The NSW Court of Appeal (‘Court‘) recently determined an appeal from the Land and Environment Court (‘LEC‘), where it was argued that Kempsey Shire Council (‘Council‘) was not entitled to recover its clean-up costs under the Protection of the Environment Operations Act 1997 (‘Act‘) from the directors of a company that had caused pollution.
This case confirms that a Council will be entitled to recover its clean-up costs under the Act, in circumstances where it has not fully complied with a clean-up notice issued to it by the Environment Protection Authority (‘EPA‘) under s92 of the Act.
Land and Environment Court Decision
We have previously blogged on the LEC decisions, and what they meant for a public authority’s ability to recover costs from individual directors.
In summary, the EPA found asbestos on a Company’s land (‘Site‘). The EPA issued a “clean-up” notice under s91 of the Act to the Company. The Company failed to comply with the notice. The EPA then issued a clean-up notice on Council (‘Notice to Council‘).
The Council complied with the Notice to Council at its own cost (as required under s92(1) of the Act). Council then issued a compliance cost notice to the Company under s104 of the Act. The costs remained unpaid, and so Council commenced the LEC proceedings against the Company’s directors, under s105 of the Act, in order to recover Council’s costs incurred cleaning up the Site.
The LEC ordered the Council’s clean-up costs to be paid by the Company’s directors (totalling > $1.2 million).
Court of Appeal Decision
After the LEC decision, the Company’s directors, Mr Michael Slade, and Mr Barry Slade (‘Appellants‘) appealed to the Court. The Appellants’ argument was that for the Council to be entitled to recover its clean-up costs, it was necessary for the Council to have effected a clean-up pursuant to the Notice to Council, issued to it by the EPA.
The Appellants argued that this had not occurred, as the Notice to Council required an Asbestos Assessment Report to be provided to the EPA, by ‘a Qualified and Experienced Occupational (Asbestos) Hygienist’, and this had not occurred.
The Court dismissed the appeal for 3 reasons, and we examine two of these below.
The Court found that the Council’s rights under s104 (compliance cost notice) and s105 (proceedings to recover a debt) were not dependent on the Council’s compliance with the EPA’s Notice to Council.
For these cost recovery rights to exist, the Council must have taken ‘clean-up action under s92’. Section 92 of the Act allows for clean-up action:
- as required by the EPA, due to the issuing of a notice (s92(1)), or
- of a public authority’s own volition (s92(2)).
The Court found that the Appellants’ argument therefore failed, as even if the Council had not strictly adhered to the Notice to Council under s92(1), it would have cleaned up the Site of its own volition, therefore fulfilling the second leg of s92 of the Act, and conferring on it the rights under s104 and s105.
McFarlan JA found that Council earlier relying on s92(1) did not preclude it from later relying on s92(2). This was not ‘an election between inconsistent rights or remedies’, but rather the Council choosing ‘to call in aid one source of power rather than another‘.
In addition, the Court found that Council’s alleged non-compliance with the Asbestos Assessment Report requirement would not alter the fact that a clean-up action had occurred under s92. Section 104(2) merely requires a clean-up action to have occurred under s92, it does not specify that the public authority must have complied fully with the terms of the notice.
Read the judgment in full here.
If you wish to discuss this case, or the Act generally, please contact Carlo Zoppo, Partner on 8235 9705 or by email at firstname.lastname@example.org.