Environment Protection Authority v Caltex Australia Petroleum Pty Ltd

Orders sought

1. The prosecutor sought, and the defendant accepted, that, in addition to entering a conviction, imposing a fine, and making an order against the defendant for costs (in the agreed sum of $450,000), the Court should make orders, pursuant to s 250(1) of the POEO Act, requiring; 1. the placement of notices in the media, and in the defendant's Annual Report; 2. the payment of 50% of the amount of any fine imposed, instead, to each of: 1. the City of Botany Bay for the "Bushcare and bushland management project in Sir Joseph Banks Park", and 2. the Department of Primary Industries for "Stocking Mulloway to enhance recreational fishing opportunities in Botany Bay"; and 1. the acknowledgement of the fact of conviction and penalty in any public references to the payments in (2).
2. Appearing for Caltex, Mr Walker SC reminded the Court (Tp49, LL34 - 36) "that the good works that may be funded by a fine don't justify the increase of what would otherwise be a fine".

The Charge

1. The charge was finally framed in these terms (Further Amended Summons filed in Court, by consent, on 23 May 2016, some emphasis added): ... between about 23 May 2013 and about 12 July 2013, at Banksmeadow in the State of New South Wales, the Defendant committed an offence against section 116(2)(d) of the Protection of the Environment Operations Act 1997 ("the [POEO] Act") in that, being the occupier of the land on which a substance escaped and on which the container from which the substance escaped was located at the time of the escape, the Defendant did negligently, in a material respect, contribute to the conditions that gave rise to the commission of an offence under section 116(1) of the [POEO] Act, namely the offence by Pasquale Crisafulli that, on or about 12 July 2013, Pasquale Crisafulli negligently caused a substance to escape in a manner that harmed or was likely to harm the environment.
2. For context, I set out s 116 of the POEO Act in full (with some emphasis added): Leaks, spillages and other escapes (1) If a person wilfully or negligently causes any substance to leak, spill or otherwise escape (whether or not from a container) in a manner that harms or is likely to harm the environment: (a) the person, and (b) if the person is not the owner of the substance, the owner, are each guilty of an offence. (2) If: (a) the person in possession of the substance at the time of the leak, spill or other escape, or (b) the owner of any container from which the substance leaked, spilled or escaped, or (c) the owner of the land on which the substance or any such container was located at the time of the leak, spill or other escape, or (d) the occupier of the land on which the substance or any such container was located at the time of the leak, spill or other escape, wilfully or negligently, in a material respect, caused or contributed to the conditions that gave rise to the commission of the offence under subsection (1), that person, owner or occupier is guilty of an offence. (3) A person may be proceeded against and convicted of an offence under subsection (2) whether or not a person has been proceeded against or convicted of an offence under subsection (1) in respect of the leak, spill or other escape. (4) It is a defence in any proceedings against a person for an offence under this section if the person establishes that the leak, spill or other escape was caused with lawful authority. (5) In this section: container includes anything used for the purpose of storing, transporting or handling the substance concerned. owner of a substance includes, in relation to a substance that has leaked, spilled or otherwise escaped, the person who was the owner of the substance immediately before it leaked, spilled or otherwise escaped.
3. In the present case, the prosecutor made an election under s 116(3), and charged Caltex, under s 116(2)(d), with, being the occupier of the subject land, and "negligently, in a material respect" contributing to the conditions that gave rise to the commission by Pasquale Crisafulli of an offence against s 116(1).
4. The following particulars of the charge are set out in the Further Amended Summons: 1. The land The land of which the Defendant was the occupier, on which the substance which escaped and the container from which the substance escaped was located at the time of the escape was land known as the "Banksmeadow Terminal", at Penryhn Road, Banksmeadow, New South Wales. [See Exhibit P2] 2. The substance The substance which escaped was a petroleum product principally comprising unleaded petrol and also comprising some water and some particulate contaminants (the Petroleum Product). 3. The container The container from which the substance escaped was an above-ground storage tank located on the subject land (particularised below), known as "Tank 901" (Tank 901). [See tabs 2, 6, 19, and 21 of Exhibit P1] 4. The escape of the substance Up to approximately 157,200 litres of the Petroleum Product escaped from Tank 901 on 12 July 2013, for a period of about 81 minutes commencing shortly before 1:30 am and continuing until about 2:50 am. Upon escaping from Tank 901, the Petroleum Product took the form of liquid and vapour. 5. Particulars of manner in which Mr Crisafulli negligently caused the Petroleum Product to escape from Tank 901 (a) Presenting himself for work at the Banksmeadow Terminal on 11 July 2013 in a highly intoxicated state, surreptitiously consuming alcohol while on the shift and not disclosing this state or consumption to the Defendant, including the Defendant's Yard Coordinator, and personnel of Wood Group PSN Australia Pty Ltd (PSN), including, Mr Browning; (b) Receiving a permit to work from the Defendant's Yard Coordinator and signing the permit to work [tab 15 of Exhibit P1] as Work Supervisor for an operation involving the attempted transfer of 60,000 litres of petroleum product from Tank 901, via its water draw valve, to slops storage using a temporary arrangement of pumps and hosing and associated fittings (the "Tank 901 Product Transfer Exercise") in circumstances where Mr Crisafulli did not understand the responsibilities associated with the role of Work Supervisor despite having previously received training on the Caltex permit to work procedures; (c) Failing to fulfil the responsibilities associated with the role of Work Supervisor, including by undertaking the Tank 901 Product Transfer Exercise as Work Supervisor without providing any, or any proper, supervision including by failing to exercise adequate oversight to ensure the Tank 901 Product Transfer Exercise was carried out safely; (d) Representing to the Defendant, including the Defendant's Yard Coordinator that he was capable of carrying out the Tank 901 Product Transfer Exercise; (e) Urging the Defendant's Yard Coordinator to continue the Tank 901 Product Transfer Exercise in circumstances where the Yard Coordinator wished to cease the Tank 901 Product Transfer Exercise; (f) Incorrectly fitting and failing to secure the coupling of a temporary hose to the elbow joint affixed to the water draw valve of Tank 901 during the Tank 901 Product Transfer Exercise by using a spanner to apply excessive force to the point of overload to the coupling arms on the female coupling fitting while in the open position thereby fracturing both coupling arms and then taping the lower section of the male coupling; (g) Securing the coupling of a temporary hose to a 90 degree elbow fitting so that the mouth of the elbow fitting was facing vertically upwards (also termed an upturned gooseneck fitting [emphasis added]); [The fitting can be seen in photographs at tabs 7 to 11 of Exhibit P1, and is before the Court as Exhibit P5, with its "camlocks" now repaired]; (h) Opening the water draw valve of Tank 901 in circumstances where he knew or should have known that the coupling was incorrectly fitted and not secure; and (i) Continuing to open the water draw valve of Tank 901 after first observing droplets of fluid leaking from the coupling between the temporary hose and the elbow joint affixed to the water draw valve when the valve was first cracked open. [The coupling can be seen in Exhibit P3] 6. Particulars of harm or likely harm to the environment (a) The Petroleum Product escaped in a manner that caused harm to the environment in that its escape caused air pollution by reason of the emission into the air of air impurities comprising petroleum vapours and odours. (b) The Petroleum Product escaped in a manner that caused harm to the environment being harm to identified workers (Mr Crisafulli and Mr Browning) and emergency personnel (Mr Vaysbakh and Mr Morasso) who came into contact with the fuel and were in the immediate vicinity due to the inhalation and ingestion of petroleum and petroleum vapours. 7. Manner in which the Defendant negligently, in a material respect, contributed to the conditions that gave rise to the commission of the offence by Mr Crisafulli against s116(1) of the [POEO] Act The Defendant negligently, in a material respect, contributed to the conditions that gave rise to the commission of the offence under s 116(1) of the [POEO] Act in that: (a) The Tank 901 Product Transfer Exercise was an exercise carried out as part of the implementation by the Defendant of abnormal procedures at the Banksmeadow Terminal after the Defendant became aware that petroleum product being transferred from the Kurnell Refinery through "Pipeline A" was contaminated with particulates. (b) The abnormal procedures the Defendant caused to be carried out of which the Tank 901 Product Transfer Exercise formed part, involved: (i). allowing petroleum product known or suspected to be contaminated with particulates to settle in storage tanks at the Banksmeadow Terminal, including Tank 901, with the intention of transferring the lowest stratum or strata of the petroleum product in the tank/s from the water draw valve to slops using a temporary arrangement of pumps and hoses and associated equipment; and (ii). using a temporary arrangement of pumps and hoses and associated equipment to transfer petroleum product, including contaminated petroleum product from the water draw valves at the base of storage tanks to slops storage. (c) The Defendant caused the abnormal procedures, including the Tank 901 Product Transfer Exercise, to be carried out without any risk assessment carried out under the Defendant's management of change process which forms part of the Defendant's Operational Excellence Management System. (d) The Defendant caused the Tank 901 Product Transfer Exercise to be carried out, using a temporary arrangement of pumps and hosing and associated fittings, at night under inadequate lighting. (e) The Defendant caused the Tank 901 Product Transfer Exercise to be carried out with a 90 degree elbow fitting, which could only practicably be affixed to the water draw valve of Tank 901 with its mouth facing vertically upwards. (f) The Defendant issued a permit to work for the Tank 901 Product Transfer Exercise in contravention of the Defendant's permit to work procedures, in particular that no written job safety assessment form had been completed and the permit to work was issued by a probationary permit officer, without being considered and co-signed by an approved (non-probationary) permit officer. (g) The Defendant's Yard Coordinator instructed Mr Crisafulli to: (i). open slightly the water draw valve of Tank 901 (known as 'cracking open the valve'); (ii). continue to open the water draw valve of Tank 901 after being made aware that droplets of fluid had leaked from the coupling between the temporary hose and the elbow joint affixed to the water draw valve when the valve was first cracked open (notwithstanding that those droplets had stopped). (h) The Defendant caused the Tank 901 Product Transfer Exercise to be carried out in the knowledge that Tank 901 contained in excess of 2 million litres of petroleum product and in the knowledge that there was no double isolation of the water draw valve of Tank 901.
5. Section 119 of the POEO Act provides (since 2005 - emphasis added): A person who is guilty of an offence under this Part is liable, on conviction: (a) in the case of a corporation - to a penalty not exceeding $5,000,000 for an offence that is committed wilfully or $2,000,000 for an offence that is committed negligently ... ...
6. The charge brought against Caltex does not allege any "wilful" element, so the relevant maximum penalty Caltex faces is a fine of $2 million.

Mr Crisafulli

1. Mr Pasquale Crisafulli, named in charge particulars 5 to 7, was, at the time of the offence, an employee of a company generally known as "Production Services Network", or "PSN". (The correct name of the company is Wood Group PSN Australia Pty Ltd - SAF 4, and particular 5(a) in [13] above.) PSN was a contractor to several "Caltex Refinery" companies, pursuant to a "Refinery Services Agreement" (tabs 4 and 5 of Exhibit P1).
2. Mr Crisafulli has not been charged, but Caltex's plea is to the "derivative" offence under s 116(2)(d) of the POEO Act. On the night in question, he and Browning connected the water draw valve on tank 901 ultimately to the "slops" tank 931 (Tp6, LL42 - 45). They had not regularly used, in transferring product at Kurnell, camlocks of the type involved here (Tp13, LL15 - 20).
3. Although more than 157,000 litres of fuel escaped, it was all contained within a bund designed to contain a much larger quantity, even the whole capacity of the tank (2.4 million litres - Tp18, LL33 - 39).
4. Under s 116, any offence committed by Crisafulli "is an element of the offence [charged] against Caltex" (Tp24, LL46 - 47), so Caltex's plea of guilty accepts that Crisafulli caused the "escape", in contravention of s 116(1). His negligence is detailed in the particulars of charge (see also Tp26, LL1 - 12), and includes "surreptitious" consumption of alcohol, and connection of equipment while "highly intoxicated", but he himself has "neither admitted nor been found guilty" of such matters (Tp26, LL22 - 24), and is not a party to these proceedings.
5. The Court is conscious of its obligation to stress in this judgment that Crisafulli "has not had an opportunity to reply" to what is alleged against him, and that, in the present circumstances, it is "not necessary for the Court finally to determine whether his conduct was indeed that which" the parties have described and agreed: see R v Joel Clayton Tory [2006] NSWCCA 18, per Adams J, at [12]. See also Jimmy v The Queen (2010) 77 NSWLR 540; [2010] NSWCCA 60, regarding "parity" considerations in these circumstances.
6. The prosecutor's written submissions say (par 20): The immediate cause of the incident was Mr Crisafulli's action in failing to properly connect the Camlock fitting between the hose and the gooseneck fitting. Based on the evidence, it is the prosecutor's position that Mr Crisafulli was negligent, not only in failing to properly attach the hose to the gooseneck fitting (attempting to close the Camlock arms the wrong way), but also by surreptitiously consuming alcohol while on shift and by reason of carrying out the task of connecting the hose to the water draw valve of Tank 901 while highly intoxicated by alcohol.
7. Mr Howard SC (for the prosecutor) said (Tp31, LL20 - 35): ... although the negligent conduct of Mr Chrisafulli (sic) caused the petrol to escape from tank 901, the safe transfer of 60,000 litres of product via the valve at the bottom of the tank, when the tank contains 2.3 million or more litres of petrol, by means of a temporary arrangement of a pump, a compressor, some flexible hoses and associated connection pieces, should not have been carried out at all, and should certainly not have been carried out without appropriate safeguards on a premise that a person in Mr Chrisafulli's (sic) position would not make the sort of mistake he made, whether drunk or sober. The mistake was to fix the Camlock connection the wrong way ... but ... the defendant ... contributed in a material respect to the commission of that offence, the conditions that gave rise to the commission of that offence and its degree of negligence will inform the Court as to the objective seriousness of this offence. and (at Tp32, LL10 - 14): ... the contribution of the defendant to the conditions that gave rise to the commission of the [(sic) - "offence"?] by Mr Chrisafulli (sic) was not only material but constituted a major and overarching contribution to those conditions notwithstanding that Mr Chrisafulli (sic) directly and negligently cause (sic) the discharge.
8. Mr Walker confirmed (Tp38) that Caltex's "plea carries with it an admission that" Crisafulli committed the relevant offence (L14), which was "the immediate cause of the accident" (L22), and that Caltex "admitted [its] own systemic failures" (L26).
9. However, he stressed (Tp39, L2) that Caltex and Crisafulli committed "two different offences", and (L5) that Caltex contended that, because of his "very high degree of negligence" (subs par 15), "Crisafulli was more culpable than the company". He also said (Tp39, LL19 - 200) that "there is nothing in our corporate conduct that bears any comparison in terms of wrongdoing with Mr Crisafulli's drunkenness". The spill was "substantially attributable to a person other than the defendant, in a way the defendant could not possibly foresee", so Caltex's offence "is less serious because its conduct was not directly (i.e. causally) proximate to the harmful event" (subs par 16).

The Evidence

1. The Court's sentencing task was greatly facilitated by the extensive co-operation between the parties, who were able to reach agreement on: 1. a Statement of Agreed Facts ("SAF"), running to 168 paragraphs, over 33 pages, much of which, in the interests of fairness, will be set out at great length in this judgment; 2. a bundle of 21 relevant and helpful documents, which were tendered with the SAF (as Exhibit P1); 3. the defendant's relying, without cross-examination, amendment, or objection, on three affidavits, sworn by two of its senior personnel, Rodney John Rutledge (2), and Andrew Terence Brewer; and 4. the tender of additional photographs (Exhibits P2 and P3), two items of plant/equipment (Exhibits C1 and P5), and a relevant Caltex procedure document, promulgated in December 2015 (Exhibit P4)
2. The Court acknowledges that deponents Rutledge and Brewer attended the hearing, with a number of other senior Caltex executives (see Tp38, LL33 - 45, and c.f. tab 3 of Exhibit P1). Caltex submits (par 51) that its leadership team has seen it as important that the investigation of the incident be "thorough and comprehensive", that the company "learn as much as possible" from it, and that those lessons be "embedded in the organisation" nationally.

The Incident, in brief

1. The relevant "incident" upon which the charge is based was the "uncontrolled discharge" of the subject "petroleum product", mainly unleaded petrol ("ULP"), "from the water draw valve" of storage tank 901 "into a surrounding bunded area", during the attempt to transfer the ULP to tank 931.
2. That transfer was the "last of a series of tank-to-tank transfers of ULP using temporary arrangement of hoses and pumps and associated equipment which had been conducted by Caltex over a period of about 6 weeks, commencing on 24 May 2013, in order to return gasoline products contaminated with particulates" to Caltex's Kurnell Refinery. Those procedures during that period have been referred to as "the abnormal procedures" (SAF 1, 2 and 43).
3. The bunded area surrounding tanks 901 and 902 had a surface area, exclusive of tank footprint, of 1443.598 m² (SAF 42).
4. The parties are agreed (SAF 4) that: The cause of the Incident was negligence by Mr Pasquale Crisafulli, an employee of a contractor of Caltex, ... (PSN). Caltex negligently contributed in a material respect to the conditions that gave rise to the Incident.

The site and relevant personnel

1. The Banksmeadow Terminal, at the relevant time, was a "24/7" operation, regulated by an Environmental Protection Licence ("EPL") No. 6950, and the incident occurred outside normal business hours, when the only Caltex employees on duty were Mikey Elmir and Richard Veraguth (SAF 7, 8, 12, and 13. EPL at tab 1 of Exhibit P1).
2. PSN's obligation was to provide workers for the Kurnell Refinery, but, for part of the abnormal procedures period, at Caltex's request, some of PSN's Kurnell contractors were seconded to assist at Banksmeadow.
3. At the time of the incident, Crisafulli and Paul Browning, who "had been fully inducted to work" at Kurnell, were on shift at Banksmeadow (SAF 14 - 20). Both were qualified and experienced mechanical fitters, with more than 30 years of relevant experience - Browning worked at Kurnell on overhauls, set-ups and maintenance duties, and Crisafulli worked mainly on maintaining tank mixers there. Neither was really experienced in product transfer, nor in the use of "camlock fittings". Both had worked a few shifts at Banksmeadow before the incident (SAF 21 - 33).
4. Specialist Hazmat Fire-fighter Eddie Vaysbakh had five years relevant incident/spill experience when he arrived on the scene at around 1.54 am on 12 July 2013 (SAF 34 - 35). Another NSW Fire and Rescue Officer (Station Officer Ron Morasso) is also mentioned in the SAF (at 130ff), and named in particular 6(b) (at [13] above).

Caltex procedures

1. Caltex's "Operational Excellence Management System" ("OEMS") is described in the SAF in great detail (SAF 36 - 40). At its core are 22 "OE" processes for managing risk, two of which are relevant to this case - Process 5 "Safe Work Systems" (SAF 39), and Process II, "Management of Change" ("MOC" - SAF 40).
2. "MOC" is defined to mean the "system of administrative procedures or steps designed to prevent introduction of uncontrolled hazards during, or as a result of, change" (SAF 40(a)), and the "MOC" process "must be applied for any non like-for-like change that may impact security; the health or safety of personnel or the environment; or the reliability of plant" (40(b)). The steps involved in the process are set out in the SAF (40(c)).

The relevant tank and associated equipment

1. SAF 41 records (some emphasis added): ... The upturned gooseneck may also be described as a gooseneck fitting with a 90 degree elbow, "upturned" in this instance as it was positioned to point upward rather than sideways. At the time of the incident, Tank 901 contained a total of 2.385 million litres of ULP. Tank 901 is a 15m diameter external floating roof storage tank, with a height of 14.5m and has a nominal working capacity of 2,480 m3 of ULP. A temporary arrangement of hoses and pipes and associated equipment was connected to the water draw off-take of Tank 901. This temporary arrangement comprised a 3 inch diaphragm pump the suction hoses of which were connected by means of flexible hoses to the Tank 901 water draw valve which had a temporary elbow with male Camlock fitting connected to it (the "upturned gooseneck"). ... At the time of the incident, a female Camlock fitting at the end of the hose leading to the diaphragm pump was placed over the male Camlock fitting or upturned gooseneck connected to the water draw valve. It is this connection that failed.

The contamination of fuel

1. On or about 23 May 2013, particulate contamination was identified in ULP piped to Banksmeadow from Kurnell. Such contaminated fuel was "not suitable for the market" (SAF 44). The SAF notes in this respect: 45. The particulate contamination of the Pipeline A transfer pipeline was detected on 23 May 2013 following an emergency shutdown of the transfer of product to the BMT as a result of high pressure due to blockage of the Pipeline A in-line filter, which could not cope with the amount of particulate coming through the line from the Kurnell Refinery. The particulate contamination problem repeatedly presented after that date. 46. On approximately 19 June 2013 the contaminant was identified as Isoviv adsorbant and the particulate contamination of product was considered to have likely occurred when a section of pipeline at the Kurnell Refinery, which had been unused for a period of time, and in which particulate matter in the nature of an Isosiv adsorbent had accumulated, was returned to operation. Upon the return to operation of this section of pipeline, the particulate matter which had accumulated in the pipeline spread throughout the gasoline system including into and through Pipeline A to the tanks at the BMT. Determining the solution to the contamination problem continued to be difficult in the period leading up to the Incident. The contamination problem was partly but not fully resolved by cleaning Pipeline A, through a process known as pigging (which was completed at the end of June 2013) and by the emptying and cleaning of the affected tanks at BMT (which was occurring from mid-June 2013 until the time of the Incident). 47. As a result of the particulate contamination, between 23 May 2013 and 11 July 2013 (i.e. in the period leading up to the Incident) Caltex adopted the abnormal procedures to address the contamination problem which involved: a. allowing petroleum product known or suspected to be contaminated with the particulates to settle in the storage tanks at the BMT with the intention of transferring the lowest stratum or strata of the petroleum product in the tank/s from the water draw valve to the slops tank (Tank 931) using a temporary arrangement of pumps and hoses and associated equipment; and b. using a temporary arrangement of pumps and hoses and associated equipment to transfer petroleum product, including contaminated petroleum product from the water draw valves at the base of the storage tanks at the BMT to the slops tank (Tank 931) for the purpose of transferring it back to the Kurnell Refinery. 48. During the period of the abnormal procedures from 24 May 2013 to 11 July 2013, the Banksmeadow Terminal continued to receive regular transfers of petroleum products from the Kurnell Refinery on most days during this period through Pipeline A including petroleum which was contaminated with the particulate matter. Over a 3 week period from 23 May 2013, before each of the transfers from the Kurnell Refinery to BMT occurred, the product was tested at the Kurnell Refinery. On all occasions, the product was found to be on-specification for all properties including particulates. However, a number of transfers to BMT were confirmed to contain particulates although the product being released from Kurnell did not. Not all transfers from the Kurnell Refinery through Pipeline A resulted in the transfer of contaminated product to BMT, although the reasons for this remain unclear. The initial clean out of the BMT tanks did not fully resolve the contamination problem, and further cleaning of the tanks was required. During this process of additional cleaning of the tanks the incident occurred.
2. Tab 14 of Exhibit P1 contains a "consolidated chronological account of activities" relevant to (1) transfers from Kurnell to Banksmeadow, and to (2) "removal of the contaminated product (and water) from the BMT tanks during the period of abnormal procedures" (SAF 49). It shows transfers from various tanks, to tanks 901 and 931, and between 901 and 931, during June and early July 2013, and (at fol 154 of tab 14) from 1900hrs on 11 July to 1900hrs on 12 July 2013, "Removal of water and product from tanks 906 and 901 to 931".
3. As noted by Mr Howard, the operation involving tank 906 was carried out successfully (Tp21, LL11 - 13), but that involving 901 resulted in the subject "escape" of petrol (Tp4, LL31 - 32).

The "abnormal procedures"

1. The lengthy period of "abnormal procedures" was managed by a Caltex "crisis" management team. Activities at Banksmeadow were coordinated by its Operations Manager. Contrary to the requirements of the OEMS, the MOC process was not applied to the abnormal procedures, and, during the period 24 May to 12 July 2013, "there was a shortage of resources ... to cope with the temporary tank to tank product transfers" (SAF 50 - 53).
2. SAF 54 records: The extended period of abnormal operations at the BMT led to frustration and workload fatigue issues resulting in departures from Caltex's OEMS procedures, including: a. a failure by Caltex to identify that the abnormal procedures constituted a temporary change and were required to go through a management of change process; b. failures in Caltex's implementation of the permit to work system at times, such as its failure to prepare written JSA's, failing to adequately describe in detail the tasks to be carried out and using one permit to cover multiple tasks.
3. The following details of the abnormal procedures adopted to decontaminate fuel are recorded in SAF 55 - 61 (some emphasis added): 55. A total of 74.3 million litres (55,354 tonnes) of unleaded petrol was received from the Kurnell Refinery by pipeline by way of regular deliveries through Pipeline A between the 24 May 2013 and 11 July 2013. Of this volume, approximately 23 million litres (17,135 tonnes) was off specification by reason of the particulate contamination and this off specification product was returned to the Kurnell Refinery for reprocessing. Specifically, the contaminated product was transferred from the Refinery to five dedicated gasoline tanks at BMT (including Tank 901). 56. Despite the efforts of staff at BMT and the Kurnell Refinery to discover the source of the contamination and resolve the contamination problem, of the volume of product transferred to BMT during the period between 24 May 2013 and 11 July 2013, approximately 23 million litres (17,135 tonnes) was deemed unmarketable due to particulate contamination and was transferred from the receiving tanks to the slops tank (Tank 931) using temporary arrangements of pumps, hoses and associated connections before being returned to the Kurnell Refinery for reprocessing. 57. This process of decontamination carried out at the BMT primarily involved allowing the contaminated product to stand, without agitation, to enable contaminant to settle to the bottom of the tank. The bottom portion of all gasoline tanks at BMT which received the contaminated petroleum, consisting of water and contaminated product, was periodically drawn off from the tanks' water draw valves and transferred to the slops tank using the temporary arrangement of hoses pumps and associated connections. 58. Typically the water draw valve at the bottom of each of the subject tanks at the BMT is used for a procedure known as a "water draw procedure" which is used when water that has entered the tank through the floating roof is required to be drained off at the bottom. This water draw procedure is considered a routine procedure but is carried out under close supervision. However the transfer of petroleum from the BMT tanks to the slops tank (Tank 931) during the period of abnormal operations was not a water draw procedure. The water draw valve is also used to transfer the residual petrol (up to approximately 100,000L to 150,000L) from one tank to another tank as part of the preparations for entry, cleaning and inspection purposes. This would occur approximately once in every 10 years for each tank and is subject to a specific Turnaround and Inspection procedure approved under the OEMS. The transfer of petroleum from the BMT tanks to the slops tank during the period of the abnormal operations did not involve the approved Turnaround and Inspection procedure. 59. The abnormal procedures were directed towards trying to stop contaminated product from getting into the market, and to then getting clean product back into the market as soon as possible safely. 60. Product was only able to be transferred back to Kurnell from Tank 931 (also known as the slops tank). Therefore, in order for the contaminated product to be returned to Kurnell for re-refining, and for the abnormal procedures the defendant had settled upon to be carried out, it was necessary for product to be internally transferred from the relevant gasoline tank (i.e., the tank at the BMT to which the off specification product had been transferred from the Kurnell Refinery) to Tank 931, from which it was then able to be transferred back to the Kurnell. 61. These internal transfers from the BMT tanks to the BMT slops tank using temporary arrangements of pumps hoses and associated connections were carried out on 12 occasions during the period of the abnormal procedures prior to the incident. On four occasions during the abnormal procedures prior to the Incident, such internal transfers occurred at night.
4. The SAF then makes the following "comment" (at 62 to 69 - some emphasis added): 62. A water draw valve is not typically used for the transfer of product. The OEMS required the management of change process to be applied to the transfer of product via the water draw valve. However, this was not carried out. 63. The Terminal Operations Manager at Banksmeadow terminal was responsible for initiating the MOC procedure. 64. If the Defendant had applied its MOC procedure, the following would have occurred prior to any implementation of the abnormal procedures: a. a full risk assessment would have been carried out with Banksmeadow staff, including the Terminal Operations Manager, and appropriate subject matter experts, such as mechanical engineers and operational specialists; b. there would have been consultation between the team leading the risk assessment and affected Banksmeadow Terminal staff; c. alternative suitable control measures would have been considered (such as hard piping and double isolation of the valve); d. any final design measures, if approved, would have been approved by persons with the appropriate engineering and operations authority; e. any necessary and appropriate training, instruction and information would have been provided; f. any suitable controls to manage risk associated with the modification would have been implemented, including a pre-safety start up operational readiness check; g. written procedures and drawings incorporating suitable control measures would have been prepared by persons with appropriate expertise (such as mechanical engineers and operational specialists) and provided to personnel involved in the procedures. h. the Defendant would have allocated sufficient resources, in respect of any approved procedures, to ensure that the approved procedures were carried out safely. 65. Had the MOC process been applied by the Defendant, either the abnormal procedures would not have been approved or if they were approved, the process would have ensured that the risks of the transfer, using approved control and design measures, were reduced to a level as low as reasonably practicable. 66. Of the departures from industry standards and practices, Caltex's failure to recognise that the petrol transfers using temporary hoses and an air driven pump was a "change" from routine water draws, and that this proposed "change" required scrutinising through the OEMS, was the most significant. 67. Change is defined in the OEMS as follows: Changes can only be effectively managed under this Process if they have been identified as a change in the first instance. Failure to recognise change for what it is, has historically constituted a large proportion of poor MOC related failures or losses. "Change" is defined as a modification made to an existing facility, unit of plant, piece of equipment, system, organization, process, product, activity or entity from its current design or state. Change includes the introduction of new plant, processes, procedures, products, systems or substances etc. and the removal of same. The definition of change used in this Process includes both permanent and temporary modifications as well as emergency, minor and stealth change types. All personnel shall be appropriately trained and/or instructed in the understanding of what constitutes a change. 68. The Defendant materially contributed to the causes of the Incident by failing to recognise the hazards that would be introduced by the product transfer arrangements during the period in which the abnormal procedures were implemented. Such hazards included loss of containment. This was not in accordance with the Caltex OEMS and culture. 69. Caltex had an appropriate safety management system in place (as part of its OEMS) and generally sought to implement this system across its operations but did not implement the OEMS (as explained at pars 62-68 above) in relation to the abnormal procedures.

11 - 12 July 2013

1. The events of 11 - 12 July 2013 are agreed in these terms (SAF 70 - 108 - some emphasis added): 70. During the dayshift prior to the Incident, ULP had been received from Kurnell Refinery into Tanks 901 and 906. As noted above Tank 901 already had approximately 395,000 litres in it from previous transfers (representing 20% of the tank volume). A further 2,000,000 litres was transferred into Tank 901 (representing approximately 80% of the total tank volume). 71. The plan for the nightshift was for 60KL of the product from each of Tank 901 and Tank 906 to be transferred to Tank 931. 72. On 11 July 2013 at 5:24pm, Mr Craig Osborne sent an email to Mr Clifton Bell (BMT Operations Manager) with an update on current operations at BMT and the plan for the nightshift. This email first set out the proposal for 60KL of product to be withdrawn from each of Tank 901 and 906. Mr Bell was not at BMT at the time of the Incident as he had been travelling interstate. Arrival of Mr Crisafulli and Mr Browning at BMT for nightshift and issue of work permit 73. As noted above, the following individuals worked at BMT on the night of the Incident: a. the Caltex employees: Mr Elmir (Yard Coordinator) and Mr Veraguth (SCADA Operator), commenced their shifts at BMT at 6:00 p.m. on 11 July 2013; and b. the PSN employees: Mr Browning and Mr Crisafulli, who left the Kurnell Refinery at approximately 5.50 p.m., drove to BMT in a ute and "tagged on" at the site at 6:59 p.m. Intoxication of Mr Crisafulli 74. Shortly after the Incident (at 3.15 a.m.), while at the Prince of Wales Hospital, Mr Crisafulli was tested and recorded a blood alcohol level of 58 mmol/L (0.267%). 75. Based on this blood alcohol level, it is highly likely that Mr Crisafulli was in an intoxicated state when he presented himself for work at BMT on the night of the Incident. Mr Crisafulli did not disclose the fact of his intoxication to Caltex, PSN, Mr Elmir or Mr Browning. 76. Mr Crisafulli surreptitiously consumed alcohol during the course of the shift by: a. bringing a Gatorade bottle onto the BMT site filled with orange juice and a quantity of vodka; and b. consuming the contents of the bottle during the course of shift when he was not in the company of Mr Browning or Mr Elmir. 77. Mr Crisafulli was aware of the Caltex and the PSN Drug and Alcohol Policies. The Caltex Drug and Alcohol Policy prohibits employees and contractors, such as Mr Crisafulli, from exceeding a 0.05% blood alcohol level. Such restrictions are standard and expected in the petroleum industry. 78. During the set-up of the transfer, Mr Crisafulli appeared to Mr Browning and Mr Elmir to be fine and alert. Mr Browning did not smell any alcohol on Mr Crisafulli. Events leading up to Incident 79. Mr Browning and Mr Crisafulli were met at BMT by Mr Elmir who conducted the work permit process with them upon arrival. 80. Mr Elmir's role as Yard Coordinator was to oversee the work. Mr Elmir was a probationary Permit Officer. In fulfilling that role, it was his responsibility to determine whether to issue the work permit, to ensure the risks of the operation were properly understood and that appropriate control measures were in place. Mr Elmir, as the Yard Co-Ordinator, was also the Defendant's operator on duty during that night. The PSN contractors were not operators, they were fitters. It was the responsibility of the fitters, Messrs Browning and Crisafulli, to fit together the pumps and pipes and connectors with which the Defendant provided them. It was the responsibility of the operator, Mr Elmir, to make the decision whether or not to carry out the product transfer exercise. 81. Mr Crisafulli was the permit receiver and signed the work permit on the night of the Incident. The Permit signed by Mr Crisafulli and attached as [tab 15 of Exhibit P1] stated beneath the signature panel that as permit receiver he understood the precautions and controls which must be taken to perform the work safely, and that he would communicate these requirements to members of his crew and ensure ongoing compliance with the permit conditions and in maintaining a clean and orderly worksite. 82. Mr Elmir had completed the required training to act as a permit officer. 83. At the time of issuing the relevant work permit, Mr Elmir was a "probationary" permit officer. Under the OEMS, as a probationary permit officer, Mr Elmir was not entitled to issue a work permit without it first being considered and co-signed by a qualified (non-probationary) permit officer. Mr Elmir issued the work permit without complying with that requirement. ... 84. The process of issuing the work permit involved Mr Elmir completing and discussing the contents of each section of the work permit with Mr Browning and Mr Crisafulli. As stated above, Mr Crisafulli then signed the permit as work supervisor. In doing so, Mr Crisafulli agreed to exercise adequate oversight of Mr Browning to ensure the work was carried out safely. 85. Completion of the work permit involved an assessment of the risks involved in the task. The time taken to complete and issue the work permit was between 20 minutes to half an hour. The assessment of risk did not include an assessment of the particular pump, hoses, and fittings used for the exercise or their arrangement, including the use of the gooseneck fitting, which was only able to be fitted in an upturned position. 86. Mr Crisafulli did not fulfil and, due to his state of intoxication, Mr Crisafulli was not in a fit state to fulfil the role of work supervisor. 87. The OEMS required a work permit to be accompanied by a completed job safety assessment (JSA) form. However, no JSA form was completed nor was any JSA number sighted on the work permit. 88. At various times during the course of the evening, Mr Elmir went with Mr Browning and Mr Crisafulli to inspect the site where they were conducting the work. The site inspection also involved an assessment of the risks involved in the work. Transfer of 60KL from Tank 906 to Tank 931 The first task completed on the nightshift as part of the abnormal procedures was the transfer of 60Kl of product from Tank 906 to Tank 931 using a temporary arrangement of hoses and pumps and associated equipment. This work commenced at approximately 2100 hours on 11 July 2013 and was successfully completed by midnight, without incident. Setting up for the transfer of product from Tank 901 to Tank 931 89. Following completion of the transfer from Tank 906 to Tank 931, Mr Crisafulli and Mr Browning proceeded to set up for the transfer of product from Tank 901 to Tank 931. 90. When they arrived at Tank 901, they found a 90 degree elbow gooseneck fitting with a new gasket that had been placed near the water draw compound. The upturned gooseneck fitting was to be fitted to the flange on the water draw valve. ... [see photos at tabs 7, 8, 9 and 10 of Exhibit P1.] 91. It was originally proposed that the transfer be conducted using the pump in the Tank 906 compound. However, at about 12:30 a.m. the PSN fitters advised Mr Elmir that the pump located in the Tank 906 compound could not be moved without the use of a crane. 92. There was discussion between Mr Elmir, Mr Browning and Mr Crisafulli as to whether the work should proceed or be delayed or cancelled until the dayshift, as it was non-urgent work. 93. Mr Elmir advised Mr Crisafulli and Mr Browning that they should cease their work and go home. Mr Crisafulli and Mr Browning strongly urged Mr Elmir to allow them to continue until the end of their shift. This was a course acquiesced in by Mr Elmir as operator. 94. Mr Crisafulli and Mr Browning then devised an alternative arrangement, which involved a temporary arrangement of hoses using a 3 inch diaphragm pump previously used for the pump out of Tank 902 and to extend the suction hoses over to the Tank 901 water draw value off take. 95. Mr Elmir, Mr Crisafulli and Mr Browning discussed the alternative arrangements, and decided to go ahead with the transfer on the basis that the set up was not different from the set up at Tank 906 and the same measures that were part of the Tank 906 transfers could be implemented for the Tank 901 transfer. This involved a visual inspection of the set up, including "walking the line" to open up the downstream valves to make sure that when the tank valve was opened up there were not going to be any downstream valves that were still isolated, and to ensure the camlocks were secured by duct tape. Mr Elmir observed the camlock fittings and visually checked to see that there was either tape or wire on the camlock fittings. He saw tape, on the camlock fitting at Tank 901 which ruptured. The temporary hose arrangement installed to the water draw valve of Tank 901 comprised: a. Two 70mm Class 1000 hydrocarbon transfer hoses connected to the suction of an 90mm diaphragm pump but replaced by a 3 inch diaphragm pump on the night; b. the discharge of the diaphragm pump was then connected via several lengths of 70mm Class 100 hose to a slops pipeline to Tank 901; and c. all hoses were fitted with 70mm camlocks. Male to male camlock joiners had been used to connect the hose lengths; d. the hoses were temporarily connected to the water draw valve by means of a 90 degree elbow with a bolted flange fitting to the water draw valve at one end in an upturned direction (the "upturned gooseneck") and a male camlock fitting to the temporary hoses connected to the pump; and e. a diesel air compressor to provide compressed air to the pump. Drawings of the layout of the pump, compressor and temporary hoses set up for the transfer are at ... [tabs 12 and 13 of Exhibit P1]. 96. Camlock fittings are widely used in the petroleum industry in other contexts, such as tank to truck transfers but not for tank to tank transfers. 97. The only sources of light, other than from their torches, were from the neighbouring container terminal and the street lights within BMT. Mr Browning and Mr Crisafulli were working by pencil light torches and hand held torches. 98. Mr Browning fitted an (sic) 90 degree elbow ("gooseneck") fitting to the water draw valve using two spanners. Mr Browning did not wish to use the 90 degree elbow gooseneck fitting as he thought it put too much strain on the hose which was required to bend. Mr Browning knew that there was a straight or 180 degree gooseneck on T902 and one on T906 but decided to leave those as he thought the Defendant might be using them for those tanks the next day. It was the first time that Mr Browning had seen a 90 degree elbow gooseneck fitting on a water draw valve at the BMT. Mr Browning made several attempts to fit the hose to the 90 degree elbow gooseneck at various angles however fitting it upwards was the only way it would fit. He did not want to fit it in an upturned orientation. Mr Browning fitted the 90 degree elbow gooseneck male camlock fitting onto the water draw valve. Mr Crisafulli undertook the task of stepping into the water draw pit and attaching the hose with the female camlock fitting to the male camlock fitting attached to the water draw valve. 99. Using a spanner left to him by Mr Browning, Mr Crisafulli applied excessive force to the coupling arms on the female camlock fitting while in the open position to the point of overload. Both coupling arms were fractured as a result. ... [see photos at tab 11 of Exhibit P1.] Mr Crisafulli then applied tape to the outside of the camlock. As a result, the female camlock fitting was not properly fitted and secured to the male camlock fitting. 100. There was no double isolation at the water draw valve of Tank 901 which may have allowed isolation of the water draw valve using a second valve further away from the source of the release. Nor was there a mechanism for quick isolation (a device that would allow rapid closure of the valve). The only way to close the water draw valve was manually at the point it was opened by turning a wheel. A water draw valve with a single isolation is not intended to be used for a transfer of product in the way that occurred on the night of (sic) Incident, that is, transfer of large volumes of product using a temporary hose and diaphragm pump in circumstances where the relevant tank was full or nearly full. 101. Photos of the Tank 901 water draw valve with upturned male camlock fitting are at ... [see photos at tabs 7, 8, 9 and 10 of Exhibit P1.]. The photograph at [tab] 8 depicts spanners which were located in the area in which Mr Crisafulli was working. 102. These actions were completed at about 01:30. Mr Browning and Mr Crisafulli advised Mr Elmir that the transfer arrangement was prepared. The air compressor and diaphragm pump had not yet been started. 103. After the fittings had been connected, it was the responsibility of Mr Elmir, as the Yard Coordinator, to say go ahead or not to go ahead with the product transfer exercise. Mr Elmir attended Tank 901 and stood approximately 5 metres from the water draw pit to observe the commencement of the transfer. 104. Mr Elmir instructed Mr Crisafulli to "crack" the water draw valve, which means to open the valve only slightly. Mr Elmir had not done this type of task before. 105. Mr Crisafulli opened the water draw valve. Some drops of product were immediately observed (fewer than 10). The droplets then stopped. 106. Following consultation with Mr Elmir and Mr Browning, Mr Elmir told Mr Crisafulli to 'just give it a little bit more'. Mr Crisafulli then began to open the valve further. 107. The hose then blew and a vertical gush of ULP erupted from the upturned gooseneck fitting with Mr Crisafulli standing over the top of it. The ULP sprayed vertically. This made it difficult to reach the Tank 901 isolation valve to turn off the product flow through the water draw valve. Browning and Crisafulli were immediately dowsed in petrol. 108. Mr Elmir, Mr Browning and Mr Crisafulli did not attempt to shut off the water draw valve before they retreated.

The Aftermath

1. In fairness to both parties, I should now set out in full that part of the SAF (109 - 141), which describes "Events following the Incident", including a paragraph which the SAF notes was only provisionally agreed (117). (Some emphasis has again been added): Events following the Incident 109. Mr Browning and Mr Elmir assisted Mr Crisafulli to a nearby safety shower. 110. The spanners referred to above remained in the water draw pit, where they were later located. 111. Mr Browning then went to retrieve the ute which was parked outside the bunded area. Mr Browning then drove the ute back to the vicinity of the safety shower, collected Mr Crisafulli and drove him to an amenities block. 112. Mr Browning has marked ... a diagram showing the location of the safety shower and the route he drove in his ute [see tab 16 of Exhibit P1]. 113. Mr Elmir contacted Mr Veraguth by radio who then contacted emergency services at 1:31 a.m.. The first NSW Fire and Rescue personnel arrived at approximately 1:38 a.m. 114. NSW Fire and Rescue established an Emergency Operations Centre in the BMT training room. 115. NSW Fire and Rescue applied foam to suppress vapours from the fuel commencing at approximately 1:52 a.m. 116. The foam was initially applied from a fixed foam monitor adjacent to the bund for Tank 901. The foam monitor only lasted for a few minutes before it was exhausted. 117. [This paragraph is provisionally agreed: Caltex did not initially provide NSW Fire and Rescue with a plan showing the location of the foam at BMT. However, two Emergency Manifest Boxes were located at BMT on the night of the Incident; one was located outside BMT at the BMT Entry Gate and the other was located inside BMT on the northern wall of the building housing the entry/exit turnstile to the terminal. The Emergency Manifest Box is required by law, and known to emergency services. The Emergency Manifest Box is lockable and universal keys to the box are held by emergency services, including Fire and Rescue NSW officers who responded to the Incident. The Emergency Manifest Box contained a copy of the BMT Emergency Plan. Under each of the Emergency Manifest Boxes was located a large PVC tube which had screw caps at one end. These were not locked and each contained an A3 Fire Fighting Services Plan showing the location of foam at BMT. Caltex representatives provided the Fire Fighting Services Plan to NSW Fire and Rescue after the water draw valve at the base of Tank 901 had been shut off. The presence of the Fire Fighting Services Plan in the Emergency Manifest Boxes was not mentioned by Caltex representatives prior to it being provided to NSW Fire and Rescue. In the absence of such a plan, NSW Fire and Rescue then began searching the premises for foam stores.] 118. At the time foam was first applied there was fuel in the corner of the bund (which was flowing to the bund's lowest point in the south east corner) but at that stage was not fully covering the bund floor. 119. At the time foam was first applied the area of the bund which was covered in fuel and releasing a vapour was 30m x 30m. 119. At around 1.54am NSW Fire and Rescue firefighter Eddie Vaysbakh arrived at the terminal. 120. Mr Vaysbakh, like the other firefighters who attended at the site, had been equipped with a breathing apparatus on his back shortly after his arrival. His reason for initially not fitting the breathing apparatus over his face was that he did not realise how bad the situation was. He was also wearing his personal protective equipment being a full structural suit, helmet and boots. As he was not wearing his breathing apparatus, his face and neck were exposed and he could smell and taste the fuel. His reasons for not putting the breathing apparatus over his face throughout his time at the site were because: a. he stayed in the Warm Zone which was further from the spill than the Hot Zone; b. the breathing apparatus was also very cumbersome to wear and would have restricted his ability to hear and talk. 121. As a result, he could smell and taste fuel. 122. NSW Fire and Rescue subsequently found additional foam supplies in the form of six 200L drums and a 2500L static tank. Caltex employees did not provide NSW Fire and Rescue with a map showing the location of foam applicators and foam supplies at BMT until after the valve had been shut off. 123. NSW Fire and Rescue moved the drums manually end over end from around the BMT to the area where they were used. 124. The drums weighed around 200 kg and were very difficult to move manually. 125. The purpose of the 2500L static tank was to directly deliver foam to the adjacent foam pumphouse via hard piping for the purpose of extinguishing tank top fires and fires at the tanker truck loading rack (TTLR). It was not designed or intended to be used as a foam store for other purposes. 126. The valve on the 2500L static tank was seized and NSW Fire and Rescue used buckets to top up foam drums from this tank. 127. At approximately 2.30 am Jon Andrews, NSW Fire and Rescue Relieving Inspector, attended the BMT and observed what he perceived to (sic) a rising vapour cloud over the back of the BMT, although it is likely that what he saw was a rising cloud of moisture in the air formed because of the vapour cloud beneath it. There was also the very heavy smell of fuel in the air. 128. By 2.21 am NSW Fire and Rescue had still not been able to apply a complete foam blanket to the fuel in the bund. This was in part because the geyser of fuel from the valve was breaking down the foam blanket as it was being applied. The firefighters were concerned that the situation remained at the high end of extremely dangerous even after foaming of the bund was carried out as the gush of fuel continually broke through the foam blanket. 129. NSW Fire and Rescue subsequently determined that the risk to the public of an incident if the contents of the tank, which was around 2.395 million litres at the time the incident, were allowed to drain through the upturned gooseneck into the bund, outweighed the risk to an officer in entering the bund to shut off the valve on the tank. 130. A NSW Fire and Rescue officer (Station Officer Morasso) entered the bunded area, waded through the knee-deep fuel and foam in the bund and shut off the valve on the tank. 131. At the time Mr Morasso entered the bund he was fitted with personal protective clothing including fire tunic, heavy duty fire pants, helmet, rubber boots and a breathing apparatus. Upon exiting the bund, Mr Morasso was taken to a decontamination area to be decontaminated. 132. Mr Vaysbakh assisted with the decontamination of Mr Morasso in the decontamination area which involved the removal of Mr Morasso's personal protective clothing (which was saturated with fuel). Mr Vaysbakh continued to work without breathing apparatus despite being fitted with such personal protective equipment. 133. Mr Vaysbakh and another firefighter took Mr Morasso to the BMT canteen to further wash him down. 134. As Mr Vaysbakh washed down Mr Morasso, Mr Vaysbakh began to feel nauseous. 135. Once the valve had been closed the critical stage of the NSW Fire and Rescue operation was over. 136. The duration of the Incident was from 1:29am (the approximate time of the loss of containment) and 2:50am (when the water draw valve was closed); a period of approximately 81 minutes. A total of 157, 205L of fuel escaped. 137. All of the ULP liquid was contained within the bund. 138. Soon after the valve was closed, a Sydney Airport tanker arrived at BMT and used a load of foam to apply a foam blanket to the fuel pooled in the bund. 139. Until the leak was contained, there were around four NSW Fire and Rescue station officers, Inspector Rainnie, Relieving Inspector John Edwards and around 35 fire fighters at BMT. 140. Relieving Inspector Edwards stayed at the BMT until 7am and assisted in the coordination of the emergency response with Caltex, the local emergency management officer, Urban Transport, the airport fire service in relation to a range of matters. 141. Caltex provided support to emergency services during the response to the Incident, including by providing food for firefighters.

The Risks and Consequences

1. The following risks and consequences of the incident are noted by the SAF (at 142 - 159, including par 154, which refers to par 117, and is also only provisionally agreed. Again some emphasis has been added): The Risk of Ignition 142. Unleaded petrol is a highly flammable liquid and may form flammable vapour mixtures with air, but only at certain concentrations. Inherent in the nature of a release of unleaded petrol such as occurred on the night of the Incident is the risk of ignition and the consequent risk of a major fire. If fire occurs, this may have a significant impact on the relevant facility and the surrounding areas. 143. However, in this case, the flammable part of the vapour cloud was confined to the bunded area and a short distance downwind to the south-east. In the conditions which prevailed, it was not likely that the flammable vapour cloud would have ignited, given the absence of any ignition sources in the area in which it formed. Colourbond fence 144. A "Colourbond" fence had been installed along the eastern boundary of BMT to act as a vapour barrier and prevent the migration of vapours. Environmental Harm 145. The Incident caused air pollution by emission into the air of air impurities comprising petroleum vapours and odours. The vapours and odours released were transient in nature. 146. There is no evidence that the release of the vapours and odours caused any adverse impacts on flora, fauna, soil, surface water or groundwater at or in the vicinity of the BMT. 147. In this respect, there was no lasting or significant environmental harm caused as a result of the Incident. Environmental Health Impacts of the Incident General 148. The ULP contained 0.91% benzene which is a human carcinogen. The boiling point range for the majority of the components of petrol is 40 to 150 degrees Celsius. It contained alkanes and cycloalkanes such as octane ad cyclooctane, which have acute health effects. The vapour cloud would have been rich in alkanes. 149. The limit for short term exposure to petrol vapour set by the American Conference of Government Hygenists is 500ppm (the STEL) not exceeding 15 minutes and no more than 4 times per day. The vapour concentration in the vapour cloud above and a short distance downwind from the bunded area exceeded the STEL, and emergency services officers not wearing Personal Protective Equipment (PPE; breathing apparatus) may have been exposed to the STEL. In particular, Mr Eddie Vaysbakh may have been so exposed as he did not wear his breathing apparatus for the reasons expressed above. Symptoms and treatment of Mr Vaysbakh 150. Following his return to the station, Mr Vaysbakh became incapacitated. He suffered the following further symptoms: extreme vomiting and nausea, intense headaches and extreme sensitivity to light. Mr Vaysbakh was taken by ambulance to St Vincent's Hospital in Darlinghurst where he was treated with anti-nausea tablets. While the severity of his symptoms subsided, he continued suffering migraines and vomiting for around 2 days after the incident. He could also taste petrol in his mouth. His capacity to function was significantly reduced during 2 days after the incident. 151. As noted above, Mr Vaysbakh had been fitted with a breathing apparatus shortly after his arrival, but chose not to wear it for the reasons expressed above. He inhaled fumes during the period he was in the "warm zone". He was in that area for around 90 minutes. 152. The Caltex Material Safety Data Sheet (MSDS) with respect to ULP contains the following statement on page 4 of 12: Precautions in connection with Fire: Fire fighters should wear Self-Contained Breathing Apparatus (SCBA) operated in positive pressure mode and full protective clothing to prevent exposure to vapours or fumes. 153. The MSDS in force at the relevant time is [at tab 17 of Exhibit P1]. 154. [This paragraph is provisionally agreed: Information regarding the product stored on site, including ULP was available to all firefighters in the BMT Emergency Manifest Boxes which were located at BMT. However, note the circumstances described in paragraph 117 above.] 155. Had Mr Vaysbakh worn his breathing apparatus it is highly unlikely that he would have experienced the symptoms described above. Symptoms and treatment of Mr Crisafulli and Mr Browning 156. Mr Crisafulli was completely doused in ULP and ingested an amount of ULP. He inhaled fumes from the time of the Incident to the time he was taken to the nearby emergency shower. Mr Crisafulli and Mr Browning were subsequently taken by ambulance to hospital. Mr Crisafulli did not show symptoms of nausea or vomiting at the hospital. 157. Following the Incident, Mr Browning was treated by a psychiatrist and a psychologist for anxiety and depression, including the prescription of medication. Mr Browning continued to take prescription medication for anxiety and depression as at the date of swearing his affidavit on 22 September 2014. 158. Subsequently, Mr Browning was subject to a psychiatric assessment on 23 February 2016, in which the assessing psychiatrist documented as follows: a. By 3 October 2013, Mr Browning had recovered sufficiently to allow him to return to work, initially in a clerical role for several weeks and then as a fitter. b. From 18 November 2013, Mr Browning returned to a wholly clerical role at the Kurnell Refinery, fluctuating between 3 and 4 days per week at work. c. By October 2014, Mr Browning was experiencing what could be described as a substantial remission of his mood and anxiety conditions such that he was able to function again as a fitter; and d. Mr Browning felt confident of continuing in this occupation beyond his mandatory retirement age as he is a very fit man. However, these aspirations were unfulfilled by the closure of the Kurnell Refinery a month later and following notification from his employer Wood Group PSN that he had been made redundant. Mr Browning was 65 at the time of his redundancy. 159. The treating psychiatrist concluded as follows (as at the time of assessment): a. Mr Browning was suffering chronic Post Traumatic Stress Disorder and co-morbid Major Depressive Disorder, in partial remission at the time of assessment. b. Mr Browning was not suffering any pre-existing or underlying psychiatric conditions and did not have any history of the same at the time of the Incident. c. Based on Mr Browning's description of his medical history as provided to the psychiatrist, Mr Browning was not subject to any major competing psychological stressors at the time of the trauma which may have heightened subsequently his vulnerability to mental illness. d. As a result of the Incident, Mr Browning has gone on to develop a number of characteristic symptoms consistent with chronic Post Traumatic Stress Disorder including nightmares of the trauma, intrusive daytime recollections of the traumatic event, affective changes (irritability), emotional/social withdrawal and dissociative episodes. e. The incident at BMT on 12 July 2013 has been a substantial contributing factor to his condition at the time of the assessment. f. Mr Browning will require ongoing psychiatric treatments for at least the next 2-3 years (forecast as at the time of assessment) including regular review by a psychiatrist and pharmacotherapy at the psychiatrist's discretion.

Exhibit P1 - The Agreed Bundle

1. Video footage showing the terminal following the "loss of containment" is before the Court at tab 18 of Exhibit P1, and was shown to the Court (Tp14, L37 - p17, L5). The video was taken from various locations along Botany Road, shown within the "red box" marked on the aerial photograph at tab 19 of Exhibit P1 (SAF 160 - 161).
2. The readings taken from various Gas Detectors at Banksmeadow Terminal are included at tab 20 of Exhibit P1 (SAF 162).
3. Tab 21 is a plan of the BMT, dated 17 June 2013, showing the Fire Water System, and said (SAF 163) to show, for example: a. the location of Tank 901; and b. the location of Gas Detectors (labelled "AX") along the eastern side of the plan near the railway line.
4. At tab 16 there is another copy of this plan, including some annotations, made on 22 September 2014, by Browning, showing post-incident movements on the site.
5. Gas Detector AX1 is listed twice because it is a line of sight detector with two probe heads (emitter and receiver) which detect gas passing between the two heads. The gas detectors were effective in detecting and alarming the presence of vapours in the tank farm area. They also provided some capability for ongoing monitoring of the concentration of flammable vapours, and were supplemented at the time of the incident by portable monitors. The levels did not get so high that there was a risk of ignition. Upon closure of the valve at Tank 901, the readings of the gas detectors showed significant reduction of vapour in the area (SAF 164 - 166).

Sentencing issues in the SAF

1. SAF 167 records the parties' agreement that the defendant entered its guilty plea "at the first reasonable opportunity".
2. SAF 168 records that the following assistance was provided by Caltex to the EPA, during both its investigation and these proceedings, by: a. voluntarily and at an early stage, submitting to the EPA a number of documents which are critical to the prosecution's evidence, including Caltex's internal investigation report (on 8 October 2013) and supplementary investigation report (on 5 December 2013) in relation to the incident; b. voluntarily providing to the EPA the camlock, hoses and connections the subject of the proceedings; c. voluntarily allowing, accompanying and assisting EPA representatives and experts on the BMT for the purposes of a site inspection; d. providing timely responses to each of the requests in eight separate notices issued to Caltex by the EPA under section 193 of the [POEO Act]; e. providing documents and information, either voluntarily or in response to statutory notices, that may have otherwise been subject to claims for legal professional privilege, in particular, notes prepared for the purposes of obtaining legal advice; f. submitting to the interview of five Caltex employees by the EPA, as legally required by statutory notice; g. providing documents requested in a number of subpoenas issued by the Court at the prosecutor's instigation; h. Caltex was able to provide detailed, thorough and reliable information to the EPA due to the extent and thoroughness of its own investigations of the incident; and i. Caltex has been frank, open and cooperative in its dealings with the EPA and in providing the assistance outlined above.

The New Procedure (Exhibit P4)

1. The December 2015 "Transfer" document (Exhibit P4) has the following stated purpose: ... to ensure that if a tank to tank transfer of hydrocarbon product has to be undertaken using temporary installations at a Caltex terminal, adequate safeguards are in place through the Caltex Permit to Work system to reduce the risk to an acceptable level. ... This operation is carried out by trained and competent personnel (staff/contractors) with effective supervision to ensure compliance with the conditions of the Caltex Permit to Work. and its "Scope" is defined as follows: 2.1 This procedure covers: • Movement of product from an above-ground storage tank at a Caltex terminal via temporary hoses, pipework and/or pumping equipment directly into another vessel, such as a receiving slops tank, a portable tank, a vacuum truck tank or a road tanker. 2.2 This procedure does not cover: • Draining (or pumping out) of water from storage tanks. • Movement of product via permanently installed piping systems designed for the purpose of moving product into and out of storage tanks. • Emptying a storage tank for Turn-Around and Inspection (T&I).
2. In the section on "General Precautions" (4.1), the new procedure says (4.1.1): Opening a tank to a temporary piping and/or hose set-up carries with it a risk of large loss of containment of flammable or combustible liquids with potential to escalate to fire and vapour ignition if all specified controls are not implemented and effectively controlled. Accordingly, a thorough MOC in accordance with OEMS Process 11.0 shall be followed on every occasion where product is to be drawn from an in-service product tank via temporary piping and/or hose set-up to ensure that: a) The intended scope, purpose and parameters of the transfer arrangements through the temporary set-up are fully identified and understood by all involved. b) The persons with the appropriate skills and expertise in operations, engineering and process safety aspects of the job review the intended temporary set-up. c) The hazards associated with the temporary transfer arrangements are identified and reviewed in the context of the specific individual temporary set-up and its operation. d) The controls for all identified hazards are specifically addressed in the agreed safe work procedure for both set-up of the temporary transfer arrangements, and execution of the transfer task. e) A red pen marked up Plot Plan and Process and Instrumentation Diagram (P&ID) showing all hoses, pumps and fixed piping shall be attached to the MOC. MOCs shall be conducted at the earliest possible time in advance of the work and shall take into account the specific circumstances of the planned installation and manning arrangements.
3. Sections 4.2 and 5 clearly delineate the "roles and responsibilities of personnel", section 6 contains a very detailed "MOC checklist", and section 7 a "Temporary Pump and Hose System Checklist".

The Affidavit evidence

1. Rodney John Rutledge's affidavit of 19 April 2016 was sworn in his capacity as Caltex's "National Process Safety and Regulatory Advisor" since October 2014. At the time of the incident he was Senior Advisor - Process Safety and HES Risk Management.
2. On 16 July 2013, he was tasked with leading an investigation into the incident in accordance with relevant procedures in Caltex's OEMS, and, in December 2014, with undertaking a review to test and report on the status of the recommendations arising from the investigation. As he says (in par 4): ... Specifically, the intent was to test and report on the extent the completed actions were implemented to meet the original intent of the recommendation and to what extent they had been embedded within Caltex processes and procedures. Caltex refers to this activity as "validation and verification" (V&V).
3. He deposes (pars 6 and 7): 6 Caltex has implemented, and continues to test the resilience of, a large number of actions (many of which have involved substantial effort and cost) to ensure that an occurrence like the Incident is unlikely to reoccur. These actions, outlined below in my affidavit, can be broadly categorised as being: (a) Interim risk mitigation measures implemented immediately following the Incident; (b) Improvements made to implement recommendations arising from the primary and supplementary investigations; (c) Further improvements identified and implemented through the V&V process; and (d) Additional actions committed to by Caltex in an enforceable undertaking offered to, and accepted by, Safe Work (sic) NSW (formerly known as Work Cover (sic)) pursuant to Part 11 of the Work Health and Safety Act 2011 (NSW) (Enforceable Undertaking). 7 In my view, the actions that have had the most significant impact on how Caltex manages its business and those that have delivered the greatest risk improvements (not just at BMT but across Caltex's operations nationally), have been: (a) Revision of the management of change (MOC) process and supporting procedures and implementation of improved MOC training across the national network of terminals. My auditing indicates a substantial improvement in the number of changes being managed with a more robust MOC review process. This has significantly improved the performance of MOC as a key incident prevention risk control measure; (b) Improved national operating procedures for management of water draw and abnormal product transfers. These detail minimum acceptable standards for performing these activities including equipment design, supervision and MOC reviews. A total of three new detailed procedures have been developed and implemented nationally across Caltex terminals; (c) Completion of a comprehensive review of the Permit to Work processes utilised at Caltex facilities to prepare work sites, communicate safe work requirements and return equipment to service. This has included training and re-accreditation requirements for Permit Officers; (d) Introduction of formal training for members of Regional Emergency Management Teams (REMT) which provide support to agencies responding to incidents at Caltex facilities; (e) Increased firefighting foam stocks at all Caltex terminals to improve the initial response to large spills; and (f) Intensification of Caltex's drug and alcohol testing program, in particular the introduction of "challenge testing" for supervisors and Permit Officers and post incident causal testing.
4. In the investigation, Rutledge led a team of four over a period of 4 - 5 months, and he deposes in great detail to the conduct of the investigation, and to delivery of its reports to the EPA (pars 10 - 14). The investigation report included material on the clean-up operations, in which Rutledge himself was not personally involved. He records (in par 15): (a) The liquid product released during the Incident was fully contained within the bund surrounding Tank 901 (and Tank 902); (b) On the morning of 13 July 2013, the liquid product (together with the mixture of foam and water used as part of the emergency response) was safely pumped from the containment bund to a nearby storage tank, from where it was transported from BMT by a specialist liquid waste company for controlled disposal within subsequent days; (c) Stormwater drains surrounding the Tank 901/902 bund were immediately closed and isolated following the Incident and were then cleaned and tested before being returned to normal service; (d) Environmental assessment of the impact of the Incident on soil and groundwater was undertaken as soon as restrictions to the Tank 901/902 bunded area (imposed by WorkCover NSW) were lifted. Gauging of surrounding groundwater monitoring bores was conducted on 12 July 2013. No hydrocarbon odour or other impacts were detected. Groundwater monitoring conducted between 17 and 25 July 2013 demonstrated that product was not released to the groundwater; and (e) Despite the investigation not raising any concerns or need to do so, out of an abundance of caution in situ remediation of the bund floor and concrete footings was completed on 30 July 2013. and (in par 16): (a) The total cost of (and associated with) the clean up, including amounts invoiced by FRNSW, the transport and disposal of the product, drain cleaning, groundwater gauging and monitoring, and remediation of the tank site, was $1,100,817.68. Of this amount, Caltex was able to recover $726,477.53 from its insurer. This claim will impact on Caltex's "loss history" for the next 5 years, which is a factor in the calculation of insurance premiums; and (b) The value of the lost product (i.e. at its cost price) was $111,170.57.
5. He also deposes to the interim risk mitigation measures taken during the investigation (pars 17 -18), and to the implementation - and cost to Caltex - of the recommendations he made (pars 19 - 20: $402,800).
6. The subsequent "V&V" process ([59] above) was more detailed than usual, and remains on-going, as Caltex is seeking "long-lived cultural change to prevent incidents and manage environmental and safety risks" (pars 21 - 29).
7. Rutledge has also been directly involved in fulfilling the commitments Caltex made in its Enforceable Undertaking to SafeWork NSW (pars 30 - 32: estimated total costs would appear to amount to about $805,000).
8. In his supplementary affidavit of 23 May 2016, he sought to clarify and amplify the steps he took in his investigation, especially regarding the MOC process, and BMT's failure to conduct an appropriate systematic MOC review prior to the relevant product transfer operation. He found (par 12): (a) the threshold for initiating a formal management of change review was too high and was not being used for less complex changes which also had the potential to impact safe, reliable operations; (b) no Tier 2 process had been implemented in relation to the MOC Process at the time of the incident; and (c) monitoring and reporting was not sufficient to provide assurance in relation to compliance. and concluded (pars 13 - 16): 13 For this reason, one of the recommendations I made in my investigation report was for the implementation of a framework of Tier 2 process documents for management of change that adequately communicated the threshold of change for management of change initiation and the process steps required for full compliance. I had witnessed in Caltex Refining the value of this process guidance; in particular for the identification of "Not In Kind" changes requiring management of change application. 14 Other Recommendations related to the importance of monitoring & reporting management of change system compliance to Caltex management on a routine basis. 15 As described in my earlier affidavit, the Verification & Validation activities that I have performed since the incident indicate to me that the maturity of implementation of management of change within Caltex terminals has progressed significantly. In 2015 I audited the management of change process in Distribution and there was evidence of an order of magnitude improvement in the number of management of changes being raised, including application to abnormal operations. 16 There was also evidence of an improved framework of management of change documentation, system resources and training. Improved governance processes are also evident for management of change at the facility and business unit level.
9. Andrew Terence Brewer has been, since April 2014, Executive General Manager - Supply Chain Operations, and a member of Caltex's Executive Leadership Team. At the time of the incident he was Manager of the Kurnell Refinery.
10. He states (par 5) Caltex's "deep regret" that it has committed an offence against the POEO Act; he says that Caltex "takes its environmental obligations seriously", and (par 6) that "Caltex unreservedly apologises for the Incident".
11. He also expresses (par 7) Caltex's gratitude to Fire & Rescue NSW, especially for the "brave actions" of Morasso, and (pars 8 and 17) Caltex's commitment to Rutledge's investigation and recommended responses, and (pars 9ff) to the achievement of "operational excellence", through implementation of the OEMS and the environmental management system developed in accordance with it, and "a thorough and robust" V&V process.
12. Brewer deposes (pars 21 - 23) that the defendant was prosecuted by WorkCover in July 2015, in relation to this spill incident, and offered an Enforceable Undertaking, which was accepted by SafeWork NSW (see [60]6 above), as "an appropriate resolution of [those] prosecution proceedings". Mr Walker reminded the Court (Tp48, L49 - p49, L16), that that prosecution, which had a "very considerate overlap" with this present case, did not result in any findings against the defendant.
13. Brewer also deposes (pars 25 - 35) to Caltex's very substantial support of communities in which it operates, including Kurnell. I accept this evidence, and commend it, without seeing the need to repeat it here in detail - the causes supported are many, and varied, and all meritorious.
14. Brewer concludes (pars 36 - 39): 36 Caltex has invested considerable time and finances to build its reputation within our industry and the general community. The recording of a conviction in this proceeding is likely to adversely impact upon this reputation. 37 As part of the processes for tendering, expressions of interests (sic) and pre-qualifications, Caltex is required to declare environmental statistics demonstrating environmental compliance and performance. As part of this process, customers request disclosure as to whether Caltex has incurred any penalties. The recording of a conviction in this proceeding against Caltex would need to be disclosed to potential customers and is likely to impact upon its ability to win or be short listed for tenders and expressions of interest. It is not possible to quantify the costs associated with these matters but they are likely to be substantial. 38 The recording of a conviction in this proceeding will also be taken into account by the Environmental Protection Authority when calculating the licence administration fees for the environmental protection licence for BMT and will result in the payment of higher fees. 39 It is also highly likely that Caltex will be subject to increased insurance costs as a result of any conviction.

Statutory Provisions and some Principles relevant to Sentencing

1. The objects of the POEO Act are set out in s 3, and the most relevant to the present case are: (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, ...
2. Section 3A of the Crimes (Sentencing Procedure) Act 1999 ("the CSP Act") sets out the following "Purposes of sentencing": (a) to ensure that the offender is adequately punished for the offence, (b) to prevent crime by deterring the offender and other persons from committing similar offences, (c) to protect the community from the offender, (d) to promote the rehabilitation of the offender, (e) to make the offender accountable for his or her actions, (f) to denounce the conduct of the offender, (g) to recognise the harm done to the victim of the crime and the community.
3. Section 241 of the POEO Act provides: 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.
4. It is now well-established that the penalty to be imposed is one to be determined by undertaking an instinctive synthesis of all the relevant objective and subjective circumstances of the offence and of the offender (Markarian v The Queen ("Markarian") (2005) 228 CLR 357; [2005] HCA 25). The sentence imposed must not only reflect, but also be proportionate to, those objective and subjective circumstances (Veen v The Queen (1979) 143 CLR 458; [1979] HCA 7, and Veen v The Queen (No 2) (1988) 164 CLR 465; [1988] HCA 14).
5. In Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683, at 698, Kirby P said: While it is the function of the Court itself to assess the seriousness of the offence in question, the maximum penalty available for an offence reflects the "public expression" by parliament of the seriousness of the offence: ... The task of a court is to assess the relative seriousness of the offender's particular offence in relation to a worst case for which the maximum penalty is provided. Having determined the relative seriousness of the offence, the penalty to be imposed is that which approximately correlates upon the scale of penalty set by the legislature from zero to the maximum. ... ... The Court must keep in mind not only the facts which establish the seriousness of the offence but also those which tend to mitigate that seriousness or exculpate the offender. In this process, where a relevant fact is the subject of conflicting evidence, and where that evidence is of like probability, the Court should resolve the conflict of fact in favour of the offender: ...
6. Section 116 covers a range of offending, a situation which the High Court has said, in a different context, "carries no implication that each category ... is as heinous as another ... When an offence is defined to include any of several categories of conduct, the heinousness of the conduct in a particular case depends not on the statute defining the offence but on the facts of the case" (Ibbs v The Queen (1987) 163 CLR 447; [1987] HCA 46, at 452).
7. The following provisions of s 21A of the CSP Act are possibly relevant in the present case (some emphasis added): 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. (2) Aggravating factors The aggravating factors to be taken into account in determining the appropriate sentence for an offence are as follows: ... (ca) the offence involved the actual or threatened use of explosives or a chemical or biological agent, (cb) the offence involved the offender causing the victim to take, inhale or be affected by a narcotic drug, alcohol or any other intoxicating substance, (d) the offender has a record of previous convictions ... ... (g) the injury, emotional harm, loss or damage caused by the offence was substantial, ... (i) the offence was committed without regard for public safety, ... (ib) the offence involved a grave risk of death to another person or persons, ... (o) the offence was committed for financial gain, ... The court is not to have additional regard to any such aggravating factor in sentencing if it is an element of the offence. (3) Mitigating factors The mitigating factors to be taken into account in determining the appropriate sentence for an offence are as follows: (a) the injury, emotional harm, loss or damage caused by the offence was not substantial, (b) the offence was not part of a planned or organised criminal activity, ... (e) the offender does not have any record (or any significant record) of previous convictions, (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, ... (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), ... (k) a plea of guilty by the offender (as provided by section 22), (l) the degree of pre-trial disclosure by the defence (as provided by section 22A), (m) assistance by the offender to law enforcement authorities (as provided by section 23). ...
8. As Mr Walker acknowledges (subs par 9), objective seriousness is "a necessary aspect" of the sentencing exercise. However, the courts have recognised that it is the factor which fixes both the upper and lower limits of penalty. As the prosecutor's submissions say (par 31): ... As to the upper limit, it does so because a sentence should never exceed that which can be justified as proportionate to the gravity of the offence considered in light of its objective circumstances. At the other end of the scale, it fixes the lower limit because allowance for any subjective factors should never produce a sentence which fails to reflect its objective seriousness which fail to meet the objectives of punishment. (See also Preston ChJ in Environment Protection Authority v Waste Recycling and Processing Corporation [("Waste Recycling")] (2006) 148 LGERA 299: [2006] NSWLEC 419, and the cases cited therein.)
9. The defendant's written submissions (par 9 again) respond to that submission of the prosecutor, in these terms: ... This proposition is to be read subject to the prohibition against "two-stage" sentencing. Assessment of objective seriousness is one factor amongst a number of factors that must be taken into account in the "intuitive synthesis" that lies at the heart of the sentencing determination. It would be erroneous to determine (or "fix") an appropriate or provisional sentence by reference to one factor only, such as objective seriousness, and then modify that sentence to take into account other factors, such as subjective factors: [Markarian] at [37].
10. In his oral submissions, Mr Howard said of this dispute (Tp28, LL30 - 39): We agree, but agreeing as we do with that proposition, we would add that the proposition which Justice Preston put which we have paraphrased at 31 of our submissions is not one which runs a risk of traversing the prohibition against a relevantly described two stage sentencing process. Rather we take it that Justice Preston in putting the proposition which we've cited at 31 of our submissions is simply putting in essence that the sentence must be proportionate at the end of the day. Not that there should be some fixing of an amount with incremental additions or subtractions but simply that at the end of the day the Court must take into account both the objective and the subjective circumstances and reach the right result.
11. When assessing the objective gravity or seriousness of an environmental offence, the circumstances to be taken into account may include the following (Plath v Rawson ("Plath") (2009) 170 LGERA 253; [2009] NSWLEC 178, per Preston ChJ, at [48]): (a) the nature of the offences; (b) the maximum penalties for the offences; (c) the harm caused to the environment by commission of the offences; (d) the state of mind of the offender in committing the offences; (e) the offender's reasons for committing the offences; (f) the foreseeable risk of harm to the environment by commission of the offences; (g) the practical measures to avoid harm to the environment; and (h) the offender's control over the causes of harm to the environment.
12. The Markarian synthesis requires the Court to take into account also the relevant subjective circumstances. Preston ChJ said, in Plath (at [140]): Within the limits set by reference to the objective gravity of the offences, the Court may take into account the favourable factors personal to the offender. Factors to be considered are: lack of prior criminality; prior good character; plea of guilty to the offences; contrition and remorse; and assistance to authorities.
13. The prosecutor must establish matters adverse to the offender beyond reasonable doubt, but the defendant's onus in respect of matters favourable to it is the balance of probabilities: R v Olbrich (1999) 199 CLR 270; [1999] HCA 54, at [27].

Objective seriousness and relative culpability issues

1. The subject incident, on any consideration, was a major "spill" event, which involved (prosecutor subs 52 - 53) large volumes of "an inherently dangerous and highly flammable substance", but, fortuitously, failed to reach its adverse potential.
2. The evidence blames both Caltex and Crisafulli for it, and Mr Walker submits (Tp45, L14) that Caltex cannot be held "responsible for those things which it is reasonable to leave to an individual", and (LL20 - 21) "certain people are reasonably left to do it properly". He says (LL28 - 36) that the primary and proximate causal factors in this incident were Crisafulli's failures (a) to arrive sober; (b) to remain so; (c) to accede to the reluctance of the Yard Co-ordinator to do the transfer, and the reservations of Browning; and (d), as a senior and experienced fitter, to work the simple camlock mechanism properly, and without damaging it.
3. It is to the defendant's credit that it had in place, and generally implements across its operations, an appropriate safety management system (defence subs par 13), and a more than adequate bund at the site of the spill (subs par 20a, and Tp46, LL18 - 28).
4. However, Caltex failed to follow its own rigorous "MOC" process, and apply it to the extended period of "abnormal procedures", undertaken with the authority of senior personnel, and Caltex then provided Crisafulli with an unsatisfactory gooseneck fitting, and, it would seem, inadequate training or instruction.
5. Mr Walker contests the prosecutor's contention (in its subs pars 42 - 43) that providing poor equipment was the "dominant" or "major and overarching" failure in this incident (Tp46, LL4 - 11).
6. However, he accepts (subs par 18) that that circumstance "materially" contributed to Crisafulli's offence, and concedes (par 11) that Caltex's "key failing" was not to follow its own procedures. That negligence reaches the criminal standard necessary to found the charge, and Mr Walker correctly argues (par 12) that it cannot additionally be found to be an aggravating feature, sounding in "sterner punishment": R v Tadrosse (2005) 65 NSWLR 740; [2005] NSWCCA 145. See also Environment Protection Authority v Ampol Ltd (1993) 81 LGERA 433.
7. I cannot accept, however, his characterisation (Tp41, L4) of Caltex's behaviour as "goodhearted mistake", or (Tp42, L6) "modest" wrongdoing.
8. In respect of the company's OEMS/MOC failure, I accept the prosecutor's submission (par 41) to the following effect: 41. Had the defendant carried out an assessment of the risk of carrying out this type of abnormal procedure under its OEMS Management of Change process, it must be inferred, and is presumably uncontentious, that the defendant would not have caused or permitted the Tank 901 Product Transfer Exercise to have been carried out: (a) without, or otherwise than in accordance with, a written procedure prepared under the OEMS system specifically for this type of exercise; (b) using the temporary arrangement of pumps and hosing that the defendant supplied for the task, including, hosing connections relying on Camlock fittings and (c) supplying and using a 90 degree elbow fitting ("gooseneck fitting") which could only practicably be affixed to the water draw valve of Tank 901 with its mouth facing vertically upwards; (d) at night time under inadequate lighting; (e) pursuant to a work permit signed by a Probationary Permit Officer contrary to the defendant's written work permit procedures; (f) without the completion, first, of a written job safety assessment form; and (g) without there being any provision for double isolation or quick isolation of the water draw valve to enable the valve to be shut quickly or remotely in the event of a connection failure. (See also par 69 of those submissions)
9. The harm caused to the environment, mainly air, and to human health, was generally minor and transient, save for the psychiatric opinion expressed that the incident has played some part in Browning's ongoing psychological problems. Insofar as Vaysbakh suffered acute but short-term ill-effects, it is to be recalled that he chose not to wear his appropriate equipment (see generally, prosecutor subs pars 56 - 58, and 61 - 65).
10. There was, of course, some risk of ignition/explosion, but that was, in all the circumstances, clearly a remote potential element of harm, which was unlikely, and did not eventuate (prosecutor subs 59 - 60, and Tpp36 and 39).
11. Morasso's courage and professionalism in turning off the "geyser", and the defendant's expertise, promptness, and thoroughness in cleaning up the spill, ensured no harm to land or water.
12. In terms of the other s 241 considerations ([74] above), Caltex was clearly in "control over the causes that gave rise to [its] offence" (s 241(1)(d)), and well knew of practical measures it could have taken to "prevent, control, abate or mitigate" harm (s 241(1)(b)), most significantly by not pursuing "abnormal procedures", by following its own safety and "permit to work" and "JSA" procedures, and by providing appropriate training, lighting, and equipment, including isolation equipment, and adequate foam.
13. Foreseeability (s 241(1)(c)) refers to the harm element, not the incident itself (defendant subs par 26, c.f. prosecutor subs par 16, but see SAF 149 - 151). I accept Mr Walker's submission (par 27) that, as ignition was not "likely", the risk of it does not fall within this provision. Nor could the defendant have reasonably foreseen the ultimate residual harm suffered by Browning, or the failure of Vaysbakh to wear his protective equipment (par 28).
14. I conclude, on balance, that the resulting harm was "limited", and that the defendant's offence is of moderate objective seriousness.

Subjective circumstances and mitigating factors

1. Caltex is a very large enterprise, employing a large workforce.
2. I accept its assertion of "a corporate culture valuing safety and the environment" (subs par 52).
3. Its evidence before me shows that it undertook "comprehensive rectification and improvement measures", following the subject incident (Rutledge's affidavits, and subs par 25).
4. Apart from its response to the event under consideration, I take note of its extensive community involvements (Brewer's affidavit, prosecutor's subs par 29, and defendant's subs par 39. See [70] and [71] above).
5. It is accepted that the defendant's guilty plea at an early stage entitles it to a "discount" of 25%: R v Thomson, R v Houlton (2000) 49 NSWLR 383; [2000] NSWCCA 309.
6. Clearly, the company's assistance to the authorities was "exemplary" (Tp48, L19). Indeed, Mr Walker submitted (Tp48, LL6 - 11) that the defendant waived privilege, and went beyond what might be compelled, to the point of self-incrimination. As his written submissions state (par 34), it was "significant, useful, extensive and timely, and the information provided was truthful, complete and reliable" (see also prosecutor subs par 104, and SAF 168). That co-operation extended to the preparation of the very comprehensive SAF, which certainly "substantially shortened the duration of the sentence hearing" (par 35 - from a projected four days to one). I will apply a further "discount" in this respect.
7. The defendant admits to two prior convictions for Tier 2 offences, arising from a single incident and resulting in "modest fines", and I accept that it "does not have a 'significant record'" (s 21A(3)(e), and prosecutor subs par 38).
8. The prospects of Caltex's reoffending are slight, even though risks are inherent in its operations, and I consider that the need for specific deterrence is comparatively low. However, "just" punishment and general deterrence, are called for. I reject the defence submission (par 63) that only "a relatively modest fine should be imposed", if by that is meant that only a "token" fine is called for.
9. I am satisfied that Caltex's contrition and remorse satisfy the tests laid out by Preston ChJ in Plath ([157] - [164]), and in Waste Recycling (at [203] to [214]). There is extensive evidence of rehabilitation, and of systemic change across the company. The presence of many senior executives at the hearing, the clear acceptance of the company's responsibility for punishable behaviour, and the sworn statements of appreciation and remorse are all to Caltex's credit.
10. No cases were cited which the Court could accept as "comparable" to the present, but I have reviewed my lengthy analysis of sentencing considerations, including discounts, and "scales" of seriousness, in the marine oil spill case Newcastle Port Corporation v MS Magdalene Schiffahrtsgesellschaft MBH; Newcastle Port Corporation v Vazhnenko [2013] NSWLEC 210, to which I referred learned senior counsel on both sides in the present case during submissions.
11. Caltex has already lost $111,000 worth of marketable product, paid net clean-up costs of $347,000, and spent $403,000 on rectification/improvement, and at least $805,000 in complying with its enforceable undertakings to settle the workplace related prosecution for the same incident. It has now agreed to pay the prosecutor's costs of $450,000, and the cost of appropriate advertisements.

Conclusion

1. On a scale of seriousness such as was developed by Stein J in Environment Protection Authority v Orange City Council [1995] NSWLEC 103, the ranking of "moderate", i.e. between "low" and "mid" ranges, indicates that the appropriate penalty to impose in this case is a fine of 30% of the maximum, namely $600,000, discounted by one-third for the plea and other mitigating factors.
2. Instead of imposing a fine of $400,000, I am content to order payments of $200,000 to each of the two projects nominated in the prosecutor's draft orders. In view of some apparent concern (Tp49, L42 - p50, L9) about how much money those two projects might presently need, I shall grant the parties liberty to apply in respect of the application of those funds.

Orders

1. The summons in matter 2016/152448 (formerly 50498 of 2014) having been withdrawn by consent ([6] above), the Court now makes the following orders in matter 2016/151308 (formerly 50851 of 2014): 1. The Defendant is convicted of the offence charged in the further amended summons filed in Court on 23 May 2016. 2. Pursuant to s 250(1)(a) of the Protection of the Environment Operations Act 1997 ("POEO Act'), the Defendant is to place a notice, in the form of Annexure A to this judgment, in the following publications: i. Australian Financial Review within the first 21 pages at a minimum size of 20cm x 11cm, within 30 days of this order; ii. Sydney Morning Herald within the first 21 pages of the General News Section at a minimum size of 18.6cm x 12.9cm, within 30 days of this order; and iii. Southern Courier within the first 5 pages at a minimum size of 18.6cm x 12.9cm, within 30 days of this order. 1. Pursuant to section 250(1)(a) of the POEO Act, the Defendant : i. is to place a notice in the form of Annexure A in the Environmental Regulations Section of the Directors' Report to be included in the Defendant's next Annual Report, both in the version of the Annual Report to be provided to Australian Stock Exchange on 21 February 2017 and in the version of the Annual Report to be subsequently made available to the public; and ii. in addition, is to include the reference in Annexure B in the Health, Safety and Environment Section of the Defendant's next Annual Report as made available to the public on or after 21 February 2017. 1. Pursuant to section 250(1)(a) of the POEO Act, the Defendant is to provide to the Prosecutor a complete copy of the page of the publications in which the notice appears within 14 days of the date of publication of the notices set out in Orders (2) and (3). 2. Pursuant to section 250(1)(e) of the POEO Act, in lieu of a fine, the Defendant is to pay the following amounts in respect of projects for the restoration or enhancement of the environment, within 28 days of the date of this order: i. The amount of $200,000 is to be paid to City of Botany Bay (or its successor) for the "Bushcare and bushland management project in Sir Joseph Banks Park". ii. The amount of $200,000 is to be paid to the Department of Primary Industries for "Stocking Mulloway to enhance recreational fishing opportunities in Botany Bay". 1. The parties have liberty to apply in respect of the allocation of the funds in Order (5). 2. Pursuant to s 250(1)(a) of the POEO Act, all future public references by the Defendant to the payments specified in Order (5) above shall be accompanied by the following passage: "Caltex Australia (Petroleum) Pty Limited's contribution to the funding of the''[insert name of project]" is part of a penalty imposed on it by the Land and Environment Court of NSW after it was convicted of an offence against the Protection of the Environment Operations Act 1997." 1. The Defendant is to pay the Prosecutor's legal costs, in the amount of $450,000. 2. All exhibits are returned to the parties, but the actual Statement of Agreed Facts will remain in the Court file.

Annexure A (35.0 KB, pdf) Annexure B (24.8 KB, pdf) 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: 20 February 2017