemical contamination exceeding the Soil Investigation Level for rural/residential property, adverse aesthetic materials, and asbestos contamination. Mr Passlow expressed the opinion that: the fill material requires remediation risk assessment to address the long term health and safety of occupants of the site and the environment. 11Mr Passlow further said that: In my opinion, to achieve that goal, a Remediation Action Plan (RAP) should be developed for the site, inclusive of input from The Hills Shire Council, to achieve appropriate outcomes and reinstate the beneficial use of the site as a rural/residential property. It is likely that the RAP will require removal and/or remediation of both Fill Body 1 and Fill Body 2. 12In my earlier judgment at [94], I accepted the evidence of Mr Passlow and Mr Ziemowit Wierzchowski, another expert, of the estimated volume and weight of the material in each of Fill Bodies 1 and 2 and, taking into account the history of filling on, and movement of fill around, the property, found at [98] that: a substantial proportion of the material ... was transported and placed there by Mr Kinnarney in his company's truck and trailer in the period of about seven months prior to 1 July 2010. 13I concluded at [137]: the defendants transported 100 per cent of the material comprising Fill Body 2 and approximately 60 per cent of the material comprising Fill Body 1. 14I made no finding that it was Mr Kinnarney who pushed fill over the edge of the escarpment at Fill Body 1. This is significant because this probably represented the greatest environmental damage. However, that fill was part of the tonnage transported to the subject land by the defendants. 15The fill material transported contained not only asbestos contamination but bricks, agricultural pipe, tiles, cement, asphalt, gyprock, wood and clods of clay. 16Fill Body 2 was an area of about 25 metres by 25 metres and up to five metres deep in places. 17Photographs taken by the Council officers on 1 July 2010 showed that the fill had been partially pushed over native bushland and that in Fill Body 1 several small native bushes and ground cover species had been damaged by the dumping of fill at this location. Several large trees were covered with fill around the trunk. 18The quantity and positioning of the fill in the two fill bodies is such, I infer, that it is impracticable for that material to be removed from the subject land. However, the major responsibility for this, in my view, rests with the landowner, Mr Ralph Clark, who instigated and directed the quantity and positioning of the fill. 19The prosecutor submits that the land containing the fill bodies has been, for all practical purposes, rendered incapable of being built upon without substantial measures being taken to ensure the landfills are stable and that the value of the land has been devalued. On the evidence, I am unable to make the findings. 20The significance to the environment of the presence of asbestos in the fill is given emphasis by the fact that cl 42 of the Protection of the Environment Operations (Waste) Regulation 2005 makes detailed provision for the transport of material containing asbestos. The defendants are not to be punished for breaching the requirements of this regulation. However, I can take cognisance of the seriousness with which the potential for harm to the environment, including humans, posed by asbestos in transported waste is regarded by the making of this regulation and by its detailed regulatory contents. I infer that it would be unlikely that the land containing the fill bodies could be built upon without a survey for, and removal of, the asbestos. 21The evidence shows that other contaminants are also present, including, in three samples analysed, levels of Benzo(a)Pyrene which exceed accepted levels. 22The landowner, Mr Clark, wanted the fill in order to use the fill bodies as a firebreak. On the evidence, the firebreak fulfils an important function. The prosecutor submits that future landholders will be inhibited in what they can otherwise do with those portions of the subject land. On the evidence, I am not able to make that finding nor express a conclusion as to the likelihood of future landholders wanting to do anything in particular on those portions of the subject land. 23I conclude that the transporting of the fill to, and the deposit of it on, the subject land has caused significant degradation of the land. Insofar as that degradation is due to the presence of asbestos fragments and other contaminants, it has the potential to cause harm to the health or safety of human beings. Because of the inferred cost of remediation I conclude that the offences have caused significant actual and likely harm to the environment.

Foreseeability of harm 24The environmental harm discussed above was reasonably foreseeable by the defendants.

Practical measures to prevent, control, abate or mitigate harm 25The defendants could have prevented the environmental harm caused or likely to be caused by the offences if they had not committed the offences. So far as concerns importation onto the subject land of asbestos, the harm could have been mitigated had the defendants complied with the law relating to the transportation of waste containing asbestos: cl 42 Protection of the Environment Operations (Waste) Regulation. The defendants did not take any practical measures to prevent or mitigate the harm.

Control over causes 26The defendants had control over the causes giving rise to the offences. 27However, it should be taken into account in the defendants' favour that the placing of the fill was not at their instigation but at the instigation of the owner of the subject land, Mr Clark. An extraordinary aspect of the case is that the prosecutor Council granted Mr Clark an indemnity against prosecution within weeks after his initial interview by Council officers in July 2010, and it was established at trial that Mr Clark had lied in that interview when he said that he did not receive any money for the fill.

State of mind and reason for offending 28A statutory aggravating factor is if the offence was committed for financial gain: s 21A(2)(o) CSP Act. The offences were committed in the course of running a business. The prosecutor submits that it was committed for financial gain to save the cost of having to pay tip fees when transporting waste to a licensed waste station. The invoices in evidence indicate that the corporate defendant paid the owner of the subject land a little over $18,000 for tipping the waste. I accept that the offences were committed as a way of reducing costs.

Conclusion as to objective seriousness 29I conclude that the objective seriousness of the offence was moderate.

SUBJECTIVE CONSIDERATIONS 30An aggravating subjective consideration is that on 19 August 2011 Mr Kinnarney was found guilty in the Local Court of two related offences against s 125 of the Environmental Planning and Assessment Act 1979 of carrying out development without development consent by the filling of land and clearing of bushland on Mr Kinnarney's own property between 17 December 2007 and 15 July 2009, before the subject offences. The material deposited was similar to that transported in the present case. In respect of the first offence (filling of land) he was fined $5,000, and ordered to pay court costs of $81 and the prosecutor council's professional costs of $110,260. The quantum of the costs order was taken into account in fixing the amount of the fine. In respect of the second offence (clearing of bushland), without proceeding to conviction the Court imposed a two year good behaviour bond. 31The prior convictions were recorded after the commission of the subject offences and therefore are not relevant to determining whether Mr Kinnarney has been deterred by previous punishment. However, they are relevant to show that the current offences are not uncharacteristic aberrations. 32The prosecutor submits that, Mr Kinnarney having been caught transporting waste to his land and charged with offences in respect of that activity, the defendants took the opportunity when it arose in late 2009 to use the neighbouring land as the destination for the waste material. Given the primary role of Mr Clark, the neighbouring landowner, in instigating the arrangement with Mr Kinnarney, I am not inclined to accept that there was a conscious nexus in Mr Kinnarney's mind between the earlier offences and the later transportation to the neighbouring land. 33There is no evidence of remorse or of good character. 34The defendants provided some assistance to the prosecutor by way of information concerning invoicing and payments, and the true nature and extent of the role of the owner of the subject land, Mr Clark, which helped to expose untruths by that person.

DETERRENCE 35General deterrence is important. That is, the penalty imposed should deter those who might engage in similar activities from committing like offences. In light of the prior convictions, I think that there is also some need for the penalty to deter the defendants from committing this sort of offence again.

CANNOT BE SENTENCED FOR MORE SERIOUS OFFENCE 36The defendants should not be sentenced for an offence with which they have not been charged. Therefore, since s 115(1) of the POEO Act creates another offence of wilfully or negligently disposing of waste in a manner that harms or is likely to harm the environment, negligently (to the criminal degree) or wilfully disposing of waste should not be attributed to them.

CONSISTENCY IN SENTENCING 37The Court should have regard to comparable cases from which guidance can be obtained. I have been referred to several cases of unlawfully transporting waste but their widely differing factual circumstances make it difficult to obtain guidance. They do assist me, however, to conclude that a fine is appropriate.

COSTS 38The prosecutor seeks a costs order pursuant to s 257B of the Criminal Procedure Act 1986. Costs are part of the penalty and may be taken into account in determining the amount of the fine: Environment Protection Authority v Barnes [2006] NSWCCA 246 at [78] (the imposition of costs was an "important aspect of the punishment"); Environment Protection Authority v Hardt [2007] NSWLEC 284 at [66]. The defendants have not agreed the quantum of the prosecutor's costs. For present purposes only, I will assume that they will be roughly in the order of $200,000.

AVOIDING DOUBLE PUNISHMENT 39Because the defendant Mr Kinnarney is the sole shareholder of the defendant company, the sentences to be imposed should avoid punishing, in effect, Mr Kinnarney, twice over: Tiger Nominees Pty Ltd v State Pollution Control Commission (1992) 25 NSWLR 715 at 722 per Gleeson CJ; Director General of National Parks and Wildlife v Wilkinson [2002] NSWLEC 171 at [79] per Lloyd J; Hawkesbury City Council v Johnson; Hawkesbury City Council v Johnson Property Group Pty Limited (No 2) [2009] NSWLEC 6 at [123] per Pain J ("The application of this approach would mean that the two Defendants would have a reduction in their penalties"). In Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (No 2) [2002] FCA 559, 190 ALR 169 at [45], Finkelstein J considered what penalty should be imposed on a corporation and its principal shareholder, who had caused the corporation to contravene the Trade Practices Act 1974 (Cth). The maximum penalty for a corporation was $10 million and for an individual $500,000 (a 20:1 ratio). His Honour said at [45]: "I will not ignore the fact that Mr Wilson is the principal shareholder in WTC, and the diminution of its assets that will result from the imposition of a pecuniary penalty is a loss that will ultimately be borne by Mr Wilson. If I do not make allowance for this when assessing Mr Wilson's penalty he will, in effect, be punished twice over." His Honour proceeded to fine that corporation twenty times the amount he fined its principal shareholder: at [49]. 40In Minister For The Environment and Heritage v Greentree (No 3) [2004] FCA 1317, 136 LGERA 89, the Minister sought pecuniary penalties under the Environment Protection and Biodiversity Conservation Act 1999 (Cth) against a corporation and its sole director/shareholder. The maximum penalty was $5.5 million for a corporation and $550,000 for an individual: at [6]. Sackville J fined the corporation double the amount he fined the individual: at [88]. His Honour explained at [77] - [78] and [82]: 77 ...it is appropriate to take into account both the fact that Auen is, in effect, a "one-man" company and the relationship between Auen and Mr Greentree. The evidence indicates that Mr Greentree is the sole director and, in effect, the sole shareholder of Auen. (Prime Grain Pty Ltd is a shareholder of Auen, but Mr Greentree holds all shares in Prime Grain Pty Ltd.) While Auen has the capacity to pay a substantial penalty, its position is not the same as, for example, a very large publicly listed corporation to which a pecuniary penalty of some hundreds of thousands of dollars might be of relatively small financial moment.

78 I infer that Mr Greentree will bear the burden of any diminution of Auen's assets that will result from the imposition of a pecuniary penalty on the company. It is appropriate to take that fact into account in order to prevent Mr Greentree being punished, in effect, twice over: Australian Competition & Consumer Commission v ABB Transmission & Distribution Ltd (No 2) (2002) 190 ALR 169 at 182 [45], per Finkelstein J; Re HIH Insurance Ltd (2002) 42 ACSR 80 at [131]-[132], per Santow J. On the other hand, Auen has been involved in a deliberate contravention of s 16(1) of the EPBC Act. The contravening conduct was undertaken in Auen's commercial interests. It is also necessary to bear in mind that the maximum penalties that can be imposed on a corporation are ten times larger than the penalties that can be imposed on individuals who contravene the EPBC Act. The overall pecuniary penalty should obviously be no less than if Auen, a corporation, had been the sole contravenor. On the contrary, the overall penalty should reflect the fact that Mr Greentree, as well as Auen, has contravened s 16(1) of the EPBC Act.

82 Having regard to the maximum penalty applicable to a contravention by an individual, I think that a pecuniary penalty of $150,000 should be imposed on Mr Greentree. Had Auen been the only contravenor, taking into account its status as a private company and the higher maximum penalty applicable to a contravention by a corporation, I would have imposed a penalty in the order of $400,000. Having regard to the desirability of avoiding penalising Mr Greentree twice over, I think that Auen should pay a penalty of $300,000. In my view, the total penalty of $450,000 is appropriate in the circumstances of the case. 41In both ABB and Greentree the heavier penalties imposed on the corporation compared with the individual appear to have taken into account the heavier maximum statutory penalties for corporations compared with individuals. In ABB, the penalties reflected the precise ratio between the two. In Greentree, the penalties appear to have been more the product of instinctive synthesis.

APPROPRIATE PENALTY 42Had the corporate defendant been the only contravenor, taking into account its status as a private company and the maximum penalty under s 143(1) of the POEO Act for a contravention by a corporation, as well as the liability for the prosecutor's costs in the sum of perhaps roughly $200,000, I would have fined it in the order of $80,000. Had Mr Kinnarney been the only contravenor, taking into account the maximum penalty applicable to a contravention by an individual and the liability for the prosecutor's costs, I would have fined him in the order of $40,000. Having regard to the desirability of avoiding penalising Mr Kinnarney twice over, these amounts should be adjusted by fining the corporate defendant $50,000 and Mr Kinnarney $30,000. In my view, the overall penalty of $80,000 is appropriate in the circumstances of this case.

RELATED PROCEEDINGS 43There are related proceedings 50417 of 2011 against Mr Kinnarney, referred to in my earlier judgment at [3], which should be stood over for mention before me on 22 June 2012.

ORDERS 44The orders of the Court in the various proceedings are as follows: 50416 of 2011 (1)The defendant Kinnarney Civil & Earthworks Pty Ltd is fined $50,000. (2)The defendant is to pay to the Registrar of the Court, for payment to the prosecutor, the prosecutor's legal costs as agreed or as determined in accordance with s 257G of the Criminal Procedure Act 1986. (3)The exhibits may be returned. 50418 of 2011 (1)The defendant Patrick Pius Kinnarney is fined $30,000. (2)The defendant is to pay to the Registrar of the Court, for payment to the prosecutor, the prosecutor's legal costs as agreed or as determined in accordance with s 257G of the Criminal Procedure Act 1986. (3)The exhibits may be returned. 50417 of 2011 These proceedings are stood over for mention before Biscoe J on 22 June 2012.

Amendments 07 May 2012 - typograpphical errors in paras [42], [43], [44]. Amended paragraphs: 42, 43, 44 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: 07 May 2012