Land and Environment Court of New South Wales CITATION : Environment Protection Authority of New South Wales v Arenco Pty Ltd [2006] NSWLEC 244 PROSECUTOR PARTIES : Environment Protection Authority of New South Wales DEFENDANT Arenco Pty Ltd (now AXZ Constructions Pty Ltd) (ACN 081 417 601) FILE NUMBER(S) : 50036 of 2005; 50037 of 2005 CORAM: Pain J KEY ISSUES: Prosecution :- Environmental offences - pollution of waters by sediment - whether to make orders under s250 Crimes (Sentencing Procedure) Act 1999 s 21A, 22 LEGISLATION CITED: Interpretation Act 1987 s30 Protection of the Environment Operations Act 1997 s 120, 241, 244(3), 250(1) Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357; Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 ; Environment Protection Authority v Cut and Fill Pty Ltd [2005] NSWLEC 401; Environment Protection Authority v Ecolab Pty Limited (2002) 123 LGERA 269 ; Environment Protection Authority v Hochtief Thiess [2005] NSWLEC 506; CASES CITED: Environment Protection Authority v Metziya Pty Ltd [2003] NSWLEC 196; Markarian v The Queen (2005) 79 ALJR 1048 ; R v O'Neill [1979] 2 NSWLR 582; R v Sharma (2002) 54 NSWLR 300; R v Thomson; R v Houlton (2000) 49 NSWLR 383; State Pollution Control Commission v White Wings Limited (unreported, Land and Environment Court, 1 November 1991 DATES OF HEARING: 08/05/2006 DATE OF JUDGMENT: 05/09/2006 APPLICANT Ross Fox (solicitor) SOLICITORS LEGAL REPRESENTATIVES: Department of Environment and Conservation, Legal Services Branch DEFENDANT Patrick Holland (solicitor) SOLICITORS Minter Ellison Lawyers JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES Pain J 9 May 2006 50036-50037 of 2005 Environment Protection Authority v Arenco Pty Limited JUDGMENT 1 Her Honour: On 20 January 2006 the Defendant, Arenco Pty Ltd (now AXZ Constructions Pty Ltd), pleaded guilty to two breaches of s 120(1) of the Protection of the Environment Operations Act 1997 ("POEO Act"), in that it caused water pollution on two separate occasions on 8 September 2004, by allowing sediment to be introduced into waters near Mount Panorama Racing Circuit, Mount Panorama. The plea of guilty means the essential legal elements of the offence have been admitted: R v O'Neill [1979] 2 NSWLR 582 at 588. 2 Section 120(1) of the POEO Act states: Prohibition of pollution of waters (1) A person who pollutes any waters is guilty of an offence. (2) In this section: pollute waters includes cause or permit any waters to be polluted. 3 The maximum penalty for these offences is $250,000 each for a corporation. While there have been very recent amendments to the POEO Act to provide for a penalty of $1,000,000 for s 120(1) offences, by virtue of s 30(1) of the Interpretation Act 1987, the maximum penalty in this case remains $250,000. 4 The parties tendered an statement of agreed facts (SOAF) in evidence. According to this statement, the Defendant caused water pollution on 8 September 2004 between 8.00am and 9.00am, and again between 2.15pm and 2.45pm at Mount Panorama Racing Circuit, Mount Panorama, Bathurst, New South Wales. The waters polluted were Hawthornden Creek and downstream at Queen Charlottes Vale Creek and the Macquarie River ("the waterways"). In response to a tendering process conducted by Bathurst City Council, the Council awarded the Defendant a contract to undertake construction of a new pit/paddock complex at the Mount Panorama Racing Circuit, for the purpose of motor racing and hospitality. The Defendant was responsible for the implementation of the sediment and erosion controls on the construction site. Approximately 20m from the construction site was a large area used by supporters, officials and public campers (the camping area) during the 2004 Mount Panorama racing event. 5 On the morning of 8 September 2004, a collection of excess water was observed by employees of the Defendant near the offices on the construction site ("Area 1"). The excess water was observed to be murky and laden with fine, clay type sediment. To enable further construction for the pit development, employees of the Defendant removed the excess water from Area 1 by placing a flexi drive pump into the pool of water. The pump was fed into the drainage system on the construction site, which had been fitted with sediment controls. The pump was fed into the same "V" drain as the second offence (described as Pump 2) at a point closer to the construction site offices. The drainage system ultimately led the water into the waterways. This removal of water from Area 1 took place between approximately 8.00 am and 9.00 am ("Pump 1"). The Defendant estimates that Pump 1 resulted in approximately 14,400 litres of water containing sediment being pumped into the drainage system. The volume of water provided by the Defendant is based on an approximate area calculation. 6 Later in the day, a second collection of excess water was observed by employees of the Defendant near an area known as Core 2 ("Area 2"). The water was observed to contain sediment. As in the case of Pump 1, the excess water was removed from Area 2 by feeding a flexi drive pump into the pool of water and drainage system. This removal of water from Area 2 took place approximately between 2.15 pm and 2.45 pm ("Pump 2"). The Defendant estimates that Pump 2 resulted in approximately 4,200 litres of water containing sediment being pumped into the drainage system. The volume of water provided by the Defendant is based on an approximate area calculation. 7 Both offences were caused by employees of the Defendant using a flexi drive pump to pump water containing sediment directly into the stormwater drain leading to the waterways. The water was pumped to allow for planned work activities in the area and in response to previous safety committee complaints about worker movement through puddles of water on the construction site. 8 The water containing sediment then continued underground to the open stormwater drain, which connected with Hawthornden Creek and was marked "Pipe discharging dirty water to drain". This is the main stormwater drain taking water off the site. Three other drains connect to it in addition to the drain from the construction site. 9 The Sediment and Erosion Control Plan prepared for the Defendant by its consultant required a silt fence to be installed between the point where the pipe from the construction area connected with the main stormwater drain which took water off the site to Hawthornden Creek. The silt fence between these points was destroyed by overnight heavy rainfall. The water containing sediment then flowed into the stormwater drain marked "Dirty water enters drain" and continued to flow into Hawthornden Creek along the route of the stormwater drain. There were no sediment controls between the destroyed silt fence and the point of discharge into Hawthornden Creek. The Defendant had no contractual responsibility to install any sediment controls beyond the boundary of the construction site at the corner of Pit and Conrod Straights. 10 An inspection of sediment control measures should have been carried out that morning following the heavy rain the night before, as required by the Defendant's Inspection & Test Plan – ENV-ITP-001 –Temporary Erosion and Sedimentation Control (see below, par 13). 11 On 8 September 2004, at approximately 3.00 pm, Mr Clift and Mr Mark Clyne, Environment Protection Officers with the Prosecutor, conducted an inspection of the construction site at the Mount Panorama Racing Circuit and the surrounding waterways. During the inspection the officers observed small clear flows at some entry points along the stormwater system. A number of water samples were taken at different points on and off the premises. Officers of the Prosecutor did not make inspections of the entire Mount Panorama Racing Circuit and did not sample water from all catchments and discharge points at the Mount Panorama Racing Circuit. Sediment control measures 12 The Defendant has a company-wide environmental management plan in place on every project it undertakes. In order to implement the Sediment and Erosion Control Plan the Defendant developed a site-specific sedimentation policy called the Integrated Project Management Plan – AR 166 – Mount Panorama Redevelopment – Sedimentation Control Plan ("Sediment Control Plan"). The Sediment Control Plan formed part of the Defendant's Integrated Management Plan for the construction of the pit development. 13 The Sediment Control Plan included the following: (i) Outline and overview of the Sediment Control Plan, which states the objectives of the plan and the measures that should be implemented; (ii) The Inspection & Test Plan – ENV-ITP-001 – Temporary Erosion and Sedimentation Control, which was used to document and record the stages that needed to be successfully completed in order for the Sediment Control Plan to be effectively implemented; (iii) The Inspection Report for Temporary Erosion and Sedimentation Control, which was required to be completed by the nominated employee of the Defendant weekly, and during periods of or immediately after periods of rainfall; (iv) The Workplace Inspection Report for Occupational Health and Safety, Quality Assurance and the Environment, which was required to be completed by the Defendant's Safety and Environmental Officer on a weekly basis; and (v) The OH&S and Environmental Weekly Inspection/ Audit Checklist, which was an additional document that was required to be completed by the Defendant's Site Safety Committee on a weekly basis. 14 The sediment control measures were designed to prevent and minimise the entry of sediment into the waterways. In general terms, the sediment control measures referred to the implementation of silt fences around areas where soil had been disturbed or was likely to be disturbed, or where there was likely to be surface water run-off, during the course of the pit development. The silt fences were designed to filter out sediment. 15 The SOAF includes reference to the number of weekly reports and checklists prepared by the Defendant's employees from May to September 2005. Paragraphs 19-25 of the SOAF set out the details of these reports. One of these included completion of the OH&S & Environmental Weekly Inspection/Audit Checklists on 3 September 2004, as set out at par 20 of the SOAF. The report from this date noted that a silt fence was required in the drain area of Conrod Straight, and that this was erected the next day, 4 September 2004. Increased sediment controls 16 After September 2004, in addition to the silt fences, the Defendant implemented a series of hay bale bunds at sensitive outlet points, which were used to slow the flow of the water and thus allow the heavier particles in suspension to settle at the bottom of the line of flow. 17 Further, the Defendant placed geotechnical fabric over every stormwater drain cover at the construction site with hay bales placed at the high side of the drain cover to again slow the flow of the water and filter the suspended soils. 18 Since 8 September 2004, inspections of the sediment control measures were carried out on a weekly basis and immediately after rainfall to ensure that repair of measures, if necessary, could be undertaken. Training of Defendant's employees 19 The Defendant did not have any formal training for its employees in relation to sediment control before the date of the offences. 20 On 22 March 2005, eight employees of the Defendant undertook a training course entitled Effective Environment Management Planning Course, facilitated by external trainer Peter Kapil of Benchmark Certification Pty Ltd. The purpose of the environmental training course was to provide the employees with: (i) background information on environmental management; (ii) an overview of the International Standard ISO 14001: Environmental Management; (iii) application of environmental management systems; (iv) integration with other management systems; and (v) options for internal audit and external certification. Evidence in relation to environmental harm 21 The Prosecutor's officers took various samples of the sediment laden water in the afternoon of 8 September 2004, including in the Mount Panorama Pit (sample 15), at the end of the pipe from that pit before it entered the stormwater drain on the premises (sample 4), and downstream of the stormwater drain in numerous locations. Dr Yoshi Kobayashi, Acting Head of the Rivers and Wetlands Unit at the Department of Environment and Conservation, analysed the samples. Based on the samples taken from the pool of water in which the pump was placed (sample 15), and the pipe discharging into the open drain (sample 4). Dr Kobayashi's expert opinion is as follows: (i) the discharges into the waterways resulting from Pump 1 and Pump 2 would have the potential to degrade the quality of receiving waters and adversely affect aquatic life; (ii) elevated concentrations of total suspended solids and turbidity downstream of the discharge point would have reduced light penetration, negatively affecting primary production in the form of algae and other aquatic plants; and (iii) the discharge would also have caused stress and possibly mortality to filter-feeding animals that strain particles of food from the water by interfering with those mechanisms. Finding on penalty 22 Section 241 of the POEO Act specifies matters that must be considered when imposing a penalty: (a) the extent of the harm caused or likely to be caused to the environment by the commission of the offence 23 "Harm" is defined in the Dictionary to the POEO Act as including: … 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. 24 "Water pollution" is defined in the Dictionary to the POEO Act as: water pollution or pollution of waters means: (a) placing in or on, or otherwise introducing into or onto, waters (whether through an act or omission) any matter, whether solid, liquid or gaseous, so that the physical, chemical or biological condition of the waters is changed, … 25 There was no actual environmental harm as a result of these offences, which resulted in approximately 18,600 litres of sediment-laden water being discharged. There was harm within the definition in the POEO Act. Based on the opinions expressed by the Prosecutor's expert, Dr Kobayashi, there was potential for actual harm according to the POEO definition. 26 The Defendant submitted the Mount Panorama Racing Circuit is a large site with four drains connecting to the main stormwater drain. It submitted that Dr Kobayashi's results do not distinguish between sediment that was already present in the waterways from other sources and any sediment that entered the waterways as a result of the offences. The Defendant argued that Dr Kobayashi's conclusions reflect the combined contributions of sediment in the waterways from the offences and the sediment that had been discharged into the waterways from the camping area and part of the remainder of the Mount Panorama Racing Circuit. This submission can be made because the downstream sample results show higher turbidity levels than samples 15 and 4. In addition, his conclusions were largely based on sample results taken from a pool of water in which the pump was placed some time after the pumping occurred. It is more than likely that by this time the sediment load per litre was higher. Even if these submissions were true, Dr Kobayashi's findings apply to the samples taken at 15 and 4. As relied on by the Prosecutor, I apply the finding of Bignold J in State Pollution Control Commission v White Wings Limited (unreported, Land and Environment Court, 1 November 1991), where he stated that: … The Defendant discharging effluent into degraded waters is not to be given any advantage by way of mitigation simply because the receiving waters are in a degraded state. This was applied by Cowdroy J in Environment Protection Authority v Ecolab Pty Limited (2002) 123 LGERA 269 at 273. (b) the practical measures that may be taken to prevent, control, abate or mitigate that harm 27 The Prosecutor argued that there were practical measures which could have been taken other than pumping the water to the drain, such as spreading sand on the water or pumping the pooled water to the water tanker engaged on site for general purposes. The Defendant accepted that practical measures could have been taken, namely checking to ensure the sediment control fences that were in place were adequate. 28 There clearly were practical measures which could have been taken to prevent the harm caused as a result of these two offences. (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 29 The Defendant admits that the harm was foreseeable. The Prosecutor argued that the Defendant's employees failed to consider whether the stormwater system was capable of settling out the sediment from the water pumped into the system and made no attempt to ensure the relevant sediment control fence was functioning. Further, the required inspection under the Defendant's Sediment and Erosion Control Plan was not carried out after the heavy rain the previous night. (d) the extent to which the person who committed the offence had control over the causes that gave rise to the offence 30 The Defendant admits that it had control over the causes giving rise to the offence. (e) whether, in committing the offence, the person was complying with orders from an employer or supervising employee . 31 Not relevant. Consideration of penalty 32 In considering the gravity of the crime, regard must be had to the culpability of the Defendant and the individual circumstances which led to the commission of the offence. No aggravating factors as referred to in s 21A(2) of the Crimes (Sentencing Procedure) Act 1992 have been placed before me for consideration. 33 The Court is also to have regard to the maximum penalty applicable, as this is an expression of the seriousness Parliament attributes to the offence: see Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698 and 701 respectively: The task of a court is to assess the relative seriousness of the offender's particular offence in relation to a worst case for which the maximum penalty is provided … …the more serious the lasting environmental harm involved the more serious the offence and, ordinarily, the higher the penalty . 34 The Prosecutor argued the offences were foreseeable, negligent and/or reckless, given the actions of the Defendant's employees in failing to check adequate sediment control measures were in place. The Defendant's solicitor argued that the actions were not reckless. 35 Having regard to the factors in s 241 this matter is not minor. There was potential for harm. Practical measures could have been taken to avoid the circumstances giving rise to the occurrence and the harm was reasonably foreseeable. While I accept that the Defendant's employees did not act deliberately they did not take any care on this occasion to consider the effect of their actions. The Defendant clearly did not have adequate training in place for its employees. General deterrence 36 Sentencing under the environment protection legislation must embrace powerful considerations of general deterrence: see Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357, per Badgery-Parker J at 367. In Axer, Mahoney JA stated at 359: The quantum of the fines which the legislation allows to be imposed has no doubt been fixed not merely to indicate the seriousness with which such pollution is regarded but also to deter those engaged in such activities and to procure that they will take the precautions necessary to ensure that it does not occur. 37 The Prosecutor did not argue that specific deterrence was a relevant consideration and I will not take this into account on penalty. Evenhandedness 38 One sentencing principle is that of evenhandedness, whereby similar offences should receive similar penalties. The Court must also be mindful of the comments of Badgery-Parker J in Axer: There is always a difficulty in attempting to compare the penalty in one case with the penalty in another because of the wide divergence of facts and circumstances … 39 The Prosecutor referred to three previous cases of this Court which have considered offences under this section (s 120) of the POEO Act. These are Environment Protection Authority v Hochtief Thiess [2005] NSWLEC 506, Environment Protection Authority v Cut and Fill Pty Ltd [2005] NSWLEC 401, and Environment Protection Authority v Metziya Pty Ltd [2003] NSWLEC 196. 40 In Hochtief, the defendants treated sediment laden water generated by the construction of the Epping to Chatswood component of the Parramatta Rail Link Project. Treated water was licensed to be discharged into a creek, however the treatment system failed and an overflow of sediment-laden sludge entered the creek. There was no actual environmental harm. Bignold J imposed a penalty of $40,000, discounted to $24,000 in light of mitigating factors. 41 Cut and Fill Pty Ltd involved the defendant failing to properly put in place adequate sediment and erosion controls when clearing and stripping topsoil from an area of land adjacent to a creek. Sediment then entered the creek. There was no actual environmental harm, and no long-term consequences, however the discharge would have degraded the waters. Mitigating factors included the defendant subsequently installing erosion and sediment controls, an early plea of guilty, a previously unblemished record and cooperation with the prosecution. Therefore, Lloyd J held at [37] that the appropriate penalty was $12,000, discounted to $7500 in light of the mitigating factors. 42 In Metziya sediment was discharged into waters as a result of the earth moving works occurring on premises occupied by the defendant. There had been a failure to install effective erosion and sediment controls on the premises. There was no environmental harm beyond the actual pollution itself. The defendant had been put on notice by the Council before the incident that its sediment and erosion controls were inadequate. Mitigating factors included an early plea of guilty, contrition and remorse, and co-operation with the prosecution. I held that an appropriate penalty was $30,000, to be discounted to $19,500 in light of mitigating factors (at [40]). 43 While this case is not identical there are a number of similarities with the facts in Metziya. Totality 44 The Prosecutor accepted that the totality principle applied given the timing of the two similar offences on the same day. That principle requires that a total fine for more than one offence should not exceed what is warranted when the offences are viewed as a whole: see Camilleri's Stockfeeds at 703-704 per Kirby P, with whom Campbell and James JJA agreed. 45 In my opinion, the circumstances of the first offence warrant that a penalty of $30,000 representing 12 per cent of the maximum penalty, should be imposed. 46 There are a number of mitigating factors that should be taken into account to reduce that penalty. Firstly, the Defendant pleaded guilty at the earliest opportunity being 20 January 2006, the same day on which the Prosecutor served its evidence on the Defendant. A plea of guilty entitles the Defendant to a discount in penalty under s 22 of the Crimes (Sentencing Procedure) Act 1999 in the range of 10-25 per cent: R v Thomson (2000) 49 NSWLR 383; R v Houlton (2000) 49 NSWLR 383; R v Sharma (2002) 54 NSWLR 300. The challenges of applying the discount identified in R v Thomson; R v Houlton in light of the High Court decision in Markarian v The Queen (2005) 79 ALJR 1048 are discussed by Biscoe J in Environmental Protection Authority v Hochtief AG [2006] NSWLEC 200. As he notes at [87], the Thomson guidelines for guilty pleas has continued to be applied and upheld since Markarian by the New South Wales Court of Criminal Appeal. 47 The Defendant relied on the affidavit of Robert Cooper, Director of AXZ Constructions Pty Ltd, sworn 10 April 2006, who expressed contrition and remorse on behalf of the company. 48 The company took action, as specified at par 48 and 50-55 of the SOAF, after the offences to ensure there was unlikely to be any repetition of such a pollution event and to ensure its employees received appropriate training. 49 The Defendant cooperated with the Prosecutor in relation to these proceedings. 50 The Defendant has no prior record of environmental offences. 51 In all the circumstances I think that the Defendant's penalty should be discounted by a total of 30 per cent and consider that a fine of $21,000 is appropriate for the first offence (matter no 50036 of 2005). Applying the totality principle I consider a penalty of $5,000 should be imposed for the second offence (matter no 50037 of 2005). 52 The Defendant has agreed to pay the Prosecutor's costs in the sum of $25,050. Other orders 53 The Prosecutor and Defendant both submitted that it is appropriate that the Court make orders under s 250 of the POEO Act instead of imposing a fine by way of penalty. This is enabled by s 244(3) of the POEO Act which states: Other action not required Orders may be made under this Part regardless of whether any penalty is imposed, or other action taken, in relation to the offence. 54 The parties have handed up draft orders which rely on s 250(1)(a), which provides for a publication order, and s 250(1)(e). The latter is a new provision which commenced on 1 May 2006. It states: The court may do any one or more of the following: … (e) order the offender to pay a specified amount to the Environmental Trust established under the Environmental Trust Act 1998, or a specified environmental organisation, for the purposes of a specified project for the restoration or enhancement of the environment or for general environmental purposes, … 55 Section 250(1)(e) refers to the payment being made to the Environmental Trust or a specific environmental organisation. There is no definition of "environmental organisation" in the POEO Act. In this case the order drawn up by the parties provides for payment to the Department of Primary Industry (Mineral Resources NSW). While in common parlance I would not assume that a government department is encompassed by the term "environmental organisation" it seems to me this term should be given a facilitative interpretation so that where a body, be it a government department or community organisation, undertakes environmental projects amongst other activities having no connection with the environment, the term specified environmental organisation can be considered to apply to it. I will therefore make the order sought in relation to s 250(1)(e) as handed up by the parties. 56 I also consider it is appropriate to make the publication order filed by the parties. Orders 57 The Court orders that: 1. The Defendant is guilty and is convicted of the offences with which it is charged under s 120(1) of the POEO Act. 2. Pursuant to s 250(1) of the POEO Act, the Defendant cause a notice in the form of Annexure A to be placed in the Early General News section of the following newspapers in the earliest edition possible after the making of this order and within 14 days of the date of this order: (i) The Sydney Morning Herald; and (ii) The Western Advocate 3. Pursuant to s 250(1)(e) of the POEO Act the Defendant pay the Department of Primary Industry (Mineral Resources NSW) the amount of $26,000 to be used for the erosion and sediment control project at the abandoned Silver Peak Mine Site, Yerranderie NSW. 4. The Defendant is to pay the Prosecutor's costs of the proceedings against it, in the sum of $25,050. 5. The exhibits may be returned. ANNEXURE A PROSECUTION FOR POLLUTION OF WATERS On 9 May 2006, the Land and Environment Court of New South found Arenco Pty Ltd (now AXZ Constructions Pty Ltd) ("Arenco") guilty of two offences against the Protection of the Environment Operations Act 1997, in that it caused the pollution of Hawthornden Creek and downstream waterways including Queen Charlottes Vale Creek and the Macquarie River, near Mount Panorama ("the waterways"). Arenco pleaded guilty to the charges and the Court found that, among other things: 1. On 8 September 2004 between 8.00 am and 9.00 am, and between 2.25 pm and 2.45 pm, Arenco pumped a total of approximately 18,600 litres of water containing sediment into the stormwater drainage system at the Mount Panorama Racing Circuit neat Bathurst; 2. The water containing sediment ultimately flowed into the waterways; 3. The water containing sediment had to potential to adversely affect the aquatic life and degrade the waterways. By way of an appropriate penalty, Arenco was ordered to pay $26,000 towards sediment and erosion control works at the Silver Peaks derelict mine site at Yerranderie. Arenco was prosecuted by the EPA, a part of the Department of Environment and Conservation. This notice is placed by order of the Land and Environment Court and is paid for by Arenco. 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.