Environment Protection Authority v Ditchfield Contracting Pty Limited

Actions taken to prevent reoccurrence of the offence

1. The spill triggered a review of Ditchfield's incident management system. This in turn triggered a procedure of re-familiarisation for Ditchfield employees which resulted in a revised safe work method statement being prepared specifically for refuelling the service truck from the Fuel Farm on 7 September 2016. The supervisors and workers were directly involved in this task, rewriting in their own words the existing procedure and safety requirements for this task.
2. On 7 September 2016, in consultation with the Fuel Farm manufacturer, Ditchfield made changes to the fuel dispensing software so that the Fuel Farm dispensing pumps automatically shut down after dispensing 1,000 litres of diesel.
3. On 10 September 2016, the Fuel Farm was decommissioned and removed from the Ditchfield Compound. Alternative fuelling arrangements, involving a Fuel Cart from offsite attending the Ditchfield Compound to refuel plant and equipment, were made.

Sentencing considerations

1. The sentence imposed by the Court must reflect both the objective seriousness of the offences and the subjective circumstances of the offender. The Court must consider the factors of relevance in s 21A of the Crimes (Sentencing Procedure) Act 1999 ('Sentencing Act') and s 241(1) of the POEO Act. The Court must consider the purposes for which the Court must impose a sentence in s 3A of the Sentencing Act. Paragraphs (a), (b), (e), (f) and (g) are relevant to the offence and to the offender in this case.

Objective seriousness of the offence

1. The objective circumstances of the offence of relevance are: the nature of the offence; the maximum penalty; the environmental harm; the foreseeability of the risk of environmental harm; the practical measures to prevent environmental harm; and the control over the causes giving rise to the offence.

Nature of the offence

1. The objects of the POEO Act include to protect the quality of the environment and to prevent pollution of it. Provisions of the POEO Act prohibit various forms of pollution, including pollution of water. The prohibitions can be relaxed by obtaining various forms of authority, such as an environment protection licence. The application for and approval of an environment protection licence requires environmental impact assessment of the activity and the imposition of licence conditions to prevent, control, abate or mitigate pollution and other harm to the environment.
2. Ditchfield's conduct of polluting waters, other than in accordance with an environment protection licence authorising the pollution of waters, undermined this statutory scheme.

Maximum penalty

1. The maximum penalty for the offence against s 120 of the POEO Act is $1,000,000 for a corporation. There is also a daily penalty of $120,000 per day of continuing offences, but Ditchfield is not charged with committing a continuing offence. This high maximum penalty reflects the seriousness with which Parliament views the offence against s 120 of the POEO Act.

The environmental harm caused

1. The harm caused or likely to be caused to the environment by the commission of the offence is a consequence of the offence that is relevant to the objective seriousness of the offence: s 241(1)(a) of the POEO Act and s 21A(2)(g) of the Sentencing Act.
2. The commission of the offence by Ditchfield caused actual pollution of the waters of the creek.
3. The creek is an intermittent, semi-permanent watercourse with some aquatic and riparian vegetation in the creek below the impacted area. The creek is defined as an intermittent, semi-permeable watercourse due to the combination of surface water runoff and groundwater seepage that extends the period of flow.
4. The creek supported some aquatic life at the time of the spill. The creek was not pristine and it was in an area subject to other disturbances. The impacted area of the creek was likely to have low biodiversity, with a fair representation of the aquatic biodiversity that was present in the creek.
5. Regarding the aquatic environment, the presence of macrophytes in the creek channel and the relatively abundant presence of fauna such as Freshwater Crayfish and Hemiptera Family Hydrometridae in the creek downstream of the impacted area indicates a high level of water permanence and groundwater flow. The Hydrometridae is typically found in permanent wetlands with good water quality and macrophytes as they are ambush predators. There is no evidence of any impact on Freshwater Crayfish as a result of the spill.
6. Regarding the terrestrial environment, the presence of Melaleuca species, which are groundwater dependent vegetation, adjacent to and downstream from the impacted area of the creek, is indicative of groundwater flow.
7. The spill caused significant actual harm to the environment in the impacted area in the short term. The overall impact to the creek, downstream water course and native vegetation was considered by the experts called by the parties to be minimal if not negligible in the mid to long term. The impacts of the spill were relatively localised in space, being the area extending from the Ditchfield Compound, across the electricity easement and approximately 60m downstream within the drainage line and the creek up to the bund.
8. Contaminated waters pooled within the creek, up to the bund where the pollutant was contained, were degraded for up to approximately 5 days following the spill. The high levels of petroleum hydrocarbon in pooled waters exceeded the Australia and New Zealand Guidelines for Fresh and Marine Water Quality (2000) by Australia and New Zealand Environment and Conservation Council and the Agriculture and Resource Management Council of Australia and New Zealand ('ANZECC WQG') for diesel, but were well above the concentrations reported for petroleum hydrocarbons that cause 50% lethality to a range of aquatic life. Polycyclic aromatic hydrocarbons naphthalene and phenanthrene also exceeded the corresponding ANZECC WQGs.
9. The actual harm caused severe degradation of the surface soil layers and the aquatic ecosystem in the area directly impacted by the diesel. The direct contact of the diesel with the soils at the site, in the drainage channel and various pooled waters in the creek within the adjoining property, would have caused serious impacts, including death, to most exposed and/or trapped organisms such as invertebrates.
10. The evidence of actual environmental harm included visible diesel within the creek for approximately 60m to the bund. Dead invertebrate organisms were present within the water and an incapacitated lizard coated in diesel was removed from the water and placed on the creek bank.
11. The spill also caused disturbance to the soils, stream banks and riparian vegetation due to the remediation earthworks. High turbidity was recorded in the creek immediately after the spill and approximately one month after the spill. Despite this, water was found to be in relatively good condition. The cause of the high turbidity cannot be determined on the available evidence, however, the remediation works may have caused a temporary increase in the turbidity of the creek.
12. The remediation works have now stabilised the creek banks.
13. No threatened aquatic species were identified at the time of the spill within the area of the creek impacted by the spill. The impacts on riparian vegetation as a result of the spill were minimal. One hollow bearing tree was removed in the remediation, which contained an empty feather tailed glider nest.
14. The duration of the harm caused by the spill was short, extending from the time of the spill to the removal of the affected water and soil. The period was 7 days, being 3 to 9 September 2016. The ecological harm was limited to the area from the diesel spill location on the Fuel Farm to the location of the bund in the creek. The impacts of the incident were contained by the bund and the prompt remediation of the impacted area.
15. The long term impact of the diesel spill was adequately limited in extent and exposure time because of the containment of the pollutant by the bund and the rapid remediation and removal of polluted soils from the impact zone at the site, electricity easement and creek. These actions prevented the expansion of the pollution plume to both the terrestrial riparian vegetation and baseflow stream ecosystem downstream of the bund in the creek and into downstream waterways.
16. I find that the actual harm to the environment was low, considering the limited extent and duration of the environmental impacts.

Foreseeability of risk of harm

1. The extent to which Ditchfield could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence is a relevant objective circumstance: s 241(1)(c) of the POEO Act.
2. The risk that diesel might spill during the transfer of diesel from the Fuel Farm to the Fuel Tank was reasonably foreseeable.
3. The Fuel Farm had a capacity to hold 69,200 litres of diesel fuel. Whilst the Fuel Farm was manufactured in accordance with relevant Australian standards and had an internal bund to retain any leak that occurred inside the tank, there was no external bund to contain any leakage or spillage of diesel that occurred outside of the tank. The most likely, and clearly foreseeable, means of leakage or spillage of diesel fuel would be during the transfer of diesel from the Fuel Farm to the Fuel Cart. The only device capable of containing any leakage or spillage was the spill grate. The efficacy of the spill grate to contain a spill depended on the Fuel Cart being positioned above the spill grate. The spill grate only had a capacity to contain a spill of 1,350 litres. Any spillage exceeding this capacity would overflow onto the ground, as happened on the day of the offence. Neither the Fuel Farm nor the Fuel Cart had an automated shut off valve to prevent excess fuel transfer and spillage once the Fuel Cart had been filled. The Fuel Cart displayed a warning notice that the fuel system did not shut off automatically and that instead it must be shut off manually.
4. If leakage or spillage of diesel fuel did occur away from the spill grate or of a volume that exceeded the capacity of the spill grate, there was no other physical means to contain the diesel fuel. The topography sloped from the Ditchfield Compound to the drainage line and creek. A spill of diesel fuel of the volume that occurred on the day of the offence would inevitably flow to the drainage line and the creek.
5. In these circumstances, I find beyond reasonable doubt that Ditchfield could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence.

Practical measures to prevent risk of harm

1. Another factor relevant to the objective seriousness of the offence is the practical measures that may be taken to prevent, control, abate or mitigate the harm caused or likely to be caused to the environment by the commission of the offence: s 241(1)(b) of the POEO Act.
2. There were practical measures that Ditchfield could have taken that would have prevented, controlled, abated or mitigated the pollution of waters. The Fuel Farm and Fuel Cart could have been fitted with an automatic shut off valve to stop fuel transfer once the Fuel Cart was full or after a set volume of fuel had been transferred. Ditchfield did change the fuel dispensing equipment in the Fuel Farm after the offence so that the dispensing pumps automatically shut down after dispensing 1,000 litres of diesel. Such measures could have been taken before the spill occurred. The spill grate could have had a larger capacity. It might not have been practical to have had a spill grate that could contain all of the diesel that overflowed on the day of the offence, but any larger capacity spill grate would have been able to contain more diesel and hence mitigated the volume of diesel that overflowed. There could have been an external bund to contain spillage within the refuelling area. Refuelling could have occurred offsite, as was done after the offence. Ditchfield made alternative fuelling arrangements within a week of the offence, involving a Fuel Cart from offsite attending the Ditchfield Compound to refuel plant and equipment.
3. I find, beyond reasonable doubt, that these were all simple measures that could have been taken that would have prevented, controlled, abated or mitigated the harm or likely harm to the environment caused by the commission of the offence.

Control over causes giving rise to the offence

1. The extent to which Ditchfield had control over the causes which gave rise to the offence is another factor relevant to the objective seriousness of the offence: s 241(1)(d) of the POEO Act.
2. Ditchfield occupied the Ditchfield Compound and had complete control over all of the activities carried out in the Ditchfield Compound, including refuelling at the Fuel Farm.

Conclusion on objective seriousness

1. Considering all of these objective circumstances, I find the offence is in the low range of objective seriousness for the offence of water pollution.

Subjective circumstances

1. Within the boundaries set by the objective seriousness of the offence, the Court may consider the subjective circumstances of Ditchfield, including its lack of prior convictions, its early plea of guilty, its remorse for the offence, its good corporate character, the unlikelihood of it reoffending and its assistance to authorities.

Lack of previous convictions

1. Ditchfield has no prior convictions for offences against any environmental legislation: s 21A(3)(e) of the Sentencing Act.

Early plea of guilty

1. Ditchfield entered a plea of guilty to the offence at the earliest available opportunity: s 21A(3)(k) and s 22 of the Sentencing Act. Ditchfield should receive the maximum discount of 25% of the penalty imposed for the utilitarian value of the plea of guilty to the justice system.

Remorse for the offence

1. Ditchfield has expressed genuine remorse for the offence. Ditchfield's early plea of guilty is consistent with it being remorseful. Ditchfield has accepted responsibility for its actions and has acknowledged and made reparation for the harm caused to the environment by its actions: see s 21A(3)(i) of the Sentencing Act and Environment Protection Authority v Waste Recycling and Processing Corporation (2006) 148 LGERA 299; [2006] NSWLEC 419 at [203]-[214].
2. First, Ditchfield took action immediately upon noticing the spill of diesel. It promptly notified the Council, which in turn notified the EPA. Ditchfield employees promptly dug an earth bund in the creek to contain the flow of diesel. They worked on the day of the spill and in the following days to remove the contaminated soil and to remediate the environment harmed by the spill.
3. Secondly, Ditchfield cooperated with the Council and the EPA in the investigation, clean up and remediation of the spill. Ditchfield cooperated by: reporting the spill to the Council on the day of the spill; voluntarily and promptly cleaning up the spill and ensuring the independent validation of the clean up efforts; voluntarily allowing, accompanying and assisting EPA officers during their inspections of the site; providing, in a timely manner, the requested responses to all statutory notices for information and records, including making five staff available for interviews and providing documents and information; being frank, open and cooperative in its dealings with the EPA during the course of the investigation; waiving strict compliance with the disclosure provisions under Pt 5 Div 2A of the Criminal Procedure Act 1986; and agreeing to a Statement of Agreed Facts for the purposes of sentencing.
4. Thirdly, Ditchfield has taken action subsequently to implement precautions to prevent reoccurrence of the spill. Within four days of the offence, Ditchfield revised its safe work method statement for refuelling the Fuel Cart from the Fuel Farm. Also within four days, Ditchfield changed the software of the fuel dispensing equipment at the Fuel Farm so that dispensing pumps automatically shut down after dispensing 1,000 litres of diesel. Within seven days, Ditchfield emptied, decommissioned and removed the Fuel Farm. Thereafter, Ditchfield implemented alternative fuelling arrangements involving bringing a Fuel Cart from offsite to refuel plant and equipment.
5. Fourthly, the Managing Director of Ditchfield, Mr Warren Ditchfield, gave evidence by affidavit and attended the sentence hearing. Ditchfield's Regional Manager also attended the sentence hearing. Mr Ditchfield said, on behalf of Ditchfield, that he sincerely apologised for committing the offence, Ditchfield "takes its environmental responsibilities very seriously and are very disappointed that the incident has occurred" and the incident is "not up the high standards we expect of ourselves and we deeply regret that it occurred". Mr Ditchfield noted the actions that Ditchfield took to clean up the spill and to remediate the environment harmed and to minimise the possibility that such an incident could happen again.
6. All of these statements and actions speak of Ditchfield's genuine remorse.

Good corporate character

1. Ditchfield is of good corporate character: s 21A(3)(f) of the Sentencing Act. Mr Ditchfield gave evidence that Ditchfield has supported numerous communities and charities.

Unlikelihood of reoffending

1. Having regard to its lack of prior convictions, its early plea of guilty, its remorse for the offence and its actions to avoid a reoccurrence of the offence, I find Ditchfield is unlikely to reoffend: s 21A(3)(g) of the Sentencing Act.

Assistance to authorities

1. As I have found above, Ditchfield cooperated with and provided assistance to the Council and the EPA at the time of, and in the days after, the spill in the investigation, clean up and remediation of the spill. Ditchfield has agreed to a Statement of Agreed Facts that assisted the sentencing process. Ditchfield has agreed to pay the EPA's costs of the proceedings, in an amount as agreed or assessed. Assistance to authorities is a mitigating factor: s 21A(3)(m) and s 23 of the Sentencing Act.
2. The extent of mitigation that should be afforded for Ditchfield taking such actions is reduced, however, because firstly I have already taken Ditchfield's assistance into account under other mitigating factors (such as remorse for the offence) and, secondly, Ditchfield was obliged to take many of the actions to prevent, clean up and remediate the pollution it caused in order to comply with its obligations under the POEO Act (see Dyno Nobel Asia Pacific Pty Ltd v Environment Protection Authority (2017) 228 LGERA 55; [2017] NSWCCA 302 at [43], [44]). Nevertheless, I do make allowance for the assistance provided by Ditchfield that is not already covered by these matters.

Appropriate sentence for the offence

1. I take into account the objective circumstances and the subjective circumstances of Ditchfield as I have discussed above.
2. I take into account the purposes of sentencing in s 3A of the Sentencing Act. The purposes of punishment, retribution and denunciation are relevant. There is a need for the Court, through the sentence it imposes, to ensure that Ditchfield is adequately punished for the offence, to hold it accountable for its actions, and to denounce the conduct of Ditchfield in proportion to the seriousness of the offence.
3. The sentence also needs to act as a deterrent. The purpose of general deterrence is relevant to ensure that people and businesses carrying out activities near waters do not pollute waters and take the necessary precautionary and preventative measures. The sentence of the Court must act to deter other operators from committing like offences to that committed by Ditchfield.
4. In the circumstances of this case, having regard to Ditchfield's lack of prior convictions, its genuine remorse for the offence, its good corporate character, its actions taken at the time of and following the spill to address the causes of the spill and to prevent reoccurrence, and the unlikelihood of it reoffending, there is no particular need for individual deterrence of Ditchfield.
5. In determining the appropriate penalty, the Court should be consistent with a pattern of sentencing for like offences. I have had regard to the sentences imposed by this Court in other cases involving pollution of waters to which the parties have drawn my attention. I have considered the sentences imposed and the objective and subjective circumstances of the offences and the offences involved that led the sentencing court to impose those particular sentences. The cases include Environment Protection Authority v Hanson Precast Pty Ltd [2008] NSWLEC 285; Environment Protection Authority v Straits (Hillgrove) Gold Pty Ltd (2010) 174 LGERA 314; [2010] NSWLEC 1114; Environment Protection Authority v Pipeline Drillers Group Pty Ltd [2012] NSWLEC 18; Environment Protection Authority v KBL Mining Ltd [2014] NSWLEC 178; Environment Protection Authority v Sydney Water Corporation [2015] NSWLEC 80; Environment Protection Authority v Borg Panels Pty Ltd [2016] NSWLEC 71; Environment Protection Authority v Hawkesbury City Council [2017] NSWLEC 39; Dyno Nobel Asia Pacific Pty Ltd v Environment Protection Authority (2017) 228 LGERA 55; [2017] NSWCCA 302; and Environment Protection Authority v Ardent Leisure Ltd [2018] NSWLEC 36.
6. The sentence that I consider to be appropriate to be imposed on Ditchfield for the offence it committed is not inconsistent with the sentences imposed in those cases that provide a check or yardstick. The amounts of the fines imposed in those cases vary considerably, depending on the particular facts found about the objective and subjective circumstances of the offence and the offender involved and any other component of the sentence (such as the amount of costs ordered). It is not a useful exercise to compare only the amount of the fine imposed in each of those cases with the amount of the fine that I consider to be appropriate in the present case. They are different but that is because the circumstances are different. Furthermore, the more appropriate yardstick against which the sentence in this case should be compared is the maximum penalty set by Parliament for the offence ($1,000,000) rather than the amounts of the fines imposed in past cases.
7. Synthesising all of the relevant objective and subjective circumstances of the offence and this offender, and considering the relevant purposes of sentencing, I consider that the appropriate monetary penalty is $140,000. This amount should be discounted by 25% for the utilitarian value of the plea of guilty. This makes the amount $105,000.
8. Both the EPA and Ditchfield submitted that it is appropriate that the amount of the monetary penalty be paid to the Environmental Trust for general environmental purposes, under s 250(1)(e) of the POEO Act, instead of as a fine. I consider that this would be appropriate in the circumstances of this case.
9. In addition, Ditchfield should be ordered under s 250(1)(a) of the POEO Act, to publicise the offence, including the circumstances of the offence and its environmental and other consequences, and the monetary penalty imposed and other orders made against Ditchfield. The parties have agreed on the terms of the notice that should be published in the appropriate newspapers. I consider some minor adjustment to the wording should be made to reflect my findings. The parties disagreed as to where the notice should be publicised. The EPA contended that the notice should be published in a newspaper circulating throughout the State (the Sydney Morning Herald), a newspaper circulating in the region in which the offence was committed (the Newcastle Herald) and a trade magazine (Inside Construction). Ditchfield contended that publication in a State newspaper as well as a regional newspaper was too punitive. Instead, the notice should be publicised in only one of those newspapers.
10. The main purpose of publicising the detection, prosecution and punishment of Ditchfield for the offence is to improve the effectiveness of general deterrence. People and businesses need to be aware that the offence of pollution of waters committed by Ditchfield is a crime, that offenders will be prosecuted and that the courts will impose significant penalties on offenders. By such awareness, people and businesses will be deterred from committing the offence. However, in order to achieve this purpose of deterrence, notice must be published in publications and other media accessed by the people and businesses who are to be deterred. The offence of pollution of waters is committed widely and not only in a particular industry. Publication of the notice therefore needs to be widespread. Publication in both a State-wide and a regional newspaper, as well as a trade publication, is appropriate.
11. Ditchfield should be ordered to pay the prosecutor's costs, under s 257B of the Criminal Procedure Act 1986. As the amount of costs has not yet been agreed, the appropriate order is that Ditchfield pay to the EPA such costs as may be determined under s 257G of the Criminal Procedure Act.

Orders

1. The Court makes the following orders: 1. The defendant is convicted of the offence against s 120 of the Protection of the Environment Operations Act 1997 as charged. 2. Pursuant to s 250(1)(e) of the Protection of the Environment Operations Act 1997, the defendant is ordered to pay, within 28 days of the date of this order, the amount of $105,000 to the Environmental Trust established under the Environmental Trust Act 1998 for general environmental purposes. 3. Pursuant to s 250(1)(a) of the Protection of the Environment Operations Act 1997, the defendant is ordered to: 1. Within 28 days of the date of this order, at its expense, cause a notice in the form of Appendix A to be placed within the first 12 pages of publication (i) and within the first 5 pages of publications (ii) and (iii) at a minimum size of 10cm by 18 cm: 1. The Sydney Morning Herald; 2. The Newcastle Herald; and 3. Inside Construction. 1. Within 35 days of the date of this order, provide to the prosecutor a complete copy of the page of the publications in which the notice appears. 1. Pursuant to s 257B of the Criminal Procedure Act 1986, the defendant is ordered to pay to the registrar of the court, for payment to the prosecutor, the prosecutor's costs in such amount as may be determined under s 257G of the Criminal Procedure Act 1986.

Addendum made on 5 July 2018 (Robson J)

1. On 14 June 2018, Preston CJ of LEC gave judgment in these Class 5 proceedings including orders as per [78] above.
2. On 5 July 2018, as a result of a request by the defendant to vary Order (3)(a)(iii), the orders were varied with the consent of the prosecutor. Robson J, as Duty Judge, was advised that the publication referred to in the order styled 'Inside Construction' has been discontinued and was to be replaced by the publication styled 'Inside Waste'. Because of different publication dates, the date by which the defendant is required to comply with Order (3)(a) and (b), is also required to be varied. In the circumstances, Robson J varied the Court orders made 14 June 2018 by the deletion of Order (3) and the substitution of the following order (as agreed between the parties): 3. Pursuant to s 250(1)(a) of the Protection of the Environment Operations Act 1997, the Defendant is ordered to: a. Within 28 days of the date of the Order of the Court on 14 June 2018, at its expense, cause a notice in the form of Appendix A to be placed within the first 12 pages of publication (i) and within the first 5 pages of publication (ii) at a minimum size of 10cm x 18cm: i. Sydney Morning Herald; ii. The Newcastle Herald. b. Within 55 days of the date of the Order of the Court on 14 June 2018, at its expense, cause a notice in the form of Appendix A to be placed within the first 5 pages of publication (i) at a minimum size of 10cm x 18cm: i. Inside Waste. c. Within 35 days of the date of the Order of the Court on 14 June 2018, provide to the Prosecutor a complete copy of the page of the publications in 3(a)(i) and 3(a)(ii) in which the notice appears. d. Within 62 days of the date of the Order of the Court on 14 June 2018, provide to the Prosecutor a complete copy of the page of the publication in 3(b)(i) in which the notice appears.

EPA v Ditchfield Contracting Pty Ltd [2018] NSWLEC Appendix A (65.6 KB, pdf)

Amendments 22 June 2018 - Defendant's representation added to cover sheet. 05 July 2018 - Addendum made on 5 July 2018 (Robson J) added at [79]-[80]. 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: 05 July 2018