Introduction

Aargus Pty Ltd (Aargus) and two of its employees were convicted for failing to disclose the presence of asbestos in a stockpile of soil that was classified as waste, in a recent decision of the Land and Environment Court of NSW. 

Aargus, Mr Kariotoglou and Mr Kelly pleaded guilty to charges of breaching section 144AA of the Protection of the Environment Operations Act 1997 (NSW) (POEO Act), by supplying false or misleading information regarding waste – in this case, waste containing asbestos.  As a result, the judgment of Justice Craig was limited to determining the appropriate sentence.  

All were convicted and Aargus was fined $30,000.  Mr Kariotoglou, the Project Manager, was fined $9,000 and Mr Kelly, the Environmental Manager, was fined $3,000.  The EPA’s legal costs were apportioned by Justice Craig, with Aargus required to pay 50% of the costs, Mr Kariotoglou responsible for 30% and Mr Kelly for 20%. Additionally, a clean-up notice was issued, and the site had to be remediated, at significant cost.

Aargus was also required to publish a public notice in the monthly Waste Management Environmental Magazine, stating that Aargus had been convicted of supplying false information about the classification of waste, the penalties imposed upon it and its employees and a summary of facts giving rise to the offences.

Facts

Aargus is an Australian company that provides an integrated environmental management service.  Mr Bonadio, the owner of land at Oakville, New South Wales (Property), engaged Aargus to report on the waste classification of stockpiled materials that Mr Bonadio wished to use for landscaping. 

Mr Kariotoglou, the Project Manager, inspected the stockpiled material on 5 October 2010 and found two pieces of fibre cement lying on the surface, which he suspected to contain asbestos.  Mr Kariotoglou collected both pieces, placed them in plastic bags and took them to the Aargus’ office for disposal.  Two soil samples from the stockpile were taken and sent for laboratory analysis.  No asbestos was found in that analysis. 

Once Mr Kariotoglou received the results of the soil analysis, he prepared and signed both the Soil Classification Report (Report) and Asbestos Clearance Certificate (Certificate).  Relevantly, the Report and Certificate stated that no asbestos materials were observed.  Mr Kelly, the Environmental Manager, reviewed and signed both documents.  At the time, Mr Kariotoglou informed Mr Kelly that two pieces of fibre cement had been removed from the stockpiled material before inspection was finished.  On 14 October 2010, Aargus issued the Report and Certificate to Mr Bonadio. 

The material (containing asbestos) was then spread over the Property.  On 21 October 2010, the Property was inspected by Hawkesbury City Council officers.  After raking through the surface of the materials, the Council officers discovered several pieces of suspected asbestos –containing fibro material.  The Council officers requested that Mr Kariotoglou prepare a remediation report, making recommendations on the removal of soils and material containing asbestos from the Property.  Subsequent laboratory analysis of the suspected asbestos material revealed the presence of amosite and chrysotile asbestos.  A draft clean-up notice was issued and all imported material was removed from the Property, at significant cost.

Breach of the POEO Act

Under section 144AA of the POEO Act it is an offence to supply information, or cause or permit information to be supplied, “that is false or misleading in a material respect about waste, to another person in the course of dealing with the waste”.  Both the Report and Certificate contained false information by stating that there was no asbestos or suspected asbestos in the waste material. 

Justice Craig found that Aargus, Mr Kariotoglou and Mr Kelly all contributed to the preparation and provision of the Report and the Certificate - and therefore to the supply of false information about the waste to Mr Bonadio (at [64]). 

While it was Mr Kariotoglou who exercised primary control over the Report and Certificate, Justice Craig found that Mr Kelly, who was in a managerial role, shared the control and responsibility with Mr Kariotoglou as he reviewed and signed the Report and Certificate (at [64]).  Justice Craig considered the culpability of Mr Kelly as less than that of Mr Kariotoglou, because Mr Kelly had to rely on information Kariotoglou provided to him (at [118]). 

Aargus was held responsible as the company purported to exercise control over staff by having policies and procedures for staff to follow when they were conducting inspections and compiling reports (at [64]).  Justice Craig imposed the heaviest penalties on Aargus as it is a corporation, and therefore subject to a higher maximum penalty than an individual, but also because Aargus employed Mr Kariotoglou and Mr Kelly and their actions were “…not said to be outside the scope of functions that they were required to perform on behalf of their employer” (at [116]).

Lessons learned

This decision is the first prosecution under section 144AA of the POEO Act. The EPA has recently been very active in prosecuting offences involving waste.  The case shows that the EPA is not only willing to prosecute a company who provides false or misleading information about the classification of waste, but also the employees involved.  Therefore, it is important that both companies, and individuals, are aware of the relevant laws and requirements, and comfortable that they have been complied with. Companies and individuals should also be aware of the other potential costs involved in such actions, including paying for remediation of sites.

Further, the case is an important reminder of the need to have appropriate policies in place, and to follow those policies.  Justice Craig found that Aargus could have imposed the necessary protocols and controls to ensure that all reports and certificates issued under the company name complied with the POEO Act (at [116]).  His Honour noted that Aargus has amended and improved its manuals for site assessments and the provision of reports since these offences first arose (at [96]).

Justice Craig held that the failure to record the presence of fibro cement material created the real possibility of environmental harm - a factor that the court considers when imposing a penalty for an offence under the POEO Act.  It is likely that the spreading of the material on the Property would have broken asbestos fibres, making previously non-friable material friable.  Once asbestos becomes friable, any touching or disturbing of the material will aerate the asbestos fibres, contaminate the air and increase the chances that toxic fibres are inhaled by bystanders. 

Justice Craig also emphasised the importance of supplying accurate information about waste, particularly where asbestos is involved. .If the Report and Certificate had noted the suspected presence of asbestos, detailed testing would have occurred, and it is likely that the stockpiled material would not have been relocated onto the Oakville property.  

It is also essential to be aware of the special requirements relating to the transportation, disposal, re-use or recycling of any type of asbestos waste (clause 42 of Protection of the Environment Operations (Waste) Regulation 2005), as well as relevant workplace health and safety requirements.  As Aargus failed to disclose the presence of asbestos in the waste, the earthworks and demolition company who relocated the stockpile were not aware of the need to abide by these requirements.