Environment Protection Authority v S J Perry [2004] NSWLEC 715

Reported Decision : 135LGERA 431

Land and Environment Court of New South Wales

CITATION : Environment Protection Authority v S J Perry [2004] NSWLEC 715 PROSECUTOR: Enviornment Protection Authority PARTIES : DEFENDANT: S J Perry FILE NUMBER(S) : 50038 of 2004 CORAM: Bignold J KEY ISSUES: Environmental Offences :- 3000 tonnes of used tyres abandoned by Corporation-Liability of Director of Corporation for offence committed by Corporation-Appropriate penalty-Clean-up-Order too financially burdensome to Defendant with limited financial means-penalty also to reflect Defendant's limited financial capacity. LEGISLATION CITED: Protection of the Environment Operations Act 1997, ss 115, 169 CASES CITED: Millner v Raith (1942) 66 CLR 1; Rahme (1989) 43 Aust Crim R 81 DATES OF HEARING: 15/12/2004 DATE OF JUDGMENT: 12/17/2004

PROSECUTOR: Mr J Rushton SC SOLICITORS Department of Environment and Conservation

LEGAL REPRESENTATIVES: DEFENDANT: Mr J Maston, Barrister with Mr M Seymour, Barrister SOLICITORS Baldock Stacey and Niven

JUDGMENT:

17 - - THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

BIGNOLD J

17 December 2004

50038 of 2004 ENVIRONMENT PROTECTION AUTHORITY v STANLEY JAMES PERRY

JUDGMENT HIS HONOUR: A. INTRODUCTION 1 The Defendant has pleaded guilty to a charge that "as a director of K P Recycling Pty Ltd (ACN 094 910 817) between 1 May 2001 and 31 July 2001 inclusive, he committed an offence against the Protection of the Environment Operations Act 1997, s 115(1) by reason of s 169(1) of that Act, in that K P Recycling Pty Ltd did negligently dispose of waste in a manner that harmed or was likely to harm the environment". 2 The particulars endorsed upon the Summons were as follows: (a) Corporation that contravened s 115(1) of the Act:C K.P. Recycling Pty Ltd (ACN 094 910 817) (b) Place where corporation committed the contravention: at a property known as Lot 9, DP 7775454, Arthursleigh Lane, Gilgandra, New South Wales (the "premises"). (c) Waste: Approximately 3000 tonnes of used tyres. (d) Nature of contravention: The corporation negligently abandoned the waste it had previously stored at the premises. (e) Negligence: Abandoning the waste at the premises and, as a result, leaving the waste in such a state that it would harm or would be likely to harm the environment because: (i) of the amount of the waste involved; and/or (ii) the waste was stored too close to the boundary of the premises; and/or (iii) the waste was not separated into stockpiles. (f) Harm or likely harm to the environment: (i) degradation of the environment; (ii) land pollution, namely, the degradation of land because of the disposal of the waste on the land; (iii) disposal of the waste in such a manner as to pose a risk of fire and air pollution (iv) disposal of the waste in such a manner as to increase the likelihood of air pollution in the event of a fire; (v) disposal of the waste in such a manner as to increase the amount of air pollution in the event of a fire; (vi) disposal of the waste in such a manner as to increase the risk of harm to nearby residents from air pollution in the event of a fire; (vii) disposal of the waste in such a manner as to increase the likelihood of and amount of water pollution resulting from attempts to extinguish any fire at the premises; and/or (viii) disposal of waste in such a manner as to degrade the environment by providing conditions for the breeding of organisms such as mosquitos and rodents. 3 The Protection of the Environment Operations Act 1979, s 115 (the PEO Act) is in the following terms: 115 Disposal of waste—harm to environment (1) Offence If a person wilfully or negligently disposes of waste in a manner that harms or is likely to harm the environment: (a) the person, and (b) if the person is not the owner of the waste, the owner, are each guilty of an offence. (2) Defence—lawful authority It is a defence in any proceedings against a person for an offence under this section if the person establishes that the waste was disposed of with lawful authority. (3) Definitions In this section: dispose of waste includes to dump, abandon, deposit, discard, reject, discharge or emit anything that constitutes waste, and also includes to cause or permit the disposal of waste. owner of waste includes, in relation to waste that has been disposed of, the person who was the owner of the waste immediately before it was disposed of. waste includes any unwanted or surplus substance (whether solid, liquid or gaseous). A substance is not precluded from being waste merely because it may be reprocessed, re-used or recycled. 4 The Dictionary to the PEO Act includes the following relevant definitions— harm to the environment includes any direct or indirect alteration of the environment that has the effect of degrading the environment and, without limiting the generality of the above, includes any act or omission that results in pollution. environment means components of the earth, including: (a) and, air and water, and (b) any layer of the atmosphere, and (c) any organic or inorganic matter and any living organism, and (d) human-made or modified structures and areas, and includes interacting natural ecosystems that include components referred to in paragraphs (a)–(c). pollution means: (a) water pollution, or (b) air pollution, or (c) noise pollution, or (d) land pollution. land pollution means the degradation of land because of the disposal of waste on the land. 5 Section 118 of the PEO Act provides the following general defence to tier 1 offences (the present charge is for a tier 1 offence): 118 General defence for tier 1 offences It is a defence in any proceedings against a person for an offence under this Part if the person establishes: (a) that the commission of the offence was due to causes over which the person had no control, and (b) that the person took reasonable precautions and exercised due diligence to prevent the commission of the offence. 6 Section 119 prescribes the maximum penalty for tier 1 offences—namely a penalty not exceeding $1,000,000 in the case of a corporation and a penalty not exceeding $250,000 or 7 years imprisonment or both, in the case of an individual. 7 Section 169 which is the basis for the Defendant's admitted liability in respect of the present charge provides as follows: 169 Offences by corporations (1) If a corporation contravenes, whether by act or omission, any provision of this Act or the regulations, each person who is a director of the corporation or who is concerned in the management of the corporation is taken to have contravened the same provision, unless the person satisfies the court that: (a) the corporation contravened the provision without the knowledge actual, imputed or constructive of the person, or (b) the person was not in a position to influence the conduct of the corporation in relation to its contravention of the provision, or (c) the person, if in such a position, used all due diligence to prevent the contravention by the corporation. (2) A person may be proceeded against and convicted under a provision pursuant to this section whether or not the corporation has been proceeded against or been convicted under that provision. (3) Nothing in this section affects any liability imposed on a corporation for an offence committed by the corporation against this Act or the regulations. (4) Without limiting any other law or practice regarding the admissibility of evidence, evidence that an officer, employee or agent of a corporation (while acting in his or her capacity as such) had, at any particular time, a particular intention, is evidence that the corporation had that intention. 8 The competing submissions on sentence for the admitted offence ranged from (i) the Prosecutor's case for the imposition of a significant penalty plus the making of an order pursuant to s 245 of the PEO Act requiring the Defendant to remove from the Gilgandra premises where they are stored some 3,000 tonnes of used tyres and to transport those types to a waste facility authorised to receive that type of waste; to (ii) the Defendant's case for the imposition of a more modest fine which is commensurate to the Defendant's limited capacity to pay that fine. 9 The PEO Act, s 245 which appears in Pt 8.3 ("Court Orders in connection with offences") is in the following terms: 245 Orders for restoration and prevention The court may order the offender to take such steps as are specified in the order, within such time as is so specified (or such further time as the court on application may allow): (a) to prevent, control, abate or mitigate any harm to the environment caused by the commission of the offence, or (b) to make good any resulting environmental damage, or (c) to prevent the continuance or recurrence of the offence. 10 It is to be noted in respect of an order made under s 245 that such an order may be made "in addition to any penalty that may be imposed" (s 244(2)) and that it is a separate offence (created by s 251) if a person "fails to comply with" such an order with a prescribed maximum penalty of "$60,000 for each day the offence continues". 11 For the reasons hereafter given, I am of the opinion that in the circumstances of this case, especially in view of the Defendant's lack of financial means, that it is not appropriate to make the order sought under s 245 because it would be likely to impose on the Defendant an insurmountable and crippling financial burden of hundreds of thousands of dollars and it is likewise appropriate to considerably reduce the fine that otherwise would have been warranted (commensurate with the seriousness of the admitted offence, and having regard to the objective circumstances of the commission of the offence and the Defendant's subjective culpability and personal circumstances) on account of the Defendant's present limited financial means. 12 Before setting forth my reasons for concluding what is the appropriate sentence in this case, I intend to first recite the relevant facts concerning the admitted offence and then the facts concerning the Defendant's subjective culpability and personal circumstances. 13 But before so proceeding, I should make a few observations concerning the present charge and the Defendant's liability under it. Firstly, it is to be noted that the Summons preferring the charge was not filed until 30 April 2004 nearly three years after the commission of the offence. 14 Secondly, it is to be noted that the Defendant's liability to the present charge is a status liability in that it is a liability imposed upon him as a director of the corporation that contravened the PEO Act. 15 Thirdly, it to be noted that the present charge was brought in circumstances where no charge has been brought against the corporation K P Recycling Pty Ltd (KP) (presumably because that company went into liquidation soon after the commission of the offence in mid 2001). 16 The liability created by s 169 which the Defendant has admitted is a liability that he as a Director of K P "is taken to have contravened the same provision" that was contravened by KP. 17 Speaking of a similar provision contained in the Commonwealth Defence Act 1903, Starke J in Millner v Raith (1942) 66 CLR 1 at 5 said: The provisions (of the similar provision) are complementary to (sections creating specific offences). They make a director or person concerned in the management of a body corporate responsible as a principal for any act or fact specified in those sections merely because of his relation to the body corporate. 18 This decision is cited in Peter Gillies' "Criminal Law" (4th ed 1997) at p 149 in support of the following statement in his chapter 6 ("The Criminal Liability of Corporations"): It has occasionally been provided in a statute creating criminal liability in a company, that when an offence is committed by a company every person being a director or person concerned in the management of the company shall be guilty of this offence unless that person proves certain matters of exculpation 19 However, as noted at pp 166/167 in Bates and Lipman "Corporate Liability for Pollution" (1998) modern environmental protection legislation in Australia has almost uniformly created liability in corporate officers "solely by virtue of their position in the organisation" for environmental offences committed by their corporations. 20 A similar legislative pattern has emerged in modern English environmental protection legislation—see for example the Environmental Protection Act 1990, s 157(1) which provides: 157(1) Where an offence under any provision of this Act committed by a body corporate is proved to have been committed with the consent or connivance of, or to have been attributable to any neglect on the part of, any director, manager, secretary or other similar officer of the body corporate or a person who was purporting to act in any such capacity, he as well as the body corporate shall be guilty of that offence and shall be liable to be proceeded against and punished accordingly. 21 Speaking of a similar provision contained in the English Fire Precautions Act 1971 (s 23) imposing separate liability on a "director, manager, secretary or other similar officer of the body corporate" for an offence committed by the body corporate "attributable to any neglect on the part of" those nominated persons, the English Court of Appeal in R v Boal (1992) 3 AllER 177 said at 181: It follows from all this that the appellant was only properly imperilled by s 23 if, as the assistant general manager of the shop, he had the management of the whole affairs of the company , was intrusted with power to transact the whole of the affairs of the company , and was managing in a governing role the affairs of the company itself . The intended scope of s 23 is, we accept, to fix with criminal liability only those who are in a position of real authority, the decision-makers within the company who have both the power and responsibility to decide corporate policy and strategy. It is to catch those responsible for putting proper procedures in place; it is not meant to strike at underlings. 22 The liability imposed by the PEO Act, s 169 is imposed textually in more absolute terms than are the similar English provisions (although the differences are probably considerably narrowed by dint of the exculpations from that liability expressly provided by s 169(1)). B. THE RELEVANT FACTS CONCERNING THE ADMITTED OFFENCE 23 The relevant facts principally are sourced in the Statement of Agreed Facts (Exhibit 1) which was tendered at the outset of the hearing. From the contents of that Statement I extract the following factual summary: (i) In the second half of 2000 the Defendant first became acquainted with the then existing business of receiving used vehicle tyres for storage and recycling that had been commenced at Gilgandra by Mr Noel Keerie in January 2000; (ii) The business was being conducted on a rural parcel of land owned by the Gilgandra Shire Council and leased to Mr Keerie's Company, En-Tyre Rubber Works Pty Ltd and situate some 8 kilometres from the Gilgandra township. Mr Keerie's Company had obtained development consent under the Environmental Planning and Assessment Act 1979 from the Council on 6 December 1999 for the establishment on the Council's land of a " tyre storage and processing plant ". Conditions of consent included conditions that had been recommended by the Environment Protection Authority. Condition (xi) required that a "$ 20,000 bond be paid to Council in cash or bank guarantee " for the stated reason: to ensure that funds are available to manage tyres left on site in the event that activities relating to the land use cease (iii) the lease granted by the Council to Mr Keerie's Company was for a period of two years commencing on 17 January 2000 at a monthly rent of $1,000 and included an option for purchase of the land by the lessee. The lease permitted the use of the premises for " tyre storage and processing facility " as approved by the Council's grant of development consent. The lease contained the following condition: 12.3 When this lease ends, unless the tenant becomes a tenant of the property under a new lease the tenant must— 12.3.1 return the property to the landlord in the state and condition that this lease requires the tenant to keep it in; and 12.3.2 have removed any goods and anything that the tenant fixed to the property and have made good any damage caused by the removal. Anything not removed becomes the property of the landlord who can keep it or remove and dispose of it and charge to the tenant the cost of removal making good and disposal. (iv) On 28 February 2000 , the Environment Protection Authority issued an Environment Protection Licence (No 10635) pursuant to the PEO Act to Mr Keerie's business name " En-Tyre Recycled Constructions ". That Licence authorised the use of the Gilgandra premises by the carrying out of scheduled activities comprising " Waste facilities—tyres " subject to specified conditions including the following: Waste L5.1 The licensee must not cause, permit or allow any waste generated outside the premises to be received at the premises for storage, treatment, processing, reprocessing or disposal or any waste generated at the premises to be disposed of at the premises, except as expressly permitted by the licence. L5.2 This condition only applies to the storage, treatment, processing, reprocessing or disposal of waste at the premises if those activities require an environment protection licence. L5.3 Except as provided by any other condition of this licence, only inert in the form of tyres may be stores or transferred, recovered b way of separating or processing at the premises. L5.4 The total quantity of inert waste in the form of tyres stored or transferred, recovered by way of separating or processing at the premises must not exceed 2500 tonnes at any one time. L5.5 Not limiting condition L5.4, the amount of tyres less than 1.2 metres in diameter must not exceed 200 tonnes. (v) On 24 October 2000 Licence No 10635 was varied by the Environment Protection Authority following a request made by Mr Keerie in March that year. The variation included an increase of the limit on the storage of used tyres at any one time from 2,500 tonnes to 5,000 tonnes. In the " background " recitals to the Variation of the Licence it is disclosed that Mr Keerie had informed the EPA officers of his obligation under a Court order obtained by the Great Lakes Council to remove by the end of 2000 all stored tyres (some 2,000 tonnes) at premises in Coolongolook which Mr Keerie had previously operated. (vi) In mid 2000 Mr Keerie had entered into negotiations with Brambles Industrial Mining Services with the prospect of supplying Brambles with thousands of tonnes of crumbed or chipped used rubber tyres for use as stemming in drill holes when carrying out mine blasting. Those negotiations had included the supply by Mr Keerie of chipped rubber which was successfully trialled by Brambles at their mine sites. Brambles representatives inspected the Gilgandra premises and 16 November 2000 they addressed the Gilgandra Council indicating that they hoped to use Mr Keerie's Gilgandra operation because of its locational advantage to Brambles. Brambles intention was to utilise the Gilgandra premises as the processing plant with used tyres coming in for processing before going out to Brambles for use at their Mines. However, Brambles wanted to do business with a person with more business acumen than that possessed by Mr Keerie. It was at that point that the Defendant came on the scene and for the remainder of the year 2000 the Defendant also attended meetings with Brambles representatives and KP was formed as a corporate entity with the Defendant and Mr Keerie being its directors. The Defendant had no previous interest or experience in the used tyre recycling business. In the course of those meetings and negotiations, the Defendant prepared a draft business plan for the supply from the Gilgandra operation of Brambles needs. The plan was well received by Brambles which responded by informing KP on 10 January 2001 that Brambles would wish to continue to form a strategic partnership with KP with an initial need for chipped tyre supply at the rate of 28,000 tonnes per annum. (vii) Mr Keerie who was in a lot of debt had approached the Defendant to seek his involvement in the business especially in financing the operation. The Defendant eventually agreed and thereafter incorporated KP to conduct the business. (viii) By letter received by the Council on 22 December 2000, the Defendant, as Director of KP, advised that "Entyre Recycled Constructions has now formed into a company" of which the Defendant and Mr Keerie were directors. Thereafter, monthly rental payments were made by KP until default in the payment of rent occurred in June 2001; (ix) In January 2001, the Defendant became aware that Mr Keerie was in financial difficulty and was in the process of having himself declared bankrupt. On 18 January 2001, Mr Keerie ceased being a Director of KP and the Defendant thereafter became the sole Director. Mr Keerie continued at the Gilgandra premises as an employee of KP and was chiefly responsible for the day to day operation. The Defendant only twice attended the Gilgandra premises. (x) From late 2000 until June 2001, KP acquired and brought many used tyres to the Gilgandra premises, with the result that by June 2001 some 3,000 tonnes of used tyres were stored at the premises. KP received $350,000 gross in payment for the tyres which it brought to the Gilgandra premises during this period. (xi) By letter dated 24 April 2001 addressed to Mr Keerie the EPA again varied Licence No 10635 by imposing a further qualification on the condition limiting the quantity of stored tyres to "not more than 5,000 tonnes at any one time". This qualification was expressed in the following additional condition: L5.6 Any tyres received at the premises….in excess of 3,000 tonnes must be sourced only from the premises at…..Coolongolook". The reasons for this unilateral change in the relevant condition were set forth in the EPA's accompanying letter and are encapsulated in the following background recitals to the Variation of the License: (a) KEERIE; NOEL & SUSAN t/as ENTYRE RECYCLED CONSTRUCTIONS ("the licensee") is the holder of environment protection licence 10635 for Scheduled Activity – Premises Based ("the licence") under the Protection of the Environment Operations Act 1997 ("the POEO Act"). (b) The licensee currently has two separate licensed Used Tyre Processing or Disposal facilities, these being environment protection licence 10635, Arthursleigh Lane Gilgandra ("Gilgandra") and environment protection licence 6187, 13041 Pacific Highway Coolongolook NSW ("Coolongolook"). The licensee was required by a court order to remove all tyres from the Coolongolook premises by the 31 December 2000. (c) On the 24 October 2000 the EPA amended environment protection licence 10635 by changing the tyre storage limit on the licence from 2,500 to 5,000 tonnes. This amendment was on the understanding that the increase in tyre storage volume for Gilgandra was to accommodate those tyres required to be relocated from Coolongolook, thus enabling the licensee to comply with the court order. (d) On the 6 March 2001 the EPA was advised that none of the tyres at Coolongolook appeared to have been removed. Furthermore, during an inspection of the Gilgandra premises by the EPA on the 8 March 2001, Terry Knowles and Carmen Dwyer of the EPA were advised by the licensee that approximately 2,500 were stored at the Gilgandra premises. (e) In order to ensure that the Gilgandra premises has sufficient capacity to accommodate Coolongolook tyres and thus enable the removal of tyres from the licensees premises at "Coolongolook", the EPA via this notice varies environment protection licence 10635 by restricting the amount of tyres obtained from sources other than Coolongolook and stored at the Gilgandra premises at any one time to 3000 tonnes.