> Land and Environment Court of New South Wales CITATION : Environment Protection Authority v Fernando and Another [2003] NSWLEC 281 PROSECUTOR Environment Protection Authority PARTIES : DEFENDANTS Chester Fernando Steadfast Maintenance Services Pty Limited FILE NUMBER(S) : 50047; 50048 of 2003 CORAM: Talbot J KEY ISSUES: Prosecution :- deliberate and deceitful conduct by individual - whether attributable to company trading as trustee - whether a company entitled to benefit of s 10 of the Crimes (Sentencing Procedure) Act 1999 Crimes Act 1914 (Cth) s 19B LEGISLATION CITED: Crimes (Sentencing Procedure) Act 1999 s 10 Interpretation Act 1987 s 8(d), s 21 Protection of the Environment Operations Act 1997 s 143(1), s 143(1)(a), s 241(1)(a), s 241(1)(e) Environment Protection Authority v Virotec International Limited [2002] NSWLEC 110, unreported; Inspector Stewart v Siemans Dematic Pty Ltd (formerly Mannesman Dematic Colby Pty Ltd) No 2 [2003] NSWIRComm 45; John C Morish Pty Ltd v Luckman (1977) 30 FLR 88; CASES CITED: Morrison v Peacock and Roslyndale Shipping Company Pty Ltd [2003] NSWLEC 68, unreported; Reg v O'Neill [1979] 2 NSWLR 582; Sheen v Geo Cornish Pty Ltd (1978) 30 FLR 466; Trade Practices Commission v Sun Alliance Australia Pty Ltd (1994) 16 ATPR 42-286; Workcover Authority of NSW (Inspector Hopkins) v Profab Industries Pty Ltd [2000] NSWIRComm 142 DATES OF HEARING: 31/10/2003 DATE OF JUDGMENT: 11/19/2003 PROSECUTOR Mr D M Samuels (Solicitor) SOLICITORS Environment Protection Authority LEGAL REPRESENTATIVES: DEFENDANTS Mr J M Atkin (Barrister) SOLICITORS Carroll & Associates JUDGMENT: IN THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES 50047 of 2003 50048 of 2003 Talbot J 19 November 2003 Environment Protection Authority Prosecutor v Chester Fernando Steadfast Maintenance Services Pty Limited Defendants Judgment Introduction 1 There are two defendants before the Court to answer charges in relation to the same events. In matter No. 50047 of 2003 Chester Fernando is charged that on the 24 January 2002 off the Putty Road south of Singleton ("the place") he committed an offence against s 143(1)(a) of the Protection of the Environment Operations Act 1997 ("the PEO Act"), in that he did transport waste to that place, being a place that could not lawfully be used as a waste facility for the waste. 2 In matter No. 50048 of 2003 Steadfast Maintenance Services Pty Limited ("the company") is separately charged with the same offence, as a consequence of Chester Fernando and David Pereghy, employees of the company, transporting the waste to the place and dumping it. 3 Section 143(1) of the PEO Act provides that if a person transports waste to a place that cannot be lawfully used as waste facility for that waste, a person is guilty of an offence. In the case of a corporation the maximum penalty is $250,000. In the case of an individual the maximum penalty is $120,000. Each of the defendants has entered a plea of guilty. 4 The facts in support of a plea in mitigation are diverse. The Offence 5 The company operates a cleaning service business. Chester Fernando is a paid employee and at the time of the offence held the position of manager. 6 The company is a trustee of the Fernando Trust trading under the business name of Steadfast Maintenance Services Pty Limited. The Trust was created in 1978 as a discretionary trust. The original settlor was Terence ("Terry") Fernando, who is the father of Chester Fernando, and holds the positions of Director and Secretary of the company. 7 In January 2002 the company contracted to carry out a clean up of a unit in the Metro Centre at Rydalmere ("the Metro Centre"), previously occupied by a printing company which had gone into liquidation. The sum quote included the collection and disposal of all drums of chemicals, in addition to general cleaning, window cleaning, carpet cleaning, the removal of wooden pallets, the removal of paper products and the demolition of timber framework. 8 After carrying out certain cleaning tasks on 22 January 2002 Chester Fernando and Mr Pereghy loaded drums of chemicals and some smaller tins onto a white van owned by the company, with the intention of transporting them to the company office at Yagoona in accordance with instructions issued by Terry Fernando. Terry Fernando had obtained a quote from Collex for the removal of the contents of the drums and tins. Prior to loading, the contents from some of the smaller tins were added to the contents of the larger drums. Instead of transporting the tins and drums to Yagoona, Chester Fernando decided to dump the material elsewhere. Chester Fernando explained to Mr Pereghy that he had under-quoted for the job. He informed Mr Pereghy that he had been advised "if you take it outside the UBD area, you got no problem, you know, the places where things are dumped." 9 Chester Fernando drove the van along the Putty Road towards Singleton for approximately two hours. He then took the van along a dirt road off the Putty Road at Milbrodale, near a Roads and Traffic Authority stockpile area adjacent to McDonalds River, 62 kilometres south of Singleton. The drums and tins were unloaded and placed on the dirt road around and near an existing mound of rubbish. 10 Following a report on 24 January 2002 the New South Wales Fire Brigade stationed at Singleton, the Bulga Rural Fire Service Brigade and officers from the Newcastle Office of the Environment Protection Authority ("the EPA") attended at the site. Samples were taken from each container for analysis. There were 46 containers in total. The drums were collected by Cleanaway on 26 January 2002. Following analysis, the contents of the containers were variously classified as non-controlled aqueous liquid waste, hazardous waste and Group A waste. 11 Further enquiries led to an EPA officer speaking to Chester Fernando by telephone on Friday 8 February 2002. Asked about the removal of waste from the Metro Centre, Chester Fernando responded with words to the effect "the place was left open all the time, we didn't take it" and "we don't own a white Hiace with blue writing." 12 Following that phone call Chester Fernando peeled off the writing on the company's van, arranged for the tyres to be changed and for the van to be "buffed up" with the intention of concealing the identity of the van. On that same afternoon, however, Chester Fernando advised his father of what he had done. According to Terry Fernando, he only became aware of the incident at that time. 13 On 11 February 2002 Chester Fernando telephoned the EPA officer and the following day attended at the Newcastle Office of the EPA where he, together with Mr Pereghy, gave a full and frank account of the incident. 14 Prior to the disclosure of the true position to this father, Chester Fernando had advised Terry Fernando that the drums of chemicals had disappeared. When Terry Fernando asked "how" Chester Fernando said, "Dad, you know the whole place is open. We lost 6 Fire Extinguishers so anybody could have taken it away." 15 It is no surprise that no permission had been granted for the land at Milbrodale to be used as a waste facility. Chester Fernando 16 For the purpose of 241(1)(a) of the PEO Act there was no actual harm caused to the environment by the commission of the offence, primarily because the fire brigades and the EPA initiated a prompt response to the information received. 17 Some of the chemicals sampled contained hazardous waste and some were flammable. Dumping of chemicals in this category in bushland leaves them exposed to the ravages of bushfire, in particular, vandalism and the deteriorating effect from exposure to adverse weather conditions. Even if the goods had been transported to Yagoona as planned, the company had no formal procedures for identifying the contents of the containers or appropriate facilities for handling hazardous waste, such as the availability of protective equipment. The evidence is that the premises were open and that there was experience of unauthorised persons having access to the premises. 18 The practical measures that may have been taken to prevent, control, abate or mitigate the harm (if it had occurred) are obvious and readily available. The company had even contracted with Collex for the appropriate removal of the material. The only reason this was not followed up was that Chester Fernando was seeking to avoid a cost of $1,500 as he had under-quoted on the job. 19 The incident was completely foreseeable and Chester Fernando had complete control over the causes which gave rise to the offence. He was the manager of the company and the principal employee responsible for the undertaking of the contract at the Metro Centre. 20 Section 241(1)(e) does not strictly apply, although technically Chester Fernando was complying with directions of the company to carry out the work at the Metro Centre. Even those directions involved an illegality by requiring him to transport the chemicals to the company's premises. 21 There is a real case for demonstrating the need for general deterrence in the punishment of Chester Fernando. That need is in addition to the important aspect of deterrence to Chester Fernando as an individual. The nature of the business in which he is employed is such that the temptation can be expected to arise regularly, even if the Court can be satisfied that Chester Fernando realises that his actions were irresponsible and stupid. In the course of carrying out the offence he mentioned to Mr Pereghy the need to ensure that the chemicals were dumped at a location where there would not be any danger to houses or schools and hence to ensure that the dumping place was remote. Such commendable aspirations are inconsistent with his intention to dump the containers other than at an authorised waste facility. There is no doubt that Chester Fernando knew that what he was doing was contrary to law, dangerous and deceitful. 22 The defendant's conduct was deliberate and dishonest, placing the seriousness of this particular offence and his culpability at the highest end of the scale. It is only fortuitous that no actual environmental harm occurred. 23 In this defendant's favour he ultimately co-operated with the EPA and volunteered a confession, assisted the EPA with its enquiries and agreed to provide a record of interview. A plea of guilty was entered at the earliest opportunity. The defendant facilitated an efficient hearing by participating in the preparation of an Agreed Statement of Facts. 24 Chester Fernando is married and has two children. He has established himself in business in the role of manager of the company and otherwise appears to be regarded as a person of good character. 25 Mr Atkin, who appears on his behalf, tendered a written report from a forensic psychiatrist, Dr Stephen H Allnutt, over the objection of the prosecutor. Dr Allnutt was not called to give evidence in person and accordingly there has been no opportunity to test his evidence. He states in his written report that Chester Fernando presents the symptoms of a resolving major depressive disorder, brought about by a tendency to feel excessively responsible for incidents that occur in his life with an exaggerated vulnerability to feel overwhelming responsibility and very strong feelings of guilt in relation to mistakes. He is said to feel a deep sense of guilt, remorse and regret at having made the decision that he made at the date of the alleged offence. Chester Fernando himself has not given evidence. His alleged feelings of guilt and remorse are commendable but they do little to excuse the overt actions on 22 January 2002. 26 Chester Fernando must be regarded as primarily responsible for the offence. In some respects what he did might be regarded as a frolic outside the terms of his employment and for which he must take full responsibility. It is appropriate in the circumstances to determine the punishment for Chester Fernando without any regard to the involvement of the company. 27 His early plea of guilty, ultimate co-operation with investigating officers, the fact that it is his first offence of an environmental nature and his otherwise apparent good character are the only mitigating factors. After allowing for an appropriate discount in respect of these matters, the Court is nevertheless of the opinion that the deliberate and overt acts of the defendant and the nature of those acts demand a significant and substantial penalty, in addition to the payment of costs to the prosecutor which he has agreed to pay in conjunction with the company. 28 Chester Fernando will be ordered to pay a monetary penalty by way of a fine in the sum of $60,000. That is notwithstanding that Chester Fernando and the company have given a joint and several undertaking to meet the costs of the clean-up of the site. Steadfast Maintenance Services Pty Ltd 29 To a very large extent the circumstances as they involve the company have already been explained. There appears to be no issue that the company is before the Court in its capacity as a trustee of the discretionary trust and that the business is carried on by the company in a nominal capacity. The company itself does not trade and has no assets. 30 The business conducted by the trustee generates a profit from time to time. There is evidence that historically through the good offices of Terry Fernando, the company has applied at least part of its profits to a number of charitable organisations. It is not disputed that Terry Fernando is highly regarded by a number of charitable organisations generally associated with the Catholic Church and that he has made significant benevolent bequests and carried out good works from time to time over the years. He has used the trust as a vehicle for achieving these charitable objectives so that, in a sense, one of the ultimate objectives of the trust can be recognised as being to generate funds for benevolent purposes. 31 Furthermore, it must be said in the company's favour that Chester Fernando embarked upon an escapade that was clearly outside what might be considered to be the reasonable and authorised actions of a manager acting on behalf of his employer. Nevertheless, Chester Fernando acknowledges that the actions he took were for the benefit of the company in order to avoid the cost and expense of disposing of the chemicals through the proper channels. Furthermore, if the strict procedure expected by Terry Fernando, acting on behalf of the company as trustee, had been followed an offence would have nonetheless occurred. It is not appropriate, therefore, that the company be exonerated from any blame for the offence. The plea recognises this in any event (Reg v O'Neill [1979] 2 NSWLR 582). 32 In final submissions Mr Atkin urged the Court to apply the provisions of s 10 of the Crimes (Sentencing Procedure) Act 1999 ("Crimes (Sentencing Procedure) Act") so that after finding the offence proved the Court does not proceed to a conviction of the company, thereby preserving its good name and record. The Court asked Mr Atkin to specifically address the question as to whether s 10 of the Crimes (Sentencing Procedure) Act applies to a corporation. His written response refers to cases where s 10 has been applied such as Morrison v Peacock and Roslyndale Shipping Company Pty Ltd (2003) NSWLEC 68, unreported, Environment Protection Authority v Virotec International Limited [2002] NSWLEC 110, unreported, Inspector Stewart v Siemans Dematic Pty Ltd (formerly Mannesman Dematic Colby Pty Ltd) No 2 [2003] NSWIRComm 45 and Workcover Authority of NSW (Inspector Hopkins) v Profab Industries Pty Ltd [2000] NSWIRComm 142. Furthermore, s 8(d) and s 21 of Interpretation Act 1987 include a corporation in the expression "person" which is used in s 10. 33 Mr Atkin points to the comparable provision under Commonwealth legislation as being s 19B of the Crimes Act 1914 (Cth) ("the Cth Crimes Act"). That section also refers to a person and, as with s 10, some references are only appropriate to individuals. It has been held, however, that the benefit of s 19B is available to a corporate defendant. Mr Atkin refers to Sheen v Geo. Cornish Pty Ltd (1978) 34 FLR 466 and John C Morish Pty Ltd v Luckman (1977) 30 FLR 88 as well as Trade Practices Commission v Sun Alliance Australia Pty Ltd (1994) 16 ATPR 42-286 where it has been held that s 19B of the Cth Crimes Act may be applied to a corporation. Although the prosecutor concedes, probably quite properly, that s 10 can be relied upon by a company defendant, final determination of whether s 10 can be applied to a company can be made at a time when there is a real issue as to whether the section should be applied as a matter of discretion. However, in the present case the actions of Chester Fernando can be directly attributed to the company, particularly as they were undertaken by him as its manager, in pursuance of a scheme to save the company money. 34 Nevertheless, the culpability of the company defendant is nowhere near as serious as that of the individual Chester Fernando. His actions were in effect an irresponsible frolic of his own, carried out without consultation with Terry Fernando as the sole Director and Secretary of the company, settlor of the trust and apparently senior administrator of the business. Nonetheless, the company has a responsibility to ensure that the business is carried out having regard to its environmental responsibilities, particularly where the enterprise involves the handling and disposal of noxious substances. 35 By attributing the intent and performance primarily to Chester Fernando acting otherwise than in accordance with his responsibilities as a manager, the Court is able to take into account a significant mitigating circumstance in that respect. Furthermore, the company, acting on behalf of the trust, must be regarded as a good corporate citizen with no prior record of any offence. It is entitled to the maximum discount for the early plea of guilty and co-operation with the prosecutor in the preparation for a hearing based on an Agreed Statement of Facts. The Court proposes, after having regard to all of those matters and after taking into account such matters as general and personal deterrence, the payment of legal costs and the undertaking to meet clean-up expenses, to impose a fine at the lower end of the range. 36 The company will be convicted and ordered to pay a monetary penalty by way of a fine in the sum of $5,000. Orders 37 The formal orders of the Court are as follows:- (1) In matter No. 50047 of 2003, the Court finds the offence as charged in the summons proved. (2) In matter No. 50048 of 2003 the Court finds the offence as charged in the summons proved. (3) In matter No. 50047 of 2003 Chester Fernando is convicted and ordered to pay a monetary penalty by way of fine in the sum of $60,000. (4) In matter No. of 50048 of 2003 Steadfast Maintenance Services Pty Limited is convicted and ordered to pay a monetary penalty by way of fine in the sum of $5,000. (5) By consent, Chester Fernando and Steadfast Maintenance Services Pty Limited are ordered to jointly and severally pay the prosecutor's costs in matter No. 50047 and matter No. 50048 of 2003 as agreed or assessed. (6) 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.