Environment Protection Authority v Excel Fuels Pty Limited

Land and Environment Court (NSW)|2002-06-13|Before: Bignold J

CITATION : Environment Protection Authority v Excel Fuels Pty Limited [2002] NSWLEC 160 PROSECUTOR: Environment Protection Authority PARTIES : DEFENDANT: Excel Fuels Pty Limited FILE NUMBER(S) : 50138 of 2001 CORAM: Bignold J KEY ISSUES: Environmental Offences :- pollution of waters-mitigating circumstances-application for discharge without conviction. LEGISLATION CITED: Protection of the Environment Operations Act 1997, s 120 Crimes (Sentencing Procedure) Act 1999, s 10 Cabonne Shire Council v Environment Protection Authority (2001) 115 LGERA 304; Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 701/702; Environment Protection Authority v BHP Steel (AIS) Pty Ltd (2001 NSWLEC 214; Environment Protection Authority v Byron Shire Council (2001) NSWLEC 54; CASES CITED: Environment Protection Authority v Devro-Teepak (2001) NSWLEC 275; Environment Protection Authority v Haylan (2001) NSWLEC 89)· Environment Protection Authority v Middle Harbour Constructions (2002) 119 LGERA 440; Environment Protection Authority v Timber Industries Ltd (2001) NSWLEC 25; The Queen v Olbrich (1999) 199 CLR 270; Thorneloe v Filipowski (2001) 116 LGERA 56 DATES OF HEARING: 13 June 2002 DATE OF JUDGMENT: 09/13/2002

PROSECUTOR: Mr G Plath, Solicitor SOLICITORS: Solicitor Environment Protection Authority

LEGAL REPRESENTATIVES: DEFENDANT: Mr D Olney, Solicitor SOLICITORS Booth Brown Samuels and Olney

IN THE LAND AND Matter No. 50138 of 2001 ENVIRONMENT COURT OF Coram: Bignold J. NEW SOUTH WALES 13 September 2002

The Defendant has pleaded guilty to the charge of an offence against the Protection of the Environment Operations Act 1997 (the PEO Act) in that on or about 13 December 2000 at Lithgow it polluted waters.

According to the Particulars endorsed upon the Summons -

(i) the pollutant was "matter containing diesel fuel and/or petroleum product and/or oil";

(ii) the waters were "a stormwater drain leading to Farmers Creek and downstream thereof"; and

(iii) the manner in which the pollution occurred was "the transfer of the pollutant from a bunded area at the premises at or near the corner of Main Street and Enfield Avenue, Lithgow, to an oily water Separator from which it was pumped to the waters".

The PEO Act, s 120(1) and (4) respectively provide as follows:

……. (4) A person who contravenes this section is guilty of an offence.

The terms "pollution" and "waters are terms defined very expansively by the Dictionary to the PEO Act as is the expression "water pollution or pollution of waters".

It is clear that the aforesaid particulars of the offence fall within the ambit of those expansively defined terms.

The PEO Act, s 123 prescribes a maximum penalty of $250,000 for an offence under Part 5.3 (which includes s 120) committed by a corporation.

The only issue for decision by the Court is sentence, in respect of which the Prosecutor submits that in the circumstances of this case presently to be recited, the Court should record a conviction and impose an appropriate penalty whereas the principal Defence submission is that the Court should apply in favour of the Defendant the discretion conferred by s 10 of the Crimes (Sentencing Procedure) Act 1999 by not recording a conviction for the admitted offence. Alternatively, the Defence submission is that the admitted offence should be regarded as involving low culpability on the part of the Defendant. B. THE RELEVANT FACTS

The parties have very helpfully prepared an Agreed Statement of Facts (Exhibit 1) from which the following narration of the relevant facts is extracted.

The Defendant, which occupies land and infrastructure situate at Lithgow (the premises) which are owned by Mobil Oil Australia Limited, conducts at those premises the business of a fuel distributorship, involving the storage, distribution and sale of oil and fuel products supplied by Mobil.

There are installed at the premises six above ground storage tanks, each of which is included within a bunded area with a compacted clay floor.

In February 1999, there was installed at the premises a "Spinifex oily water Separator" (the Separator). At the time of installation, the contractor provided initial training for the Defendant's personnel in the operation of the Separator.

At the time of the water pollution incident, the Separator which had a storage capacity of 8,000 litres was not capable of recovering anything more than approximately 100 litres of spilt product, the Separator having been designed to treat only small amounts of oily water materials eg small spills in bunded areas and stormwater runoff from the bunded areas of the site.

On the date of the offence when Mr Rutherfurd was the Acting Depot Manager of the Defendant's premises, there was delivery of a tanker load of 34,000 litres of diesel fuel. He had decided that the delivery would be transferred to Tank No 15 which was virtually empty.

Mistakenly, Mr Rutherfurd directed the tanker driver Mr O'Mara (who had arrived with the diesel fuel at about 1.00pm) to transfer the fuel to Tank No 16 instead of Tank No 15, when Tank No 16 was already full. Upon receiving this direction, the tanker driver did not check (by dipstick) the capacity of Tank No 16 to receive the delivery before commencing to transfer the fuel into that tank. After a while he observed diesel fuel spraying out of the top of the overfilled tank No 16 and spilling into the bunded area surrounding the tank farm. He thereupon pressed the emergency stop button which had the effect of shutting down everything at the premises.

He then informed Mr Rutherfurd of the incident which involved some 1,400 litres of fuel being contained within the bunded area. (Mr Rutherfurd initially estimated the quantity of spilt fuel to be 400 litres.)

At 1.40 pm the local Fire Brigade arrived at the premises following receipt of an anonymous call to the "000" emergency telephone number, by which time it was observed that the entire bunded area was covered with spilt fuel.

In discussion with the Fire Brigade, Mr Rutherfurd advised that the most appropriate way of dealing with the spilt fuel was to release it from the bunded area by allowing it to drain to the Separator via a drain in the bund and the underground drain leading to the Separator which was located some 20 metres to the north of the bunded area. This advice accorded with Mr Rutherfurd's intention to store the fuel in the Separator's storage capacity and thereafter and recover the fuel via the treatment processes of the Separator. Accordingly, he opened the valve to the drain located in the bunded area thereby allowing the fuel to flow to the Separator.

Following this action, the Fire Brigade hosed down the bunded area and prepared to leave the premises.

While this action was being taken the tanker driver realised that the Tank No 15 was the correct receptacle for the fuel contents in his tanker, and in order to transfer fuel from Tank No 16 to Tank No 15,, he restored the main power supply to the premises. This action automatically reactivated the Separator.

Just as the Fire Brigade was about to leave the scene, a check of the stormwater drain in Main Street directly opposite the Defendant's premises revealed the presence of diesel fuel. The Fire Brigade Officer returned to the premises to inform Mr Rutherfurd of his observation of fuel in the stormwater drain whereupon the latter switched the Separator's pump off. The Separator had been pumping fuel to the stormwater drain. In the meantime, inspection of the stormwater outlet to Farmers Creek had revealed the entry of an unknown quantity of fuel and a hydrocarbon boom was placed at the outlet to contain further fuel from entering the Creek. The Fire Brigade then attempted to contain the fuel in the open sections of the stormwater drain by employing hydrocarbon booms and absorbent mats.

By 8.00 pm that same day, the clean-up operations by the Fire Brigade had been completed. The Fire Brigade had recovered altogether from all sources (ie the stormwater drain and Farmer's Creek where the outlet from the drain is located) some 800 litres of fuel and water.

An estimated 1,400 litres of fuel escaped during the spill, of which 800 litres was contained in the Separator and 180 litres was recovered from the stormwater drain and Farmer's Creek. The result is that up to 400 litres of diesel fuel which was not recovered made its way into the stormwater drain and via that drain into Farmer's Creek.

The cause of the water pollution incident was the mistaken understanding by Mr Rutherfurd as to the operation of the Separator. He mistakenly thought that once the emergency stop button had been engaged by the tanker driver, the operation of the Separator would indefinitely cease and would only be reactivated by a manual restart switch.

This mistaken belief was based upon Mr Rutherfurd's understanding and experience of Separators in the fuel industry during his career of 17 years. In fact, the Separator was wired differently and automatically was reactivated when the tanker driver switched on the mains power supply to the premises. Having been thus reactivated, after its initial 20 minute cycle had processed and treated the fuel and water, it commenced pumping the treated fluid to the stormwater system, and because there was such a quantity of diesel fuel in the Separator (well in excess of its capacity to process 100 litres), its pumping action had transferred the diesel fuel direct to the stormwater system. Unknown to Mr Rutherfurd there was a valve on the line between the Separator and the air compressor which if manually closed, would have prevented the Separator from being automatically reactivated when the mains power to the plant was switched on by the tanker driver.

At the time of the commission of the admitted offence, no staff at the premises, including Mr Rutherfurd had any knowledge or training concerning the operation of the Separator. Mr Rutherfurd had been appointed the Acting Depot Manager only a few days earlier following the sudden departure from the job of the Depot Manager, (who had received training in the operation of the Separator).

Additionally, Mr Rutherfurd was mistaken in believing that the Separator was capable of processing the quantity of spilt fuel that had been directed to it. Its design capacity was only to recover a relatively small amount of product.

At the time of the offence, there were no written procedures in place at the premises concerning the use of the Separator.

Concerning the seriousness of the offence and its consequences for the environment, rather than summarise the facts I should quote in full pars 84 to 86 (inclusive) of the Agreed Statement of Facts, noting that in par 4 it is stated that "(T)he discharge of the pollutant may have been connected to the death of hundreds of worms in Farmers Creek". 84. The offence is serious because of the nature of pollutants discharged. The pollutant was diesel fuel, which is classed as Dangerous Goods Class 3 (Flammable Liquid). It is noted that diesel fuel is not as flammable as other dangerous goods of this class. The pollutant is toxic to aquatic life. It is also serious because significant public resources, including the services of the Fire Brigade, were expended in preventing harm from the discharge. 85. The potential harm to the environment of a spill of diesel fuel would be significant, considering the volume that was not recovered by the Fire Brigade. The waters of Farmers Creek flow to Lake Lyell and these waters are within the Sydney water catchment.
Mark Clyne observed a large quantity of dead worms present at various places in the waters of Farmers Creek on the morning of 14 December 2000. EPA Ecotoxicology officers were called out to the scene on this same day but, by the time they arrived, there had been a large storm event and the worms were flushed further down the creek. C. THE COMPETING CASES ON SENTENCE

As earlier noted, the parties have advanced significantly divergent submissions on sentence. The Defence submission for an order under the Crimes (Sentencing Procedure) Act 1999, s 10 is strongly opposed by the Prosecutor. (I shall presently consider that submission).

The Prosecution submitted that the offence, understood in the light of the agreed facts, is well capable of being regarded as a serious offence and on no account should be regarded as falling at the lowest end of the spectrum of seriousness of offences against the PEO Act, s 120.

In particular, the Prosecution submitted that the facts established that the water pollution was caused by a series of mistakes on the part of the Defendant's employees, including more particularly by its Duty Depot Manager, Mr Rutherfurd, of a very basic nature, exposing a lack of appropriate operational knowledge, procedures and protocols especially in respect of the Separator.

In respect of each of the factors enumerated in the PEO Act, s 241 the rival submissions were to the following effect - (a) the extent of the harm caused or likely to be caused to the environment by the commission of the offence,

The Prosecutor submits that the offence resulted in "actual harm" to the receiving waters (both the stormwater drain and Farmers Creek) by virtue of the introduction thereto of up to 400 litres of diesel fuel.

Moreover, the Prosecutor submits that that harm included of the death of hundreds of worms.

Defence Counsel submits that no actual harm to the environment has been established and in particular, the Court could not be satisfied to the requisite standard of "proof beyond reasonable doubt" (see The Queen v Olbrich (1999) 199 CLR 270) that the water pollution incident caused the death of the hundreds of worms that were observed the following day at various places in Farmers Creek. (b) the practical measures that may be taken to prevent, control, abate or mitigate that harm.

Here, the Prosecutor submits that since the water pollution incident was caused by virtue of the combination of a number of elementary mistakes by the Defendant's staff (including the Acting Depot Manager) and the absence of effective procedures or protocols to prevent such environmental incidents, it is obvious that practical measures could have been taken to prevent the occasioning of the water pollution incident and consequent the harm to the environment.

Defence Counsel submitted that the water pollution incident had been caused by a combination of human mistakes creating unusual circumstances, and that the decision of Mr Rutherfurd to transfer the spilt fuel contained within the bunded area to the Separator for immediate storage purposes and for ultimate recovery purposes was a reasonable decision to make "on the spur of the moment" and that such action was unlikely to have created the water pollution incident. (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,

The Prosecutor submits that potential environmental harm from the escape of fuel from the Defendant's premises was clearly foreseeable.

Defence Counsel submits that Mr Rutherfurd did not, and hence could not, reasonably foresee that transferring the spilt fuel from the bunded area to the Separator would be likely to cause harm to the environment, because he mistakenly thought the fuel would be stored in the Separator for a time when the Separator was not operating. (d) the extent to which the person who committed the offence had control over the causes that gave rise to the offence,

The Prosecutor submits that the Defendant had control over the premises including its infrastructure and installations by virtue of employing staff to operate the premises who had control over the causes that gave rise to the offence, those causes relevantly being the several mistakes made by Mr Rutherfurd and the tanker driver, combined with the absence of procedures and protocols to guard against fuel spills at the premises and instructions on the operation of the Separator.

It is agreed that factor (e) is not relevant in the present case where the Defendant is vicariously liable for the acts of its employees which involved the commission of the water pollution offence.

In addition to the foregoing submissions, Defence Counsel relied upon the following mitigating factors (which are not disputed by the Prosecutor) -

(i) this is the Defendant's first environmental offence in connection with the conduct of all of its fuel distribution operations in seven different towns in Western NSW over the past 15 years;

(ii) the Defendant took immediate corrective action when alerted that fuel was observed in the stormwater drain;

(iii) the Defendant fully co-operated with the Fire Brigade and the EPA in their responses to the water pollution incident;

(iv) the Defendant entered a plea of guilty at an early stage;

(v) the Defendant had agreed to pay the Prosecutor's costs;

(vi) the water pollution incident was entirely accidental;

(vii) only a limited quantity of fuel (approximately 400 litres) had escaped from the premises and was initially confined to the stormwater drain which serves other industrial premises in the locality; (viii) storm events that occurred overnight and the following day would have flushed the stormwater drain and Farmer's Creek and dispersed and diluted the escaped fuel; and

(ix) after the water pollution incident, the Defendant had reviewed its methods and procedures for unloading fuel operations and for emergency situations occurring at the Depot, and had conducted mechanical engineering investigations of the Separator, which initiatives had resulted in the installation of additional safety cut-outs to prevent the Separator from automatically re-starting and other improvements to water quality in the waters treated and discharged by the Separator and in the retraining of all depot staff in the correct operation of the Separator;

An adjudication of these competing submissions requires initially, consideration of the Defendant's case for its conditional or unconditional discharge without conviction (which is opposed by the Prosecutor) and if that consideration is unfavourable to the Defendant, thereafter consideration of the appropriate penalty to be imposed, having regard to all relevant factors, including those prescribed by the PEO Act, s 241. D. THE EXERCISE OF THE COURT'S DISCRETION UNDER THE CRIMES (SENTENCING PROCEDURE) ACT 1999, s 10

10 (1) Without proceeding to conviction, a court that finds a person guilty of an offence may make either of the following orders: (a) an order directing that the relevant charge be dismissed, (b) an order discharging the person on condition that the person enter into a good behaviour bond. (2) An order referred to in subsection (1)(b) may be made if the court is satisfied: (a) that it is inexpedient to inflict any punishment (other than nominal punishment) on the person, or (b) that it is expedient to release the person on a good behaviour bond. (3) In deciding whether to make an order referred to in subsection (1), the court is to have regard to the following factors: (a) the person's character, antecedents, age, health and mental condition, (b) the trivial nature of the offence, (c) the extenuating circumstances in which the offence was committed, (d) any other matter that the court thinks proper to consider.

In exercising the discretion conferred by s 10(1), I am required to consider each of the factors enumerated in subsection (3).

In Thorneloe v Filipowski (2001) 116 LGERA 56 the Court of Criminal Appeal gave extensive consideration to the scope of judicial discretion conferred by the Crimes (Sentencing Procedure) Act 1999, s 10. (It also considered this Court's approach to the exercise of that discretion in respect of environmental offences, noting the fact that the decided cases had consistently declared that the discretion would "rarely" be exercisable in respect of those offences.)

The Chief Justice discussed the wide ranging discretion in the following passages at pp 79 and 80: The discretion conferred by s10 is wide-ranging. There is no warrant for treating the scope and range of matters which it is "proper" for a sentencing judge to take into account in a narrow way. Nevertheless, it is a discretion which must be exercised judicially. The identification of relevant considerations turns on the scope and purpose of s10. As Windeyer J said in the context of concluding that the then equivalent of s10 in South Australia applies to the offence there under consideration:

The whole history of criminal justice has shewn that severity of punishment begets the need of a capacity for mercy. The more strict a rule is made, the more serious become the consequences of breaking it, the less likely it may be that Parliament would intend to close all avenues of exception. Especially when penalties are made rigid, not to be reduced or mitigated, it might seem improbable that Parliament would not retain a means of escaping the imposition of a penalty which must follow upon conviction, that it would abolish it, not directly but by a side wind. This is not because mercy, in Portia's sense, should season justice. It is that a capacity in special circumstances to avoid the rigidity of inexorable law is of the very essence of justice. ( Cobiac v Liddy (1969) 119 CLR 257 at 269).

The last sentence of this passage was quoted with approval by Gleeson CJ when he said in R v Ingrassia (1997) 41 NSWLR 447 at 449:

The essence of s556A is that it empowers a court which considers that a charge has been proved, in certain circumstances, to take certain steps 'without proceeding to conviction'. The legal and social consequences of being convicted of an offence often extend beyond any penalty imposed by a court.

Notwithstanding, the width of the ameliorative purpose of s10, it does, in terms, direct attention to "the relevant charge". The scope and purpose of s10 will, to some extent at least, vary from one offence to another. I have not found it easy to determine whether a factor which is not relevant on sentencing for the charge, can nevertheless be a "proper" matter to be considered when exercising the discretion under s10. On balance, I have concluded that s10 does have a scope and purpose which extends beyond the elements of the offence of the "relevant charge". I refer in particular to the effects of the act of recording a conviction, to which Gleeson CJ referred in Ingrassia.

My consideration of the factors enumerated in s 10(3) in their application to the facts of the present case may be summarised as follows:

This factor operates in favour of the Defendant inasmuch as prior to this offence it has had a long and unblemished history in the fuel distribution industry in many towns in Western NSW.

This factor operates, in my judgment, against the Defendant inasmuch as "water pollution" offences created by the PEO Act (and its predecessor legislation) have long been considered to be serious offences for which significant maximum penalties have been prescribed by Parliament. Inasmuch as factor (b) also involves a consideration the objective and of subjective factors relevant to the commission of the particular offence, I would regard the offence as serious by dint of the introduction into the stormwater drain and thereafter Farmers Creek of 400 litres of diesel fuel that were not recovered in the clean-up operations undertaken by the Fire Brigade, and I would regard the Defendant's subjective culpability as serious by dint of the absence of proper procedures and protocols for the operation of the Separator and the absence of training of any employee at the Depot in the operation of the Separator as part of the infrastructure of a fuel storage and distribution operation, which is inherently dangerous by the nature of the goods handled.

In my judgment, the relevant facts scarcely support any finding of "extenuating circumstances" in the commission of the offence, apart from the fact that the "water pollution" was not deliberately caused. Rather, it was caused by a series of human mistakes, which were obviously avoidable by the exercise of due care (in the case of the original mistake of transferring the diesel into the wrong Receiving Tank) and by a working knowledge of the operation of the Separator (in the case of Mr Rutherfurd's mistakes). The water pollution incident was committed in the unusual circumstance of dealing with the original spill from the overfilled Tank (which was safely contained within the bunded area) in what was mistakenly considered by Mr Rutherfurd to be a safe manner (ie transferring the spilt fuel to the Separator's storage facility).

However though unusual, the circumstances of the commission of the offence were not "extenuating". Clearly Mr Rutherfurd's mistaken understanding of the operation of the Separator was not a reasonable mistake (otherwise the Defendant would have had a basis for exculpation, because it may be accepted that Mr Rutherfurd's mistaken understanding was "honestly" held). Focussing attention on the Defendant's subjective culpability leads to the inevitable finding that it was culpable in failing to provide any employee at the depot (including Mr Rutherfurd who had only become the Acting Depot Manager a few days before the incident) with proper training in the operation of the Separator and in failing to have in place a procedure or protocol for the operation of the Separator.

For all the foregoing reasons, my consideration of this factor is adverse to the Defendant.

The mitigating factors that I have earlier recited operate in favour of the Defendant in the present context (These same factors also obviously have a significant influence upon the quantum of any penalty that may be imposed upon sentence if the discretion not to convict is not exercised in favour of the Defendant).

The overall balancing and weighing of my conclusions in respect of the relevant factors enumerated in subsection (3) leads me to the ultimate conclusion that I am not satisfied that it is appropriate to either unconditionally or conditionally, discharge the defendant without proceeding to a conviction, pursuant to the Crimes (Sentencing Procedure) Act 1999, s 10(1).

Although as earlier noted, there is to be found in the decided cases a strong prevailing judicial disposition in this Court that the discretion conferred by s 10 (and its predecessor legislation, the Crimes Act 1900, s 556A) will very seldom be appropriate to be applied to environmental offences, I have exercised the statutory discretion in the present case solely by reference to my evaluation of the present facts in their relation to the statutory criteria prescribed for the exercise of that discretion. The result, but not the operative cause, of that exercise of that statutory discretion, accords with the prevailing judicial disposition in this Court.

Accordingly, I am of the opinion that the facts of the present case both justify and require the recording of a conviction for the offence charged and the imposition of an appropriate penalty, and it is that question which I now must consider. E. THE APPROPRIATE PENALTY

The PEO Act, s 241(1) requires the Court, in imposing a penalty for an offence against the Act to consider a number of specified matters, in addition to "other matters it considers relevant" (subsection (2)).

Such "other" relevant matters obviously include the several mitigating factors I have earlier mentioned. In my judgment, these mitigating matters, taken globally and in combination, justify a significant sentence discount. In the present case, I think the discount should be in the order of 50 per cent of the amount of penalty that would otherwise be justified by reference to the matters enumerated in s 241(1), together with the relevance of prevailing sentences for the same or similar environmental offence with which the Defendant is charged pursuant to the sentencing principle of "even handedness": Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 701/702.

In relation to the sentencing principle of "even handedness", it is to be noted that the PEO Act, s 120(1) (which came into force on 1 July 1999) repealed the Clean Waters Act 1970 and the Environmental Offences and Penalties Act 1989 and re-enacted a number of offences relating to water pollution. However, the maximum penalty for such offences was doubled. Accordingly, in applying the principle of "even handedness" in sentencing the penalties imposed in respect of convictions of water pollution offences under the previous legislation will not be directly relevant (because the maximum prescribed penalty in such cases was only 50 per cent the currently prescribed maximum penalty). Reference to the penalties imposed for convictions of water pollution offences under the PEO Act reveal penalties ranging between $6,000 (Environment Protection Authority v Haylan (2001) NSWLEC 89) and $60,000 (Environment Protection Authority v BHP Steel (AIS) Pty Ltd (2001) NSWLEC 214; Environment Protection Authority v Byron Shire Council (2001) NSWLEC 54) Environment Protection Authority v Devro-Teepak (2001) NSWLEC 275) for offences against the PEO Act, s 120 committed by corporations (with a maximum prescribed penalty of $250,000).

The disparity in overall spectrum of penalties that have been imposed for offences against s 120 demonstrates the fact, emphatically endorsed by the Court of Criminal Appeal in Cabonne Shire Council v Environment Protection Authority (2001) 115 the LGERA 304 that penalty that is imposed in a case depends upon the facts of the case and that therefore any attempted comparison of penalties imposed in other cases will be of limited, if any, utility.

In the Cabonne Shire Council case, Giles JA (whose judgment was agreed in by the other members of the Court) endorsed the following statement concerning the maximum prescribed penalty for an offence against s 120 made by the Chief Judge in Environment Protection Authority v Timber Industries Ltd (2001) NSWLEC 25; The maximum penalty for a breach of s 120 of the POEO Act in the case of a corporation is $250,000 (s 123(a)). It is to be noted that, upon the enactment of the POEO Act, the maximum penalty for water pollution offences in the case of a corporation was doubled - that is, the maximum penalty was increased from $125,000 to $250,000. That does not mean, however, that the Court should simply impose a penalty effectively twice that which the Court would have imposed had the offence been committed before the coming in to force of the POEO Act on 1 July 1999. Rather, the proper approach of the Court must be to assess the relative seriousness of the particular offence in relation to a worst case for which the maximum penalty of $250,000 is now provided; that is, the penalty to be imposed is that which correlates upon the scale of penalty set by the legislature from zero to the maximum: Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698. The increase in penalty must be taken as indicative of the legislature's reflection of community standards in relation to the seriousness of the offence ( R v Slattery (1996) 90 A Crim R 519), and it is the increased penalty against which the penalty for this particular offence must be measured.

In Environment Protection Authority v Middle Harbour Constructions (2002) 119 LGERA 440, the Presiding judge in the Court of Criminal Appeal, Beazley JA (although dissenting in the result of an unsuccessful appeal against the inadequacy of the sentence imposed by the trial judge on conviction of an offence against of the PEO Act, s 120) made the following observations as a matter of principle on the question of sentence which I would respectfully adopt and apply: 7 The Act is the latest statutory enactment reflecting the community's increasing awareness of and concern for the environment and for its control. In Axer Pty Ltd v Environment Protection Authority (2001) 113 LGERA 357, Mahoney JA said at 359:

In determining the fine appropriate to an offence of pollution, two things are to be borne in mind: the seriousness with which the community regards pollution of this kind; and the purposes sought to be achieved by the imposition of fines in cases such as these. The community has adopted a stern policy against pollution. The legislative scheme requires that proper, and strict, precautions be taken by those whose activities may cause proscribed pollution. ... The quantum of the fines which the legislation allows to be imposed has no doubt been fixed not merely to indicate the seriousness with which such pollution is regarded but also to deter those engaged in such activities and to procure that they will take the precautions necessary to ensure that it does not occur.

8 The Act imposes strict liability in respect of offences committed under it. Accordingly, it catches a wide range of conduct from deliberate offending to accidental acts, the result of which may be anything from minimal to significant harm to the environment. This raises a particular problem when seeking to determine an appropriate penalty, and in particular one which accords with an appropriate range of sentences

Having regard to the relevant facts as I have summarized them and as they are more completely stated in the Statement of Agreed Facts (Exhibit 1) I make the following findings in respect of each of the factors enumerated in s 241(1)(a),(b),(c) and (d).

"Actual harm" was caused to the environment by virtue of the introduction into Farmer's Creek of 400 litres of diesel fuel, which had the effect of "degrading the environment" comprising those waters (see the definition of "harm to the environment" and "environment" contained in the Dictionary to the PEO Act).

However, I am not satisfied beyond reasonable doubt that that harm included the death of the worms that were observed in Farmers Creek on the day following the pollution incident.

Practical measures were available, which if taken, would have prevented the water pollution incident, namely

(i) adopting the proper procedures and checks before transferring the diesel fuel from the tanker into what was in fact an already full receiving tank; (ii) having proper knowledge and training in the operation and design capacity of the Separator.

Had the proper procedures been adopted in respect of the transfer of the diesel fuel the tanker driver, would have discovered before commencing the transfer, that there was no available storage capacity in the Tank nominated (incorrectly) by Mr Rutherfurd.

Had Mr Rutherfurd known the operation and design capacity of the Separator, he would not have directed the spilt fuel contained within the bunded area to the Separator for storage for recovery purposes.

Had Mr Rutherfurd proper knowledge of the operation of the Separator, he would have ensured that it was not automatically reactivated once mains power was turned on at the plant, by ensuring that the Separator was manually switched off.

Harm (actual and potential) to the environment (namely the waters of Farmers Creek) could reasonably have been foreseen by the Defendant in the event of fuel escaping from the premises into the stormwater drainage system installed in Main Street which ultimately discharged into Farmers Creek.

The Defendant had control over the causes that gave rise to the offence inasmuch as it should have ensured that its employees at the Depot had training in the operations of the Separator, in which event (ie if the employees were properly trained) (i) the spilt fuel would not have been directed to the Separator other than for temporary storage purposes and (ii) the Separator would have been switched off so as to not be automatically reactivated when mains power to the plant was switched on by the tanker driver.

In the light of these findings, I am of the opinion that the offence, though committed accidentally was entirely avoidable had there been proper training of the Depot employees in the operation and design capacity of the Separator. The failure of the Defendant to provide that proper training and knowledge was a serious omission in the context of the operation of a fuel distribution depot for which the Defendant must be held to be significantly culpable.

The nature of the pollutant, diesel fuel, and its scale (400 litres) and its introduction into Farmers Creek means that the offence is in my judgment properly regarded as one of serious objective gravity.

In all of the circumstances, I consider that but for the influence of the mitigating factors (which I have valued globally as justifying a 50 per cent sentence discount), the offence in the present case warranted the imposition of a penalty of $50,000, reflecting 20 per cent of the maximum penalty. However, by factoring in the 50 per cent sentence discount, the resultant penalty is $25,000 representing 10 percent of the maximum penalty. Such a result, in my judgment, is a just and appropriate penalty in the present case.

Accordingly, I propose to convict the Defendant and to impose a penalty of $25,000.

The Defendant has already agreed to pay the Prosecutor's reasonable legal costs, but the amount has not yet been agreed. F. ORDERS

For all the foregoing reasons, I make the following orders -

The Defendant is convicted of the offence charged.

A penalty of $25,000 is imposed in respect of that conviction.

The Defendant shall pay the Prosecutor's reasonable legal costs in the sum agreed, or failing agreement, in accordance with the Land and Environment Court Act 1979, s 52(2).

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.

(2001) 115 LGERA 304

(2002) 119 LGERA 440

(2001) 113 LGERA 357

At a glance

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Judgment (105 paragraphs)

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Cases Cited (8)

Cited By (4)