Environment Protection Authority v Nulon Products Australia Pty Ltd

Environment Protection Authority v Nulon Products Australia Pty Ltd - [2015] NSWLEC 153 - NSWLEC 2015 case summary — Zoe

[5]

Nulon Products Australia Pty Ltd

Nulon is a manufacturing enterprise located at 17 Yulong Close, Moorebank ("the premises"). The company has operated since the 1970s, adopting its present name in 1981. It currently employs 70 people.
The company manufactures a range of blended lubricants, coolants and motor engine additives at the premises. The premises are a 4,500m² facility designed for the sole purpose of creating and blending those products. The plant operates one shift, with overtime in line with sales demand. As a consequence, on the night of the incident, there were no employees present at the premises.
Nulon is the holder of Environmental Protection Licence 20107. The Environmental Protection Licence authorises the carrying out of scheduled activities of chemical storage, petroleum and fuel production at the premises.
Nulon has a number of blending tanks on the premises which are used to create oil products. The blending tanks are located in the production area, which is separated from the offices (located upstairs), the warehouse, and the on-site lab. At the time of the incident, the blending tanks had heating coils within them and agitators, which were operated separately, to stir the blend. The blending tanks have vents at the top. Smoke detectors are automatically linked to Fire & Rescue NSW so that there was automatic notification of the fire alarm sounding on the date of the incident discussed below.
Nulon's premises are mechanically ventilated by air vents located in the roof. When switched on, motorised propellers draw hot air from the factory out and into the atmosphere outside. During extremely hot weather, the roof vents were manually left open overnight (only comprising a very small percentage of the year) to ensure that the premises would cool down. This no longer occurs following the incident.
There are a number of references in this judgment to Nulon's SCADA system. To provide the appropriate contextual understanding, it is to be noted that SCADA is an automatic control system that houses blend formulas. Nulon uses SCADA to ensure the consistency of all blends that it produces. Formulations are ordinarily pre-stored in the SCADA system, with the operator identifying the recipe required and the tank in which it is to be blended. The SCADA system opens valves, turns on pumps and adds bulk liquids in the correct sequence and controls heating and agitation of any relevant blend. The SCADA system will prompt the blender to make small additions of additives when necessary and advise of the quantity to be added.

[6]

The incident in the early hours of 5 february 2014

At around 2.00 am on 5 February 2014, Ms Gabriella Gutierrez, Nulon's Human Resources and Systems Manager, received a phone call from the company monitoring the alarm installed at the Nulon factory. The monitors advised Ms Gutierrez that sensors detected vapours from the production area. Ms Gutierrez instructed the alarm company to call the fire brigade and decided to attend the factory in person.
At 2.27 am, Fire & Rescue NSW officers from Busby Fire Station responded and arrived at the premises. When Ms Gutierrez arrived, Fire & Rescue NSW officers were inside the premises, having obtained a key from Fire & Rescue NSW officers from Liverpool Station. No significant odours were noticed by Fire & Rescue NSW officers.
On arrival, Ms Gutierrez could not see any smoke or smell anything unusual. When she and the Fire & Rescue NSW officers entered the production area, they heard a noise which indicated one of the tanks may have still been on. Ms Gutierrez phoned Ms Carolynn Wade, Production Manager. Ms Wade instructed the Fire & Rescue NSW officers to tap the computer screen to wake up the system, and this confirmed that the light for the heater was green, indicating it was on. She instructed them on the phone to switch it off.
Ms Wade arrived at Nulon's premises sometime before 3.00 am (she would otherwise typically have arrived at the premises at 4.30 am). No smoke was observed by Ms Wade.
The odour in the production area was described by Ms Wade as strong but not overbearing, "pungent … like sulphur", "kind of like when you do tarring on the road". Ms Gutierrez described the smell as "like burnt oil", and "it was smelly but it wasn't anything that you couldn't handle". Both stated that the odour had no effect on them.
Fire & Rescue NSW officers directed Ms Wade to blending Tank 206 and showed her the reading on their temperature gun showing the tank's temperature to be 160°C-170°C. However, SCADA was showing the temperature of blending Tank 206 to be 20°C.
Ms Wade then flicked the agitator on and off, to determine whether blending Tank 206 was the overheating tank and to establish its correct temperature. This resulted in what Ms Wade described as opaque steam and/or smoke and the gear oil product coming out of the breather valve at the top of the tank.
The factory was ventilated by Fire & Rescue NSW officers opening the roller door and other doors when they first arrived at the premises. Fire & Rescue NSW officers stayed until 3.38 am, having ascertained, using an Orion Gas Detector, that there were no dangerous gases.
All members of Nulon's staff were advised at approximately 5.00 am on 5 February 2014 not to attend work that day to allow the odour, which may have affected staff, to dissipate from the plant.
The substance in the tank which overheated was manual gearbox and transaxle oil, classified as a non-hazardous and non-dangerous good under the Work Health and Safety Regulation 2011 and the Australian Dangerous Goods Code.
The total weight of the lost substance was approximately 37 kilograms, based on the difference of weight at the time of blending and following the incident. There is no formal record at the time of the incident of how much of the product evaporated into the atmosphere and how much was caught in the bund area at the premises after coming out of the breather valve at the top of the tank. Up to approximately 17-20 kilograms of the blend may have evaporated into the atmosphere based on visual observations of the amount of product that came out of the breather valve at the top of the tank, but the exact amount is unknown.
The oil was allowed to cool and, the following day, was decanted and disposed of by a contractor under instruction from Nulon employees.
Nulon self-reported the incident to the Environment Protection Authority ("the EPA") and to the WorkCover Authority on 5 February 2014.

[8]

Prosecution of Nulon

The EPA has prosecuted Nulon for a breach of s 64(1) of the POEO Act. This provision is in the following terms: 64 Failure to comply with condition (1) Offence If any condition of a licence is contravened by any person, each holder of the licence is guilty of an offence.
The primary orders sought in the summons (including the supporting particulars for the first order sought) are in the following terms: (1) An order that the Defendant, Nulon Products Australia Pty Ltd (ACN 000 057 036), having its Registered Office at 17 Yulong Close Moorebank in the State of New South Wales, appear before a Judge of the Court to answer the charge that, from about 4 February 2014 to 5 February 2014, at 17 Yulong Close Moorebank in the said State (the Premises), it committed an offence against section 64(1) of the Protection of the Environment Operations Act 1997 (POEO Act) in that it was the holder of a licence, a condition of which was contravened by a person. Particulars: (a) Licence Environment Protection Licence 20107 (the Licence) (b) Licence condition O2.1 All plant and equipment installed at the premises or used in connection with the licensed activity: a) …; and b) must be operated in a proper and efficient manner. (c) Manner of breach The Defendant failed to operate plant and equipment installed at the Premises in a proper and efficient manner, as follows: (i) the computer system controlling Tank 206 was switched to manual mode, bypassing temperature controls, and was left unattended; (ii) the heating element in the tank remained on and no checks were made at the end of the shift as to whether the heating element was switched off in accordance with normal end-of-shift procedures; (iii) the product in Tank 206 was heated past 121oC, being the temperature at which the least thermally stable additive in the product began to break down, and being greater than the maximum temperature for heating specified on the additive's Material Safety Data Sheet; (iv) the air vents were left open, delaying the detection of the overheating product; (v) the Defendant's employee agitated the stirrers on Tank 206 when the temperature on the tank read 160-170 degrees Celsius, leading to smoke billowing from the tank; (vi) without having conducted a hazard operability study or similar systematic analysis to identify hazards associated with the heating process and the plant design; and (vii) without adequate work procedures including that there were no formal sign-off sheets or a policy regarding ventilation. As a result of the Defendant's failures to operate plant and equipment in a proper and efficient manner, Smooth Shift Manual Gearbox and Transaxle Oil overheated and caused the emission of air impurities at the Premises on or about 4 to 5 February 2014. (d) Date on which evidence of the alleged offence first came to the attention of an authorised officer: Evidence of the offence first came to the attention of authorised officer Rodney Fox on 5 February 2014. (2) That the Defendant be dealt with according to law for the commission of the above offence.

[13]

An additional publication order under s 250(1)(b) of the POEO Act

In addition to the option of requiring publication of a general statement as set out above, s 250(1)(b) of the POEO Act permits the Court to require a convicted offender to make notification to specified persons. The provision is in the following terms: (b) order the offender to take specified action to notify specified persons or classes of persons of the offence (including the circumstances of the offence) and its environmental and other consequences and of any orders made against the person (including, for example, the publication in an annual report or any other notice to shareholders of a company or the notification of persons aggrieved or affected by the offender's conduct),
In these proceedings, there is a readily identified group of persons who have been adversely affected by the discharge from Nulon's premises. Those are the employees of Sphere Healthcare who needed to go home (as discussed in more detail later) as a consequence of the impact of the odours.
During the course of the proceedings, I raised, with the representatives of the parties, my view that it would be appropriate to require, in addition to the general publication order that had been agreed to by Nulon, a requirement that Nulon's CEO write to each of the adversely impacted employees of Sphere Healthcare to inform those employees of the outcome of the proceedings and to apologise for the impact that the odour escape had had on them. Ms Shahnawaz, solicitor employed by the Prosecutor, indicated that there was no objection to this course of events being followed but that she was unaware of any such order having been made in the past.
Mr Nash, counsel for Nulon, was instructed that Nulon raised no objection to such a course of events. As a consequence, I directed the parties to confer about the terms of an appropriate letter for this purpose. I was subsequently advised that the terms of such a letter had been settled - with it to read as follows: Dear [INSERT] On [INSERT DATE] Nulon Products Australia Pty Limited was convicted in the Land and Environment Court under Section 64 of the Protection of the Environment Operations Act 1997 for breaching a condition of its Environment Protection Licence. Nulon Products Australia Pty Limited, located in Moorebank, engages in oil and lubricant production. On 4-5 February 2014, you may recall that an environmental incident occurred at our factory in Moorebank. A heater inside a blending tank was left switched on and the gear oil in the tank overheated. Nulon Products Australia Pty Limited unreservedly apologises to you for this incident. We have now put in place numerous controls to ensure that this incident does not happen again. Again, please accept our sincere apologies. Yours faithfully Greg Simons CEO, Nulon Products Australia Pty Limited.
As a consequence of the agreement of the parties to my suggestion, the orders will require that such a letter be sent by Nulon's CEO to each of the persons identified on the list provided by Sphere Healthcare's CEO (at Exhibit A tab F folio 74A). The terms of the letter are also reproduced as Annexure A to this judgment.

[14]

The hearing

In effect, the sole matter that was in dispute between the parties is how the incident giving rise to the offence should be characterised. The Prosecutor characterises the incident as giving rise to an offence of moderate seriousness, whilst the position advanced on behalf of Nulon is that it should be regarded as being of low seriousness.
How the offence should be characterised forms the essential preliminary element for the commencement of the sentencing process discussed later. Other than this aspect of characterisation (and the determination of monetary penalty that flows from it), the Prosecutor and Nulon have reached agreement (as set out in the sections above) concerning all other outcomes to follow from this prosecution.
An agreed folder of documents was tendered (Exhibit A) containing: 1. A copy of the Consolidated Statement of Agreed Facts and the following referenced documents; 2. A copy of the "Environment Protection Licence" issued to Nulon by the Office of Environment & Heritage - this licence sets out the administrative conditions, limit conditions, operating conditions, monitoring and recording conditions, reporting conditions, and general conditions; 3. A copy of the "Record of Interview" between Robert Evans, Office of Environment & Heritage, and Gabriella Gutierrez; 4. A copy of the "Record of Interview" between Robert Evans and Carolyn (sic) Wade; 5. A copy of Nulon Products' "Safety Data Sheet" according to WHS and ADG requirements; 6. A copy of the EPA's "Incident Detail Report" - setting out an incident description, prioritisation, involvement, outcomes, time and costs, and a consolidated log; 7. Copies of email communication between Nulon and Sphere Healthcare in regards to Sphere Healthcare's "Claim Following Incident On Wednesday 5th February 2014" - the claim sets out those employees of Sphere Healthcare affected as well as the requested compensation sought from Nulon; 8. A copy of the "Summary of Emergency calls and incidents in relation to the Nulon Products Alarm"; 9. A copy of the "Summary of calls made to F&RNSW" - the map displays the position of Nulon, Sphere Healthcare, and the locations from which the calls to Fire & Rescue NSW were made; 10. A copy of Nulon's Incident Report "The Emission of Odour Smoke from Nulon Products Australia Pty Ltd Report 4th-5th February 2014" - this report pertains to the schedule of events, findings and action proposed/taken, product and pollutant details, and complaints received; 11. A copy of the Expert Report prepared by Dr Richard Michell for the Office of Environment & Heritage titled "Incident at Nulon Products Australia Pty Ltd on 4-5 February 2014"; 12. A copy of the Supplementary Report prepared by Dr Richard Michell - this Supplementary Report provides requested further expert opinion; 13. A copy of a document displaying ME Engineering's website - this website displays the project work of Nulon's Oil Lubricants Plant as completed by ME Engineering; 14. A copy of each of the Nulon Blending Procedure Competency Assessment Forms of Manual Mascarenhas and Roland Aggio, as completed by Carolynn Wade; 15. A copy of the Expert Report prepared by Dr Michael Robertson for the Office of Environment & Heritage - this report is in relation to forensic toxicology; 16. A copy of the Expert Report prepared by Dr Ian Spence for CBP Lawyers, solicitors for Nulon - this report offers responses to the conclusions in the expert report by Dr Michael Robertson in relation to the harm and potential harm caused by the incident at Nulon.
Mr Nash also read the affidavit of Mr Simons, Nulon's CEO and a director of Nulon.
No oral evidence needed to be adduced at the hearing. As a consequence, the hearing was conducted efficiently and concluded in a little over half a day (in lieu of the two full days for which it had originally been listed).

[18]

Crimes (Sentencing Procedure) Act 1999

The Crimes (Sentencing Procedure) Act 1999 ("the Sentencing Procedure Act") sets out, in s 3A, the purposes for which a sentence may be imposed. The provision is in the following terms: 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.
The Sentencing Procedure Act also sets out, in s 21A, various aggravating, mitigating and other factors potentially required to be taken into account in a sentencing process. To the extent that the matters set out in these two provisions are relevant to these proceedings, I have had regard to them in the following discussion.
It is clear that the relevant factors that are called upon for consideration by the POEO Act also, effectively, coincide with elements requiring to be considered arising out of the provisions of s 21A of the Sentencing Procedure Act. In my subsequent analysis of Nulon's objective and subjective factors, these provisions are drawn together as appropriate, as is noted in each instance.
In Plath v Rawson [2009] NSWLEC 178; 170 LGERA 253, Preston CJ set out at [48] a list of matters potentially to be taken into account when assessing the objective gravity of an environmental offence. This list was not expressed as exhaustive. The matters listed by his Honour were:

the nature of the offence;
the maximum penalties for the offence;
the harm caused to the environment by commission of the offence;
the state of mind of the offender in committing the offence;
the offender's reasons for committing the offence;
the foreseeable risk of harm to the environment by commission of the offence;
the practical measures to avoid harm to the environment; and
the offender's control over the causes of harm to the environment.

In Plath v Rawson, Preston CJ also set out (at [140]) the favourable factors personal to the offender able to be taken into account within the limits set by reference to the objective gravity of the offence. This list is also not to be seen as exhaustive. The matters of this nature listed by his Honour were:

lack of prior criminality;
prior good character;
plea of guilty to the offences;
contrition and remorse; and
assistance to authorities.

Those matters relevant to these proceedings from each of the above lists, together with any other relevant matters, are discussed below. I now turn to address the relevant factors concerning Nulon.

[24]

Sphere Healthcare

Sphere Healthcare is located approximately 400m north of Nulon Products, on the northern side of the M5 South Western Motorway to Nulon. Records from the Bureau of Meteorology indicate that wind was travelling from the south at 3.00 pm on 4 February 2014, at 9.00 am and 3.00 pm on 5 February 2014.
On the morning of 5 February 2014, 15 employees of Sphere Healthcare went home sick. Five of the 15 employees were interviewed and stated: "I wound my window of my car down to swipe my card and immediately I smelt a gas smell and thought my car was burning. The smell was very unpleasant"; "As we drove towards work I began to notice a strong smell which I would describe as a burning oil smell. I thought there was something wrong with Erin's car and we had a conversation in regards to that." "I assumed it was a gas type smell, maybe a gas leak." "When I opened the door of my car I immediately smelt an odour that reminded me of the smell of roadwork or tar being laid and a burning oil type of smell. The smell was so intense I thought it might have had something to do with the oil in my car burning." The smell was "overwhelming"; "On the way to work I was travelling on the M5. I pulled over and stopped the car as I could smell an odour and thought there was a problem with the car. The inside of the car and the outside of the car smelt the same. The odour smelled like burned oil or burned tar, like during road construction. A similar smell is like a service station workshop."
The employees described the following: 1. Starting to cough and being unable to stop, followed by a headache; 2. Feeling pressure behind the eyes, tasting the odour, feeling lightheaded, having affected speech, and feeling like she would vomit if she did not get away from the odour; 3. Feeling clammy, coughing and having a headache. Tried to get a doctor's appointment but unable to obtain one; 4. Feeling lightheaded, dizzy, nauseous, experiencing an unpleasant taste in the mouth and lump in throat; and 5. Slight headache/headache.

[25]

The furthest locations

It is also appropriate to reproduce the relevant extracts from the table of analysis of complaints made to Fire & Rescue NSW for the four most remote complaint locations. The extracted portions of the complaint analysis for these locations are reproduced but I have also added in the table below a column showing the distance and direction from Nulon's premises as measured by me from this map on its original, tendered at A3 size using the 1:550 scale shown on it. The extract of these four complaint locations and the distances from the source of the odour are: Distance and direction Time Fire & Rescue appliances Called to Comments 5.9 km 07.47 am Canley Vale Road Fairfield Call of gas leak. No response, units already on site. North 5.1 km RP101 (Bonnyrigg Heights) West-norwest 10.26 am P41 (Smithfield) Cartwright Avenue Liverpool 10.51 am Bonnyrigg Heights rescue Pump & Smith field pumper responded to smell of burning at St Therese Primary School; 10.57 am Horningsea Park responded. Gas began to dissipate. Units left site 11.12 am. AP7 (Horningsea Park) 6.1 km 10.35 am P49 (Cabramatta) South Liverpool/Busby Road Liverpool 10.35 am Cabramatta pumper responded to Busby Public School to smell of gas. Children being kept inside during recess. Nothing found. Same smell as before. Returned to station 11.08 am. West-norwest 5.4 km 11.22 am HP85 and H85 (Chester Hill hazmat units) Newbridge Road and Henry Lawson Drive Bankstown 11.22 am Chester Hill hazmat units responded to gas leak. Dredging taking place in the area that may be source of the smell. No current dredging operations found. No smell present on arrival. EPA notified. Returned to station 11.46 am. East

[27]

Toxicological evidence

Dr Michell, lubricant consultant for the Prosecutor, set out, at some length, a technical analysis of the nature of the emissions and the thermal and other processes causing them to be generated. This information was available to both Dr Robertson, forensic toxicologist for the Prosecutor, and Dr Spence, pharmacology and toxicology expert for Nulon, (Dr Michell's Report and Supplementary Report were part of the documentation provided for their consideration). It is not necessary for me to set out, in detail, technical evidence of Dr Michell to understand the evidence of Dr Robertson and Dr Spence. To the extent that Dr Mitchell's material is engaged in their evidence, that will emerge from my consideration of their reports.
Dr Robertson considered the question of harm to the employees of Sphere Healthcare. His report set out his conclusions in the following terms: 24 The symptoms described by the employees following the inhalation exposure to the vapours include: throat and chest irritation; cough; headache; nausea; lightheaded; dizziness and taste. These described symptoms are all consistent with the symptoms described in studies following the exposure to sufficient amounts of one or more of hydrogen sulphide; sulphur oxides and alkyl mercaptans. 25 It is therefore my opinion that there was actual harm to the environment (including to human health and amenity) caused by the incident for the following reasons: a) A number of employees experienced symptoms consistent with the inhalation or exposure to vapours of unknown identity but likely included hydrogen sulphide, sulphur oxides and alkyl mercaptans; b) The described symptoms were generally consistent amongst those employees who described symptoms; c) While medical assessments were not performed or reported on the employees, the describe symptoms became apparent at or about the time of the exposure and resolved when removed from the exposure; d) The absence of an alternative cause for the described odours and subsequent symptoms. 26 The actual harm caused relates to both the contamination of the environment and human injury. The harm to the environment relates to the odour that was caused by the overheating of the tanks. This odour was detected by both employees and the general public with no other more likely cause for the odour. The harm to the employees relates to the transient illnesses caused following the inhalation of the odour. These include both direct illnesses (e.g. throat and chest irritation; cough; taste) and symptoms that may either be direct i.e. a response to the inhaled toxin, or due to an indirect response i.e. an emotional or psychological response e.g. headache, dizziness and nausea. 27 The extent of the actual harm on the employees difficult to assess in the absence of any medical assessments including the presence or absence of pre-existing or co-existing medical conditions; verification of throat and chest irritation; presence of cough or difficulty in breathing; liver and lung function etc. That said, the exposure of many of the employees to the gases was acute (a number of hours) and would be unlikely to have caused any significant illness beyond that described above by the employees. Given the described symptoms would be regarded as mild and did not involve symptoms such as slurred speech and loss of consciousness etc, I would expect that symptoms associated with this short-term exposure would not be long-lasting and would most likely resolve after being removed from the environment and following the elimination of the inhaled compound and any metabolites. This appears consistent with reports of employees who state that in the hours (and in some cases days) after being removed from the source of the exposure the condition improved. It is however possible the longer-term sensitivity to fumes and gases may occur in some employees such that similar symptoms may occur following subsequent exposure to lower levels of gases.
Dr Spence commented on these aspects of Dr Robertson's report. He did so in the following terms: 4 The inference that the symptoms experienced by employees at Sphere were the result of the leak from Nulon is reasonable as there is no evidence of any other source of the odours. Dr Robertson's comments (paragraph 24) on the relation between the symptoms described by the employees in Sphere (unpleasant taste, headache, nausea, light-headedness/dizziness) and the agents to which the employees may have been exposed (hydrogen sulphide, alkyl mercaptans and alkyl sulphides) are reasonable. All the symptoms are, however, non-specific and cannot be attributed with certainty to any of the agents believed to have been released in the incident. 5 The statement "the extent of the actual harm on the employees is difficult to assess in the absence of any medical assessments …" (paragraph 27) is not accurate. The actual harm is quite easy to assess. The key information is that no one received medical assistance at the time, or subsequently, indicating that no severe or persistent symptoms occurred as a result of this incident. This indicates that the episode may have been unpleasant and inconvenient to individuals but beyond this there is no evidence of harm.
Considering these two reports together, it is clear that both experts accept that there has been actual harm. Both experts agree, by implication, that removal from exposure to the odour caused the actual harm to the employees of Sphere Healthcare to be of comparatively short duration. Although Dr Robertson describes in [27] of his report the reasons for absence of any information indicating any long-term impact, Dr Spence's observation that, again by inference, such information is not available because the response to the exposure by Sphere Healthcare employees did not require medical attendances that would have caused such material to become available is correct. As Dr Spence puts it, as earlier quoted, this indicates that "the episode may have been unpleasant and inconvenient to individuals but beyond this there is no evidence of harm". In this context, it is clear that this use of the word "harm" means harm of an ongoing nature. It does not deny the fact that the immediate impact on the employees of Sphere Healthcare constituted harm.

[30]

Potential harm to the environment

Preston CJ set out, under the heading "Objective harmfulness of offence", in Environment Protection Authority v Waste Recycling and Processing Corporation [2006] NSWLEC 419; 148 LGERA 299 (at [145]), a number of principles. The first of them, relevant in these proceedings, is that: Harmfulness needs to not only be considered in terms of actual harm, the potential or risk of harm should also be taken into account.
There are a number of matters requiring consideration to assess what might have been the potentiality for harm to the environment when compared to the actual results of the incident.
Dr Michell considered Nulon's plant and operations in his report. The relevant elements are reproduced below: 7 By the standards of the industry, Nulon has invested in quite sophisticated plant to blend its products. Based on my meeting with them, their operations, technical and managerial staff appear to be competent. However, based on the transcript provided, Nulon has not conducted a Hazard and Operability study (HAZOP) or made any similar, systematic analysis to identify the potential hazards associated with its blending operations. 8 The blending of lubricating oils and similar products is a relatively simple, physical mixing operation. The main environmental risks are associated with containment. However, in Tank 206, this mixing operation can be facilitated by using an in-tank electric heater element. The availability of this heater adds a significant further risk. This risk was not adequately recognised and hence not managed appropriately.
After identifying SCADA and some of its operational attributes, he continued: 12 However, these process controls should not be confused with controls for ultimate safety. They play a major safety role but such control systems can fail, human errors can be made (a wrong temperature programmed), relays to turn items off can fail, etc. For critical safety items there should be independent controls and alarms which are not dependent on computer logic or process control systems being in operation. Over-temperature is one such critical item in this blending operation. The level of the contents of the tank with respect to the heater and the forced movement of the contents via the stirrer are lesser but still important safety items when the heater is on. 13 Preferably, these shortcomings of the plant should be overcome or minimised by its design. However, at the 4-5 February 2014 they existed and so the proper operation of the plant needed to take them into account. In my opinion this was not done adequately. There was no systematic procedure to ensure that the main environmental risk, leaving the heater on, was managed. Also, the inadequacy was compounded by the general practice of the Blender not logging off from the SCADA when he left for the day. This meant that, potentially, anyone could subsequently turn the heater on quite easily, with no authorisation to do so.
Dr Michell then proceeded to draw a conclusion, at [14] (Exhibit A tab J folio 90), concerning the absence of such a failsafe design at the Nulon plant when the incident occurred. He said that: 14 I conclude that Nulon failed to operate the plant installed on the premises (in relation to Blending Tank 206) in a proper and efficient manner on 4-5 February 2014, with respect to its environmental performance.
With respect to this opinion, he was requested, for the purposes of drafting his Supplementary Report (Exhibit A tab K), to comment further on this: 2a. Please confirm whether it is your understanding that Nulon did not have in place independent controls and alarms not dependent on computer logic or process control systems at the time of the incident, and if so, the basis of your understanding.
In response, Dr Michell said (Exhibit A tab K folio 119) the following: 6 The matters which I was asked to provide an opinion on with respect to the Nulon operation were limited to just a single mixing tank (Tank 206) and a single safety incident (overheating of the contents of Tank 206 on 4-5 February 2014). Hence, while the question has a wider scope, my answer is limited to the matters which I investigated. 7 With respect to overheating of Tank 206, Nulon did not have in place, at the time of the incident, any system to detect or respond to the excessive temperature of the tank contents, outside of the control logic in the SCADA system. If the SCADA was not on, but the heater was, there was no control limit to temperature rise. 8 Also, the primary purpose of the SCADA system was process control - the blending of a batch. It was not operational safety. As an example, if an error were made in entering a batch target temperature into the SCADA, the control system would attempt to take the tank contents up to that erroneous temperature.
This evidence is uncontradicted. It therefore follows, I am satisfied, that these design deficiencies meant that there was always the inherent potential for an incident such as that which occurred if there were to be human operator error. It is clear that, although the plant as installed had received recognition for its design (material in Exhibit A tab L), there was the inherent weakness of vulnerability to human error such as that giving rise to this incident (where design changes could have eliminated this - as I accept is now the case following the ameliorative measures undertaken by Nulon after the incident).

[31]

Foreseeability of risk of harm to the environment

The POEO Act requires my consideration of "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" (s 241)(1)(c)) in the circumstances of this incident.
In his Primary Report, Dr Michell was asked to comment on the environmental risks arising from the deficiencies he had identified in Nulon's processes and controls in the context of the incident that had occurred. He identified (at [18]) two main environmental risks so arising in the following terms: i. emission of vapours and gases from overheating of the components of the product in Tank 206 ii. the potential for a fire or explosion in and around Tank 206
He observed that what had actually happened was: 19 The incident reached the point where i) occurred. The vapours from i) were detected by the smoke detection system sufficiently early to allow a response which avoided potential progression to ii).
With respect to the second of the identified risks, that of fire, Dr Michell said the following (Exhibit A tab J folios 95 and 96): 35 In my opinion, the risk of a fire was a real and not remote risk. Fire could potentially have occurred by two routes - continued rise in temperature of the vessel contents until their autoignition temperature was reached or ignition, by a spark or similar mechanism, of flammable gaseous compounds given off at elevated temperature. 36 With respect to the first route, although, by the time the tank contents reached 180°C, the fumes had increased to a level sufficient to trigger the smoke detector, this temperature was still, in my estimate, at least 50°C below the autoignition temperature of the blend (estimated from the components of the blend - the MSDS for the SS75W/90 does not give a value for its autoignition temperature). The smoke detector alarm and the response to it were timely. Further unabated heating would have resulted in auto or self-piloted ignition within a few hours. 37 With respect to the second route, as explained in i) above, the gaseous emissions would have contained hydrogen sulphide. This is highly flammable and potentially explosive. 38 The lower flammability limit of hydrogen sulphide is 4%volume in air (Ref. 21). This concentration is about 400 times greater than the level that gives a health risk (Ref. 21). It would require about 16 litres of hydrogen sulphide to be present in the 400 litre headspace to render its contents flammable. On the information I have available, I cannot estimate whether this concentration would have been reached at any time during the event that there was sufficient Anglamol 6085U in the blend to make it possible. 39 Even if a flammable mixture were present, it still requires a source of ignition for a fire/explosion to result. The stirrer motor is positioned immediately above the tank and the stirrer shaft passes through an unsealed hole in the centre of the tank roof. If it had been in operation, a spark from the stirrer motor could have been an ignition source. 40 Although I believe there was a real and not remote risk of fire or explosion via the second route, I cannot quantify it. However, irrespective of its quantitative level, the presence of a comprehensive smoke detection system, and the fact that the stirrer was not operating, meant that the risk did not materialise.
At this point, I should observe that Dr Michell's Primary Report was not without positive comment for Nulon. He had earlier said (Exhibit A tab J folio 90): 17 On the positive side of the ledger, the smoke detection system installed was comprehensive and sophisticated. It did the job for which it was designed. The notification to security and emergency services also worked well and efficiently. Overall, the systems in place to respond to such an incident were adequate and minimised its consequences.
With respect to this avoidance of the progression to a fire or explosion in and around Tank 206, it is appropriate to note, as set out above from Dr Michell's Primary Report, that the comprehensive and sophisticated smoke detection system had functioned for the purpose for which it had been installed and, therefore, had acted to prevent realisation of any outcome from the second of the risks identified by Dr Michell.
I am satisfied that it is appropriate to conclude, despite Dr Michell's mildly apocalyptic tone concerning these risks he has identified, that the "comprehensive and sophisticated" and fully operative smoke detection system means that the only foreseeable risk likely to be occasioned in circumstances such as those that gave rise to this incident were those that, in fact, were caused by the incident.
It follows, therefore, that the risk was, in fact reasonably foreseeable but the foreseeable risk was limited in the confined fashion set out rather than in the more extensive fashion canvassed by Dr Michell.
If I am incorrect in so concluding as a consequence of consideration of Dr Michell's reports, I also consider that the same conclusion follows from the toxicological evidence. I have reached that conclusion based on the following analysis of that evidence.
Dr Robertson was asked to respond to the following question: Was there any potential harm to the environment (including to human health and amenity) caused as a result of the incident? If so, what was the extent of the potential harm?
Dr Robertson's response to this question was in the following terms: 32 Whilst the actual harm is outlined above, further potential harm may have arisen and been more significant had exposure to either a greater concentration of vapours or to the vapours for a longer period of time that occurred, particularly if heating and vapour emissions had continued and/or ventilation been inadequate. This may have subsequently led to greater toxicity including but not limited to: loss of consciousness and death. 33 In addition, there existed the potential harm of exposure to the product that may have occurred due to fire or explosive combustion. It is noted that the flashpoint of the heated product was 190°C and it appears that the heat of the mixture was in the range of approximately 160°C to 180°C, close to this flashpoint. As such with ongoing heating and an ignition source, ignition of the highly flammable gases may have led to fire or explosion and subsequent exposure via additional inhalation of toxic fumes; gases and direct contact of the product i.e. eyes, skin etc. It is unknown what the autoignition temperature is for the product.
Relevant to this point (and discussed by Dr Spence as considered below), it should be repeated from the earlier extract from Dr Robertson's report that he had observed: It is however possible that longer term sensitivity to fumes and gases may occur in some employees such that similar symptoms may occur following subsequent exposure to lower levels of gases.
Dr Spence dealt with the views of Drs Robertson and Michell relevant to this point in the following terms: 6 Dr Robertson's answer in relation to 'potential harm' should also be clarified. Paragraph 32 states "further potential harm may have arisen and been more significant had exposure to either a greater concentration of vapours or to the vapours for a longer period of time than occurred, particularly if heating and vapour emissions had continued and/or ventilation been inadequate." While this statement would be true if the hypothetical conditions were met the simple facts are that none of these conditions arose as a result of the Incident on 4-5 February and speculation about what might have occurred if circumstances had been completely different is not helpful. 7 In relation to this speculation I would note that loss of consciousness as a result of exposure to hydrogen sulphide only occurs at concentrations in the range 500-1000 ppm and death has only been reported following inhalation of quantities in excess of 2000 ppm2. The estimates of the concentrations occurring in this incident are less than 1 ppm and could have been considerably lower than this as the odour is detectable at concentrations in the range of 1 ppb2. No one would have lost consciousness or died at the estimated concentrations, no matter how long the exposures had been. Dr Michell suggests that a concentration of 100 ppm may have been reached inside the headspace of the tank. Acute exposure to 100 ppm is still below the threshold for serious adverse effects and as far as I can understand the tank headspace is not in a place where human exposure can occur. 8 There is very little quantitative information on the link between exposure level and serious adverse effects and level of exposure to alkyl sulphides or alkyl mercaptans in humans. What information is available suggests a similar profile for alkyl mercaptans to that of hydrogen sulphide: irritation/mild symptoms at ~1 ppm with the possibility of more serious effects at exposures greater than 500 ppm for significant periods of time. There is less information concerning the toxicity of alkyl sulphides but the limited data available suggests only moderate toxicity. 9 Dr Michell's report also includes the statement "It is however possible that sensitivity to fumes and gases may occur in some employees such that similar symptoms may occur follow (sic) subsequent exposure to lower levels of gases." Sensitization to chemicals following exposure has been reported for many different agents. Chemical sensitization appears to be idiosyncratic and related to different behaviour of the immune system in different individuals. The effect is more often seen in skin than in the respiratory system although it does occur there. I could find no reports of this phenomenon with hydrogen sulphide or the other agents which may have been released. There is some indirect evidence that this phenomenon does not occur with hydrogen sulphide: the EPA estimate of the Rfc (estimate of a daily exposure that is likely to be without an appreciable risk of deleterious effects during a lifetime) for hydrogen sulphide is 1.4 ppm. This suggests that exposure to hydrogen sulphide in this incident is unlikely to have any long-term effects.
As with the risk of harm from the specific incident, I am satisfied that, for the reasons set out by Dr Spence, the existence of the alarm system earlier discussed meant that there was no realistic probability that, in the hypothetical possibility of such an event recurring, there was any potential for harm to the environment of greater seriousness of impact than that which had actually occurred.
It might well be that, if there were to have been some differing wind pattern, there might have been some greater occurrence of impact (only mentioned for the purposes of this consideration and not otherwise taken into account) but there is no possibility, I accept from Dr Spencer's evidence, that there would be any greater potential for a more serious impact, merely that it might have been more widespread. As a consequence, I draw no adverse conclusion against Nulon on the basis of potentiality for harm.

[32]

Control over the causes of the harm

The POEO Act also requires my consideration of "the extent to which the person who committed the offence had control over the causes that gave rise to the offence" (s 241)(1)(d)) in the circumstances of this incident.
It is clear that the initial failure to ensure that the heating element in Tank 206 was turned off at the end of the shift on 4 February was the underlying cause of the incident and that ensuring that this did not occur was entirely within the control of Nulon.
However, I should note that I am satisfied that the prompt response by Ms Guiterrez and Ms Wade after being notified of the incident contributed to minimisation of the consequences of the earlier failure to turn off the heating element.
Although the flicking of the agitator switch for Tank 206 by Ms Wade had the effect of mobilising the heated liquid and thus, apparently, exacerbating the extent of the discharge, I am satisfied that this was, under the circumstances, an understandable (and, perhaps, even necessary) action given the then limitations in SCADA as to the information available when the equipment was being heated but was in a passive state. As I understand the evidence, this information deficiency has now been rectified as part of the measures taken by Nulon as a consequence of the incident. I do not consider that this action by Ms Wade, although contributing to the scope of the incident, could in any way be regarded as a factor of aggravation.
Once the incident had been triggered, however, there was little else that could be done by Nulon, of a practical nature, to ameliorate the impact of the wind-carried odour. Although Nulon took the step of advising its own employees not to attend the premises on the day of the incident, it did not take steps to canvass in the neighbourhood.
Although the only way of viewing this is through the lens of hindsight, I am satisfied that this reaction was not unreasonable and that, given the nature of the odour and that it was generally merely found to be unpleasant by those experiencing it, this response was reasonable. There is certainly, I consider, no way that it was possible for Nulon's management staff to predict with any specificity the directions in which any odour plume might travel or where it might ground. To this extent, I am satisfied that there was no reasonable measure available to mitigate the impact and certainly no basis whatsoever upon which Sphere Healthcare could have been identified as a specific location likely to be subject to any intensity of the odour.
Further, to the extent that Nulon is vicariously liable for Ms Wade's actions, I do not consider that they warrant any specific adverse finding concerning Nulon by the engagement of the provisions of s 241(1)(c) and (d) of the POEO Act.
Whilst Nulon's conduct is to be taken into account in determining the position of the incident within the descriptive range of seriousness (as discussed later), the Prosecutor has not proved beyond reasonable doubt that the conduct of Nulon or of any of its employees was reckless or careless or negligent so as to be an aggravating factor (R v Olbrich [1999] HCA 54; 199 CLR 270 at [27]).
I am also satisfied that it is appropriate to conclude, as a consequence of the range of additional measures introduced by Nulon in response to the incident (as discussed later under the heading "Likelihood of reoffending"), that the first of the risks identified by Dr Michell has had the likelihood of any further occurrence significantly ameliorated (if not eliminated entirely). However, this current position does not eliminate the necessity to have regard to the foreseeability of the risk and the control that Nulon had, at the time of the occurrence of the incident, over the practical measures that, had they been taken, would have prevented the incident.

[37]

Nulon is a good corporate citizen

The second relevant factor is that in s 21A(3)(f) of the Sentencing Procedure Act as to whether the company is "of good character".
I am satisfied that I should regard Nulon as being a good corporate citizen and to take that fact into account in the sentencing consideration later to be undertaken. I have reached that conclusion for two reasons.
First, affidavits from the CEOs of two of Nulon's suppliers were read - with those affidavits incorporating references attesting to the company's professionalism and operational commitment. Each of those references discloses that the writer of the reference had been informed of the offence with which Nulon has been charged and opines, either expressly or by implication, that the author is of the view that it is unlikely that the company would reoffend.
Second, and perhaps more significantly, is material contained in the second of the two [12]s of the affidavit of Mr Simons (there being two paragraphs given that number in his affidavit) concerning community activities undertaken by Nulon. Relevantly, his affidavit sets out Nulon's public service activities in the following terms: Nulon regularly donates to "Helping Hand", which is a committee formed in 2004 to recognise worthy recipients for financial assistance. It assists and helps individuals with medical equipment, modification of homes for disabled people, replacing necessities etc. It has annually donated money from 2004 to date. Currently Nulon is supporting a local public school in two of its programs - MultiLit, for kids with literary skill challenges, and a speech therapy program for indigenous students at the school.
These activities extending over a decade prior to the incident giving rise to these proceedings demonstrate that Nulon has, altruistically, provided support in its local community in a socially responsible fashion. This is a factor needing to be given more than modest weight in the company's favour when addressing all factors to derive an appropriate penalty level.

[38]

Likelihood of reoffending

The third relevant factor is that in s 21A(3)(g) of the Sentencing Procedure Act as to whether Nulon "is unlikely to re-offend". This is also relevant, for the future, to prevention and, thus, avoidance of the potential for future incidents of this type. This is relevant as part of my consideration of matters required by s 241(1)(b) of the POEO Act.
The Statement of Agreed Facts records (at [59]) that Nulon has responded to the incident in the following manner: … (a) Interviews were conducted with the staff involved at the time of the incident, following the incident. (b) Mechanical air vents will now close automatically at 11pm every night, even if left open. There is an end of shift procedure to ensure the air vents are off or in automatic mode. (c) All heaters within the blend Tanks are limited to 85º Celsius in both automatic mode and manual mode. (d) The blending work instruction manual has been updated, to particularly refer to the completion of the end of shift checklist to record that all valves and motors of the Tanks have been turned off, and if any motor or pump of the Tanks is still running (this includes heaters) after 1:45pm, a red beacon located on the SCADA control box will flash. (e) A Competency Assessment of certain employees was undertaken following the incident. (f) Linking the heaters and agitators together in the Tanks to provide accurate read out of temperatures. (g) Installing a visual beacon, comprising a red light, on timer to flash if a motor is active on each of the Tanks after 1.45pm daily. (h) Developing an "end of shift checklist for blending" to ensure written checks are conducted at the end of each shift, to formalise the procedure existing before the incident to check that the following has occurred for Tanks 202-206 at the Premises: i. All valves have been closed. ii. All valves have caps fitted. iii. The hopper lid is closed. iv. The floor is clean. v. The stirrer is off. vi. All pumps are off. vii. Heaters are off. (i) Completion of a tank farm upgrade at the Premises. Additional bulk tanks and pipelines were installed, with the expansion including pipelines linking Tanks to minimise going into manual mode. (j) Audits to identify other potential risk factors: i. Completing internal CID entry and safety investigation reports in the aftermath of the incident dated 6 February 2014. ii. Drafting a Project Charter of Nulon dated 5 February 2014 entitled "Eliminating Serious Risk" which was to address the circumstances of the incident. iii. Having meetings with I-Tech Corporation, in relation to a preliminary review of process control operations and control systems on behalf of Nulon dated 27 February 2014. iv. Undertaking a Control Hazard and Operability Study (CHAZOP) in September 2014 for the Nulon tank farm expansion project. A very large due diligence assessment was undertaken comprising of three A3 folders. SCADA has been completely upgraded to accommodate new tanks and pipelines and to ensure that any errors or risks identified in the system have been addressed, in accordance with the CHAZOP. (k) A Pollution Incident Response Management Plan (PIRMP) has been fully updated and implemented in accordance with the requirements set out in the Protection of the Environment Operations Act 1997 (NSW), Part 5.7A. (l) JBS&G were engaged by Nulon to review the PIRMP document developed for the Premises by Nulon and recommend any changes. JBS&G did not highlight or identify any gaps in the already identified risks and/or measures already in place by Nulon. (m) The amended and modified PIRMP has been tested and staff have been trained, including the following: i. Evacuations for chemical spills. ii. Undertaking major spills evacuations (n) The SCADA system now "times out" or goes to sleep after two hours if it is not operated. An individual will be required to log back in with their specific login details to operate SCADA once it has timed out. The Operator, Supervisor, Production Manager and Administrator now have specific logins, such that: i. The Operator cannot change or override the maximum temperature settings of the system. They can only start and stop a blend, but they cannot make changes to the heating within the Tanks in any mode. ii. The Supervisor cannot change or override the maximum temperature settings of the system. They can only start and stop a blend, but they cannot make changes to the heating within the Tanks in any mode. iii. The Administrator has overall system access to calculate or reformulate blends but still cannot override the maximum temperature settings of the system. iv. Maximum temperature settings of the system cannot be overridden at any access level other than by the authorised third party, iTech. (o) There is now a formal "Daily Team Leader/Supervisor Shutdown Procedure". (p) Fire alarm checks continue to be undertaken biannually to ensure that the fire and smoke detection system at the Premises is properly operating. (q) Fire extinguishers and the ventilation system continue to be checked and maintained biannually. (r) Monthly checks of PPE equipment and inventory continue to occur to ensure that the relevant PPE equipment is readily available in designated work areas.
Mr Simons' affidavit records, at [49]: In particular, measures have been adopted to ensure that "manual mode" has the same level of system safety control as "automatic mode".
I am satisfied these steps demonstrate an increased commitment on behalf Nulon to ensure that an incident such as that giving rise to this prosecution will not occur again. When coupled with the fact that Nulon has had no prior environmental pollution convictions and that there is no material suggesting any prior unprosecuted incidents, I am therefore satisfied that it is unlikely that the company will reoffend.

[48]

Submissions on characterisation of the offending

As earlier noted, the sole area of disagreement between the Prosecutor and Nulon is how, on a scale of seriousness, this incident should be characterised and, as a consequence of that determination (and having regard to the various subjective factors earlier set out), the penalty to be derived (before giving the appropriate discount for the early guilty plea).
It is appropriate to set out elements of the Prosecutor's submissions as to how the offence should be characterised objectively. In the Prosecution's written submissions, the position adopted was summarised in the following terms: (a) The harm occasioned by the offence included direct harm to people working in the area, including 15 employees of the business located upwind of the Defendant's premises, as well as amenity impacts on the wider community; and (b) The circumstances are such that the factors listed in s 241(1) of the POEO Act of practical measures, foreseeability and control elevate the seriousness of the offence.
In her oral submissions for the Prosecutor, there are two matters from what Ms Shahnawaz put to me that should be cited on this point. The first extract was in the following terms: The prosecution makes three basic points, which establish the objective seriousness of the offence; that is: * the causes of the offences which can be broken up both into the immediate causes and the underlying causes and we say that all of those causes were completely within the control of the defendant; * the harm, in this case, was foreseeable and should have, in fact, been foreseen; * thirdly, the environmental harm which actually occurred included actual harm to human health as well as less serious amenity impacts. However, the potential or risk of harm is also something that the Court should have regard to and it increases the objective seriousness of the offence (Transcript P15 L28-38).
The second extract was: … the defendant submits that the harm was insubstantial and that the objective seriousness of the offence should be characterised as being of low objective seriousness. It is difficult to imagine a situation where actual harm was occasioned to human health and yet the offence could be characterised as of low objective seriousness even if the actual harm was short-term (Transcript P20 L35-40).
In his written submissions, Mr Nash addressed the question of objective seriousness in the following terms: 24 Thus in relation to both 'actual harm' and 'potential/risk of harm', such harm was not 'substantial'. To the contrary, the harm was insubstantial, and it is submitted that this demonstrates that the commission of the subject offence should be characterised as being of 'low' objective seriousness.
He also said, at [27]: Characterisation of objective circumstances: in all circumstances, it is submitted the offence is properly characterised as being of low objective seriousness. It is submitted that a fine at or near the maximum penalty for an offence under the Protection of the Environment Operations Act 1997, s 64(1), would be reserved for a situation where, for example: 1. There was substantial, permanent and actual environmental harm; 2. The offence was committed intentionally; 3. The offence was motivated by financial or commercial considerations; 4. The offender has multiple previous convictions; 5. The offender pleaded not guilty but was found guilty after trial; 6. The offender provided no cooperation to the relevant investigative and prosecutorial authority; 7. The offender is neither remorseful nor contrite; and 8. The offender is likely to reoffend. None of the above circumstances are present in this case. There being no aggravating features, and having regard to the 'broad spectrum' of matters which can give rise to an offence, it is submitted that, having regard to the absence of any of the circumstances identified in paragraph 27(a), 27(b) and 27(c) above, and in particular the absence of any intention, recklessness or negligence on the part of the defendant, the proper characterisation of the objective circumstances of the offence is that it is of 'low' objective seriousness.
He expanded on these on a number of occasions during the course of his oral submissions. Several extracts from the transcript are appropriate to be set out as being relevant elements of his submissions on this point. First (in my consideration - these extracts not being in transcript order), he said: There were amenity impacts in the form of physical discomfort to people. We know that insofar as concerns the environment, the harm was limited to unpleasant odour in the atmosphere, and we make the point at 18(a) that there is no other identifiable evidence of harm to the biological environment apart from unpleasant odour in the atmosphere. I think there can be no doubt that the presence of the compounds that were in the atmosphere are foreign particulate in the atmosphere, but nonetheless, as the agreed evidence is that the particulate dissipated as time went on and there was no permanent harm to the environment. And finally, at 5(b), the physical discomfort was mild and transitory, and again, we emphasise the point of the medical assistance being sought but there being no evidence of medical assistance being rendered to individuals. We place particular emphasis, your Honour, at para 20 where we have conceded and accepted the potential risk of harm and likely harm in the context that it is the agreed fact that the risk was real and not remote. However, the agreed position is that the risk of harm cannot be quantified. That is because there was no source of ignition for the fire or explosion, no evidence that the auto ignition temperature of the product in the tank would have been reached in the circumstances, and we emphasise again the nature of the smoke detection system that was implemented and installed at the time of the incident, the notification to the relevant emergency services, and the fact that all of those systems were in place, were adequate, and minimised its consequences (Transcript P32 L22-45).
He also said: A relevant consideration, whether or not it was committed without regard for public safety, and the prosecutor here not establishing its onus. We would say and embrace the same position, that notwithstanding the fact that the prosecutor has conceded the absence of any relevant consideration in relation to state of mind, the Court in this instance would not be satisfied as to any of those adverse matters of the defendant. I make the submission, your Honour, because - and I of course say it with great respect to the chief judge, but in the Sydney Water case, the parties' agreed position was that there was no substantial harm, yet his Honour found substantial harm. So I just want to make sure that I address your Honour in case your Honour was considering making a relevant finding.
I interpolate, here, that, for the reasons already set out, I am satisfied that there are no aggravating factors of the nature set out in the Sentencing Procedure Act relevant to the company in these proceedings. He continued: So we say, your Honour, in all of those circumstances, that the Court would properly characterise objective seriousness as low, there being no relevant aggravating features or circumstances in the case. And essentially, your Honour, what I'm asking the Court to do, in my respectful submission, is to imagine a spectrum of offences starting, of course, at the very low end and at the very high end. I've given the Court the hypothetical worst case scenario at para 27, and simply make the submission that none of that is present. So if you had to plot on a spectrum where potential offences could fall, in all of the circumstances here, where it's agreed that the impact on health and the like was low, mild and transitory; the impact on the environment was low; Dr Robertson saying not significant, the circumstances, your Honour, are such that even though it's a serious offence, there is a difference, in my submission, between the use of the word "serious" and the proper characterisation of the offence. We concede it's serious. Any criminal act, if proved, is serious, there can be no doubt about that. So to the extent that the cases that my friend relies upon observe the fact that the matter is serious, is not decisive or necessarily informative as to where the objective characterisation of seriousness falls on that spectrum. We say, when you look at that spectrum in all of the circumstances, the case must fall at the lower end of the spectrum. It's not of mid-seriousness, it's not of high seriousness, most certainly. But in all the circumstances, your Honour, having regard to those matters, it must be, in our submission, at the lower end of objective seriousness (Transcript P37 L25- P38 L11).
He concluded his submissions on this point by saying: So, your Honour, in summary, the way in which we characterise this case is an unfortunate incident caused by simple human error which had minor amenity impacts on some people and the environment and there was no other quantifiable risk to any person or the environment. We say the objective seriousness is low, the subjective considerations are overwhelmingly strongly in favour of the defendant, and your Honour would, in undertaking the instinctive synthesis exercise, weighing up all of the relevant cases that you have been taken to, decide on the appropriate quantum for payment to the Environmental Trust (Transcript P44 L40-48).
He also sought, earlier in his submissions, to draw comfort from the fact that the Prosecutor, in its regulatory capacity, had not intervened, in any regulatory fashion, with Nulon after the event. In this regard he said: What we know here, your Honour, is that upon the EPA being self-notified by Nulon of the incident, there is no evidence that anything was done at any time by the EPA between the time of the incident, or later, that would show any cause for concern held by the EPA in relation to the ongoing operations of the plant at the premises. It was within the power of the relevant regulatory authorities, both the EPA and the council, to do something if it was concerned that there was harm at the time of the incident, immediately after the time of the incident or subsequently. I make the strong point, your Honour, that this is not a criticism of the EPA. I am not criticising the EPA at all in making that observation. But we say it is relevant because it demonstrates that fact that to the extent it is said that there was potential harm, no injunctive or other regulatory action was taken at or immediately after the time of the incident (Transcript P33 L8-22).
This submission is dealt with below at [196].
Mr Nash's submissions on sentence, inter alia, made reference to two earlier odour prosecutions, Environment Protection Authority v Caltex Refineries NSW Pty Limited [2008] NSWLEC 194 (Caltex Refineries) and Environment Protection Authority v Hunter Valley Energy Coal Pty Ltd [2015] NSWLEC 120 (Hunter Valley Energy). He did so in support of his proposition that the objective seriousness in this instance was sufficiently conformable with the circumstances in each of those cases that a similar characterisation approach should be taken in these proceedings.
I am unable to agree with that proposition. My disagreement arises for differing reasons in relation to each of these two cases. I turn, first, to Caltex Refineries. The facts may be summarised briefly as being: 1. an unpleasant odour was emitted from faulty operation of the refinery's flare; 2. complaints about the odour were primarily from residents of Kurnell, the suburb in the immediate vicinity of the refinery; 3. complaints commenced to be made on 23 December 2006 and continued until 29 December 2006; 4. the majority of the complaints were made on 26 December 2006; and 5. the complaints were typically of a very strong and very unpleasant odour characteristic of sulphur.
Lloyd J's consideration of matters in Caltex Refineries set out in s 241 of the POEO Act dealt with the impact of the odours on the residents in the following terms: Extent of the harm caused or likely to be caused to the environment 28 The prosecutor submits that the failure to operate the plant in a proper and efficient manner has directly caused actual environmental harm and that the offence is therefore aggravated: citing Environment Protection Authority v Ballina Shire Council (2006) 148 LGERA 278 at 294. Foul odours were emitted for six days, occasioning a direct and significant impact on the amenity of the residents which was magnified by the fact that it was over the Christmas period. 29 Caltex acknowledges the impact which the odour had on the amenity of the residents during the Christmas period. However, it submits that there is no evidence that the odour caused any actual harm beyond amenity impacts, despite the concerns over health which the residents expressed. 30 I agree with Caltex that the effects of the odour are limited to amenity. There is no evidence of actual environmental harm.
Although, obviously, his Honour's comments were in response to the particular facts and circumstances of that case, I understand Mr Nash to be seeking to have me draw a conclusion that his Honour's comments in [30] are ones that I should adopt and apply in these proceedings.
I am unable to do so. Contrary to the brief position adopted by his Honour at [30], I disagree that it is inappropriate to treat impacts to human amenity as not being actual environmental harm in the sense of environmental harm as called up by the POEO Act. "Harm" is defined as "harm to the environment includes any direct or indirect alteration of the environment that has the effect of degrading the environment and, without limiting the generality of the above, includes any act or omission that results in pollution".
There are two observations to be made supporting my rejection of his Honour's conclusion. First, the statutory definition expressly imports acts of pollution into the concept.
Second, there is no temporal yardstick stated in or able to be implied from the definition. The harm may, indeed, be transitory and merely unpleasant as is the position with respect to the odour released from Nulon's premises. However, there is no necessity for the impact to be either ongoing or one causing permanent damage for it to fall within the concept of environmental harm.
In addition, Caltex Refineries is further considered later in the context of consistency of sentencing.
With respect to Hunter Valley Energy, I should initially observe that Pain J was not, apparently, referred to the Caltex Refineries decision. However, in this case her Honour did not demur from the acceptance by the Defendant that the amenity impacts from the blast fume giving rise to that prosecution did cause actual harm to the environment as defined in the POEO Act. Her Honour went on to say in [19]: … Those affected experienced relatively minor symptoms which resolved shortly afterwards (SOAF at par 40-53). There is no evidence that anyone required medical treatment or suffered long lasting health impacts. The environmental harm was transitory and therefore less harmful, relying on Kirby P in Camilleri's Stock Feeds at 701. The harm was to amenity rather than human health. The blast dispersed within 25 minutes and dispersed over vacant property owned by the Defendant on the other side of the industrial estate. I agree with the Defendant that there is no evidence of any potential for serious impact on human health as a result of the blast fume.
The proposition that her Honour refers to in Camilleri's Stock Feeds at 701 is the proposition (citations omitted): (4) The odour was non-toxic. There was no serious and lasting environmental harm. In environmental matters the Court has previously exercised its discretion in relation to penalty on the principle that the more serious the lasting environmental harm involved the more serious the offence and, ordinarily, the higher the penalty.
This provision is, self-evidently, relevant in the present proceedings.
Although I here accept, for reasons earlier set out, that "there is no evidence of any potential for serious impact on human health as a result of" the Nulon incident, there is also considerable difference between the factual circumstances in Hunter Valley Energy when compared to those arising in the present proceedings.
In particular, although the immediate impact on employees in the industrial estate described in the Statement of Agreed Facts in Hunter Valley Energy are comparable, by analogy, with those of the employees of Sphere Healthcare in these proceedings, the more general geographic and temporal spread of the odour in this case is far more extensive.
Having said that, I do observe that, at [33], her Honour agreed with the submission made on behalf of the Defendant in those proceedings that the offence is at the low end of the medium-range.
I see no reason why, in these proceedings, the Hunter Valley Energy proceedings might not be regarded as a relevant benchmark for comparable classification purposes with the objective facts applicable in these proceedings.
Indeed, because of the much broader temporal and geographic extent of the impact of the Nulon odour, I am fortified in my conclusion that the Nulon incident should be regarded as being of greater seriousness when compared to her Honour's finding in Hunter Valley Energy.
I have earlier set out the measures that Nulon has undertaken, since the event, to ensure that there will be no repetition of that which has occurred. I consider it reasonable to infer that the EPA was aware of the steps that the company was undertaking in the immediate aftermath of the event giving rise to the prosecution and thereafter.
Although there is no express evidence on this point, it is not unreasonable to assume that regulatory intervention may have been considered unnecessary given the positive steps (of more than passing utility to the company in my assessment of the subjective matters requiring to be taken into account in these proceedings) being taken by Nulon rendered regulatory intervention unnecessary.
I am unable to accept Mr Nash's submissions as to the characterisation of the incident and the consequences which flowed from it. Having considered these submissions and all the objective factors in this case, I am satisfied that it is appropriate to regard the company's offending as being of moderate seriousness and in the middle of the range of such offences.
I have so concluded for the following reasons: 1. I have earlier set out the number and distribution of the complaints made to Fire & Rescue NSW from the early hours of 5 February 2014 to the time of the last relevant contact some 29 hours later. For the reasons earlier discussed, the only conclusions appropriate to be drawn about the impact are those that derive from the specific evidence available to me and, for the reasons earlier described, I do not go beyond the specifics derived from the complaints. However, the extent of the impact recorded over such a broad area and over a significantly extending period of time supports a conclusion that the impact is of moderate seriousness; 2. The impact of the employees of Sphere Healthcare, although lasting, effectively, for only a day, significantly if transitorily impacted on their well-being; and 3. The nature of the temporary impact was disruptive of the daily activities of a more than an insignificant number of people - ranging from those in the immediate vicinity (such as the employees of Sphere Healthcare) to those at a distance of more than six kilometres (the necessity to keep the pupils at Busby Public School inside during recess).
The wide extent of the actual (although generally transient) impacts confirms that, qualitatively, the incident should be regarded as being of moderate seriousness.

[50]

Other potentially relevant pollution cases

I have been taken by Ms Shahnawaz and Mr Nash to a number of other pollution cases from which it is suggested I might garner some guidance on how I might characterise the seriousness of Nulon's offending and the level of penalty that might be appropriate to attach to it.
These cases (together with a short analysis of each) are: No Case name Offence and maximum penalty Short facts and sentencing considerations Penalty PROSECUTOR S 124 POEO Act Black smoke being emitted for approximately 9 minutes. 1 Environment Protection Authority v Caltex Refineries (NSW) Pty Ltd [2006] NSWLEC 335 Air pollution caused by failure to operate plant in a proper and efficient manner 31 people made 38 complaints over 5 days. Symptoms caused by the odour included nausea, headache, diarrhoea, shortness of breath, tightness in chest, some had to close doors and windows. [21]-[22] Fine of $77,000 Maximum $250,000 Harm The harm was 'reasonably serious but short-term with no evidence of long-lasting impacts and no evidence that medical assistance was sought by the complainants'. [45] Objective seriousness 'The matter is serious given … harm to the environment, that the offence was reasonably foreseeable and that the Defendant had control over the causes of the offence.' [66] S 64 POEO Act Over the course of 6 days, 31 residents made 35 complaints of a very strong and unpleasant odour characteristic of sulphur. The impacts were limited to impacts were limited to impacts on amenity, which also occurred over the Christmas holiday season. [19]-[20] 2 Environment Protection Authority v Caltex Refineries (NSW) Pty Limited [2008] NSWLEC 194 Fail to operate in a proper and efficient manner Harm Limited to amenity impacts. No evidence to actual harm. [30] $78,000 Environmental Services Order Maximum $1,000,000 S 64 POEO Act A visible plume of ammonium nitrate was emitted into the atmosphere. 3 Environment Protection Authority v Orica Australia Pty Ltd (The Evaporator Incident) [2014] NSWLEC 104 Failure to carry out licensed activities in a competent manner Some employees were affected. Three reported eye/throat irritation, coughing and headaches. The effects lasted several hours for two, and for one night for the other. The actual harm was of limited duration. $122,500 Environmental Services Order Maximum $1,000,000 Harm Moderate environmental harm, being actual harm to three employees of limited duration. [114]-[118] Objective seriousness 'Having regard to all the objective factors … particularly the actual, albeit temporary, harm that occurred to the employees, and the potential harm that could have been caused by the incident, that the offence should be classed in the mid-range of seriousness.' [136] S 129 POEO Act On three occasions over a period of two months, hydrogen sulphide was emitted in excess of the permitted limits, for a period of 4 hours, 4 hours, and 6 hours. 4 EPA v Illawarra Coke Co Pty Ltd [2002] NSWLEC 21; 118 LGERA 451 Offensive odour On the first occasion, three complaints were made. On the second, three complaints were made. On the third, two complaints were made. Each complaint was similar - ie headaches, itchy nose/throat/ eyes. The harm was minor and settled after removal from the odour. The small number of complainants indicated sensitive individuals were affected only. Fines imposed: $40,000; $20,000 and $10,000 Maximum $250,000 [38] Harm Prosecutor's case alleged disamenity only. [33] Objective seriousness 'not of the most serious kind, as harmful long-term impacts are not alleged'. [38] Discharge of gases from coke ovens, black smoke and the discharge of some liquid. The gases included chemical components, the most acutely toxic of which was hydrogen sulphide. The emissions lasted approximately 3 hours. S 64 POEO Act There was no evidence that any persons suffered any health effects. [26] 5 Environment Protection Authority v BlueScope Steel (AIS) Pty Ltd [2004] NSWLEC 400 Fail to maintain plant and equipment in a proper and efficient manner [26] … but if an individual were to have particular sensitivity they could experience an acute respiratory effect. $70,000 Maximum $250,000 Harm Of short duration, no direct harm apart from visual impact. [65] Potential existed for mild irritation to potentially lethal consequences. [59] DEFENDANT S 120(1) and s 64(1) POEO Act Hundreds of thousands of litres of sewage effluent from Sydney Water's Malabar Waste Water Treatment Plant was discharged into the ocean as a result of a pipe leak. 1 Environment Protection Authority v Sydney Water Corporation [2015] NSWLEC 80 Polluting waters and failing to comply with the licence condition Harm The Court found that the offence resulted in the pollution of waters in circumstances where the discharge should have occurred 3.6 km offshore and 80m underwater and that the harm was substantial having regard to the nature of the pollutant (being insufficiently treated sewage effluent), the number of days over which the pollutant was discharged, the volume of the pollutant, the difference in the marine environment that actually received the pollutant and the interference with public amenity and enjoyment of Malabar Beach. $78,750 per offence Maximum $1,000,000 Objective seriousness Low to moderate S 120(1) and s 64(1) POEO Act The subject offence in this case is related to the escape of 6 to 12 tonnes of nitric acid following the failure of a pipe. 2 Environment Protection Authority v Orica Australia Pty Ltd (the Nitric Acid Air Lift Incident) [2014] NSWLEC 103; 206 LGERA 239 Pollution of waters and breach of licence condition Harm The Court found that the harm arising from the offence was insubstantial. $42,000 Maximum $1,000,000, and in the case of a continuing offence a further penalty of $120,000 for each day the offence continues S 64(1) POEO Act This case involved the release into the environment of mercury vapours when louvres were left open at Orica's Former ChlorAlkali Plant Mercury Remediation Project at the Botany Industrial Park. 3 Environment Protection Authority v Orica Australia Pty Ltd (the Botany Mercury Incident) [2014] NSWLEC 110 Breach of licence condition, release to the environment of mercury vapours Harm The Court found that the incident had the potential to cause harm, as mercury is a poison with high toxicity to humans in sufficient concentrations and over prolonged periods of exposure, but that the levels of mercury vapour were low. $35,000 Maximum $1,000,000 S 64(1) POEO Act This case involved the discharge of supernatant (which had been removed from a waste sludge storage tank) into Perisher Creek. 4 Environment Protection Authority v State of New South Wales (Department of Environment, Climate Change and Water) [2010] NSWLEC 67; 174 LGERA 19 Breach of licence condition, failed to operate equipment in a proper and efficient manner Harm The Court found that the likelihood of harm was low. $80,000 Maximum $1,000,000 S 64(1) POEO Act Dust emissions occurred, landing on surrounding property. 5 Environment Protection Authority v Causmag Ore Company Proprietary Limited [2009] NSWLEC 164 Breach of licence condition, dust emissions Harm The Court found that the dust emissions caused a localised nuisance, but was not substantial. $20,000 Maximum $1,000,000 S 64(1) POEO Act Generated wastewater which had a sewage-like odour and had failed to close a lid on the tank after cleaning it, being the tank that contained the wastewater. 6 Environment Protection Authority v Coastal Recycled Cooking Oils Pty Limited [2008] NSWLEC 242 Breach of licence condition, all plant and equipment must be maintained in a proper and efficient condition, and must be operated in a proper and efficient manner Harm The Court found there was actual harm to the environment, but that the harm was transitory and affected one person and possibly other persons present in the area where the incident occurred. $18,000 Maximum $1,000,000

At a glance

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Cases Cited (23)

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