Environment Protection Authority v Hanson Precast Pty Limited

Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 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 Environment Protection Authority v Hochtief AG and Thiess Pty Ltd [2007] NSWLEC 177 Environment Protection Authority v Waste Recycling and Processing Corp (2006) 148 LGERA 299 CASES CITED: Markarian v The Queen (2005) 228 CLR 357 R v Carroll [2008] NSWCCA 218 R v McNaughton (2006) 66 NSWLR 566 R v Slattery (1996) 90 A Crim R 519 R v Thompson; R v Houlton (2000) 49 NSWLR 383 R v Whyte (2002) 55 NSWLR 252 Veen v The Queen (1979) 143 CLR 458

PROSECUTOR: Ms P Lenehan, solicitor SOLICITORS: Department of Environment and Climate Change LEGAL REPRESENTATIVES: DEFENDANT: Mr N Hemmings QC SOLICITORS Allens Arthur Robinson

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

ENVIRONMENT PROTECTION AUTHORITY v HANSON PRECAST PTY LIMITED

EX TEMPORE JUDGMENT 1 HIS HONOUR: This is a criminal oil pollution case. The defendant, Hanson Precast Pty Limited, has pleaded guilty to a charge of polluting waters contrary to s 120(1) of the Protection of the Environment Operations Act 1997 (POEO Act) on or about 19 April 2007 at or near Mulgrave in New South Wales. The defendant is now before the Court for sentence. 2 The defendant has admitted that between 200 and 300 litres of heat transfer oil escaped from its premises via the stormwater drainage system. The spill affected about 200 metres of an unnamed watercourse. The offence occurred when the defendant, as occupier of the premises from which the pollutant was released, caused the pollutant to pass through the premises' stormwater drainage system and discharge into those waters. Background 3 The agreed facts are set out at [4] - [33] below.

4 Hanson owns and operates a pre-stressed concrete batching plant business at 63 Railway Avenue North, Mulgrave. Hanson owns and controls a heat transfer system on the premises used in curing the pre-stressed concrete on casting beds. The premises have four casting beds under which heat transfer oil circulates in pipes. Licensed premises 5 Hanson is the holder of Environment Protection Licence No. 542 to operate a concrete batching plant at the premises. EPL No. 542 is Item 2 in the agreed tender bundle. EPL No. 542 does not authorise any discharge of the pollutant from the premises. A map of the premises is included in Item 3 in the agreed tender bundle and identifies the four casting beds; the heating system boiler; the settling pit and the stormwater pit (also called the "Controlled Discharge Pit" in Drawing M2/001/A) located on the premises; the culvert under Windsor Road (also see photograph 1 of Item 1 in the agreed tender bundle); and the three sample locations. 6 A Plant Layout - Drainage plan of the premises (Drawing M2/001/A) is included in Item 3 in the agreed tender bundle and shows the location of the oil trap pit, detention pit and the controlled discharge pit (i.e. a stormwater pit). The pollutant 7 The heat transfer oil material, safety data sheet, is Item 4 in the agreed tender bundle. When new, heat transfer oil is a clear and bright oily liquid with a mineral oil odour. Heat transfer oil contains corrosion inhibitors, an anti-foam and zinc antiwear additives. Heat transfer oil is a combustible liquid.

The heating system and stormwater 8 The heating system was installed at EMP Concrete Pty Limited's Blacktown site in 1989 and relocated and installed at the premises in 1999. The heating system involves heating pipes running from the heating system boiler to each of the four casting beds and under each of these casting beds. The heating pipes running between the boiler and the casting beds are in a concrete service trench. The heating system contains 2,000 litres of heat transfer oil in the boiler and pipes and is a closed system. The heating system boiler has a concrete bund around it. If oil were ever to leak from the boiler, it would be directed into the service trench. 9 The service trench flows into an enclosed pit, known as the oil trap pit. The oil trap pit was designed with a baffle system to segregate oil from stormwater runoff. To operate correctly, the oil trap pit is designed to contain water so that any oil floats on top of the water and is retained by the baffle, preventing oil from exiting the oil trap pit. 10 Stormwater that enters the oil trap pit flows into the settling pit, then through internal drains to the detention pit, then into the controlled discharge pit and offsite into a drain which in turn flows under Industry Road, Mulgrave. The oil trap pit has a cover on it. 11 All stormwater from the premises flows to Industry Road, Mulgrave, with the exception of the main office. 12 The pipes in the service trench were inspected annually. The pipes under the casting beds are inspected when a leak appears. While the concrete is curing on the beds, the service trench can be viewed, but the view under the beds is limited. 13 Ian Vernon is the maintenance manager and is responsible for inspecting, maintaining and repairing any deficiencies in the oil heating pipes and casting beds.

14 Directly after the incident, Mr Vernon went on stress leave from his position as maintenance manager. Investigators from the prosecutor made requests to the defendant's company representative, Mr Ian Kinny, to conduct a statement of interview with the maintenance manager. The prosecutor was advised that due to the nature of Mr Vernon's leave, no such interviews were to be conducted. This resulted in the affidavit of Mr Ian Kinny being sworn on 9 April 2008 (see [34] - [46] below).

15 As a result of the serious nature of the information provided to the prosecutor's investigators by Mr Kinny, no record of interview was conducted with Mr Vernon in this matter. The incident - Tuesday, 17 April 2007 16 On Tuesday, 17 April 2007, only Beds 1 and 2 were in operation at the premises. At 6:30pm, the low oil level alarm was activated on the heating system and the system automatically shut down. A noticeable oil smell was observed adjacent to Bed 1. The oil leak was thought to be beneath Bed 1. Accordingly, oil to Bed 1 was shut off. Hanson thought the leak had been contained, and an additional 300 litres of heat transfer oil was added to the heating system and it was restarted. 17 The heating system then operated throughout the night on Tuesday, 17 April 2007 on Bed 2 only. Wednesday, 18 April 2007 18 On Wednesday, 18 April 2007, production occurred on Beds 2 and 4 only. The boiler was started at 2:30pm. At 5:00pm, the boiler was inspected by the maintenance manager before leaving the premises and appeared to be functioning normally. Sometime after 5:00pm, the low oil level alarm was again activated on the heating system and the system automatically shut down. Thursday, 19 April 2007 19 On the morning of Thursday, 19 April 2007, the concrete on Bed 1 had sufficiently cured and stripping was commenced. An oil smear was then noticed in the settling pit adjacent to the heating system boiler. 20 An oil soak boom was placed across the outlet of the settling pit and the controlled discharge pit adjacent to the boundary was inspected. Actions were then immediately taken to bund stormwater outlets to prevent possible leaked oil escaping offsite. Hanson was notified by Hawkesbury Council that an oil spill had occurred. At 12:59pm on 19 April 2007 Hanson reported the incident to the Department of Environment and Climate Change (DECC) Environment Line. 21 Further investigation by Hanson revealed that a pipe in the service trench supplying heat transfer oil to Bed 4 was leaking due to a pipe having corroded. 22 Hanson then determined that Bed 1 had been incorrectly identified as the source of the heat transfer oil leak as there was oil found inside the service trench between Bed 1 and Bed 2. This resulted in heat transfer oil from the corroded pipe in the service trench draining into the oil trap pit. 23 The oil trap pit relies on oil floating on top of water contained in the base of the pit. Due to an extended period of dry weather, the oil trap pit was dry and therefore the baffle system was not functioning. The heat transfer oil should have been retained by the baffle. However, as the baffle was dry, the heat transfer oil passed under the baffle and into the offsite stormwater system discharging into an unnamed culvert at Industry Road, Mulgrave. Volume spilt 24 It is estimated that between 200 and 300 litres of heat transfer oil entered the off site stormwater drain. The low level alarm 25 The heating system shuts down automatically if the low oil level alarm is activated. Once the low oil level alarm has been activated, the heating system can only be restarted manually after adding more heat transfer oil. A float switch prevents the operation of the high temperature oil pump if there is insufficient oil in the tank. Cause of the incident 26 The incident was caused by:

(a) Hanson's investigation of the low oil level alarm on Tuesday 17 April 2007 wrongly concluding that the oil leak was located beneath Bed 1. This conclusion was based on there being a noticeable oil smell adjacent to Bed 1 and also that Bed 1 had not been in operation for an extended period; (b) Hanson incorrectly determining the source of the oil leak and then refilling the heating system with 300 litres of heat transfer oil and restarting the system; (c) a pipe in the service trench supplying heat transfer oil to Bed 4 corroding and causing oil to flow into the oil trap pit; (d) the baffle system in the oil trap pit, which was designed to separate oil from water and prevent oil entering an offsite stormwater drainage system, was not operating as it had been designed to; (e) the oil trap pit not being inspected following the oil leak which was a consequence of: (i) the oil trap pit being awkward to investigate; and (ii) a belief that the oil leak was located under Bed 1. Environmental harm 27 The incident caused actual environmental harm as follows:

(a) the incident caused heat transfer oil to be placed on top of the unnamed watercourse at Mulgrave for approximately 200 metres from 19 April 2007 to 22 April 2007; (b) the incident killed a small number of Gambusia (small fish - approximately two centimetres in length) by physically trapping or smothering them in the floating oil or reducing the oxygen in the water and directly by the ingestion of the oil; (c) the incident and the clean up caused damage to a number of reeds located within the unnamed watercourse (which were required to be removed during the clean-up of the incident); and (d) the incident resulted in a temporary change to the chemical composition of the water in the unnamed watercourse. 28 The incident also caused an odour in the area adjacent to the unnamed watercourse at Mulgrave on 19 April 2007. 29 The incident had the potential to cause the following environmental harm:

(a) to aquatic organisms located within the watercourse as a result of smothering; (b) to aquatic organisms located within the watercourse as a result of ingestion of the pollutant; and (c) to aquatic organisms as a result of assimilation of the pollutant into the water. Action taken to prevent a further incident 30 After the incident, Hanson undertook the following works and implemented the following procedures: (a) the connection from the oil trap pit to the settling pit has been permanently sealed to ensure that no oil or water can pass from the oil trap pit to the settling pit then offsite via the detention pit and the controlled discharge pit; (b) the oil level in the heating system is now being monitored daily; (c) the oil trap pit now has a permanent submersible pump installed to pump any future oil spills into oil recycling containers; (d) the oil trap pit now has a float switch and a visual high level alarm flashing light to alert staff of any need to pump out the pit; and (e) the service trench oil pipes are now inspected every three months.

Clean up action 31 At the time Hanson became aware that the oil leak had escaped offsite, Hanson had a contractor (Transpacific Industrial Solutions Pty Limited) undertaking routine maintenance and cleaning of the stormwater system at the premises. Once Hanson became aware that the oil leak had escaped offsite (on Thursday, 19 April 2007), the clean-up was commenced by Transpacific Industrial Solutions Pty Limited within one hour.

32 The clean-up continued until Sunday, 22 April 2007. The total amount invoiced by Transpacific Industrial Solutions Pty Limited on 15 May 2007 (and others) was $63,775.50 (including GST).

Prior convictions 33 Hanson has no previous convictions for prior environmental offences. Hanson has fully cooperated with DECC investigators. Mr Kinny's evidence 34 The following evidence, which I accept, was given by Mr Ian Kinny, the defendant's manager at its Mulgrave and Riverstone sites since late 2006. 35 Mr Kinny undertook a detailed investigation of the circumstances leading to the incident. Based on information provided to him during the investigation by Mr Vernon, the maintenance supervisor at the premises throughout its 25 years of operation, Mr Kinny satisfied himself that in the history of operation of the premises there had not been a prior significant oil leak which had flowed into the service trench or the oil trap pit. That evidence is hearsay in the absence of evidence from Mr Vernon, but it was admitted as evidence of the state of mind of Mr Kinny and is indicative of the investigation that he undertook. 36 From Mr Kinny's review of the operating records, he is aware that at the time the incident occurred: (a) this was the first time that casting Bed 1 had been in operation after an extended idle period of approximately three months; and (b) during that time, Beds 2, 3 and 4 had been in normal operation. 37 The casting beds are flat and their base is below any opening into the service trench. This limits potential for leakage from the pipes beneath the casting beds to flow into the service trench. The heating system shuts down when approximately 300 litres of oil is lost and the low oil level alarm is then activated. A quantity of 300 litres of oil beneath a casting bed would leave only a film of oil of approximately three millimetres over a portion of the base of the beds. There have been small leaks which occasionally occurred in this area in the past but they have been cleaned up after the pre-stressed concrete hollow-core planks on those beds had cured and been lifted.

38 The heating pipes beneath the casting beds are inspected when a leak occurs. However, they cannot be inspected whilst there is concrete curing on the beds, as the presence of concrete restricts access beneath the beds. Therefore, inspection can only take place after the concrete is lifted, but the concrete can take several days to cure if the heating system is disabled. 39 There was a noticeable smell next to Bed 1 on 17 April 2007. However, it is not possible to physically check whether there is an oil leak beneath that bed if there is concrete curing on it. 40 The cover on the oil trap pit is a heavy concrete lid which requires a crane to lift it. Removal of the cover needs to occur after hours as the process of lifting cannot occur during normal operation of the premises. 41 The settling pit and the service trench are inspected, maintained and cleaned by the defendant or contractors on a regular basis. Prior to this incident, that occurred approximately every six months. 42 Based on information from Mr Vernon during the course of Mr Kinny's investigation, Mr Kinny satisfied himself that over the past 25 years there had been ten leaks in the pipes beneath the casting beds and on each occasion the oil had been contained and did not leak into the service trench or oil trap pit. Again that evidence is hearsay but it was admitted as evidence of Mr Kinny's state of mind and as indicative of an aspect of the investigation that he undertook. 43 The post-incident works and procedures described in the agreed facts were undertaken by the defendant to eliminate the possibility of a repeat of the incident. 44 In the course of an interview by investigators on behalf of the prosecutor in October 2007, Mr Kinny described the oil trap pit and the settling pit. He said that the settling pit had a steel grate on it so that you can see into the base, and that even in dry weather there was almost always a small flow of water, which the defendant thought seeped into the drainage system from ground water. On the occasion of the incident, the oil trap pit had a cover on it and was far more awkward to investigate. 45 Mr Kinny told the investigators that there was a baffle in the oil trap pit which was intended to work by water being above the base of the baffle so that if any oil flowed into the pit then, being lighter than water, the oil would be retained by the baffle on the plant-side of the pit. He informed the investigators that that particular pit appears to have been dry when this incident occurred, possibly because of an extended drought. 46 It is apparent that there was an overflow of oil from the oil trap pit through a pipe to the settling pit and thence into the stormwater drainage system. Other evidence 47 On 6 July 2007 the defendant wrote a letter to the prosecutor in response to a statutory notice. Amongst the information provided in that letter was the following: The pipes under the casting beds are inspected when a leak appears to be evident as the pipes are sealed below steel beds up to 170 metres long. Over the last 20 years there have only been six leaks in the pipes under the casting beds and the oil was contained in those beds and did not escape. There was no intention or expectation that oil from the heating system should ever have accessed the stormwater drainage system.

There is no record of any oil spilling into the stormwater drainage system in the past. Some small volumes of water do collect in the service trench over time and this water drains into the oil trap pit. The pit was originally designed to have an oil trap so that any oil making its way into the pit would be retained on the inflow side of the pit until it was removed and any water following into the pit could make its way into the drainage system. The only oil to enter the pit in the past has occurred during deliberate maintenance operations on pipes in the service trench. Such oil was of limited quantity and was immediately removed from the pit and was never known to pass the baffle in the pit to the outflow side of the pit. 48 The defendant's operating manual for its oil heater states that: Alarms should be investigated properly and decisive action taken to rectify the cause of any alarms. 49 Photographs in evidence show black oil in the watercourse affecting reeds in the drain and discolouring sizeable pebbles which appear to have been placed there for ornamental purposes. Overview of the prosecutor's case 50 The prosecutor submits that the offence is not trivial, that there are no extenuating circumstances and that the primary factors that should be taken into account in sentencing are:

(a) the defendant's failure to properly implement simple precautions that would have prevented the offence from occurring; (b) foreseeability of the incident in light of the failure to take proper precautions; and (c) the need for general deterrence in cases involving water pollution, particularly when there is a failure to take proper precautions. 51 The spill affected about 200 metres of the unnamed watercourse or drain. The prosecutor accepts that the spill was accidental but points out that it resulted in actual and potential environmental harm.

Sentencing considerations 52 The objects of the POEO Act include the following, in s 3: (a) to protect, restore and enhance the quality of the environment in New South Wales, having regard to the need to maintain ecologically sustainable development, … (d) to reduce risks to human health and prevent the degradation of the environment by the use of mechanisms that promote the following:

(i) pollution prevention… (ii) the reduction to harmless levels of the discharge of substances likely to cause harm to the environment,… (iv) the making of progressive environmental, improvements including the reduction of pollution at source,… 53 The defendant compromised the objects of the POEO Act by failing to protect the quality of the environment to the extent that the oil travelled some 200 metres in the watercourse or drain and caused actual harm to the environment as well as other potential harm. However, the defendant submits, in effect, that those objects have not been greatly compromised having regard to the fact that the discharge was into an industrial drain and was contained over a relatively short distance. There is no suggestion that the incident permanently degraded the environment. 54 A stern policy against pollution lies behind the legislation. In Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 at 359, Mahoney JA held: 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 may be imposed evidences this: for the present offence, a maximum fine of $125,000 [now $1 million] was available. 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. ... 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 many cases care must be supplemented by position precautions; business must be arranged and precautions taken so as to ensure that pollution will not occur.

Precautions may be costly. The cost of precautions to avoid pollution will no doubt become accepted, in due course, as an ordinary cost of operating in an industry where, absent precautions, pollution may occur...The fine should be such as will make it worthwhile that the cost of precautions be undertaken...

In the end the object of the legislation is to prevent pollution and to do this, inter alia, by the deterrent effect of a substantial find and by, in consequence, persuading the industries concerned to adopt preventive measures. 55 The overlapping purposes of sentencing are set out in s 3A of the Crimes (Sentencing Procedure) Act 1999 as follows: 3A Purposes of sentencing

The purposes for which a court may impose a sentence on an offender are as follows:

(a) to ensure that the offender is adequately punished for the offence, (b) to prevent crime by deterring the offender and other persons from committing similar offences, (c) to protect the community from the offender, (d) to promote the rehabilitation of the offender, (e) to make the offender accountable for his or her actions, (f) to denounce the conduct of the offender, (g) to recognise the harm done to the victim of the crime and the community. 56 Section 21A requires the Court to take into account a number of matters insofar as they are relevant. Section 21A relevantly provides: 21A Aggravating, mitigating and other factors in sentencing

(1) General In determining the appropriate sentence for an offence, the court is to take into account the following matters: (a) the aggravating factors referred to in subsection (2) that are relevant and known to the court, (b) the mitigating factors referred to in subsection (3) that are relevant and known to the court, (c) any other objective or subjective factor that affects the relative seriousness of the offence. The matters referred to in this subsection are in addition to any other matters that are required or permitted to be taken into account by the court under any Act or rule of law.

(2) Aggravating factors The aggravating factors to be taken into account in determining the appropriate sentence for an offence are as follows: … (g) the injury, emotional harm, loss or damage caused by the offence was substantial, … The court is not to have additional regard to any such aggravating factor in sentencing if it is an element of the offence.

(3) Mitigating factors The mitigating factors to be taken into account in determining the appropriate sentence for an offence are as follows: (a) the injury, emotional harm, loss or damage caused by the offence was not substantial, … (e) the offender does not have any record (or any significant record) of previous convictions, (f) the offender was a person of good character, (g) the offender is unlikely to re-offend, (h) the offender has good prospects of rehabilitation, whether by reason of the offender's age or otherwise, (i) the remorse shown by the offender for the offence, but only if: (i) the offender has provided evidence that he or she has accepted responsibility for his or her actions, and … (k) a plea of guilty by the offender (as provided by section 22), … (m) assistance by the offender to law enforcement authorities (as provided by section 23). 57 As for a plea of guilty, s 22 relevantly provides: 22 Guilty plea to be taken into account

(1) In passing sentence for an offence on an offender who has pleaded guilty to the offence, a court must take into account: (a) the fact that the offender has pleaded guilty, and (b) when the offender pleaded guilty or indicated an intention to plead guilty, and may accordingly impose a lesser penalty than it would otherwise have imposed. 58 The utilitarian value of a plea of guilty is generally assessed in the range of 10 percent to 25 percent: R v Thompson; R v Houlton (2000) 49 NSWLR 383.

59 As for assistance by the offender to law enforcement authorities, s 23(1) provides: 23 Power to reduce penalties for assistance provided to law enforcement authorities

(1) A court may impose a lesser penalty than it would otherwise impose on an offender, having regard to the degree to which the offender has assisted, or undertaken to assist, law enforcement authorities in the prevention, detection or investigation of, or in proceedings relating to, the offence concerned or any other offence.

60 Section 241 of the POEO Act requires the Court to consider a number of objective seriousness matters so far as they are relevant. Section 241 provides:

(1) In imposing a penalty for an offence against this Act or the regulations, the court is to take into consideration the following (so far as they are relevant): (a) the extent of the harm caused or likely to be caused to the environment by the commission of the offence, (b) the practical measures that may be taken to prevent, control, abate or mitigate that harm, (c) the extent to which the person who committed the offence could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence, (d) the extent to which the person who committed the offence had control over the causes that gave rise to the offence, (e) whether, in committing the offence, the person was complying with orders from an employer or supervising employee. (2) The court may take into consideration other matters that it considers relevant.

61 The sentence must reflect both the objective circumstances and the subjective circumstances of the offence: Veen v The Queen (1979) 143 CLR 458 at 490. The penalty should be determined by an instinctive synthesis of all the relevant objective and subjective circumstances: Markarian v The Queen (2005) 228 CLR 357 at [37], [39], [66] and [73]. Objective seriousness of the offence 62 The primary consideration in sentencing is the objective seriousness of the offence because it fixes both the upper and lower limits of proportionate punishment: R v McNaughton (2006) 66 NSWLR 566 (CCA) at [15]; R v Whyte (2002) 55 NSWLR 252 (CCA) at [156] - [158].

Maximum penalty 63 The primary indicator of objective seriousness is the maximum penalty, for that is the expression by parliament of the seriousness of the offence: Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698. The potential seriousness of an offence under s 120 of the POEO Act is reflected in the maximum penalty, which for corporations was increased fourfold to $1 million on 1 May 2006: s 123 POEO Act. Section 123 also provides for a further penalty not exceeding $120,000 for each day the offence continues. In the present case, the prosecutor does not seek a daily penalty. The sharp increases in the maximum penalty indicates a legislative intention that the existing sentencing patterns are to move sharply upwards: R v Slattery (1996) 90 A Crim R 519 at 524. It does not follow, however, that for every offence after the date of increase, the increase in penalty will be by the same multiple as the increase in the maximum penalty. Offences of low criminality remain offences of low criminality even if the maximum penalty is increased: Cabonne Shire Council v Environment Protection Authority (2001) 115 LGERA 304 at 312.

64 Apart from the maximum penalty, s 241 of the POEO Act requires the Court to take into account a number of matters relevant to objective seriousness, which I address below. There are two components to the assessment of those matters and to the assessment of objective seriousness of an offence generally: an examination of the precise acts or omissions of the offender, and the consequences of those acts or omissions: R v Carroll [2008] NSWCCA 218 at [39]. That examination has been conducted earlier in this judgment. Environmental harm 65 An indicator of objective seriousness of a pollution offence is whether there has been any actual environmental harm, and if so, its seriousness: s 241(1)(a) POEO Act. The spill caused actual harm and potential further harm to the environment (see [27] - [29] above). There was substantial short-term environmental harm but there are no long-term harmful effects. 66 Although the condition of the receiving waters is not a mitigating factor, it is relevant to the assessment of the harm or likely harm by the commission of the offence: Environment Protection Authority v Waste Recycling and Processing Corp (2006) 148 LGERA 299 at [149]; Environment Protection Authority v Hochtief AG and Thiess Pty Ltd [2007] NSWLEC 177 at [19]. Whilst conceding that there is no doubt that there has been environmental harm, the defendant points out that the oil spilt was about the equivalent of the contents of a 44 gallon drum and submits that it is significant that the discharge went into a drain and was confined. That is so. However, the oil spilt was still substantial and over a substantial distance; the drain was in the nature of an open watercourse; and, as the defendant acknowledges, the oil damaged reeds, killed mosquito-eating fish and stained rocks. Practical measures 67 An indicator of objective seriousness of a pollution offence is the practical measures that may be taken to prevent, control, abate or mitigate the harm to the environment: s 241(1)(b) POEO Act. The prosecutor submits that obvious practical measures could have been taken prior to the incident. They include the measures taken by the defendant following the incident in order to prevent any recurrence (see [30] above); ceasing production until the source of the leak had been correctly identified or a safe system implemented; and measures to ensure that if the leak was not in the pipes of Bed 1 that a procedure was in place to prevent a spill. The prosecutor submits that it was not acceptable for the defendant to operate its business, even for a temporary period, without taking reasonable precautions. 68 I accept the thrust of the prosecutor's submissions. It seems to me that if the baffle control in the oil trap pit was to be used as the control mechanism to prevent oil entering the drainage system, then there should have been a system in place for being able to check readily whether there was water in the oil trap pit because, without such water, the baffle control was useless. Foreseeability 69 An indicator of objective seriousness of a pollution offence is the extent to which the person who committed it could have reasonably foreseen the harm caused or likely to be caused to the environment by the commission of the offence: s 241(1)(c) POEO Act. The prosecutor submits that the harm and likely harm could and should reasonably have been foreseen, based upon a number of matters including the following:

(a) the defendant should have been aware that the trap pit was connected to the stormwater system that ultimately flowed to the unknown watercourse; (b) the defendant was aware that liquids could escape the premises from the oil trap pit; (c) the defendant's employees were not aware of the actual location or cause of the leak for almost two days before the oil escaped, during which time production continued; (d) 300 litres of oil was added to a closed system by an employee of the defendant with only minimal investigation being carried out into its possible causes; (e) the only means of preventing oil in the oil trap pit from entering an offsite stormwater drain was a baffle which was not functioning. The oil trap pit was inspected infrequently and no other measures were in place; (f) the defendant's employees failed to inspect the service trench, the oil trap pit, the settlement pit or the control discharge pit or any other area once the incorrect belief had been formed that the leak was under Bed 1; and (g) a low level alarm in the heating system should have been investigated properly and decisive action taken to rectify the cause prior to restarting the system. 70 I accept the thrust of the prosecutor's submissions. In particular, the defendant knew that without water in the oil trap pit, the baffle control to prevent oil entering the drainage system would not work. The defendant knew that if the baffle control did not work and sufficient oil entered the pit then the oil could escape into the drainage system. The very existence of the oil trap pit and its baffle control demonstrates the foreseeability of what occurred. Control over the causes 71 An indicator of objective seriousness of a pollution offence is the extent to which the defendant had control over the causes that gave rise to the offence: s 241(1)(d) POEO Act. It is agreed that the defendant had control over the causes. Conclusion as to objective seriousness of offence 72 Overall, in my opinion, the objective seriousness of the offence is more towards the lower end of the scale. Subjective considerations 73 The following mitigating subjective matters should be taken into account in the defendant's favour:

(a) the defendant has no record of prior convictions: s 21A(3)(e) Crimes (Sentencing Procedure) Act 1999 ; (b) the defendant is a corporation of good character: s 21A(3)(f); (c) the defendant has given full assistance to the prosecutor: ss 21A(3)(m) and 23; (d) the defendant pleaded guilty at the earliest time: ss 21A(3)(k) and 22. Consequently, the defendant is entitled to the full discount of 25 per cent on sentence; (e) the defendant has shown remorse, has provided evidence that it accepts responsibility for its actions and has acknowledged the damage caused: s 21A(3)(i). Remorse has been expressed convincingly on behalf of the defendant by Mr Kinny, the defendant's manager at its Mulgrave and Riverstone sites, who was a reliable and careful witness. He said that everyone concerned with the defendant had been devastated by this incident and that all of the team who reported to him in relation to the matter were quite distressed. Indeed, the maintenance manager has had a significant medical condition as a result of the incident. The defendant sincerely regrets what has happened; (f) the cleanup was efficiently handled by the defendant once notified by the council and has cost the defendant over $63,000; Deterrence 74 The prosecutor submits that there is a role for specific deterrence in relation to the defendant because of the failure of the systems it had in place. I do not consider that there is a strong case for specific deterrence. My assessment is that the defendant was conscientious about environmental safety and has responded well to this incident, both in the cleanup and in working out systems which can prevent a recurrence. There should also to be taken into account in the defendant's favour that an incident like this was unprecedented and that Bed 1 had just resumed operation. There was therefore potential, as occurred, for the defendant to make a mistaken assumption initially about the cause of the incident. That is not to say that the conduct of the defendant should be excused. Such is the premium which has been placed by the community, through the legislature, on the avoidance of pollution, that the failure to take practical measures which could and should have been taken to avoid this incident, to which I have referred earlier, should not be excused. 75 There is a stronger case for general deterrence to deter others from committing a similar offence: I do not understand that to have been disputed by the defendant. Even-handedness 76 The prosecutor referred to the penalties in a few other oil pollution cases, but the parties placed no particular reliance upon them in the divergent circumstances of the present case. Conclusion 77 In my opinion, an appropriate penalty for the offence warrants a fine of $50,000, after discounting by one-third for all mitigating factors including a 25 per cent discount for the utilitarian value of the early plea of guilty. The orders of the Court will be as follows:

1. The defendant is convicted of the offence as charged. 2. The defendant is fined the sum of $50,000. 3. The defendant is to pay the prosecutor's legal costs of the prosecution agreed in the sum of $17,680. 4. The defendant is to pay the prosecutor's investigation costs under s 248 of the Protection of the Environment Operations Act 1997, agreed in the sum of $4,320. 5. The exhibits may be returned.

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