Environment Protection Authority v Baiada Poultry Pty Limited [2008] NSWLEC 280 | Case summary

1 HIS HONOUR: Baiada Poultry Pty Limited has pleaded guilty to having committed an offence against s 120(1) of the Protection of the Environment Operations Act 1997, of polluting waters. The Court's task is to determine the appropriate sentence for the offence. The events of the offence 2 The offence involved about 1,000,000 litres of effluent from Baiada's poultry rendering plant at 1154 Oxley Highway, Tamworth, escaping from a defective weld in an underground pipeline that conveys effluent from the plant to Tamworth Regional Council's sewer line. The effluent descended into an unnamed watercourse in a paddock owned by Baiada. The effluent extended down the watercourse for approximately 1.1 kilometres. The watercourse was dry at the time due to the drought conditions prevailing in the Tamworth area. 3 The leak of the effluent pipe was first discovered on 6 April 2007 by Mr Wiegold, a farmer who agisted his cattle on land in the area. He observed effluent in the watercourse on Baiada's premises and on the adjoining council land. He traced the source of the effluent to the ground near a standing pipe on Baiada's premises. He observed the effluent to have travelled down the watercourse for approximately 700 metres. 4 Unfortunately, 6 April 2007 was Good Friday so when Mr Wiegold went to the main office of Baiada's plant to report the leak, the office was closed and he was unable to report the incident. Mr Wiegold did not subsequently report the leak after Easter. 5 Mr Wiegold visited the land again 20 days later, about mid-morning on 26 April 2007. He again observed effluent in the watercourse. The source of the effluent was still the ground near the standing pipe. He observed the effluent to have travelled approximately 400 metres further down the watercourse than he had previously observed on 6 April 2007. The effluent extended in total for 1.1 kilometres down the watercourse. This time Mr Wiegold was successful in notifying Baiada about the leak. 6 The cause of the leak was later identified to be a defective weld of a T-fitting of the standpipe to the effluent pipeline. The pipeline had been installed in late 2005 by an independent plumbing contractor engaged by Baiada. Examination after the leak had occurred revealed that the T-fitting had not been solvent welded in accordance with the relevant standard, Australian Standard 3500. Prior to the leak occurring, however, Baiada had no knowledge of the defective weld. The pipeline and the T-fitting were underground and were not observable from the surface. 7 The effluent, being waste matter derived from the processing of organic material at Baiada's plant, had the following characteristics: dark in colour; a high concentration of organic matter; a high concentration of nitrogen; a high concentration of plant nutrients; and high levels of biological oxygen demand (BOD) (by way of comparison, domestic raw sewage typically has a BOD of about 200 milligrams per litre compared with 6,120 milligrams per litre in the effluent measured at one of the sample sites of the effluent in the watercourse). Events after the offence 8 On being notified on 26 April 2007 by Mr Wiegold who had observed the effluent in the watercourse, Baiada notified the Council and the Environment Protection Agency (EPA) of the leak. An officer of the Council attended in the afternoon. After investigation, the source of the leak was discovered at about 4.30pm. Baiada provided further information to the EPA at 5.30pm. 9 Baiada arranged for a grader to attend the premises so that a bund could be constructed across the watercourse to stop the further progression of the effluent down the creek. However, due to the time of day and light rain, the bund was unable to be constructed on the night of 26 April 2007. The bund was constructed the next day, 27 April 2007. The bund halted further progression of the effluent down the watercourse. The effluent did not reach either Bolton's Creek or the Peel River downstream. 10 The effluent in the watercourse was cleaned up to the satisfaction of the EPA and the Council. The clean-up consisted of the collection of the effluent in the watercourse using liquid waste transport vacuum trucks and, following directions from officers of the EPA and the Council, the pumping and discharging of the effluent to the surrounding land, focusing on the higher areas of the paddocks as far away from the watercourse as possible and involving the application as thinly as possible over the largest possible area. 11 At all times, Baiada was cooperative and complied with the directions of the EPA and the Council officers regarding the clean-up. The environmental harm caused by the offence 12 The actual environmental harm caused by the effluent was confined to the unnamed watercourse. The effluent did not reach Bolton's Creek or the Peel River. The extent of actual environmental harm was very small but not absent. The environment that was exposed to the release of the effluent (the 1.1 kilometre stretch of the unnamed watercourse) was not sensitive and contained no permanent aquatic life, because there is usually no water in the watercourse. This was aided by the removal of much of the effluent on 27 April 2007 and on the following days. 13 The evidence did not establish that there was likely environmental harm to the downstream waters of Bolton's Creek or the Peel River. Therefore, I do not need to determine in this case, if such likely harm to an environment that was not the actual receiving environment can properly be considered. Steps taken by Baiada to avoid reoccurrence of the offence 14 Baiada has subsequently taken three steps to avoid a repetition of the leak that resulted in the commission of the offence. 15 First, Baiada now conducts a weekly physical inspection of the length of the pipeline, including the section of the pipeline along the Oxley Highway to the connection point with the Council sewer. Prior to and at the time of the incident, Baiada did not undertake such inspections. 16 Secondly, Baiada has removed all standing pipes that were installed at the time the standing pipe in question failed. A replacement system of six standpipes has been installed along the length of the pipeline. They are shorter and are protected at the base by concrete. These new standpipes were installed at a cost of $19,304.26. 17 Thirdly, since the incident, Baiada has installed telemetric flow meters at the point where the pipeline meets the Council's sewer to monitor the flow rate at that point. If the flow rate drops an alarm activates in the control room at Baiada's plant. This measure will assist Baiada in more quickly locating a problem in the pipeline in the event that the pipeline should fail again. The cost of installation of this measure was $11,747. Cost of clean-up, rectification and compensation 18 The cost to Baiada for the clean-up and rectification works were as follows: clean-up ($4,984), initial rectification works (including installation of new standpipes)($24,302.86), installation of telemetric alarm system ($11,747) and June 2008 works ($3,696.50). 19 Baiada has agreed also to pay the EPA's cost and expenses of investigating the offence, agreed in the sum of $4,872. 20 Baiada has also agreed to pay the prosecutor's legal costs, agreed in the sum of $30,000. Sentencing considerations 21 The sentence imposed by the Court must reflect both the objective gravity or seriousness of the offence and the personal or subjective circumstances of the defendant. The Court must consider the factors of relevance in s 21A of the Crimes (Sentencing Procedure) Act 1999 and s 241(1) of the Protection of the Environment Operations Act 1997. The purposes for which the Court may impose a sentence are those set out in s 3A of the Crimes (Sentencing Procedure) Act 1999. Paras (a), (b), (e), (f) and (g) are relevant in this case. Objective circumstances 22 The objective gravity of the offence has two principal components: the precise acts or omissions of the offender and the consequences of those acts or omissions: R v Carroll [2008] NSWCCA 218 at [39] and Environment Protection Authority v Snowy Hydro Ltd [2008] NSWLEC 264 at [137]. Nature of offence and maximum penalty 23 Pollution of waters is a result offence where the proscribed result directly undermines the object of the Protection of the Environment Operations Act 1997. It is a strict liability offence. 24 At the time of commission of the offence the maximum penalty for a breach of s 120(1) of the Protection of the Environment Operations Act 1997 was $1,000,000 (s 123(a) of the Protection of the Environment Operations Act 1997). This maximum penalty was raised from $250,000 as and from 1 May 2006. This high maximum penalty reflects the seriousness with which Parliament views the offence. Objective harmfulness of offence - environmental harm 25 The harm caused or likely to be caused to the environment by commission of the offence is a consequence of the offence relevant to the objective gravity of the offence: s 241(1)(a) of the Protection of the Environment Operations Act 1997. 26 Here, the actual environmental harm was very small. The evidence did not establish likely harm to the environment. Foreseeability of risk of harm 27 The extent to which the defendant could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence is a relevant objective circumstance: s 241(1)(c) of the Protection of the Environment Operations Act 1997. 28 The risks that the effluent pipe might rupture and that effluent might pollute waters were reasonably foreseeable. Indeed, Baiada's own risk assessment (in Baiada Poultry Pty Limited, Environmental Management System, Contingency Plan, Oakburn Recovery Plant, July 2006) identified the risk of rupture of the pipes in the plant's effluent system. 29 However, Baiada submitted that the extent or degree of foreseeability of this risk was low. Baiada's risk assessment had stated that "it is felt unlikely in the extreme that other pipes for the effluent system would be subject to rupture". Baiada submitted that the effluent pipe had been installed only a couple of years before the leak occurred; it had been installed by a licensed plumber who had previously been contracted by Baiada to perform plumbing work at the plant; Baiada had no knowledge that the weld of the T-fitting had not been done in accordance with the relevant Australian Standard; and the pipe was underground so that any defect was not discernible by usual observation without excavation and specific inspection. 30 These submissions may be accepted as far as they go. They are matters that show an absence of knowledge by Baiada about the integrity of the pipe. However, they do not show that Baiada took any steps to form a positive belief in the integrity of the pipe or took any steps to monitor the continued integrity of the pipe or took precautions to prevent pollution if the pipe lost integrity for any reason. 31 Experience also shows, time and again, that accidents happen. As Mahoney JA said in Axer Pty Limited v Environment Protection Authority (1993) 113 LGERA 357 at 359: "The legislation does not seek merely to prevent deliberate or negligent pollution. It envisages that, at least in many cases, proper precautions must be taken to ensure that pollution does not occur. Experience has shown that it is not enough merely to take care: accidents will happen. The legislation envisages that in many cases care must be supplemented by positive precautions; business must be arranged and precautions taken so as to ensure that pollution will not occur." 32 In this case, the pipe carried effluent which, by its inherent characteristics, had a high potential to pollute waters. The pipe was located uphill and not far from the unnamed watercourse. It was reasonably foreseeable that the pipe could lose integrity, so as to cause escape of effluent from the pipe, for a variety of reasons. It is not necessary to foresee the precise event that occurred in this case, namely the defective weld of the T-fitting. Many other causes of loss of integrity of the pipe can reasonably be foreseen. It is reasonably foreseeable that any loss of integrity causing escape of effluent could, having regard to the inherent characteristics of the effluent and the watercourse being downhill of the pipe, pollute the watercourse. 33 The reasonable person's response to these foreseeable risks would be to take precautions to ensure that the pipe does not lose integrity so as to cause effluent to escape but, if this were to occur, that swift action would be taken to minimise pollution as a result. The steps subsequently taken by Baiada of weekly physical inspection of the length of the pipeline; encasing the base of the standing pipes in concrete; and installation of telemetric flow meters to monitor the flow of effluent through the pipe and activate an alarm if flow rates drop, are all precautions that a reasonable person, foreseeing the risks of loss of integrity of the pipe so as to cause escape of effluent and pollution of the watercourse, would take to ensure pollution of the watercourse does not occur. Practical measures to prevent risk of harm 34 Another factor relevant to the objective gravity of the offence is the practical measures that could have been, and may be, taken to prevent, control, abate or mitigate harm to the environment by the commission of the offence: s 241(1)(b) of the Protection of the Environment Operations Act 1997. 35 As noted above, the measures taken by Baiada after the event, which were practical measures, could have been taken before the event and would have prevented or minimised the extent of pollution of the watercourse. A considerable volume of effluent escaped (1,000,000 litres) and the leak had continued for at least twenty days without any action being taken by Baiada. Weekly physical inspections and telemetric flow meter would have detected the leak at an earlier time. Encasement of the joints between the effluent pipe and the standing pipes would have protected against defects in the joints. Such actions are measures which a reasonable person, foreseeing the risks of loss of integrity of the effluent pipe so as to cause escape of effluent and pollution of the watercourse, would reasonably have taken. 36 The evidence does not establish that there were any other practical measures that Baiada should have taken before the event or after the event to prevent, control, abate or mitigate the harm to the environment that had been caused. Control over causes 37 The extent to which the defendant had control over the causes which gave rise to the offence is another factor relevant to the objective gravity of the offence: s 241(1)(d) of the Protection of the Environment Operations Act 1997. 38 Baiada had control over its plant and over the pipeline conveying effluent from its plant to the Council's sewer. 39 The precise, immediate cause of the leak was a defective weld of the T-fitting by the plumber contracted by Baiada. Baiada submitted that, because the plumber was an independent contractor, Baiada had no control over the manner in which the plumber performed its duties. 40 Again, this submission may be accepted as far as it goes. The fact remains, however, that Baiada could have, and should have, taken the practical measures it subsequently took to prevent pollution. If Baiada had taken such measures, the pollution may not have occurred at all (by reason of the encasing in concrete of the base of the standpipes) or may have been minimised (pollution would have been detected earlier by reason of the weekly physical inspections of the length of the pipe and the telemetric flow meters). The taking or not taking of these practical measures was a decision within the control of Baiada. Complying with orders 41 The factor of complying with an order of a superior, referred to in s 241(1)(e) of the Protection of the Environment Operations Act 1997, is not relevant in this case. Subjective circumstances Prior criminality 42 Baiada has four prior convictions for environmental offences. 43 In Environment Protection Authority v Baiada Poultry Pty Limited [2000] NSWLEC 249, Baiada pleaded guilty to being the occupier of scheduled premises, being the premises the subject of this matter, and not holding a licence for those premises. Baiada was fined $18,000 and ordered to pay the prosecutor's costs of $8,000. 44 In Environment Protection Authority v Baiada Poultry Pty Limited, unreported, Land and Environment Court, LEC Nos 50034 and 50035 of 1998, Lloyd J, 2 September 1998, Baiada pleaded guilty to two offences of emitting odours from scheduled premises in Coonabarabran in breach of s 15A of the Clean Air Act 1961. For one offence, Baiada was fined $20,000 and for the other offence Baiada was fined $10,000. Baiada was also ordered to pay the prosecutor's costs of $7,000. 45 In Tamworth City Council v Baiada Poultry Pty Limited, unreported, Land and Environment Court, LEC No 50055 of 1999, Talbot J, 4 February 2000, Baiada was convicted of a breach of s 16(1) of the Clean Waters Act 1970. The offence concerned the Tamworth processing plant at Bridge Street, Tamworth. This is not the premises the subject of this offence. The particulars of the offence involved the placement of biological matter in a position where it could descend into the Council's stormwater system located in the northwest corner of the property. The defendant was fined $20,000 and ordered to pay costs of $12,000. 46 Prior criminality has been held not to be part of the objective circumstances of the offence. The boundaries of a proportionate sentence are set by the objective circumstances which do not encompass prior convictions: R v McNaughton (2006) 66 NSWLR 566 at 574 [24], 578 [60], 580 [73], [76] and [81]. Prior convictions, therefore, cannot be used to impose a sentence which is greater than the upper boundary of a proportionate sentence set by the objective gravity of the offence: Veen v The Queen (No 2) (1988) 164 CLR 465 at 477; Baumer v The Queen (1988) 166 CLR 51 at 57-58. 47 Nevertheless, prior criminality can still legitimately be taken into account in fixing where, within the boundary set by the objective circumstances, a sentence should lie. Prior criminality is relevant to show whether the offence is an uncharacteristic aberration or whether the offender has manifested a continuing attitude of disobedience to the law. If so, the purposes of retribution, deterrence and protection of society may all indicate that a more severe penalty is warranted: Veen v The Queen (No 2) (1988) 164 CLR 465 at 477; R v McNaughton (2006) 66 NSWLR 566 at 579 [126]. 48 Baiada submitted that, notwithstanding these prior convictions for environmental offences, the Court would not conclude that Baiada has manifested a continuing attitude of disobedience to the law. Baiada submitted that the most recent of the prior convictions was entered almost eight years ago. All of the convictions were entered within a relatively confined period between 1998 and 2000. They arose from unrelated factual circumstances and those which involved pollution occurred in relation to other sites. 49 Mr Simon Camilleri, the general manager of operations of Baiada, gave evidence, both by way of affidavit and orally, describing the transformation in the company since the time of the prior convictions. The business has significantly expanded since 2000 and has operated since that time, until the commission of this offence, without offending. Baiada has established and maintained an environmental management system governing all of its operations, including the plant involved in this offence. Baiada has employed a national environmental risk manager, Ms Elaine Dickson, who also gave evidence by way of affidavit in these proceedings. Baiada is, apparently, the only poultry processing company in Australia to have obtained ISO 14001 accreditation for its environmental management system. Baiada's environmental management system is not only accredited, but is regularly the subject of internal and external audits. 50 I accept that Baiada has responded appropriately to and since the prior convictions, in particular, by implementing an environmental management system, employing environmental staff, and implementing appropriate procedures to comply with environmental laws. I do not find that the current offence is part of a continuing disobedience of the law by Baiada. Plea of guilty 51 Baiada entered a plea of guilty on 20 June 2008 which was less than one month after the first return of the summons. The prosecutor accepts that this warrants the maximum discount of 25 per cent for the utilitarian value of a plea of guilty. I agree. Contrition and remorse 52 Baiada has expressed genuine contrition and remorse for the commission of the offence. The early plea of guilty is consistent with Baiada being genuinely contrite and remorseful. Baiada notified the Council and the EPA as soon as it was informed of the leak by Mr Wiegold. Baiada cooperated fully with the Council and the EPA. It took action to prevent further harm and to remedy the harm that had been caused to the watercourse by the pollution event. Baiada has taken action subsequently to implement precautions to prevent reoccurrence of the incident. All of these actions speak of Baiada's contrition and remorse. 53 The general manager of operations of Baiada, Mr Simon Camilleri, and the national environmental risk manager, Ms Dickson, both gave evidence in the form of affidavits and in the case of Mr Camilleri also oral evidence in Court. Mr Camilleri expressed his sincere regret at the incident and his desire to prevent such an incident reoccurring. Assistance to authorities 54 Baiada cooperated with and provided assistance to the Council and the EPA about the leak and its causes, and cleaned up its consequences. Baiada has agreed to pay the EPA's investigation costs in the sum of $4,872 and the EPA's legal costs of $30,000. Synthesising the objective and subjective circumstances 55 Taking both the objective circumstances of the offence and the subjective circumstances of the offender into account, I consider the appropriate penalty to be in the sum of $160,000. This sum should be reduced by 25 per cent for the utilitarian value of Baiada's early plea of guilty. The resultant amount is $120,000. Type of penalty that should be imposed 56 Both the prosecutor and Baiada submit that this is a case where it is appropriate for the Court to make an order under s 250(1)(e) of the Protection of the Environment Operations Act 1997, coupled with a publication order under s 250(1)(a), in lieu of a fine. The orders that are set out in Pt 8.3 of the Protection of the Environment Operations Act 1997, which includes the orders under s 250, may be made by the Court regardless of whether any penalty is imposed or other action taken in relation to the offence: see s 244(2) and (3) of the Protection of the Environment Operations Act 1997. 57 The parties have agreed that the order should be that Baiada pay an amount specified by the Court to Tamworth Regional Council for the purposes of a particular project proposed by that council for the restoration and enhancement of the environment, namely, the extension of the Grassy Box Woodland Conservation Project at North Bolton's Creek. Bolton's Creek is a creek nearby to Baiada's plant. 58 I accept that this is a case where it is appropriate to take the course urged by the prosecutor and the defendant of making an environmental service order under s 250(1)(e), together with a publication order under s 250(1)(a), instead of imposing a fine. The amount of the order under s 250(1)(e) should be $120,000 which I have determined is the appropriate penalty. 59 I note that it is important that if an order is made under s 250(1)(e) or, for that matter, an order under s 250(1)(c) of the Protection of the Environment Operations Act 1997, a publication order generally should also be made. It is important to publicise to the community at the time an order under s 250(1)(c) or (e) is made that the works that will be carried out as a result of the order are being undertaken as a result of the offender committing an offence and not for other reasons, such as the offender being an altruistic citizen: see Environment Protection Authority v Centennial Newstan Pty Limited [2006] NSWLEC 732 at [141]. 60 For the same reason, the publication order should also include a requirement that the offender accompany any future reference it makes to the specified environmental service project with a reference to the funding of the specified project being required as a result of a penalty imposed by the Court as a result of the offender's conviction for an offence against the Protection of the Environment Operations Act 1997. 61 Although the parties agreed that the action that should be taken to publicise the offence, its consequences and the Court's orders is to place a notice in the first 12 pages of the early general news section of the Sydney Morning Herald, the Northern Daily Leader and the Financial Review at a minimum size of 8 centimetres by 12 centimetres, the precise terms of the notice were the subject of debate between the parties. I find that the terms of the public notice that should be given should be as follows: "PROSECUTION FOR POLLUTION OF WATERS On 20 June 2008, Baiada Poultry Pty Limited ("Baiada") pleaded guilty to having committed an offence against s 120(1) of the Protection of the Environment Operations Act 1997 of polluting waters. The offence involved the escape of 1,000,000 litres of effluent from an effluent pipe from Baiada's poultry rendering plant into an unnamed watercourse at Tamworth, NSW. On 26 September 2008, the Land and Environment Court of New South Wales convicted Baiada for the offence and ordered Baiada to pay $120,000 to Tamworth Regional Council to fund the North Bolton's Creek - Extension of the Grassy Box Woodland Conservation Project; to pay the costs and expenses of investigation of the Environment Protection Authority (EPA) of $4,872 and the EPA's legal costs of $30,000; and to publish this notice. Baiada was prosecuted by the EPA, a part of the Department of Environment and Climate Change. This notice has been placed by order of the Land and Environment Court and paid for by Baiada." 62 In addition to these orders, the Court will make an order under s 248(1) of the Protection of the Environment Operations Act 1997 that Baiada pay the EPA's cost and expenses of investigation of the offence in the sum of $4,872 and an order that Baiada pay the EPA's legal costs in the sum of $30,000. Orders 63 The Court makes the following orders:

Environment Protection Authority v Baiada Poultry Pty Limited

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Judgment (19 paragraphs)

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