Filipowski v Cadem Shipping Pty Limited & Anor

Crimes (Sentencing Procedure) Act 1999, s 10 Criminal Procedure Act 1986, s 4(2) Land and Environment Court Act 1979, s 74 LEGISLATION CITED: Land and Environment Court Regulation 2000 Land and Environment Court Rules 1996 Legal Profession Act 1987 Marine Pollution Act 1987, s 8

Filipowski v Island Maritime Limited [2005] NSWLEC 73 ; Filipowski v Mediterranean Shipping Co [2005] NSWLEC 159 ; CASES CITED: R v Thompson (2000) 49 NSWLR 383 ; Thorneloe v Filipowski (2001) 52 NSWLR 60

DATES OF HEARING: 27/06/05-28/06/05; 12/09/05-14/09/05

PROSECUTOR Mr A L Hill (Barrister) SOLICITORS Dibbs Barker Gosling

DEFENDANTS Mr G J Nell (Barrister) SOLICITORS Norton White

JUDGMENT: THE LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

Filipowski v Cadem Shipping Pty Limited and Filipowski v Clark, G L

JUDGMENT The Prosecutions 1 Talbot ACJ: These proceedings involve two prosecutions that relate to a discharge of oil from the ship the Tavake Oma ("the ship"). The discharge occurred at the No 8 Berth Glebe Island on 11 October 2001.

2 The owner of the ship, Cadem Shipping Pty Limited ("Cadem"), and the ship's master, Captain Guy Laurence Clark have each been charged with an offence under section 8(1) of the Marine Pollution Act 1987 (NSW) ("the Marine Pollution Act").

3 Section 8(1) of the Marine Pollution Act provides:-

Subject to subsections (2) and (4), if any discharge of oil or of an oily mixture occurs from a ship into State waters, the master and the owner of the ship, and any other person whose act caused the discharge are each guilty of an offence punishable, upon conviction by a fine not exceeding:

(a) If the offender is a natural person - 2 000 penalty units, or

(b) If the offender is a body corporate - 10 000 penalty units.

5 Both defendants have entered pleas of guilty. The matters have been heard together as the facts in each case are identical.

The Agreed Facts 6 The Tavake Oma is a general cargo vessel, built in 1984. The ship is a single deck geared multi purpose cargo vessel with one cargo hold and capable of carrying containers, break bulk and bulk cargoes.

7 At the date of the incident, 11 October 2001, Cadem was the owner of the ship and Captain Guy Laurence Clark was the ship's Master. Intercontinental Shipping Management ("ISM") managed the ship while it was owned by Cadem.

8 The discharge the subject of these proceedings is a discharge of oil in ballast water that was pumped from the ship's No 9 starboard double bottom water ballast tank ("No 9S tank") on the morning of 11 October 2001 shortly after 0730 hours.

9 The Tavake Oma arrived at Sydney on 8 October 2001 and was secured at No 8 Berth, Glebe Island at 0607 hours on that date. Captain Clark rejoined the ship on that date after leave and was informed of a possible leak between the No 10 centre ("No 10C tank") and No 9S tanks. It was reported to him that some time previously water had been found in the No 10C tank and the level in No 9S tank had fallen.

10 The discharge of the ship's cargo of approximately 4,000 MT of soda ash was completed on about 10 October 2001 and the hold was cleaned in preparation for receiving the next cargo of containers. With the ship's hold empty, Captain Clark took the opportunity to investigate the suspected leak. The No 10C tank was emptied of oil residue, opened for gas freeing and inspected. The No 9S tank was filled with seawater in order to test the structural integrity of adjacent boundaries with the No 10C tank. Both Captain Clark and the Chief Engineer Mr Bryce Smith looked into the manhole to the No 10C tank but neither saw any leakage of water between the No 9S and No 10C tank. As no leak was found, Captain Clark decided to pump out the No 9S tank. The No 9S tank was pumped out until suction was lost at about 2300 hours on 10 October 2001.

11 The Master conducted a second inspection of the No 9S and No 10C tanks following the loss of suction in the pump for No 9S tank at about 2300 hours on 10 October 2001 together with the Chief Engineer. Both were satisfied that there was no ingress of water into the No 10C tank. During the course of the inspection Captain Clark entered the No 9S tank to retrieve the Chief Engineer's glasses and observed that a quantity of water approximately 20 to 30cm deep remained in that tank. At this time the Master noticed there was no sheen on the surface of the water in the tank that could indicate the presence of oil.

12 The following morning at about 0730 hours Captain Clark instructed the Electrical Engineer, Gabe Faga, to resume discharging No 9S tank. Once pumping was resumed a check overboard was made during which oil, or an oily sheen, was noticed on the water by the Electrical Engineer. He ceased pumping and notified the Master who immediately reported the incident to the Sydney Ports Corporation ("SPC").

13 It became apparent that oil, or oily water, had leaked into the No 9S tank from the No 11 starboard sludge/slops tank ("No 11S tank"). The No 11S tank is a wing tank directly above the No 9S tank. The leak had occurred some time between the Master's inspection of the No 9S tank at 2300 hours on 10 October 2001 and 0730 hours on 11 October 2001 when the Electrical Engineer resumed deballasting.

14 Subsequent investigations revealed a 20 mm fracture in the horizontal steel plating on the starboard side of the No 9S tank below the No 11S tank through which the leak had occurred. At the time of the discharge neither the Master nor the crew were aware of either any fracture or any leak between those tanks.

15 During the investigations a hole was discovered in the top of the No 10C vent pipe where it ran through the No 9S tank. The hole is a likely point of entry of water suspected of leaking to the No 10C tank from the No 9S tank. A small hole was also found in the elbow of the suction pipe to the No 9S tank, which may have been the reason for the pump losing capacity during the deballasting operation on 10 October 2001.

16 At 0802 hours on 11 October 2001 the SPC Port Operations Control Tower notified SPC Marine Supervisor Mr Robert Jeffrey that there had been reports of an oil spill at the No 8 Berth, Glebe Island. On arrival the Master told Mr Jeffrey that the slick was seen during deballasting and that all overboard pumping had ceased. Mr Jeffrey boarded the Tavake Oma and proceeded with the Master and the Electrical Engineer to inspect the ship's double bottom ballast tanks. All tanks were clean except the No 9S tank, which was heavily contaminated with oil. The No 9S tank was approximately 150mm from full ("pressed up"). Mr Jeffrey then took two samples from the No 9S tank and two samples from the daily service tank. Mr Jeffrey attempted to take a sample from the slops/sludge tank, No 11S, but found it empty. The Chief Engineer told Mr Jeffery that there should have been approximately 17 cubic metres in the No 11S tank.

17 Mr Jeffery disembarked from the Tavake Oma and gave instructions for an oil containment boom to be placed at the end of the No 7 Berth Glebe Island across White Bay to the No 1 Berth White Bay.

18 Officers of the SPC commenced a clean up operation, which continued until 16 October. During the clean up 67 packets of oil absorbent pads, with 100 pads per pack; and 102 packs of oil absorbent sausage boom, with two lengths of three metre boom per pack, were used. The clean up also involved the use of propeller action from SPC vessels in an attempt to flush out oil from under the wharf.

19 At 1712 hours on 11 October 2001 the Tavake Oma was moved from the No 8 Berth Glebe Island to the No 5 Berth Darling Harbour.

20 Interviews with the ship's Master Captain Clark were recorded and form part of the evidence.

Likely Cause of the Incident 21 It is agreed that the cause of the incident was contamination of the No 9S tank with oil or oily water, part of the contents of which were discharged into the Harbour. The contamination of No 9S tank resulted from a leak that occurred through a small (20mm) fracture in the steel plate that separated No 9S tank and No 11S tank. It is not known when the fracture occurred, however I accept that it did not begin to leak before 2300 hours on 10 October 2001. I also accept that the fracture would not have been revealed in the course of any ordinary inspection of the tank. The fracture was revealed after the discharge had occurred and both tanks were emptied and opened up completely and inspected.

22 No satisfactory explanation as to the cause of the fracture has been established. Mr Anthony Hearne, a Marine Engineer and former Fleet Technical Manager of ISM, suggests that the fracture might have opened up as a result of a collision with a tug but this speculation was strongly rejected by Mr Peter Burge, a Marine Engineer and Surveyor engaged by the prosecutor. Neither Mr Hearne nor Mr Burge have any first hand or repeated knowledge of any event that could have caused the fracture.

23 The defendants deny that the fracture occurred as a result of the age or condition of the ship. The unchallenged evidence of Mr Hearne is that the ship was in good condition structurally. In March 2001 it went into dry-dock in Indonesia for the purposes of an Intermediate Class Inspection. During the dry-docking general maintenance work was performed as well as repairs to damage that had occurred as a result of a grounding the previous year. All areas of steel plating were examined visually and subjected to ultrasonic thickness testing. Those parts that may have required replacement during the following 5-7 years were replaced. The Class surveyor approved all repair work.

24 The experts agree that the ultrasonic testing along with the visual examination were sufficient to determine the condition of the plates.

25 Mr Burge expressed concern that the wastage of 19% reported for one site on the relevant plate could indicate a point of vulnerability where a fracture might occur. Captain David Read, a marine surveyor engaged by the defendants, explained that the particular point with a degree of wastage of 19% was in a position well aft of the fracture.

Quantity and composition of the spill 26 Dr Brian King, Chief Scientist of ASA Asia-Pacific Pty Ltd engaged by the prosecutor, and Captain Read each calculated the quantity of oil spilled using similar methods based on assumptions as to area, degree of coverage and thickness. Dr King calculated an area of 5,000 square metres based on a diagram that had been prepared by Mr Jeffery, whereas Captain Read calculated a much smaller area of 2,750 square metres based upon his observations on 11 October 2001 and measurements made at the scene and recorded in his contemporaneous notes. Dr King estimated coverage at 70% based on notes and photographs supplied to him, whereas Captain Read estimated coverage at 50% based on his own observations and notes.

27 Dr King used OILMAP oil spill simulation software to calculate the thickness of the oil as being at least 0.3mm. Captain Read assumed a thickness of 0.1mm using a table in a Technical Information Paper published by the International Tanker Owners Pollution Federation Limited that related the physical appearance (colour) of the oil slick to its approximate thickness. During cross-examination Captain Read conceded that he had misinterpreted the table leading him to the incorrect assumption that the thickness given of "> 0.1mm" was a "worst case scenario". Dr King concluded that the amount of oil present in the slick was at least 1050L. Captain Read came to an amount of 137.5L.

28 Dr King used an alternative method of calculation to confirm his initial estimate. This second method was based on the quantity and absorbency of oil absorbent material used in the clean up operation. Mr Nell submits on behalf of the defendants that Dr King's second calculation should not be accepted as it assumes facts of which there is no admissible proof.

29 Captain Read is not an expert at assessing the quantum of oil spills. His calculation was based on his own observations and experience. Dr King is an expert with the relevant credentials. However his estimates are made solely on theoretical calculations based upon observations by third parties.

30 The defendants accept that on any view there was a sizeable discharge of an oily water mix, more than a hundred litres and probably some hundreds of litres. It is submitted, however, that beyond that it is not possible to be any more precise as to the quantity of oil that was discharged into the water.

31 If any finding is to be made as to the quantity of oil discharged, it must be found beyond reasonable doubt: Filipowski v Mediterranean Shipping Co [2005] NSWLEC 159 at [11]. The defendants submit that it is not possible in this case to determine the quantity of oil discharged beyond reasonable doubt. Where, as in this case, there is no concrete measurement of the amount involved the defendants are entitled to have the extent of the spill assessed on the basis of the lower range of the estimates given: Filipowski v Island Maritime Limited [2005] NSWLEC 73 at [28].

32 There is some debate about the composition of the discharge. The No 11S wing tank, the contents of which entered the No 9S tank and then the Harbour, was described by Captain Clark, Mr Hearne and Captain Read as a 'slops' tank, whereas Mr Burge asserted that it was a 'sludge' tank, containing fuel oil sludge, lubricating oil sludge and oily engine wear products. The evidence of those with personal knowledge of the ship discloses that the tank was used to store waste water which may or may not have been contaminated by oil, cargo, dust, waste, engine room bilges and cargo hold bilges. It is clear nevertheless that the tank No 11S, no matter what designation is assigned to it contained a mixture of oil and water.

Environmental harm 33 No survey of the environmental impacts of the spill took place until September 2004, almost three years after the event. Consequently there is no direct evidence of environmental harm.

34 The prosecutor relied on the evidence of Mr William Rooney of W S Rooney and Associates as to the extent of environmental harm. Mr Rooney's report was based upon his review of the affidavit evidence and upon his observations made during a site inspection of the subject area on 8 September 2004. Mr Rooney's assessment was that the spill was quite severe in terms of the quantity of oil and the duration of exposure. He formed the view that the spill would probably have killed most sessile organisms within the intertidal zone and that the food web remained disturbed in the area around the wharf at the time of his survey. He concluded that the

probable actual harm that did occur to the marine environment was virtually the worst or maximum that could have occurred under the circumstances. 35 The defendants rely upon the evidence of Dr Marcus Lincoln-Smith of The Ecology Lab Pty Limited. Dr Lincoln-Smith assesses the consequences of the spill as relatively minor. He considers that there are no sensitive ecological areas within or close to White Bay and that the spill impacted only a restricted area within the Bay. Dr Lincoln-Smith points out that the spill area is likely to be subject to a wide range of anthropogenic impacts, including surface contaminants from other parts of the harbour.

36 Dr Lincoln-Smith disagrees with Mr Rooney's opinion that most of the sessile organisms in the intertidal zone within the spill area would have died. He says that although there would have been deaths, there would not have been "mass mortality" to the extent referred to by Mr Rooney.

37 Dr Lincoln-Smith thought that recovery of the marine ecology would commence within a timeframe of months up to a year following the spill and would be "well on the way to recovery" within 12 months of the incident whereas Mr Rooney stated that the area had not recovered at the time of his inspection in September 2004.

38 Dr Lincoln-Smith's survey was more comprehensive, both in terms of physical examination of the site and review of literature. The defendants submit that Mr Rooney's evidence should not be accepted. His conclusion as to the likely mass mortality of organisms in the intertidal zone is, they say, baseless. As to his contention that the food web remained disturbed at the time of his report, it is submitted on behalf of the defendants that Mr Rooney is not in a position to express an opinion based on his own observations and knowledge.

39 For the purpose of determining the severity of the consequences the defendants are entitled to the benefit of any doubt in that respect. I accept the evidence of Dr Lincoln-Smith as reflecting the most likely impact from the spill.

What could have been done to avoid the spill 40 The prosecution submits that the Shipboard Oil Pollution Emergency Plan ("SOPEP") required the Master, in the circumstances where there was doubt as to the integrity of the No 9S tank, to have the suspect tank, adjacent tanks and the hull thoroughly inspected.

41 The introduction to the SOPEP states that the document sets out "steps to be taken when a pollution incident has occurred or is likely to occur". At the time the Master directed the Electrical Engineer to recommence deballasting of the No 9S tank no pollution incident had occurred. Nor was it reasonable for the Master to suspect that a pollution incident was likely to occur.

42 The SOPEP also sets out guidelines for pollution prevention. Relevant to the discharge of ballast is paragraph C412 which requires:

Loading and discharging operations are to be closely supervised and all necessary precautions taken to prevent environmental pollution…

The surface of ballast tanks is to be visually inspected for contamination on a regular basis. 43 There is no suggestion that the defendants did not regularly inspect the surface of ballast tanks for contamination. Indeed the Master had observed that there was no oily sheen on the surface of the No 9S tank only eight hours before the incident occurred. 44 The prosecution witness Mr Burge gave evidence that he believes a sounding of tank No 9S should have been carried out prior to the recommencement of deballasting. He concedes that his approach was based on a practice of "erring on the side of caution". The defendants submit that this was a "counsel of perfection".

45 Mr Hearne (who says he implemented the SOPEP on the Tavake Oma) thinks that prudent practice does not require a sounding to be carried out prior to recommencing deballasting operations where there is no suspicion of contamination.

46 The defendants submit that Mr Hearne's evidence as to prudent practice should be accepted over that of Mr Burge because Mr Hearne's experience at sea was current at the time of the incident, whereas the evidence of Mr Burge was not.

47 The defendants reject any submission that the Master acted contrary to the SOPEP. It has not been suggested that the SOPEP, or any other procedures on board the Tavake Oma, did not reflect prudent practice. For reasons that appear later I have concluded that the Master did not act imprudently carelessly or otherwise than in accordance with accepted procedure.

The Master 48 It is submitted on behalf of the Master that he should receive the benefit of section 10 of the Crimes (Sentencing Procedure) Act 1999, which relevantly provides as follows: (1)Without proceeding to conviction, a court that finds a person guilty of an offence may make any one of the following orders:

(a) an order directing that the relevant charge be dismissed,

(b) an order discharging the person on condition that the person enter into a good behaviour bond for a term not exceeding 2 years,

(c) an order discharging the person on condition that the person enter into an agreement to participate in an intervention program and to comply with any intervention plan arising out of the program.

(2)An order referred to in subsection (1) (b) may be made if the court is satisfied:

(a) that it is inexpedient to inflict any punishment (other than nominal punishment) on the person, or

(b) that it is expedient to release the person on a good behaviour bond.

(2A)An order referred to in subsection (1) (c) may be made if the court is satisfied that it would reduce the likelihood of the person committing further offences by promoting the treatment or rehabilitation of the person.

(3)In deciding whether to make an order referred to in subsection (1), the court is to have regard to the following factors:

(a) the person's character, antecedents, age, health and mental condition,

(c) the extenuating circumstances in which the offence was committed,

(d) any other matter that the court thinks proper to consider. 49 The principles applicable to exercise of the discretion under section 10 in the circumstances of a strict liability offence are comprehensively reviewed in Thorneloe v Filipowski (2001) 52 NSWLR 60. Two relevant considerations discussed in Thorneloe arise in the current matter.

50 Firstly there is the question of the amount of oil discharged when the event took place. I prefer Captain Read's first hand assessment of the area over which the oil spread in White Bay to the estimate by Dr King based on the freehand sketch plan prepared by Mr Jeffrey. However Captain Read underestimated the thickness of the oil on the surface by a factor of at least three. His estimate therefore should be increased to at least 412.5L, which contrasts with the 1050L calculated by Dr King. Adopting 500L as a reasonable estimate deduced from the evidence as a whole also takes into account the difference between Dr King and Captain Read in respect of the estimated coverage expressed as a percentage of the total area affected. It cannot be said that the spill or discharge was minor.

51 Secondly I am satisfied that Captain Clark acted diligently after he first became aware of the discrepancy between the levels in tanks No 10C and No 9S and that he took all the practical steps open to him to discover whether there was a defect in either of those tanks. In particular he tested No 9S tank for leaks. He did not observe oil on the water in that tank when he stepped into it. Hence there was no indication of oil leaking from No 11S into No 9S at the time of his inspection.

52 I accept the evidence of Mr Hearne over the evidence of Mr Burge to the effect that prudent practice did not require a sounding to be carried out prior to recommencement of deballasting operations where there was no reason to suspect contamination of No 9S tank.

53 Either the fracture in the plating between No 11S and No 9S occurred for the first time between the time of the inspection at 2300 hours on 10 October 2001 and the next morning when pumping from No 9S recommenced or the defect did not become manifest, for whatever reason, until after the inspection. It has not been demonstrated how or when the fracture occurred. Nor has it been shown that Captain Clark overlooked or disregarded any fact that could have alerted him to the prospect of a leak from No 11S to No 9S.

54 As was the case in Thorneloe I find that there was nothing the Master could have done to prevent the discharge. The provisions of the SOPEP relied upon by the Prosecutor only apply after a spill has occurred or is likely to occur. There is nothing in the SOPEP drawn to my attention that would apply to the circumstances faced by Captain Clark in the middle of the night of 10 October 2001. He responded to the report made to him when he came on duty using practical common sense and his experience. In the event that did not prove to be enough but nothing more could have been expected of him.

55 Although any discharge of oil into waters must be regarded as serious nonetheless in relative terms the subject spill can be regarded as being at the lower end of the scale of magnitude. I am satisfied, according to the judgment of the Court of Criminal Appeal in Thorneloe in particular the Chief Justice, that the Master Captain Clark is entitled to benefit from a section 10 order. Captain Clark as Master could not, as a matter of practical reality, have done anything to ensure that the offence and its adverse consequences did not occur.

56 If I proceeded to conviction of Captain Clark the punishment would be a nominal fine. There is no record of any previous convictions. He has been at sea since 1974 and obtained his Master Class 1 Certificate in 1987. No adverse evidence has been received in relation to his character or antecedents. The whole of the circumstances surrounding the offence are sufficiently extenuating to justify the application of section 10 in the case of the Master.

The Owner 57 No submission has been made that the owner be given the benefit of a section 10 order.

58 I have already said that the discharge of oil from the ship cannot be regarded as minor or trivial. Nevertheless the court is entitled to take into account the fact that the ship was the subject of an Intermediate Class Inspection in March 2001 and that necessary repairs and maintenance were undertaken to reflect the adverse aspects of the report after that inspection.

59 The object of creating strict liability for an offence is to encourage greater vigilance to prevent harm to the environment. The SOPEP prepared on behalf of the company apparently provides little guidance, if any, to the operating crew where certain events occur. Nevertheless it has not been adequately demonstrated to me that a SOPEP necessarily should take account of all the contingencies that might occur as a consequence of a fault in plates between tanks. It is particularly difficult in this case because the cause of the 20mm fracture has never been identified or explained. Nevertheless the Marine Pollution Act provides for strict liability.

60 The Court is required to take account of five principal general considerations when sentencing namely general deterrence, personal deterrence, retribution, rehabilitation and protection of the community. Rehabilitation does not arise in the present context of a corporate defendant. There was harm to the environment and even on the more conservative estimate of Dr Lincoln-Smith this would have extended over a period of at least twelve months. The owner has overall responsibility for the seaworthiness and structural soundness of the ship and must expect to take responsibility for an event that leads to discharge of oil or other substances into the water.

61 Nothing adverse has been noted against the owner and I will proceed to impose a fine on the basis that it has a clear record. The owner has paid the cost of the clean up in the sum of $57,185.90.

62 Having regard to the degree of seriousness of the spill being at the lower end of the scale of magnitude and the maximum penalty of $1.1m I propose to fine the defendant owner an amount of $50,000. I have taken into account an appropriate allowance for the early plea of guilty and the cooperation between the crew and the SPC in respect of the clean up operation (R v Thompson (2000) 49 NSWLR 383).

Costs 63 There has been no direct argument regarding a costs order but nevertheless it is appropriate for the defendant to pay the prosecution's costs as agreed or assessed.

64 Following the repeal of clause 8 of the Land and Environment Court Regulation 2000 and the Legal Profession Act 1987 the Court has made new rules pursuant to section 74 of the Land and Environment Court Act 1979 and subsection 4(2) of the Criminal Procedure Act 1986 in relation to determination of costs in proceedings in Class 5 of the Court's jurisdiction if no agreement is made between the prosecutor and the defendant. The rules are contained in Part 16 Division 3 of the Land and Environment Court Rules 1996 and provide for application to the proper officer of the Supreme Court for assessment of the whole or any part of the costs directed to be paid.

1. In matter No 50044 of 2004 the defendant is found guilty and convicted of the charge in the summons.
2. In matter No 50044 of 2004 a penalty of a fine in the sum of $50,000 is imposed.

3. In matter No 50045 of 2004 the offence is proved but without proceeding to conviction the charge is dismissed pursuant to Section 10 of the Crimes (Sentencing Procedure) Act 1999.

4. The Defendants in both matters are ordered to pay the Prosecutor's costs in such amount as shall be agreed or assessed pursuant to Part 16 Division 3 of the Land and Environment Court Rules 1996.

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