Friday 13 July 2018

Five to face Brisbane court over serious breaches of environmental law


It is thought that up to 320 square kilometres of agricultural land around Chinchilla may be at risk from contamination by chemicals and gases, due to alleged mismanagement of underground burning by Linc Energy Limited.

In November  2016 former Linc Energy chief executive Peter Bond along with four former staff members – Donald Schofield (managing director), Stephen Dumble (chief operations officer), Jacobus Terblanche (chief operations manager) and Darryl Rattai (former general manager) – were summonsed for breaching environmental law.

However their matters were adjoined until after The Queen v. Linc Energy Ltd was concluded and are all five are now due to face a committal hearing in the Brisbane Magistrates Court this month.

BRIEF BACKGROUND

ABC News, 11 May 2018:

A gas company has been fined a record $4.5 million for causing serious environmental harm at its underground coal gasification plant on Queensland's western Darling Downs.

Linc Energy was found guilty by a District Court jury in Brisbane last month after a 10-week trial.

The company was charged with five counts of wilfully and unlawfully causing serious environmental harm between 2007 and 2013 at Hopeland near Chinchilla.

Linc Energy mismanaged the underground burning of coal seams, which caused rock to fracture and allowed the escape of toxic gases which contaminated the air, soil and water on site.

The court heard the highest fine imposed upon a company so far in Queensland for similar offending was $500,000.

Linc Energy did not defend itself during the trial because it is now in liquidation.
Five executive directors have been charged with failing to ensure compliance of the company and are due to face a committal hearing in the Brisbane Magistrates Court in July.

Prosecutor Ralph Devlin told the court the company knew it was causing damage but pressed ahead with operations, and described its offending as "serious".

"The defendant acted in devious and cavalier way … its motivation was commercial gain," he said.

"It pursued commercial interests over environmental safeguards."

The court heard there would be monitoring and remediation of the site for decades to come, and it will take potentially between 10 to 20 years for groundwater to recover.

The Sydney Morning Herald, 10 April 2018:

“It was an undefended case, the liquidators chose not to defend it, so, of course, there is going to be a guilty verdict,’’ he [Peter Bond] told The Australian of Monday's court ruling.

“It means nothing; there was no one in court to call bullshit and there was a lot of bullshit to that case."

Excerpt from THE QUEEN v. LINC ENERGY LTD (IN LIQUIDATION), 11 May 2018, Sentence:

HIS HONOUR: On the 9th of April 2018, Linc Energy Limited in liquidation was found guilty by a jury of five counts of wilfully and unlawfully causing serious environmental harm. That followed a 10-week trial, and the offence is contained in the Environmental Protection Act. There was no appearance by the defendant in in  liquidation pursuant to an order of the Supreme Court under the Corporations Law. The liquidators did not have to appear. That caused particular difficulties during the trial and also has an impact on sentence proceedings as I have not been assisted by any submissions on behalf of the defendant in relation to penalty.

As the defendant is a corporation, the only penalties that are open are financial: either a fine or compensation. The provision in relation to the imposition of fines is covered by sections 45 to 48 of the Penalties and Sentences Act. The first aspect of that is that, pursuant to section 48(1)(a) and (b) and subsection (2) of that Penalties and Sentences Act, the Court must take into account:

 …so far as is practicable, the financial circumstances of the offender and the nature of the burden the imposition of the fine would have on the offender.

Section 48, subsection (2) provides the Court may fine if it is unable to find out the  matters referred to in subsection (1). There is no information before me as to the circumstances of the liquidation of the corporation. I am unaware of any of its assets or liabilities, or whether it will have the capacity to pay fines. As to the utility of imposing a financial penalty on a corporation in liquidation, there are no restrictions in law as to that. Indeed, the cases referred to me demonstrate it is appropriate, 25 whether as a need for denunciation or general deterrence of specific criminal conduct…..

In relation to counts 1 to 3, a combination of section 437 of the Environmental Protection Act 1994 and 45 section 181B of the Penalties and Sentences Act 1992 provides a maximum penalty of five times the 4165 penalty units, that is, a total of 1,561,875 thousand dollars for each of the offences covered in counts 1 to 3……

In my view, the defendant put its commercial interests well above its duty to conduct its processes in a way that safeguarded the environment. This is shown by its continued efforts to be seen as a successful Gas to Liquid producer on a commercial scale, where it operated gasifiers clearly above hydrostatic pressure to produce suitable gas for the GTL process, well knowing that contaminants were escaping widely and that damage to the land structure was occurring. As I have noted during the course of argument, there are varying degrees of wilfulness, which is an element of each offence.

The Prosecution have submitted that the appropriate way to approach the quantum is 45 by assessing the maximum and then reaching an appropriate proportion to address each offence. In terms of the section I earlier quoted in relation to the quantum of  fines, it seems to me the damage occasioned by each of these offences is significant and needs to be taken into account in the calculation of a quantum. In relation to each of counts 1 to 3, I accept the Prosecution’s submission that it is appropriate to impose 50 per cent of the maximum in relation to those.

In relation to each of counts 4 and 5, as I have noted, there are aggravating features. The defendant was well aware of the problems with the site and proceeded in disregard of its own experts. They had clearly advised the site was unsuitable because of the earlier gasifier operations; however, the defendant persisted simply 10 on a commercial basis.

In relation to the final count, the defendant purposely hid the issue of groundwater contamination from the regulator. I accept the Prosecution’s submission that fines in relation to each of those later offences should be at 75 per cent of the maximum.
I intend to reduce each of those fines to recognise the totality issues that I have spoken about, including the interplay between each offence and the damage that has actually been occasioned. On each of counts 1, 2 and 3, I fine the defendant the sum of $700,000. On each of counts 4 and 5, I fine the defendant the sum of $1,200,000. Convictions are recorded. The Prosecution does not seek its costs in relation to this Prosecution.

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