Land and Environment Court New South Wales

• Medium Neutral Citation: Environment Protection Authority v Wyanga Holdings Pty Ltd; Environment Protection Authority v Cauchi [2014] NSWLEC 68
• Hearing dates: 27, 28 May 2014
• Decision date: 28 May 2014
• Jurisdiction: Class 5
• Before: Craig J

Decision

(1) In proceedings 51002 of 2013 I find the defendant, Wyanga Holdings Pty Ltd, guilty of the offence as charged;

(2) In proceedings 50991 of 2013 I find the defendant, Joseph Cauchi, guilty of the offence as charged; and

(3) In proceedings 50996 of 2013 I find the defendant, Louise Cauchi, guilty of the offence as charged.

• Catchwords: PROSECUTION - offences against s 66(2) of the Protection of the Environment Operations Act 1997 (NSW) by a company and its directors - breach of licence condition - material extracted from quarry in excess of maximum scale allowed by condition - failure to disclose non-compliance with condition limiting maximum extraction - other conditions with which there had been non-compliance disclosed in Annual Return - information false or misleading in a material respect - charges attract "special executive liability" on the part of directors - s 169(1) of the Protection of the Environment Operations Act
• Legislation Cited: Protection of the Environment Operations Act 1997 (NSW)
• Cases Cited: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; 239 CLR 27; Taylor v The Owners - Strata Plan No 11564 [2014] HCA 9
• Category: Principal judgment
• Parties: 13/51002; Environment Protection Authority (Prosecutor); Wyanga Holdings Pty Ltd (Defendant); 13/50991; Environment Protection Authority (Prosecutor); Joseph Cauchi (Defendant); 13/50996; Environment Protection Authority (Prosecutor); Louise Margaret Cauchi (Defendant)
• Representation: T Howard SC (Prosecutor); M R Gracie (Defendant); Office of Environment and Heritage (Prosecutor); Balmain Lawyers (Defendant)
• File Number(s): 13/51002, 13/50991, 13/50996

EX TEMPORE Judgment

1 Wyanga Holdings Pty Ltd (Wyanga) has been charged with an offence against s 66(2) of the Protection of the Environment Operations Act 1997 (NSW) (the POEO Act). The summons by which Wyanga has been charged in proceedings 51002 of 2013 alleges that between 15 and 20 April 2012, as the holder of an environment protection licence, Wyanga supplied information to the prosecutor, as "the appropriate regulatory authority", under a condition of the licence and that information was false or misleading in a material respect. By election made at the commencement of the hearing, the prosecutor alleges that the material was "misleading". Wyanga has pleaded not guilty to that offence.

2 Joseph Cauchi (in proceedings 50991 of 2013) and Louise Cauchi (in proceedings 50996 of 2013) are each charged by summons with an offence against s 66(2), arising out of the same circumstances as those that found the offence with which Wyanga has been charged. The charging of the offence under s 66(2) of the POEO Act against each of Joseph and Louise Cauchi is founded upon s 169(1) of that Act. At the time of the offence alleged against Wyanga, Joseph and Louise Cauchi were each directors of that Company. Each of them has pleaded not guilty to the offence with which they have been charged.

3 It is convenient to refer to Wyanga, Joseph Cauchi and Louise Cauchi collectively as "the defendants". Although they are each charged in separate proceedings, all three proceedings have, by agreement, been heard together. Both the prosecution and the defendants have also agreed that the evidence tendered be evidence in all proceedings.

4 The facts giving rise to the offences charged are not in dispute. The parties have co-operated in preparing an Agreed Statement of Facts (ASOF) "in relation to liability", to which is attached those documents that support the facts. The ASOF together with the supporting documents have been tendered as Exhibit A. My reference to facts or documents is derived from that Exhibit.

5 Wyanga was incorporated in August 2003. Since its incorporation, each of Joseph and Louise Cauchi have been the only directors and shareholders of that Company.

6 Wyanga operates a hard rock quarry known as Corindi Quarry at Corindi Beach on the north coast of New South Wales. On 31 January 2011 Wyanga was issued with Environment Protection Licence 13330 (the Licence) under s 55 of the POEO Act for the conduct of its Corindi Quarry. Quarry operations constituted a "scheduled activity" under the provisions of that Act and as a consequence the Licence was required. The "scheduled activity" identified in that Licence is described as:

"Crushing, grinding or separating

Extractive activities".

The activities undertaken by Wyanga at the Corindi Quarry included:

(a) extraction of gravel and rock referred to as "quarry materials";

(b) stockpiling of quarry materials onsite; and

(c) transport of quarry materials from the quarry to customers.

7 It is common ground that the Licence issued on 31 January 2011 was current at the date of the offence alleged against Wyanga. Section 1 of the Licence is headed "Administrative Conditions". Under that heading, condition A1.2 provides:

"This licence authorises the carrying out of the scheduled activities listed below at the premises specified in A2. The activities are listed according to their scheduled activity classification, fee-based activity classification and the scale of the operation. Unless otherwise further restricted by a condition of this licence, the scale at which the activity is carried out must not exceed the maximum scale specified in this condition".

8 The "scheduled activity" is then described in the terms that I have earlier quoted. The "fee-based activity" is referred to as "land-based extractive activity" and "the scale" of the operation identified in the condition is a maximum of 50,000 tonnes. It is accepted by the defendants that "the scale" represents a maximum annual tonnage of extractive material won from the site of the quarry. The premises to which the Licence applies and "specified in A2" are the Corindi Quarry at Corindi Beach.

9 Section 6 of the Licence is headed "Reporting Conditions". Condition R1.1 which appears under that heading provides:

"R1.1 The licensee must complete and supply to the EPA an Annual Return in the approved form comprising:

(a) a Statement of Compliance; and

(b) a Monitoring and Complaints Summary.

A copy of the form in which the Annual Return must be supplied to the EPA accompanies this licence. Before the end of each reporting period, the EPA will provide to the licensee a copy of the form that must be completed and returned to the EPA."

The reporting period was defined to mean the period of 12 months after the issue of the licence and each subsequent period of 12 months.

10 On 15 April 2012, Louise Cauchi, on behalf of Wyanga, forwarded to the EPA by email Sections A to D of the Annual Return, intending to comply with condition R1.1 of the Licence. Those Sections of the Annual Return were accompanied by other documents, included among which was a letter signed by Louise Cauchi on behalf of Wyanga and dated 12 August 2012. I will return to the contents of that letter shortly.

11 Those Sections of the Annual Return, completed on behalf of Wyanga, were in a form provided to it by the prosecutor. Section C of the Annual Return was headed "Statement of Compliance - Licence Conditions". Paragraph C1 of that Section required that a box be ticked in response to the question:

"Were all conditions of the licence complied with (including monitoring and reporting requirements)?"

In response to this question, the box with the word "No" was ticked. There followed from that question in the printed form a requirement that details be supplied "for each non-compliance in the format, or similar format, provided on the following page."

12 Paragraph C2 of the Return, which was on "the following page", was headed "Details of Non-Compliance with Licence". Beneath that heading were a number of questions that required response. However, those questions were not responded to by Wyanga in the printed form. Rather, against the heading requiring details of non-compliance were written the words "See Cover Letter". That "cover letter" is a reference to the letter of 12 April signed on behalf of Wyanga by Louise Cauchi.

13 The letter of 12 April 2012 identifies two conditions with which Wyanga had not complied. They were identified as conditions "M21" and "M8". In respect of each condition the letter quotes and then responds to each of the questions appearing in paragraph C2 of Section C of the Annual Return. In fact, there is no condition "M21" in the Licence but this appears to have been an intended reference to condition M2.1. Both conditions M2.1 and M8 are imposed under Section 5 of the Licence which contains conditions directed to monitoring and recording aspects of the quarrying operation.

14 Importantly, neither the completed content of Section C of the Annual Return nor the letter of 12 April, providing details of non-compliance with Licence conditions, acknowledged any failure to comply with Licence condition A1.2, imposing a maximum "scale" or annual extraction limit of 50,000 tonnes. As it happened, in the 12 month period between 1 February 2011 and 31 January 2012, Wyanga extracted approximately 96,597 tonnes of quarry materials from the Corindi Quarry.

15 It would appear that, through oversight on behalf of Wyanga, the complete form of Annual Return required by the prosecutor was not sent under cover of the email from the Company on 15 April 2012. Upon that oversight being realised, the final page of the Annual Return, being Section E of that document, was sent to the prosecutor on 19 April 2012. That Section of the Annual Return is headed "Signature and Certification". Relevantly, the document states:

"I/We

• declare that the information in the Monitoring and Complaints Summary in section B of this Annual Return is correct and not false or misleading in a material respect and

• certify that the information in the Statement of Compliance in sections A, C and D and any pages attached to Section C is correct and not false or misleading in a material respect."

The document is signed by Louise Cauchi and Joseph Cauchi in their respective capacities as Director and dated by hand, 12 April 2012.

16 As I have earlier recorded, none of these facts are in contention. The only issue argued on behalf of the defendants is directed to the proper construction of s 66 of the POEO Act. In essence, the defendants argue that the appropriate subsection to be applied to the conduct of Wyanga was s 66(4) and that, in the circumstances, no offence under s 66(2) has been committed. This necessitates reference to the relevant statutory provisions.

17 Section 66 of the POEO Act relevantly provides:

"66 Conditions requiring monitoring, certification or provision of information, and related offences

(1) Monitoring

The conditions of a licence may require:

(a) monitoring by the holder of the licence of the activity or work authorised, required or controlled by the licence, including with respect to:

(i) the operation or maintenance of premises or plant, and

(ii) discharges from premises, and

(iii) relevant ambient conditions prevailing on or outside premises, and

(iv) anything required by the conditions of the licence, and

(b) the provision and maintenance of appropriate measuring and recording devices for the purposes of that monitoring, and

(c) the analysis, reporting and retention of monitoring data.

(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, or

(b) in the case of an individual-$250,000.

(2A) Conditions relating to certain information

The conditions of a licence may require the holder of a licence to supply to the appropriate regulatory authority information relating to a pollution incident to which Part 5.7 applies in addition to the

information required under that Part.

(3) Certification

The conditions of a licence may require the holder of the licence to

supply to the appropriate regulatory authority a statement that is

certified by the holder, by another person approved by that authority or by a person prescribed by the regulations, as correct and that states all or any of the following:

(a) the extent to which the conditions of the licence, or any

provisions of the regulations applicable to the activity or work authorised, required or controlled by the licence, have or have not been complied with,

(b) particulars of any failure to comply with the conditions or any such regulations,

(c) the reasons for any failure to comply with the conditions or any such regulations,

(d) any action taken, or to be taken, to prevent any recurrence of that failure or to mitigate the effects of that failure,

(e) the fee paid or payable in relation to the licence (including the manner of calculation of the fee or other specified aspect of the fee).

(4) False or misleading certificates

A person who gives a certificate for the purposes of a condition referred to in this section is guilty of an offence if any of the statements certified is false or misleading in a material respect.

Maximum penalty:

• in the case of a corporation-$250,000, or
• in the case of an individual-$120,000."

18 Before turning to consider the submissions of the parties directed to s 66, it is appropriate to refer to the provisions of s 169 of the POEO Act, relied upon by the prosecutor to sustain its charges against Joseph and Louise Cauchi. Section 169(1) provides:

"(1) If a corporation contravenes, whether by act or omission, a provision of this Act attracting special executive liability, each person who is a director of the corporation or who is concerned in the management of the corporation is taken to have contravened the same provision, unless the person satisfies the court that:

(a) (Repealed)

(b) the person was not in a position to influence the conduct of the corporation in relation to its contravention of the provision, or

(c) the person, if in such a position, used all due diligence to prevent the contravention by the corporation."

By subsection (1A) of that section, the provisions of both subsections (2) and (4) of s 66 are identified as provisions attracting "special executive liability".

19 Neither Joseph nor Louise Cauchi rely upon the defences identified in paragraphs (b) or (c) of s 169(1). They accept that if Wyanga is found to have contravened s 66(2), they also will be taken to have contravened that section.

20 As the prosecutor submits and the defendants accept, the elements of an offence against s 66(2) of the POEO Act are as follows:

(a) a holder of a licence;

(b) supplies information or on whose behalf information is supplied;

(c) under the conditions of the licence;

(d) to the appropriate regulatory authority; and

(e) the information is false or misleading in a particular respect.

In the context of the last element, the prosecutor has elected to rely upon information that is misleading in a material respect.

21 I find beyond reasonable doubt that the first four elements of the offence have been established by the prosecutor. The defendants accept this to be the case. The evidence establishes that:

(i) Wyanga is the holder of the Environment Protection Licence, being a licence within the meaning of s 66(2);

(ii) pursuant to condition R1.1 of the Licence, Wyanga was required to provide to the EPA an Annual Return for the reporting period 31 January 2011 to 30 January 2012 in the approved form, comprising a Statement of Compliance and a Monitoring and Complaints Summary;

(iii) in the period from about 15 April 2012 to about 20 April 2012, Wyanga submitted its Annual Return for the reporting period from 31 January 2011 to 30 January 2012, having sent Sections A to D of that Return to the EPA on 15 April and then sent Section E of that Return to the EPA under cover of a letter dated 19 April;

(iv) in submitting the Annual Return to the EPA, Wyanga "supplied information" contained in that Return, it having been submitted to the EPA on behalf of Wyanga by Louise Cauchi, one of the two directors of the Company; and

(v) as the Licence identified the Corindi Quarry as scheduled premises, that is evidence that the premises are so scheduled, with the consequence that pursuant to s 6 of the POEO Act, the EPA is the "appropriate regulatory authority" for the purpose of s 66(2) of that Act.

22 It is the fifth or final element of the offence, namely that the information supplied is misleading in a material respect, that is contentious. The source of contention is within a narrow compass.

23 For its part, the prosecutor makes reference to the terms in which the Annual Return was provided on behalf of Wyanga, with particular emphasis upon Section C of that Return. I have already recorded the question posed in Section C as to whether all conditions of the Licence had been complied with and the requirement that details of each non-compliance be provided. The "Cover Letter" identified in the form as responsive to the requirement to supply details of non-compliance, being the letter of 12 April 2012, states:

"The following information is in response to C1 Compliance with Licence Conditions."

That statement makes clear and I am satisfied beyond reasonable doubt that the information provided in that letter is information that is, and was intended to be, incorporated by reference in Section C of the Annual Return.

24 The information so provided and incorporated is the information identified as being responsive to the questions posed in the Annual Return requiring details of non-compliance with conditions. The information is confined to identifying and explaining breaches of conditions M2.1 and M8.

25 It follows that the information provided as to compliance with conditions conveys a representation that during the reporting period Wyanga did not comply with conditions M2.1 and M8 and, by omission of any reference to any other condition of the Licence in response to the question being addressed, that Wyanga had complied with all other conditions of the Licence. However, Wyanga acknowledges that in the period between 1 February 2011 and 31 January 2012 it extracted approximately 96,597 tonnes of material from the Corindi Quarry. Clearly, that exceeded by a considerable margin the limit of 50,000 tonnes imposed by condition A1.2 of the Licence. That level of extraction reflected non-compliance with that condition: yet it was a non-compliance that was not disclosed in the Annual Return.

26 The failure to disclose the non-compliance with condition A1.2 was misleading in a material respect. It was misleading because of the representation in the Return that it was a condition with which Wyanga had complied. The degree to which the information was misleading was material both because the omission to identify non-compliance with condition A1.2 was itself material and because of the extent to which the "scale" or maximum extraction limit had been exceeded.

27 The defendants seek to avoid this result by contrasting the provisions of s 66(2) of the POEO Act with the provisions of s 66(4). They contend that the only misleading aspect of Wyanga's conduct was the certification in Section E of the Annual Return by Joseph and Louise Cauchi, as directors of Wyanga. In the circumstances, the certification may have constituted an offence against s 66(4) for giving a "false or misleading" certificate "in a material respect" but it did not constitute a contravention of s 66(2).

28 In short, it is contended that the "information" to which s 66(2) is directed is information of the kind identified in subsection (1). As will be seen from the terms of the section, subsection (1) is directed to the imposition of monitoring conditions. Condition A1.2 of the Licence, being the condition said by the prosecutor to have been contravened, is not such a condition.

29 This consequence, so it is submitted by the defendants, flows from the manner in which s 66 is structured. Subsection (1) addresses monitoring, followed by subsection (2) directed to the provision of information that is false or misleading. Subsection (3) addresses the power to include a licence condition requiring provision of a certified statement to "the appropriate regulatory authority", followed by subsection (4) imposing a penalty for any false or misleading statement in a certificate, presumably given in accordance with a condition imposed under subsection (3). Condition R1.8 of the Licence imposed the obligation for the Statement of Compliance within the Annual Return to be certified.

30 I do not accept that the defendants' construction of s 66 is correct. In order to construe s 66(2) in the manner for which the defendants contend, it is necessary to read into the subsection words of qualification that are not expressed in it. Although the necessary words of qualification to be read into the subsection were not articulated in the defendants' submissions, those words would require that the information to which s 66(2) refers be limited by reference to information of a kind that is related to a condition imposed pursuant to subsection (1).

31 The task of statutory construction must begin with a consideration of the text itself: that must be its focus (Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; 239 CLR 27 at [47]). In this case, the provisions of s 66(2) are clearly expressed. No ambiguity arises by reference to the text as to the scope or ambit of information to which the subsection is directed. The text of the subsection imposes no qualification upon the subject matter of the information to which it is directed.

32 Moreover, the context does not, to my mind, require the qualification suggested by the defendants. Subsection (2) is directed to the conduct of the "holder of a licence". Subsection (4) is directed to the conduct of a person who gives a certificate. As subsection (3) makes clear, the certifier of a statement provided to "the appropriate regulatory authority" may not necessarily be the holder of a licence. Certainly, the context does not demonstrate satisfaction of the pre-requisites for reading subsection (2) as if it contained the additional words necessary to sustain the construction for which the defendants contend (Taylor v The Owners - Strata Plan No 11564 [2014] HCA 9 at [39].

33 A further factor militating against the construction for which the defendants contend is subsection (2A) of s 66. Obviously enough, that subsection precedes the certification provisions of subsection (3) upon which the defendants rely. A condition authorised by subsection (2A) is unrelated in its content to the matters identified in subsection (1). Yet, if the defendants are correct, the only basis upon which the provision of false or misleading information in a material respect relating to a pollution incident that, by condition, a licence holder was required to report, could only be the subject of prosecution if a further condition of that licence required certification and the certificate given in respect of the information was false or misleading. I cannot interpret the provisions of the section as a whole as leading to that consequence. It certainly does not follow from the sequence in which the subsections of s 66 are expressed. The defendants' submissions must be rejected.

34 On the proper application of s 66(2) to the facts, the prosecutor's submissions as to satisfaction of the fifth element of the offence should be sustained. I am satisfied beyond reasonable doubt that in the circumstance in which Section C of the Annual Return was completed, information that was misleading was supplied to the prosecutor in that, having expressly identified those conditions of the Licence with which Wyanga had not complied, the failure to disclose the contravention of condition A1.2 was misleading in a material respect.

35 A contravention of s 66(2) by Wyanga has therefore been established. By operation of s 169(1), a contravention of that section by each of Joseph Cauchi and Louise Cauchi has also been established.

36 In the result:

(1)  In proceedings 51002 of 2013, I find the defendant, Wyanga Holdings Pty Ltd, guilty of the offence as charged;

(2)  In proceedings 50991 of 2013, I find the defendant, Joseph Cauchi, guilty of the offence as charged; and

(3)  In proceedings 50996 of 2013, I find the defendant, Louise Cauchi, guilty of the offence as charged.

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Decision last updated: 04 June 2014