Environment Protection Authority v Gundawag Holdings Pty Limited [2001] NSWLEC 86

Land and Environment Court of New South Wales

CITATION : Environment Protection Authority v Gundawag Holdings Pty Limited [2001] NSWLEC 86 PROSECUTOR: Environment Protection Authority PARTIES : DEFENDANT: Gundawag Holdings Pty Limited ACN 001 312 330 FILE NUMBER(S) : 50073 of 2000 CORAM: Lloyd J KEY ISSUES: Environmental Offences :- breach of condition of pollution licence - penalty LEGISLATION CITED: Protection of the Environment Operations Act 1997 s 64 and s 241 CASES CITED: Matthews v Goulburn Wool Processors Pty Limited, Supreme Court of NSW, Smart J, 6 November 1986, unreported DATES OF HEARING: 19/03/2001 EX TEMPORE JUDGMENT DATE : 03/19/2001

PROSECUTOR: Mr D Samuels (Solicitor) SOLICITORS: Stephen Garrett LEGAL REPRESENTATIVES: DEFENDANT: Mr S N Griffiths (Solicitor) SOLICITORS: Pike Pike & Fenwick

JUDGMENT:

1

IN THE LAND AND Matter No. 50073 of 2000 ENVIRONMENT COURT Coram: Lloyd J OF NEW SOUTH WALES Decision date: 19 March 2001

Environment Protection Authority Prosecutor v Gundawag Holdings Pty Limited ACN 001 312 330 Defendant

EXTEMPORE JUDGMENT HIS HONOUR: 1. The defendant is charged with an offence against section 64(1) of the Protection of the Environment Operations Act 1997 in that on or about 1 November 1999 at Milton it was the holder of a licence, a condition of which was contravened. Condition W4 of licence number 003102, which relates to the premises of Milton District Meats, Slaughterhouse Road, Milton, states: There must be no discharge of waste water to any water course or to any area other than the defined waste water disposal area. 2. The reference in Condition W4 to the defined waste water disposal area is, I understand, a reference to an irrigation area onto which waste water can be disposed within the defendant's property. 3. The relevant facts are derived largely from a statement of agreed facts supplemented by affidavit evidence and oral evidence put before me this morning. It is convenient to briefly state those facts. The defendant at relevant times held a pollution control licence for an abattoir known as Milton District Meats at Slaughterhouse Road Milton. I have referred to condition W4 of that licence. The premises is used for slaughtering cattle, sheep and occasionally pigs. Over the weekend of 30th to 31st October 1999 Mr Richard Finlayson, who lives on a property opposite those premises, noticed that irrigation was taking place on the irrigation area of the premises. On Monday 1 November 1999 he noticed that the sprinklers on the irrigation area were again operating. He observed a brown coloured liquid running from the direction of the irrigation system on the irrigation area along the western boundary of the irrigation area, through a boundary fence, over a roadside nature reserve and into a culvert under the adjoining road. 4. As a result of what he saw, Mr Finlayson notified the prosecutor. Mr Peter Jamieson and Mr Craig Patterson, both of the Wollongong office of the prosecutor, then went to the premises on the same day. Their inspection revealed that abattoir effluent was being spray irrigated on the designated effluent irrigation area. The ground beneath the irrigators was saturated and effluent was hitting the ground and running off. The effluent was seen running off beyond the property boundaries on three sides being the southern, western and eastern property boundaries. To the west of the premises effluent was seen running off the property into the beginnings of a gully on a neighbouring property and into a dam on that property. Liquid was seen flowing out of the dam towards an unnamed tributary of Burrill Lake. The flow of effluent was estimated to be in the order of 40 litres per minute. Samples taken of this flow revealed that the nutrient levels were very high and there were high concentrations of organic matter and total suspended solids. 5. To the east of the premises discoloured waters were seen to flow over the ground and through the eastern boundary fence. Mr Jamieson estimated that this flow was approximately 40 litres per minute. Samples at this location again revealed nutrient levels were high with high concentrations of organic matter and total suspended solids. 6. To the south the effluent was seen running from the premises in two locations. An interrupted flow of effluent was followed from the fence line to a dam off site located at the base of a gully. Mr Jamieson estimated the flow of effluent at this point at approximately 22 litres per minute. That effluent was sampled and again showed that nutrient levels were very high and high concentrations of organic matter and total suspended solids. I should add that the property to the south is occasionally used by Shoalhaven City Council as an effluent application area to help alleviate the load on the Ulladulla Sewerage Treatment Plant in peak periods. 7. The irrigators on the defendant's property were only turned off after Mr Craig-Smith who looked after the day to day running of the premises was spoken to by Mr Jamieson who made him aware of the situation. 8. It appears that irrigation had taken place on the premises for about 7 to 8 hours on the two days before the incident as well as on the day of the incident. The person carrying out the work on behalf of the defendant on those days was Mr Sylvio Crestani, a retired person who had only worked on the site for a couple of days and had been on trial to see how he could handle this work. Mr Crestani had been given about ten minutes training when he first started and he was not aware of the licence conditions. When he started the pumps to irrigate the area on Monday, 1 November, he had not previously checked the irrigation area to ascertain its suitability for irrigation. He had not been told to check the perimeters of the property whilst spraying was taking place. Mr Craig Smith, in an interview with Mr Jamieson, admitted that he knew it was an offence to have effluent leaving the premises. 9. The defendant is the owner of the land upon which the abattoir and the irrigation was being carried out. Rainfall records have been tendered which show that there was no substantial rain for about one week before this incident. There was a minor rainfall event, however, on the Saturday before the incident. No actual environmental harm was observed on 1 November 1999 although it seems that there was some potential for environmental harm. An algal bloom was seen on the dam on the adjoining property to the west. I accept, however, that the algal bloom on that dam is not definitely attributable to the discharge which occurred on this occasion. 10. One of the matters that has to be taken into consideration on the question of penalty under section 241(1)(a) of the Act, is the extent of the harm caused or likely to be caused to the environment by the commission of the offence. I accept that the word "likely" means a real and not remote chance or possibility regardless of whether it is less or more than a fifty per cent chance: see Matthews v Goulburn Wool Processors Pty Limited (Supreme Court of NSW, Smart J, 6 November 1986, unreported). The likelihood of environmental harm in this case has been described in a report prepared for the prosecutor by Mr G W Coade, an environmental scientist. Mr Coade notes that the nutrient levels of the water leaving the site were very high, with high concentrations of organic matter and total suspended solids, as well as high concentrations of total phosphorous and total nitrogen. These are said by him to be well in excess of the guideline values in the Australian Guidelines. According to Mr Coade, impacts from the discharge are likely to be relatively local and in the dams or pre-pools that permanently contain water. He agrees that the occurrence of the algal bloom on the dam on the adjoining property was not definitely attributable to the discharge although it is consistent with it. 11. I am not satisfied beyond reasonable doubt that the discharge from the defendant's premises caused the algal bloom. According to Mr Coade the potency of the discharge will be attenuated as it moves through the catchment and processes of dilution, absorption and decay reduce the concentration of nutrients, degradable organic matter and bacteria in the water. In his opinion, which I accept, he would not expect any immediate and obvious impacts within one or two kilometres of the premises. Mr Coade does, however, question the cumulative impact of such discharges as this, particularly with regard to the level of nutrients. He notes that some of the drainage system drains into Burrill Lake and that lake, like many coastal lakes in New South Wales, is poorly flushed by the ocean waters so that nutrients entering it are likely to remain there for a long period - decades or more. He says that coastal lakes are thus particularly sensitive to pollution by nutrients and to polluting activities in the catchments of such lakes. 12. Evidence of the extent of likely environment harm was also given for the defendant by Mr C R Brodie, who has been retained to advise the defendant on the preventative measures it should be taking. He notes that similar concentrations of nitrogen and phosphorous had been found from time to time in Millards Creek, which is one of the adjacent creeks and in other local creeks as well. He says that there have been frequent occasions in past years when similar levels of contamination have been found in watercourses in the local vicinity. He points to several other potential contributors of contamination to watercourses in the immediate vicinity arising from what might be described as the general rural activities that are being conducted in the area. He expresses the opinion that any potential impact would be extremely local and no severe impact was likely due to the intermittent flow characteristics of the local water courses. 13. It is appropriate then to return to the matters for consideration set out in section 241 of the Act. Paragraph (a) refers to the extent of harm likely to be caused to the environment. I have already referred to this. There is no evidence of actual environmental harm. I am satisfied that applying the test of "likely" that I have described, there was a real and not remote chance or possibility of harm occurring as a consequence of this event. The evidence of Mr Brodie does not detract from the evidence of Mr Coade in this respect. 14. The next consideration is paragraph (b): the practical measures that may be taken to prevent, control, abate or mitigate that harm. In my opinion practical measures were available and could have been taken. Those practical measures are recognised by Mr W J Smith, a director of the defendant, who refers to some of them in his affidavit. He refers to the fact that since the incident Mr Brodie has been engaged; that the defendant has changed its land management practices; and that it has removed over 50 tree stumps and planted a mixture of crops in order to harvest the nutrients and avoid run off. The defendant has cleaned out and enlarged an existing dam for wet weather storage, thus dramatically reducing the need to irrigate in periods of wet weather. The defendant has cleaned out and deepened all contour banks which had gradually silted up over a number of years. And the defendant is in the process of development an environmental management plan. The fact that these things are now being done suggests that they could and perhaps ought to have been done before the incident occurred. 15. Moreover in the present case it seems that no instructions were given to Mr Crestani as to how he was to carry out his work. The evidence is that the land within the defendant's property adjacent to the area being irrigated was dry. There is no explanation as to why the irrigators had not been moved to the dry section of the property. In an interview with Mr Smith, he admits that he had been careless and had not sat down with Mr Crestani to tell him about these things. There was no induction training or the like. 16. The next consideration under section 241 is paragraph (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. In the present case I am of the view that the events were evidently foreseeable and I need only repeat what I have said in relation to paragraph (b). 17. The next consideration is paragraph (d): the extent to which the person who committed the offence had control over the causes that gave rise to the offence. In the present case it was the defendant that was carrying on business on the land and it was the defendant who owned the land, it was the defendant who therefore had complete control over the relevant activities. Paragraph (e) of section 241 is not presently relevant. 18. There are other matters that the Court must take into consideration. Firstly there was an early entry of the plea of guilty. I take into consideration the express statement of contrition referred to by Mr Smith in his affidavit. He states that he would like to formally express to the Court the Company's contrition in relation to the offence which has occurred and its resolve that there should be no similar occurrence in the future. Of course the plea of guilty is itself an act of contrition on the part of the defendant. It seems also that the defendant has co-operated fully both at the time of the commission of the offence and subsequently with the prosecutor. The defendant has also expended a considerable sum of money, that is between $450,000 and $500,000, on improving its environmental protection systems. I take into account the fact that there is, it seems, some prospect of the abattoir being connected to the Council's Sewerage Treatment Plant and if that proceeds it will remove the risk of this event occurring in the future. I also note that the sewerage connection costs are in the order of $7,000. 19. I have, of course, taken into account the fact that there was no serious or lasting environmental harm. Naturally the more serious and lasting the likelihood of environmental harm, the more serious the offence and the higher the penalty. 20. The maximum penalty for this offence is $280,000. That is an expression by the legislature of the seriousness with which it regards this offence. The penalty has relatively recently been increased to that amount. It has in fact been doubled, so that the legislature must be taken to have in mind the seriousness of the this and of similar kinds of offences when it doubled the maximum penalty. 21. The maximum, of course, is only to be imposed in the most serious case. In applying the principle of even handedness, which I am required to do, I take into account the level of penalties that have been imposed by other judges for similar offences. Most of those to which I have been referred were imposed under the previous penalty regime, when the maximum penalty was half of what it is now. That does not mean, of course, that penalty must be immediately doubled above what it would otherwise if the offence had occurred when the old penalty regime was in place. Nevertheless, the penalty must be higher than would have previously been the case. 22. There is also a need for general deterrence, although I accept that the defendant is a prominent employer in the local district and any penalty would be well publicised in that local district. The defendant employs some forty full time staff and fifteen contractors. There is in evidence a letter from the economic development manager of Shoalhaven City Council which refers to the value of the defendant as an employer in the Shoalhaven region. The defendant also says that any fine will have to be paid by borrowing against the business overdraft and this will present a further threat to the viability of the abattoir. It is said that there have been five local coastal abattoirs which have closed in the last five to six years. I accept, therefore, that the defendant in this case is an important employer in the region and its continued viability is of some importance. 23. Nevertheless, the law requires me to impose a penalty; a penalty which is consistent with those that have been imposed for similar offences. I am prepared to allow a discount of twenty per cent on the penalty that would otherwise be imposed on account of the early plea of guilty. The utilitarian value of the plea is not particularly great since the offence was observed to be actually occurring, not only by Mr Finlayson but also by the two officers of the prosecutor. Moreover, as I have noted, the defendant's employee had to be asked by the prosecutor's witnesses to turn the irrigation system off. I am thus not prepared to allow any discount for the utilitarian value of the plea. The penalty I propose to impose in this case, taking into account the twenty per cent discount is $18,000. 24. The formal orders of the Court are therefore as follows: 1. The defendant is convicted of the offence as charged. 2. The defendant must pay a penalty of $18,000. 3. The defendant must pay the prosecutor's costs of $5,500 (which I note is the agreed amount of costs).