Environment Protection Authority v Johnson and Johnson Pacific Pty Ltd

1. The Defendant has pleaded guilty to a charge of an offence against s 120(2) of the Protection of the Environment Operations Act 1997 (PEO Act) in that on or about 27 October 1999 at Botany, it caused waters to be polluted.

2. The particulars of the offence endorsed on the Summons are as follows:

Owning and maintaining the trade waste system on the premises at Stephen Road, Botany from which matter was introduced into adjacent stormwater pipes which discharge to Floodvale Drain.

Highly alkaline waste water with a pH of more than 8.5.

Subsection (4) provides that "a person who contravenes this section is guilty of an offence".

The Dictionary to the PEO Act contains relevant definitions (see s 4) including definitions of the terms "pollution", "water pollution" and "waters". Each of these terms is broadly defined.

Relevantly for present purposes "water pollution" includes "placing in or on, or otherwise introducing into or onto, the waters (whether through act or omission) any matter, whether solid, liquid or gaseous that is of a prescribed nature….".

The Protection of the Environment Operations (General) Regulation 1998 cl 52 provides that "matter described in Schedule 3 is prescribed as matter for the purposes of paragraph (c) of the definition of water pollution in the Dictionary at the end of the Act". Schedule 3 includes the following matter:

Any matter that has a pH value of less than 6.5 or more than 8.5.

Relevantly, the Dictionary to the PEO Act defines "waters" to include "(a) artificial watercourse or (b) water in ….water channels".

The PEO Act s 123 prescribes a maximum penalty of $250,000 where the defendant is a corporation on conviction of an offence under Pt 5.3 which includes the offence charged against the Defendant in the present case.

The parties have assisted the Court in its understanding of relevant facts by tendering an Agreed Statement of Facts (Exhibit 1) from which the following summary version of relevant facts has been distilled - (a.) The Defendant is the owner of a large industrial site known as No1 Stephen Road, Botany. (b.) Since 1995 the Defendant has leased to a separate entity Polo Citrus Pty Ltd (Polo Citrus) a building located at the rear of the industrial site which the lessee uses for the purpose of manufacturing detergents and liquid hand soaps. (c.) In that manufacturing process, Polo Citrus produces liquid waste which is collected in a concrete pit contained in the floor of the building. The contents of the pit are emptied approximately once each month (involving some 1000 - 2000 litres) by being pumped to the sewer owned and operated by Sydney Water pursuant to a trade waste agreement. (d.) At 4 pm on 27 October 1999, officers of Botany Council in response to advice of a pollution incident observed milky white liquid with a large amount of foam in Floodvale Drain located in close proximity to the Defendant's industrial premises. Upon investigation, it was discovered that the polluted waters were entering Floodvale Drain via a stormwater pipeline draining the Defendant's premises. A citrus odour was detected at the discharge point. Floodwater Drain discharges into Botany Bay 1.2 km distant from the Department's premises. (e.) Further investigation revealed that Polo Citrus had earlier that day emptied in the conventional manner approximately 2000 litres of waste water from the holding pit within the floor of the factory premises. (f.) Later in the evening investigating officers from the Environment Protection Authority (the EPA) arrived on the scene and collected samples of the polluted liquid (i) discharging from the aforesaid stormwater pipe; (ii) flowing in Floodwater Drain; and (iii) within the collection pit in the factory floor. Laboratory test results of the samples indicated a pH value of the discharge from the stormwater pipe into Floodwater Drain of 10.6, compared with a pH value of 6.9 from upstream and downstream samples taken from Floodwater Drain. (g.) Further investigation by the EPA revealed that at the time of the pollution incident a submersible pump located in the pit (used to pump the contents from the collection pit uphill to Sydney Water's sewer) was not operating because of some malfunction caused by damage to the relevant electrical control box by the severe hailstorm experienced in parts of Metropolitan Sydney in April 1999. Par 11 of the Agreed Statement of Facts (Exhibit 1) describes the effects of the pump failure in the following terms:

This caused the pit to fill up to the point where the waste backfilled the sewer line. The waste then leaked from the underground sewerage pipe into the ground and then leaked from the ground into the stormwater pipe and to the stormwater pit which in turn went to the waters of Floodwater Drain. (h.) The Defendant admits that it and not its lessee, Polo Citrus, is responsible for maintaining the trade waste pits and associated equipment. At the time of the pollution incident, the Defendant's routine inspection and maintenance programme did not include the relevant installations used by Polo Citrus but subsequently, the Defendant has extended its inspection and maintenance programme to include these installations. Additionally, the Defendant has installed a high level alarm system in the holding pit to be detonated in the event of the occurrence of any similar problem which created the pollution incident. (i.) No actual environmental harm caused by the pollution incident was observed other than the fact that water quality in Floodwater Drain was degraded immediately downstream the discharge point from which the polluted waters entered the Drain, and the pollution incident had created a potential environmental harm.

The Prosecutor ultimately submits that the Court should impose a sentence representing 15 to 20 per cent of the maximum prescribed penalty, having regard to the objective gravity of the offence, the subjective culpability of the Defendant and the need for general deterrence whilst making the appropriate discount for mitigating circumstances (namely (i) this is the first environmental offence committed by the Defendant; (ii) the Defendant's unblemished prior record, in conducting industrial activities for many decades at its Botany site; (iii) the early entry of a plea of guilty; (iv) the Defendant's entire co-operation with the investigating officials; (v) the Defendant's genuine contrition for the offence; and (vi) the remedial measures implemented by the Defendant to prevent a recurrence of the pollution incident.

The Defendant ultimately submits that the Court should exercise in its favour the discretion conferred by s 10(1) of the Crimes (Sentencing Procedure) Act 1999, having regard to the combination of the mitigating factors mentioned and the proper assessment of the Defendant's small subjective culpability in the commission of the offence and the objective facts involved in the offence.

An adjudication of these competing submissions requires initially, consideration of the Defendant's case for its conditional or unconditional discharge (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). My consideration of each of these factors may be summarised as follows: -

This factor operates powerfully in favour of the Defendant which is part of a worldwide group of companies which seek to meet the highest standards in environmental management - complying with either its own high standards or relevant local standards. The Defendant has operated by either itself (or its predecessors) at the Botany industrial premises continuously since 1938 with an unblemished environmental record.

Since 1990, the Defendant has subjected its Botany industrial site and off-site waste disposal activities to periodic independent environmental audit. On the occasion of each of the four audits that have been undertaken, the Defendant has achieved the highest rank.

Additionally, and in more recent times, the Defendant has commenced an initiative to seek to achieve certification of its Botany industrial site under International Standards Organisation 14001.

Accordingly, I find the Defendant to be a person of the most excellent professional character and reputation.

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 of subjective factors concerning the person committing the offence, I am of the opinion that the Defendant bears significant culpability inasmuch as the agreed facts indicate that it, and not its lessee, was responsible for the maintenance of the plant and installations. On the basis of the agreed facts, it cannot fairly be said that the Defendant's failure to repair the damaged electrical control box and to repair the damaged pump did not have some causative connection with the commission of the offence.

In so concluding, I note that the offence charged does not depend upon the creation of environmental harm. Pollution of waters is, as I have indicated, a broad offence and includes placing relevantly polluted matter in a water channel. In the present case, the relevant pollutant was matter containing a high alkaline level and the relevant waters were Floodwater Drain. Obviously, there are conceivably far more toxic pollutants than the pollutant involved in the present case just as there are far more sensitive waters than those contained in Floodwater Drain which collects runoff etc from a large area of industrially developed premises and it follows from these objective factors that the offence in the present case, is properly classified as being at the lower end of the spectrum of overall gravity of a water pollution offence, which offence however remains a serious offence.

In my opinion, this factor operates against the Defendant, for similar reasons which led to my holding that factor (b) operates against the Defendant.

In truth, I do not think that there are any "extenuating circumstances" in which the offence was committed. It may be the case that the underground pipes leaked the waste waters when they backfilled into the pipe because the pump was malfunctioning. However, leaking underground pipes do not, in my judgment, constitute "extenuating circumstances" in the commission of the offence of "causing waters to be polluted", when the pollution emanates from industrial plant and installations for which the Defendant, as owner of the Industrial premises, is responsible.

In the context of the relevant offence being an offence of "strict liability", (cf Alphacell Ltd v Woodward (1972) AC 824) it is obvious that an industrialist, such as the Defendant, must ensure that pollution of waters does not emanate from the plant and installations used in the various industrial processes conducted at the premises. This means that measures must be employed to ensure that pipes carrying waste waters etc do not leak in a manner where the contents find their way into stormwater drains etc such as occurred in the present case.

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 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 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.

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 of - (a) $15,000 (Gosford City Council v Build Max Developments Pty Ltd (2000) NSWLEC 224); (b) $20,000 (Environment Protection Authority v Turner Industries Ltd (2001) NSWLEC 25); (c) $45,000 (Environment Protection Authority v Simplot Australia Pty Ltd (2000) NSWLEC 40; and (d) $60,000 (Environment Protection Authority v Devro-Teepak Pty Ltd (2000) NSWLEC 275).

It is to be noted that each of the penalties imposed in these cases reflected considerable sentence discounting (up to 50 per cent in Simplot) on account of mitigating factors.

My consideration of the agreed facts in the present case in relation to the factors specified in s 241 leads me to the following conclusions - (i.) the offence was foreseeable inasmuch as any physical failure of the integrity of the installations for handling waste waters, (including failure of the underground pipes developing leaks) was reasonably foreseeable; (ii.) practical measures could have been taken to "prevent, control, abate or mitigate " harm - namely the failures in the electrical control box and the pump were both readily detectable and simply remediable; (iii.) "harm" as broadly defined in the PEO Act Dictionary was caused to the immediate receiving waters in Floodwater Drain, although there is no evidence of harm being caused to aquatic life either in the drain or in the waters of Botany Bay into which the Drain ultimately discharged; and (iv.) the Defendant was responsible for the physical installations even though its lessee was actually operating the plant when the pollution incident was caused and to the extent that the agreed facts indicate that the pollution incident was caused by a failure in the physical integrity of the installation, the Defendant was relevantly "in control".

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 paid the Prosecutor's reasonable legal costs in the sum of $5,500.

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

1. The Defendant is convicted of the offence charged.
2. A penalty of $25,000 is imposed in respect of that conviction.
3. The Defendant shall pay the Prosecutor's reasonable legal costs in the sum of $5,500 (noting that such payment has already been made).
4. Exhibits to remain on the Court file.

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