Barbara Filipowski v Vopak Terminals Sydney Pty Limited

Cabonne Shire Council v Environment Protection Authority (2001) 115 LGER 304; Thorneloe v Filipowski (2001) 116 LGERA 56; CASES CITED: R v O'Neill (1979) 2 NSWLR 582; R v Olbrich (1999) 199 CLR 270; He Kaw Teh v The Queen (1985) 157 CLR 523

DATES OF HEARING: 14, 19/10/2005, 15/11/2005, 20/12/2005

PROSECUTOR: Mr A Hill, Barrister SOLICITORS Dibbs Abbott Stillman LEGAL REPRESENTATIVES: DEFENDANT: Mr I Hemmings, Barrister SOLICITORS Corrs Chambers Westgarth

THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

50009 of 2005 BARBARA FILIPOWSKI v VOPAK TERMINALS SYDNEY PTY LIMITED

JUDGMENT HIS HONOUR: A. INTRODUCTION 1 The Defendant has pleaded guilty to a charge of an offence against the Marine Pollution Act 1987, s 27(1) in that on 24 September 2003 it was the occupier of a place from which a discharge of oil occurred into State Waters, namely Port Botany. 2 The Marine Pollution Act, s 27 provides as follows: Prohibition of discharges to which Part applies (1) If a discharge to which this Part applies occurs, each appropriate person in relation to the discharge, and any other person whose act caused the discharge, are each guilty of an offence punishable, upon conviction, by a fine not exceeding: (a) if the offender is a natural person - $500 000, or (b) if the offender is a body corporate - $10 000 000. (2) Subsection (1) does not apply to a discharge: (a) if the discharge was for the purpose of combating specific pollution incidents in order to minimise the damage from pollution and was approved by a prescribed officer, or (b) if the discharge was carried out by the holder of a licence under the Protection of the Environment Operations Act 1997 in accordance with that licence. 3 Section 27 appears in Part 4 of the Act which is headed "Pollution relating to transfer operations". Section 26 specifies the discharges to which Part 4 applies by providing as follows: Discharges to which Part applies This Part applies to a discharge of oil or of an oily mixture or of a liquid substance or of a mixture containing a liquid substance into State waters: (a) from a ship or place on land in or in connection with a transfer operation, or (b) from any apparatus or purpose-built pipeline used in or in connection with a transfer operation, whether or not it is being so used, but does not apply: (c) to a discharge that occurs on the landward side of the first isolating valve on land of any apparatus or purpose-built pipeline used in or in connection with a transfer operation, whether or not it is being so used, or at any other place prescribed for the purposes of this section, or (d) to a discharge to which Part 2 or 3 applies. 4 A number of terms employed by ss 26 and 27 are defined by the Act - either by Section 3 which defines terms for the purposes of the Act or by s 25 which defined terms for the purposes of Part 4. Of particular relevance to the present charge are the following definitions contained in s 25: appropriate person means : (a) in relation to a discharge from an apparatus on a ship: (i) the owner of the ship, or (ii) the master of the ship, or (iii) the owner of the apparatus, or (iv) the person in charge of the apparatus, and (b) in relation to a discharge from a ship: (i) the owner of the ship, or (ii) the master of the ship, or (iii) the person in charge of the transfer operation of the ship, and (c) in relation to a discharge from an apparatus on a place on land: (i) the occupier of the place, or (ii) the owner of the apparatus, or (iii) the person in charge of the apparatus, and (d) in relation to a discharge from a place on land the occupier of the place, and (e) in relation to a discharge from a purpose built pipeline: (i) the occupier of the land on which the pipeline is situated, or (ii) the person in charge of the pipeline, or (iii) the owner of the pipeline. occupier : (a) in relation to a place on land (other than a pipeline) means:

(i) the person exercising personally or by employees or agents the right of occupation of the land, or (ii) if there is no occupier - the owner of the land, and, in the case of a vehicle, includes the person in charge and the owner of the vehicle, but does not include the occupier or owner of the land on or over which the vehicle stands or moves, and

(i) the owner of the pipeline, and (ii) the lessee, licensee or user of any lease, licence or right of user for the use of the pipeline for the carriage of oil or of an oily mixture or of a liquid substance or of a mixture containing a liquid substance.

oil has the same meaning as it has in Part 2. place on land includes: (a) any structure or apparatus on or above or below the surface of any land, (b) any thing or vehicle resting on or moving over land, (c) any thing resting on or lying under the bed, bank or shore of any State waters, (d) a pipeline, and (e) any thing afloat (other than a ship) if it is anchored or attached to the bed, bank or shore of any State waters or is used in any operation for the exploration of the sea-bed or subsoil beneath any State waters or for the exploitation of the natural resources of that sea-bed or subsoil.

transfer operation means any operation that is involved in the preparation for, or in the commencement, carrying on or termination of, a transfer of oil or of an oily mixture or of a liquid substance or of a mixture containing a liquid substance to or from a ship or a place on land. 5 In Part 2 of the Act, "oil" has the same meaning as it has in Annex 1 to the 1973 International Convention for the Prevention of Pollution from ships: vide s 7. 6 According to that Annex, "oil" means petroleum in a form including crude oil, fuel oil, sludge, oil refuse……and includes the substances listed in Appendix 1 to this Annex". Appendix 1 contains lists of oils. 7 Notwithstanding the Defendant's guilty plea and the fact that s 27 imposes strict liability for a result offence (see Thorneloe v Filipowski (2001) 116 LGERA 56 at 80 per Spigelman CJ), the principal Defence submission seeks the discharge of the Defendant by the favourable exercise of the discretion conferred by the Crimes (Sentencing Procedure Act) 1999, s 10. 8 The fundamental, if not sole, basis for this submission is that it is the Defendant's case that the pollution incident that occurred during a transfer operation was caused by circumstances beyond the Defendant's control and more particularly was caused by the pumping action or inaction that occurred on that vessel "Team Neptun" during that transfer operation creating a surge or water hammer pressure in the pipeline which caused the gasket to blow out. 9 The Prosecutor has disputed the Defence case that the pollution incident was caused by circumstances beyond the Defendant's control, and much of the hearing has been directed to the issue of how and why the gasket between the flanges to the pig launcher cover in the pipeline failed, thereby causing the escape of oil product from the Defendant's pipeline during the transfer operation from the "Team Neptun". 10 This issue that has been raised by the Defendant is clearly a matter in mitigation of liability and penalty, rather than being a matter of exculpation of liability. Accordingly, it is important at the outset to appreciate precisely which party carries the onus of establishing the issue and what is the relevant standard of proof. 11 The Defendant, throughout the hearing and in its final address has maintained the position that the factual issue, having been fairly raised by the Defence case, the burden shifts to the Prosecutor to negative beyond reasonable doubt that issue so raised by the Defendant. 12 In my respectful judgment, this Defence submission must be rejected as being heterodox. Where (as in the present case) a court accepts a defendant's plea of guilty, that plea is an admission of liability in respect of the offence charged, and in respect of all of the essential elements of the offence:" R v O'Neill (1979) 2 NSWLR 582 and where at the hearing on sentence for such an admitted offence, the prosecutor seeks to raise matters of aggravation of the offence, these matters must be proved by the prosecutor beyond reasonable doubt, and conversely where the defendant seeks to raise matters in mitigation, those matters must be proved by the defendant on the balance of probabilities: see R v Olbrich (1999) 199 CLR 270 at 280/281. 13 The argument advanced on behalf of the Defendant is in similar vein to that which the High Court in Olbrich firmly rejected in the following passage at 280: Courts of criminal appeal in Australia have considered the subject of fact finding for sentencing many times in the last thirty years [28] . Not all of the questions that have been examined in those decisions must be considered now. For present purposes, it is enough to say that we reject the contention that a judge who is not satisfied of some matter urged in a plea on behalf of an offender must, nevertheless, sentence the offender on a basis that accepts the accuracy of that contention unless the prosecution proves the contrary beyond reasonable doubt. The incongruities that would result if this submission were accepted are well illustrated by the present case. The respondent swore that he was a courier but the judge disbelieved him. To require the judge to sentence the respondent on the basis that he was a courier is incongruous.

[28] R v O'Neill [1979] 2 NSWLR 582; R v Martin [1981] 2 NSWLR 640; R v Savvas [No 2] (1991) 58 A Crim R 174; Chow v Director of Public Prosecutions (1992) 28 NSWLR 593; R v Isaacs (1997) 41 NSWLR 374; R v Chamberlain [1983] 2 VR 511; R v Storey [1998] 1 VR 359; Law v Deed [1970] SASR 374; R v Stehbens (1976) 14 SASR 240; R v Jobson [1989] 2 Qd R 464; R v Nardozzi [1995] 2 Qd R 87; R v Morrison [1999] 1 Qd R 397; R v Aloia [1983] WAR 133; Salisbury v The Queen (1994) 12 WAR 452; Langridge v The Queen (1996) 17 WAR 346; R v Turnbull (1994) 4 Tas R 216. See also in England R v Newton (1983) 77 Cr App R 13; R v Palmer (1993) 15 Cr App R (S) 123; R v Guppy and Marsh (1994) 16 Cr App R (S) 25; and in Canada R v Gardiner [1982] 2 SCR 368. 14 Accordingly, in the present case it is for the Defendant (which has admitted the charge) to establish on the balance of probabilities any matters in mitigation (which are in dispute) including the issue of whether the cause of the gasket blowing out and hence of the oil discharging from the Defendant's pipeline was something beyond the Defendant's control, and in particular, something that originated in the pumping action or inaction on the vessel "Team Neptun" creating a significant pressure surge in the course of the transfer operation. 15 The disputed issue as to how and why the gasket came to fail was the subject of competing expert evidence (which regrettably, by the parties choice, was not the subject of joint conferencing, which may have clarified disputed issues far more effectively than occurred at trial). But before considering that evidence on the disputed issue, I shall first record the uncontentious facts concerning the pollution incident and the Defendant's follow-up action etc. B. THE UNDISPUTED FACTS 16 I take the following summary of the undisputed facts from Defence Counsel's written outline of submissions (which in my judgment aptly reflect the undisputed evidence). However, because the parties are in dispute as to the cause of the gasket failure, I will confine the facts concerning the incident to the undisputed facts. BACKGROUND 1. The Defendant, Vopak Terminals Sydney Pty Limited (Vopak), is a company operating at Port Botany in New South Wales. Vopak's operations at Port Botany include bulk fuel transfer operations and storage at the Site B Terminal on the corner of Friendship and Fishburn roads, Port Botany (Site B Terminal). 2. Vopak has operated at Port Botany under its current name since 1999 and prior to that as Van Ommeren and Powell Duffryn Terminals from 1979. Vopak was the occupier of the Site B Terminal in September 2003, which it had occupied since 1996 and continues to occupy. 3. The vessel Team Neptun (Ship) arrived at the Port Botany Bulk Liquids Berth (BLB) at 2.15PM on Tuesday 23 September 2003 to discharge 28 million litres of unleaded petrol (ULP) to the Site B Terminal. 4. The Ship was to follow standard procedures, which include discharge of the ULP into the Vopak Marine Loading Arm (Marine Loading Arm) using the Ship's pumps. 5. Routine inspections and checklists were carried out by Sydney Ports Corporation (SPC), Ship personnel and Vopak personnel prior to commencement of pumping of ULP. The routine inspections and checks carried out by Vopak included a visual leakage test of the Vopak flanges associated with the Marine Loading Arm and the soundness of: (a) the connection to the Ship's manifold; (b) the pipework; (c) the connection at the base of the Marine Loading Arm; and (d) the pig launcher closure arrangement (Pig Launcher). 6. The Pig Launcher, also known as a pigging chamber or pig catcher , is the launching chamber for the pig. A pig is a device which is forced through a pipe under high pressure to clean or clear the pipe, in a similar way to a rifle pull-through. Vopak owns and operates the Marine Loading Arm and the Pig Launcher at the BLB. 7. Vopak personnel carried out a leakage test by pressuring the system to between 650kpa and 800kpa with Nitrogen followed by a visual inspection of each flange connection to detect any leakages. This testing was completed at 2.55pm on 23 September 2003. No leakages were detected in the Pig Launcher or Marine Loading Arm. 8. The discharge of ULP from the Ship commenced at 5.15pm on Tuesday 23 September 2003 and carried on continuously throughout the evening and the night of 23 September 2003. During this period the discharge process was normal and no significant events were observed by Vopak operators. 9. Vopak's shipping transfer operating procedures are contained in the Site B Operations Manual dated June 2001. Part of these procedures include on-site monitoring of the transfer operations at the BLB by a team of two Vopak operators. 10 PUMPING PROCEDURE 11 The pumping operation is carried out by the Ship. 12. The Vopak Site B Operations Manual requires that the Ship start the discharge by pumping at a slow rate and increase pressure gradually to a maximum pressure of 800kPa. 13. Flow would be continued at the 400kPa pressure for approximately 10-15 minutes. 14. After radio confirmation by Vopak's operators on the BLB that the discharge system is operating safely, the pressure is then increased by the Ship to a maximum of 800kPa (or 8 bar). 15. This process of bringing up the pressure slowly occurred on 3 occasions during the discharge: (i) at the commencement; (ii) soon after the commencement when flow was stopped and then recommenced]; and (iii) after the incident. 16. Two Vopak operators were present on the BLB during the entire transfer operation from the Ship. Vopak operators inspected hoses, gasket joints and the general working area every 15 minutes throughout the transfer operation. The inspection included checking the pressure gauge, which gauges pressure in the Marine Loading Arm. Vopak also took samples every hour as required. THE INCIDENT 17. 20 hours into the continuous transfer operation, at approximately 12.30pm on 24 September 2003, a section of the gasket on the Pig Launcher Cover was blown out of the flanges on the Pig Launcher. 18. For between 30 and 60 seconds, ULP was discharged under pressure via the failed gasket on the Pig Launcher. During this event, a quantity of ULP sprayed over the BLB manifold area and the side of the Ship. 40 litres of ULP entered the waters of Botany Bay ( discharged ULP ) and the remainder was captured in the BLB retrieval system).

EMERGENCY PROCEDURES FOLLOWING THE INCIDENT 19. The Vopak and SPC emergency procedures were immediately activated following the Incident. 20. Vopak personnel immediately contacted Ship personnel by radio to stop pumping ULP. The Ship's discharge pumps were shut down as soon as practicable by the crew. The Vopak Site B Terminal emergency shutdown system was also activated and all operations ceased. The BLB area was secured and made ready for fire fighting operations to commence if required. 21. SPC personnel had observed the incident. SPC personnel and Vopak operators assisted in the clean-up of spilt ULP from the BLB. No absorbent materials were required in the clean up of the BLB. 22. Because of the volatility of the ULP, together with the evaporative effect of the day time ambient temperature (which was 24oC) the ULP that sprayed onto the hull of the Ship and entered the waters of Botany Bay, evaporated. 23. SPC assessed the situation and considered that there was no need for further action. The ULP on the water's surface had evaporated within minutes of the Incident. 24. The transfer operation in respect of ULP from the Ship recommenced at 2.00pm on 24 September 2003 after the failed gasket was replaced and the system pressure tested again by Vopak personnel. The transfer operation was completed at 8.35pm on Wednesday 24 September 2003. The ship left Port Botany the next day. INVESTIGATIONS AND ACTIONS FOLLOWING THE INCIDENT 25. Vopak has carried out an investigation and exhaustive review of transfer operations following the incident, with the aim of preventing any further incident of this nature. 26. The system being used at the time for the discharge of ULP from the Ship had satisfactorily discharged approximately 3.4 billion litres of fuel (approximately 3,400 hours of discharge time) over a seven year period and was operating as per design at the time. 27. Pig Launcher gasket was replaced, on average, every two ships. Vopak's inventory and purchasing records show that 20 x 14" gaskets (of the type used solely on the Pig Launcher) were used in the period of 15 April 2002 to 24 September 2003. During this period, 31 ships were discharged, equating to approximately 821 million litres of fuel over 82 hours. 28. Vopak has made operational changes to further lower any risk of an incident in the future. 29. Vopak has discussed the Incident with SPC and implemented maintenance and operational procedural changes including: (a) New procedures whereby Marine Loading Arm operators will change gaskets on the Pig Launcher prior to each ship discharging. The gaskets are to be changed every time the flanges are broken (unsealed) on the Marine Loading Arm and Pig Launcher. (b) Installation of a pressure recorder on the Marine Loading Arm to record changes in pressure in the Marine Loading Arm; (c) Instructions to operators that any changes in a ship's discharge pressure are to be investigated immediately; (d) Changes to the maintenance system used for the Pig Launcher flange, surfaces and bolts. Maintenance of these components is now performed quarterly using computer software which programmes the work to be carried out, records the work completed and specifies timing of future work. Previously this work was carried out six monthly without the assistance of a computer programme; (e) The type of gasket used on the Pig Launcher has been reviewed and a different type of gasket is now in use; (f) Vopak employees and contractors have attended refresher training conducted by the SPC to ensure that they are up to date with emergency procedures the BLB ; and (g) Commissioned an expert to determine the effect of pressure surges (Surge Study), in relation to the Main Loading Arm whilst vessels are discharging. 30. Vopak has co-operated fully with SPC over the Incident and has provided copies of all maintenance and testing records for the relevant equipment. 31. The Vopak costs of the clean-up, investigation and changes to procedures is at least $30,000. 32. Vopak personnel have spent over 100 hours in time carrying out training, reviewing the incident and implementing procedures to further reduce the risk of another incident. 33. Vopak understands that it will be expected to pay the costs associated with this Prosecution. C. THE DISPUTED ISSUE OF THE CAUSE OF THE GASKET BLOWOUT 17 It is important at the outset to appreciate the nature of this disputed issue and the relevance of that issue to the charge, the subject of these proceedings, in the overall context of a hearing on sentence for an admitted offence. 18 The Defendant is charged with what is, in truth, a status offence. Its liability for that offence (which the plea of guilty admits) arises because of its status as an "appropriate person" in respect of the discharge that occurred from "a place on land in connection with a transfer operation". 19 It is an "appropriate person" by virtue of being the occupier of a place on land (see par (d) of the definition of "appropriate person") where that place is a "pipeline" (see par (d) of the definition of "place on land"). 20 It is apparent that the offence admitted by the Defendant depends upon the mere occurrence of the discharge, rather than upon the Defendant's involvement in the "cause" of the discharge (A separate liability from the status liability imposed upon an "appropriate person" is also imposed by s 27(1) of the Act upon "any other person whose act caused the discharge"). 21 In these circumstances, the question of the relevance of the "cause" of the discharge, the subject of the present charge (where "cause" is not an element of the offence) is not entirely clear. In this respect, it is to be noted that it is by no means unusual that in prosecutions for offences under s 8 or s 27 of the Act the cause of the discharge is never revealed. In the present case it is not in dispute that the "cause" of the discharge was the failure of the gasket in the flange cover to the pig launcher in the Defendant's pipeline. (It is this undisputed fact that establishes that the discharge occurred from a "place on land" (rather than from the "ship") "in connection with a transfer operation" and hence establishes the status liability of the Defendant as the "appropriate person in relation to a discharge from a place on land".) 22 But what has been doggedly in issue in these proceedings is the "cause" of the failure of that gasket. The Defendant has raised this issue because it has asserted that the failure of the gasket was caused by circumstances beyond its control, and more specifically, because it asserts that it was caused by a pressure surge created in the pipeline by the manner in which the "Team Neptun" crew pumped the petroleum from the ship's holds into the Defendant's receiving pipeline. The relevance of this issue so raised by the Defendant (but disputed by the Prosecutor) is that if it is established that the gasket failure was caused by the ship's pumping action creating a pressure surge in the pipeline, the Defendant says that that fact so significantly mitigates its responsibility for the admitted offence as to justify the Court exercising in favour of the Defendant the discretion conferred by the Crimes (Sentencing Procedure) Act 1999, s 10 by dismissing the charge. 23 Alternatively, if that discretion is not so favourably exercised, the Defendant relies upon that mitigating factor as justifying a much lighter penalty than might otherwise be imposed. 24 The Prosecutor has disputed the issue sought to be raised by the Defendant, by adducing competing expert evidence in reply to the expert evidence called by the Defendant, disputing the Defendant's case that the cause of the gasket failure was the ship's pumping action or inaction creating a pressure surge in the Defendant's pipeline. 25 Additionally, the Prosecutor has sought to establish that there are more probable causes of the gasket failure than the cause of a pressure surge created by the ship's pumping action (namely the fact that the failed gasket had been previously used contrary to the manufacturer's recommendations and warnings and recognised industry practice) and the fact that the bolts on the flanges clamping the gasket had not been tensioned by employing the conventional industry equipment, namely a torque spanner). 26 However, in adducing this evidence of more probable causes of the gasket failure than the cause asserted by the Defendant, the Prosecutor has not sought to establish a case of aggravation of the Defendant's liability. 27 The final and discrete aspect of the Prosecutor's case disputing the issue sought to be raised by the Defendant in mitigation is one that assumes that the Defendant can successfully establish that a pressure surge caused the gasket failure. This is its reliance upon the provisions of Australian Standard AS 4041 - 1998 "Pressure Piping" requiring that pipelines (such as the Defendant's pipeline) be designed "to withstand the impacting forces caused by external or internal conditions, including hydraulic, shock, pressure surges and water hammer". In relying upon this Australian Standard, the Prosecutor submits that the Defendant cannot avoid responsibility for the gasket failure because its pipeline is expected to be able to withstand pressure surges of the type that it alleges the ship's pumping action created in the present case. 28 As I have earlier held, it is for the Defendant to prove on the balance of probabilities the factual issue that it has raised in mitigation. In disputing the issue and seeking to raise a case to the contrary, the Prosecutor carries an evidential, but not the legal burden on that issue. In particular, it is not the Prosecutor's duty to negative beyond reasonable doubt the issue raised by the Defendant (in the manner that it is incumbent upon a prosecutor to prove guilt beyond reasonable doubt by negativing all manner of exculpation raised in proceedings: see He Kaw Teh v The Queen (1985) 157 CLR 523). 29 Ultimately, if the Defendant fails to establish the issue on the balance of probabilities, the result will be that the cause of the gasket failure will simply not be proved, but as I have earlier noted, this gap or lack of proof will not affect either the Defendant's admitted liability for the offence or the appropriate sentence to be imposed for that admitted offence, including the undisputed fact that the discharge occurred because of the gasket failure. Nor will that result (to the extent that it is not known how and why the known cause of the discharge occurred) be an unusual feature of prosecution for an offence against s 8 or s 27 of the Act where the full extent of relevant causation is not often known. 30 It is against the foregoing legal matrices that I come to consider the evidence relevant to the disputed issue of how and why the relevant gasket failed. 31 In considering the overall evidence, it is instructive to see whether and how the issue first came to be raised by the Defendant before the present proceedings were commenced, and following that commencement (on 10 March 2005) how it was raised and presented in the evidence. 32 The Defendant first raised the issue (albeit far less directly than in its presented evidence) in its third written communication dated 30 September 2003 to Sydney Ports Corporation as part of its investigation into the pollution incident. The communication (Exhibit 7) was in the following terms; Attention: Jim Pullin (Sydney Ports Corporation) Location Bulk Liquid Berth Date 30th September 2003 Re: Unleaded Gasoline Spillage at Bulk Liquid Berth 24/9/2003 At a post incident meeting brief this morning attended by you and Vopak personnel, the following reports were tabled, and recommendations were made. Just prior to the incident 2 operators were stationed at the berth George Cifranic and Graham Myer, who gave the following details of the events. At 1230 hours on the 24th September 2003 George and Graham were standing at the door of the operators shelter at the berth when they heard the ships pumps decrease in sound, which indicates the ship discharge pump rate is falling. George went to the Vopak loading arm and noticed the pressure on the pressure gauge located on the loading arm had fallen, so he contacted the ship via the 2-way radio inquiring for the reason. After a very short period of time 30 secs to a minute, Graham said there was a loud bang similar to a water hammer and turned to look at the marine loading arm to see fuel spraying from the pig sender. The ship was contacted immediately and told to stop pumping, also Graham went to the isolation valve below the pig sender and closed the valve to limit the spillage. Graham then radioed to the terminal asking Paul Blazek (Leading Hand) to close the motorised valve on the loading arm, to prevent any flow back from the ship, therefore isolating the pig sender and stopping the flow. I contacted the ship (Team Neptun) yesterday via the shipping agents and asked them to confirm the reason for the stoppage in flow from the ship during the discharge and the subsequent restarting of pumping and they denied any involvement at all. It is unfortunate the above did not come to light before today, as Graham and George left the wharf half an hour after the incident occurred and were not interviewed until today. Certain measures ie. Operations notice and change in procedure to fit new gaskets to the pig sender were taken immediately after the incident, to prevent a re-occurrence and other measures were discussed today and will be implemented in the near future. I have listed the recommended changes below and noted status: 1. Operations notice was DOC NO NOP03021 issued 26/09/2003. Completed 2. Procedure changed requiring gaskets to be changed on each ship completed on 26/09/2003. To be presented at Operations Meeting Wednesday 1st October. Completed 3. Installation of pressure recorder to be installed on the Connex Arm to record changes in pressure, to be investigated immediately. Quotation received. 4. Quarterly maintenance on pig sender flange surfaces and bolts to be set up in Mainpac to ensure frequent checks are carried out by maintenance personnel. Pig sender serviced by Trinor on 1/10/2003 and work requests added to Mainpac for quarterly checks on flange faces and bolts. 5. Review of gaskets being used on Connex Arm and pig sender being reviewed as asbestos type gaskets (Tesnit Solvenit) are the better types and are being phased out. The gasket used during the spillage on the 24th was a Klinger Sil which is being trialled as a replacement gasket for the Tesnet Solvnit. I will be contacting other users of gaskets in similar locations to see what they use. Until this review is completed Tesnit Solvenit gaskets will be used in all critical flanges. Review is currently under way by Vopak Engineering Manager Eric Strautins. 6. Refresher training of operating personnel at the BLB. Vopak to discuss with Jim Pullin 7. Installation of 2 foam extinguishers at the head of the BLB wharf to use in case of minor spillage's or fuel accumulating in the pit. Action Jim Pullin 8. Investigate the possibility of installing voice recorders on the two-way radios, as this would have enabled the review of conversation between the Team Neptun and the shore prior to the spillage during the discharge. BTW communications have been contacted and are preparing a quotation. Brian Williamson Site B Terminal Manager 33 Prior to that communication being sent to Mr Pullin, there had been two earlier written Incident Reports provided by Mr Williamson to Mr Pullin, following the latter's request made a few hours after the pollution incident that both the ship's Master and the Defendant "prepare a preliminary report on the cause of the spill" 34 Mr Pullin was employed by Sydney Ports Corporation as Manager of the Bulk Liquids Berth at Port Botany. He attended the scene of the incident a few minutes after the spill had occurred. He made certain observations of the aftermath of the spill and interviewed the ship's Master and Mr Williamson, the Defendant's Site B Terminal Manager. After receiving the Master's written report about one hour after requesting it, Mr Pullin spoke on the telephone to Mr Williamson when he read aloud the Master's report, in response to which, according to par 22 of Mr Pullin's affidavit, Mr Williamson said words to the effect: "That seems about right, I don't disagree with any of that". 35 In the first of Mr Williamson's written Incident Reports dated 24 September 2003 (Exhibit 5), Mr Williamson stated the following: Attention: Jim Pullin (Sydney Ports Corporation) Location Bulk Liquid Berth Date 24th September 2003 Re: Unleaded Gasoline Spillage at Bulk Liquid Berth The incident occurred at 1230 on the 24th September 2003 when a gasket on top of the pig launcher on the Site B line at the base of the Marine Loading Arm gave way spraying approximately 200 litres of gasoline onto the berth and against the side of the Team Neptun. The majority of the gasoline was contained within the confinement of the concrete bunded area of the berth, but a small amount sprayed onto the side of the ship and landed in the water. After the gasket on top of the pig launcher flange was replaced and pressure tested to 650 kpa (with no leaks), the BLB was washed down with water and pumped into a slops tank. Permission was given by Sydney Ports to recommence the discharge from the Team Neptun at 1340 hours. I, accompanied by the Port Officer went to the Chief Officers office on the ship and resigned the ship to shore check list and the discharge was recommenced at 1400 hours. The gasket on top of the pig launcher that gave way was inspected by the operators before the start of the discharge and found to be in good order, and the Marine Loading Arm including the pig launcher were pressure tested to a pressure of 650 kpa with no leaks from the flange. This is the normal practice after connecting the loading arm to the ship and repeat checks by the operators are made (every 15 minutes) during the ship discharge, as the operators are required to complete a wharf shipping log. As a preventative measure, the shipping procedures will be changed immediately, that requires the gaskets on the pig launcher and the Marine Loading Arm connection to the ship to be replaced every ship, and a Operations Notice will be raised, alerting the operators to the change in procedures. Regards Brian Williamson Site B Terminal Manager 36 The evidence does not reveal what, if any, action was taken by Sydney Ports Corporation, in respect of the three Incident Reports it had received from Mr Williamson on behalf of the Defendant, before the present proceedings were commenced by summons filed on 10 March 2005. There is nothing in the evidence to indicate any further investigation of the ship the "Team Neptun" which left Port Botany the day after the pollution incident after completing the transfer operation and after the Master had provided his report on the incident to Mr Pullin. It may readily be inferred that that report was accepted by Mr Pullin, particularly after he had obtained Mr Williamson's acceptance of it in his telephone conversation. Although Mr Williamson's third Incident Report had raised questions as to the ship's pumping action at the time of the pollution incident, his Incident Report records the denial by the ship's agent of any involvement by the ship in the incident. Significantly "no letter of protest" was lodged by the Defendant with the ship's Agent (which would normally occur if a claim against the ship was contemplated). What is significant in the Defendant's case at the sentencing hearing is that it is asserting fault on the part of the ship two years after the incident where that fault, if established, probably would involve an offence separately committed by the ship in circumstances where the investigations into the incident have long since been concluded. 37 On 12 May 2005, the Defendant entered a plea of guilty when the following directions were given: 1. Defendant to serve a draft Statement of Facts by 26 May 2005. 2. Defendant to respond to Draft Statement of Facts by 16 June 2005. 3. Unless parties settle Draft Statement so as to produce an Agreed Statement of Facts, the following directions apply to the filing of evidence - (i) Defendant to file and serve any affidavit evidence by 30 June 2005. (ii) Prosecutor to file and serve any affidavit evidence in reply by 4pm 14 July 2005 (iii) Statement of Agreed and Disputed Facts to be filed by 28 July 2005 4. Direct the parties to approach the Registrar to obtain a hearing date after 28 July 2005 on basis of parties' estimate of 1 day hearing. 38 Thereafter, the parties obtained a hearing date for 16 August 2005. 39 On 20 July 2005, further directions were given for the filing by the Prosecutor of evidence in reply on the basis that the Defendant had then filed all of its evidence. (That evidence comprised five affidavits (all sworn in July 2005), including the affidavit of Christopher Flannery, a consultant mechanical engineer with 30 years specialisation in the chemical and petrochemical industries.) Further directions were also given for the filing of a Statement of Agreed and/or disputed facts. 40 On that hearing date, it became apparent that the case was not ready for trial. This was principally because of the unavailability of one of the Prosecution Witnesses, Mr Dennis Petersen, a consultant marine engineer, whose affidavit principally in response to Mr Flannery's affidavit, had been filed by the Prosecutor. Since Mr Petersen was required by the Defendant for cross-examination and he was unlikely to be available for an extended period, the Prosecutor obtained the Court's leave (without objection from the Defendant) to obtain the evidence of another Marine Engineer, Mr Burge, who had been asked to review and comment on Mr Petersen's affidavit. 41 At the adjourned hearing, the parties' legal representatives informed the Court that they had been unable to agree upon a Statement of Facts, although they had conscientiously attempted to produce an agreed statement. 42 The result of the absence of an agreed Statement was the tendering of multiple affidavits, all sworn in 2005. However, only three deponents (the competing experts (Mr Flannery and Mr Burge) and Mr Williamson) were cross-examined. 43 The issue of the ship "Team Neptun" creating the pressure surge in the Defendant's pipeline causing the failure of the gasket clamped between the flanges in the pig launcher cover to the Defendant's pipeline is directly asserted by Mr Williamson in his affidavit when he says the following at pars 16 and 17: In my opinion, this action by the ship created the surge in pressure known as the hammer effect. In my opinion, the Incident was caused by this pressure surge (or hammer effect) which caused the flange gasket, being the weakest part of the pipeline, to fail between 2 bolts. 44 Mr Williamson's affidavit makes it clear that he formed these opinions as a result of his contemporaneous investigations into the incident, especially his conversation with Mr George Cifranic, one of the Defendant's two contract employees in attendance at the Bulk Liquids Berth on the day of the pollution incident. 45 There is nothing in Mr Williamson's evidence to suggest that his contemporaneous investigations into the pollution incident revealed anything more than what he had asserted (far less emphatically and directly) in his third written communication to Mr Pullin of Sydney Ports Corporation (the contents of which communication have been fully set forth earlier in these reasons). 46 Mr Williamson, in giving these opinions, is not presented as an expert witness. He has had some 16 years experience working for the Defendant and its predecessor at the Bulk Liquids Terminal at Port Botany, holding successively various senior positions of Operations Coordinator, Terminal Superintendent and Terminal Manager. 47 Furthermore, Mr Williamson's non-expert opinions on the cause of the gasket failure depend upon what he had been informed of the events surrounding the pollution incident by Mr Cifranic and Mr Graham Meyer, two contract employees of the Defendant, who were stationed at the wharf when the gasket failed and the discharge occurred. (Both these employees swore an affidavit in these proceedings.) 48 Before examining the sworn evidence of Mr Cifranic and Mr Meyer, it is important to note the dependence upon Mr Williamson's view of the facts surrounding the pollution incident, of the expert opinions proffered by Mr Flannery, as is revealed in the following extracts (pars 9 and 10) of his affidavit, sworn 14 July 2005: - 9. I have reviewed a statement of facts about the Incident dated 21 April 2005, which states at par 4 that at about 12.30 hours on 24 September 2003, within a period of approximately 30 seconds, the ship ceased and recommenced pumping at full pressure. Normally the ship would recommence pumping incrementally over a period of time after any stoppage. 10. I have assessed the effect that the actions of the ship as set out in paragraph 9 are likely to have on the pipeline. My report dated 6 July 2005 is annexed and marked A 49 The reference in Mr Flannery's affidavit to the statement of facts (from which he recites par 4) is apparently a reference to a version of the facts that the Defendant had proffered to the Prosecutor in accordance with the Court's Directions relating to a Statement of Agreed Facts (with which version the Prosecutor declined to agree). 50 It is apparent that the relevant opinions expressed by both Mr Williamson (as a non-expert) and Mr Flannery (as an expert) are essentially premised upon the fact that within a period of approximately 30 seconds, the "Team Neptun" both ceased to pump petroleum product from the Ship's tanks (four tanks were being concurrently pumped) into the Defendant's pipeline and recommenced pumping at full pressure. It is also clear that the premised fact was based upon what Mr Williamson had been informed by two contract employees, Mr Cifranic and Mr Meyer, who were stationed on the wharf when the gasket failed and the discharge occurred, when he questioned them a few days after the occurrence of the discharge (as he records in his third Incident Report given to Mr Pullin). 51 In his affidavit sworn on 13 July 2005, Mr Cifranic gives the following evidence of his relevant observations at the scene of the pollution incident: 5. On 24 September 2003 I was on duty from 0600 hours until 1300 hours with my work partner, Graham Meyer. 6. I recall that when I commenced duties it was a nice clear early Spring day and the ship Team Neptun ( Ship ) was already connected and discharging unleaded petroleum ( ULP ) to the Vopak Site B Terminal ( Terminal ). 7. My duties were to monitor the pressure at the base of the marine loading arm (known as the cluster), take samples of ULP and maintain radio contact with the Ship, the Terminal control leading hand operator and the Sydney Ports Corporation office. 8. I recall that during my shift everything was running smoothly with not much flow fluctuation and no ULP leaks. 9. At approximately 1230 hours, I came out of my bunker and checked the pressure gauge. 10. I noticed that there was little pressure, indicating that there was no flow from the Ship. I had received no notice from the Ship about the reduction in pressure. 11. I immediately made radio contact with the Ship and made enquiries as to what was happening. 12. The response from the person onboard the Ship over the radio was words to the effect of changing tank or changing pump . 13. I then turned to observe the pressure gauge and observed a zero pressure reading. 14. I then heard a loud bang or hammer like noise emanating from the Ship's deck. 15. I then observed that ULP leak appeared, which began spraying horizontally at the level of my head and in the direction of the Ship. The Ship was approximately 9 metres from the pig launcher. 16. I immediately called the Ship over the radio and said stop pumping, stop pumping, stop pumping . 17. I observed that the Ship stopped pumping and the leak stopped within 30-60 seconds. 52 In his affidavit sworn on 13 July 2005, Mr Meyer gives the following evidence of his relevant observations at the scene of the pollution incident: 3. On 24 September 2003 I was on duty fro 0600 hours with my work partner, George Cifranic. 4. At approximately 1230 hours on 24 September 2003 I was in the staff shelter adjacent to and 15 metres from the unloading ship Team Neptun ( Ship ), which was unloading unleaded petroleum ( ULP ) to the Vopak Site B Terminal ( Terminal ) and could not see the Ship. 5. I heard a loud bang and turned the corner of the shelter to see fuel spraying from the pig sender (launcher). 6. I waved at the Ship's crew to stop pumping. They responded and ceased pumping and I then went below the isolation valve to the shore side of the pig sender and closed it. 53 It is apparent that there are significant differences between Mr Williamson's contemporaneous record of what he had been informed were the relevant observations of the two contract employees concerning the pollution incident and the contents of the two affidavits (sworn nearly two years after the occurrence of the pollution incident). But most significantly of all, there is nothing in the content of either the contemporaneous hearsay record or the testimonial record (two years after the event) that supports the premised fact that within a period of approximately 30 seconds the ship's pumps stopped and recommenced at full pressure (my emphasis). 54 Not only does the testimonial evidence of the Defendant's two contract employees not establish the factual premise upon which Mr Flannery's opinion is based, but there is other evidence that raises doubt as to (i) the existence of the loud "bang" noise deposed to by the Defendant's two contract employees; and (ii) the source and nature of that noise, if it existed. 55 As to the doubt as to the existence of the "bang" noise, there is the affidavit evidence of Robert Strelis, Port Officer employed by the Sydney Ports Corporation. He was in attendance at the Bulk Liquids Berth on the day of the pollution incident. His duty that day was between 0630 and 1830 hours, when he conducted random inspections of the bulk cargo transfers occurring at the Berth. In his affidavit sworn 3 March 2005 in par 5 he makes the following relevant observation: I had just boarded the ship Team Neptun and was standing 2 metres from the gangway speaking to 2 crew members of the Team Neptun and signing the ship's Register. I turned due to the sound of increased noise from the ship's pumps. Suddenly there was unleaded petrol spraying under great pressure from the pig sender unit of Vopak's Marine Loading Arm, onto the side of the ship Team Neptun , into the water and onto the Bulk Liquids Berth wharf. I immediately told the crew to stop pumping and signalled to the cargo room on the Bulk Liquids Berth to stop pumping. 56 In his affidavit in reply sworn 1 September 2005 he states the following: 1. I refer to my affidavit sworn on 3 March 2005 and in particular refer to paragraph 5 thereof and say whilst standing on the deck of the ship Team Neptun I heard an increased noise from the ship's pumps. I turned due to the increased noise of the pumps which was like a whirring sound like an increase in the pumps. It was steady but swift increase in the sound of the ship's pumps. 2. I do not recall a bang or hammer sound as described by Mr Cifranic in paragraph 14 of his affidavit of 13 July 2005. Had I heard a bang or hammer sound I would have included that in my report which I wrote on the same day as this event occurred. The only noise that I heard was the increased whirring sound from the ship's pumps.

(I interpose that Mr Strelis made a contemporaneous note of his observations on the pollution incident, a copy of which is annexed to his earlier affidavit and the note is consistent with what he deposes to in that affidavit.)

Mr Peter Burge, Consultant Marine Engineer, in his written Report in reply to Mr Flannery's evidence, after carefully reviewing the affidavit evidence given by Mr Cifranic, Mr Meyer and Mr Strelis, proffers the following opinions -

(i) the " bang " noise deposed to by the Defendant's two contract employees was " consistent with the noise that would be produced when the section of the gasket separated under pressure and broke away from the cover flange of the pig launcher" (par 26);

(ii) if the noise had originated from the ship's deck, Mr Strelis who was standing on the deck was far more likely to have been aware of it than were Mr Cifranic and Mr Meyer, who were on the wharf; (par 26)

(iii) the video of the incident captured by the Sydney Port Corporation's surveillance camera installed at the Bulk Liquids Berth showed " an initial wild, but steady, spray pattern of liquid emanating from the pig launcher cover that abates slightly then resumes its previous pattern, then stopping temporarily before it sprays once more and then finally stops altogether "; (par 37)

(iv) " the steadily increasing whirring noise described by Mr Strelis and the flow fluctuations shown on the video are consistent with the ship's pumps losing and regaining suction of the liquid in the tanks from which they were draining as the liquid levels in those tanks stopped to a point where continuous suction was no longer possible " ; (par 29)

(v) Mr Cifranic's observation of the gasket blowout occurring immediately after the time that he observed that there was zero pressure in the pipeline " strongly indicates that the blowout occurred when the cargo pumps had regained suction and had resumed pumping at a swift but steady rate of acceleration as observed by Mr Strelis ". " There is no indication of an unduly sudden or unusually rapid stopping of the flow of liquid and no indication that as of the ship's valves, or more importantly, that any of the Vopak valves downstream the Marine Loading Arm had been closed at any time during the liquid transfer operation. Flow fluctuations caused by cargo pumps losing and regaining suction are normal and to be expected during any such liquid cargo transfer operation and the pipelines have been, or ought to have been, designed to safely cope with these normal fluctuations. As there were no valves reported to have been shut in the system, I am of the opinion that these flow fluctuations would not result in pressures that are significantly higher than the set pumping pressure " ( par 35 ). 57 For those reasons (which are amplified in Mr Burge's detailed Report), Mr Burge expresses the opinion at par 28 of his Report that "the evidence does not support the opinions of Mr Williamson and Mr Flannery that the ship's pumps stopped suddenly and then rapidly resumed full pumping pressure". 58 In my opinion, Mr Burge's careful and detailed review of the factual evidence of what was observed at the scene of the pollution incident on 24 September 2003, including his expert opinions, interpreting those observations from the vantage point of considerable marine engineering experience, demonstrates the obvious inadequacy of the factual foundation for Mr Flannery's opinion as expressed in the following extract from p 6 of his written report under the heading "Possible causes of Gasket Failure": The abnormal pressures caused by stopping and suddenly restarting the ship's transfer pump could be much higher than the leak test pressure (If(sic) fact the system design pressure could be exceeded). These abnormal pressures could cause excessive stretching of flange bolting. The risk of a gasket blowing out under these conditions is high. 59 In short, the demonstrable flaw in Mr Flannery's opinion lies in his entire acceptance of the unverified major premise that "within a period of approximately 30 seconds, the ship ceased and recommenced pumping at full pressure". 60 The failure of the Defendant's evidence to substantiate the factual premise upon which Mr Flannery's opinion as to the cause of the gasket failure is based, essentially and necessarily undermines that opinion. The question arises as to whether there is any residual value in his opinion. (As will appear later in his Report in Reply to Mr Burge, Mr Flannery expresses his opinion quite differently despite that opinion being said to be a reiteration of his original opinion). At its highest, I consider that his evidence is no more than a theoretical dissertation on the possible causes of the failure of the gasket in the Defendant's pipeline. Indeed (even putting aside the failure to verify the major premise) the stated aim of Mr Flannery's Report was: This report summarises design information for the 300 mm pipeline from the Port Botany Bulk Liquids Berth to Vopak Site B, and considers possible causes of the gasket failure that occurred on 24 September 2003 (p 1). 61 Thereafter, the Report contains a physical description of the pipeline (its length is 1 kilometre), including its constituent materials, a discussion of "normal operating conditions" and of "abnormal operating conditions". The discussion on "Abnormal Operating Conditions" commences with the following statement: Pressure surges in long pipelines may greatly exceed the normal operating pressure if valves are closed or opened quickly, or if the transfer pump starts or stops suddenly. This phenomenon is called pressure surging or water hammer . The magnitude of these pressure surges is dependent on the normal pipeline velocity, and the speed with which valves are opened or closed. This behaviour is discussed in standard texts. 62 Thereafter, there is a very brief discussion of the following phenomena -

(ii) Effect of Transfer Pump Starting too quickly; and

(iii) Effect of transfer Pump Stopping too Quickly. 63 Next, there is a brief comment on the Defendant's procedure for the ship's pumping activity to observe (starting the pump at a low speed so that pressure does not initially exceed 400 kPA, slowly building up speed to the nominated transfer rate or until the pressure reaches 800kPA). 64 The final section of Mr Flannery's Report is headed "Possible causes of Gasket Failure" and contains the opinion that I have earlier recited. 65 Unfortunately, it was the theoretical nature of Mr Flannery's opinions which induced a forensic enquiry at the hearing which proved to be as unhelpful as it was unnecessary. I am here referring to his stated opinions as to the effects of rapid valve closure creating dynamic surge pressures in the pipeline (as high as 3,500 kPA for gasoline transfers and higher for diesel transfers) being in excess of the pipeline design pressure of 1960 kPA. 66 It was this entirely theoretical data that led to the following evidence in the course of the cross-examination of Mr Flannery: Q. And you've said that you can have maximum surges, water hammers, or hydraulic shock up to 4,500 kilopascals in this line, haven't you? A. I said they can be as large as that. Q. They can be as large as that. And this line is meant to cope with them in accordance with the standard? A. What this standard requires is that the surges be assessed and you cope with the surge that you have been, that has been assessed. What I believe in this case is that a detailed surge study has been carried out and that it determined that the maximum surges are not excess of 2,000 Kpa. Q. So you have said that the surges can be as high as 4,500? A. That's right. Q. Is that correct or not? A. That's correct. Q. Right. Therefore this line is meant to cope with that sort of surge, isn't it? A. It's meant to cope, it's required to cope with the maximum surge you can get in operation. Q. And the maximum surge you can get in operation is up to 4,500? A If a detailed surge study has been undertaken and that surge study concludes that the maximum surges are less than that, because of the controls that are implemented in the system, then you design for the lower figure. Q. Sir, is there such a surge study? A. I know it's been done on other transfer lines, and I suspect it has been done here. Q. Has one been done or not? Do you know, Yes, or, No? A. I believe one has been done. Q. How do you believe that? A. I've seen a copy of it. 67 After Prosecuting Counsel called for the Surge Study (when there was no immediate production of it) the cross-examination continued: HILL: Q. So you say you have seen a surge study which shows lesser surges than you predict? A. Yes, because of controls that have been implemented. Q. Because of controls that have been put in there? A. Controls on valves in particular. Q. So that this line, this pipeline, has a facility which will bring the surges back to a certain level. Is that right? A. No. It will prevent vales closing too quickly, it will prevent surges getting, becoming, I think in excess of 2,000 kPa. Q. So this line has a study which has said that if we put particular things in it, surges in this line will not be greater than 2,000 kilopascals. Is that right? A. Yes. Q. So in other words, this line has an ability to stop a surge from getting above 2,000 kilopascals? A. Yes. Q. So when you put forward this proposition of yours, that surges can be 4,500 and 3,200, that's not correct. A. Yes, it is. The surge that is generated can be that high without the controls that are built into the pipeline. Q. But the controls are built into the pipeline, aren't they? A. Yes. 68 As a result of this aspect of Mr Flannery's evidence and in view of the Prosecutor's desire to examine the Surge Study (which could not be made available at the hearing), the hearing had to be adjourned. By the time the hearing resumed, the Defendant had filed a further affidavit from Mr Flannery annexing a copy of the draft Surge Study dated June 2005, prepared for the Defendant by Sinclair Knight Merz, Consulting Engineers. In his affidavit, Mr Flannery identified that document as the Surge Study that he had referred to in the course of his evidence under cross-examination. 69 Mr Flannery states that in preparing his affidavit evidence and his reports presented in evidence in these proceedings "he had not relied upon" the draft Surge Study. His affidavit includes the following paragraphs: The Preliminary Draft Surge Study is a complex engineering report, which requires Vopak to consider recommendations and carry out further work before implementing them (on page 16). The Preliminary Draft Surge Study confirms that surges can occur and includes a recommendation (on page 16) to control them: Standard Operating Procedures for normal start-up and shut down of ship's unloading pumps be included with the requirement for a steady ramp up or ramp down over a minimum 30 second period. 70 At the resumed hearing, Mr Flannery's further affidavit was received into evidence as was Mr Burge's further affidavit sworn 7 November 2005, but neither deponent was further cross-examined. 71 Mr Burge's further affidavit annexes a Report which states (par 3) that he was asked to review the Surge Study and comment on its relevance to the matter before the Court and in particular to determine whether it may affect the opinions that he had previously given in his evidence. 72 In par 4 of his Report, Mr Burge states the following: Although Mr Flannery has not relied upon this report, I consider that it is relevant to the matter before the Court as it analyses a situation that very closely resembles the circumstances that were associated with the spillage of unleaded petrol from the Vopak plant at the Bulk Liquids berth, Port Botany, when cargo was being discharged from the ship, Team Neptun. 73 Mr Burge's affidavit summarises the contents of the Surge Study, noting that it had employed a specialised computer program called "Hytran (version 3.3.9) hydraulic surge analysis software" to determine the potential establishment, magnitude and location of any surges that might occur in the pipeline under specific conditions. 74 Mr Burge notes in par 11 of his Report that the Surge Study models four different scenarios, using gasoline as the modelling medium, including the scenario of where the ship's cargo discharge pump is (a) stopped over a 30 second period; and (b) started over a 30 second period. 75 After reviewing the affidavit evidence given in the proceedings of relevant observations made by witnesses of the pollution incident, Mr Burge concludes that "it is reasonable to assume" that the most similar of the four scenarios modelled in the Surge Study was that where the ship's cargo discharge pump is stopped over a period of 30 seconds and is started over a 30 second period. 76 Mr Burge notes that the Surge Study records that highest pressure created by 30 second period for pump start-up is 970 kPA and that the highest pressure created by the 30 second period for pump shut-down is 736 kPA. These pressure levels are compared with the maximum allowable working pressure of 1960 kPA for the flanges in the Defendant's pipeline. 77 Mr Burge's Report contains the following conclusions: There is nothing in the report that leads me to alter my original opinion ie (a) The spillage was not the result of any unusual action by the ship. (b) The Vopak pipeline ought to have been able to cope with the wide range pressure fluctuations encountered during normal operations. 78 In the course of his final address, Prosecuting Counsel, relying upon the evidence that fell from Mr Flannery in the course of his cross-examination concerning the Surge Study (which I have earlier recited from the Transcript), launched a very significant and sustained attack upon Mr Flannery's credit as an expert witness. In particular, much of Mr Flannery's evidence was claimed to be "misleading" because, according to Prosecuting Counsel's submission - The truth is, surges within this pipeline no matter how caused, are limited by various means to less than 2000 kPA [p 13 of the Prosecutor's outline of submissions] This statement is quite misleading when one considers that he has said surges or water hammer in this pipeline are limited to 2000 kPA [p 14 of the Prosecutor's written outline of submissions] 79 At the conclusion of the final addresses, I informed the parties that I felt uncomfortable and uncertain with the state and manner in which the expert evidence concerning the surge study had been left. I invited the parties to consider whether the Court should have the benefit of some additional expert evidence (preferably by Joint Statement) on the question whether the Defendant's pipeline had inbuilt mechanisms to attenuate pressure surges from whatever source to a pressure not exceeding 2000kPa. (Mr Flannery, under cross-examination appeared to have affirmed that proposition in the testimony I have recited.) 80 The following week, the parties appeared and agreed in principle to some additional expert evidence being given to assist the Court in properly understanding the expert evidence. On that occasion, Defence Counsel handed up a draft list of additional questions to be jointly addressed by the experts. Prosecuting Counsel did not fully concur with the draft and I suggested that I would consider the draft an dif possible refine and simplify the question to be put to the experts. This led to my request of 7 December 2005 that the parties consider whether they were willing to consider agreeing to a fact that I had drafted in a fashion which required completion by the parties (with the benefit of expert advice). 81 The parties agreed to adopt that course and subsequently they submitted as an agreed fact the following statement: - At the time of the admitted offence there was not installed in the Defendant's pipeline system a control mechanism or device that was capable of attenuating the transmission of pressure emanating from an external source so that the transmitted pressure experienced in the pipeline would not exceed the relevant design or test pressure for that pipeline. 82 In the supplementary written submissions that Prosecuting Counsel and Defence Counsel filed in respect of that agreed fact, Defence Counsel submitted that the agreed fact had entirely eliminated the basis for Prosecuting Counsel's attack on Mr Flannery's credit as an expert witness. 83 I accept this submission, but nonetheless it does not eliminate the entirely theoretical basis of Mr Flannery's opinions, or the difficulty that developed in his evidence, because of his inability or reluctance to recognise the need in the present case to differentiate between theoretical and practical considerations and I suspect that this reluctance to concentrate on practical considerations largely derived from Mr Flannery's lack of experience and of knowledge of the workings at the ship in a transfer operation. 84 In marked contrast to the theoretical basis of Mr Flannery's opinions , Mr Burge's opinions were founded upon very practical considerations. I have earlier referred to his detailed examination of the observable facts concerning the pollution incident (including his careful consideration of the affidavit evidence given by Mr Cifranic and Mr Meyer and Mr Strelis) leading him to the conclusion that the evidence did not support the Defendant's case and that within a period of 30 seconds the ship's pump stopped suddenly and then rapidly resumed full pumping pressures. I return now to consider other contents of his Report where he expresses the following reasons for his opinion that a "water hammer" or hydraulic "shock" did not take place at all: A ship such as Team Neptun and its component systems are part of a single, contiguous steel structure in which any concussion or shock impulse is felt throughout the entirety of the vessel. Hydraulic shock is a severe event and if it had occurred, a significant clang noise and shock impulse movement would have been very noticeable on the ship. This was not the case. The evidence does not show that any of the factors likely to create a water hammer or hydraulic shock were present. Nor does the evidence reveal any of the effects that would have been observed if a hydraulic shock pressure spike had occurred. Such effects are likely to have included the following: (a) A significant and obvious shock movement of the less constrained elements of the pipeline systems and fittings, in particular the relatively light structure of the Marine Loading Arm. (b) A noticeable shock effect of the concrete loading platform. (c) An initial expulsion of petrol vapour from the blown out gasket rather than the sudden but steady liquid petrol spray reported by the witnesses and shown in the surveillance video. 85 Again, I find that this practical reasoning in support of Mr Burge's opinion is both reasonable and convincing. 86 Unlike Mr Flannery, whose Report into "the possible causes of the gasket failure" simply did not address any possible causes (other than the cause based upon the unverified fact of pressure surge created by the ship's pumping action or inaction) Mr Burge's Report proceeds to consider other likely causes for the gasket failure. Drawing on the opinion that had been expressed by Mr Petersen in his affidavit (which had been prepared in response to his brief to consider all of the affidavit evidence filed in the proceedings and to provide his opinion "as to whether any actions taken by the vessel Team Neptun contributed to the subsequent failure of the Vopak pig launcher cover flange joint"), Mr Burge examines two other possible causes that had been identified by Mr Petersen, namely (i) incorrect bolt tightening of the pig launcher cover flanges; and (ii) repeated earlier usage of the gasket that failed. 87 Mr Burge cites a number of international publications (eg "Guidelines for Safe Seal Usage - Flanges and Gaskets" published in 1998 jointly by the Fluid Sealing Association (USA) and European Sealing Association and "Sealing Technology - Best Available Techniques for sealing technology….." published in 2005 by European Sealing Association). The second mentioned publication contains the following guidance relevant to both possible causes identified by Mr Petersen and Mr Burge: 5.4 Storage and handling of gaskets and gasket materials - ………..Never re-use a gasket, since it may have been modified dramatically under operating conditions and hence cannot guarantee the required level of sealing performance. Even if the gasket appears okay, it is not worth taking the risk. The cost of a new gasket is miniscule when compared with the cost of downtime caused by a leak or blow-out and the considerations of safety and environmental protection. Similarly bolts or studs may have been damaged due to corrosion, or may have lost ductility by being tightened past their yield point: if you cannot be sure - do not take the chance! Consequently, never re-use gaskets or fasteners. 5.5 Assembly procedures This section provides detailed guidance for the preparation, inspection and assembly of flanged joints. Sections 5.5.1 though to 5.5.6 address the preliminary issues and 5.5.7 provides a guide to the methods of tightening the fasteners. 5.5.7 Bolt/stud tightening system - ………….It is vitally important to control accurately the amount of torque applied to any particular flange arrangement, and hence always use a torque wrench or other controlled-tensioning device (recently calibrated) The sequence in which bolts or studs are tightened has a substantial bearing upon the distribution of the assembly pressure on the gasket. Improper bolting may move the flange out of parallel. A gasket will usually be able to compensate for a small amount of distortion of this type, but serious difficulties may be encountered if the flanges are substantially out of parallel. Consequently always torque nuts in a cross bolt tightening pattern. Always run the nuts or bolts down by hand initially. This gives an indication that the threads are satisfactory….etc. Now torque the joint using a minimum of 5 torquing passes, using a cross-bolting sequence for each pass (as shown). 88 Mr Burge's Report at pars 75-78 contains the following conclusions: · I agree with Mr Petersen that no action by the ship Team Neptun caused the spillage of Unleaded Petrol at the Bulk Liquids Berth on 24 September 2003. · The surveillance video recording taken at the Bulk Liquids Berth depicts a fluctuating and irregular flow of petrol from a damaged flange sealing joint at the pig launcher cover but not a high pressure spike that would be typical of a hydraulic shock situation and of sufficient magnitude to damage any of the elements in the pipeline. · The evidence strongly suggests that the pig launcher cover flange sealing joint had not been assembled in accordance with industry standards in that: (a) The gasket had been used on more than one occasion contrary to the industry and manufacturers' guidelines that state that such a gasket must not be re-used. (b) There is no evidence that the fastening bolts that secure the pig launcher flange cover were examined for wear, degradation and elongation prior to their re-use on 23 September 2003. (c) There is no evidence that the fastening bolts were tightened according to a sequential, cross bolt tightening pattern to an appropriate torque setting. (d) There is no evidence that Vopak staff were trained in procedures to effectively and safely seal the pig launcher cover flange. (e) Some of the evidence states that the pig launcher and other elements associated with the Marine Loading Arm were only tested to a pressure of 650 kPa which is significantly less than the normal discharge pressure of 800 kPa and less than the 700 kPa at which Vopak directed the ship to discharge its cargo. (f) Other contradictory evidence states that the pig launcher was tested to 800 kPa but according to Vopak's expert, this is the normal operating pressure. The Australian Standard directs that such pipelines ought to be pressure tested to 110% of their maximum allowable operating pressure. 800 kPa is less than 110% of the maximum allowable operating pressure. · I agree with Mr Petersen that the spillage of ULP was caused by an ineffective cover joint gasket seal on the pig launcher.

89 In his Report In Reply to Mr Burge's Report, Mr Flannery addresses Mr Burge's opinions concerning the re-use of the failed gasket in the flanged joint. Mr Flannery proffers the following contrary opinions: I agree that many gasket suppliers recommend that gaskets be replaced after each use. However once a flanged joint has been made, tested and found to be leak free at the test pressure it is unlikely to fail catastrophically at pressures below or equal to the test pressure. This is true whether a new or re-used gasket has been used. The gasket material may relax after the initial tensioning. This normally occurs in a fairly short time. This would normally result in a slow weep from the joint. This is normally corrected by re-tensioning of the flange bolts. This relaxation can occur with both new and re-used gaskets. (Refer page 32, Section 5.5.9 of the ESA publication No. 014/05.) The failure that occurred in this incident was much more than a slow weep from the joint. It was an example of drastic structural failure of the gasket. The tension in the flange bolting clamps the gasket firmly in the joint. Structural failure of the gasket cannot occur unless the pressure is high enough to stretch the bolts, so that the gasket is no longer effectively clamped in the joint. I believe that the drastic gasket failure that occurred in this incident is highly unlikely unless the joint was subject to a pressure much higher than the test pressure, and previous operating pressures. 90 In reply to Mr Burge's conclusions (that I have earlier recited) Mr Flannery's Report in reply states: My conclusions as attached to my affidavit of 14th July 2005 differ from that of Mr Burge. To reiterate, (i) The probability of a drastic gasket failure, as occurred in this incident is low, unless at some time during the unloading operation the pressure was much greater than the pressure at which the joint was tested, and operated (700 kPa). If the flange bolts were tensioned sequentially, and to the correct tension, the flange would operate without gasket failure up to the flange design pressure of 1960 kPa. If the flange bolting was not tensioned correctly it is more difficult to predict the failure pressure. However it is known that this flange operated without leakage at 700 kPa. In my opinion it is unlikely that a drastic structural gasket failure as occurred in this incident would occur unless there was an increase in pressure of at least 50%. (ii) Pressures well in excess of the specified unloading pressure of 700kPa could have been caused by the actions of persons controlling the ship pumps. Pressures much higher than 700kPa would have occurred if the ship pumps stopped, and were then restarted at the previous operating speed. 91 Although styled by Mr Flannery a "reiteration" of his original conclusions, it is apparent that the conclusions expressed in his Report in reply are quite different from his original conclusions. For example, there is nothing in his original Report opining on the pressure producing gasket failure "if the flange bolting was not tensioned correctly". In his original Report he opines that abnormal pressure caused by ship's pump stopping and suddenly restarting could exceed the design pressure of the pipeline (ie 1960 kPA). This estimate of the magnitude of such pressure is not repeated in his Report in reply ("pressure much higher than 700kPA"). 92 Under cross-examination, Mr Flannery's testimony that a gasket could be re-used on a number of occasions after its initial use "until it leaked" was unconvincing, because he also stated that his advice to a client would be to use a new gasket each time. 93 In further reply to Mr Burge's evidence concerning the Defendant's re-use of gaskets and the manner of assembling the pig launcher cover flanges and gasket, the Defendant adduced evidence from Mr Williamson and from Mr Perkins, an operator employed by the Defendant at its Port Botany plant. It is admitted in that evidence that before the occurrence of the pollution incident, the Defendant's standard procedure was to re-use gaskets where upon inspection by the operator the gasket was considered to be in a good condition (Williamson par 5). 94 Mr Perkins' affidavit elaborates on this by saying that the gasket would be inspected by Vopak operators and if found to be in a good condition and having a smooth surface it would be re-used. If the gasket was found to have a surface that was rough or worn, the Vopak operator would decide whether or not to re-use it. 95 Under cross-examination, Mr Williamson was unable to say how many times the failed gasket had been re-used. He said the worst case scenario was up to six times but it might be less - he simply did not know. No records were kept by the Defendant of when gaskets were changed. 96 In Mr Perkin's affidavit, he describes in some detail the manner in which the pig launcher flange is removed and reassembled after the pig has cleared the pipeline. The re-assembly is undertaken by two operators working together using a ratchet and spanner. 97 Mr Williamson stated that the operators who bolted the flange the last time prior to the gasket failure had in excess of 15 years experience carrying out flange assembly. 98 It is not without significance that the Defendant did not call evidence from the persons employed by the Defendant who had (i) reassembled the pig launcher cover flanges prior to the pollution incident; (ii) had carried out the leak test on the pipeline immediately before the "Team Neptun" commenced the transfer operation. Instead, the evidence concentrated on what would have been done as part of normal procedures. This is an intrinsically insecure foundation for finding facts as to the cause of the gasket failure. One significant factual matter admitted by Mr Williamson under cross-examination is that the leak test of the gasket that subsequently failed was conducted while the pipeline was under pressure of 650 kPA (which is less than the pre-set 700kPA operational pressure for the transfer operation involving the "Team Neptun" and hence was an obviously inadequate leak test). 99 Having regard to the totality of evidence, and to my decisive preference of Mr Burge's expert opinions over the competing opinions of Mr Flannery, the Defendant has not established on the balance of probabilities that the cause of the gasket failure was the creation by the ship's pumping action or inaction of a pressure surge greater than the operating pressure (700 kPA) that was applied during the transfer operation, in the course of which the pollution incident occurred. 100 As a matter of probabilities, I am far more persuaded by the Prosecution evidence that the more probable cause was the fact that that gasket had been re-used on an unspecified number of previous occasions before the occurrence of the pollution incident. 101 However, since I am not satisfied beyond reasonable doubt of this fact, the result for the purpose of sentence must be that the cause of the gasket failure has not been established. 102 It may be helpful at this point if I restate in summary fashion the reasons why I have not been persuaded on the balance of probabilities by the Defendant's case that the failure of the gasket was caused by a pressure surge created by the "Team Neptun's" pumping action or inaction in the course of the transfer operation pumping the unleaded petrol from four of the ship's tanks into the Defendant's pipeline.

(i) The Defendant's asserted fact that within a period of approximately 30 seconds, the ship's pumps stopped and recommenced pumping to full pressure is not supported by the Defence evidence (either the hearsay contemporaneous representation contained in Mr Williamson's Third Incident Report to Mr Pullin or the testimonial evidence of Mr Cifranic and Mr Meyer);

(ii) That hearsay representation also contains Mr Williamson's report of the denial of responsibility by the Shipping Agent for the " Team Neptun" ;

(iii) There is obvious and significant conflict between the contemporaneous representations and the testimonial evidence of the Defendant's two contract employees.

(iv) To the extent that the evidence of Mr Cifranic and Mr Meyer establishes any relevantly observed facts, the expert interpretation of those facts undertaken by Mr Burge in his Report is far more persuasive in negativing the creation of a pressure surge by the ship's pumping action as the cause of the gasket failure than is the evidence of Mr Cifranic and Mr Meyer in establishing that that was the cause of the gasket failure.

(v) To the extent that Mr Flannery's expert opinion is based upon the asserted factual premise of the ship's pumps, both suddenly stopping and suddenly restarting to full pressure - all within a period of approximately 30 seconds - that opinion necessarily falls with the failure of the Defendant to establish the factual premise.

(vi) To the extent that Mr Flannery's opinions as to the possible cause of the gasket failure are otherwise sustainable (ie without being based upon that factual premise) these opinions are far too theoretical to be of any real assistance in seeking to ascertain the cause of the gasket failure. Moreover, the opinions are hampered by Mr Flannery's obvious unfamiliarity with ship's pumping systems.

(vii) Far to be preferred to Mr Flannery's theoretical opinions are the competing expert opinions of Mr Burge, a very experienced Marine engineer, that there is no evidence of a pressure surge created by the ship's pumping action causing the gasket to fail and that there are more probable causes of that failure for which the Defendant is responsible (ie the repeated prior use of the gasket that failed and the manner in which the flange bolts were tightened). Mr Burge's opinions of the probable cause of the gasket failure are corroborated by the opinions of Mr Petersen, another very experienced marine engineer.

(viii) To the extent that Mr Flannery's further opinions (as stated in his Report in reply) are founded on the fact of the " catastrophic structural failure " of the gasket, those opinions are unconvincing inasmuch as they do not eliminate as a more probable and reasonable hypothesis for the gasket failure either the effects of the repeated use of the gasket or the manner in which the bolts to the flange were tightened.

(ix) Moreover, Mr Flannery's opinions postulate as a possible cause of the gasket failure a pressure surge of less pressure than the design operating pressure of 1960 kPA (in which event the cause of the gasket failure would be the failure to maintain the integrity of the pipeline to the design pressure, rather than the creation of a pressure surge below that pressure level). The alternative hypothesis advanced by Mr Flannery for the gasket failure is a pressure surge exceeding the design pressure level of 1960 kPA - but this hypothesis makes no attempt to evaluate the operation of the relief valves in the ship's pumping system or the results of the Surge Study, both of which negative the hypothesis of the creation by the ship's pumping action of a pressure surge exceeding the design pressure level of 1960 kPA. Ultimately, it would appear that Mr Flannery's opinion of the creation of a pressure surge higher than the design pressure level depends upon the establishment of the original factual premise of the ship's pumps suddenly stopping and suddenly recommencing to full pressure - all within a period of approximately 30 seconds. Thus, his later expressed opinion rises no higher than the original opinion which was entirely based upon that unverified factual premise, and for that reason was rejected. (x) Finally, Mr Flannery's opinions as to the cause of the gasket failure make no attempt to explain why the requirements of Australian Standard AS 4041 that piping be designed to withstand " impact forces caused by external or internal conditions, including hydraulic shock, pressure surges and water hammer " , should not be given prevailing weight. It was when he was faced with this requirement under cross-examination that Mr Flannery revealed his knowledge of the Surge Study (which revelation as we have already noted led to an unhelpful line of enquiry at the hearing). D. THE APPROPRIATE SENTENCE 103 The consequence of the Defendant's failure to establish that the gasket failure was caused by circumstances beyond its control and responsibility entirely subverts the foundation for its submission for the favourable exercise of the sentencing discretion conferred by s 10 of the Crimes (Sentencing Procedure) Act 1999. 104 To the extent that the Defence submission may be maintained, notwithstanding the Defendant's failure of proof on the cause of the gasket failure, I do not think that this is a case for the favourable exercise of the sentencing discretion. The admitted offence is obviously a very serious environmental offence for which a very significant maximum penalty is prescribed. 105 Moreover, the offence imposes liability independently of fault, on an owner/occupier of a pipeline located in a marine environment if a discharge of oil occurs from that pipeline in the course of a transfer operation. 106 In other words, the legislature has imposed a strict and onerous responsibility upon the owner/occupier of a pipeline situate in a marine environment which is utilised in the receipt of oil delivered from ships using the port facilities. The obvious object of the legislation is to afford the sensitive marine environment the maximum protection from the risk of oil pollution. 107 A discharge into State waters occurring from the pipeline may be the result of some physical failure in the pipeline (such as occurred in the present case where the gasket blew out from the pig launcher cover flanges). Another cause may be some operational failure, including human error etc. These results reflect obvious risks which the owner/occupier of the pipeline must be taken to be aware of, and in respect of which it must take precautionary preventative measures to avoid the realisation of such obvious risks. 108 Ensuring the maintenance of the operational integrity to the required design standard of the pipeline to receive oil pumped from the ship's tanks is an obvious precautionary and preventative measure for the owner/occupier of the pipeline to take to avoid the risk of physical failures occurring in the pipeline. There is nothing unusual or exceptional in the failure of a gasket or a joint in a steel pipeline. 109 The Defendant has failed in its evidence to blame the ship "Team Neptun" for the cause of the gasket failure. As I have earlier found, as a matter of probabilities, the cause of the gasket failure is more likely to have been the result of action or inaction on the part of the Defendant (eg its continued prior use of the failed gasket and its practice of not employing a torque wrench to tighten the bolts on the flanges clamping the failed gasket) than action or inaction by the ship's pumping the unleaded petrol into the Defendant's pipelines. 110 However, for the purpose of sentence, I am prepared to regard the cause of the failed gasket as not being known or established. (This approach can only operate in favour of the Defendant). 111 Although it is agreed that only 40 litres of the much greater amount of unleaded petrol that was discharged from the failed gasket in the Defendant's pipeline, actually entered the waters of Port Botany the particular circumstances of the commission of the admitted offence are properly to be regarded as serious, simply by virtue of the fact that a pipeline transferring oil fails in a marine environment, with the obvious risks that that failure entails. 112 Although the decision of the Court of Criminal Appeal in Thorneloe has affirmed that the sentencing discretion conferred by the Crimes (Sentencing Procedure) Act 1999, s 10 applies to the offence with which the present Defendant is charged, the Defendant's case for the favourable exercise of discretion is virtually unsupportable in the light of the Defendant's failure to establish its claim that the gasket failure was caused by the ship's pumping action or inaction creating a pressure surge in the Defendant's pipeline. 113 It may be accepted that the amount of unleaded petrol that entered the waters of Port Botany created a "comparatively minor pollution" to adopt the Chief Justice's description of the facts in Thorneloe (involving a discharge of up to 30 litres of gas oil) but unlike the facts in Thornleloe, the present Defendant is not a first offender and there are things that it could have done to avert the pollution event that occurred. 114 As to its environmental record, the Defendant, prior to the commission of the present offence had received two Penalty Infringement Notices in respect of minor pollution incidents - one in 2001 involving a minor on-shore leak from a transfer station and one in 2002 involving a spillage of 5 litres of diesel during a maintenance operation. 115 The Defendant has, subsequent to the commission of the present offence, received another Penalty Infringement Notice in respect of droplets of diesel leaking from the Marine Loading Arm down the side of the ship into the waters of Port Botany. 116 Having noted these prior pollution incidents, it must be said in fairness to the Defendant that they are only minor blemishes to an otherwise excellent environmental record and history of operating over the past 30 years at Port Botany as a bulk liquid storage facility where it has become the largest independent bulk liquid storage company in the world (being part of an international organisation managing 82 terminals in 28 countries). The Defendant's pipeline at Port Botany has, during the past 7 years, successfully handled the transfer of 3.4 billion litres of fuel (involving a total of some 3,400 hours of discharge time). 117 That the Defendant could have done things that may have avoided or mitigated the pollution incident is attested by the changes to its operational procedures that the Defendant put in place immediately after the pollution incident. (These include the matters outlined in Mr Williamson's Incident Reports provided to Mr Pullin in the week following the pollution incident that I have earlier recited). 118 Having regard to the foregoing considerations which are all relevant to the factors enumerated in the Crimes (Sentencing Procedure) Act 1999, s 10(3), I am firmly of the opinion that this is not a case for the exercise in favour of the Defendant of the sentencing discretion conferred by s 10(1) of that Act. 119 In my judgment, the circumstances of the present case call for the conviction of the Defendant and the imposition of an appropriate penalty. 120 That penalty must reflect the objective gravity of the offence and the Defendant's subjective culpability in its commission. Additionally, it must reflect the relevant mitigating factors being the Defendant's early entry of a guilty plea, its expression of contrition, its co-operation with the investigation into the pollution incident, its excellent (albeit not unblemished) environmental record in an industry in which it is a world leader and its introduction of procedural and operational changes (following the pollution incident) to improve its supervision and maintenance of the integrity of the pipeline. 121 But for the mitigating factors (which globally justify a 40 percent reduction in penalty), I consider that the objective and subjective considerations relevant to the admitted offence would justify a penalty in the order of $100,000. 122 Applying the global 40 percent discount produces a penalty of $60,000 which, in my judgment, is appropriate in the light of all relevant considerations in the present case. 123 That measure of penalty is within the range (at the upper level) of penalties that have been imposed for offences under the Marine Pollution Act, s 27 involving only small or minor discharges of oil into State Waters. I am of course conscious of the facts that those penalties were imposed when the maximum prescribed penalty for a corporation offender was $1.1 million and that maximum penalty has more recently (but before the commission of the offence in this case) been increased to $10 million. 124 While recognising that the significant increase in the prescribed maximum penalty is a clear indication of the gravity with which the legislature (representing the community) regards offences involving oil pollution of marine waters, it must be borne in mind that it is the maximum penalty that has been significantly increased and this fact does not, per se, justify an automatic mathematical increase in the penalty to be imposed in a given case. (cf Cabonne Shire Council v Environment Protection Authority (2001) 115 LGER 304 at 312). 125 There is nothing in the objective and subjective factors relevant to the admitted offence that would justify an evaluation of the present offence as anything other than one falling at the lowest end of the spectrum of overall potential gravity of the offence charged. 126 For the reasons I have given, the penalty of $100,000 reduced on account of mitigating factors to $60,000 is an appropriate penalty in the present case. E. CONCLUSIONS AND ORDERS 127 For all of the foregoing reasons, I make the following orders -

1. The Defendant is convicted of the offence charged.

2. A penalty of $60,000 is imposed in respect of that conviction.

3. The Defendant is to pay the Prosecutor's costs as determined in accordance with the Criminal Procedure Act 1986 , s 253(2) .

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.