APPEAL COURT, HIGH COURT OF JUSTICIARY
Lord Justice Clerk Lord Clarke Lady Cosgrove	[2010] HCJAC 80 Appeal No: XC750/09 OPINION OF THE COURT delivered by LORD CLARKE in CROWN APPEAL AGAINST SENTENCE by HER MAJESTY'S ADVOCATE Appellant; against DOONIN PLANT LIMITED Respondents: _______

Appellant: Shand, QC, AD; Crown Agent

Respondents: Gray, QC et Coll; Nelson, Gibb & Landa, Hamilton

3 August 2010

[1] At a continued first diet on 21 October the respondents pled guilty at Glasgow Sheriff Court to the following charge:

"(002) Between 16 January 2007 and 30 March 2007, both dates inclusive at Bardykes Bing, Hamilton Road, Cambuslang, Glasgow you DOONIN PLANT LIMITED, ROBERT FORREST, THOMAS DOONIN and GARY DOONIN all directors of said Doonin Plant and MICHAEL KELLY did dispose of controlled waste, namely paper, wood, plastic, metal, vegetation, polystyrene, insulation material, chipboard, cardboard, roofing felt, carpeting, a ladder, a bicycle, a mattress and a bath in a manner likely to cause pollution of the environment or harm to human health, namely that they did dispose of said waste on land that was not lined with an impermeable liner or supplied with an appropriate leachate collection system or landfill gas extraction system, resulting in (a) the likely release of leachate containing high levels of Biochemical Oxygen Demand and dissolved metals into ground water and water course; and (b) the likely release of landfill gas being released into the atmosphere, causing offensive odour which would impact on the quality of air; CONTRARY to the Environmental Protection Act 1990, section 33(1)(c)".

Pleas of not guilty by the respondents were accepted by the Crown in relation to two other charges involving breaches of section 33(1)(a) and section 33(1)(b)(ii) of the said Act. The three directors of the respondents and the other individual who were originally charged with the offences tendered pleas of not guilty, which pleas were accepted by the Crown.

[2] Prior to sentencing the respondents, the sheriff was provided by the procurator fiscal depute with a written narrative of facts, which had been agreed with junior counsel then appearing for the respondents. The sheriff has appended to his report to this court a copy of that narrative. Having considered that narrative and submissions made on behalf of the respondents and the Crown, the sheriff reached the conclusion that the appropriate fine to be imposed in the circumstances of the case was £10,000, which sum he reduced by one-fifth to £8,000 having regard to the fact that the plea of guilty was tendered at a continued first diet. The Crown have appealed against the sentence imposed as being unduly lenient.

[3] Section 33(1)(c) of the Environmental Protection Act 1990 (hereinafter referred to as "the 1990 Act") provides that a person shall not

"treat, keep or dispose of controlled waste in a manner likely to cause pollution of the environment or harm to human health".

By section 75(4) of the 1990 Act it is provided that "controlled waste" means "household, industrial and commercial waste or any such waste". Section 33(7)(a) provides as follows:

"It shall be a defence for a person charged with an offence under this section to prove -

(a) that he took all reasonable precautions and exercised all due diligence to avoid the commission of the offence; ...."

In tendering the plea that they did the respondents accepted that no such defence was available to them in the circumstances.

[4] The respondents are one of a group of companies that has been in existence since 1955 and the present company was incorporated on 10 November 1961. Its website states that the company is primarily involved in road transportation and haulage of materials for the construction industry, but current activities include transportation, waste disposal and recycling, site remediation, demolition, earth moving and site clearance. The locus of the offence was Bardyke's Bing which is owned by the respondents. The site was that of a former colliery and covers a large area of land, extending to 66 acres. It is located between Cambuslang and Blantyre on the north side of the A724 Hamilton Road. At the time of the offence large portions of the site were unfenced. The nearest housing development is located some 500 metres north of the site.

[5] The respondents had held a waste management licence under section 33(1) of the 1990 Act but this had been suspended on 25 August 2006 in circumstances that we shall describe. As at the date of the offence the respondents were not permitted to deposit or treat waste at the site unless carrying out certain exempt activities which are not relevant for present purposes. The respondents had no permission to use the site as a landfill site. At authorised landfill sites, waste can be permanently disposed of. Those sites, however, require to be properly constructed, engineered and run to ensure the safe disposal of the waste with no detriment to the environment. Vehicles, for example, entering landfill sites must be weighed and checked prior to dumping. Waste is deposited in cells which must be lined and capped with an impermeable substance to contain the waste and any leachate or gas generated by the waste to ensure that there is no escape causing pollution to the environment.

[6] Leachate is a liquid which is produced when waste degrades over time and is also produced when rainwater seeps through the waste and in doing so extracts substances from the decomposing waste. Leachate can be extremely polluting. Landfill gas is also produced as a result of the breakdown of biodegradable waste in landfill. It has a distinctive odour. There are specified measures that require to be taken to provide for the management of landfill gas.

[7] Inspectors of the Scottish Environmental Protection Agency ("SEPA") had, before January 2007, concerns about activities taking place at the said locus. As a result of routine inspections carried out at the locus between March and August 2006 SEPA suspended the waste management licence, which had been held by the respondents in respect of the site. Thereafter SEPA received complaints from members of the public about waste being deposited on the site. Authorised surveillance operations were carried out by SEPA officers on 16, 17, 23, 25, 26 and 31 January 2007 from 10am to 3pm each day. On those days the officers captured, on tape, activities carried on at the site which involved the repeated dumping of controlled waste by large skip vehicles which, after dumping their skips contents, would leave the site. Bulldozers were seen to flatten and move the waste and to cover it with soil. During the periods of time in question vehicles bearing the respondents' livery were seen to dump waste but, in addition, vehicles apparently belonging to various other parties were seen to make regular deposits of waste. Over the six days of surveillance 81 separate deposits of waste were made. It was the view of the SEPA experts that the methods used for depositing the waste, involving the tipping of mixed waste types, without any prior sorting and their subsequent compaction and covering over with soil, were all indicative of permanent deposit. The activities which were observed amounted, in the officers' opinion, to disposal activities as would be seen on a landfill site.

[8] At the site the waste which was seen being brought on to it was not being weighed or checked, and the methods used to deal with the waste would, in the experts' opinion, contaminate each waste type to such a degree as to make it either unusable or very difficult and costly to excavate and separate for use. The locations where the waste was seen being deposited, compacted and buried were not lined with an impermeable substance to contain the waste and any leachate or gas generated by the waste. There was no provision on the site for the treatment of leachate or landfill gas.

[9] On 8 February 2007 SEPA officers attended at the site in terms of section 150 of the 1990 Act. They found, at a location on the site, freshly excavated cells within which they saw various waste deposits, including wood, plastic, metal, a conifer tree and foam pipe insulation. These deposits were still fresh. The inspectors took photographs of the site on this occasion, Crown Production 18. As well as photographing waste, the inspectors took photographs which showed the stratified remains of old or previously deposited waste, including plastic and wood. The officers spoke to a digger and machine driver who said that he was employed by a company other than the respondents but had been hired out to the respondents. He described the site as "a landfill site". Another person was spoken to who stated that he had also been hired out to the respondents to carry out bulldozing work at the site and other sites to recycle muck, rubble and anything that could get recycled.

[10] On 6 March 2007 SEPA officers carried out further surveillance of the site. They observed a skip vehicle arriving on the site and depositing its contents, including plastic and cardboard. On 30 March 2007 SEPA officers conducted a survey of the site to establish the extent of waste hidden under the topsoil. They were accompanied by Dr Alistair Ruffle of Queen's University, Belfast, who was to inspect the site and prepare an expert report. It was noted that an area on the site approximately 20 metres long and 20 metres wide and 3 metres deep had been recently excavated. Controlled waste could be seen there in a black liquid, indicative of leachate with the distinctive and strong sulphurous smell consistent with leachate. More photographs were taken, which are Crown Production 22, which showed stratified layers of waste including paper, metal, insulating foam and a black liquid at the base of the excavation. Two samples were taken of black liquid from the site for later analysis. The samples were analysed and found to be leachate which was potent and would contaminate and harm water and soil.

[11] The foregoing is a summary of the agreed statement of facts which was before the sentencing sheriff. The procurator fiscal depute had drawn the sheriff's attention to the evidence which established that the manner in which the materials were being disposed of, by the respondents, was likely to cause pollution of the environment. Particular reference was made to the photographs taken on 8 February 2007 (supra) which show older, previously deposited, waste material in stratified form on one area within the site which had been partially excavated. What had been observed by the inspectors as taking place on this site was waste material being disposed of in a manner likely to cause pollution on the site.

[12] Junior counsel for the respondents, before the sheriff, had pointed out that the charge to which the respondents had pled guilty related to disposal of materials in a manner likely to cause pollution of the environment and resulting in the likely release of leachate. There was no evidence of actual pollution or release of leachate. The respondents did, however, accept that they had fallen down insofar as materials had been brought onto their site in such a condition, and over such a period, as to lead to the possible creation of leachate which could escape from the site. The respondents' plea of guilty to the charge in question did not mean that they had not intended later to remove and rework the materials concerned. Junior counsel had stressed to the sheriff that the respondents were a significant operation, who did not operate on a casual basis, and were not a fly-by-night concern. The company was profitable, though profit levels were less recently than they had been in the past. The only other material which was given to the sheriff regarding the financial position of the respondents was a statement by junior counsel that the respondents had elected to allow material, having an estimated value of £1.2 million, to remain lying on the site as its removal could have disturbed a rare orchid which had been discovered there. They had entered into discussions with Scottish Natural Heritage to preserve the species in question.

[13] The sheriff noted that the respondents had four previous convictions for similar offences. Three of these convictions occurred over a relatively short period during 2007, shortly after the commission of the offence to which the present proceedings relate. On 3 April 2007 the respondents were convicted of a breach of section 30(F)(1) of the Control of Pollution Act 1974 and were fined £1,800. On 6 June 2007 at Linlithgow Sheriff Court the respondents were convicted of a breach of section 33(1)(A) and (6) of the 1990 Act and were fined £3,000. On 22 August 2007 at Lanark Sheriff Court the respondents were found guilty in respect of two charges, one involving a breach of section 20(3)(A) of the Water Environment and Water Services (Scotland) Act 2003, in respect of which they were fined £5,000. They were also convicted of a breach of section 20(1) of the Water Environment and Water Services (Scotland) Act 2003, in respect of which they were fined £3,000. On 25 July 1995 at Glasgow Sheriff Court the respondents were fined £500 in respect of a breach of section 3(1)(A) and (2) of the Control of Pollution Act 1974.

[14] In sentencing the respondents, the sheriff said that the protection of the environment was a matter of significant public concern and that any activities which were likely to cause pollution or harm to human health required to be dealt with firmly, to discourage any repetition and thereby to reduce the occurrence of any actual pollution or harm being caused. He took into account, however, that the offences in question did not involve actual pollution or harm to human health and the fact that the respondents had taken apparently significant steps to improve their statutory compliance since the dates libelled. Subsequent visits from SEPA officers had not, it seems, revealed any fresh concerns on their part. In all the circumstances the sheriff considered, as has been noted, that the appropriate financial penalty was a fine of £10,000 which he modified by one-fifth on the basis that the plea was tendered and accepted at a continued first diet. Accordingly a fine of £8,000 was imposed.

[15] It should be noted that by section 33(8)(b) of the 1990 Act a person convicted on indictment, as was the position in the present case, of committing an offence under the section is liable to imprisonment for a period not exceeding five years or a fine or both. There is no limit to the fine which may be imposed on conviction on indictment. The fine which may be imposed on a summary conviction under the section is specified as not exceeding £50,000.

[16] The advocate depute contended that the fine which had been imposed by the sheriff was, in all the circumstances, unduly lenient. Reference was made to various authorities involving the imposition of substantially higher fines on companies which were involved in breaches of the health and safety legislation. We should observe that these authorities are not directly in point in relation to offences committed under the legislation with which we are concerned where different considerations come into play.

[17] As well as attacking the starting point for the fine thought to be appropriate in this case (£10,000) the advocate depute submitted that the amount of discount given to the respondents (one-fifth) was too generous, having regard to the limited utilitarian value of the plea, given at the stage it was. By that time all the necessary preparation had been made by the prosecution for leading the necessary technical and factual evidence before the court.

[18] The Crown had, since the imposition of the fine, instructed an accountant's report which was provided by Ronald M Sinclair, Chartered Accountant, a copy of which was placed before this court. The accountant had examined accounting material relating to the respondents. Among Mr Sinclair's conclusions appear the following:

"From my examination of the accounts there is no doubt that the company was in a strong financial position at the end of December 2008. Even with the limited information shown in abbreviated accounts the Shareholders' Funds were stated in the Balance Sheet at 31 December 2005 to be £3,816,084 and grew to £4,153,045 at 31 December 2006 and to £4,415,187 in 2007 before falling slightly to £4,245,610 at 31 December 2008.

Perhaps more importantly the company's cash position was also strong being shown as £1,431,970 at 31 December 2005, £1,774,039 in 2006, £1,713,517 in 2007 and £1,317,408 at 31 December 2008.

Although there are no Profit and Loss Accounts attached to the abbreviated accounts, the Profit and Loss Reserve in the Balance Sheet rose from £3,747,212 at 31 December 2005 to £4,084,173 in 2006 to £4,191,963 in 2007. This indicates profits after tax (and possibly dividends paid out) of £336,961 in the year to 31/12/06 and £107,790 in 2007.

It is true to say that the 2008 accounts indicate that there may have been a loss of £169,577 after tax and dividends. ... There were still Net Assets/Shareholders Funds of £4,022,386 at 31/12/08 and cash at bank of £1,317,408."

The author of the report then drew attention to three other matters in the respondents' abbreviated accounts in the following terms:

"(1) The company held an investment property (see note 3) throughout the period examined. This cost £498,515 but was valued at £652,867 at 31 December 2008. By definition such an investment is not required for the company's business and could be sold in the event of any financial or cash flow problem.

(2) The company has lent up to £116,469 during 2007 to one of the directions Mr G Doonin and up to £163,969 in 2008 (see note 6). Likewise it lent up to £126,220 to another director Mr F J Doonin, Senior in 2007. Although this is not illegal providing such loans are declared, approved by the shareholders in the company and repaid by the end of the financial year. ... it does indicate that the company had sufficient resources to grant such loans.

(3) Note 7 to the accounts discloses information about another related company, Doonin Waste Ltd which owes Doonin Plant Ltd £42,050 at 31 December 2008. As this company had Net Assets/Shareholders Funds of £76,192 and Cash at Bank of £120,217 per its Balance Sheet at 31 December 2008, it could clearly have paid off the debt due of £42,050 to provide Doonin Plant with necessary cash".

No issue was taken, on behalf of the respondents about the content of the accountant's report at the hearing before this court.

[19] In his submissions to the court, senior counsel for the respondents argued that the fine imposed by the sheriff reflected a proper exercise of his discretion in the matter and was not unduly lenient. It had never been accepted by the respondents that the activities upon which they were engaged were activities which would be seen on a landfill site. The site was operated as a treatment and transfer site. The statutory exemptions entitled them to bring the waste on to the site and to have it stored thereon temporarily. It had never been the respondents' intention to allow the waste to remain on a permanent basis. There had been no deliberate breach of the statutory provisions to maximise profit or to save money. It was, indeed, of concern to the respondents themselves that leachate had developed since that meant that as a consequence they may not be in a position to sell on the waste in question. It had to be accepted that the respondents had not taken all reasonable steps nor had they exercised due diligence in respect of their activities which occurred at the site. The respondents' responsible approach to environmental matters was, however, otherwise demonstrated by the fact that, on the discovery of the rare orchid on the site, they had refrained from disturbing the land where the orchid was found and thereby deprived themselves of recovering material which could have had a value to them of over £1 million. The respondents had taken steps to improve the operations on the site and had received official recognition of this.

[20] As regards the discount applied by the sheriff, that had fallen well within the sheriff's discretion in such a case. Delays in bringing matters to a head had not been as a result of any fault on the part of the respondents. It was pointed out that all the previous convictions of the respondents had been dealt with on summary complaint which, perhaps, reflected their relative insignificance in all the circumstances.

Decision

[21] We have had no hesitation in reaching the conclusion that the fine imposed in the circumstances of this case was unduly lenient. We note that the respondents did not produce to the sheriff any documentary material relating to their financial position, at the time of sentencing, nor did the sheriff call for such material. The sheriff, in reaching a view about the financial position of the respondents, as has been seen, relied solely on the statement made by junior counsel relating to the respondents apparently having given up the opportunity to use approximately £1 million worth of material which was located in a position near a rare orchid. The sheriff simply deduced from that the respondents were in sound financial health. In HM Advocate v Munro & Sons (Highland) Limited 2009 SCCR 265 the court observed, in a case of a conviction of a company under the health and safety legislation, that where a company had been convicted of an offence in respect of which its financial position would be relevant in determining the level of fine, it was for the company to place before the court sufficiently detailed information about its financial position to enable the court to see the complete picture, without having to resort to speculation, and that, in addition to lodging all relevant documents, it may in some cases be thought necessary to lead the evidence of an accountant. We consider that that observation applies equally to convictions of companies under the 1990 Act. The sheriff clearly, in our view, was not provided with sufficient relevant information by the respondents to arrive at the proper assessment of the appropriate fine to be imposed in this case. We have now, as has been seen, had the benefit of an accountant's report, prepared on behalf of the Crown, the content of which we have referred to and which, as we have said was not challenged in any respect on behalf of the respondents. That report discloses that the respondents were well able to pay a substantially greater fine than that which was imposed, without suffering severe financial hardship.

[22] We were not impressed, at all, by senior counsel for the respondents' main submission namely that the respondents had never intended to operate the site as a landfill site. The facts, in the agreed narrative appended to the sheriff's report, to which we have referred, taken together with what can be seen in the photographs taken by the SEPA officers satisfy us that there was a course of conduct here by the respondents which involved a serious and significant breach of the legislative provisions with real potential for danger to the environment and consequences for public health. We have to have regard to the fact that this prosecution was brought by way of indictment, which reflects the seriousness of the misconduct involved, and that parliament has provided no upper limit to the fine that can be imposed in such cases. We have had regard, also, to the fact that in summary cases involving breaches of the same provisions a fine of up to £50,000 may be imposed. There is a legitimate public concern about the impact of such offences on the environment. In particular, it is a matter of considerable public concern that companies may fail to comply with their environmental responsibilities if it costs them less to pay the penalty for breaking the law than it would to install proper safeguards, or to desist from the conduct in question. Conduct of the sort revealed in the circumstances of this case, in our judgment, has to be regarded as serious having regard to the potential of serious harm that arises therefrom. A fine in a case such as the present, in our judgment, requires to be large enough to bring the message home to those who manage and are shareholders in companies like the present that the statutory provisions designed to protect our environment must be taken seriously by them. The fine imposed by the sheriff in this case, having regard to the financial position of the respondents was, in our judgment, unlikely to meet these objectives. The conduct in question took place over a period of time and involved a blatant and complacent disregard by the respondents of their responsibilities. That the site in question was in nearby proximity to a residential area compounded the seriousness of the situation. The offence with which we are dealing, has also to be set against the number of analogous previous offences, three of them recent, where fines were imposed on the respondents, which clearly did not have the deterrent effect that is required. In all the foregoing circumstances, we consider that a fine of £100,000 was the appropriate fine to be imposed in a case of this sort. We, moreover, consider that not only was the starting point taken by the sheriff clearly far too low, the discount that he applied to that starting point was over-generous. The case first called in court on 2 March 2009. The respondents, and the former co-accused, did not tender pleas until 29 October 2009. We accept, as the advocate depute informed us, that given the technical nature of this prosecution, the utilitarian value of the plea being given when it was was somewhat limited since the preparation of the case would have been virtually completed by that time, and the expense in relation thereto largely incurred. Moreover the delay in pleading was, no doubt, linked with the Crown's acceptance of pleas of not guilty by the directors and the other individual who were indicted. It is, perhaps, surprising that while accepting a plea of guilty from the respondents, the Crown was unable to impute responsibility to any individual. We accordingly consider that a discount of no more than 10% was appropriate here. We will accordingly quash the original fine imposed and substitute therefor a fine of £90,000.