Environment Protection Authority v George Weston Foods Ltd

Environment Protection Authority v George Weston Foods Ltd - [2010] NSWLEC 120 - NSWLEC 2010 case summary — Zoe

[11]

The incident 3 On the morning of 26 September 2008, an employee of Penford Farm, an entity which conducts an effluent re-use facility in proximity to the Peel River, observed a white oily film on the surface of the River. That employee, who was at that time working on the south-western bank of the River, also observed the white oily substance discharging from a stormwater outlet located half way up the north-eastern bank of the River and flowing down to the River itself. The substance was clearly visible in the River downstream of this stormwater outlet but not upstream of it. That observation was reported by the employee to his manager. 4 Later that same day the Penfold Farm manager drove to the north-eastern bank of the River in order to check an effluent pipe which was associated with his company's operations. No leak in that effluent pipe was located. However, his observation of the material floating on the River was one of a slick of white, oily, fatty material moving downstream. He observed "orangey sections" within the slick and also that portions of the slick were caught in eddys of the River adjacent to its banks. 5 Having determined that none of the effluent pipes associated with the operations of Penford Farm were discharging the material observed on the surface of the river, the employees of Penford Farm took no further action. 6 However, on 30 September an employee of a Tamworth newspaper, having observed the white slick on the River as it passed through the City, reported the observation to Tamworth Regional Council (the Council). Mr Reid, the Council Manager of Environment and Health, inspected the River and observed that parts of it were covered with a "whitish substance" which was both collecting in eddys and pockets and also flowing in the main channel. Observations further downstream by another Council employee observed a slick of material "more solid than oil and whitish in colour", floating on parts of the surface of the water. The slick at that point was described as being patchy and discontinuous with each patch extending for approximately 10 - 20 metres. In light of these observations, arrangements were made with officers of the NSW Fire Brigade to install floating booms across the Peel River. 7 The Council officers then made observations of the stormwater outlet from which the white oily substance appeared to be trickling, as had first been observed by the employee of Penfold Farm. A series of stormwater pits upstream of this outlet pipe were inspected and pits containing fatty material, said to vary in colour from white to white mixed with brown and orange, observed. Pits containing this material were eventually traced back to a pit into which stormwater from the defendant's premises flowed. 8 Later on 30 September 2008, the Council employees were joined by officers of the prosecutor. Their joint investigations continued, as a result of which employees of the defendant were interviewed. Upon being presented with the result of investigations, that evening employees of the defendant accepted that the material in the River and found in the various stormwater pits was a mixture of animal tallow and vegetable oil (the pollutant) that had come from its premises. At that time the defendant was requested to clean the pollutant from the off-site stormwater system, a request that was followed by a statutory clean-up notice. 9 The defendant reacted promptly. It retained a contractor to clean the pollutant from the off-site stormwater system, with work commencing in that regard on the evening of 30 September. This work involved the pumping of water into the off-site stormwater system and then having the water sucked from a downstream point in that system into a storage tank. The liquids thus extracted were disposed of at a licensed waste facility. During this process some 13,880 litres of water were pumped and extracted from the off-site stormwater system. The component of pollutant contained within this volume of water is not known.

[12]

10 The pollutant was removed from the Peel River primarily through the use of pool scoop nets. The clean-up operation involved 4 to 5 employees of the defendant, engaged fulltime on the operation and often late into the evening. In addition, volunteers from the local branch of the NSW State Emergency Service, varying in number from 3 to 15, were engaged in the clean-up operation, using boats which provided access to the pollutant along the course of the River. As well, the defendant engaged two independent contractors to assist in the operation. 11 Floating booms were installed by the Council at three locations along the River while one of the contractors retained by the defendant installed a boom in order to impede the downstream progress of the pollutant. 12 The clean-up of the Peel River took from 1 October 2008 until the evening of 4 October when the Council declared, subject to ongoing daily inspections, that the clean-up appeared to have been satisfactorily achieved. Subsequently, booms were found to be intact and on 7 October, following inspection by officers of the Council and employees of the defendant, the Council determined that the clean-up was complete and booms were then removed from the River. 13 On 3 October 2008, prior to removal of the booms and the "all clear" being given by the Council, the section of the River running through Tamworth was inspected by Dr Susan Wilson, an environmental scientist retained by the prosecutor. She observed pollutant on the surface of the waters of the Peel River in aggregated masses on some gravel bars and at the edge of parts of the River's banks. Dr Wilson noted wilting of several patches of grass on gravel bars near the water's edge, accompanied by aggregates of the pollutant and residue of the pollutant on the leaves of that wilted grass. She also observed bins containing the pollutant which had been removed from the River by both volunteers from the State Emergency Services and by the defendant's employees using pool scoops. 14 It was not possible to provide an accurate indication of the volume of pollutant removed from the River. It was estimated that approximately 3.5 tonnes of material was removed from the River but the material so removed was made up of the pollutant, river water and an amount of unrelated debris which included leaves, branches, pieces of plastic and general rubbish. It seems to be accepted that the booms placed in the River were generally successful in arresting the escape of pollutant, as less than 10 litres of the pollutant was washed over the boom located furthest downstream from the discharge point, that material being washed over late in the evening of the night of 4 October following rainfall on that day.

[13]

The Tamworth operations of the defendant 15 One of the business divisions of the defendant is called "Weston Cereal Industries". In turn, one of the businesses conducted by Weston Cereal Industries is called "Weston Animal Nutrition" (WAN). It was under the latter name that the defendant conducted its business in Murray Street, Tamworth (the WAN premises). Those premises are located to the east of the Peel River. WAN produces animal nutrition supplies for all species of commercial livestock. Its product range includes compound feeds, feed concentrates/balancers and milk replacements. At the time of the incident, the WAN premises were producing stock feed using various grains blended with a mix of tallow, vegetable oil and molasses to form mash, pellets or nuts. 16 The defendant received deliveries of animal tallow and vegetable oil by tanker deliveries to the site. Those products were pumped from delivery vehicles into a tank on site known as the "VAO tank", an acronym for vegetable and animal oil. The tank was surrounded by a concrete bund which collected any material leaked from it. 17 In order to manufacture product, the contents of the VAO tank were pumped, through pipes, to a mixing hopper where they were mixed as part of the process of producing the stockfeed. In order to maintain suitable viscosity of material within the tank, allowing its contents to be readily pumped to the mixing hopper, a series of steam pipes were installed. The steam passing through these pipes was generated from a boiler on site. As steam passed through these pipes, they acted as a heating coil within the tank. They were designed and installed as a sealed system so that there was no intended admixing of steam with the contents of the VAO tank. 18 After emerging from the tank, steam from the steam pipe vented within the WAN premises. As the steam was vented and exposed to cool air, it formed a condensate, some of which ran down a pipe into an open drain then discharged into an onsite stormwater pit which was remote from the VAO tank and main building in which processing occurred. 19 The condensate was only ever intended to be clean water, free of contaminants. No loss of integrity in the steam pipe system had ever occurred at the WAN premises which had resulted in material from the VAO tank or any other processing tank onsite entering the onsite stormwater system. 20 Such was the design at the discharge pit for condensate that the capacity to readily observe the quality of discharging condensate from the ground surface was limited.

[14]

Cause of the incident 21 The defendant conducted several investigations to determine the cause of the incident. The first investigation, conducted immediately upon the defendant becoming aware of the discharge of the pollutant, suggested that a breach of the steam pipe within the VAO tank had allowed the vegetable oil/tallow blend to enter the steam condensate drainage pipe, draining into an unsecured stormwater drain from which material then ran into the Council stormwater system, ultimately discharging into the Peel River. 22 The VAO tank was drained and inspected by the defendant on 12 October 2008. Upon inspection, a small hole was found in a welded joint on an elbow of the steam pipe within that tank. A subsequent investigation conducted by the defendant's divisional engineering manager concluded that while the steam pipes appeared to be in good condition outside the VAO tank, corrosion within the tank had caused the formation of the small hole in a welded section of the steam pipe. It was suspected that the formation of a slag inclusion when completing the weld had weakened the welded joint where the hole had formed, that inclusion in the weld rendering the pipe more susceptible to corrosion. 23 In the event of the vegetable oil/tallow blend leaking into the steam pipe, it was the view of the defendant's engineer that while steam was flowing through the pipe the blend would have been sufficiently viscous to have been discharged in small quantities as part of the condensate which ran into the onsite discharge pit. After discharge, cooling of the condensate containing the pollutant would have commenced as it ran from the pit through underground pipes to the onsite stormwater system. As that cooling process continued, the pollutant would have begun to solidify. 24 Upon solidification, the defendant's engineer considered that the pollutant would have sat unobserved within the onsite stormwater system until a large volume of water entered the system, such as would occur after a major rain event, and flushed it through to the Peel River. While concealed within the onsite stormwater system, it was contended by the defendant that the existence of the pollutant would not have been detectable by external visual inspection. Ultimately, so the defendant determined, it was by this mechanism that material from the VAO tank entered the offsite stormwater system and discharged into the Peel River. 25 While the prosecutor acknowledges that the pollutant flowing to the Peel River was the vegetable oil/tallow from the VAO tank and that some of that pollutant could have reached the River in the manner explained by the defendant, it does not accept that explanation as being the primary cause of the incident. However, it frankly acknowledges that it is not able to advance an alternate explanation. Nonetheless, it submits that the absence of an alternate explanation has little bearing upon the determination of the appropriate penalty to be imposed upon the defendant. In essence, it submits that the possibility of pollution resulting from loss in the integrity of the VAO tank storage system, having regard to the characteristics of the pollutant and the location of the tank uphill of the Peel River, was reasonably foreseeable. 26 To the extent that it has bearing upon the penalty to be imposed upon the defendant, it is necessary that I make a finding upon the evidence presented to me as to the cause of the incident. In The Queen v Olbrich (1999) 199 CLR 270, the High Court collected the authorities in Australia for the previous 30 years, directed to the onus and standard of proof to be applied at a sentence hearing. Relevantly, the majority in that case said this (at [27]): " … we would adopt what was said by the majority in R v Storey ( citation omitted) - that a sentencing judge 'may not take facts into account in a way that is adverse to the interests of the accused unless those facts have been established beyond reasonable doubt. On the other hand, if there are circumstances which the judge proposes to take into account in favour of the accused, it is enough if those circumstances are proved on the balance of probabilities.'"

[17]

Actual or likely environmental harm 31 The extent of the harm caused or likely to be caused to the environment by the commission of the offence must be considered: s 241(1)(a). An appropriate principle to be applied is that the more serious the lasting environmental harm or likely harm involved in the incident, the more serious the offence and, ordinarily, the higher the penalty (Camilleri's Stockfeeds Pty Ltd v Environmental Protection Authority at 701). Moreover, the fact that the environment, in this case the section of the Peel River passing through the City of Tamworth, was already disturbed or modified, is not a mitigating factor (Environment Protection Authority v Waste Recycling and Processing Corporation [2006] NSWLEC 419 at [149]; (2006) 148 LGERA 299 at 326). As was observed by Preston J in that case (at [147]): "Harm can be direct or indirect, individual or cumulative. Activities that contribute incrementally to the gradual deterioration of the environment, even when they cause no discernible direct harm to human interest, should also be treated seriously." 32 The pollution incident, first observed on 26 September 2008 had, as its principal effect, a reduction in the aesthetic and recreational value of the Peel River as it flowed through the City of Tamworth. It was an effect that extended over 2.25 kms of the River and was apparent for a period of nine days. 33 The harm to the visual and recreational amenity afforded by the River was exacerbated by its course through the populated areas of the City of Tamworth. As I have earlier noted, this section of the River is flanked by recreational parks and is spanned by a number of pedestrian and motor vehicle bridge crossings. The developed and populated areas of the City lie on either side of the River. Consequently, the impact of the pollutant could be expected to have affected a large number of people. 34 Samples of water taken from this section of the River showed oil and grease content to be between 100 and 800 times higher than expected background levels. Water quality was thereby reduced below Australia and New Zealand Environment Conservation Council Guidelines for the safe recreational use of water, both visually and for direct contact. 35 While it is acknowledged that harm was occasioned to isolated patches of grass located along gravel bars within the River, causing that grass to wilt and discolour, it is accepted by the prosecutor that there was no evidence of actual harm beyond that which has already been described.

[19]

Practical measures which may have been taken to prevent, control, abate or mitigate the harm 38 The prosecutor submitted that there were a number of practical measures that may have been taken and which, if taken, would have controlled or mitigated the harm arising from an incident of the kind which is the subject of the present charge. Those suggested measures include: (i) installation of filters, screens, alarms or other devices, such as a first flush system, allowing the defendant to prevent, control or be aware of the flow of materials from the onsite stormwater system to the offsite stormwater system; (ii) regular physical inspections, beyond visual inspections, of the contents of the onsite stormwater pits; (iii) regular cleaning of the onsite stormwater system; (iv) regular visual inspections of the Peel River adjacent to the WAN premises; (v) installation of more precise level monitoring equipment on the VAO tank; and (vi) bunding of all input and output areas associated with the handling of vegetable, oil and tallow. 39 It is further suggested that discharge of pollutant from steam line pipes could have been controlled and any pollution incident mitigated if measures had been taken which include: (i) isolating steam line pipes from the onsite stormwater system; (ii) physically sampling or otherwise testing the condensate from the steam line pipes; (iii) pressure testing of the steam line pipes; (iv) re-designing the outlet from the condensate discharge pipe so that the material being discharged into the relevant pit could more readily be inspected; and (v) internal inspections of the VAO tank, including the system of steam pipes contained within it, at intervals more frequent than annual inspections. 40 The defendant takes issue with some of these measures as being practical. However, it must first be noted that at least two of the identified measures were implemented subsequent to the incident. They involved the diversion of condensate from the steam pipes so as to cause that condensate to be discharged and collected in an intermediate bulk container unit, thereby avoiding its direct entry into the stormwater system. It also introduced a regime of inspection of the contents of that bulk container unit to determine the presence of any pollutant prior to the contents of the unit being discharged. 41 While it is not disputed that the defendant had the means to implement the measures identified by the prosecutor, it disputes that at least some of those were practical measures that it could have taken. It has identified a regime of regular inspection of the components of all operations that were being carried out at the WAN premises at the time of the incident. It had in place an environmental management plan which included a stormwater and effluent management procedure. This required weekly visual inspections of the condensate discharge point and the pit which received discharge from this pipe. A senior employee engaged at the WAN premises would, several times per week, inspect tanks, drains, steam pipes and pits. 42 There was also in place a maintenance regime for tanks, steam pipes and the boiler. Basic checks for leaks from pumps and pipes were performed when pumps were first operated each morning. 43 However, before the integrity of steam pipes located within tanks could be inspected, including those located within the VAO tank, it was first necessary for each tank to be drained of product. The inspection regime adopted by the defendant for this purpose involved draining of the tank on an annual basis for a period of 3 weeks so as to enable the tank and its internal infrastructure to be examined. It was impractical, so the defendant contended, for that exercise to have been undertaken more frequently. The impracticality of so doing was not specified although it was implied that it would have been a costly exercise and that had it been done with greater frequency, there is no certainty that the hole in the steam pipe of present interest would have been discovered. 44 Further, the defendant submits that had there been a leak in the steam pipes, this could be expected to have manifested itself in the following ways; (i) a soapy substance being present in the boiler tubes as a result of the material in the VAO tank being drawn back to the boiler through the hole in the pipe; (ii) water being present in the material being pumped from the VAO tank due to the steam entering that tank through the leakage point; or (iii) solidification of the contents of the VAO tank where insufficient heat was being delivered so as to keep the contents viscous, with the result that the pipes delivering the tank contents to the mixing hopper would clog with solidified material.

[21]

Foreseeability 47 In the events that occurred, the extent to which the defendant could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence is very much related to consideration of the practical measures that may be taken to prevent, control, abate or mitigate that harm. Those matters have already been discussed. 48 Having accepted the result of the defendant's investigation as to the cause of the incident and that it involved a chain of causation that, over many years, had not previously materialised, these findings do not exculpate the defendant in the context of foreseeability. As Preston J observed in Environment Protection Authority v Baiada Poultry Pty Ltd at [32], it is not necessary that the precise event be foreseen in order to determine foreseeability of harm caused by the commission of the offence. It must have been foreseeable that other causes of loss in the integrity of the steam pipes could occasion the drawing of pollutant into the system which discharged into onsite pits. Importantly, the escape, by whatever means, of material contained in the VAO tank into the onsite stormwater system and the potential harm which it would cause if able to move from that system into the offsite drainage system must have been foreseeable. Further, it must have been foreseeable that the location of the WAN premises in relative close proximity to the eastern bank of the Peel River, at a point where those premises were elevated above it, would inevitably result in any pollutant entrained in the offsite drainage system escaping to the River, thereby polluting it. Steps taken after the incident, whereby condensate was intercepted and inspected before discharge, demonstrates that the harm was foreseeable if appropriate precautions were not taken. 49 I have accepted that what occurred involved a combination of unusual circumstances. In ordinary parlance, it can be described as "an accident". However, so to describe the incident does not detract from its significance in assessing penalty. In that regard, the observations of Mahoney JA, made nearly seventeen years ago in Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 at 359, remain apposite. His Honour said: "The legislation does not seek merely to prevent deliberate or negligent pollution. It envisages that, at least in many cases, proper precautions must be taken to ensure that pollution does not occur. Experience has shown that it is not enough merely to take care: accidents will happen. The legislation envisages that in may cases care must be supplemented by positive precautions; business must be arranged and precautions taken so as to ensure that pollution will not occur." 50 The foreseeability of potential harm from a discharge of the vegetable oil/tallow blend used at the WAN premises, was heightened by an incident that had occurred in early 2008. Some 8.5 tonnes of that blend had overflowed from the mixing hopper due to human error when a valve was not manually closed at the end of production day. Approximately 8 tonnes of material were recovered by the defendant's employee from within the premises but approximately 500 kgs reached the Peel Street stormwater drain. Fortuitously, on that occasion, the material had not washed to the Peel River and it is not asserted that environmental harm was in fact occasioned by that incident. Nonetheless, it is an incident that ought to have demonstrated to the defendant the potential harm that could be occasioned by the escape of material ordinarily contained within the VAO tank. 51 In the circumstances, I am satisfied beyond reasonable doubt that environmental harm was reasonably foreseeable in the absence of measures appropriate to arrest and detain the pollutant onsite.

[23]

53 The nature of the offence; the penalty that attaches to it; the degree of harm to the environment, both actual and potential; the practical measures available to control or mitigate the harm; the foreseeability of harm and the control over the circumstances which occasioned the commission of the offence, all inform the basis upon which the objective gravity of the offence should be determined. The prosecutor submits that in addition to the matters already considered, there are two further factors which should inform the seriousness with which the offence is considered. 54 First, it points to the fact that the pollutant remained in and was clearly visible upon the Peel River for a period of nine days. Secondly, it points to the number of personnel involved in the clean-up operation, involving personnel from the Fire Brigade, State Emergency Service, Tamworth Regional Council, independent contractors retained by the defendant and full time employees of the defendant, often working late into the evening. It also points to the volume of material which was extracted from the River by those involved in clean-up activities. 55 While the prosecutor does not question the prompt response by the defendant to the incident, once its occurrence and cause was drawn to its attention, it claims some support for the seriousness of the offence by reason of the fact that with all the personnel involved, the clean-up operation still occupied five days. 56 I am satisfied that a significant volume of pollutant escaped from the defendant's premises but the precise volume of that material cannot, on the evidence, be determined. Whilst the tonnage of material extracted from the River was stated, the components of that material extend well beyond the pollutant. Moreover, there is no suggestion in the evidence that because of the potential for serious harm that the pollutant could cause, greater resources should have been devoted to the clean-up than those which were in fact directed to it. As the defendant points out, Council officers essentially assumed supervision of the clean-up operation. The measures adopted by the defendant were undertaken in accordance with directions given by Council officers and in a timely manner. I accept the submission made on behalf of the defendant that had the defendant been requested to devote more resources to the clean-up, then it would have done so. 57 Taking all those matters into account, I consider that the offence should be regarded as being towards (but certainly not at) the lower range of objective gravity.

[24]

Subjective factors 58 In determining the penalty appropriate to be imposed for this offence, I am required to take into account those factors which mitigate the seriousness with which the conduct of the defendant should otherwise be considered. So much is required by s 21A(3) of the Crimes (Sentencing Procedure) Act 1999 (the CSP Act). Before turning to consider the relevant requirements of the statutory provision, it is appropriate to record facts pertaining to the defendant itself. 59 The defendant is said to be one of the largest food manufacturers in Australia and New Zealand, having a workforce of about 8,300 employees. It operates almost 60 manufacturing, production and office sites in these two countries. Its sites include feed and flour mills, bakeries, small goods factories, food laboratories and warehouses. It also has overseas operations. 60 The core business of the defendant is said to involve the supply of bread, cakes, processed meats, cereal based products, smallgoods, flour and milling, baking ingredients and animal nutrition products to the Australian and New Zealand markets. It also exports flour and frozen products to the Asian market. In addition, industrial cleaning and hygiene products for both the commercial and domestic markets in Australian and New Zealand are produced, with research and technological services also provided. 61 As part of the management of its overall enterprise, the defendant has in place detailed environmental policies and procedures which operate throughout the various divisions in which its business is conducted. These policies, systems and procedures have been detailed in evidence and, for present purposes, it is unnecessary for me to recite them in their detail. Suffice it is to record that they reflect a corporate enterprise that takes a responsible and serious approach to environmental management for which it is to be given credit, both generally and in the context of considering the appropriate penalty for this offence.

[32]

Parity 78 The principle of even-handedness, or parity in sentencing, requires the Court to have regard to the general pattern of sentencing for offences of the kind under consideration. However, care must be taken in assaying that task, as the wide divergence of facts and circumstances leading to the imposition of particular penalties in a given case exemplify the basis upon which this care is to be exercised. 79 Prosecution for a breach of s 120 of the POEO Act was considered in Environment Protection Authority v Baiada Poulty Pty Ltd. In that case, effluent from a poultry processing operation escaped to a watercourse as a result of what was found to be a defective weld in a pipe at the defendant's plant. Like the present defendant, Baiada acted promptly upon its attention being drawn to the incident; it took action to prevent further discharge of pollutant; it took charge of clean-up operations and it implemented measures to address the system defects which had given rise to the escape of about 1 million litres of effluent over a period of 20 days. An early guilty plea was entered. It had four prior convictions for environmental offences. 80 In the result, Baiada was fined the sum of $160,000 to which a discount of 25% was applied. It was also ordered to pay investigation costs totalling almost $5,000 and as well it was ordered to pay legal costs in the sum of $30,000. The company had, itself, incurred clean-up costs of almost $5,000. 81 In Environment Protection Authority v Hanson Precast Pty Ltd [2008] NSWLEC 285, the Court was required to consider the appropriate penalty for breach of s 120 of the POEO Act by the defendant when 200 to 300 litres of heat transfer oil escaped from its premises through the stormwater drainage system and into a watercourse. Although systems were in place designed to abate or mitigate the loss of this oil from the defendant's premises, these systems failed. There was short term environmental harm although no long-term effects. The defendant had entered an early guilty plea but, in light of the detailed measures that the company had in place to address environmental safety, no strong case for specific deterrence was made. A penalty of $75,000 was imposed to which a discount of 33% was applied by the sentencing judge. 82 The third case to be noticed is the decision of this Court in Environment Protection Authority v Nalco Australia Pty Ltd [2007] NSWLEC 831. The offence charged in that matter was also one committed under s 120 of the POEO Act. The defendant company operated a chemical manufacturing plant. A low toxicity chemical was delivered to its plant and stored in a tank. However, a valve on the storage tank and four further valves in the onsite stormwater system had been left open, with the consequence that 9,000 litres of chemical flowed through an offsite stormwater drain into Botany Bay. The pollution incident occurred due to the inexperience and oversight of personnel employed at the defendant's facility. 83 It was determined that there was no actual environmental harm and potential only for minor transient harm. Again, the defendant had entered an early plea of guilty; it had no prior convictions; it had expressed contrition and otherwise had demonstrated environmental responsibility. Having concluded that the offence was "at the lower end of the scale", Lloyd J imposed a penalty of $75,000 to which a discount of 33% was applied in light of the many mitigating factors. 84 Each of the three cases to which I have made reference have, both in their objective and subjective factors, features which distinguish them from the present case. I am satisfied that the volume of pollutant that escaped in the present case was not as great as that considered in Baiaida. Further, the present defendant has a far better record than did the defendant in that case. While the subjective factors present in both Hanson and Nalco have similarity to those which apply to the present defendant, the objective seriousness and severity of each of those offences does not appear to be as great.

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Judgment (40 paragraphs)

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Cases Cited (12)

Cited By (9)