> Land and Environment Court of New South Wales CITATION : Environment Protection Authority v Heggies Bulkhaul Limited [2003] NSWLEC 77 PROSECUTOR: Environment Protection Authority PARTIES : DEFENDANT: Heggies Bulkhaul Limited ACN 003 717 499 FILE NUMBER(S) : 50097 of 2002 CORAM: Lloyd J KEY ISSUES: Environmental Offences :- water pollution - plea of guilty - penalty - mitigation - environmental harm - native vegetation - remedial action LEGISLATION CITED: Protection of the Environment Operations Act 1997 s 120, s 241 Crimes (Sentencing Procedure) Act 1999 s 21, s 21A, s 22 and s 22A Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357; Cabonne Shire Council v Environment Protection Authortiy (2001) 115 LGERA 304; [2001] NSWCCA 280; Cameron v The Queen (2002) 76 ALJR 382; 187 ALR 65; [2002] HCA 6; Camilleri's Stock Feeds Pty Limited v Environment Protection Authority (1993) 32 NSWLR 683; Director- General of the Department of Land and Water Conservation v Greentree & Anor [2003] NSWCCA 31; Director of Public Prosecutions (Cth) v El Karhani (1990) 21 NSWLR 370; Environment Protection Authority v Aaron Plant Hire & Earthmoving Pty Ltd (2000) 108 LGERA 300; [2000] NSWLEC 122 ; Environment Protection Authority v Duke Eastern Gas Pipeline Pty Ltd [2002] NSWLEC 84; CASES CITED: Environment Protection Authority v Supreme Poultry & Chickens Pty Ltd & Anor [2001] NSWLEC 215 ; Environment Protection Authority v Tenterfield Shire Council (2000) 112 LGERA 173; Environment Protection Authority v The Crown in the right of New South Wales [2002] NSWLEC 52 ; Hoogendoorn v MISR Shipping Company & Hassan [2001] NSWLEC 171; Pearce v The Queen (1998) 194 CLR 610; R v De Simoni (1981) 147 CLR 383; R v Thompson (2000) 49 NSWLR 383; Ryan v The Queen (2001) 206 CLR 267; Veen v The Queen [No. 2] (1988) 164 CLR 465 DATES OF HEARING: 12/03/2003 and 13/03/2003 DATE OF JUDGMENT: 03/28/2003 PROSECUTOR: Mr P Barley (solicitor) SOLICITORS: Stephen Garrett LEGAL REPRESENTATIVES: DEFENDANT: Mr I S Lloyd QC SOLICITORS: Freehills JUDGMENT: - 13 - IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES 50097 of 2002 Lloyd J 28 March 2003 Environment Protection Authority Prosecutor v Heggies Bulkhaul Limited ACN 003 707 499 Defendant JUDGMENT Introduction 1 The defendant, Heggies Bulkhaul Limited, has pleaded guilty to an offence against s 120(1) of the Protection of the Environment Act Operations 1997 ("the PEO Act") in that it caused waters to be polluted. That section headed "Prohibition of pollution of waters", at the relevant time, provided as follows: (1) Prohibition on polluting A person must not pollute any waters. (2) Prohibition on causing pollution A person must not cause any waters to be polluted. (3) … … (4) Offence A person who contravenes this section is guilty of an offence. 2 The remaining issues relate to costs and penalty. The former question has been resolved by an agreement between the parties to the effect that the defendant will pay the prosecutor's costs of $15,000. The maximum penalty for the offence in the case of a corporation is $250,000. 3 The relevant facts which give rise to the commission of the offence are derived largely from an agreed statement of facts. This has been supplemented by the affidavits and oral evidence of Mr P J Lawrence and Mr R J Byrnes, the company secretary of the defendant and an environmental consultant retained by the defendant respectively. The Facts 4 The facts relevant to penalty are as follows. The defendant, Heggies Bulkhaul Limited, ACN 003 707 499, operates a sand extraction quarry at Penrose Quarry, Hume Highway, Paddys River NSW 2577, lots 1-5 in deposited plan 253462 ("the quarry"). Hanging Rock Swamp ("the swamp"), which borders the quarry, is a peat swamp in the southern part of the Central Tablelands and forms part of an important scientific and hydrological resource and habitat for wetland flora and probably fauna. The swamp supports a population of the vulnerable species Eucalyptus aquatica (commonly known as Broad-leaved Sally) and a number of other species listed under the Threatened Species Conservation Act 1996. 5 The defendant is the holder of Environment Protection Licence No. 4720, issued by the prosecutor under the protection of the PEO Act. 6 On 12 October 2001 at 6.00 am, the defendant discovered that there had been a discharge of water, sand and silt from the quarry into the swamp. At 8.25 am that morning the defendant reported the incident to the prosecutor. 7 As I understand it, the event was caused by a malfunction in the sand washing machinery, believed to have been caused by the instalment of small spigots in an attempt to produce better quality sand. This prompted the release of an excessive amount of sand into the pipelines which discharge the wash water into a sedimentation pond. The surfeit sediment produced a blockage in the pipelines which in turn caused a release of backlogged processed water, sand and silt (sand slurry) from an overflow point in the header tank. The processed water and sand slurry released from the overflow point ran partly into and partly around the sedimentation pond which filled and overflowed into the swamp, having breaching sediment control fencing and hay bales. 8 It is estimated that the release of processed water and sand slurry occurred over a period of 2.5 to 5 hours and resulted in approximately 3,250,000 to 6,500,000 litres of processed water, the equivalent of 500 tonnes of sand, being spilled into the swamp. The sand deposition area within the swamp covered an area approximately 800 m2 and was measured to a depth of 75 centimetres. Deposition of silt in the swamp extended for a distance of up to 3.5 kilometres 9 The incident caused a blockage of the water flow through the swamp for approximately six weeks. In turn, this caused inundation of plants in the upstream marsh. There was damage to aquatic and semi- aquatic vegetation in the area covered by the sand slurry including the death of at least one Eucalyptus aquatica tree and the thinning or death of the crown in approximately ten other specimens. This species is protected under the Threatened Species Conservation Act 1996. 10 Further, some gully erosion occurred and some white sand was deposited on the embankment leading from the header sump to the swamp. The fine suspended material which flowed down the creek increased the turbidity of the waters, thereby possibly affecting the aquatic ecosystem by reducing the available light and impacting on the feeding habits of aquatic fauna. This may also have deleteriously affected benthic habitat. 11 Following the incident on 12 October 2001, the defendant refrained from starting the quarry's operations until 22 October 2001. During that period, the defendant undertook several remedial activities. On 12 November 2001, pursuant to s 91 of the PEO Act the prosecutor issued the first of three clean-up notices (No. 1012667) to the defendant requiring it to, inter alia, construct a three metre channel through the sand deposition area in the swamp by 3 December 2001. 12 On 6 December 2002, having discovered that the defendant had not fully complied with the first notice, the prosecutor issued the second notice (No. 1013485). That document required the defendant to complete certain of the clean- up actions specified in the first notice by 10 December 2001. However, on the 10 December 2001, the channel constructed was not three metres wide, as required, throughout its entire length. The defendant advised the prosecutor, that in order to construct the channel within the sand deposition area, it was necessary to make some of the sections of the channel narrower so as to preserve vegetation in the area. 13 On 14 December 2001, the defendant submitted the Penrose Quarry Clean Up Action Plan to the prosecutor in accordance with the first notice. That day, after inspecting the sand deposition area, the prosecutor issued a third notice (No. 1013730) requiring the defendant to widen and deepen the channel constructed under direction in the second notice; to batter and maintain the channel bank slopes; and to minimise disturbance during the works by machinery. 14 On 19 December 2001 the prosecutor issued two Penalty Infringement Notices to the defendant for non-compliance with items 1 to 4 of the first notice. Items 1, 2 and 4 specified relevant compliance dates. Item 3 required the defendant to maintain the slope of the channel bank so as to prevent slumping of the sand into the channel. However, on 20 December 2001 it was observed by the prosecutor that the defendant had complied with, or was complying with, the directions in the third notice. 15 Between 15 March 2002 and 13 June 2002, the prosecutor inspected the quarry on two occasions and observed that the defendant had removed sand from the deposition area in the swamp and was maintaining the slope of the channel bank so as to prevent slumping of the sand into the channel. It was also observed that the channel was permitting unimpeded water flow through the swamp. Despite damage to approximately ten Eucalyptus aquatica near the creek and 15 to 20 specimens further away, some of these trees had been relieved of the excess sand and showed signs of recovery. Upon this inspection, the prosecutor agreed that it was appropriate that the defendant cease excavation and removal of sand from the swamp. 16 On 13 June 2002, the prosecutor issued notice of licence variation No. 1011652 to the defendant. This required the recipient to furnish the prosecutor with a 12 month monitoring and revegetation program entitled "Hanging Rock Swamp Flora Study" by 19 July 2002; and a final report detailing the findings of the study to the prosecutor by 29 August 2003. 17 In June 2002, the defendant submitted the first report to the prosecutor, which was followed by an amended report, requested by the prosecutor, in August of that year. 18 The defendant is currently carrying out the plan set out in the Hanging Rock Swamp Flora Study. The defendant intends to submit its final report to the prosecutor by 29 August 2003 in accordance with condition U1.2 of the licence. 19 Mr Lawrence's evidence details his actions immediately following his being notified of the incident forming the present charge. Mr Lawrence notified the prosecutor of the incident at approximately 8.25 am on 12 October 2001. Between 12 and 22 October 2001, Mr Lawrence supervised investigation of the event, various clean –up works and a number of modifications to operations to prevent any future episode. 20 Mr Lawrence stated that the defendant has employed an Environmental Officer at the quarry since September 1998. This person is primarily responsible for ensuring that all environmental safeguards required and proposed for the development are enforced and monitored during the life of the quarry. In addition, the defendant has retained Mr Robert J Byrnes of International Environmental Consultants Pty Limited ("IEC") since 1997 to provide independent professional environmental consultancy services in relation to the quarry and assist the environmental officer as required. 21 In relation to the defendant's non-compliance with the first clean-up notice, Mr Lawrence states that whilst they were confused as to its requirements, after the defendant received the notice, the defendant concentrated on the bigger picture of preparing the clean- up action plan, including obtaining quotes from contractors to remove all of the deposited sand from the swamp. In this way, the defendant inadvertently missed the earlier date by 30 hours, the notice having been clarified by Mr Hardiman, the prosecutor's senior regional operations officer, on 4 December 2001. 22 Mr Lawrence also states that as a consequence of this incident the defendant has incurred costs of $60,000 including the cost of management time, and approximately $90,000 in production losses relating to the period in which the plant was shut down. 23 Mr R J Byrnes, the principal of IEC, as previously noted, has provided environmental services to the defendant in relation to the quarry since 1997. His evidence provides an appraisal of the damage to the swamp and an account of his instructions from and services rendered to the defendant following the incident. Mr Byrnes was notified of the incident on 12 October 2001 and inspected the site the following day. He instructed the defendant not to remove any sand from the swamp until he had obtained further advice from a botanist. Mr R Lembit, a qualified botanist, inspected the site on 5 December 2001. 24 Following the prosecutor's issue of the first clean-up notice on 12 November 2001, IEC prepared a Clean Up Action Plan in accordance with the notice. In addition, IEC prepared a 12 month monitoring program to report on the impact of the incident and the clean- up actions upon certain flora species within the swamp (the abovementioned Hanging Rock Swamp Flora Study) and two quarterly reports ending October 2002 and February 2003. 25 Mr Byrnes' opinion is that despite the effects of the drought, the spill had caused only "minor" and "localised" environmental impact and that the swamp would recover by natural processes. In particular, in his second quarterly report, he states that a number of the trees that had previously been considered to be dead were showing new growth and other trees that had appeared to be under stress, had recovered. Further, Mr Byrnes expects that subsequent reports will show continual improvement and that the swamp will eventually make a complete recovery. 26 This assessment is partially attributed to the non- toxic nature of the material that was discharged into the swamp as well as the fact that it forms a component of the swamp itself. Moreover, it is possible that a similar event to that which occurred on 12 October 2001 could happen normally with heavy rain or a land slump. Submissions on Penalty 27 Mr P Barley, appearing for the prosecutor, makes the following relevant submissions on penalty. (i) The maximum penalty indicates, generally, the seriousness with which Parliament, representing the people, has viewed the offence: Director of Public Prosecutions (Cth) v El Karhani (1990) 21 NSWLR 370 at 380, per Kirby P, Campbell and Newman JJ). (ii) The task of the court is to assess the relative seriousness of the offender's particular offence in relation to the worst case for which the maximum penalty is provided: Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698 per Kirby P; Environment Protection Authority v The Crown in the right of New South Wales [2002] NSWLEC 52, per Talbot J. (iii) The need for general deterrence and to encourage full compliance are main purposes of punishment upon considering penalty: Camilleri's Stock Feeds at 701; Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 at 359. 28 In relation to the factors to be considered in formulating penalty enumerated in s 241 PEO Act, the prosecutor makes the following relevant submissions. (iv) There has been actual harm to the environment, as set out in the statement of agreed facts. (v) All of the "remedial action" in the agreed statement of facts carried out subsequent to the incident could have been done beforehand and would have prevented or substantially mitigated the harm which occurred as a result: Axer at 359. Further, it is admitted in the statement that, despite the fact that a new configuration of the plant was being essayed, no testing was undertaken and nothing more than observation was used to monitor the operation of the plant. Further still, the defendant was slow to comply with a clean-up notice issued to it a month after the incident. (vi) A holder of an environmental protection licence is on notice of the possibility of harm. The operators of a quarry should be particularly aware of the undue harm to the environment their operations could cause. The defendant was aware of the high conservation value of the swamp. This puts a greater responsibility on the defendant. Given this, the environmental harm caused or likely to be caused was reasonably foreseen by the defendant. (vii) The agreed statement of facts reveals that the defendant had complete control over the causes of the spill: it sought advice, changed the spigot and did not do any further testing. (viii) In relation to s 241(2) of the PEO Act, as a licence holder and a neighbour to a high conservation area, the defendant had a heightened responsibility to be vigilant and take preventative measures. This responsibility was disregarded by the defendant. (ix) It is conceded that mitigating factors include that the defendant contacted the prosecutor after the spill; arranged for the clean up (although it was tardy, however, in carrying it out); pleaded guilty at an early stage (although the case against them was overwhelming); and instigated a comprehensive monitoring program. (x) Comparable cases are Environment Protection Authority v Aaron Plant Hire & Earthmoving Pty Ltd (2000) 108 LGERA 300; [2000] NSWLEC 122 and Environment Protection Authority v Duke Eastern Gas Pipeline Pty Ltd [2002] NSWLEC 84. However, they each have several distinguishable factors. 29 Mr I S Lloyd QC, appearing for the defendant, makes the following relevant submissions on penalty. (i) On 15 November 2002 the defendant indicated an intention to plead guilty which lead to such a plea on 29 November 2002. On the former date the parties were close to finalising an agreed statement of facts. In the present case the guilty plea entitles the defendant to a full discount of 25%: R v Thompson (2000) 49 NSWLR 383 at 411; Cameron v The Queen (2002) 76 ALJR 382 at 386 and 396; [2002] HCA 6 at [22] and [75]; s 22(1)(b) of the Crimes (Sentencing Procedure) Act 1999. (ii) The affidavits of Mr Lawrence and Mr Byrnes are relied upon in mitigation of the defendant's culpability. In particular, the former affidavit reflects Mr Lawrence's contrition and remorse on behalf of the defendant. The latter shows the defendant's past and ongoing commitment to the protection of the environment. (iii) As to the considerations under s 241(1) of the PEO Act, the defendant's criminality and the gravity of the offence are properly assessed at the lower end of the scale. The incident was caused by an equipment failure and was reported as soon as the defendant was aware of it. (iv) The pollutants were naturally occurring materials, and apart from the harm noted in the statement of facts, the environmental harm was transitory and relatively minor in nature. The prospect of lasting harm is negligible, if not non- existent. (v) Apart from the early misunderstanding relating to the first clean up notice, the defendant has at all times fully co- operated with the prosecutor. It organised the preparation of a remediation action plan and continues to monitor the site and report to the prosecutor. The defendant has incurred costs in relation to this incident totalling $150,000. For its tardiness with respect to the first clean up notice, the defendant has paid penalties pursuant to two Penalty Infringement Notices. By dint of s 225(1) of the PEO Act, the defendant is not liable to any further proceedings in relation to that non-compliance: Director-General of the Department of Land and Water Conservation v Greetree & Anor [2003] NSWCCA 31 at [94]-[96]. Any subsequent penalty in relation to this element of the matter would amount to double jeopardy: R v De Simoni (1981) 147 CLR 383; Pearce v The Queen (1998) 194 CLR 610 at 614-615; Director-General of the Department of Land and Water Conservation v Greentree & Anor [2003] NSWCCA 31 at [94]-[96]. (vi) The defendant could not have foreseen that the alteration to the machinery, on the advice from a recognised industry consultant, would cause the malfunction that prompted the incident. Further, at the time, the defendant's activities were being carried out in accordance with council's requirements. (vii) In relying upon the industry consultant for advice in altering the machinery, the defendant had no control over the cause that gave rise to the offence. (viii) Since the incident, action has been taken to ensure that such an occurrence is never repeated. (ix) Pursuant to s 241(2) of the PEO Act, other factors supporting the submission that the fine to be imposed ought to be at the low end of the scale are the early plea of guilty, the contrition and remorse shown on behalf of the defendant, the defendant's co-operation with the prosecutor, its good environmental record to date, the fact that the defendant has agreed to pay the prosecutor's costs of $15,000 and the time the statement of agreed facts has saved the court. (x) Despite the comments in Cabonne Shire Council v Environment Protection Authority (2001) 115 LGERA 304 at 312; [2001] NSWCCA 280 at [35], Environment Protection Authority v Duke Eastern Gas Pipeline Pty Ltd [2002] NSWLEC 84 is a case of similar criminality. There the defendant was fined $25,000 after all relevant discounts were applied. Considerations on Penalty 30 Section 241 of the PEO Act sets out a number of matters which the court is required to take into consideration in imposing a penalty for an offence against the Act. Section 241(1)(a) The extent of the harm caused or likely to be caused to the environment by the commission of the offence. 31 Despite the incident resulting in the blockage of water flow for approximately six weeks, it seems that the only permanent damage to the environment is the death of one protected Eucalyptus aquatica tree. The remaining damaged specimens are predicted by Mr Byrnes, an environmental consultant, to make a full recovery by natural processes. This is attributed partially to the non-toxic nature of the material that spilled into the swamp. The generally timely and competent clean-up plan instigated by the defendant involving, inter alia, the construction of a water flow channel and excavation removal of sand from the swamp further facilitated the restoration of the swamp to its former state. Section 241(1)(b) The practical measures that may be taken to prevent, control, abate or mitigate that harm. 32 The activities undertaken subsequently to the incident include the removal of the small spigots and replacement by the original ones in the washing plant; the sealing of the overflow point in the header tank with welded sheet metal; the installation of an overflow pipe connecting the header tank to a containment area within the quarry; and the rectification of the erosion occurring in the area of the header tank and the adjacent embankment. These have substantially reduced the likelihood of a similar event in the future. However, several of these activities could have been carried out as preventative measures which would have averted this incident altogether. Section 241(1)(c) The extent to which the persons 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 33 Whilst it may have been foreseeable that had the header tank became blocked, causing an overflow and resulting in quarry material spilling into the swamp, the fact that the defendant was relying upon expert advice means that it had reason to expect that no such blockage would occur. The consultant that had been engaged by the defendant was a recognised consultant in the sand industry. The defendant acted reasonably in relying upon its consultant's advice. Further, after the small spigots were installed in the washing plant, despite no testing, the defendant observed that the processing plant was operating normally. Indeed, it appeared to be working conventionally on 9 October 2001, 10 October 2001 and 11 October 2001. It follows that, the defendant could not have reasonably foreseen what occurred or the harm caused. Section 241(1)(d) The extent to which the person who committed the offence had control over the causes that gave rise to the offence. 34 The defendant had complete control over the causes that gave rise to the offence. The defendant employed Coral Process Technologies Pty Ltd ("Coral") as a consultant to advise it in the production of better quality sand. The defendant implemented Coral's advice, namely to install smaller spigots. This facilitated the blockage of sand in the pipelines which prompted the overflow into the swamp. As noted above, however, I find that the defendant acted reasonably in relying upon its consultant's advice. Section 241(1)(e) whether, in committing the offence, the person was complying with orders from an employer or supervising employee. 35 This is not relevant in the present case. 36 By dint of s 241(2) of the PEO Act, the court may take into consideration other matters that it considers relevant to the imposition of a penalty for such an offence. In this case, I accept the fact that the defendant has entered an early plea of guilty. Pursuant to s 22 of the Crimes (Sentencing Procedure) Act 1999, it is relevant that the defendant indicated an intention to plead guilty on 15 November 2002, that is, almost the earliest possible opportunity. Such plea was formally entered on 29 November 2002. The utilitarian value of a plea to the criminal justice system should generally be assessed in the range of 10 to 25 percent discount on sentence: R v Thompson (2000) 49 NSWLR 383 at 419. It follows that the earlier the plea, the greater the utilitarian value. The defendant's plea falls in the period in which it must be considered early. This warrants a full discount of 25 percent. 37 At the time of the commission of the offence by the defendant, ss 21A and 22A of the Crimes (Sentencing Procedure) Act 1999 had not yet commenced. Despite the fact that s 22A extends to proceedings for an offence that were instituted (but not determined) before the commencement of the section on 19 November 2001 (cl 40, Sch 2, Crimes (Sentencing Procedure) Act), it follows that those provisions do not apply to the present matter as the summons was filed on 3 September 2002. 38 However, s 21A is a codification of the common law relating to the principles employed in the formulation of penalty. It follows, then, that the defendant's otherwise generally good character and contrition must be taken into account: Ryan v The Queen (2001) 206 CLR 267. Likewise, the element of deterrence must be considered. In the present case there is little need for a specific deterrent in determining penalty as the defendant never intended the resultant pollution to occur, and has since, taken steps to prevent a recurrence. 39 I find that the defendant, with the exception of the misunderstanding in relation to the first clean up notice, did undertake prompt and effective action to remedy the offence: Environment Protection Authority v Supreme Poultry & Chickens Pty Ltd & Anor [2001] NSWLEC 215 at [23]. This remedial action has been outlined in pars [11] to [15]above. 40 I take into account the fact that the defendant co- operated with the prosecutor prior to the commencement of the prosecution and thereafter (Hoogendoorn v MISR Shipping Company and Hassan [2001] NSWLEC 171 at [13]). This culminated in the production of an agreed statement of facts, minimising the prosecutor's effort and the court's time in determining this matter. Further, apart from the two penalty infringement notices issued to the defendant, the defendant has no record of environmental offences (Veen v The Queen [No. 2] (1988) 164 CLR 465 at 477). As a participant in extractive industry, it seems to have taken and does take its responsibility to the environment seriously. 41 Finally, it must be noted that s 120 of the PEO Act is a strict liability offence. The nature of the offender is not a factor in determining guilt. The wording of the statute is clear. A person must not pollute any waters. The primary consideration is the absolute prohibition contained in the Act: Environment Protection Authroity v Tenterfield Shire Council (2000) 112 LGERA 173 at 182. Precautions must be taken to ensure that waters are not polluted. It is clear that there was no intention to pollute the swamp. However, the actions of the defendant resulted in that offence. It is thus appropriate that a penalty be imposed although, in this case, at the lower end of the scale. It seems to me that a penalty representing 15 per cent of the maximum is appropriate, which should be discounted by a further 30 per cent for the various mitigating factors including the early plea of guilty, resulting in a penalty of $26,000. Orders 42 The formal orders of the Court are: 1. The defendant is convicted of the offence as charged. 2. The defendant must pay a penalty in the sum of $26,000. 3. By consent, the defendant must pay the prosecutor's costs in the sum of $15,000. 4. The exhibits may be returned. ********** I hereby certify that the preceding 42 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice Lloyd. Associate Dated: 28 March 2003 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.