Environment Protection Authority v Bulga Coal Management Pty Ltd

Chronology 7It is useful to set out a brief chronology in order to understand the parties' submissions which the Court has prepared as follows based on the Defendant's submissions: October 2011 Events giving rise to charge occur November 2011 Mr Amidy and Mr Bower records of interview 6 February 2012 Part 5.7 s 148(2) of PEO Act amended 5 October 2012 Prosecution commenced 14 November 2012 Letter from the Defendant's solicitors to the Prosecutor stating that the Defendant was willing to plead guilty to the related water pollution offence on the condition that the s 148(2) charge was discontinued. Proceedings on s 148(2) charge would cause considerable argument on a not guilty plea and the Defendant saw little utility in proceeding given the amendments to Pt 5.7 (exhibit A tab 3) 22 February 2013 Defendant pleads guilty to related water pollution offence and not guilty of failure to notify charge 24 July 2013 Defendant's Operations Manager Mr Hiatt's affidavit provided by Defendant's solicitor under cover of letter (exhibit A tab 4) together with affidavits of Mr de Groot, Mr Amidy and Mr Bower 16 August 2013 Prosecutor advises Defendant it will rely on Mr Hiatt's affidavit 2 October 2013 Section 247J CP Act notice filed notes the agreement between the parties that the Defendant will call Mr de Groot, Mr Amidy, Mr Bower and Mr Hiatt in its case and read their affidavits. 22 November 2013 Further letter from Defendant's solicitor to the Prosecutor stating that there is no utility in proceeding to trial because of the amendments to Pt 5.7, the Defendant's guilty plea to the water pollution charge and other circumstances of this case (exhibit A tab 5) 25-29 November/2 December 2013 Hearing

First contention (s 257D(1)(a)) 8The investigation into the alleged offence was conducted in an unreasonable manner within the meaning of s 257D(1)(a) of the CP Act by reason of the Prosecutor's failure to interview the Defendant's Operations Manager, Mr Ben Hiatt.

Principles 9In determining whether the investigation was conducted in an unreasonable manner in the requisite sense, the Court should have regard to the following principles (which are generally agreed): (a)The test is not whether the investigation fell grossly below optimum standards. No such threshold applies: JD v Director of Public Prosecutions [2000] NSWSC 1092, at [30] - [31]; Wollongong City Council v Ensile Pty Ltd (No 9) [2008] NSWLEC 248 at [7]; Pittwater Council v A1 Professional Tree Recycling Pty Ltd (No 3) [2009] NSWLEC 21; (2009) 165 LGERA 6 at [7]. (b)The test is purely objective. To find that the conduct of the investigation in a particular case was unreasonable does not necessarily impugn the general competence, far less the integrity, of those responsible for it: JD v Director of Public Prosecutions at [31]. (c)A prosecutor's failure to interview an eyewitness or an otherwise material witness is capable of satisfying the test: Cliftleigh Haulage Pty Ltd v Byron Shire Council [2007] NSWCCA 13 at [21], [28] and [29]; A1 Professional Tree Recycling at [15]; Campbell v Director of Public Prosecutions [2009] NSWSC 973. (d)Where it is said that the investigation was unreasonable by reason of a failure to interview a witness, it is not necessary to establish that the evidence of that witness suggested that the Defendant might not be guilty of the offence: that would be to conflate the test under s 257D(1)(a) with the test under s 257D(1)(c): Cliftleigh at [20] - [21]. 10The investigators knew or should have known Mr Hiatt was a material witness.

The 22 November 2011 ROI 11Relatively early in the investigation phase, during the course of the interviews of Mr Bower and Mr Amidy, which were conducted on 22 November 2011, the Prosecutor's investigating officers were put on notice of the relevance of Mr Hiatt's role. During the course of these interviews, the investigating officers were put on notice that: (a)Mr Hiatt was the Operations Manager. (b)Mr Hiatt was Mr Amidy's direct supervisor. (c)Mr Bower reported directly to Mr Hiatt at the time of the incident. (d)Mr Hiatt was in charge of the open cut operation and was the most senior person on a day to day basis on site. (e)Mr Bower reported the incident to, and discussed it with, Mr Hiatt on 9 October 2011. (f)Mr Hiatt was involved in the discussion on site on Monday morning 10 October 2011 when the decision was made to notify the Prosecutor of the incident. 12On 29 May 2012, the Prosecutor issued to the Defendant a notice under s 193 of the PEO Act requiring the Defendant to provide information, inter alia, as to whether the Defendant had in place any policies or procedures in relation to the reporting of pollution incidents. Clearly the investigators were alive to the relevance of such policies and procedures. 13In its response of 8 June 2012 to the Prosecutor's statutory notice, the Defendant identified that it did have in place a procedure in relation to the reporting of pollution incidents and it produced to the Prosecutor the Incident Management Procedure. 14As the Court found, the Incident Management Procedure, which is stated to be applicable to all persons on site and the stated purpose of which is "to give clear guidance on incident reporting requirements ... in line with regulatory, corporate and site standards", required that all external reporting will be undertaken by the Operations Manager or delegate including to the then DECC (EPA) in accordance with s 148 of the PEO Act. 15Notwithstanding that the Incident Management Procedure identified the Operations Manager as the person with the responsibility within the company hierarchy to report incidents to the EPA, and notwithstanding that the investigators knew that Mr Hiatt was the Operations Manager at the relevant time, they did not seek to interview him.

Conclusion 16In these circumstances, the Court should accept that the Prosecutor failed to interview a material witness and, accordingly, the investigation was conducted in an unreasonable manner. In this respect, the Court should follow the approach taken by the Court of Criminal Appeal in Cliftleigh and make an award of costs to the Defendant on this basis.

Second contention (s 257D(1)(b)) 17The proceedings were initiated without reasonable cause within the meaning of s 257D(1)(b) of the CP Act: (i)The Prosecutor's first alternative, that it needed only to prove that, on 9 October 2011, the Defendant was aware of the pollution incident and, as an objective fact, the incident caused or threatened material harm to the environment, was contrary to established principle and had no real or substantial prospects of success. (ii)The Prosecutor's secondary alternative that, if proof of mens rea was required, the Defendant was aware on 9 October 2011 that the pollution incident caused or threatened material harm to the environment, reasonably necessitated inquiry to be made of the Operations Manager, Mr Hiatt, and the proceedings should not have been initiated without those inquiries having been made.

Principles 18In determining whether the proceedings were initiated without reasonable cause, in the requisite sense, the Court should have regard to the following principles (which are generally agreed): (a)The failure of the proceedings does not, of itself, mean they were initiated without reasonable cause: A1 Professional Tree Recycling at [15(e)] and the authorities cited therein. (b)Proceedings may be said to have been initiated without reasonable cause if, objectively assessed on the facts or the facts apparent at the time of initiating the proceedings, they had no real or substantial prospects of success or were doomed to failure: A1 Professional Tree Recycling at [15(e)] and the authorities cited therein. (c)The question whether proceedings are initiated without reasonable cause is to be answered by reference to the quality of the evidence gathered, with an eye to the enquiries made, and not made: JD v DPP at [28]. 19The Defendant submitted that the construction of s 148 of the PEO Act advanced by the Prosecutor as its first alternative was not reasonably arguable, but, on the contrary, had no real prospects of being accepted. It was misconceived being based on the asserted "objective fact" that the pollution incident was one which caused or threatened material harm to the environment which could be established by expert evidence informed by events taking place after the date of the incident and after the notification in this case by the Defendant's employees to the Prosecutor. Such evidence could be determinative of criminal liability attaching to the person on whom the duty to notify was cast, leading to unfair results and punishing a luckless victim contrary to principles in Environment Protection Authority v N (1992) 26 NSWLR 352 (Bulga (No 1) at [85]-[86]). A practical result of the Prosecutor's approach was that all pollution incidents had to be reported, no matter how trivial. 20The Prosecutor's second alternative was also untenable. The Prosecutor submitted the evidence established that the Defendant was aware on 9 October 2011 that the pollution incident caused or threatened material harm to the environment. The Prosecutor's investigation was unreasonable in that Mr Hiatt was not interviewed, for the reasons already advanced. This proposition is then also relevant in considering whether the proceedings were initiated without reasonable cause because this latter question requires the Court to turn its eye to the enquiries made and the enquiries which should have been made. At the time the proceedings were initiated, the Prosecutor's second alternative was not sustainable in the circumstances that Mr Hiatt had not been interviewed and had not been requested to provide the Prosecutor with a proof of evidence, having regard to his central role.

Third contention (s 257D(1)(d)) 21There are other exceptional circumstances relating to the Prosecutor's conduct of the proceedings which make it just and reasonable to award professional costs to the Defendant on and from various dates pursuant to s 257D(1)(d). The Prosecutor's conduct in proceeding to a contested hearing on the failure to notify charge after the Defendant had pleaded guilty to the water pollution charge, despite the provision by the Defendant of proofs of evidence in advance of trial and despite the written representations made by the Defendant, was disproportionate and unreasonable. The Prosecutor should not have proceeded after certain events in these unusual circumstances, either after the plea of guilty to the separate water pollution offence on 22 February 2013 or after the provision of Mr Hiatt's affidavit on 24 July 2013 or after the second written representation of the Defendant's solicitor on 22 November 2013.

Technical or trivial breach 22The alleged breach of s 148, taken at its highest, was a technical or trivial breach. In order to assess whether the Prosecutor acted unreasonably and disproportionately in going to trial on the failure to notify charge, having secured a guilty plea in the related water pollution charge, it is necessary first to consider the facts known to the Prosecutor pertaining to the seriousness, or, conversely, the triviality of the conduct the subject of the charge. 23At the time of instituting the proceedings, the Prosecutor knew that the Defendant had notified the pollution incident to the Prosecutor within 24 hours of the Defendant's personnel becoming aware that a pollution incident had occurred. The Prosecutor also knew that this was how the Prosecutor had found out about the incident. The Prosecutor also knew that no additional harm was caused or likely to be caused to the environment as a result of the Defendant notifying the Prosecutor of the pollution incident on 10 October 2011 rather than on 9 October 2011. The Prosecutor adduced no evidence to suggest that the notification of the incident on 10 October 2011 rather than 9 October 2011 had in any material way prejudiced the efficacy of the clean-up or had otherwise adversely affected the response or the investigation of the incident. In these circumstances, it properly is to be concluded that the alleged breach of s 148(2) by the Defendant, if it were to be established, was a technical or trivial breach, which had no material, actual or potential consequences, and that this was known to the Prosecutor.

The significant amendments to the provisions of Part 5.7 of the PEO Act 24The relevant provisions of Pt 5.7 of the PEO Act were significantly amended from 6 February 2012. The unamended, superseded version of Pt 5.7 applied in this case. There was a recognised uncertainty in the unamended version of Pt 5.7 about the temporal scope of the obligation to notify as soon as practicable, a matter which the Prosecutor must have reasonably anticipated was in dispute. The Prosecutor knew that this uncertainty had been addressed and resolved by the amendments made on 6 February 2012, which changed the requirement from as soon as practicable to immediately. It was also recognised that there was uncertainty under the unamended version of Pt 5.7 as to whether the requirement to notify the EPA of all relevant information about the incident (as identified in s 150) meant that the obligation to notify the EPA of the incident did not arise until all relevant information about the incident was known. The Prosecutor must have reasonably anticipated that issue could also be in dispute in the proceedings and knew that the uncertainty about that issue had been dispelled by the February 2012 amendments. 25Although the dismissal of the summons ultimately did not turn on those issues, it is a relevant consideration that the Prosecutor was evidently willing to run a test case on issues which had become academic by reason of the February 2012 amendments.

Relevant sequence of events regarding the charge and the proceedings. 26On 14 November 2012 (prior to the first return date), the Defendant's solicitors wrote to the Prosecutor and, expressly in the interests of resolving the proceedings in the most just, quick and cheap manner, conveyed a without prejudice offer that the Defendant would enter a guilty plea to the water pollution charge on the condition that the Prosecutor discontinue the failure to notify charge. The offer was supported by reasons. It was rejected by the Prosecutor. 27On 22 February 2013, the Defendant pleaded guilty to the water pollution charge and not guilty to the failure to notify charge. The sentence hearing for the water pollution offence was necessarily deferred until the determination of the contested failure to notify charge. 28The service of the Defendant's affidavits was beyond what is required by the case management provisions of the CP Act. The Defendant placed its lay evidence on the table in advance of trial and that evidence put the Prosecutor on notice that the Defendant was defending, inter alia, on the basis that it was not aware on 9 October 2011 that the incident had caused or threatened material harm to the environment. Whether the conduct of the proceedings by the Prosecutor after receiving these affidavits was exceptional must be adjudged in the light of its awareness of that evidence. 29On 22 November 2013, as the matter approached trial, the Defendant's solicitors again wrote to the Prosecutor, making representations as to why the Prosecutor should not proceed to trial on the failure to notify charge. These representations were grounded in the interests of the proportionate conduct of the litigation. The Prosecutor did not accept the representations.

Principles 30In determining whether the ground articulated in s 257D(1)(d) of the CP Act is made out, the Court should have regard to the following principles: (a)The word exceptional is not defined in the CP Act and is potentially of broad ambit. Its ordinary meaning is something out of the ordinary or unusual: Port Macquarie - Hastings Council v Lawlor Services Pty Ltd (No 7) [2008] NSWLEC 75; (2008) 139 LGERA 87, at [75]. (b)The exceptional circumstances must relate to the conduct of the proceedings by the Prosecutor: Lawlor Services at [75]. (c)The word other before exceptional circumstances contemplates that there may be exceptional circumstances other than those identified in subparagraphs (a) - (c), which enliven the power to award costs in favour of a defendant under this remainder category. (d)The preceding propositions are derived from the plain words of subparagraph (d). It would be an error to place any gloss on those words by overlaying a different test. 31It is just and reasonable to award costs to the Defendant because of these exceptional circumstances. It may be accepted that the Prosecutor has a discretion as to which charges it brings and presses to a contested hearing and what charges it declines to bring or press to a contested hearing. However, that does not mean that the Prosecutor should be immunised from any costs consequences flowing from the decisions it makes in the conduct of summary criminal proceedings. It would in no way interfere with the Prosecutor's discretion for the Court to make an award of costs in favour of a defendant pursuant to s 257D(1)(d) if the Court is satisfied that there are exceptional circumstances relating to the conduct of the prosecution by the prosecutor which make it just and reasonable to make such an award.

Response to first contention s 257D(1)(a) of the CP Act

Statutory construction of s 148(2) of the PEO Act 32The Defendant has not established that the investigation was unreasonable within the meaning of s 257D(1)(a) of the CP Act in relation to the failure to call Mr Hiatt. What Mr Hiatt might or might not have said had no relevance to the proper construction of s 148(2) of the PEO Act and the possible outcomes of the proceedings had the construction advanced by the Prosecution been accepted by the Court. The Defendant accepted this. 33Mr Hiatt was simply irrelevant to the case advanced by the Prosecutor based upon the construction of s 148(2) for which it contended. It was agreed that Mr Hiatt knew on Sunday, 9 October 2011 that there had been a pollution incident. On the construction of s 148(2) of the PEO Act for which the Prosecutor contended, that was enough. 34Secondly, and in any event, this is not a case where a witness was not interviewed and as a consequence was not called. In Coomes the Court referred at [60] to the decision of the Supreme Court of New South Wales in De Varda v Constable Stengord (NSW Police) [2011] NSWLEC 868 as follows: De Varda, relied on by the Defendants, also does not assist in the circumstances of this case. Davies J in considering s 214(1)(a), an identical provision to s 257D(1)(a) applying to lower Courts, held (at [31]) that the "paragraph can be satisfied without proof of what an uncalled witness would have said. "If the "prosecution interviews and calls fewer than the available eyewitnesses the section may apply". If a "witness who was not interviewed and called, might have thrown a different perspective on the matter the paragraph may apply" These are not binding statements of principle which require that every witness be interviewed regardless of the circumstances. 35What Davies J said in De Varda may not be binding in terms of principle, but he and the courts more generally have been called upon to consider the failure to interview a witness as a possible trigger for s 257D(1)(a) in circumstances where not only has a material witness not been interviewed, but as a consequence the witness has not been called. This is readily understandable in a circumstantial case where a material witness who was not interviewed or called might have given direct evidence. 36This is a very different case. Mr Hiatt may not have been interviewed but he swore an affidavit and gave evidence on behalf of the Defendant. That evidence was challenged by the Prosecutor. It would be illogical to apply s 257D(1)(a) in respect of a witness who was not interviewed but who gave evidence and whose evidence was the subject of challenge. There is no suggestion that had Mr Hiatt been interviewed he would have said anything other than what he said in his affidavit. 37The investigation period is ongoing after proceedings have commenced. It did not stop when proceedings commenced in October 2012. Mr Hiatt provided an affidavit through the Defendant's solicitors in July 2013 and his evidence was tested in the proceedings.

Prosecutor's alternative case - the Defendant knew on 9 October 2011 of material harm to the environment (s 257D(1)(a)) 38As has already been noted the Prosecutor conducted the proceedings in the alternative on the basis that if the Prosecution was required to prove as an element of the offence that the Defendant had knowledge on Sunday, 9 October 2011 that the pollution incident had caused or threatened material harm to the environment, then the Defendant had such knowledge on that day and it was practicable to report it. The Court determined that the Prosecutor had not proved this matter beyond reasonable doubt. 39It is submitted that it was not unreasonable that Mr Hiatt was not interviewed in respect of the Prosecutor's alternative case, namely, that the Defendant knew on Sunday 9 October 2011, that the pollution incident had threatened or caused material harm to the environment, and that it was "practicable" to report the matter on that day. 40None of the matters relied on by the Defendant in relation to its first contention demonstrate an unreasonable investigation. On the assumption that Mr Hiatt was a material witness he was called. Well before the hearing the Prosecutor had received his affidavit. This is not a case where a Prosecutor failed to interview a material witness who should have been interviewed and called. Each of the particular factual matters identified by the Defendant in its first contention were known to both parties by the time the trial commenced. 41Firstly for the purposes of deciding whether costs should be ordered in this case it is irrelevant that Mr Hiatt was a material witness. The fact is that Mr Hiatt was called. The fact that he was not interviewed had no impact upon the proceedings whatever. This is not a case where there was both a failure to interview and a failure to call a witness who might have thrown a different perspective on the matter. This is not a case where what Mr Hiatt might have said was unknown. Well prior to the commencement of the trial everyone knew what he would say by reason of the fact that he had sworn an affidavit. However, the Prosecutor did not accept that the Defendant was unaware on Sunday 9 October 2011 that the pollution incident had caused or threatened material harm to the environment or that it was impracticable to report the matter on that day. A number of the matters relied upon by the Prosecutor are referred to in Bulga (No 1). 42It was reasonable and entirely legitimate for the Prosecutor to take the position during its investigation that to the extent that there was to be a contest on the issue of the Defendant's state of mind concerning material harm on Sunday 9 October 2011, the Defendant's evidence, including that of Mr Hiatt, should be tested at trial. 43Secondly, the Defendant relies upon its Incident Management Procedure which, according to the Defendant, indicates that Mr Hiatt was the person responsible for notifying incidents to the Prosecutor. That is not at all clear from the Incident Management Flow Chart which suggests that although internally the matter would be reported via the Department Manager (Mr Bower) to the Operations Manager (Mr Hiatt) external reporting would be made via the Department Manager (Mr Bower) and any one of the Environmental Coordinator (Mr Amidy), the HS&T Manager or the Statutory Manager. The Prosecutor was entitled to take the position that the Incident Management Procedure was not determinative of anything. The internal company procedures could not displace statutory reporting duties. That was the case advanced by the Prosecutor at trial. 44It was reasonable for the Prosecutor to contend that because their knowledge was the Defendant's knowledge each of these individuals and, in particular, Mr Amidy had an obligation to report the matter on Sunday 9 October 2011. Mr Amidy was the officer who in fact reported the matter the next day and had reported in the past. He did not suggest when interviewed that his ability to report was in some way constrained by the terms of the Incident Management Procedure. 45The fact that the Court accepted the evidence of the Defendant's witnesses, including Mr Hiatt, at trial, is not of significance in an assessment of whether the earlier investigation was reasonably conducted by the Prosecutor.

Statutory construction of s 148(2) 46In its second contention, the Defendant argued that the proceedings were initiated without reasonable cause within the meaning of s 257D(1)(b) of the CP Act because the construction of s 148(2) of the PEO Act for which the Prosecutor contended was contrary to established principle and had no real or substantial prospects of success. According to the Defendant, the construction of s 148(2) for which the Prosecutor contended was not reasonably arguable. That submission is plainly wrong. In support of it the Defendant merely re-agitates the position put by it at trial. 47As the Court noted, these proceedings were the first prosecution where a plea of not guilty had been entered for an offence based upon s 148(2) of the PEO Act. Comprehensive submissions were advanced by the Prosecutor and the Defendant in relation to the proper construction of s 148(2). Each of those submissions was carefully considered by the Court. Ultimately, the Court preferred the construction advanced by the Defendant. On no view of the matter could it be said that the argument of the Prosecutor was unworthy of consideration. A party cannot be said to have commenced proceedings without reasonable cause merely because the proceedings were unsuccessful. 48The position here is not dissimilar to that which faced the Court in A1 Professional Tree Recycling. There the Court acknowledged that the parties had advanced competing constructions in relation to the provisions of a Tree Preservation Order which were critical to the outcome of the case. The Court noted that the correct construction was a matter of some difficulty, that the defendant's construction was to be preferred, that the prosecutor's construction was reasonably arguable, and that it was not to the point that the Court preferred the defendant's construction. 49A similar situation arose in Halpin v Department of Gaming and Racing [2007] NSWSC 815 where the Court was required to consider whether proceedings had been initiated without reasonable cause within the meaning of s 70(1)(b) of the Crimes (Appeal and Review) Act 2001 in circumstances where the Court had been required to determine competing interpretations of certain provisions of the Gaming Machines Act 2001. The Court noted that the outcome of many proceedings turns upon the Court in question establishing the proper construction of statutory provisions and then applying them as so interpreted to the facts of a particular case. The fact that a party pursued proceedings upon the basis of an interpretation of the legislation which was ultimately held to be incorrect did not satisfy the requisite test in s 70(1)(b) of the Crimes (Appeal and Review) Act. 50The threshold for establishing that proceedings have been "initiated without reasonable cause" within the meaning of s 257D(1)(b) is a high one. It has been considered by the Court on a number of occasions. An applicant who has the benefit of the protection of s 257D(1)(b) "will only rarely be ordered to pay the costs of a proceeding in exceptional circumstances": Thompson v Hodder (1989) 21 FCR 467 at 470 cited with apparent approval in A1 Professional Tree Recycling at [11]. It has been said that the protection afforded by provisions similar to s 257D(1)(b) is in the form of conferring a power on the Court to order costs against a party who in substance institutes proceedings which in other jurisdictions might constitute an abuse of the process of a court: Heidt v Chrysler Australia Ltd (1976) 26 FLR 257 at 272 cited with approval in Thompson v Hodder at 469-470, see also A1 Professional Tree Recycling at [11]. 51The approach adopted by Wilcox J in Kanan v Australian Postal and Telecommunications Union (1992) 43 IR 257 has been followed in a number of other criminal proceedings. His Honour at 264 said: It seems to me that one way of testing whether a proceeding is instituted "without reasonable cause" is to ask whether upon the facts apparent to the applicant at the time of instituting the proceeding, there was no substantial prospect of success. If success depends upon the resolution in the applicant's favour of one or more arguable points of law, it is inappropriate to stigmatise the proceedings as being "without reasonable cause". But where on the applicant's own version of the facts, it is clear that the proceeding must fail, it may properly be said that the proceeding lacks reasonable cause. 52The construction of s 148(2) of the PEO Act for which the Prosecutor contended raised arguable points of law. The test to be applied has been described as being similar to the one applied by a court on an application for the exercise of summary power to stay or strike out proceedings: Council of Kangan Batman Institute of Technical and Further Education v Australian Industrial Relations Commission [2006] FCAFC 199; (2006) 156 FCR 275 at [63]; Halpin at [60]. On no view of the matter (had the proceedings been civil litigation) would the Court have exercised the summary power to stay or strike them out on the basis that the statutory construction advanced by the Prosecutor was unarguable. The Court could not reasonably conclude that this prosecution had no real prospects of success or was doomed to failure: Council of Kangan Batman Institute of Technical and Further Education at [60]; A1 Professional Tree Recycling at [14].

Alternative case - Defendant had knowledge of material harm 53The alternative case advanced by the Prosecutor was, as has already been noted, that the Defendant had knowledge on Sunday, 9 October 2011 that the pollution incident had caused or threatened material harm to the environment. 54In the second contention, the Defendant claimed that if proof of mens rea was required, this reasonably necessitated inquiry to be made of Mr Hiatt and the proceedings should not have been initiated without those inquiries having been made. More particularly, the Defendant asserted that the Prosecutor's case was untenable. For the following reasons the Defendant's submissions are misconceived. First it was agreed between the parties that the knowledge held by each of Mr de Groot, Mr Amidy, Mr Bower and Mr Hiatt was knowledge which was attributable to the Defendant. 55Put another way, if the knowledge of any of Mr de Groot, Mr Amidy, Mr Bower and Mr Hiatt on Sunday 9 October 2011 was that the pollution incident had caused or threatened material harm, then that was knowledge of the Defendant as at Sunday 9 October 2011 and the incident should have been reported on that day. Again it is noted that although the Defendant sought to reserve its position in relation to whether Mr de Groot or Mr Bower had any entitlement or responsibility to report, no such reservation was made in respect of Mr Amidy or Mr Hiatt. It was the Prosecutor's case that each of these persons had the relevant knowledge as at Sunday 9 October 2011, and that the matter should have been reported on that day by at least Mr Amidy, Mr Bower or Mr Hiatt. It is simply silly to suggest that an interview with Mr Hiatt prior to the commencement of proceedings would have made any difference. By the time the trial commenced Mr Hiatt had sworn an affidavit. The Prosecutor knew what he would say but did not accept it. 56It was reasonable for the Prosecutor to take the position that the Defendant's evidence would be tested at trial. It cannot be said that the fact that Mr Hiatt was not interviewed had any material bearing on whether the proceedings were initiated without reasonable cause within the meaning of s 257D(1). 57Second, and in any event, the reasonableness of the decision to institute proceedings is not based upon the test used by the Prosecutor's authorities for continuing to prosecute (whether there is a reasonable prospect of conviction) or the existence of a prima facie case. The question is whether, objectively assessed on the facts, or those apparent at the time of initiation, the proceedings had no real prospects of success or were doomed to fail. The relevant facts are those known at the time of commencement of the proceedings. 58The relevant facts known at the time of commencement of the proceedings did not include what Mr Hiatt ultimately said in his affidavit. However, based upon what was known to the Prosecutor at that time, it cannot be said that the proceedings had no prospects of success or were doomed to fail. It was the Prosecutor's position that on the assumption that the Defendant had knowledge on Sunday 9 October 2011 that the pollution incident had caused or threatened material harm, then at the very least each of Mr Bower Mr Amidy and Mr Hiatt had a responsibility to report it. The Defendant did not suggest in the agreed statement of facts (ASF) that Mr Amidy was not entitled to or responsible for reporting the matter.

Third contention - exceptional circumstances s 257D(1)(d) 59Consideration of authorities suggests that the Defendant's submissions are misconceived. In Fosse v Director of Public Prosecutions [1999] NSWSC 367 Wood CJ at CL considered s 81(4)(d) of the Justices Act 1902 in relation to the expression "an exceptional circumstance". His Honour said: In that regard the mere fact that the proceedings were resolved in his favour was not enough. There had to be something in relation to the manner in which the proceedings were conducted that had led to it being just and reasonable for a costs order to be made. 60This approach was cited with approval in Director of Public Prosecutions v Barnes [2010] NSWSC 1040, Dong v Hughes [2005] NSWSC 84, Australian Securities and Investments Commission v Farley [2001] NSWSC 326; (2001) 51 NSWLR 484, and Coles Supermarkets Australia Pty Ltd v Townsden [2009] NSWSC 1117. None of the matters identified by the Defendant relate to the manner in which the criminal proceedings were conducted. Further, it is necessary in order to enliven s 257D(1)(d) of the CP Act that the circumstances relating to the conduct of the proceedings by the Prosecutor be something out of the ordinary or unusual. Nothing relied upon by the Defendant in support of this ground is out of the ordinary or unusual. 61Whether or not the offence committed was a technical or trivial breach is irrelevant. It does not concern the conduct of the prosecution by the Prosecutor. The Court cannot second guess the Prosecutor's decision to institute and continue proceedings, that is impermissible: Maxwell v R [1996] HCA 46; (1996) 184 CLR 501; Director of Public Prosecutions v B [1998] HCA 45; (1998) 194 CLR 566; Magaming v R [2013] HCA 40; (2013) 302 ALR 461. 62This was not a technical or trivial breach. In Environment Protection Authority v Caltex Australia Petroleum Pty Limited [2007] NSWLEC 647, a case where due to oversight there was a failure to report, Jagot J at [25] accepted that the policy objective of protecting the environment and the community which underpins s 148 is not necessarily dependent on the seriousness of the particular incident being reported. There is a need for the upholding of the regulatory system under the PEO Act. Further, although in the current proceedings the Court did not resolve the question of whether there had been material harm to the environment in the form of actual or potential harm to ecosystems which is not trivial, the clean-up costs amounted to internal costs of $94,550 and $193,440 of external costs. That involves very significant environmental harm within the meaning of s 147(1)(a)(ii) and s 147(1)(b) of the PEO Act. 63That amendments may have been made to Pt 5.7 of the PEO Act is irrelevant. The fact of amendment has nothing to do with the conduct of the proceedings by the Prosecutor. Contrary to the submission advanced by the Defendant, this was not a test case on issues which had become academic as a consequence of the amendments. The question of whether or not knowledge that a pollution event caused or threatened material harm was an element of the offence is a question that arose not only in relation to the legislation as it stood prior to the February 2012 amendments, but after those amendments. The replacement of the words as soon as practicable with the word immediately has nothing to do with this question of statutory construction.

Finding 64While the parties' written submissions were reasonably lengthy as set out above, the issues in relation to the first and second contentions narrowed during the hearing and these can be dealt with relatively briefly.

First contention subsection (a) 65The Defendant contended that the investigation into the alleged offence was conducted in an unreasonable manner within the meaning of s 257D(1)(a) of the CP Act by reason of the Prosecutor's failure to interview the Defendant's Operations Manager, Mr Hiatt. The principles in par 9 of the Defendant's submissions were agreed to apply. To summarise, there is no threshold of a gross failure required to be established in order to succeed on this ground, the test is objective and a prosecutor's failure to interview a material witness has been held to satisfy the test. In Cliftleigh the failure by the prosecuting council to interview and call a material witness was found in the Court of Criminal Appeal to be unreasonable for the purposes of an equivalent section, s 70 of the Crimes (Local Courts and Appeal) Act 2001 at [19]. The circumstances in that case were different in that the witness did not appear at the trial. Here Mr Hiatt did give evidence at the hearing. 66It is accepted by the Defendant that Mr Hiatt's evidence was not relevant to the first alternative case of the Prosecutor at the hearing as to the statutory construction of s 148(2). Given that position this ground cannot succeed as there could be no unreasonable failure of investigation by the Prosecutor in relation to Mr Hiatt in that circumstance. 67Further, and contrary to the Defendant's submission that the investigation phase stopped when proceedings were commenced, the investigation process is ongoing and does not stop arbitrarily when proceedings are commenced by filing a summons. I agree with the Prosecutor's submission that the investigation phase was ongoing after proceedings commenced. While the steps by which this occurred involved first the Defendant providing Mr Hiatt's affidavit and the Prosecutor then noting the agreement between the parties that he would be called by the Defendant in the s 247J notice, Mr Hiatt was before the Court at the hearing. The circumstances are unlike those in Cliftleigh where the material witness was not interviewed and did not appear at all. Given this conclusion I do not need to further consider the Defendant's submissions in relation to the content of the ROIs and of the Defendant's Incident Management Procedure manual. (Consequently I have not set out all the Prosecutor's lengthy submissions on these documents.) 68A further matter to consider, as raised in the Prosecutor's submissions, is that in its second alternative case that the Defendant's employees were aware of material environmental harm on 9 October 2011, it did not rely on the Defendant's chain of command which meant that only Mr Hiatt was the appropriate reporting officer. Interviewing Mr Hiatt was not relevant to that case theory as the Prosecutor had evidence from Mr Bower and Mr Amidy which potentially confirmed the Prosecutor's case theory. It was ultimately unnecessary for the Court to resolve the issue of whether if employees other than Mr Hiatt were aware of material harm on 9 October 2011 they should have reported the pollution incident then. 69I find there was no failure by the Prosecutor to investigate or call a material witness. The Defendant does not succeed on its case relying on s 257D(1)(a).

Second contention subsection (b) 70The Defendant contended that the proceedings were initiated without reasonable cause within the meaning of s 257D(1)(b) of the CP Act because the Prosecutor's case had no real prospect of success. The principles in the Defendant's case referred to in par 18 can theoretically apply. Most notably if objective assessment of the facts at the time of commencing proceedings suggests there were no real or substantial prospects of success or they were doomed to fail, reference can be made to the quality of evidence and the inquiries made or not made. The failure of a prosecutor does not on its own satisfy the subsection per A1 Professional Tree Recycling at [15(e)]; Coomes at [75]. 71The first alternative of the Prosecutor related to the statutory construction of s 148(2) of the PEO Act, the construction issues raised by that approach arising for the first time for consideration in this Court. My lengthy reasons on the statutory construction issues raised by the Prosecutor's first alternative are set out in Bulga (No 1) at [58]-[95]. For the reasons given by the Prosecutor identified above in par 47-52 including that this issue had not arisen before in the Court I do not consider the Defendant has discharged its onus of proof in relation to subsection (b). The authorities such as Thompson v Hodder identify that the threshold is a high one. The proceedings were not an abuse of court process, and this was not alleged. 72One of the principles cited in par 18, summarised above, addresses circumstances where fact finding is potentially found to be deficient suggesting the proceedings should not have been commenced. There was no criticism made of the fact finding necessary to underpin the (ultimately unsuccessful) statutory construction argument of the Prosecutor (as opposed to the alternative case of the Prosecutor which related to whether employees of the Defendant knew material harm was caused on a certain day). The Prosecutor's statutory construction argument was squarely a legal matter. Two cases of A1 Professional Tree Recycling and Halpin referred to in the Prosecutor's submissions at par 48 and 49 are two examples of the correct approach in this circumstance, namely that the pursuit of a legal question that was ultimately unsuccessful does not satisfy s 257D(1)(b). Kanan per Wilcox J as cited above in par 51 has been referred to in many cases as a useful guide. Success for the Prosecutor depended on an arguable point of law. Unless the Prosecutor's construction was manifestly hopeless it is difficult for the Defendant to succeed in these circumstances under this subsection and it has not. 73The alternative position concerning whether the Defendant had subjective knowledge of material harm need not strictly arise given my conclusion above that the Defendant has not established that the proceedings were commenced without reasonable cause in relation to the statutory construction case. For the reasons given by the Prosecutor I also do not consider that the alternative case of the Prosecutor can be said to have been initiated with no reasonable cause because Mr Hiatt was not interviewed before proceedings were commenced. 74The Prosecutor's submissions at par 55 identify the alternative case that the knowledge of at least one of the Defendant's employees such as Mr Bower and Mr Amidy was knowledge of the Defendant on Sunday 9 October 2011 if established (it was not). As already identified in relation to the first contention, that case theory did not rely on Mr Hiatt's role as Operations Manager. Because of the Court's findings that no employee had knowledge of material environmental harm as defined in the PEO Act on 9 October 2011 it was unnecessary to resolve this part of the Prosecutor's case but it cannot be said that view was untenable. 75The Defendant does not succeed on its claim for costs under s 257(1)(b).

Third contention subsection (d) 76There are other circumstances relied on by the Defendant as so exceptional as to justify an award of costs from different dates, as explained in the Defendant's submissions. To be relevant these must relate to the Prosecutor's conduct of the proceedings so as to make it just and reasonable to award professional costs to the Defendant pursuant to s 257D(1)(d). The principles in par 30 of the Defendant's submissions may be accepted, so far as they go, in defining exceptional as unusual. This leaves relatively open ended what circumstances could result in an award of costs under subsection (d) other than that the circumstances are beyond what has been considered in relation to the other subsections in s 257D(1) and relate to the conduct of the proceedings. The section requires that the Court find there are exceptional circumstances firstly and, if there are, whether it is just and reasonable to award professional costs in favour of the Defendant. 77The Defendant relied on various events in relation to the plea of guilty to the water pollution offence, the amendment of s 148(2), the provision of proofs of evidence by the Defendant including of Mr Hiatt on or about 24 July 2013, the making of representations by the Defendant's solicitors on 14 November 2012 and 22 November 2013 in light of the plea of guilty by the Defendant to the water pollution offence, that the charge was for a technical and trivial breach if proved by the Prosecutor, to argue that the Prosecutor continuing with the proceedings beyond various dates was exceptional. Further those circumstances suggested it was just and reasonable for the Defendant to be awarded costs. The Defendant did not argue that the proceedings should not have been commenced and does not seek all its costs. It seeks them in the alternative from different dates on the basis that at these points in time the Prosecutor should have chosen not to proceed with the prosecution because of the unusual circumstances. 78As the Prosecutor submitted subsection (d) refers to exceptional circumstances relating to the conduct of the proceedings and I agree that amendments to Pt 5.7 of the PEO Act do not relate to the conduct of the proceedings. Further, for the reasons given by the Prosecutor in par 63 above the characterisation of the amendments as rendering these proceedings to be academic only is not accurate. These two matters which I have considered discretely also inform the central issue raised by the Defendant which is the exercise of the Prosecutor's discretion to continue the proceedings despite written representations from the Defendant's solicitor and the provision of the Defendant's affidavit evidence well in advance of the trial. 79The Prosecutor does not consider that the decision to commence and continue proceedings comes within the phrase "conduct of the proceedings". I am inclined to agree. Further, the Prosecutor submitted that the Court cannot in any event review a prosecutor's discretion to commence and continue proceedings citing Maxwell at 534 and other authorities referred to at par 61. The authorities cited by the Prosecutor confirm that submission. 80I therefore cannot agree with the Defendant that I can consider the actions of the Prosecutor in the manner contended for by the Defendant, namely the Prosecutor not choosing to discontinue proceedings as part of this costs application. The decision to continue with proceedings is essentially the same exercise of the Prosecutor's discretion as the decision to commence proceedings. The matters identified by the Defendant at par 26-29 are matters where the Court is asked to impermissibly second guess decisions of the Prosecutor. The provision of the Defendant's affidavit evidence well in advance of trial is submitted to be unusual but if it is that alone does not give rise to exceptional circumstances suggesting costs should be awarded to the Defendant. 81I agree with the Prosecutor's supplementary submissions dated 21 May 2014 that proceedings initiated without reasonable cause and, I add, continued without reasonable cause are an abuse of process and this is the way courts have considered that issue when determining costs. If there is an abuse of process the Court has power to grant a stay at any stage of the proceedings. The cases cited in footnote five of the Prosecutor's additional submissions include Heidt v Chrysler Australia Ltd at 272 quoted in Thompson v Hodder at 470, both civil proceedings. To apply these in a criminal law context must be done with care but I agree that a high hurdle is set for the Defendant whereby an abuse of process argument may need to be maintained in order to succeed. I note these authorities were adopted in A1 Professional Tree Recycling, a criminal matter in which the Court was considering an application for costs under s 257D(1)(b). That section deals with whether proceedings have been commenced without reasonable cause and is related to the matters raised by the Defendant in relation to subsection (d). 82That leaves the Defendant's submission that the offence was trivial or technical which, as the Prosecutor submitted, can have no role to play in this costs application as that submission is really directed to the merits of the Prosecutor's decision to continue proceedings. 83The Defendant is unsuccessful on its application for costs and it should be dismissed. Costs are reserved.

Orders 84The Court makes the following orders: (1)The Defendant's application for costs is dismissed. (2)Costs reserved. (3)The exhibits may be returned.

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. Decision last updated: 06 June 2014