Environment Protection Authority v Bartter Enterprises Pty Ltd

Environment Protection Authority v Bartter Enterprises Pty Ltd - [2021] NSWLEC 45 - NSWLEC 2021 case summary — Zoe

[9]

Previous incidents

On 7 March 2016, an incident occurred at the Beresfield premises involving a discharge of cleaning solution containing chlorine dioxide at a dilution of 0.3% (a "hazardous substance, dangerous goods" that can cause severe burns in its undiluted form (Twin Oxide 0.3% solution)), and water sprays for approximately 10 minutes. The 21 minute long incident occurred in the Cut-Up section of the primary processing plant and resulted in the evacuation of 430 employees.
It was thought to be caused by a malfunction of the Twin Oxide Dosing Operation although no cause for the malfunction was established either by the Defendant or by Integra who supplied and serviced the system.
That afternoon, a SafeWork NSW inspector issued the Defendant with a penalty improvement notice requiring the installation of a high level alarm and a fail-safe device to prevent exposure to elevated levels. Subsequently, the Defendant implemented a number of technical measures to avoid a recurrence of the incident, ultimately removing the system from operation.
On 14 October 2016, the Prosecutor issued the Defendant penalty notice number 3085780491 for the payment by the Defendant of a penalty of $15,000 for an offence of "Contravene Licence Condition - Corporation" in respect of the incident.
On 1 December 2016, an incident occurred at the Beresfield premises involving a Contractor called SHYON PTY LTD (SHYON), trading as Mackay Pipe Installations, and a leak of Ammonia gas from a plant room structure which had not been isolated. The Ammonia alarm at the premises was activated and the premises evacuated as a safety precaution. One Bartter employee attended hospital as a precautionary measure. HAZMAT conducted an assessment of the Ammonia gas level, determined it to be safe, and handed the site back to the Defendant. SafeWork NSW were notified of the incidence and inspected the site later in the day.
SHYON was a metal fabricator. The Defendant contracted with SHYON to replace the support legs of an Ammonia vertical liquid receiver vessel (VLR), located in a plant room, on 1 December 2016. The legs were corroded and in need of replacement. The Defendant provided the Contractor with an engineer's plan for the task. SHYON provided support to the VLR for the replacement process by using a proprietary support (an Acrow prop) and by strapping its legs.
During the process for repairs, after melting built-up ice, the Contractor noticed that fitting connected to the VLR was weeping, venting small amounts of Ammonia gas. The Contractor contacted Mr Rooke who attended the plant room and manually operated the in-line valves to isolate the fitting. However, in addition to the weeping Swagelok fitting, one of the isolation valves which Mr Rooke operated caused the pipe to vent Ammonia gas.
The Defendant accepted responsibility for the incident. The incident was the subject of an Enforceable Undertaking under s 253A POEO Act given by the Defendant, dated 21 November 2017.

[14]

Statutory matters required to be taken into account in sentencing

The CSP Act then makes provision in s 21A with respect of factors that are relevant for consideration in sentencing, which may have the effect of aggravating or mitigating a sentence in a particular matter.
It is to be noted that where a Prosecutor contends that a particular sentencing consideration should be treated as an aggravating feature it must establish by evidence, beyond reasonable doubt the presence of such aggravating factor. Where a Defendant contends for the presence of a mitigating factor in sentencing it must establish the presence of such factor on the balance of probabilities: Environment Protection Authority v Sydney Water Corporation [2019] NSWLEC 100 at [131].
For the purposes of sentencing in this matter the Prosecutor did not identify any particular aggravating factors as provided for in s 21A of the CSP Act as being relevant to the determination of an appropriate sentence. The Defendant identified the following mitigating factors as being relevant to the determination of sentence: 21A Aggravating, mitigating and other factors in sentencing (1) General In determining the appropriate sentence for an offence, the court is to take into account the following matters - (a) the aggravating factors referred to in subsection (2) that are relevant and known to the court, (b) the mitigating factors referred to in subsection (3) that are relevant and known to the court, (c) any other objective or subjective factor that affects the relative seriousness of the offence. The matters referred to in this subsection are in addition to any other matters that are required or permitted to be taken into account by the court under any Act or rule of law. … (3) Mitigating factors The mitigating factors to be taken into account in determining the appropriate sentence for an offence are as follows - … (f) the offender was a person of good character, (g) the offender is unlikely to re-offend, (h) the offender has good prospects of rehabilitation, whether by reason of the offender's age or otherwise, (i) the remorse shown by the offender for the offence, but only if - (i) the offender has provided evidence that he or she has accepted responsibility for his or her actions, and (ii) the offender has acknowledged any injury, loss or damage caused by his or her actions or made reparation for such injury, loss or damage (or both), (m) assistance by the offender to law enforcement authorities (as provided by section 23), … (4) The court is not to have regard to any such aggravating or mitigating factor in sentencing if it would be contrary to any Act or rule of law to do so. (5) The fact that any such aggravating or mitigating factor is relevant and known to the court does not require the court to increase or reduce the sentence for the offence.
Section 241 of the POEO Act makes provision for matters to be taken into consideration in imposing penalty. It was to these factors that both the Prosecutor and Defendant submitted were most relevant in determining the appropriate sentence in this case. 241 Matters to be considered in imposing penalty (1) In imposing a penalty for an offence against this Act or the regulations, the court is to take into consideration the following (so far as they are relevant): (a) the extent of the harm caused or likely to be caused to the environment by the commission of the offence, (b) the practical measures that may be taken to prevent, control, abate or mitigate that harm, (c) the extent to which the person who committed the offence could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence, (d) the extent to which the person who committed the offence had control over the causes that gave rise to the offence, (e) whether, in committing the offence, the person was complying with orders from an employer or supervising employee. (2) The court may take into consideration other matters that it considers relevant.

[16]

Nature of offences and maximum penalty

Having regard to the fact that the relevant offence arises under the provisions of the POEO Act, for the purposes of the consideration of sentence in these proceedings, it is appropriate to have regard to the stated objects of that Act which relevantly includes: 3 Objects of Act The objects of this Act are as follows: (a) to protect, restore and enhance the quality of the environment in New South Wales, having regard to the need to maintain ecologically sustainable development, … (d) to reduce risks to human health and prevent the degradation of the environment by the use of mechanisms that promote the following: (i) pollution prevention and cleaner production, (ii) the reduction to harmless levels of the discharge of substances likely to cause harm to the environment, (iia) the elimination of harmful wastes, … (e) to rationalise, simplify and strengthen the regulatory framework for environment protection, (f) to improve the efficiency of administration of the environment protection legislation, …
These relevant objects reinforce the public protective nature of the legislative regime and the essential role that the regulation of pollution - through the licensing regime and the prohibition on nominated types of pollution outside that regime - plays in achieving those objects.
The strict liability nature of the offence and the quantum of the maximum penalty are indicators of the public expression by Parliament of the seriousness of the offence and the gravity of the offences as perceived by the community: Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 at 359; Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698.
In addition, there is a need for strict compliance with conditions imposed upon an EPL, as the licensing regime is a system of "authorised pollution" and the failure to observe the conditions imposed upon such authority will undermine the achievement of the objects of the POEO Act and the legislative intent of managing the discharge of pollutants into the environment: Environment Protection Authority v Orica Australia Pty Ltd (2014) 206 LGERA 239 at [204]; Environment Protections Authority v P&M Quality Smallgoods Pty Ltd; Environment Protection Authority v JBS Australia Pty Ltd [2017] NSWLEC 89 at [37].

[17]

The extent of the harm caused or likely to be caused to the environment by the commission of the offence: s 241(1)(a)

The POEO Act contains in the dictionary the following relevant definitions for a consideration of this aspect of sentencing: harm to the environment includes any direct or indirect alteration of the environment that has the effect of degrading the environment and, without limiting the generality of the above, includes any act or omission that results in pollution. environment means components of the earth, including: (a) land, air and water, and (b) any layer of the atmosphere, and (c) any organic or inorganic matter and any living organism, and (d) human-made or modified structures and areas, and includes interacting natural ecosystems that include components referred to in paragraphs (a)-(c).
These defined terms raise wide ranging considerations relating to this aspect of sentencing.
In this case, it is an accepted fact that the offence related to the release to the atmosphere of a substance that is highly dangerous to human health. The inherent danger posed by exposure to Ammonia on human health is a factor that elevates the seriousness of the likely harm to the environment from an event that caused its uncontrolled release.
It was fortunate that due to the limited duration and quantum of the release that the potential catastrophic harm that could have occurred to occupants of the premises did not materialise. In this case, as the Prosecutor accepts at [21] of its written submissions, the following factors are relevant to the determination of actual harm: 1. because Hayes shut the valve as soon as he detected the discharged Ammonia, the amount of Ammonia released was not more than about 1 kilogram; 2. the areas affected by the discharge appear to have been an unoccupied office directly underneath the external pipework for the Southern Circuit and the adjacent processing room; 3. the discharge was detected at 3:30pm and staff in the immediate area were evacuated at 3:33pm; after this, at 4:15pm, the Defendant's staff measured the concentrations of Ammonia in specific locations of the plant; the maximum concentration of Ammonia measured at the locations monitored within the processing plant was 13ppm; this is associated with lower levels of injury but was measured some three quarters of an hour after the discharge had first been detected - in other words allowing time for the concentrations to dissipate; 4. the exposure to persons was acute and short-term; 5. twenty-six staff working on site reported symptoms from the exposure. Seventeen received first aid treatment on site. Nine people were conveyed to hospital; and 6. so far as concerned Mr Hayes, he smelt Ammonia after "a few seconds". ... (i)t sort of overcame me"; he "had to turn around and catch my breath" and then immediately started to shut down the valve; his eyes were "a bit runny'' .
The release of the Ammonia was of short duration and of a limited quantity, however, the release had an adverse effect on the Defendant's employees and on Mr Hayes. This effect was limited, in the sense that it was at the milder end of the range of potential health effects that Ammonia is known to cause to human health. Having regard to the relatively small Ammonia released for a short duration with the actual manifestation of milder effects on persons present on the site, I determine the extent of harm to be at the lower end of the range of actual harm to the environment.

[21]

Prosecutor's submissions

The Prosecutor took the Court to the evidence that disclosed that the Defendant had two systems in place as part of its Safety Management System Standard - Operating Procedure that comprised: 1. A Lock-out Tag-out System; and 2. An Out of Service Isolation System.
The Lock-Out Tag-Out System: 1. Was "to ensure the correct technique is used when isolating plant and equipment"; 2. It nominated the circumstances in which it was to be used as: ''This isolation device and tag is to be placed by Maintenance Staff and/or approved contractors to isolate an item of plant or equipment from all forms of energy. This system is for the use of authorised personnel for the purpose of repairing, adjusting, servicing, removing items of plant and equipment." 1. The mechanism for a lock-out was illustrated as either a hasp or a padlock; 2. The nominated procedure defined Lock-Out Tag-Out as: "Lock-Out Tag-Out (LOTO) - A tag and device/s to physically "lock-out" an item of plant or equipment, rendering it de-activated and de-energised from all forms of energy such as electricity, water, steam, compressed air, hydraulic pressure, gravity, inertia, etc." 1. And the procedure nominated that both a device and tag must be applied - at the same time, not as alternatives and, in particular, the Application/Placement section of that document provided that: ''An appropriate device and tag MUST be fitted at each isolation point."
The Out of Service Isolation System provided that: 1. Its objective was to "ensure personnel are shown the correct procedure for removing plant and equipment from service using Out of Service Isolation procedures"; 2. The conditions of use were identified as: ''This tag is to be placed by a person who deems that an item of plant or equipment present a risk to personal safety, food safety and/or environment and is in a condition that requires Maintenance attention." 1. The definitions provided that an Out of Service tag was: "Out of Service Tag (Caution Tag) - A tag to identify plant or equipment as being not safe for operation use. The tag must contain the words 'CAUTION' and 'OUT OF SERVICE' and provision for name, date and remarks." 1. The procedure provided, by reference to the sub-heading "removal", that: "Removal is only by a suitably qualified and competent maintenance person or contractor"
The Prosecutor submitted that on a proper consideration of the evidence the Defendant was required by its own procedure to "lock-out" the Ammonia supply valve and had not done so - it had "tagged" it out. If the Ammonia supply valve had been locked out the valve could not have physically been opened until the lock was removed. If locked out the Ammonia release would not have occurred.

[24]

The implementation of the Defendant's Contractor Management System by supervision

The Prosecutor submitted that the Defendant could have supervised the carrying out of the work and that by actually physically supervising the Contractor the Defendant may have detected that the Contractor was not carrying out the work in a suitable manner.
I find that this submission does not reflect a practical response to the events leading up to the 2018 incident or a response that is practical in the context of the work. As observed by the Defendant (and is an agreed fact as referred to at [23] and [24] above) the escape of Ammonia occurred because an employee of the Contractor made a decision that he did not communicate to any person, and one that he had not formed at the start of the work day, to bring the circuit back on line without performing the safety procedures dictated to be performed prior to Ammonia being introduced into the circuit: see [19] above. His failure consisted of either: 1. Not carrying out nominated protocols, such as advising the Defendant of his intention to introduce Ammonia and/or testing the line by the introduction of an inert substance; or 2. By incorrectly carrying out protocols, such as applying the pump to test the vacuum without a pressure gauge and ignoring the known audible indication that a vacuum had not been achieved.
The manner of supervision that would be required to avoid the incident would be the constant visual supervision of the Contractor by a person sufficiently familiar with this specialised type of work. This is an unreasonable and impractical suggestion. The Defendant had in place a system of checks and had employed a reputable Specialist Contractor who had in place its own safety systems. It is unreasonable to expect the Defendant to assume that the systems in place would fail due to the inexplicable actions of an employee of the Contractor. If the Contractor's employee had employed any one of the testing regimes or advised the Defendant that he was proposing to recharge the circuit with Ammonia the incident would have been avoided. The adequacy of the Defendant's and the Contractor's systems was demonstrated by the recharging of the Northern Circuit without incident by the same Contractors (but a different employee) with the same degree of supervision.
I do not find that the Defendant failed in any way to properly manage the contract or the Contractors such that it had control of the causes of the Ammonia release.

[26]

The extent to which the person who committed the offence could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence: s 241(1)(c)

Where a particular offence relates to the breach of an EPL it is to be taken into account that the Defendant was to a degree aware of the possibility of harm were it not to comply with the terms of its EPL. I adopt the reasoning of Preston J in Environment Protection Authority v Centennial Newstan Pty Ltd [2010] NSWLEC 211 where he found at [81]: The holder of an environment protection licence is clearly on notice of the possibility of harm to the environment occasioned by any of the activities which it carries out on the site to which that licence relates.
In this case, the Prosecutor accepted that the Defendant did not, through its officers or employees, foresee the materialisation of the risk of an Ammonia release on this occasion and that there were significant failures on the part of the Contractor. However, it does contend that Defendant (or a reasonable person in the position of the Defendant) could have foreseen the likelihood of harm in the present case.
In particular, the Prosecutor submits that the Defendant had addressed the management of the inherent risk of an Ammonia release during the conduct of the works by employing a Specialist Contractor, and the Defendant should doubt that the risk could be eliminated merely by the retention of a Specialist Contractor. The Prosecutor pointed to the agreed fact at [25]-[32] above that there had been two prior Ammonia leaks, one at the premises and one on a site that was operated by a subsidiary of the Defendant's parent company. Each of these leaks occurred either during or after works had been undertaken on plant by a specialist operator.
Whilst it is a fair characterisation that the Defendant relied heavily on the expertise of Specialist Contractors I do not accept that the Defendant relied solely on such Contractors to eliminate the risk. The Defendant had its own systems in place and additional measures such as the evacuation procedure (which was promptly and efficiently implemented at the 2018 incident) to minimise risk. Further, the facts relating to the two prior leaks were sufficiently different from the present incident that concern about the inherent risk that was present, even where Specialist Contractors were being used, could not have been eliminated in the circumstances that gave rise to the commission of the present offence.

[33]

General deterrence

The Prosecutor placed considerable emphasis in this matter on the need for general deterrence, as was identified in [13] of its written submission in the following manner: Emphasis on deterrence 13. In sentencing for regulatory offences of this type, principles of general deterrence are of central importance. The sentence imposed needs to send a signal to others in like position to the Defendant to deter them from offending in a similar way.
In making this submission the Prosecutor relied upon the principles enunciated in: Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 (CCA) at 359; Camilleri's Stock Feeds at 701; Carlino v Leichhardt Municipal Council [2005] NSWLEC 198; 144 LGERA 235 (Lloyd J) at [31].
The Defendant resisted the emphasis on general deterrence in the circumstances of this case noting that the principle of general deterrence is always subject to the important qualification that in serving the objectives of general deterrence care must be taken to ensure that the penalty imposed does not cause a particular defendant to "shoulder an unfair burden of community education": Walden v Hensler (1987) 163 CLR 561 at [570]; Environment Protection Authority v Robinson [2004] NSWLEC 629 at [30]; Environment Protection Authority v Davis [2005] NSWLEC 643 at [27].
The principle of general deterrence does have an important role to play in environmental offences. In that context, I repeat the observation made by me in Port Macquarie-Hastings Council v David Peter Waite (No 2) [2020] NSWLEC 60 [92]-[95] that any penalty should be proportionate to the relevant degree of criminality and should not be increased to an extent that it exceeds a proportional sentence merely to give effect to notions of general deterrence.
In approaching the concept of general deterrence in this particular matter it is to be borne in mind that for the reasons outlined above the conduct that gave rise to the breach of the EPL was that of the Contractor and not the holder of the EPL. As conduct that is to be the subject of consideration of general deterrence is the conduct of the holder of the EPL it would not be appropriate to consider an element of deterring Contractors (and in this respect I note that the Contractor in this case was not charged with an offence).
In the circumstances that I have found relating to the objective seriousness of this offence and having regard to the degree of criminality that the Defendant bore in respect of that conduct it would be inappropriate to emphasise general deterrence in a manner that would result in a fine or penalty that was disproportionate to the Defendant's criminality. For those reasons, whilst I take into account the concept of general deterrence in the determination of sentence I do not consider that it should be of significant weight in the determination of the financial penalty, but is more appropriate to be considered in the context of the additional penalties sought by the Prosecutor in these proceedings and will be examined in terms in that context.

[36]

Publication order

In addition to any penalty imposed the Court may make further orders as identified in Division 5 Part 8.3 of the POEO Act. Section 250(1)(a) of the POEO Act provides that: (1) Orders The court may do any one or more of the following - (a) order the offender to take specified action to publicise the offence (including the circumstances of the offence) and its environmental and other consequences and any other orders made against the person,
In the context of the purposes of sentencing the publication order serves the functions of: general deterrence, denunciation and recognition of the harm done as a consequence of the offending. Whilst the imposition of a publication order is a common additional order made in environmental offences in recognition of the need for general deterrence, having regard to the nature of environmental offences, it does not necessary follow that a publication order should be made as a matter of course in all proceedings.
In each case it is a matter of determining whether the additional requirement for publication is warranted having regard to the purposes that such publication would serve. In this case, for the reasons that I have found, the primary culpability rests on the Contractor and not the Defendant. The conduct that would be sought to be deterred would be the conduct of the Contractor and not the Defendant. As the Contractor is not the subject of the sentence the publication of a sentence relating to the offence of breach of the condition of an EPL by the holder of that EPL is unlikely to resonate with contractors by the publication of the sentence as requested by the Prosecutor.
Further, any publication order by its summary form must convey sufficiently particularly the nature of the offence and the conduct which is being denounced. A publication order should not allow inferences as to greater or lesser criminality than the actual sentence imposed. In this case, I accept the Defendant's submission that even a careful drafting of the terms of any publication order would be insufficient to convey the state of affairs as to the Defendant's criminal culpability that I have found, namely that the Contractor was the primary if not the exclusive cause of the commission of the offence. To publish a notice that allowed an inference that the Defendant has somehow, by action or inaction, participated in the actual events would be to punish the Defendant by the inference by publication that circumstances existed contrary to the circumstances I have found.
For those reasons, I decline to order that a publication order be made.

[39]

Appropriate sentence

The appropriate sentence is to be derived by an "instinctive synthesis" of all of the relevant factors in order to determine an appropriate proportionate sentence: Markarian v R (2005) 228 CLR 357.
In the circumstances of this case there is limited subjective factors that are relevant to that synthesis. It is the objective circumstances of this case that both parties accept will be relevantly determinative of the appropriate sentence. For the reasons I have outlined above, I consider that whilst the release of the Ammonia into the atmosphere was a significant event with actual harm being caused and the risk of much greater harm being sustained if the circumstances were different, the culpability for that action rests with the Contractor and not the Defendant. The culpability of the Defendant in this case is at the low end of the scale. I have accepted that it had in place all reasonable systems and safeguards to ensure that the work could be undertaken with an extremely small residual risk of an Ammonia discharge. It was entirely reasonable in this case for the Defendant to rely upon the Specialist Contractors to undertake the work in a safe and appropriate manner. This did not occur. For reasons unknown, the employee of the Contractor took it upon himself to introduce Ammonia into the system in a manner that was not only contrary to the Contractor's and Defendant's written policies, but which was inexplicable on any objective assessment of his actions.
The Defendant is, as the holder of the EPL in breach of the condition of the EPL for the reasons I found in Bartter (No 3) and it should be fined an amount that is proportionate to the objective seriousness of the offence and having regard to the acts and omissions of the Defendant.
Taking into account the objective seriousness of the charge in light of the factors identified above I have determined that the appropriate sentence in this case includes the imposition of a monetary penalty (and the additional orders relating to legal and investigative costs) in the amount of $50,000.

At a glance

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Judgment (41 paragraphs)

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Cases Cited (21)

Cited By (13)