Fairfield City Council v Florence Flowers Pty Limited

Land and Environment Court (NSW)|2006-11-09|Before: Pain J

CITATION : Fairfield City Council v Florence Flowers Pty Limited [2006] NSWLEC 707 This decision has been amended. Please see the end of the judgment for a list of the amendments.

PROSECUTOR PARTIES : Fairfield City Council DEFENDANT Florence Flowers Pty Limited

KEY ISSUES: Environmental Offences :- water pollution due to oil leak - lack of bunding - plea of guilty - mitigating factors

Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357; Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 ; Environment Protection Authority v Cut and Fill Pty Ltd [2005] NSWLEC 401; Environment Protection Authority v Hines [2004] NSWLEC 107; Environment Protection Authority v Goulburn Wool Scour Pty Ltd [2005] NSWLEC 206; CASES CITED: Environment Protection Authority v Olex Australia Pty Ltd [2005] NSWLEC 475; Environment Protection Authority v Truegrain Pty Limited [2003] NSWLEC 277 ; Environment Protection Authority v Waste Recycling and Processing Corporation [2006] NSWLEC 419 ; R v Sharma (2002) 54 NSWLR 30; R v Thomson; R v Houlton (2000) 49 NSWLR 383; Shoalhaven City Council v DP Druce Pty Ltd [2005] NSWLEC 123

PROSECUTOR Mr T Howard SOLICITOR LEGAL REPRESENTATIVES: Marsdens DEFENDANT Mr A Djemal SOLICITOR Joseph G Capogreco & Associates

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

50024 of 2006 Fairfield City Council v Florence Flowers Pty Limited

JUDGMENT 1 Her Honour: The Defendant, Florence Flowers Pty Ltd, has pleaded guilty to the charge that on or about 8 August 2005 it polluted waters contrary to s 120(1) of the Protection of the Environment Operations Act 1997 in the vicinity of Lot 21 Koala Way, Horsley Park.

2 Section 120(2) states that pollution of waters under s120(1) means to "cause or permit any waters to be polluted". The Dictionary to the Act also states that water pollution includes, relevantly: (c) placing in or on, or otherwise introducing into or onto, the waters (whether through an act or omission) any matter, whether solid, liquid or gaseous, that is of a prescribed nature, description or class or that does not comply with any standard prescribed in respect of that matter… 3 Clause 52 of the Protection of the Environment (General) Regulation 1998 ("the Regulation") states that for the definition of paragraph (c) stated above, "prescribed matter" for the definition of water pollution is listed in Sch 3 of the Regulation. This includes, at point 9, oil.

4 As the Defendant has pleaded guilty it may be assumed that the Prosecutor have proved to the requisite standard the essential elements of the offence. The maximum penalty currently applicable to offences under s 120 of the POEO Act is $250,000 for a corporation. Agreed facts 5 A statement of agreed facts was tendered, as follows. 6 The land from which it is alleged the offence occurred is Lot 21 DP 239010 known as Lot 21 Koala Way, Horsley Park or 65-73 Koala Way, Horsley Park ("the land"). The land is owned by Clemente Napolitano and Josephine Napolitano as joint tenants. 7 The Defendant is a company that conducts the business of commercial flower growing on the land. The Defendant was first registered on 12 March 1991 and nominates as its registered office and principal place of business, the land. Clemente Napolitano and Josephine Napolitano are directors and shareholders in the Defendant company. 8 In undertaking the commercial flower growing business on the land, the Defendant utilises greenhouses which are heated by means of an oil heating system. The oil heating system utilises recycled waste oil. 9 On or about 8 August 2005 the oil heating system malfunctioned causing a pollution incident from the oil heating system and thereafter from the land where it was introduced into waters. 10 The precise quantity of the waste oil that escaped from the land has not been determined but it would probably be considered a substantial amount. An estimate of up to 300 litres of recycled waste oil having escaped from the oil heating system has been made by Clemente Napolitano. 11 The recycled waste oil travelled through six adjoining properties to the land until it ended up in a dam on land known as 125-129 Koala Way, Horsley Park. 12 The waters into which the recycled waste oil has been introduced are: (a) the waters in the Council's stormwater pipes, pits and channels in the vicinity of the land between the western boundary of the land and the commencement of an open watercourse or drainage channel at or near the front of the property known as 95-101 Koala Way, Horsley Park; and (b) the open watercourse or drainage channel at or near the front of the property known as 95-101 Koala Way, Horsley Park; and (c) the dam at the rear of the property known as 125-129 Koala Way, Horsley Park 13 The recycled waste oil is a liquid matter of a prescribed nature within the meaning of par (c) of the definition of "water pollution" in the dictionary to the POEO Act. Further the introduction of the recycled waste oil to the waters changed the physical and/or chemical biological condition of the waters. 14 As a result of the escape of the recycled waste oil from the land, the Prosecutor issued to the Defendant company and also Clemente Napolitano and Josephine Napolitano clean up notices. Between 12 August 2005 and 12 October 2005 the Defendant company and Mr and Mrs Napolitano complied with those clean up notices.

Prosecutor's affidavits 15 The Prosecutor relied on part of an affidavit of Stewart Rodham, sworn 26 July 2006, the coordinator of environmental management employed by Fairfield City Council, and part of an affidavit of Shivani Nair, sworn 26 July 2006, the Council's environmental health officer.

16 The affidavit of Mr Rodham states that on 8 August 2005, the Council received a complaint from Mr Ray Zygadlo, of 125-129 Koala Way, Horsley Park, that he had observed oil on his land the previous day. This led Mr Rodham to attend to the premises on 8 August 2005, where he observed a thick layer of black oil coating the water in a dam situated towards the rear of the land. He also observed the oil had flowed into the dam through an overland flow path to the east. He traced the oily substance to a stormwater drainage trench along the western boundary of 65-73 Koala Way. Upon entering this premises he met Mr and Mrs Napolitano, the owners of the land, who took him to the rear of the land where the flower growing operation was conducted. At this time Mr Napolitano indicated to Mr Rodham that there had been a minor spillage of oil approximately two weeks prior to the 8 August. Mr Rodham then entered the building where he observed an oil furnace heating system, and two oil storage tanks. The ground beneath the tanks was stained with oil. Mr Rodham issued both Mr and Mrs Napolitano with a verbal cleanup direction under the Act. He told them to give receipts for the clean up to the Council, and that there would be a further direction given concerning the remediation of the land and validation of the impacted areas. The Council's standard development conditions require bunding for exits from factory buildings were attached to his affidavit.

17 Shivani Nair attended the premises with Mr Rodham on the same day. She inspected the dam, and observed a black oily substance in the water, as well as a strong smell of petrol. Walking in an easterly direction, she observed the same substance at a stormwater pit, which had an open concrete drainage channel connected to it. Her affidavit attached various photographs showing oil on the land and in the waters specified in par 12.

Defendant's affidavit 18 The Defendant relied on the affidavit of Clemente Napolitano, sworn 7 November 2006, one of the directors of the Defendant company. This affidavit stated that Turnkey Electrical, was employed by the Defendant on a regular basis (about twice a year) to maintain its oil heating system used in the flower production business. In 2003, Mr Napolitano noticed the system was not always operating properly and contacted Turnkey Electrical. A new safety system was installed. Mr Napolitano is now aware, but was not at the time of the incident, of the Council's bunding requirement. On or about 1 August 2005, he was making his daily check and noticed some oil on the cement floor under the feeding tank, and that the heating system was shut down. He estimated approximately 300 litres of oil had escaped from the tank. He states that he did not realise the extent of the oil spill until the Council's inspector attended the premises on 8 August 2006. Since the leak giving rise to this offence, the Defendant has not used the oil heating system. This means the winter crop cannot be grown, costing the company approximately $10,000 to $15,000 per week during winter, and an estimated total loss of $120,000 for the 2005 winter crop and $150,000 for the 2006 winter crop. The Napolitanos have decided not to use the oil heating system again for future winter crops. The affidavit also gives evidence of the clean up work done by SITA Environmental Solutions, commissioned by Mr Napolitano after receiving the Council's cleanup order. His affidavit also attached references given in support of the company by community organisations.

19 Section 241 requires matters to be taken into consideration in imposing a penalty under the POEO Act.

Section 241(a) the extent of the harm caused or likely to be caused to the environment by the commission of the offence 20 There is harm to the environment as defined by the POEO Act dictionary definition of "harm" to the environment which "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". This was because the oil flowed across the land where the Defendant operates through the stormwater system under and over six neighbouring properties for a distance of 560 metres. There was also a strong odour from the oil in the dam on 125-129 Koala Way which also constitutes degradation of the environment. The harm was minor and short term according to the Prosecutor's submissions.

21 While it is accepted that harm was caused within the meaning of the Act the Defendant submitted that the amount of oil which escaped into waters is unknown and is likely to be far less than the 300 litres estimated by Mr Napolitano to have escaped from the inside tank. 22 While I accept the Prosecutor's and Defendant's submissions in relation to actual harm caused being minimal, likely harm is also a matter to be taken into account given the damage oil can do in the natural environment. Oil is a prescribed substance under the Regulation. The affidavit of Mr Rodham, par 3, refers to a thick layer of oil on the dam at 125-129 Koala Way on 8 August 2005. Its presence is certainly likely to cause harm to the environment in my view. As noted by Talbot J in Environment Protection Authority v Truegrain Pty Limited [2003] NSWLEC 277 (19 November 2003) at [15]: … It is axiomatic that the contents of the discharge, particularly oil, have a potential to cause harm to vegetation and aquatic life. …

23 In this case there was a likelihood of harm to aquatic life which I take into account. Section 241(b) the practical measures that may be taken to prevent, control, abate or mitigate that harm 24 While there is no suggestion that development consent was required for this activity, the Prosecutor argued that bunding should have been in place around the building so that any oil which leaked was more likely to be detained.

25 The Defendant's counsel argued it was not self-evident that bunding around oil storage tanks inside a building was a necessary measure that should have been taken by the Defendant given the control device in operation in the tank, the regular maintenance of it and that Mr Napolitano carried out daily inspections of the tanks. 26 Clearly as a practical measure bunding around the building in whole or part could have controlled or mitigated the effect of the oil escaping but I acknowledge the Defendant did take steps to try and avoid oil escaping. Section 241(c) the extent to which the person who committed the offence could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence 27 The Prosecutor argued that while the offence was clearly the result of an accident and was in no way deliberate the harm caused was reasonably foreseeable. The escape of oil from large oil storage tanks situated at the site of the Defendant's commercial flower growing operation could escape into the stormwater system was clearly foreseeable. 28 The Defendant argued that it had operated the business for 30 years without incident and had in place a regular maintenance program as was demonstrated in the affidavit of its Director Mr Clemente Napolitano. This included regular maintenance of the shut off valve on the feeding tank (from which the oil escaped) which was intended to stop oil rising into the top of the tank and passing into the overflow pipe at the top of the tank. That system was replaced in 2003 because there had been difficulties previously. According to Mr Napolitano's affidavit he was unaware that bunding of oil tanks was a common requirement of the Council because he had not been advised of that by the Council never having had to apply for development consent for the oil storage tanks on the property. I note that there is no suggestion that development consent is required for that activity and I make no finding on that matter as it does not arise. 29 I agree with the Prosecutor's submissions that the harm was foreseeable. Section 241(d) the extent to which the person who committed the offence had control over the causes that gave rise to the offence 30 It is agreed that the Defendant had the relevant control. Section 241(e) whether, in committing the offence, the person was complying with orders from an employer or supervising employee. 31 Not applicable. Objective gravity of the crime 32 Regard must be had to the culpability of the Defendant and the individual circumstance which led to the commission of the offence. As the Prosecutor submitted it was the result of an accident and was in no way deliberate or the result of negligent behaviour on the Defendant's part. 33 The sentence imposed must be proportional to the objective gravity of the crime. The Court is to have regard to the maximum penalty applicable, as this is an expression of the seriousness Parliament attributes to the offence: see Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698. It stated at 698 and 701 respectively that: The task of a court is to assess the relative seriousness of the offender's particular offence in relation to a worst case for which the maximum penalty is provided… ..the more serious the lasting environmental harm involved the more serious the offence and, ordinarily, the higher the penalty.

34 In this case the environmental harm was of short duration and not serious according to the Prosecutor's case although there was certainly a likelihood of greater environmental harm.

General deterrence 35 Sentences made in relation to environmental offences must embrace considerations of general deterrence: see Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357, per Badgery-Parker J at 367. In Axer, Mahoney J stated at 359: The quantum of the fines which the legislation allows to be imposed has no doubt been fixed not merely to indicate the seriousness with which such pollution is regarded but also to deter those engaged in such activities and to procure that they will take the precautions necessary to ensure that it does not occur. … The legislation does not seek merely to prevent deliberate or negligent pollution. It envisages that, at least in many cases, proper precautions must be taken to ensure that pollution does not occur. Experience has shown that it is not enough merely to take care: accidents will happen. The legislation envisages that in many cases care must be supplemented by positive precautions; business must be arranged and precautions taken so as to ensure that pollution will not occur. 36 The Prosecutor did not press for a penalty based on the need for specific deterrence and I agree. Evenhandedness 37 The Prosecutor handed up a number of water pollution cases decided in this Court in 2004-2006 as possible guides to a penalty range but stressed that each case must be determined on its facts, as it must. A review of those cases suggested that most were more serious than the matter before me. Those cases which were less serious are: (i) Environment Protection Authority v Olex Australia Pty Ltd [2005] NSWLEC 475. The pollution offence in this matter was caused by a faulty sensor alarm, a waste-pit pump failure and an isolation valve in the drainage system not being sealed. There was no actual environmental harm. The penalty was $30,000 before discount, and $15,000 after discount.

(ii) Environment Protection Authority v Cut and Fill Pty Ltd [2005] NSWLEC 401, concerned a large amount of sediment laden water entering a creek due to the failure of erosion and sediment controls at a road works site. The penalty was $12,000 before discount, and $7,800 after discount. (iii) Environment Protection Authority v Goulburn Wool Scour Pty Ltd [2005] NSWLEC 206, concerned a wool scour factory with an associated area for irrigation of effluent. During heavy rain, runoff contaminated by pollutants discharged into waters. An Environmental Service Order to the value of $20,000 was imposed. (iv) Shoalhaven City Council v DP Druce Pty Ltd [2005] NSWLEC 123, concerned a contractor carrying out construction works including earthworks, sediment control works and storm water drainage works on a 38ha area which was being developed for a retirement village. Partly constructed water quality control ponds were breached and overflowed during above-average rainfall and sediment and sediment laden water flowed under relatively high pressure into bushland and a SEPP 14 wetland. The penalty was $40,000 before discount and $30,000 after discount. (v) Environment Protection Authority v Hines [2004] NSWLEC 107, concerned the operation of a piggery on a rural property. Effluent from the piggery was introduced into a creek upon failure of the effluent irrigation system. The offence caused actual harm. There was a significant, but not severe, impairment to the downstream waterways. There was no evidence of any loss to any species of plant or animal. The penalty was $15,000 before discount and $11,000 after discount.

38 The Prosecutor considered this matter to be in the less serious category of cases.

Penalty 39 In my opinion, the circumstances of the offence warrant that a penalty of $20,000 should be imposed.

Mitigating factors 40 There are a number of mitigating factors that should be taken into account to reduce that penalty as provided by s 21A(3) of the Crimes (Sentencing Procedure) Act 1999 particularly subsections (e) (no prior record), (f) (person of good character), (g) (unlikely to reoffend) and (i) (show remorse) in addition to s 22 (early guilty plea) and s 23 and s 21A(3)(m) (co-operation with law enforcement authorities). 41 The Defendant pleaded guilty at the earliest opportunity. A plea of guilty entitles the Defendant to a discount in penalty under s 22 of the Crimes (Sentencing Procedure) Act in the range of 10-25 per cent: R v Thomson; R v Houlton (2000) 49 NSWLR 383; R v Sharma (2002) 54 NSWLR 300. The Prosecutor accepts that there has been a guilty plea at the earliest opportunity but notes that a conviction was likely on the evidence. 42 The Defendant has expressed contrition and remorse through the affidavit of Mr Napolitano, one of its directors, and I accept his statements on the Defendant's behalf. I also accept the Defendant is of good corporate character in the local community. 43 There has been full cooperation with the Prosecutor in relation to the incident in terms of the carrying out of the clean up at a considerable cost of about $80,000 and in relation to the investigation of the incident, a matter I take into account pursuant to s 23 and s 21A(3)(m) of the Crimes (Sentencing Procedure) Act. 44 The Defendant is unlikely to reoffend in my view given that it no longer uses the oil heating system which gave rise to the offence and does not cultivate winter crops at all with consequent loss of profits. 45 The Defendant has agreed to pay the Prosecutor's investigative costs as provided for under s 248 of the POEO Act of $3,465.

46 In all the circumstances I think that the Defendant's penalty should be discounted by a total of 35 per cent and consider that a fine of $13,000 is appropriate.

Orders 47 The Court orders that:

The Defendant is convicted of the offence with which it is charged.
The Defendant is fined the sum of $13,000 to be paid to the Registrar of the Court within 28 days of today's date.
The Defendant is to pay the investigation costs of the Prosecutor pursuant to s 248 of the Protection of the Environment Operations Act 1997 in the amount of $3,465.
The Defendant must pay the Prosecutor's costs of the proceedings against it, as agreed or assessed.
The exhibits may be returned.

10/11/2006 - mathematical miscalulation - Paragraph(s) figures in par 39, 46 and 47 amended

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(1993) 113 LGERA 357

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Cases Cited (12)