The case of Environment Protection Authority v Clarence Valley Metal Recyclers Pty Ltd [2023] NSWLEC 96 concerned Class 6 proceedings (LEC proceedings) in the Land and Environment Court of New South Wales (Court)  commenced by the New South Wales Environment Protection Authority (EPA) against Clarence Valley Metal Recyclers Pty Ltd (Company). The LEC proceedings were commenced to appeal the sentencing of the Company by Coffs Harbour Local Court  (Local Court)  because the EPA considered there was a "…manifest inadequacy of three fines (each $15,000) imposed on…the Company…" (at [1]) for three breaches of the Waste Avoidance and Resource Recovery (Container Deposit Scheme) Regulation 2017 (NSW) (Regulation).

The Court considered the following issues:  

• whether the trial judge correctly considered the Local Court's jurisdictional limit;
• whether the trial judge correctly applied the jurisdictional limit to all three offences; and
• whether the penalty imposed reflected the seriousness of the conduct that the Company engaged in.

The Court held that the penalties imposed by the Local Court were "manifestly inadequate" and ordered that the Company pay $149,000 which was a significant increase from the Local Court penalty of $45,000.

In the Local Court proceedings, the Company pleaded guilty to three breaches of the Regulation, namely that the Company unlawfully presented material containers for container deposit scheme (CDS)  refunds, contravening section 44(1)(c) and section 44(1)(d) of the Waste Avoidance and Resource Recovery Act 2001 (NSW). The offences concerned the Company being paid approximately $57,000 for 66 tonnes of recyclable containers that had already been returned and refunded. The Company was fined $15,000 for each offence, amounting to a total of $45,000. 

In the LEC proceedings, the EPA argued that the Local Court made three errors which resulted in a manifestly inadequate sentence. The first being that the Local Court’s jurisdictional limit was conflated with the maximum penalty for the offences. The second was the Local Court's finding that the limit of $110,000 applied collectively to three offences rather than for each offence. The third was that the sentences imposed were manifestly inadequate.

The EPA argued that the Local Court erroneously considered the Local Court's jurisdictional limit ($110,000) as the relevant "yardstick" to assess the range of appropriate penalties, as opposed to the maximum sentences contained in the Regulation.

The Court disagreed and said that the Prosecutor failed to establish that the Local Court had not had proper regard to the maximum penalty. Rather, the following extract from the transcript highlighted that the Local Court considered the "starting point" for the penalty based on a number of factors and that the starting point was within the range of the maximum penalty (at [42]):

"Having identified that the maximum amount of the penalty is $110,000 in this jurisdiction, having identified that the objective seriousness must sit at no less than mid-range, it is my view that the starting point for the financial penalty should be in the region of $40,000 to $50,000."

The Court agreed with the EPA that her Honour in the Local Court proceedings appeared to have misapprehended the jurisdictional limit applicable to the three offences. That is, the Local Court misapplied the jurisdictional limit and understood it to apply to all three offences collectively, rather than each offence. 

The outcome of this finding was that the starting point for the financial penalty should be in the region of $40,000 to $50,000 for each offence, instead of the collective total for the three offences.

The EPA successfully argued that the sentences were manifestly inadequate in light of the seriousness of the Company's conduct. Sentences are guided by principles set out in the Crimes (Sentencing Procedure) Act 1999 (NSW).

The EPA advanced the following four reasons why the Court should consider that the sentencing principles were misapplied, leading to an inadequate sentence:

1. The Company's offending conduct resulted in significant financial gain and the Company had not   repaid any of that gain. 
2. The objective seriousness of the Company's offending conduct was "high" due to the financial gain and because the offences were committed in circumstances where the guiding mind of the Company knew that the CDS refunds had already been paid for the containers which the Company subsequently submitted for further refund. 
3. A significant penalty was warranted to deter other potential offenders. 
4. There was no evidence as to the Company's financial circumstances and ability to pay a significant penalty.

As the EPA was successful in arguing the second and third errors, the Court considered that intervention was warranted and the sentencing process needed to be undertaken afresh.

After considering aggravating and mitigating factors, the Court concluded that the starting penalty for each of the three offences should be $72,000 given the sentencing discretion it was to exercise was confined to the Local Court's jurisdictional limit of $110,000 for each of the offences. The maximum 25% discount for early guilty pleas was applied reducing the $72,000 to $54,000. The Court also moderated the second and third penalties after considering the principles of totality and accumulation, given the offences were carried out as a single course of offending conduct.

Ultimately, the Court upheld all three appeals and sentenced the Company to pay a total of $149,000 for the three offences ($54,000, $50,000, and $45,000). The Company was also ordered to pay the costs of the EPA.

This case serves as an important reminder for those operating under the container deposit scheme or anyone who is regulated by the EPA, that the EPA is robustly prosecuting offences under the legislation it powers. Indeed, where the EPA is not satisfied with a penalty imposed by a Local Court, it may take steps to seek to have the penalty increased to ensure deterrence.