Land and Environment Court of New South Wales CITATION : Environment Protection Authority v Coffs Harbour Hardwoods (Trading) Pty Limited [2004] NSWLEC 563 PROSECUTOR: PARTIES : Environment Protection Authority DEFENDANT: Coffs Harbour Hardwoods (Trading) Pty Limited FILE NUMBER(S) : 50041 of 2004 CORAM: Pain J KEY ISSUES: Prosecution :- Plea of guilty - breach of Environmental Protection Licence condition requiring licensed activities to be carried out in a competent manner Crimes (Sentencing Procedure) Act 1999, s 10, s 21A LEGISLATION CITED: Environment Operations (Control of Burning) Regulation 2000 Occupational Health and Safety Regulation 2001, cl 150(2), cl 155(1) Protection of the Environment Operations Act 1997, s 64(1), s 241 Camilleri Stockfeeds Pty Limited v Environment Protection Authority (1993) 32 NSWLR 683; Environment Protection Authority v Biosolids Management Pty Limited [2004] NSWLEC 90; CASES CITED: Environment Protection Authority v Lithgow City Council [2003] NSWLEC 425; Newcastle City Council v Pepperwood Ridge Pty Limited [2004] NSWLEC 218 ; R v Paris [2001] NSWCCA 83; R v Piccin (No 2) [2001] NSWCCA 323 DATES OF HEARING: 11/10/2004 DATE OF JUDGMENT: 10/13/2004 PROSECUTOR: Mr P. Barley (solicitor) of the Environment Protection Authority LEGAL REPRESENTATIVES: DEFENDANT: Mr R. Lancaster (barrister) instructed by Koops Martin JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES Pain J 13 October 2004 50041 of 2004 ENVIRONMENT PROTECTION AUTHORITY v COFFS HARBOUR HARDWOODS (TRADING) PTY LIMITED JUDGMENT 1 Her Honour: The Defendant carries on a sawmill and timber treatment business at Glenreagh NSW. The Defendant has pleaded guilty to the charge of committing an offence under s 64(1) of the Protection of the Environment Operations Act 1997 ("the POEO Act") in that between 21 May 2003 and 29 May 2003 it contravened a condition of Environment Protection Licence No 11413 ("the licence") issued to it. The maximum penalty for this offence is $250,000. 2 The relevant condition of the licence is condition 01.1 which states that: Licensed activities must be carried out in a competent manner. This includes: · The processing, handling, movement and storage of materials and substances used to carry out the activity; and · The treatment, storage, processing, reprocessing, transport and disposal of waste generated by the activity. 3 The circumstances of the offence are set out in the Statement of Agreed Facts and can be summarised as follows: 4 At the time of the offence the Defendant's business involved the treatment of certain timber with copper chrome arsenate ("CCA") or boron impregnation so as to preserve the timber and protect it against damage by borer. The timber so treated ("the treated timber") was then machined by the Defendant, along with other untreated timber, into boards for flooring and decking. Once these boards are made any flaws such as knot holes were cut out of the boards and discarded. This process is referred to as docking and the flawed pieces of board so discarded are referred to as "dockings". The dockings were disposed of by the Defendant by being placed in a fire pit and periodically burnt. The Defendant's processes did not distinguish between the dockings made of treated timber and those made of untreated timber. 5 Usually only 10 per cent of the timber used by the Defendant is treated timber. However, during the period of the offence the Defendant was processing a higher than usual amount of treated timber, with the majority of the timber being so treated with CCA. Accordingly, during the period of the offence the Defendant's employees placed approximately 9 metres of treated dockings in the fire pit and burnt these. As the Defendant has pleaded guilty to the offence all the requisite legal elements in relation to the offence are taken to have been proved. 6 The fire pit, which has since been decommissioned by the Defendant, is described at par 13 to 16 of the Statement of Agreed Facts as follows: Prior to its decommissioning the fire pit was a circular area of approximately 10 metres in diameter with earthen walls approximately 2 metres high. It had an opening on one side through which loaders could bring timber in and dump it on the fire. A concrete pipe was located in the internal bund wall of the fire pit, approximately 60 cm above the ground level of the fire pit in May 2003. The pipe was approximately 30cm diameter and it ran through the wall. The other end of the pipe was located at ground level on the downslope of the external bund wall. A minor ephemeral watercourse runs through the middle of the site. That watercourse is approximately 20m from the point above which the concrete pipe emerged from the bund. The terrain between the bund wall and the ephemeral watercourse was relatively flat and grassed. 7 Following the commission of the offence the Defendant retained GHD Pty Limited to carry out an investigation of the soil in the fire pit and the vicinity of the fire pit. The results of this investigation are contained in reports of February and March 2004 tendered in evidence. These reports note that there are higher than background levels of heavy metals in the vicinity of the fire pit but stated that: The material [in the fire pit] is not presently considered to present a significant health risk for commercial/industrial use of the site but would not be suitable for a more sensitive land use. There is also the potential for ongoing environmental impact through the migration of sediments from this area or through potential phytotoxicity of the insitu material. 8 Further both Dr Patra, an officer employed by the Ecotoxicology and Water Science Section of the Department of Environment and Conservation and Mr Welchman, the Acting Principal Technical Policy Advisor in the Air Policy Section of the Department of Environment and Conservation, prepared affidavits in relation to the environmental harm resulting from the offence which, while not read in these proceedings, have been partially incorporated into the Statement of Agreed Facts. Paragraph 28 of the Statement of Agreed Facts sets out Mr Welchman's conclusions in relation to the use of the fire pit by the Defendant for burning treated dockings as follows: "In my opinion, the practice of burning timber treated with CCA in the burning pit at Coffs Harbour Hardwoods had the potential to be hazardous to human health and the environment and should not have been undertaken. This conclusion is based on the following: · There are no controls on emissions of air pollutants from the burning pit; · Smoke, vapour and ash generated in the pit may dissipate or concentrate in the vicinity depending on local winds and atmospheric conditions; · When timber treated with CCA is burned the copper, chromium and arsenic are released from the timber matrix in the smoke, vapour and ash; · Arsenic, copper and chromium that are emitted during burning timber treated with CCA have the potential to affect people at the premises and may also be transported across the boundary of the premises under favourable winds and atmospheric conditions; · Arsenic is an internationally recognised human carcinogen. Arsenic, chromium and copper can also cause short-term health effects such as irritation to the nose, throat and upper respiratory tracts; and · Burning timber treated with CCA is prohibited by the Protection of the Environment Operations (Control of Burning) Regulation 2000." 9 Paragraphs 30-31 of the Statement of Agreed Facts set out Dr Patra's conclusions in relation to the environmental impact of the offence as follows: Dr Patra concludes: "In the absence of any direct evidence of environmental impact by CCA chemicals from CHH on the environment, it is not possible to evaluate any harmful effects caused to the environment. However, the presence of elevated concentrations of CCA metals in the water and sediment samples in the creek down stream of CHH premises have the potential to cause adverse effects on the recruitment of biota when the creek is flowing. Consequently, in my opinion, the contamination of the sediments is likely to reduce the diversity of aquatic life likely to occur downstream of the CHH premises but, without knowing all the variable factors, it is not possible to say by how much this diversity would be reduced." Dr Patra's conclusions need to be qualified as follows: (a) His report concerns sediment samples only. There were no elevated concentrations of CCA metals in the water; (b) The sediment samples were taken at various locations from the ephemeral watercourse and not a creek. The nearest running water to the sample sediment site is the Tullawudjah Creek, which is approximately 800 metres along the dry watercourse from the closest sample site. Application by Defendant for Section 10 Order 10 The Defendant's counsel argued that the circumstances surrounding the offence were such that an order under s 10 of the Crimes (Sentencing Procedure) Act 1999 should be made. Section 10(1) states that: (1) Without proceeding to conviction, a court that finds a person guilty of an offence may make any one of the following orders: (a) an order directing that the relevant charge be dismissed, (b) an order discharging the person on condition that the person enter into a good behaviour bond for a term not exceeding 2 years, (c) an order discharging the person on condition that the person enter into an agreement to participate in an intervention program and to comply with any intervention plan arising out of the program. 11 Relevant matters to take into account in deciding whether an order under s 10(1) of the Crimes (Sentencing Procedure) Act 1999 should be made are set out in s 10(3) as follows: ( 3) In deciding whether to make an order referred to in subsection (1), the court is to have regard to the following factors: (a) the person's character, antecedents, age, health and mental condition, (b) the trivial nature of the offence, (c) the extenuating circumstances in which the offence was committed, (d) any other matter that the court thinks proper to consider. 12 It is agreed by the parties that no actual environmental harm occurred as a result of the commission of the offence. The Defendant argued that while the offence of breaching a licence condition itself was not trivial, the nature of this particular offence was trivial as no environmental harm resulted from the offence. The Prosecutor argued that the Court that while the parties agreed, as stated at par 25 of the Statement of Agreed Facts, that "there is no evidence that the offence … directly caused any harm to the environment…", I should find that the ash from the burnt treated dockings which remained in the fire pit indirectly contributed to the contamination which was found to exist in the fire pit and in the nearby ephemeral creek bed. The Prosecutor conceded that the level of contamination in the fire pit and the ephemeral creek bed were such that this environmental damage was not high. 13 I am prepared to accept as proved beyond reasonable doubt that there is a clear inference that the Defendant's burning of the treated dockings in the fire pit during the period of the offence contributed, in some small degree, to the contamination found in the pit by GHD Pty Ltd. Given that there was no evidence of any water flowing in the pipe located in either the pit or in the ephemeral water course during the period of the offence or afterwards I do not think such an inference can be drawn in relation to the contamination in the ephemeral waterway. It should be noted that the Prosecutor did not impose any requirement on the Defendant to remediate the fire pit or its surrounds as the levels of contamination are sufficiently low that the land is considered safe for its current commercial/industrial use to be continued without remediation. Accordingly, I consider that the environmental harm resulting from the offence was insignificant. 14 The question of the Defendant's culpability is, in my view, important in deciding if orders under s 10(1) of the Crimes (Sentencing Procedure) Act 1999 ought be made. While the failure to comply with a condition of an environment protection licence should generally be considered as being not trivial the particular circumstances of an offence need to be considered to determine if the Defendant's culpability was so minor as to be considered trivial. The Defendant argued that its culpability was trivial because the offence did not result from any intentional or negligent action by the Defendant. Rather the Defendant complied with the information contained in the relevant Material Safety Data Sheet ("MSDS") issued by the company which supplied the CCA used by the Defendant. It believed that compliance with this information was sufficient to ensure that it competently disposed of unwanted treated timber as required by the environment protection licence. As stated in par 23 of the Statement of Agreed Facts: The MSDS stated in a section headed "Physical description/Properties" that "Treated timber must not be burned in cooking or heating fires or in confined or unventilated places". The MSDS stated in a section headed "Acute Health Effects – Inhaled" that "The vapour from the burning material is highly discomforting and may be highly toxic if inhaled". The MSDS also stated in a section headed "Disposal" that: "Burning treated timber is not recommended, since various harmful decomposition products may be released. However, if burying is impracticable, timber may be burnt provided it is burnt in an open area or a suitable incinerator and the ashes buried". 15 Clause 155(1) of the Occupational Health and Safety Regulation 2001 requires the supplier of a hazardous substance to an employer for use at work to provide a MSDS for the substance supplied. Section 150(2) of the Occupational Health and Safety Regulation 2001 provides that the MSDS: (a) must clearly identify each hazardous substance to which it relates, and (b) must set out the following information in relation to a hazardous substance to which it relates: (i) its recommended uses, (ii) its chemical and physical properties, (iii) information relating to each of its ingredients, to the extent required by subclause (3), (iv) any relevant health-hazard information, (v) information concerning the precautions to be followed in relation to its safe use and handling, and (c) must set out the name, and Australian address and telephone numbers (including an emergency number), of the manufacturer 16 The Prosecutor relied on the Statement of Agreed Facts. This records at par 20: The following matters are also relied upon by the Prosecutor to demonstrate that the relevant conduct of CHH was not competent: · At the time of the offence, it was contrary to clause 6 of the Protection of the Environment Operations (Control of Burning) Regulation 2000 to burn CCA treated timber in the open or in an unlicensed incinerator. A person contravening that clause was liable to a maximum penalty of 100 penalty units. · The relevant conduct of CHH was contrary to CHH's own Environmental Management Plan which incorporated the Australian/New Zealand Standard (AS2843.2 1985) Timber Preservation Plant Safety Code which stated at paragraph 6.8 that 'The incineration of treated wood, sawdust and shavings shall not be carried out except in plants specifically designed for that purpose'. The CHH fire pit was not such a plant. · A DEC officer, Brian Hughes expressed the view that: "From my training and experience, it is my opinion that it was bad practice to have a pipe leading from the fire pit to the ephemeral creek." 17 The Defendant admitted that it was not aware of cl 6 of the Environment Operations (Control of Burning) Regulation 2000 and believed that it was environmentally acceptable to burn small amounts of CCA treated timber in an open fire pit with other timber in accordance with direction on the MSDS to the effect that "timber may be burnt provided it is burnt in an open area or a suitable incinerator and the ashes buried". 18 The principle difficulty I have with the Defendant's submissions concerning its reduced culpability as a result of its reliance on the MSDS is that MSDS are produced with the aim of ensuring that those using hazardous substances in the work place are informed as to their potential impacts on human health and safety, rather than the potential impact of these substances on the wider environment. MSDS do not purport to provide information to users of hazardous substances as to how those substances may be used and disposed of in a manner that does not offend environmental obligations. Accordingly, I do not find the Defendant's culpability to be trivial because of its reliance on the MSDS. Further, I note that in any event the MSDS specifically states that burning treated timber is "not recommended". The Defendant is the holder of an environment protection licence and is essentially seeking to argue that its misunderstanding of the law in New South Wales is excusable but I do not accept that submission. The Statement of Agreed Facts makes clear the toxic nature of CCA and the unsatisfactory nature of burning such waste. 19 Every section of s 10(3) of the Crimes (Sentencing Procedure) Act 1999 need not be satisfied in order for the Court to make an order under s 10(1): R v Paris [2001] NSWCCA 83 and R v Piccin (No 2) [2001] NSWCCA 323. In other words I can still make an order under s 10(1) even if I find that the offence is not trivial. However, while I accept that the Defendant is of good corporate character and that there is no actual environmental harm I do not consider that the circumstances justify a s 10(1) order as I do not think the Defendant's culpability is trivial. Accordingly I must consider the matter of penalty and the factors under s 241of the POEO Act and s 21A of the Crimes (Sentencing Procedure) Act 1999 where relevant. Section 241 of the POEO Act 20 Section 241 of the POEO Act provides that: (1) In imposing a penalty for an offence against this Act or the regulations, the court is to take into consideration the following (so far as they are relevant): (a) the extent of the harm caused or likely to be caused to the environment by the commission of the offence, (b) the practical measures that may be taken to prevent, control, abate or mitigate that harm, (c) the extent to which the person who committed the offence could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence, (d) the extent to which the person who committed the offence had control over the causes that gave rise to the offence, (e) whether, in committing the offence, the person was complying with orders from an employer or supervising employee. (2) The court may take into consideration other matters that it considers relevant. 21 In relation to s 241(1)(a) I have already considered the harm to the environment resulting from the offence above and, as set out above, I am of the view that the environmental harm resulting from the offence was insignificant. 22 In relation to s 241(1)(b) and (c) I note that the fire pit was decommissioned in August 2003 and is no longer operating so that any practical measures that could be taken to mitigate the harm have now been taken. Further, the Defendant has altered its operations so that it no longer processes treated timber of the type considered in this offence. 23 In relation to s 241(1)(d) the Defendant admits that it had control over the causes that gave rise to the offence. Section 241(1)(e) does not apply to the offence committed by the Defendant. 24 The Prosecutor submitted that the Court should take into account under s 241(2) of the POEO Act the large maximum penalty proscribed under the POEO Act for offences of this nature as an expression of the seriousness which Parliament attributes to the offence. This has been identified as a significant consideration in Camilleri Stockfeeds Pty Limited v Environment Protection Authority (1993) 32 NSWLR 683 amongst other cases. The Defendant submitted that while a large maximum penalty was proscribed for this offence this should not be given disproportionate weight as had the Prosecutor elected to proceed under the Environment Operations (Control of Burning) Regulation 2000, an option which was open to it, the maximum penalty would have been $11,000. 25 The Prosecutor also submitted that I must consider general deterrence under s 241(2) of the POEO Act. The Prosecutor argued that licence holders have a heightened responsibility to ensure that their operations are conducted in accordance with that licence and submitted that in order for the sentencing objective of general deterrence to be achieved the penalty must be set at a level which the community will regard as real punishment. The Defendant noted that it was important that the penalty should not be disproportionately increased on the basis of general deterrence alone. The Prosecutor did not make any particular submissions on the need for this penalty to reflect specific deterrence and I do not consider that the circumstances justify it, in any event. 26 I consider that the offence is certainly at the low end of the penalty spectrum. The Defendant submitted that the circumstances in Environment Protection Authority v Lithgow City Council [2003] NSWLEC 425 are analogous to this offence and regard should be had to the penalty imposed in that case in the interests of parity. Environment Protection Authority v Lithgow City Council concerned an out of date sewage treatment plant run by the Council which was awaiting State government money to undertake the necessary upgrade. The primary penalty before mitigating matters were taken into account was $10,000. The circumstances in that case are different to those here. I also note that in Environment Protection Authority v Lithgow City Council I made a finding that there was no actual or potential for harm and the circumstances relating to harm are slightly different here. The case is not therefore directly comparable. While this case is not a technical breach, as arguably was the case in Lithgow, it is not a serious matter. 27 The only case which the parties were able to refer me to which considered a similar licence condition to that breached here is Environment Protection Authority v Biosolids Management Pty Limited [2004] NSWLEC 90. The facts in that case were significantly different to those relating to the current offence and I do not find that decision of much assistance. 28 I consider the penalty should be $12,000 but there are a number of mitigating factors which should apply to reduce this. Section 21A of the Crimes (Sentencing Procedure) Act 1999 29 Section 21A(1) of the Crimes (Sentencing Procedure) Act 1999 requires the Court to consider certain mitigating and aggravating factors where relevant in sentencing. The Prosecutor did not submit that any of aggravating factors specified in s 21A existed in relation to this offence. The Defendant submitted that I must consider the following matters in mitigation under 21A(3) of the Crimes (Sentencing Procedure) Act 1999: (a) s 21A(3)(a); the environmental harm caused by the offence was not substantial; (b) s 21A(3)(b); the offence was not part of a planned or organised criminal activity; (c) s 21A(3)(e); the Defendant does not have any record of previous convictions; (d) s 21A(3)(f); the Defendant was of good corporate character as evidenced by the fact that they spent the sum of $30,000 in investigating the contamination and have since spent a sum of $460,000 as part of an ongoing commitment to environmental best practice; (e) s 21A(3)(g) and (h); which relate to the lack of likelihood of re-conviction given that the Defendant no longer deals with treated timber in the same way; (f) s 21A(3)(i); an expression of remorse was made by the Defendant's counsel from the bar table. In Newcastle City Council v Pepperwood Ridge Pty Limited [2004] NSWLEC 218 I noted at par 29 that, in relation to a corporate defendant: "It is desirable in my view that a Director swear an affidavit for a corporate Defendant if an expression of contrition is to be given serious weight by this Court." While I consider an affidavit is preferable in these circumstances, I note that two of the Defendant's directors attended Court for the hearing today and I accept the proffered expressions of remorse from the bar table on this occasion ; (g) s 21A(3)(k); the effect of an early plea of guilty; and (h) s 21A(3)(m); being the assistance rendered by the Defendant to the Prosecutor in relation to the investigation of the offence. 30 Further the Defendant submitted that I should have regard to the fact that the Defendant has agreed to pay the Prosecutor's costs in the agreed sum of $12,500 and these costs are not minor. 31 I consider that in light of these mitigating factors a reduction in penalty of 40 per cent is warranted so that a penalty of $7,200 should be imposed. Orders 32 The Court makes the following orders: 1. The Defendant is convicted of the offence with which it is charged. 2. The Defendant is fined the sum of $7,200 to be paid to the Registrar of the Court within twenty-eight days of today's date. 3. The Defendant must pay the Prosecutor's costs in the sum of $12,500. 4. The exhibits may be returned. 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.