> Land and Environment Court of New South Wales CITATION : Environment Protection Authority v Australian Pacific Oil Company Pty Limited and Others [2003] NSWLEC 279 PROSECUTOR Environment Protection Authority PARTIES : DEFENDANTS Australian Pacific Oil Company Pty Limited Craig Leonard Williams Jamie Manson Williams FILE NUMBER(S) : 50032; 50033; 50034; 50035; 50036; 50037 of 2003 CORAM: Talbot J KEY ISSUES: Prosecution :- multiple defendants to separate charges - company acting as trustee of family trust - individuals charged as directors - application of totality principle LEGISLATION CITED: Protection of the Environment Operations Act 1997 s 143(1)(b), s 169(1), s 250 CASES CITED: R v Thomson; R v Houlton (2000) 49 NSWLR 383 DATES OF HEARING: 16/09/2003 EX TEMPORE JUDGMENT DATE : 09/16/2003 PROSECUTOR Mr T G Howard (Barrister) SOLICITORS Environment Protection Authority LEGAL REPRESENTATIVES: DEFENDANTS Mr K Papanicolaou (Solicitor) SOLICITORS P & A Lawyers JUDGMENT: IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES 50032 of 2003 50033 of 2003 50034 of 2003 50035 of 2003 50036 of 2003 50037 of 2003 Talbot J 17 September 2003 Environment Protection Authority Prosecutor v Australian Pacific Oil Pty Limited Defendant Judgment Introduction 1 HIS HONOUR: The Court is dealing with six summons. Three of the charges relate to transporting waste to a property at Culcairn in the southern part of New South Wales between 9 May 2000 and 1 June 2000 whereby effectively Australian Pacific Oil Pty Limited ("the company") was responsible for the arrangements in respect of the transportation of the waste from premises occupied by the company in Sydney and other places. 2 The property at Culcairn had been purchased by the company for the purposes of establishing a waste recycling operation and a waste storage facility. The evidence is that there had been some preliminary discussions with the local council regarding a development application before the authorities intervened as a consequence of information received and concerns expressed regarding the hazard caused by the storing of drums on the property in sheds which were already erected in an area adjacent to a creek known as Billabong Creek. The premises had been previously used as an abattoirs and the company had taken some steps to consult about the way in which proper arrangements could be made for bunding and whatever else was appropriate to take account of the nature of the hazards created by the presence of the waste on the premises but they also were, it must be said, in a preliminary stage. 3 The company is charged with an offence against a s 143(1B) of the Protection of the Environment Operations Act 1997 ("PEO Act") as are the two individuals Jamie Manson Williams and Craig Leonard Williams who are charged with the same offence as a consequence of the operation of s 169(1) of the PEO Act which makes directors liable in the same way as the company. 4 The other offences relate to three charges made in the same way against the company and the same directors where the circumstances are slightly different but nevertheless represent a matter of equal concern to the transportation charge and that is for using premises at Moorebank for the storage and disposal of waste on that land, the company being the tenant of the land and again the directors standing to be charged with the same offence pursuant to s 169(1) of the PEO Act. 5 There is no dispute that there were substances stored at both premises, that is, in the first circumstance the material stored at Culcairn had been transported there in breach of the Act and the substances at Moorebank were stored on the premises being substances which constituted a significant threat to the environment being not only toxic but also hazardous in terms of flammability. 6 Some of the materials were less hazardous than others. Nevertheless they all constituted a potential threat to the environment if not managed properly and controlled in a way that ensured that either there was no prospect of an explosion or fire or indeed the escape at all of the substances. 7 The company did at some stage have a licence for other premises. The Court does not fully understand what happened in relation to that licence but it seems to have been issued for a period of a year and then suspended after a period of time, but in any event the fact is that neither the transportation of the waste to Culcairn was authorised by an appropriate licence or indeed any licence at all and equally the storage of the wastes at Moorebank was not covered by the sanction of a licence. 8 The offence in each case is obviously one that is regarded as being serious. In the case of the company a fine in the sum of $250,000 is prescribed as the maximum penalty whereas in the case of the individuals the maximum is prescribed at $120,000. 9 The Court has heard evidence and seen documentary evidence which shows that the company is no more than a trustee of what is described as the Williams Family Trust. It transpires and it appears to be agreed that a proper understanding of the financial status of the company would be that it is only a repository for the assets of the trading trust for the benefit of the two individual defendants who are also its directors. It may well be that there are other beneficiaries but that is not something that is clear and the Court is proceeding on the basis that the family interests are those of the individual defendants although there may be various degrees under the terms of the trust. 10 The point nevertheless is and the financial results show that the company itself does not appear to trade in its own right in that it only trades as a trustee pursuant to whatever the deed is that controls the Williams Family Trust. 11 In those circumstances, as it is submitted by Mr Howard who appears for the Environment Protection Authority ("the EPA"), it is appropriate to approach the question of the imposition of a penalty on the basis that the company has a nominal role to play in the activities that are associated with the family business and that the company is in effect merely an alter ego in effect for the two individual defendants. 12 It is proposed therefore to approach the question of penalty on the basis of having regard to the maximum penalty applicable to the two defendants who are individuals, to apply the principles of totality in regard to each of the six offences to determine what is the overall criminality that is involved in the circumstances and then apply it on the basis that the two individuals should be treated as co-offenders in effect. 13 I do not think that there is any anomaly created by proceeding in that manner notwithstanding that the directors have been charged only in their capacity of the office of director. The amount of the maximum penalty in each of their cases is $120,000. The impact of the penalty falling on them as individuals is properly to be regarded as being an imposition on them personally, rather than as instruments of the company. 14 I do not agree with the submission put by Mr Papanicolaou that these offences fall in the low range of consideration. On the other hand, I do not necessarily accept that it should be regarded as being in the highest range. Mr Howard has made a submission on behalf of the EPA that given all of the circumstances the offences should be regarded in totality as falling within the middle range. 15 There are a number of mitigating factors that need to be applied. Firstly, the individual defendants despite some early diffidence in regard to the nature of the materials nevertheless ultimately cooperated in a significant way with the investigating officers and upon the receipt of a clean up notice used their resources to comply with that notice, as Mr Craig Williams indicated to the Court, to the letter. Even if that is not strictly correct, it does not appear to be seriously disputed that the clean up has occurred generally in accordance with the object of the clean up notice and to the satisfaction of the EPA. 16 The significant fact about that is that the cost of the clean up is in the order of $177,000. I agree with Mr Howard that some account needs to be taken of the fact that after all the business was to collect waste, no doubt for a consideration, and although some of the waste may have been collected and the company paid a fee for that with the object of recycling the material for profit the fact is that the costs incurred may be regarded with some circumspection in the sense that they to some part at least and probably a major part at least would have been incurred if the business had been conducted on a proper footing and in accordance with conditions of a licence. 17 However, the fact is that $177,000 has been paid out. Furthermore, the defendants have agreed to respectively accept responsibility for the costs of these proceedings which include some investigative costs. Nevertheless, it has been agreed that the costs be paid in the sum of $55,000. So that overall the company has agreed and the two individual defendants have agreed to meet a commitment well in excess of $200,000. 18 Furthermore, the co-operation of the defendants has extended to the conduct of these proceedings, that is, all six of them. First of all entering a plea of guilty at a relevantly early stage in the proceedings to entitle them to the full consideration and benefit of a discount in the manner discussed in Re Thompson. [full ref] 19 Beyond that the cooperation continued to this hearing. Whereas when the matter was set down initially for two days, following the entry of the plea of guilty the matter will be completed today in half a day and there is a certain utilitarian benefit in that for which the defendants are entitled to some benefit. 20 The EPA recognises through Mr Howard that the discount to which the defendants are entitled should be the maximum in that respect. 21 The Court has formed the view that setting aside the involvement of the company for the reasons that I have indicated for a moment, the individuals taking into account the totality of the three offences but without paying a significant regard to overlapping given the way in which I propose to approach the penalty question, namely, the company is taken out of the equation as it were I would normally expect that without any account being taken by way of mitigation for the matters that I have referred to that the penalty for each individual would be in the order of between $60,000 and $70,000 each. 22 Taking into account the matters that I have referred to by way of mitigation I propose to impose a penalty on each of the directors in the sum of $40,000. In the case of the company I propose to impose a nominal penalty in the sum of $10. Furthermore, there will be an order that the defendants pay the prosecutor's costs in the sum of $55,000 as to one-third each, which reflects the agreement reached between the parties. 23 I am further informed that the defendants have agreed, and I have taken this into account as well even though I am mentioning it latterly, to arrange and pay for a quarter-page advertisement in the journal Waste Management and Environment, giving formal notice of the findings of this Court and the outcome of the prosecution, the amount of the fine and the amount of the costs and the nature of the offence. That in itself may have some financial implications for the company and its future reputation. 24 In assessing the fines I have also taken into account that this company is and the individuals are involved in a hazardous business, a messy business. It no doubt has its advantages for the community in so far as they are collecting and, if things were operating in a proper way, disposing of materials that otherwise could create a nuisance and be a burden on the community. 25 The type of business surely has to be encouraged in order to enable the management of this type of waste in an effective way. However, for the same reason that the activities are to be regarded as being for the community's benefit equally there is a very significant responsibility to ensure (a) that the relevant legislative requirements are met and that (b) there is a capacity for there to be an overseeing and regulation of the activities by the appropriate authorities, in this case being the local council at Culcairn, probably the local council at Moorebank and indeed the EPA in both cases. So that the two aspects of the company's operation, namely, the benefit to the community and the threat to the community come out roughly in balance. However, I do take account of the fact that there is some reasonable expectation that the company should be regarded in a positive light as to some aspects of what I have just addressed. 26 I have not gone into the details of the facts. I have not found it necessary to do that as a consequence of the considerable assistance given to the Court by the Statement of Agreed Facts. That document became exhibit A in the proceedings and will be retained in the file so that there is a proper understanding in the court file of the nature of the offences and the matters that the Court was able to take into account. I have covered most of those matters in summary form. 27 According to the accounts which have been exhibited to the Court, I note that the company as trustee of the Williams Family Trust is not in a viable economic position. According to his own undisputed account, at least one of the directors is suffering from financial hardship and also has personal problems. The other director may not be as impecunious as the other. Nevertheless, there is no evidence of great substance or economic wealth in either case. That has been taken into account in so far as ability to pay is recognised to a limited extent in assessing penalty. The defendants have asked for time to pay any fine. It is recognised that that is not a power that I have sitting as the sentencing judge, but nevertheless there has been evidence before me which if it was within my power would justify agreeing to an order whereby the payment of the fines in each case be postponed for a period of six months. 28 The question of costs can be dealt with as between the parties in terms of time to pay, but presumably that is part of the arrangements already made when the question of costs was agreed. 29 The Court, therefore, proposes to proceed to find the defendants guilty pursuant to the plea which has been entered which recognises the fundamental elements in relation to the offence and to find the offence proved in each case on that basis as well as relying on the Statement of Agreed Facts and to impose penalties as I have just indicated. 30 Messrs Williams, just stand up for a minute please. In a sense the Court has treated you with a degree of leniency. The fines that are provided by the legislation are severe. If the company had been other than the type of company it is, that is, effectively a trustee for yourselves the effect could have been much more severe on your family finances. You have both been utterly stupid and to a degree that stupidity has demonstrated a degree of irresponsibility that cannot be allowed to go unnoticed. You are in a hazardous industry, you have got responsibilities in relation to the management and control of the substances that come into your possession. The prospect of you appearing before this Court again must be looked at in a most serious way because next time, if there is a next time, you can expect that the penalties will be considerably in excess of the $80,000 that it has cost you this time between you and furthermore of course you may well incur further costs that you may not have expected to otherwise incur as you say you have on this occasion. So the Court says to you that you should take the chance while it is there. 31 The formal orders of the Court are as follows:- (1) I find the offence proved in each of the matters No. 50032, 50033, 50034, 50035, 50036 and 50037 of 2003. (2) Each of the defendants is convicted of the charge in the summons. (3) In the case of Craig Leonard Williams you are fined the sum of $20,000 in matter No. 50033 of 2003 and you are fined the sum of $20,000 in matter No. 50036 of 2003. (4) Jamie Manson Williams you are fined the sum of $20,000 in matter No. 50037 of 2003 and the sum of $20,000 in matter No. 50034 of 2003. (5) The company in matter No. 50032 of 2003 is fined the sum of $10. (6) The company in matter No. 50035 of 2003 is fined the sum of $10. (7) I make a composite costs order in relation to the six matters and order by consent that each of the defendants be responsible jointly and severally for the sum of $55,000 representing the costs in each matter. (8) I order pursuant to s 250 of the Protection of the Environment Operations Act 1997 that each one of the defendants jointly and severally cause a quarter-page advertisement to be published in the journal Waste Management and Environment at their respective expense in the next available edition of the publication in the form of publication order which will be exhibit F in the proceedings and will be attached to the formal orders issued by the Court. (9) I direct that the exhibits, other than exhibits A and F, 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.