Land and Environment Court of New South Wales CITATION : Environment Protection Authority v Transpacific Industries Pty Limited; Environment Protection Authority v Transpacific Refiners Pty Limited [2010] NSWLEC 85 PROSECUTOR Environment Protection Authority PARTIES : DEFENDANTS Transpacific Industries Pty Limited Transpacific Refiners Pty Limited FILE NUMBER(S) : 50074 of 2009; 50075 of 2009; 50076 of 2009 CORAM: Pepper J KEY ISSUES: PROSECUTION :- offences against 64(1) and s 66(2) of the Protection of the Environment Operations Act - breach of license condition - production and emission of volatile organic compounds in excess of license limits - intentional but not dishonest provision of materially false information to a regulatory authority - early guilty plea - sentencing considerations - no actual environmental harm - negligible potential for environmental harm - subjective factors - deterrence - consistency in sentencing - penalty LEGISLATION CITED: Crimes (Sentencing Procedure) Act 1999 ss 3A, 21A, 22, 23 Protection of the Environment Operations Act 1997 ss 64(1), 66(2), 241, 120, 250 Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 Bentley v BGP Properties Pty Ltd (2006) 145 LGERA 234 Cabonne Shire Council v Environment Protection Authority (2001) 115 LGERA 304 Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 Director-General of the Department of Environment and Climate Change v Rae (2009) 168 LGERA 121 Dodds v R [2009] NSWCCA 191 Environment Protection Authority v Barnes [2006] NSWCCA 246 Environment Protection Authority v BHP Steel (JLA) Pty Ltd [1999] NSWLEC 150 Environment Protection Authority v Caltex Refineries (NSW) Pty Ltd [2006] NSWLEC 335 Environment Protection Authority v Causmag Ore Company Pty Limited [2009] NSWLEC 164 Environment Protection Authority v Coastal Recycled Cooking Oils Pty Limited [2008] NSWLEC 242 Environment Protection Authority v Delta Electricity [2009] NSWLEC 11 Environment Protection Authority v Forgacs Engineering Pty Limited [2009] NSWLEC 64 Environment Protection Authority v Fulton Hogan Pty Ltd (2008) 163 LGERA 345 Environment Protection Authority v Ghossayn [2009] NSWLEC 181 CASES CITED: Environment Protection Authority v Hargraves (No 2) (2003) 124 LGERA 57 Environment Protection Authority v Incitec Limited [2003] NSWLEC 381 Environment Protection Authority v Peters (2006) 153 LGERA 238 Environment Protection Authority v State of New South Wales (Department of Environment, Climate Change and Water) [2010] NSWLEC 67 Environment Protection Authority v Waste Recycling and Processing Corporation (2006) 148 LGERA 299 Garrett v Freeman (No 5) (2009) 164 LGERA 287 Gittany Constructions Pty Ltd v Sutherland Shire Council (2006) 145 LGERA 189 Great Lakes Council v Mood (No 2) [2008] NSWLEC 68 Hawkesbury City Council v Johnson; Hawkesbury City Council v Johnson Property Group Pty Limited (No 2) [2009] NSWLEC 6 Hoare v The Queen (1989) 167 CLR 348 Markarian v The Queen (2005) 228 CLR 357 Pittwater Council v Scahill (2009) 165 LGERA 289 Plath v Rawson (2009) 170 LGERA 253 R v Dodd (1991) 57 A Crim R 349 R v Nichols (1991) 57 A Crim R 391 Veen v The Queen (1979) 143 CLR 458 Veen v The Queen (No 2) (1988) 164 CLR 465 DATES OF HEARING: 4 May 2010 DATE OF JUDGMENT: 31 May 2010 PROSECUTOR Mr J Giles SOLICITORS Department of Environment, Climate Change and Water LEGAL REPRESENTATIVES: DEFENDANTS Mr T Howard SOLICITORS Norton Rose Australia JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES PEPPER J 31 May 2010 50074 of 2009 Environment Protection Authority -v- 50075 of 2009 Transpacific Industries Pty Limited; 50076 of 2009 Environment Protection Authority -v- Transpacific Refiners Pty Limited JUDGMENT Introduction 1 HER HONOUR: These proceedings concern pleas of guilty by both defendants to two offences under s 64(1) and by one defendant to one offence under s 66(2) of the Protection of the Environment Operations Act 1997 ("POEOA") and the appropriate penalty to be imposed consequent upon those pleas. 2 Together with an award of costs, I have determined that: (a) in relation to the two offences against s 64(1) of the POEOA, I impose fines of $6,500 and $9,750 respectively; (b) in relation to the offence against s 66(2) of the Act, I impose a fine of $14,000; and (c) in relation to all offences, I make a publication order in the form attached at annexure 'A'. Offences 3 Transpacific Industries Pty Ltd ("TPI") pleads guilty to an offence that: (a) on or about 26 March 2008 it was the holder of an environment protection licence, a condition of which was contravened by a person contrary to s 64(1) of the POEOA ("the first offence"); and (b) that on or about 25 July 2008, it supplied information to the appropriate regulatory authority which was false in a material respect contrary to s 66(2) of the POEOA ("the second offence"). 4 Transpacific Refiners Pty Ltd ("TPR") pleads guilty to an offence under the POEOA that on or about 21 August 2008, it was the holder of an environmental protection licence, a condition of which was contravened by a person contrary to s 64(1) of the POEOA ("the third offence"). 5 The environment protection licence which was contravened was an environmental protection licence for scheduled activities which included, amongst other things, "Chemical Production – Petrochemical" and "Petroleum and Fuel Production" no 12555 ("the licence"). 6 TPI was the licence holder during the period in which it committed the first and second offences. On 7 August 2008, the licence was transferred from TPI to TPR, which meant that TPR was the licence holder at the time it committed the third offence. Factual Background Agreed Statement of Facts 7 Most of the relevant factual background relating to the three offences was contained in an agreed statement of facts. The agreed statement of facts was, however, supplemented by affidavit evidence relied on by both the prosecutor and the defendants. It is summarised below. 8 TPI is a provider of integrated waste management, industrial cleaning, environmental services, facilities management and transport solutions for Australia, New Zealand and parts of Asia Pacific. TPR carries out the business of operating a hydrogenation facility at Rutherford ("the facility") producing and selling base oil and by-products of the hydrogenation process. TPR is a joint venture between TPI and FFS Refiners Pty Ltd of South Africa ("FFS"). 9 In general terms, the facility reprocesses used lubrication oil for reuse. Specifically, the used lubrication oil is chemically reacted with hydrogen at an elevated temperature and pressure to remove oxygen, nitrogen, sulphur and metal compounds, to saturate olefins and to correct colour. It does so on a relatively small scale. 10 The facility was officially commissioned by TPI sometime between 22 May and 22 September 2007. The commissioning period was acknowledged in the licence. Initially the commissioning period under the licence was to 22 August 2007, however, on 20 August 2007, the licence was varied to grant a one month extension for the period of commissioning of the facility thereby extending it to 22 September 2007. 11 On 22 May 2007, the Environment Protection Authority ("EPA") issued the licence. There were two versions of the licence in force during the period covering all three offences. It is the version of the licence in force between 22 May and 17 December 2007 that is the relevant version. The licence was amended on 17 December 2007, but the amendments are not material to the offences. 12 The licence contained the following important conditions: (a) condition M2 of the licence required the monitoring of the concentrations of specific pollutants in emissions at specific emission points; (b) condition L3 of the licence prescribed limits for the concentration of specific pollutants at specified emission points; (c) condition R1 of the licence required TPI to submit an annual return conforming with the requirements of that condition. The annual return was required to contain, amongst other things, the results of the monitoring of the specified emission points set out in the licence; and (d) conditions R1.9.1 and R1.9.2 required TPI to prepare Air Quality Monitoring Reports containing the results of air quality monitoring in accordance with the licence "on a quarterly basis with the first air quality monitoring report due no later than 6 months from the date of issue of the licence". 13 The refining process results in the emission of a number of gaseous substances which include Volatile Organic Compounds ("VOCs"), hydrogen sulphide and carbon monoxide. VOCs are a large group of carbon based compounds that evaporate easily at room temperature. Included in the VOCs is benzene which is a principal toxic air pollutant that "must be minimised to the maximum extent achievable through the application of best practice process design and/or emissions controls" (Approved Methods for the Modelling and Assessment of Air Pollutants in New South Wales (2005), Department of Environment Climate Change and Water ("DECCW")) ("the Approved Methods Report"). First Offence on 26 March 2008 14 On 26 March 2008, ENSR Australia Pty Ltd ("ENSR") sampled the VOCs emissions from the Vapour Recovery Unit ("VRU") during the third stage of the reprocessing of the used lubrication oil. This was the first time that the emissions had been tested at the VRU. The testing was a requirement of the licence. The test revealed that the emissions contained a level of VOCs (1289.4 mg/m3) in breach of the licence limit ( which was 20 mg/m3). In particular, the VOCs emission contained approximately 31 per cent benzene (403.227 mg/m3). 15 As a consequence of the breach, TPI requested ENSR to conduct further testing to investigate why the VRU was not operating efficiently. This occurred in or about June 2008. 16 On 22 July 2008, ENSR further sampled the VOCs emissions at the VRU. Again, the emissions contained VOCs in excess, and therefore in breach, of the licence limit (507.6.1 mg/m3). Second Offence on 25 July 2008 17 On 25 July 2008, TPI submitted an annual return for the first licence year from 22 May 2007 to 21 May 2008. The agreed statement of facts describes that TPI stated in its annual return that: i. No samples had been collected and analysed, and no sample results were available, in relation to VOCs at Point 5. In fact, 1 sample had been collected and analysed and had returned a result of 1289.4 mg/m 3 . This result was in excess of the concentration limit prescribed by L3 licence (20 mg/m 3 ) and is the subject of the charge of breach of licence on 26 March 2008. This result was also in excess of the concentration limit prescribed by the Protection of the Environment Operations (Clean Air) Regulation 2002 . ii. No samples had been collected and analysed, and no sample results were available, in relation to hydrogen sulphide at Point 19. In fact, 1 sample had been collected and analysed and had returned a result of 27.4 mg/m 3 . This result was in excess of the concentration limit prescribed in condition L3 of the licence (5 mg/m 3 ) and the Protection of the Environment Operations (Clean Air) Regulation 2002 (5 mg/m 3 ). iii. No samples had been collected and analysed, and no sample results were available, in relation to carbon monoxide at Point 19. In fact, 1 sample had been collected and analysed and had returned a result of 1250 mg/m 3 . 18 Initially, the results for each of the samples tested had been written into the annual return but then were deleted with white correction liquid so that no breaches of the licence were recorded in the return. Third Offence on 21 August 2008 19 On 21 August 2008, ENSR sampled the VOCs emissions from the VRU. The emissions contained VOCs in breach of the licence limit (4171.1 mg/m3). On this occasion it is estimated that the VOCs emissions contained approximately 31 per cent benzene (1276.4 mg/m3). Modifications to Facility and Provision of Information 20 During October 2008 the facility was shut down due to the failure of catalyst tubes within the hydrogen reformers. During this time modifications were made to improve the efficiency of the VRU. Following the modifications, TPR conducted in-house testing to determine their efficacy. The results of the testing showed that while an improvement, the modifications were insufficient to bring the VOCs emissions within the licence limits. 21 Consequently, TPR redirected exhaust from a vacuum distillation column at the VRU to a fired heater. This redirection was the third stage of a three stage optimisation process developed by TPI and TPR in response to the emissions from the VRU. The first stage was the modification to the VRU performed in July 2008, and the second stage was the modification to the VRU made in October 2008. 22 On 19 November 2008, an on-site meeting was held between officers of TPR and the EPA. The EPA was briefed in detail on the three stage VRU optimisation plan to rectify the problem, including the expected time frames for the completion of the stages. At that meeting, however, officers of TPR did not make the EPA aware of the VOCs test results which had exceeded the licence limits on 26 March, 22 July and 21 August 2008. 23 The third stage modifications were completed during December 2008 in accordance with the three stage plan. 24 On 22 December 2008, the EPA received from TPR a bundle of reports required under the conditions of the licence reporting quarterly emissions. The reports disclosed to the EPA for the first time that samples had been taken and analysed and results returned, which meant that false information had been provided in the annual return. The reports also disclosed to the EPA the breaches of the licence limits for VOCs on 26 March and 21 August 2008. 25 On or about 5 January 2009, Ms Karen Marler of the EPA reviewed the submitted reports and became aware that the information the subject of the second offence had not been included in the annual return. 26 A further modification to the facility was made in either late 2008 or early 2009. At this time ENSR conducted testing of the third stage of modifications during routine quarterly stack testing. This included further testing of emissions from the VRU. The testing returned results of VOCs concentrations marginally in excess of the licence limit (34 mg/m3). In July 2009 ENSR conducted further testing of emissions from the VRU after installation and repair of a loading bay fan. The testing returned results of VOCs concentrations well below the limits of the licence. 27 All testing of emissions from the VRU subsequently have returned results well below the limits of the licence. Cause of the Offences Relating to the VOCs Emissions 28 The statement of agreed facts states that the "root cause" of the high VOCs emissions from the VRU was because: i. From the time of commissioning and at the time of the offences TPI/TPR directed waste gases from the FPCC as well as the light end storage tanks to the VRU for treatment. However, through the investigations set out above it was ascertained that more vapours reported to the VRU than had been anticipated in the plant design. The additional load resulted in emissions from the VRU being above EPL limits. Because of the unanticipated vapour load reporting to the VRU, the remaining vapours emitted from the VRU exceeded the EPL limits on the two occasions for which TPR and TPI have been respectively charged. 29 In relation to the first and third offences, that is to say, the offences under s 64(1) of the POEOA, it was agreed that there was no resultant actual environmental harm. The potential for environmental harm as a result of the commission of the offences, however, was a matter of dispute. Evidence as to Potential Environmental Harm Evidence of Mr Andrew Mattes 30 The prosecutor relied on an affidavit affirmed by Mr Andrew Mattes, the Manager of the Air Technical Advisory Services Unit with DECCW. Mr Mattes was requested to produce a report providing his opinion on the extent of environmental harm caused, or likely to be caused, by the emission of the VOCs and, in particular, benzene, from the facility. Mr Mattes concluded, somewhat equivocally in my view, that: (a) the size of the exceedences recorded in March and August 2008 suggested that there were ongoing breaches of the VOCs licence limit during that period; (b) that while benzene emissions have the potential to cause harm in an industrial area, because only a screening level analysis had been conducted it was not possible to determine the magnitude of any actual harm; (c) the elevated benzene emissions did not pose a risk of harm in residential areas; and (d) without additional monitoring data, it was not possible to definitively identify the level of emissions over the period between March and August 2008. Evidence of Mr Aleksandar Todoroski 31 The defendants relied on two experts to support their submission that in addition to there having been no actual environmental harm caused by the s 64(1) offences, there was no potential for harm. 32 The first was a report from Mr Aleksandar Todoroski, the Technical Manager of PAEHolmes dated 19 April 2010. PAEHolmes had been requested to assess the potential for VOCs impacts and, specifically, to examine the effects of elevated VOCs emissions measured on 26 March and 21 August 2008. Of the suite of VOCs emitted, benzene was chosen for modelling and assessment in the report because it represented the pollutant with the greatest potential for an adverse environmental impact. 33 The results showed that no adjacent receptors in the vicinity of the facility would have experienced one hour average benzene concentrations above the DECCW criteria outlined in the Approved Methods Report arising from the emissions on either 26 March or 21 August 2008. While the results indicated that there was a small period of time over a year that a person at the worst effected receptor might have experienced benzene concentrations above the DECCW criteria contained in the Approved Methods Report, overall the results indicated a low risk of impact on individuals in the surrounding area arising from the benzene emissions from the facility during 2008. Evidence of Dr Roger Drew 34 The second expert opinion was that of Dr Roger Drew, the Principal Consultant at Toxikos Pty Ltd. In his report dated 20 April 2010, Dr Drew undertook a human health risk assessment to determine the expected effects on human health from VOCs emissions on 26 March and 21 August 2008. 35 Dr Drew modelled air concentrations supplied by PAEHolmes. The predicted maximum air concentrations at the worst effected location were used in the assessment. This was done on the basis that if the risks of harmful health effects were negligible at this location, then it followed that the health risks would be similarly negligible elsewhere. 36 The report concluded that: (a) the highest estimated benzene concentrations at the most effected receptor location were about 2,000 to 7,000 times less than the air concentrations required to cause acute health effects in humans. Therefore, there was negligible likelihood of harm arising from short term exposures to benzene emissions at the facility. The predicted annual average concentration of benzene at the most effected location was sufficiently low that Dr Drew concluded that there was negligible likelihood of harm to human health as a result of long term exposures to benzene in emissions from the facility because: (i) exposure to the emissions may have conservatively occurred for only a short time (perhaps up to 15 months); (ii) the predicted annual concentration at the most affected location was 20 times less than the lowest concentration considered by the World Health Organisation to be associated with cancer; (iii) the predicted annual exposure was 6 to 40 times less than the range of chronic air guideline values set by competent agencies to protect against the development of cancer should lifetime exposure occur; and (iv) the calculated incremental lifetime risk from the benzene exposure was negligible; (b) because the anticipated concentrations of toluene was more than 8,000 times lower than the no effect level for acute effects in humans and 1,500 times lower than the relevant air guideline value, Dr Drew concluded that there was negligible risk to harm of human health from acute exposure to toluene in the emissions from the facility. Similarly the calculated average concentration at the most affected location was 500 to 8,300 times lower than chronic air guideline values set by international agencies. Accordingly, there had been a negligible risk from any long term exposure to toluene in the emissions; (c) maximum calculated air concentrations of n-heptane for one, six or eight hour averages at the most affected receptor were markedly less than the acute effects criteria and it was therefore unlikely that health effects would occur from exposure to n-heptane. The calculated annual average concentration of n-heptane at the receptor was more than 13,000 times less than the relevant chronic air guideline value, and therefore, Dr Drew concluded that there was little likelihood of harm to human health from exposure to n-heptane in the emissions; (d) given the very close structural similarity of 1-heptene with n-heptane, it was not unreasonable to expect the toxicity of the two compounds to be similar. In which case, the toxicity reference values and air guideline values for n-heptane could be applied to 1-heptene. Moreover, since the calculated air concentrations of 1-heptene were virtually the same as those for n-heptane at the most effected receptor, Dr Drew concluded that there was little likelihood of harm to human health from exposure to 1-heptene; and (e) in relation to the additive effects of exposure to the emitted VOCs, Dr Drew concluded that there was compelling evidence that metabolic interactions were negligible in humans exposed to VOCs concentrations at the level emitted at the facility. In addition, direct additive effects in the brain were unlikely to occur because the predicted individual concentrations between the VOCs were well below their respective threshold levels to cause these effects. 37 Dr Drew's overall conclusion was that because the concentration of VOCs at the most affected receptor were low, indeed much lower than the concentrations necessary to cause adverse health effects and lower than the relevant health air guidelines, there was negligible likelihood of harm to human health as a result of the emissions of VOCs on 26 March and 21 August 2008. Findings on Environmental Harm 38 None of the defendants' evidence on potential environmental harm was challenged by the prosecutor. Having regard to this evidence, and to the evidence of Mr Mattes, I find beyond reasonable doubt that, first, there was no actual environmental harm occasioned by the VOCs emissions on 26 March and 21 August 2008, and second, that the potential risk of environmental harm on these dates, and any time in between, was so minimal as to be negligible. This reduces the objective gravity of the commission of the first and third offence. Evidence of False or Misleading Information and the Defendants' Evidence Generally 39 At the sentencing hearing an issue arose as to whether or not there was any intention or knowledge on the part of TPI that the information it provided in its annual return the subject of the second offence was materially false or misleading, in that it knew that it was objectively wrong or inaccurate at the time of its provision and that it intended to deceive the EPA. 40 Correspondence attached to an affidavit of Mr Gavin Shapiro, sworn 6 April 2010, a solicitor engaged on behalf of TPI, made it clear that in pleading guilty to the charge TPI did not accept that by providing incorrect information in its annual return that it intended to mislead or deceive the EPA. This is because, TPI asserted, the sample results that were omitted from the annual return were inaccurate. 41 On 2 March 2010, the solicitors for TPI wrote to the EPA stating that it wanted to clarify that in pleading guilty to the charge TPI did not accept that in providing the information in the annual return that it intended to mislead or deceive the EPA. It went on to state that if the EPA intended to assert as an aggravating matter for the purpose of sentencing that TPI did so intend, that this would be contested at the sentencing hearing. Furthermore, if the EPA intended to make this allegation TPI requested that the EPA "formally and promptly notify us of that and identify what evidence you propose to rely upon in purporting to prove it, so that our client may properly prepare for the sentence hearing." 42 In response, on 3 March 2010, the prosecutor wrote to the solicitors for TPI and stated the following (emphasis added): We do not intend to assert that your clients intended to mislead and deceive the EPA in any material way. We confirm our view the evidence clearly demonstrates that TPI knew that samples had been collected and analysed for the sampling points referred to at paragraph 1(d) of the summons, but supplied information to the EPA which indicated that no such samples had been collected. 43 On 20 April 2010, the prosecutor again wrote to the solicitors for TPI and stated that (emphasis added): We wish to remove any ambiguity concerning the nature of the prosecutor's case arising out of point 2 of our letter of 3 March 2010. To avoid doubt, we confirm our position is that put in our particulars that the offence: 1. was the result of a deliberate decision by TPI not to disclose results it had been made aware of; and 2. was not the result of a deliberate plan to deceive the EPA to avoid regulatory action. 44 On any reading, the particulars given by the prosecutor in relation to the second offence are contradictory and confusing. The distinction between a deliberate decision not to disclose results that TPI was aware of and a deliberate plan to deceive the EPA to avoid regulatory action as stated in its letter of 20 April 2010 is, for example, in my opinion, a subtle one. 45 Further exacerbating matters, at the hearing the prosecutor submitted orally that TPI had acted "dishonestly" in the sense that it had knowingly included incorrect information concerning VOCs test results in the annual return. Unsurprisingly in light of the correspondence passing between the parties, TPI objected to such a submission being put. In my opinion, TPI was correct to make the objection. 46 The issue is, of course, only relevant as a factor in aggravation for the purpose of sentencing given that the offence created by s 66(2) of the POEOA is one of strict liability. 47 When the correspondence of the prosecutor of 3 March and 20 April 2010 is read together, it appears that what the prosecutor is in reality submitting is that false statements were recorded in the annual return and that these false statements were not merely the product of inadvertence or typographical error, but were deliberately made inasmuch as it was a conscious decision by TPI to whiteout the results from the return and to submit it. While TPI asserts that this conscious decision was due to a belief, albeit mistaken, that the results were inaccurate and therefore ought to be excluded, and by its letter dated 20 April 2010 the prosecutor refutes this explanation, I do not take the prosecutor's oral submission that TPI was "dishonest" to mean anything more than a rejection of the sufficiency of the explanation that TPI believed the samples to be inaccurate as a justification of their omission. Put any higher the submission would be, in my view, inconsistent with the written representations made by the prosecutor to TPI. The prosecutor is bound by these earlier representations and cannot now posit a position which it shied away from in previous correspondence. Evidence of Ms Karen Marler 48 The prosecutor relied on an affidavit of Ms Karen Marler affirmed 27 April 2010. Ms Marler is a Senior Operations Officer with DECCW, and is responsible for administering and regulating a variety of premises scheduled under the POEOA, including administering the licence issued to TPI and TPR. 49 Ms Marler deposed that the licence issued to TPI and TPR required them to submit air quality monitoring reports to the EPA on a quarterly basis and to submit an annual return, which was a summary of monitoring data and compliance information obtained within the licence year to the EPA, within 60 days of the end of each licence year. The return was completed by the licensee to provide reliable information to the EPA about the licensee's, environmental performance and compliance with its licence conditions. It is part of the self-monitoring regime created for licensees under the POEOA. 50 Ms Marler stated that the annual return was relied upon by the EPA as an accurate statement of the results of monitoring undertaken at each licensed premises. She also stated that the EPA generally relied on the certification in the annual return to determine whether a licensee had complied with the terms of its licence and had not otherwise caused pollution. Ms Marler further stated that the EPA relied upon licensees to provide accurate information with respect to processes, emissions and emission testing in order to understand how the scheduled activity is performing, its potential impact on the environment and how its performance could be improved to achieve a better environmental outcome. The licensing system provided for under the POEOA avoided the need for constant monitoring by the EPA of licensed premises. If, therefore, the EPA received an annual return which provided incorrect monitoring data and inaccurate information regarding compliance, potentially significant environmental impacts may not be detected or their detection delayed. This in turn impaired the EPA's ability to determine the cause of any complaints due to emissions and to provide possible solutions. Evidence of Mr Anthony Roderick 51 The defendants relied on the evidence of Mr Anthony Roderick, the Chief Operating Officer of Transpacific Industrials, a division of Transpacific Industries Group Limited ("Transpacific Group"), and who is also employed by TPI. 52 In his affidavit sworn 14 April 2010, Mr Roderick gave general evidence about the operation of the facility, about the environmental activities of TPI and TPR, about the attitude of both defendants to the commission of the offences and about the steps taken to avoid any further breaches of the licence. 53 Mr Roderick stated that he had overseen the operations at the facility since late 2009. Mr Roderick stated that the facility was the first oil hydrogenation facility in Australia specifically designed to enable the processing of used lubricating oil. The base oil the facility produced is used by lubricant formulators and blenders to manufacture a range of engine oils, gear and transmissions fluids, hydraulic oils and other industrial lubricant products. 54 Mr Roderick also deposed to various environmental policies and plans, including an Air Quality Management Plan, that were either in force between 26 March and 21 August 2008 or were in the process of being applied to the facility. Mr Roderick further deposed that the Transpacific Group runs a number of environmentally based community programs and initiatives in Australia. A proportion of the profits and fees from the operation of the facility goes towards these programs and initiatives. In addition, the Federal Government has recognised the environmentally beneficial nature of the used oil recycling carried out at the facility. 55 Mr Roderick deposed that the commission of the three offences "has caused genuine angst amongst the management and staff of TPI and TPR and the Transpacific Group". On behalf of those three entities Mr Roderick expressed remorse for the commission of the offences. Mr Roderick stated that the defendants "recognise and regret that these offences have constituted failures on the part of the TPI and TPR to achieve the environmental standards and goals which the Transpacific Group sets for all of its companies". 56 On behalf of the senior executives of the Transpacific Group and the executives of the defendants, Mr Roderick offered a firm commitment to do everything possible to ensure that TPR and TPI did not commit any offences in the future. 57 Mr Roderick stated that because the facility was the first of its kind in Australia, and as a result of the complexities involved in designing and constructing such a facility without any precedent to directly compare it to, it was not possible to accurately predict how all the components of the facility would operate. As it transpired, there was a need for adjustments to be made in the design of the facility. The offences had to be seen in this light, occurring, as they did, after the official commissioning period of the facility. Mr Roderick assured the Court in his affidavit that "these teething problems have now been rectified". Moreover, as part of the defendants' continuing endeavour to ensure that the facility operates according to environmental best practice, TPR prepared a proposed pollution reduction program which it submitted to the EPA in November 2009, and which the EPA has indicated that it proposes to largely impose. 58 In relation to the provision of materially false or misleading information in TPI's annual return, Mr Roderick explained that following receipt of the results obtained in the sampling and analysis carried out by ENSR in March 2008, the reliability of a number of these results were questioned, including the VOCs result at the VRU and the hydrogen sulphide and carbon monoxide results. It was for this reason that the results were not included in the annual return submitted to the EPA. 59 On 17 December 2008, TPR sent the EPA a bundle of reports pursuant to condition R1.9.1 of the licence. The reports disclosed that sample results had been omitted from the annual return and the report dated 30 May 2008, disclosed to the EPA for the first time the exceedence of the licence limit for VOCs on 26 March 2008. 60 Mr Roderick says that TPI has conducted its own enquiries as to how "it was that the annual return was modified". He states that alterations were made to the annual return to delete the relevant test results because of a real perception on the part of some of the officers of TPR and TPI at the time that the sampling results were not reliable. However, Mr Roderick states that TPI accepts "that these questions did not justify the alterations that were made, which rendered the information materially incorrect". It is on this basis that Mr Roderick says that there was no intention on the part of any officers of TPI to mislead or deceive the EPA and the situation that occurred was "regrettable" and disappointing. 61 In late 2009 a significant restructure was undertaken within the Transpacific Group which culminated in Mr Roderick's appointment to the position of Chief Operating Officer. Consequently, there has been the establishment of a new risk management function that is company wide and a Chief Risk Officer has been appointed. The Chief Risk Officer reports directly to the Transpacific Board and is responsible for all audit functions, both internally and externally. Thus, Mr Roderick deposed, significant changes have been introduced to not only meet, but to exceed, the expectations of the regulatory authorities. Furthermore on 17 November 2009, the Transpacific Group introduced a new policy across all of its New South Wales operations as a direct consequence of the events the subject of the s 66(2) offence which requires staff to certify the accuracy of the information contained in annual returns. 62 Mr Roderick conceded in cross examination that one of the two people who prepared the report altered it but that it was not known who. It was also not known whether or not this person knew at the time of the alteration that the results were in fact correct. Accordingly, Mr Roderick conceded that his belief that the person who altered the return believed the sample results to be inaccurate was somewhat speculative. However, he reiterated that at the time the annual return was lodged, significant doubt existed as to the reliability of the test results. 63 Mr Roderick also accepted that the various environmental programs and community initiatives that the defendants had established were also used for marketing purposes and that the free collection of waste oil from its customers around New South Wales, thereby promoting the disposal of waste oil in an environmentally beneficial manner, was oil that was used in the operation of the facility. Evidence of Mr Antony Steynberg 64 The defendants relied on two affidavits of Mr Antony Steynberg sworn on 20 and 29 April 2010. Mr Steynberg gave evidence as to what processes were implemented at the facility in order to rectify the VOCs emission exceedences and why the test results excluded from the annual return were believed to be erroneous. 65 Mr Steynberg is an engineer with TPR. His primary function is to provide technical support for the refinery in the area of process control and mechanical integrity. He commenced his employment with TPR in February 2008. Prior to that he was employed with FFS. Whilst at FFS Mr Steynberg assisted in setting up the construction framework for the facility. By the time Mr Steynberg came to Australia to take up his current position with TPR the facility had been commissioned. 66 Mr Steynberg deposed that from the time of commissioning in May 2007 up until December 2008, which included the charge period for the first and third offences, TPI and TPR directed waste gases containing higher than expected levels of VOCs to the VRU for treatment in accordance with the design of the plant. Mr Steynberg stated that for a complex facility, particularly one that was unique, adjustments were necessary to the original design in order to optimise operation. Further, the complexity of the mechanical and chemical engineering operations at the facility meant that these adjustments took a long time to finalise. 67 Mr Steynberg stated that following the receipt of the high VOCs reading the subject of the first offence, an investigation was initiated to discover its cause. Initially, the investigation focused on the correctness of the sampling and analysis by ENSR because of the anomalous nature of the results. Further tests were conducted in June 2008 because TPI believed that a number of the results obtained in the earlier tests conducted in March 2008 were an aberration. This included the VOCs sample the subject of the first offence and the hydrogen sulphide sample and carbon monoxide sample which were the subject of the second offence. 68 Mr Steynberg stated that from the middle of 2008 until the end of that year a three stage optimisation process was undertaken at the facility in an attempt to improve the performance of the VRU in order to reduce VOCs emissions. The first stage of this process commenced in July 2008 when a detailed investigation was initiated into the VOCs results. On 31 July 2008, it was determined as a result of preliminary testing that the malfunction of the HGP stripper was responsible for excessive VOCs emissions entering the VRU. 69 During the second stage of the optimisation plan in September 2008 it was ascertained that more waste gases were being directed to the VRU than had been anticipated in the plant design. This additional vapour load had resulted in emissions from the VRU being above licence limits, including on the two occasions the subject of the first and third offences. 70 On 23 September 2008, the third stage of the optimisation process was proposed by Mr Steynberg, namely, that the emissions from the VRU could be reduced by diverting the waste gases to a fired heater where they would be combusted and scrubbed prior to emission. This third stage was, however, subject to TPR determining the effectiveness of the second stage of the process. The third stage also required significant lead time due to the process changes it entailed. 71 In October 2008 the plant was shut down for a reactor change and at this time second stage modifications were made to the plant to improve the scrubbing efficiency of the VRU. Following the modifications, TPR conducted internal testing to determine their effectiveness. Mr Steynberg stated that because the testing was in-house it was not sufficiently accurate to provide definitive results. However, the results indicated that the modifications would be insufficient. 72 Accordingly, on 17 October 2008, the third stage of the optimisation process was initiated by Mr Steynberg. On 19 November 2008, an on-site meeting was held between officers of TPR and the EPA, during which the EPA was briefed in detail on the three stage optimisation plan, including the expected time frames for completion. In December 2008 preparations for the third stage were completed and the plant processes were modified. By 22 January 2009, the third stage of the optimisation process had been carried out. The facility, however, did not recommence its operation until January 2009 due to the combination of low annual sales and the repair of a loading bay fan which was initially defective when installed in late 2008 or early 2009. 73 In July 2009 ENSR conducted testing of the emissions from the VRU. The testing returned results of VOCs concentrations well below the licence limits. Because all testing of emissions from the VRU have returned results well below the licence limits, Mr Steynberg has concluded that the modifications have been successful. 74 Mr Steynberg stated that the completion of the three stage optimisation process and the compliance of the VOCs emissions with the licence limits occurred prior to charges being laid by the EPA. He further deposed that the cost of implementing the first two stages of the process was approximately $15,000 and the approximate direct cost of the third stage was $30,000. 75 In relation to the false information contained in the annual return, Mr Steynberg deposed in his affidavit sworn 29 April 2010 that the preliminary data for the emission testing and sampling conducted by ENSR in March 2008 was in fact questioned by TPI and TPR on 1 May 2008. Specifically, he stated that when he looked at the data it appeared to him that it was incorrect. In relation to the test results for the VOCs, Mr Steynberg queried these at the time because they were the first results obtained for VOCs at the VRU and because the VRU was running as expected and that there was nothing that could explain the higher than expected emissions. Similar queries were made in relation to the test results for hydrogen sulphide and carbon monoxide. In relation to the carbon monoxide results there was, in addition, combustion data supporting an assumption of complete combustion which meant that the carbon monoxide measurement had to be incorrect. It was for these reasons that in June 2008 Mr Stuart Douglas of TPR met with representatives of ENSR to discuss what were believed to be erroneous test results. At this meeting ENSR representatives agreed that there were anomalies in the test results, which reinforced Mr Steynberg's concerns. 76 In cross examination Mr Steynberg conceded that while testing for VOCs emissions first occurred in March 2008, he did not know when initial testing for hydrogen sulphide or carbon monoxide had occurred. When questioned about why it had taken until July before further testing of VOCs was undertaken, Mr Steynberg stated that in addition to meeting with ENSR representatives in May 2008, preparation was required in order to conduct the further testing and ENSR were not available until much later to undertake the tests. 77 Mr Steynberg further stated that he was not aware of the content of the annual return until after it had been lodged. Findings on the Provision of Materially False or Misleading Information 78 There is no question that, as has been admitted by TPI, the omission from the annual return of the test results in relation to the VOCs, hydrogen sulphide and carbon monoxide, was materially false. Accordingly, I so find beyond reasonable doubt. There can also be no doubt, and I find likewise, that the decision by TPI to not include these results was deliberate. That is to say, it was not the result of inadvertence or typographical error. 79 However, in addition to my previously expressed view that the prosecutor cannot now, in light of its earlier written representations to TPI, submit that TPI acted dishonestly in the sense that it intended to deceive the regulatory authority by not including these results, or that it lodged the return in circumstances where it knew that the results should have been included, I find that the evidence does not disclose beyond reasonable doubt any dishonest conduct on the part of TPI in the manner contended for by the EPA. 80 I accept the evidence of both Mr Roderick and Mr Steynberg (the latter of which was not seriously challenged in this regard) that TPI genuinely believed that the test results were incorrect. It was for this reason that the results were, albeit wrongly as TPI has properly admitted, not included in the annual return. I do not accept, as the prosecutor in substance submitted, that TPI sought to hide the results from the EPA. 81 It follows that even if I were to permit the prosecutor to submit, which I do not, that TPI's conduct was dishonest, I do not find that the prosecutor has demonstrated this fact to the requisite standard. Statutory Framework 82 Section 64 of Pt 3.4 of the POEOA provides: 64 Failure to comply with condition (1) Offence If any condition of a licence is contravened by any person, each holder of the licence is guilty of an offence. Maximum penalty: (a) in the case of a corporation—$1,000,000 and, in the case of a continuing offence, a further penalty of $120,000 for each day the offence continues… (2) Defence The holder of a licence is not guilty of an offence against this section if the holder establishes that: (a) the contravention of the condition was caused by another person, and (b) that other person was not associated with the holder at the time the condition was contravened, and (c) the holder took all reasonable steps to prevent the contravention of the condition. A person is associated with the holder for the purposes of paragraph (b) (but without limiting any other circumstances of association) if the person is an employee, agent, licensee, contractor or sub-contractor of the holder. 83 Section 66(2) contained in Pt 3.5 of the Act relevantly states: 66 Conditions requiring monitoring, certification or provision of information, and related offences (2) False or misleading information A holder of a licence who supplies information, or on whose behalf information is supplied, to the appropriate regulatory authority under the conditions of the licence is guilty of an offence if the information is false or misleading in a material respect. Maximum penalty: (a) in the case of a corporation—$1,000,000… 84 Section 241 of Div 5 of Pt 8.2 of the Act states: 241 Matters to be considered in imposing penalty (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. Consideration of Appropriate Sentence Purpose of Sentencing 85 The purposes of imposing a sentence on an offender are set out in s 3A of the Crimes (Sentencing Procedure) Act 1999 ("CSPA"). The sentence of the Court is a form of public retribution and denunciation of the conduct of the offender (s 3A(f) of the CSPA). It must ensure that the offender is held accountable for his or her actions and is adequately punished (s 3A(a) and (e)). 86 The sentence must also deter the offender from committing a similar offence in the future (Director-General of the Department of Environment and Climate Change v Rae (2009) 168 LGERA 121 at [8]). Moreover, the sentence of the Court needs to operate as a "powerful factor" in preventing the commission of similar offences by persons who may be tempted to do so (Rae at [9]). Approach to Sentencing 87 It is a basic principle of sentencing law that the sentence imposed by the Court for an offence must both reflect and be proportionate to the objective circumstances of the offence and the personal or subjective circumstances of the offender (Veen v The Queen (1979) 143 CLR 458 at 490 and Veen v The Queen (No 2) (1988) 164 CLR 465 at 472). Objective Gravity of the Offence 88 The primary factor to consider in determining sentence is the objective gravity or seriousness of the offence. It fixes both the upper and lower limits of proportionate punishment. It fixes the upper limit insofar as the sentence must not exceed that which can be justified as appropriate or proportionate to the gravity of the crime considered in light of its objective circumstances (Veen v The Queen (No 2) at 472, 485-486, 490-491 and 496; Hoare v The Queen (1989) 167 CLR 348 at 354). It fixes the lower limit because allowance for the subjective factors of the case ought not produce a sentence which fails to reflect the objective gravity or seriousness of the offence (R v Dodd (1991) 57 A Crim R 349 at 354; R v Nichols (1991) 57 A Crim R 391 at 395; Garrett v Freeman (No 5) (2009) 164 LGERA 287 at [51] and Pittwater Council v Scahill (2009) 165 LGERA 289 at [50]). 89 In determining the objective gravity or seriousness of the offences, the circumstances of the offences to which the Court may have regard include (Bentley v BGP Properties Pty Ltd (2006) 145 LGERA 234 at [163]; Gittany Constructions Pty Ltd v Sutherland Shire Council (2006) 145 LGERA 189 at [110], both cited in Hawkesbury City Council v Johnson; Hawkesbury City Council v Johnson Property Group Pty Limited (No 2) [2009] NSWLEC 6 at [36]-[38] and Plath v Rawson (2009) 170 LGERA 253 at [48]): (a) the maximum penalty for the offence; (b) the objective harmfulness of the defendants' actions; (c) the defendants' state of mind in committing the offence; (d) the defendants' reasons for committing the offence; (e) the foreseeability of risk of harm to the environment; (f) the practical measures to avoid harm to the environment; and (g) the defendants' control over the causes of harm to the environment. 90 As recorded above, s 21A of the CSPA further identifies matters which the Court must take into account when sentencing, including those in aggravation (s 21A(2)) and those in mitigation (s 21A(3)). The Maximum Penalty 91 The maximum statutory penalty is of considerable significance in determining the objective gravity of the offence (Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698). In Markarian v The Queen (2005) 228 CLR 357 at [31], the High Court unequivocally referred to the need to have regard to the maximum penalty as a legislative yardstick to enable comparison between the worst possible case and that currently before the Court (see also Cabonne Shire Council v Environment Protection Authority (2001) 115 LGERA 304 at [37]). 92 At the time the offences were committed the maximum penalty for breach of s 64(1) by each of the defendants was $1,000,000. The maximum penalty for breach of s 66(2) was also $1,000,000. This demonstrates the extreme seriousness with which these offences are viewed by the legislature. Nature of the Offences Having Regard to the Objects of the Legislation 93 In determining the objective seriousness of the offences the Court may have regard to the objects of the legislation which have been breached (Bentley v BGP Properties Pty Ltd (2006) 145 LGERA 234 at [168]-[172] Rawson at [49]). In this regard the objects of the POEOA are set out in s 3(a), (d), (e) and (f). 94 It is clear that both TPR and TPI have acted in a manner that compromises the objects of the Act and the quality of the environment in New South Wales, by failing to reduce risks to human health, by failing to prevent the degradation of the environment and by undermining the regulatory framework for environmental protection. This was achieved by permitting VOCs to be emitted in exceedence of licencing limits and by providing materially false information to the EPA in its annual return. Objective Harm to the Environment 95 The objective gravity of the offence is measured in part by whether there has been any actual or potential environmental harm and if so, its degree of seriousness (s 241(1)(a) of the POEOA). Usually the more serious the actual or likely environmental harm, the higher the penalty (Camilleri's at 701 and Environment Protection Authority v Fulton Hogan Pty Ltd (2008) 163 LGERA 345 at [148]). 96 While the first and third offences constituted "air pollution" as that term is defined in the POEOA (see s 4 and the dictionary to the Act), as was accepted by the parties, and as I have found, no actual harm resulted from the commission of the first and third offences. Moreover, whatever potential environmental harm was caused by the commission of the offences was so minimal as to be negligible. It follows that in respect of the commission of the two s 64(1) offences, the resultant objective harm was at the lowest end of the scale. 97 In relation to the second offence, I find that harm was caused, albeit at the lower end of the scale, by the undermining of the efficacy of the protective environmental regulatory framework. State of Mind of the Offenders 98 Because the offences are all offences of strict liability no mens rea is required to be proven by the prosecutor (Pittwater Council v Scahill (2009) 165 LGERA 289 at [69]). Nevertheless, the state of mind of an offender at the time of the commission of offence is relevant insofar as it can have the effect of increasing or decreasing the seriousness of the offence. Thus a strict liability offence that is committed intentionally or recklessly is objectively more serious than one which is committed unintentionally (Scahill at [69] and Fulton Hogan at [172]). 99 For the reasons discussed above I find beyond reasonable doubt that neither TPI nor TPR intended the commission of any of the offences. In relation to the offences committed pursuant to s 64(1), the evidence is clear that the emission of VOCs contrary to the licence limits was accidental inasmuch as it was due to design and operation flaws of the facility which were rectified upon discovery. 100 In relation to the breach of s 66(2) of the Act, I have found that while the materially false information in the annual return was deliberately provided to the EPA in the sense that the omission of the sample results was not an oversight, there was no intention by TPI to deliberately provide materially false information. At the time of the provision of the annual return TPI genuinely believed that the information ought to have been omitted because it was not accurate. While this view is plainly wrong, no mal fides can be attributed to the actions of TPI thereby increasing the objective seriousness of the offence. Practical Measures Which Could Have Been Taken to Prevent, Control, Abate or Mitigate the Harm 101 A factor which bears on the objective gravity of an offence is the practical measures that could have been taken to prevent, control, abate or mitigate the harm to the environment (Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 at [359] and s 241(1)(b) of the POEOA). The prosecutor submitted that the practical measures that were eventually implemented by TPR and TPI by way of the three stage VRU optimisation process to rectify the excessive emission of VOCs should and could have been implemented much earlier. In so doing, the commission of the third offence may have been avoided. Specificaly, the prosecutor submitted that either as an alternative, or in addition, to questioning the accuracy of the March 2008 test results, the defendants ought to have erred on the side of caution and made the contrary assumption, namely, that the results were correct and that a fault causing excess emissions existed, which would have resulted in the fault having been located and rectified earlier. 102 While I accept that after the commission of the first offence a greater sense of urgency would have been desirable in order to avoid the commission of the third offence, I nevertheless agree with the submissions put by TPR and TPI that given the novelty of the facility and the complexity of its operations, it was not unreasonable for them to, first, query the reliability of the March test results, and second, request that ENSR conduct further testing before implementing any changes. The evidence of Mr Steynberg, which was not challenged in this regard, was that ENSR was not available to conduct the further testing and that preparations were needed before it could be done. Thus a reasonable explanation exists for the delay between late March 2008, when the initial test results were received, and July 2008, when ENSR conducted further tests. It cannot be said, in my opinion, that TPR and TPI did not take sufficient steps to locate the cause of the excessive VOCs emissions and to propose and implement a solution. I therefore do not find, as was submitted to me by the prosecutor, that the defendants acted unreasonably or were excessively dilatory in implementing the practical measures to avoid the commission of the offences. 103 In relation to the second offence, however, I accept the submissions of the prosecutor that simple practical measures could and should have been taken by TPI to avoid the harm. For example, TPI could have sought clarification as to whether the samples ought to be included in the return or could have included the omitted results in the annual return but with a notation against them indicating that in TPI's opinion they were erroneous. Foreseeability of Risk of Harm 104 A factor bearing on the objective gravity of the offence is the extent to which the offenders could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offences (s 241(1)(c) of the POEOA). 105 In relation to the s 64(1) offences, by reason of the newness of the facility I accept that the commission of the first offence was not foreseeable. This is particularly so when regard is had to the complexity of the operations of the facility as deposed to by both Mr Steynberg and Mr Roderick. 106 In relation to the commission of the third offence, however, this submission is not so easily accepted given the earlier breach. While I agree that by this stage the defendants had put into effect measures to rectify the unlawful emission of the VOCs, nevertheless it cannot be said that the commission of the third offence was not reasonably foreseeable. 107 In relation to the second offence, I find that TPI could, and should, reasonably have foreseen that the omission of the sample results for the VOCs, hydrogen sulphide and carbon monoxide, even in circumstances where there was doubt as to their accuracy, would result in false information being provided to the EPA. To the extent that uncertainty existed as to the reliability of the results, it ought to have been foreseen that if TPI were incorrect about their assessment of the data or about the need to include it, then failing to disclose it in the annual return would result in the commission of an offence. Control Over the Causes Which Gave Rise to the Offences 108 A factor bearing on the objective gravity of the offences is the extent to which the offenders had control over the causes that gave rise to the offence (s 241(1)(d) of the POEOA). It is not controversial that at all times TPR and TPI respectively, as the operator and licensee of the facility, had control over the causes which gave rise to the commission of all three offences. Aggravating Features 109 In light of my findings about the circumstances giving rise to the commission of the second offence, I find that there are no aggravating features of either TPR's or TPI's conduct that increases the objective seriousness of any of the offences. Conclusion on Objective Circumstances 110 Having regard to the objective factors present with respect to each of the three charges, I conclude that the objective seriousness of the offences commissioned by TPI and TPR is low. 111 A proportionate sentence requires the Court to take into account any personal or mitigating factors present (Gittany Constructions Pty Ltd v Sutherland Shire Council (2006) 145 LGERA 189 at [144] and the authorities cited thereat). 112 The evidence discloses mitigating factors that the Court must take into account in determining the appropriate penalty (s 21A(3) of the CSPA). The subjective circumstances of the defendants to be considered in this regard include: (a) any prior criminal record; (b) the early pleas of guilty; (c) the contrition and remorse expressed by the defendants; (d) their cooperation with regulatory authorities; and (e) the financial means of the defendants. No Prior Convictions 113 In Veen v R (No 2) the High Court stated (at [477]): [477] The antecedent criminal history is relevant, however, to show whether the instant offence is an uncharacteristic aberration or whether the offender has manifested in his commission of the instant offence a continuing attitude of disobedience of the law. In the latter case, retribution, deterrence and protection of society may all indicate that a more severe penalty is warranted. 114 Neither TPR nor TPI have any prior convictions for any environmental offences or indeed any offences (see s 21A(3)(e) of the CSPA and Gittany at [146]). In my opinion the factual matrix leading to the commission of the offences clearly demonstrates that their commission was "an uncharacteristic aberration" by TPR and TPI. Prior Good Character 115 I accept that TPR and TPI are, but for the commission of these offences, corporate entities of prior good character (see s 21A(3)(f) of the CSPA). So much so was demonstrated by the evidence of Mr Roderick. To the extent that the prosecutor was critical of this evidence and sought to demonstrate that TPR and TPI derived a benefit from the marketing of their good character and from the waste oil collected by them, I do not find that this in any way detracts from their good character for the purpose of sentencing. Early Plea of Guilty 116 TPR and TPI pleaded guilty to the offences on the second mention date before the Court. Neither pleaded guilty on the first mention date because particulars of the offences were sought prior to entering a plea. Given the large amount of evidence the prosecutor, at that stage, was relying upon, this course of conduct cannot be criticised. In not pleading guilty on the first mention date the utilitarian value of the plea was not diminished (see Rae at [58]-[64] and the authorities cited thereat). Accordingly, TPI and TPR are entitled to the full 25% discount for their early pleas of guilty (see ss 21A(3)(k) and 22 of the CSPA). Contrition and Remorse and Likelihood of Reoffending 117 Both corporate defendants have expressed, through Mr Roderick, and to a lesser extent through Mr Steynberg, genuine contrition and distress for the commission of the offences (s 21A(3)(i) of the CSPA). The contrition is reinforced by Mr Roderick's outline of implemented procedures to avoid a repetition of such offences in the future. I have no hesitation in finding that both TPI and TPR have genuinely indicated its corporate contrition (Environment Protection Authority v Waste Recycling and Processing Corporation (2006) 148 LGERA 299 at [214]). 118 This factor also makes it less likely that either TPR or TPI will reoffend in the future (s 21A(3)(g) of the CSPA). I so find accordingly. Cooperation with the Regulatory Authority 119 In addition, the evidence also amply demonstrates that at all times both TPR and TPI fully cooperated and assisted the EPA in its investigation and prosecution of the offences and in the implementation of steps to avoid any future breaches of the Act (ss 21A(3)(m) and 23(1) of the CSPA). This cooperation commenced early and culminated with the filing in the Court of the agreed statement of facts (see Waste Recycling at [216]-[223]). Payment of the Prosecutor's Costs 120 The defendants have agreed to pay the prosecutor's costs fixed in the sum of $40,000. The payment of these costs is an aspect of its punishment (Environment Protection Authority v Barnes [2006] NSWCCA 246 at [78]). Capacity to Pay Fines 121 Turning to the financial position of both TPR and TPI, there is no suggestion that it will not have the capacity to pay any fine imposed on it by way of penalty (see s 6 of the Fines Act 1996). Conclusion As to Subjective Circumstances 122 The subjective circumstances of both TPR and TPI therefore mitigate to a considerable degree the sentence to be imposed. Appropriate Penalty Deterrence 123 The purposes for which the Court may impose a sentence include deterring others from committing similar offences (s 3A(b) CSPA). 124 Any fine needs to be large enough to make it worthwhile so that the cost of precautions is to be taken to outweigh any gains by not doing so and so as to not to appear a mere licence fee for illegal activity (Fulton Hogan at [190]). A person will not be deterred from committing environmental offences by the imposition of nominal fines (Bentley at [140]). Equally, the sentence imposed by the Court must show the denunciation of the crime committed and take into account the moral outrage of the community (BGP at [143]). The community is entitled to expect that the Court will exercise its discretion to impose penalties commensurate with the community's views. 125 In the circumstances of the present case, the need to specifically deter TPR and TPI from repeating the conduct that resulted in the commission of the first and third offences in the future is, on the evidence recorded above, non existent. 126 There is, however, a need to ensure general deterrence in relation to other manufacturers, including those operating facilities that utilise new and complex processes, to ensure that their licencing conditions are adhered to and that environmental pollution does not occur. The POEOA exists not only to prevent deliberate or negligent pollution but also to promote positive action to be undertaken to ensure that accidental pollution does not occur. In Axer Mahoney JA observed (at 359) that: The community has adopted a stern policy against pollution. The legislative scheme requires that proper, and strict, precautions be taken by those whose activities may cause proscribed pollution… 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 is does not occur. 127 As Pain J further recently stated in Environment Protection Authority v State of New South Wales (Department of Environment, Climate Change and Water) [2010] NSWLEC 67 (at [28]-[29]): 28 The importance of complying with environment protection licences issued under the POEO Act has been recognised by this Court on numerous occasions. In Environment Protection Authority v Incitec Limited (2003) 131 LGERA 176 McClellan J observed at [49], in relation to specific deterrence for a second offender, that: A licence provides a privilege, permitting the holder to pollute within the terms of that licence. It carries with it an obligation to ensure that any pollution is kept within the parameters provided by the licence conditions. 29 Considering s 241 of the POEO Act, Pearlman J emphasised that contravention of a pollution licence involves a breach of public trust in Environment Protection Authority v Shoalhaven Starches Pty Ltd [2003] NSWLEC 107. Her Honour stated at [49]: The defendant is entrusted, by its pollution licence, to pollute and that places it in a special category so far as other members of the public are concerned. But that permission is conditional upon the standards and limits specified in the pollution licence. 128 The need to specifically deter TPI from not providing materially false or misleading information to the regulator in the future is, on the evidence recorded above, very limited. 129 Again, however, there is a strong need to promote general deterrence in relation to manufacturers whose operations are governed by environmental licences monitored by regulatory authorities. As Ms Marler stated in her evidence, regulatory agencies such as the EPA rely heavily on the accuracy of the information provided to them in order to maintain the efficiency in the administration of the environmental protective framework and in order to ensure that environmental harm is avoided or minimised. Consistency in Sentencing 130 A relevant consideration in sentencing is the ascertainment of the existence of a general pattern of sentencing by the courts for offences such as the offence in question (Gittany at [179]-[183]). 131 The proper approach is for the Court to look at (Gittany at [182]): [182] whether the sentence is within the range appropriate to the gravity of the particular offence and to the subjective circumstances of the particular offender, and not whether it is more severe or more lenient than some other sentence (other than that of a co-offender) which merely forms part of that range: R v Morgan (1993) 70 A Crim R 368 at 371 and Capral Aluminium Ltd v Workcover Authority of NSW (2000) 49 NSWLR 610 at 641. 132 Of course care must be taken because each case is different and a sentence in one case does not demonstrate the limits of a sentencing judge's discretion (Axer at 365 and Cabonne Shire Council v Environment Protection Authority (2001) 115 LGERA 304 at 312). 133 Consistency in sentencing is an important object in a rational and fair system of criminal justice (Markarian at 390). Regard should be had to comparable cases to see if they disclose a general pattern of sentencing (Camilleri's at 701-702). Sometimes it is difficult to obtain guidance from decisions where sentences have been imposed for the same type of environmental offence. This is because of the wide range of facts and circumstances comprising environmental prosecutions and the need to tailor sentences to the individual circumstances of each case (Fulton Hogan at [197]). 134 Sentencing statistics for criminal matters dealt with by this Court are now available on the Judicial Information Research System ("JIRS"). The defendants provided JIRS statistics to the Court but the sample was of such limited breadth and relevance that little utility could be gained from it (Dodds v R [2009] NSWCCA 191 at [4]). 135 No comparable cases were put before the Court by either the prosecutor or the defendants with respect to the commission of the s 64(1) offences. This may be because prosecutions for breach of s 64(1) of the POEOA caused by air pollution typically involve dust emissions. A number of dust emission cases were reviewed by Pain J in Environment Protection Authority v Causmag Ore Company Pty Limited [2009] NSWLEC 164 (at [71]-[75]), which was itself a dust emission case. The breach in that case concerned a failure to maintain plant in a proper and efficient condition by failing to repair, and/or replace filter bags and/or fabric filters that had become damaged or deteriorated. In addition to a publication order, the Court fined the defendant the sum of $20,000 in circumstances where the defendant pleaded guilty at an early opportunity, expressed contrition and remorse, cooperated fully with the prosecutor, was of good corporate character, was found to be unlikely to reoffend, had prior convictions similar to the offence charged and was suffering considerable financial difficulties. The maximum penalty was $1,000,000. 136 In Environment Protection Authority v Ghossayn [2009] NSWLEC 181, I summarised the decisions of Environment Protection Authority v Coastal Recycled Cooking Oils Pty Limited [2008] NSWLEC 242 and Environment Protection Authority v Caltex Refineries (NSW) Pty Ltd [2006] NSWLEC 335 (at [148]-[149] and [152]-[153] respectively). I adopt those summaries for present purposes. 137 In Environment Protection Authority v State of New South Wales (Department of Environment, Climate Change and Water), Pain J summarised the decision in Environment Protection Authority v Delta Electricity [2009] NSWLEC 11 (at [90]) and Environment Protection Authority v Waste Recycling and Processing Corporation (2006) 148 LGERA 299 (at [93]). I respectively adopt her Honour's description of those decisions for present purposes. 138 Environment Protection Authority v State of New South Wales (Department of Environment, Climate Change and Water) concerned a breach of s 64(1) of the POEOA caused by treated sewage being discharged into Perisher Creek. In addition to being ordered to pay the prosecutor's costs of the proceedings fixed in the amount of $65,000, the Court ordered that the defendant pay the Southern Rivers Catchment Management Authority $80,000 for the purpose of riparian rehabilitation and exotic tree removal along 15 km of the Thredbo River. This penalty was imposed in circumstances where the defendant pleaded guilty at the earliest possible opportunity, expressed remorse, cooperated fully with the prosecutor and where there was no evidence of actual environmental harm and the likelihood of such harm was low. 139 In Environment Protection Authority v Forgacs Engineering Pty Limited [2009] NSWLEC 64, the defendant was ordered to pay $45,000 (the maximum penalty was $1,000,000) to Newcastle City Council for the purpose of replacing timber decking over mangroves. A publication order and costs order were also imposed by the Court. The proceedings concerned a failure by the defendant to prevent the emission of particles from a ship repair business in breach of its licence conditions. There was both actual harm due to amenity impacts and potential ecological harm. The defendant pleaded guilty at the earliest opportunity and a number of other mitigating factors were present. 140 The decisions reviewed above indicate that the facts and circumstances of the first and third offences are, by comparison, less serious. 141 In relation to the s 66(2) offence, TPI referred the Court to a number of cases by way of comparison: (a) first, in Environment Protection Authority v Hargraves (No 2) (2003) 124 LGERA 57, the defendant was charged with offences against s 211(2) of the POEOA with respect to information furnished by an individual defendant during the course of an interview with the prosecutor. The defendant knew that the information she gave in her answers was false and had a clear motive to deceive the prosecutor and was deliberately evasive and untruthful. The defendant lied to the council by creating bogus records relating to the amount of landfill deposited at a landfill site. The defendant lied to the prosecutor during an interview with it and lied to the Court. No plea of guilty was entered. Lloyd J described the offences as serious and fined the defendant $15,000 in relation to each offence; (b) second, in Environment Protection Authority v Peters (2006) 153 LGERA 238, the defendant was found guilty of furnishing records knowing they were false in a material particular contrary to s 211(2) of the POEOA. Jagot J found that the defendant knowingly arranged a systematic falsification of approximately 300 to 400 termite inspection certificates which the prosecutor had required a company, Mandiar Pty Ltd, of which the defendant was the sole director, to produce to it in accordance with a notice issued under s 193 of the Act. The defendant was fined $80,000 in respect of a maximum penalty of $120,000; (c) third, in Great Lakes Council v Mood (No 2) [2008] NSWLEC 68, the defendant was ordered to pay a penalty in the sum of $56,250, together with costs, in relation to the provision of false and misleading answers given pursuant to a notice served on it under s 193(1) of the POEOA. The Court was not satisfied beyond reasonable doubt that the defendant intended to deceive the council's investigation by the provision of the answers, but found that there was no doubt that he either had the relevant information or knew how to get it and either failed to look for it or failed to disclose it; and (d) fourth, in Environment Protection Authority v BHP Steel (JLA) Pty Ltd [1999] NSWLEC 150, the defendant was fined the sum of $4,000 (the maximum penalty was $125,000) and ordered to pay the prosecutor's costs fixed in the sum of $9,750 in circumstances where the corporate defendant supplied a certificate of compliance to the EPA which contained particulars which were false or misleading in a material respect. This was because the certificate omitted to state that on four occasions pollution incidents occurred. The omission was discovered after the EPA sought the production of specified records pursuant to a notice occasioned by a pollution incident notified by the defendant. No environmental harm was caused by the offence. The defendant entered a plea of guilty at a very early stage. There was no intention found on the part of the defendant to mislead or deceive the prosecutor. While the defendant had separately notified the prosecutor of two of the four pollution incidents that had occurred, the defendant was not initially aware that the other two incidents amounted to a breach of the conditions of the licence. The defendant fully cooperated with the prosecutor. 142 The defendant submitted that factually the present proceedings were analogous to those in BHP Steel. It did so in support of a submission that any penalty to be imposed ought to be towards the lower end of the scale. The defendant further submitted that the conduct of TPI was not comparable to the decisions referred to in paragraph 141(a)-(c). I agree. Totality Principle 143 It was submitted by both parties that in relation to the s 64(1) offences that the totality principle should apply. I accept this submission and have applied the principle accordingly (Gittany at [196], [199]-[200]). Publication Order 144 The parties agreed that it was appropriate that a publication order be made under s 250(1)(a) of the POEOA in accordance with text that was largely agreed and which could be incorporated into an order. 145 The prosecutor submitted that because a publication order is made in addition to, rather than instead of, any penalty (Environment Protection Authority v Incitec Limited [2003] NSWLEC 381 at [58]-[59] cited in Causmag Ore at [78]) it should not be considered in determining what penalty should be imposed. Conclusion and Orders 146 Having regard to all the evidence and to the comparable decisions referred to the Court recorded above, I find that all three offences fall at the lower end of the scale of the range of the available appropriate penalties, although the commission of the s 66(2) offence is more serious than that of the s 64(1) offences. I therefore consider that: (a) in respect of the two s 64(1) offences, it is appropriate to impose a penalty of $10,000 in respect of the first offence and $15,000 in respect of the third offence, with a deduction of 35% in recognition of the utilitarian value of the plea of guilty and the subjective and objective factors relevant to TPR and TPI in relation to both offences. This results in a total fine of $6,500 for the first offence and $9,750 in relation to the third offence; and (b) in respect of the s 66(2) offence, a penalty of $20,000.00 is appropriately imposed with a total deduction of 30% in recognition of the utilitarian value of the early plea of guilty and the subjective and objective factors of TPI. Accordingly a total penalty of $14,000 is to be imposed in respect of this offence. 147 The formal orders of the Court are: (a) No 50074 of 2009 : 1. the defendant TPI is convicted of the offence as charged; 2. the defendant must pay a penalty of $6,500 (b) No 50075 of 2009 : 1. the defendant TPI is convicted as charged; 2. the defendant must pay a penalty of $14,000 (c) No 50076 of 2009 : 1. the defendant TPR is convicted as charged. 2. the defendant must pay a penalty of $9,750. (d) Nos 500074, 50075 and 50076 of 2009 : 1. the defendants are to pay the prosecutor's costs of the proceedings fixed in the sum of $40,000; and 2. pursuant to s 250(1) of the POEOA the defendants, within 28 days of this order, are to place a notice in the first 12 pages of the early general news section of the following publications, at a minimum size of 8 cm by 12 cm in the form attached at Annexure 'A': (a) The Maitland Mercury ; (b) The Newcastle Herald ; and (c) The Sydney Morning Herald ; 3. the exhibits are to be returned. ********** Annexure 'A' Prosecution of Transpacific Industries Pty Ltd and Transpacific Refiners Pty Ltd for Environmental Offences These offences occurred at a used lubrication oil reprocessing plant at Rutherford. The plant was operated by Transpacific Industries Pty Ltd (ACN 010 745 383) ("TPI") who previously held the operating licence which was then transferred to Transpacific Refiners Pty Ltd (ACN 114 388 742) ("TPR"), who hold the licence today. On 31 May 2010, pursuant to a plea of guilty, the Land and Environment Court of New South Wales found: (a) TPI guilty of the following offences under the Protection of the Environment Operations Act 1997 (" POEO Act "): 1. breaching its environment protection licence on 26 March 2008, contrary to s 64(1) of the POEO Act; and 2. supplying materially false information about emissions to the air to the Environment Protection Authority (" EPA ") on 25 July 2008, contrary to s 66(2) of the POEO Act; and (b) TPR guilty of breaching its environment protection licence on 21 August 2008, contrary to s 64(1) of the POEO Act. The Court found, amongst other things, that: 1. TPI and TPR emitted to the air Volatile Organic Compounds (" VOCs ") in excess of their licence limits; 2. no actual or likely environmental harm was caused by the emission of the VOCs in excess of their licence limits; and 3. TPI failed to report to the EPA air monitoring results in excess of their licence limits, but did so absent any intention to deceive the EPA. TPI and TPR were ordered to pay a combined penalty of $30,250. TPI and TPR were prosecuted by the EPA, a part of the Department of Environment, Climate Change and Water. This notice is placed by order of the Land and Environment Court and is paid for by TPI and TPR. 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.