Environment Protection Authority v D F Herbert Pty Limited [2006] NSWLEC 575

Land and Environment Court of New South Wales

CITATION : Environment Protection Authority v D F Herbert Pty Limited [2006] NSWLEC 575 This decision has been amended. Please see the end of the judgment for a list of the amendments.

PROSECUTOR Environment Protection Authority PARTIES : DEFENDANT D F Herbert Pty Limited

FILE NUMBER(S) : 50015 of 2006

CORAM: Talbot J

KEY ISSUES: Prosecution :- Breach of conditions of pollution licence applicable to cattle feedlot - application of provision for daily rate of penalty.

LEGISLATION CITED: Environmental Planning and Assessment Act 1979 Protection of the Environment Operations Act 1997

CASES CITED: EPA v Alkem Drums Pty Ltd (2000) 113 LGERA 130

DATES OF HEARING: 21/08/2006

EX TEMPORE JUDGMENT DATE : 08/21/2006

PROSECUTOR Mr D Samuels (solicitor) SOLICITORS Department of Environment and Conservation LEGAL REPRESENTATIVES: DEFENDANT Mr A M Pickles (barrister) SOLICITORS Abbott Tout

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

Talbot J

21 August 2006

50015 of 2006 Environment Protection Authority v D F Herbert Pty Limited

EX TEMPORE JUDGMENT 1 Talbot J: The defendant company is charged with an offence against the provisions of s 6 of the Protection of the Environment Operations Act 1997 ("PEO Act") in that from about 13 April 2004 and continuing until about 29 July 2005 at a feedlot which it conducts on the property Gundemain near Eugowra it offended against s 64(1) of the PEO Act by contravening the condition of a licence issued to it under the Act. 2 The licence authorises the carrying out of scheduled activities at the property, namely, feedlot production. The licence contains a number of conditions. The condition which gives rise to the offence is condition L 8.1 which appears in the licence under the heading "Livestock Limits" and reads: The total number of livestock accommodated within the feedlot at any one time must not exceed 4000. 3 The parties have prepared an agreed statement of facts. The history leading up to the occurrence of the offence indicates that the establishment of the feedlot and its operation attracts some interest from the persons living or working in the locality as a consequence of the propensity for such an operation to emit odours they are generally regarded as noxious, being the emissions arising from the accumulation of manure and urine discharged by a large number of cattle. The licence particularly addresses this issue as one of its principal concerns by providing in condition L 7(4): That the licensee must not cause or permit the emission of offensive odour beyond the boundary of the premises. 4 I am not sure why but condition L 7.2 also addresses the question of offensive odour and says that: No condition of this licence identifies the potentially offensive odour for the purpose of s 129 of the Protection of the Environment Operations Act 1997. 5 Presumably there is good reason for that condition but I do not presently fully understand what that is. I do not believe that it is necessary to do so as no issue arises directly in regard to it in connection with the offence. 6 Another important historical fact is that originally, as I understand it, the company or its predecessor applied for development consent on the basis that ultimately the feedlot would operate accommodating 6000 head of cattle. 7 Apparently, in conjunction and collaboration with the EPA, development consent was granted initially for 4000 head of cattle with deferred commencement conditions applied in respect of the prospect of accommodating 6000 head. It is integrated development for the purpose of the Environmental Planning and Assessment Act 1979 ("the EP&A Act"). 8 I am informed that there was a condition of the development consent which reflected the conditions of the licence issued by the EPA under the PEO Act, namely, a condition regarding the number of cattle to be accommodated in the feedlot at any one time and that the number is not to exceed 4000. 9 Following an increase in the level of complaints regarding the noxious or offensive odours said to be emanating from the premises from various persons in the area made either directly or through means of a hotline to the Department, an investigation and inspection was carried out. Ultimately a penalty infringement notice was issued in regard to the emission of odour on 8 March 2005 as a consequence of observations made by a departmental officer on 23 February 2005. 10 A further odour survey of the area was carried out by the Department officer on 19 July 2005. He again observed offensive odours on that day. No particulars of where or how he noticed those odours is provided except the fact that they were there. Critically though on that day he made a physical observation that it appeared to him that there was a significantly higher density of cattle in the feedlot than what he had observed during the previous inspection and odour surveys. As a consequence further inquiries were made from the owner and the director of the company. The director, Mr Herbert, readily conceded that rather than there being up to 4000 head in the feedlot at the time of the inquiry there was indeed in excess of 6000 cattle penned. The exact number being, on 29 July 2005, 6269 with a further 1046 cattle being held in paddocks on the same premises. 11 In response to further inquiries from the Department, the owner provided a printout of the daily feedlot numbers and most relevantly for the period named in the charge. 12 First of all, those numbers were provided going back to 1 May 2002, which, according to my estimation, must have been very close to the commencement of the operation. 13 Relevantly, for the purpose of the charge, the printout disclosed that on 13 April 2004 there was in excedence of 155 cattle over and above the prescribed number in the feedlot. According to the printout the number in the feedlot was maintained at a figure roughly between 4500 and 4800 up to 6 May 2004. Thereafter for a period of time the figures from time to time exceeded 5000 and at other times was in the range between 4500 and 5000 and continued in that range consistently through to 29 July 2005 when the figures were disclosed to be 6269. 14 It is worth observing that on the date of the so called odour survey on 23 February 2005 the numbers were 4095 which is only marginally in excess of the licence requirements. 15 The issue of the penalty infringement notice on 8 March 2005 curiously marked the commencement of a period of significant increase of the numbers in cattle held in the feedlot, ranging up to 6000 cattle in mid April and then being maintained at a figure generally in excess of 6000 until the end of the period specified in the charge, namely 29 July 2005. 16 Mr Herbert has sworn an affidavit where he frankly admits that the operation has been carried out otherwise than in accordance with the conditions of the licence. He draws attention to a number of matters that the company asks the Court to take into account. That includes that the feedlot is a significant employer in the Eugowra district, coincidentally providing employment at a time when another commercial operation, a sawmill, ceased thereby providing employment for ten fulltime employees and five part time employees, as well as the members the Herbert family. 17 Mr Herbert seeks to explain to the Court that the excedences occurred during a period when the cattle industry was under significant stress. I think it is probably well known that there has been a drought throughout the period of the charge. That obviously has had a drastic effect on the cattle market from time to time. Accordingly, a feedlot such as the one at Gundemain provides a facility for farmers to gain some benefit from their cattle otherwise than by disposing of them in poor conditions in a weak market. There are other inherent benefits from feed lotting which he refers to such as the benefit arising from the cost of feeding cattle in that way. 18 Moreover, Mr Herbert points to the fact that this operation is carried out in a state of the art manner. It was designed to accommodate 6000 head of cattle. In order for it to operate in a financially viable way, that is the number of cattle it needs to carry. 19 Some of those matters may indicate why some importance should be placed upon the nature of this particular industry in this locality but it in no way excuses the gross excedences that occurred. 20 It is significant, in terms of assessing a penalty, that notwithstanding the issue of a penalty infringement notice following the inspection in February 2006, the company saw fit to actually increase the intensity of its operation. I am entitled to infer that in so doing it must have been aware of the potential to cause further emissions of odour that might prove to be offensive. 21 On the other hand, despite the fact that the breach appears to be wilful and deliberate and in terms of the degree of excedence serious, the defendant pleaded guilty at the first opportunity and, following detection, cooperated with the Department officer readily, accepting that there was an excedence and providing the records as requested. 22 In terms of s 241 of the PEO Act specifically the extent of the harm caused is not fully explained other than to the extent that the odour from the operation of the premises was detected to the point where complaints were generated. 23 It has not been established by the evidence directly that the odour complaints were generated specifically as of the consequence of having up to two and a half thousand additional cattle on the premises. 24 It may well be of course that the odour complaints would have been generated with a much lesser number of cattle. The number may not be the critical factor in that respect. However, I must accept that if there was an odour problem then by increasing the number of cattle by over fifty per cent it might be expected it would have some impact upon the result. 25 In terms of the practical measures that may have been taken to prevent, control or abate or mitigate the harm, again, qualifying the extent to which the evidence goes in respect of the harm then the simple remedy or practical measure open to the defendant would be to not build the numbers up to the levels which they reached. 26 It is equally reasonable to accept, and I do, that the company could reasonably have foreseen that an increased number of cattle on the premises could generate additional emissions of smell or odour and that it could well have expected that the result would be an impact upon persons within the immediate vicinity depending upon weather conditions. 27 Section 241(d) is not directed to harm, it is directed to the control that the person who committed the offence has over the causes that gave rise to the offence. It is self evident that the company controls the premises and is solely responsible for the number of cattle that enter or leave its premises at any one time. That is a matter that needs to be taken into account. 28 Mr Samuels for the EPA makes a submission reminding the Court of the commercial nature of the venture and that, notwithstanding the drought conditions that may or may not have exacerbated the demand to take the greater numbers from time to time during that period, no mention was made of difficulties being experienced in that respect to the EPA or at least there is no evidence of that. I am sure if there was the Court would have been informed about it. On Mr Herbert's own confession it would seem that the feedlot operation needed 6000 cattle in order to conduct the business on a profitable basis. That of course is no excuse for breaching the terms of the licence under the Act. If there is a difficulty in that respect the way in which the company went about solving that problem was the wrong one. 29 It is evident that the company just kept on going until it received a formal instruction to reduce the number of cattle. To its credit, it did that by the end of August 2005 shortly after the expiration of the period of the offence. 30 I take into account the submission made by Mr Pickles that there is no evidence of substantial harm other than the odour emitted from the premises. That in itself of course creates harm in that it self evidently disturbs the amenity of any persons who find themselves within the range of that offensive odour. There is no evidence that persons fell ill or that were in some other way affected to their extreme detriment. The highest the evidence reaches in that respect is that one house owner was required to close up the house. 31 The EPA wrote to the company on 8 March 2005 when it issued the penalty infringement notice. It was made plain in that letter that even though the conditions were calm on 23 February 2005 ammonia and urine odours were noted in certain areas around the feedlot. In particular, at one spot where it was noted to be offensive. It was noticed at several times during that evening. That letter, at least from that date, should have informed the company that there was a problem. 32 In order to put the complaints in a proper context I am informed by Mr Pickles without any objection by Mr Samuels that the evidence at the time that the penalty infringement notice was issued is that there were four major complainants and that there were eleven or twelve other complainants out of a total number of complaints which were noted at one hundred and four. However, the fact that any person suffered in that way is a matter to be taken into account. 33 There has been a significant debate about the manner in which the Court should determine the penalty that the company should suffer. As I have indicated there has been a plea of guilty. Nevertheless, it is significant to note that s 64 provides that in the case of a corporation the maximum penalty at the time was $250,000 and that in the case of a continuing offence a further penalty of $120,000 for each day the offence continues. The penalty of $250,000 for the offence has now been increased to $1,000,000 whereas the daily penalty remains at a $120,000. Calculation shows that the maximum penalty that might be incurred in circumstances where the offence has continued for 471 days would be in excess of $56,000,000. Nobody at the bar table suggests that should be regarded as an appropriate yardstick against which to measure the appropriate penalty in this case. 34 Nevertheless it does show that parliament regarded offences under this section as potentially being of the most serious kind, particularly if they were left to continue uncontrolled and unabated. 35 Mr Pickles raises an issue under s 242 of the Act to suggest that the offence in this case may not be a continuing offence. Section 242(1) speaks of a requirement made by or under the Act or the regulations to do or cease to do something and that such an offence or such a contravention of such a requirement continues until the requirement is complied with. As I understand his submission, before there can be a continuing offence in the terms of s 242 there needs to be a requirement made in order to do or cease to do something. In the present case there was no such requirement. 36 Mr Pickles uses the example of a situation where a notice could be issued under some part of the Act or the regulations requiring the recipient of the notice to comply with its terms and that if that was not done. In those circumstances he says there would be a continuing offence pursuant to s 242(2). 37 It may well be that the provisions of s 242 seek to deal with the type of circumstance discussed in Environmental Protection Authority v Alkem Drums Pty Limited (2000) 113 LGERA 130, where there was a problem with a company that had failed to comply with a notice. 38 However, in the course of the judgment in the Court of Criminal Appeal, particularly the judgment of Smart AJA, there is a recognition that a continuing offence is not something that arises pursuant to any statutory provision but is a matter of categorising the particular offence according to law in each case. 39 Mr Samuels submits this particular offence arises as a consequence of a contravention of a requirement made under the Act, namely, to comply with the conditions of the licence. There is no suggestion that before there is a requirement to comply with a licence that a notice should be issued. Section 241 is plain in its terms and simply provides that if any condition of a licence is contravened by any person each holder of the licence is guilty of an offence. It then goes on to provide for a continuing offence. 40 Ultimately, Mr Pickles made the submission that I should assess the penalty appropriate to the present case by having regard to the totality of the excedence over the whole period, taking into the account the excedence from time to time and the period of the excedence. Moreover, he submitted that I should take a neutral approach to the excedence without regard to the degree of excedence, although the additional penalty for continuity may have regard to the degree of excedence. 41 I find that it is appropriate to, first of all, have regard to the condition of the licence. I am not greatly assisted by what there appears. It says the total number of livestock accommodated within the feedlot at any one time must not exceed 4000. I propose to have regard to the fact that as from 13 April 2004 the company was in breach of its obligations under the licence, albeit at that first date by a marginal number of cattle, namely 155. 42 Nevertheless, no real excuse has been provided for that excedence in circumstances where the limit on the numbers of cattle was clearly a critical matter, which the licence holder should have fully appreciated, in order to ensure that the operation was conducted in a way that minimised the impact upon the environment not only in terms of odour, which is the only matter that is raised by way of potential harm in this case, but also in relation to the general protection of the environment in the context of an operation of intensive agriculture such as a feedlot. 43 I find that the offence itself is not minor. I agree with Mr Pickles that it is not of the most serious kind but is more serious than an offence that can be treated as minor. 44 Having regard to the maximum penalty applicable of $250,000 exceeding the number of cattle on the premises warrants a penalty in the order of $50,000. 45 Thereafter, I am satisfied that the company incurred a daily penalty. I am satisfied that, while ever the company kept the numbers within the initial range of just over 4000 and under 5000 cattle and having regard to the length of that period and the cumulative effect of the penalty, the 320 odd days up to the 23 February 2005 attract a penalty of at least $100 a day. 46 Thereafter, the company's culpability increased. It was made aware that there was a problem on 23 February 2005. That problem was accentuated by the letter delivered to it on 8 March 2005 making it quite clear that harm was being caused by the operation of the feedlot. Nevertheless, the numbers increased significantly. In my view the penalty on a daily basis incurred after 23 February should be more in the order of $200 a day. By the application of simple arithmetic that raises the base penalty to a figure in the order of $110,000 to $115,000. 47 In accordance with Re Thompson I recognise that this defendant is entitled to the full discount for its early plea for its ready recognition of the commission of the offence and its subsequent cooperation with the prosecutor in providing the necessary information that proved its guilt. 48 I also take into account the fact that the operation was brought into conformity with the terms of the licence by August 2005. I take into account the matters put to me by Mr Pickles in mitigation, including the previous good record of the company. However, balanced against that of course is the fact that the excedence would have been the source of a generation of additional income for the company. Although there are suggestions that some altruistic benefits flowed from its operations there is no real suggestion put to me that I should regard this company as having carried on its operations primarily for that purpose. 49 I also take into account the fact that the company has agreed to pay the prosecutor's costs in the sum of $14,000. This is in the nature of an additional penalty against the company. 50 However, it nevertheless remains that the Court should ensure that the general public is made aware that where a licence is issued under the terms of the PEO Act it is intended that the holders of those licence exercise the privilege of doing so in accordance with the law and if they do not then they will be penalised. 51 Moreover, there is an issue of personal deterrence in the present case. It should be made clear to this company, despite the expression of contrition in the affidavit of Mr Herbert which I accept, that these matters are taken seriously. It is to be deterred from any reoccurrence. Those running the company must understand that any reoccurrence of an offence of this nature will run the risk of a much severer penalty than the amount that I propose to impose. 52 After taking all of the above matters into account I find the offence proved. I find the company guilty as charged in the summons. I convict the company. I impose a penalty in the sum of $80,000. I order the company to pay the prosecutor's costs in the sum of $14,000.