Land and Environment Court of New South Wales CITATION : Minister for Planning v Hunter Quarries Pty Ltd [2010] NSWLEC 246 PROSECUTOR: Minister for Planning PARTIES : DEFENDANT: Hunter Quarries Pty Ltd FILE NUMBER(S) : 50025 of 2010 CORAM: Biscoe J KEY ISSUES: ENVIRONMENTAL OFFENCES :- sentencing - breach of condition of development consent limiting production and transport of quarry material - careless failure to monitor production and transport records - sentencing considerations Crimes (Sentencing Procedure) Act 1999, ss 3A, 21A, 22, 23, 54A LEGISLATION CITED: Fines Act 1996, s 122 Environmental Planning and Assessment Act 1979, ss 76A, 125, 126 Georgopolous v R [2010] NSWCCA 246 Markarian v The Queen [2005] HCA 25, 228 CLR 357 CASES CITED: Minister for Planning (NSW) v Coalpac Pty Ltd [2008] NSWLEC 271 Minister for Planning v Moolarben Coal Mines Pty Ltd [2010] NSWLEC 147, 175 LGERA 93 R v McNaughton [2006] NSWCCA 242, 66 NSWLR 566 R v Thomson [2000] NSWCCA 309, 49 NSWLR 383 DATES OF HEARING: 26 November 2010 DATE OF JUDGMENT: 26 November 2010 PROSECUTOR: Mr I Lloyd QC with Mr M Seymour SOLICITORS: Department of Planning LEGAL REPRESENTATIVES: DEFENDANT: Mr T Howard with Mr J Connors SOLICITORS: Harris Wheeler Lawyers JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES BISCOE J 26 November 2010 50025 of 2010 MINISTER FOR PLANNING v HUNTER QUARRIES PTY LTD JUDGMENT INTRODUCTION 1 HIS HONOUR: This is a sentencing matter. 2 The defendant, Hunter Quarries Pty Ltd, has operated a hard rock quarry near Karuah since 2002. 3 In 2005 the defendant obtained development consent number 265-10-2004 for an extension of the quarry. The consent described the development as including producing up to 500,000 tonnes of product a year over the next 22 years. Condition 6 provided: "The applicant shall not produce or transport more than 500,000 tonnes of material a year from the development." 4 Condition 7 provided that the defendant shall not extract more than 11.2 million tonnes of andesite from the site within the period of the consent. Condition 37 required the defendant to provide annual production data to the Department of Primary Industries and include a copy of that data in its Annual Environmental Management Report. Schedule 4 cl 5(h) provided that the defendant shall submit an Annual Environmental Management Report to the Director-General of the Department of Infrastructure, Planning and Natural Resources, among other things identifying any non-compliance during the previous year. 5 In December 2009 the defendant provided the Department of Planning with its 2008/09 Annual Environmental Management Report and informed the Department that it had breached condition 6 by over-production and over-transportation. 6 The defendant has pleaded guilty to a charge that between 1 August 2008 and 31 July 2009 it committed an offence against s 125(1) of the Environmental Planning and Assessment Act 1979 (EPA Act) by breaching condition 6 of the consent, contrary to s 76A. 7 The amended summons particularises the breach as involving production of 693,047 tonnes and transport of 784,527 tonnes. These figures are based on information reported by the defendant to the prosecutor. However, evidence for the defendant, which I am prepared to accept, indicates that, based on recent testing, the amount of production in the relevant period was more likely 554,437 tonnes. 8 Other evidence for the defendant, by its director, Alex Badior, and Finance Manager, Nav Pun, establishes that: (a) the defendant is deeply remorseful that it has committed the offence and has learnt its lesson; (b) condition 6 was breached inadvertently because of systemic failures to monitor the defendant's production and transport records; (c) the breach of condition 6 was largely due to the defendant's arrangements to supply major projects at a coal loader in respect of which the defendant incurred a substantial loss, in the hope that down the line it would negotiate a profitable rate for the supply of further material that would enable it to recoup its loss, and also to maintain its reputation as a reliable supplier. Predominantly because of those supply arrangements, the defendant incurred significant losses for the financial year ending 30 June 2009 and for the period the subject of the offence (although it would have made a modest profit except for unusually high legal expenditure); (d) the defendant has declined to supply material for the next stage of the coal loader project because it would put the defendant in breach of condition 6; (e) steps have been taken to ensure that quarry operations comply with condition 6 in the future; (f) the defendant proposes to apply to the Minister for Planning for a modification of condition 6 to allow annual production and transportation of 1 million tonnes of material. Unless and until the application is granted, the defendant will comply with the requirements of existing condition 6; (g) Mr Badior will do all that is within his power to ensure that condition 6 is complied with in the future. SENTENCING PRINCIPLES 9 The purposes of sentencing are set out in s 3A of the Crimes (Sentencing Procedure) Act 1999: " 3A Purposes of sentencing The purposes for which a court may impose a sentence on an offender are as follows: (a) to ensure that the offender is adequately punished for the offence, (b) to prevent crime by deterring the offender and other persons from committing similar offences, (c) to protect the community from the offender, (d) to promote the rehabilitation of the offender, (e) to make the offender accountable for his or her actions, (f) to denounce the conduct of the offender, (g) to recognise the harm done to the victim of the crime and the community." 10 In determining the appropriate sentence, the Court is required by the Act to consider prescribed aggravating and mitigating circumstances that are relevant and known to the court; "any other objective and subjective factor that affects the relative seriousness of the offence"; a guilty plea and its timing; the degree to which the defence has made pre-trial disclosures for the purposes of the trial; and the degree to which the offender has assisted or undertaken to assist law enforcement authorities in the prevention, detection or investigation of, or in proceedings relating to, the offence or any other offence: ss 21A, 22, 23. 11 The correct method of sentencing is the instinctive synthesis method, not the two step method. Instinctive synthesis is the method of sentencing by which a judge identifies all facts that are relevant to the sentence, discusses their significance and then makes a value judgment as to what is the appropriate sentence given all the factors of the case. In the erroneous two step method, the judge first determines the sentence by reference to the objective circumstances of the case and then quantitatively increases or reduces this hypothetical sentence by reference to other factors, usually personal to the accused. However, it is permissible to quantify a discount for the utilitarian value of a plea of guilty. See Markarian v The Queen [2005] HCA 25, 228 CLR 357 at [35] – [39], [50] – [84], [136] – [139]. 12 What is the significance of a plea of guilty? It is an admission of the elements of the offence and an acknowledgement of guilt for the offence: Georgopolous v R [2010] NSWCCA 246 at [49], [1], [17]. It is a mitigating factor listed in s 21A(3)(k). A plea of guilty and the timing of the plea are required to be taken into account by the Court which must give reasons if they do not attract a lesser penalty: s 22. The utilitarian value of a plea of guilty generally attracts a discount in the range of 10-25 per cent depending primarily on the timing of the plea: R v Thomson [2000] NSWCCA 309, 49 NSWLR 383 at [160]. A plea of guilty may by inference amount to evidence of remorse but, of itself, will rarely be sufficient to meet the pre-conditions of s 21A(3)(i) for remorse to be used as a mitigating factor: Georgopolous at [49]. Remorse is a mitigating factor but only if the offender shows he is truly remorseful by satisfying those pre-conditions. Section 21A(3)(i) lists remorse as a mitigating factor subject to conditions, as follows: " (3) Mitigating factors The mitigating factors to be taken into account in determining the appropriate sentence for an offence are as follows: … (i) the remorse shown by the offender for the offence, but only if: (i) the offender has provided evidence that he or she has accepted responsibility for his or her actions, and (ii) the offender has acknowledged any injury, loss or damage caused by his or her actions or made reparation for such injury, loss or damage (or both)," 13 A sentence should not be more or less than the objective seriousness of the offence requires even though it is not clear that this is consistent with the instructive synthesis approach: R v McNaughton [2006] NSWCCA 242, 66 NSWLR 566 (a five judge bench) at [15] – [16] and the authorities there cited (High Court authorities supporting the "not more" principle and Court of Criminal Appeal authorities supporting the "not less" principle). Remarks of Howie AJ in Georgopolous at [30] – [33], if they cannot be read more narrowly, might be thought to mean that it is an error to determine where an offence lies in the range of objective seriousness. If so, then that appears to be a minority view because Allsop P at [4] agreed with him except on this point, and Adams J at [9] agreed with the reasons of both which I infer meant that Adams J agreed with Allsop P on this point. Howie AJ did not mention the principles endorsed in McNaughton or the authorities supporting those principles, which continue to bind this Court. OBJECTIVE CONSIDERATIONS 14 The maximum sentence the Court may impose is a fine of $1.1 million: s 126(1) EPA Act. The maximum penalty reflects the seriousness with which the legislature regards the offence. The tendency of an offence such as this is to undermine the integrity of the regulatory planning process. 15 Assessment of the objective seriousness of an offence involves an examination of the objective circumstances and the consequences of the defendant's acts or omissions. 16 The defendant's state of mind is relevant. According to the evidence, the offence was not deliberate but was attributable to the systemic failure of the defendant to monitor its production and transportation records. Since such records had to be kept in order to comply with annual reporting requirements under conditions of the consent, it should not have been difficult to monitor them on an ongoing basis. That it was apparently not done at all was careless and bears on the objective seriousness of the offence. I do not however assess it as being as serious as it would have been if the breach had been deliberate. 17 There was no prior environmental assessment conducted to assess the impact of producing and transporting more than 500,000 tonnes a year. The absence of any prior environmental assessment of any impacts that might result from exceeding production and transport limits meant that the defendant was not armed with information upon which it could make decisions to control possible impacts. 18 Fortunately, no environmental harm resulted from the offence. Moreover, it is in the defendant's favour that throughout the relevant period it regularly monitored noise and air quality. An Environmental Compliance Report dated 3 March 2010 by Heggies evidences that throughout the relevant period the defendant was monitoring noise and ambient air quality at the quarry against assessment criteria prescribed by conditions of the development consent; that the air quality results were below the criteria; and so were the noise monitoring results with one irrelevant exception. Further, there is nothing to suggest that the increased transportation caused actual environmental harm or adverse impacts on the transport routes, those routes being almost entirely over the Pacific Highway and not through residential areas. In that respect there have been no complaints. 19 It is an aggravating factor that the defendant had no system in place for monitoring the cumulative levels of production and transportation. Accordingly, there was a real risk that a breach of condition 6 would be committed, as in fact eventuated. It is also an aggravating factor that the offence was committed in the hope of gaining a commercial benefit at some time in the future by supplying to the projects for the coal loader, even though the supply to those projects in the relevant period was at a substantial loss. 20 I assess the objective seriousness of the offence as low to medium. SUBJECTIVE CONSIDERATIONS 21 The defendant has no record of prior convictions, is a good corporate citizen and is involved in and contributes to the well being of local communities with which it feels a strong connection. 22 The defendant has expressed sincere remorse and has demonstrated that it has accepted responsibility for its actions. 23 It is common ground that the utilitarian value of the plea of guilty, which was entered at an early stage, should be reflected by a 25 per cent discount on sentence. 24 The defendant appears to have been cooperative in making disclosures and providing information to the prosecutor, agreeing to a statement of agreed facts, and agreeing the quantum of the prosecutor's costs. DETERRENCE 25 There is a need for general deterrence to promote the objective of the EPA Act in deterring persons from engaging in conduct that may harm the environment that has not first been the subject of environmental assessment and approval. General deterrence calls for a sentence that is sufficient to deter the commission of similar crimes by those who might otherwise be tempted by the prospect that only light punishment will be imposed. 26 There is little need for specific deterrence in this case. The defendant is remorseful; is aware that it must do more to ensure that controls on the consent are not breached; has taken steps to ensure that condition 6 is not breached in the future; and its director, Mr Badior, has given an assurance that he will do everything in his power to ensure that production and transportation limitations in the development consent are complied with in the future. PARITY 27 The only prior sentencing case in this Court involving breach of production limits in a development consent is Minister for Planning (NSW) v Coalpac Pty Ltd [2008] NSWLEC 271 where I imposed a fine of $200,000. Like the present case, there was no actual environmental harm, an early plea of guilty was entered, Coalpac had provided support to local community organisations, there was co-operation with the prosecutor and Coalpac was genuinely remorseful. However, that case was more serious in at least two respects. First, Coalpac's breach was intentional whereas in the present case it was due to systemic failure to monitor records of production and transportation. Secondly, Coalpac's net profit from the breach was in the hundreds of thousands of dollars and the amount of the fine was aimed at negating that net profit. In the present case the defendant did not profit from the breach. 28 In Minister for Planning v Moolarben Coal Mines Pty Ltd [2010] NSWLEC 147, 175 LGERA 93 the defendant coalmine company pleaded guilty to an offence against s 125 of the EPA Act of clearing about 4.1 hectares of vegetation for the purposes of erecting a boundary fence, which was not sanctioned under an approval granted under Pt 3A of the Act. Importantly, the area cleared contained an endangered ecological community and the clearing continued after the Department of Planning had indicated that it was unlawful. Craig J considered that the objective gravity of the offence should be seen to be low to medium. The defendant was fined $70,000. COSTS 29 The defendant has agreed to pay the prosecutor's costs in the agreed sum of $23,000. APPROPRIATE PENALTY 30 After considering all the relevant factors and discounting as aforesaid for the utilitarian value of the early plea of guilty, I consider that the appropriate penalty is a fine of $70,000. 31 The prosecutor seeks, the defendant agrees, and I propose to make an order pursuant to s 122 of the Fines Act 1996 that one half of the fine be paid to the prosecutor. ORDERS 32 The orders of the court are as follows: 1. The defendant is convicted of the offence as charged. 2. The defendant is fined the sum of $70,000. 3. One half of the fine imposed by order 2 is to be paid to the prosecutor pursuant to s 122 of the Fines Act 1996. 4. The defendant is to pay the prosecutor's costs agreed in the sum of $23,000. 5. The exhibits may be returned. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.