Filipowski v Fratelli D'Amato S.r.l and Ors

Land and Environment Court (NSW)|1999-08-03|Before: Talbot J, Mr J

CITATION : Filipowski v Fratelli D'Amato S.r.l and Ors [2000] NSWLEC 50 PROSECUTOR: Barbara Filipowski

PARTIES : DEFENDANTS: Fratelli D'Amato S.r.l Crescenzo Rosato Bruno Furlan FILE NUMBER(S) : 50088 of 1999; 50089 of 1999; 50090 of 1999 CORAM: Talbot J KEY ISSUES: Prosecution :- plea of guilty - penalty - mitigating circumstances - co-offenders LEGISLATION CITED: Marine Pollution Act 1987 s 25, s 26, s 27(1) Crimes Act 1900 s 439, s 442B, s 556A CASES CITED: Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683; Tiger Nominees Pty Ltd and Anor v State Pollution Control Commission (1992) 75 LGRA 71 DATES OF HEARING: 02/03/2000 DATE OF JUDGMENT: 03/16/2000

IN THE LAND AND Matter No. 50088-90 of 1999 ENVIRONMENT COURT Coram: Talbot J OF NEW SOUTH WALES Decision Date: 16 March, 2000

Barbara Filipowski Prosecutor v Fratelli D'Amato S.r.l Crescenzo Rosato Bruno Furlan Defendants

The defendants appear to answer separate charges in respect of the discharge of oil into the waters of Gore Cove, Port Jackson in Sydney Harbour on 3 August 1999 in contravention of s 27(1) of the Marine Pollution Act 1987.

Fratelli D'Amato S.r.l, the defendant in matter No 50088, is the owner of the vessel Laura D'Amato , from which the discharge occurred.

The defendant in matter No 50089 is Crescenzo Rosato who was the Chief Officer of the ship.

Bruno Furlan, the defendant in matter No 50090, was the Master of the ship.

Each of the defendants has entered a plea of guilty.

It is common ground that discharge occurred through the sea chest valves of the ship and that 294 cubic metres (294,000 litres) of Murban oil escaped into the waters of Sydney Harbour.

The discharge took place while cargo was being unloaded to the Shell Oil Terminal in Gore Bay. It went unobserved for at least 25 minutes after it was decided that the use of the sea suction line as a crossover line within the cargo pipeline system would allow a shorter run of cargo line to the port and starboard slop tanks, thereby increasing the rate of discharge from those two tanks.

The exit point for the crossover line to the sea chest valve is through the hull of the ship at a point about 13 to 14 metres below the surface.

Pumping was stopped after the pungent smell of hydrogen sulfide, usually associated with Murban crude oil, was detected. An oil slick was observed developing along the hull to the aft end of the ship's main deck. Oil could be seen welling up from below the water surface.

In order to fully understand the circumstances under which the incident occurred and the apparent cause of the discharge, it is necessary to have some regard to the history of the ship's movements prior to berthing in Sydney and the operation of the cargo pipeline system.

Laura D'Amato is an Italian Flag tanker owned by Fratelli D'Amato and is managed by Shipping Management S.A.M of Monte Carlo, which is part of the V Ships Group.

The Fratelli D'Amato Group of companies owns five vessels, one of which is the Laura D'Amato . The principle activity of Fratelli D'Amato is to charter vessels. The charter fleet comprises approximately 30 Panamax bulk carriers and Handy-size carriers, as well as four tankers. Four new Panamax bulk carriers are presently under construction for the Fratelli D'Amato Group.

The Laura D'Amato was built in 1991 in Japan and purchased by the Fratelli D'Amato Group in 1998. It has delivered cargo to the Shell Terminal in Gore Bay on many previous occasions. It is approved for charter and accepted by many of the worlds leading oil companies, including Shell, Mobil, Standard Oil, Cheveron, Exxon, Elf and Texaco.

The cargo operations on Laura D'Amato are supervised from the cargo control room. Some valves are controlled remotely from the control room, while others are manually activated and operated locally. There are five centre cargo tanks and six wing tanks, including a set of slop tanks.

The cargo pipeline system consists of three main lines supplemented by a system of crossover lines and associated valves.

A sea suction line permits water to be pumped into the cargo system either to provide a water plug between grades of cargo, to wash tanks and lines, or to ship extra ballast in extreme weather conditions.

Any pump can be used on another cargo line by means of crossover valves in the pumproom using the sea suction line as the crossover line.

During the cargo handling operation it is essential that the sea chest valves on the sea suction line be kept closed if the sea suction line is being used as a crossover line. Otherwise, there will be a discharge through the sea chest on the port side, about two metres above the keel.

Between 20 February 1999 and 25 March 1999, the ship was in dry dock in Singapore. All overboard discharges and the sea chest valves were opened, checked and closed after overhaul.

The ship left dry dock on 25 March 1999 for Barrow Island, Western Australia, to load a cargo of crude oil.

On 11 April 1999 an independent cargo surveyor boarded the ship at Barrow Island. The sea chest valves were checked and confirmed as being in the closed position. A red seal, No 0064801, was fixed to the sea chest valves.

After completing loading at the Saladin Terminal, the ship departed for Marsden Point Terminal, Whangarei, New Zealand, where the vessel was again inspected by an independent cargo surveyor who noted the sea chest valves were closed and sealed by the red seal, No 0064801.

Captain Bruno Furlan joined the vessel as Master in Whangarei and Crescenzo Rosato was appointed the Chief Officer/Chief Mate by V Ships.

Cargo was unloaded at Westernport in Victoria on 6 May 1999. A surveyor checked the pumproom, overboard discharges and sea valves and noted that seal No 0064801 was in place on the sea chest valves.

Further cargo was discharged at Zhanjiang in China on 23 May 1999, when the line to the sea chest valve was used without incident.

After bunkering at Singapore and Fujairah in the United Arab Emirates, the vessel sailed to Jebel Dhanna on 4 July to load a cargo of Murban crude oil for Shell in Sydney.

At Jebel Dhanna, an independent cargo surveyor went to the pumproom accompanied by a member of the crew and checked what he understood to be the sea chest valves. The surveyor tested them by turning both valves in a clockwise direction. He concluded they were shut because they would not move. He used seal No AA176067 to seal the valve. He could not recall whether there was a pre-existing seal in place. The ship's pumpman, Ignazio Paterno, was present when the sea chest valves were checked by the surveyor in Jebel Dhanna.

The ship sailed from Jebel Dhanna for Sydney on 5 July 1999.

In a record of interview tendered in evidence, Mr Paterno said he told the surveyor in Jebel Dhanna that the sea chest valves were closed but the only check he carried out was a visual inspection of the lashing and seals which remained in place and indicated to him that the valves were closed. He could not say who was the last person to operate the sea chest valves but he confirmed they were not used in Singapore, between Singapore and Jebel Dhanna, in Jebel Dhanna, or between Jebel Dhanna and Sydney.

On 29 July 1999, before arriving in Sydney, Mr Rosato, the Chief Mate, opened the test lines between the two sea chest valves and checked the manometer to see whether it showed any pressure. The reading was zero. He tried the valves by hand and noticed the seals were in place, including No AA176067.

The Laura D'Amato arrived off Sydney on 29 July 1999 and berthed in Gore Bay on 3 August 1999.

A Shell Shore Officer and the Chief Officer/Chief Mate completed a Ship/Shore Safety Check List. The sea chest valve seals were not checked.

The ship commenced discharging cargo at 14.12 hours.

During the course of the afternoon, a surveyor from the Australian Maritime Safety Authority and an independent vetting inspector checked the vessel. It was observed that a loop of twine, joined by a red plastic seal, connected the two adjacent valve handles on the sea chest valves. The valve spindles were not closely examined and the valve indicators were not read. A warning sign positioned between the valves was observed. The evidence shows the sign to read as follows:-

WARNING! SEA CHEST V/V DON'T BREAK THE SEAL DO NOT OPEN

Because the six wing tanks were not discharging quickly enough, the Mate on duty decided that a shorter run of cargo line to the slop tanks would increase the rate of discharge. The deck cadet was instructed to open crossover valves 203 and 303 so that the sea suction line could be used as a crossover.

The strong smell of hydrogen sulfide was detected at about 18.25 hours.

Shell's Senior Head Operator detected a slick of oil between the port side of the ship and the shoreline. He traced the oil to the aft end of the ship's port quarter below the water line.

He called the Shore Officer on his two way radio and instructed him to stop the pumping immediately.

The Shore Officer contacted the Chief Officer by radio and instructed him to cease pumping.

Chief Officer Rosato described what he then did in a record of interview as follows:- I was on the deck, aft of the manifold, portside. I called by radio to the Third Mate and told him to shut the pump and shut all cargo valves. The Captain overheard this on the radio and asked what is going on. I said oil on sea surface. The Captain asked where is it coming from, ship or shore? First thought coming from terminal and asked shore if they had problems. He said he did not know. I told the Cadet to close valves 203 and 303. He was still in the pump room from opening the same valves. The pumpman and I went down to check.

The pumping stopped at some time between 18.45 hours and 18.48 hours.

It is agreed that by the time the pump stopped, 294 cubic metres or 294,000 litres of crude oil had been discharged into the harbour.

When the Chief Officer checked the sea valves, the seals were intact. The side indicator on the spindles showed that the valves were open.

After ascertaining that the sea chest valves were open, the Chief Officer used a spanner to close them. He described the necessary action as "three or four shoves with a big bar" . It took approximately 20 turns of the wheel to close the valves.

Following notification of the spill, emergency procedures were activated and the ship's crew, together with Shell employees, harbour authorities, the fire brigade and other emergency services joined forces in an effort to maintain the spill within the confines of the area immediately surrounding the ship in Gore Bay. Oil containment booms were deployed as part of the operation.

There is no dispute that the oil which polluted Sydney Harbour on 3 August 1999 escaped though the sea chest valves on the port side of the ship.

There is only minor criticism of the decision to use the crossover capacity, as this is not an unusual tanker practice to provide flexibility.

A report by the Australian Transport Safety Bureau notes that although the arrangement of having the cargo system connected directly to the sea chest would seem inconsistent with the aims of the International Convention for the Prevention of Pollution from Ships 1973 as amended by the Protocol of 1978 (Marpol 73/78), the Convention does not prohibit such an arrangement.

It would be expected that normally a spool piece or a blanked spectacle piece would be fitted as a defence to prevent access to the sea chest valves during the crossover operation. No means of isolation was implemented in the present case.

The Court has been told that it is normal practice that when a sea valve is opened or closed, the wheel is then taken back half a turn so that it can be tested to see whether the valve is open or closed.

The expert conclusion is that while the sea chest valves were visibly secured, the strong possibility is that the two valves were open and that the ship's staff and inspectors had not checked the valve position indicators either at Jebel Dhanna or before arriving at Gore Bay.

The ship's Captain, Bruno Furlan, originally entertained a suspicion that the valves had been left open as an act of sabotage on the part of an employee whose employment was terminated in Singapore. He believed that the pressure gauge had been tampered with. However, there is no proof that any person interfered with the pressure valves and the seals or that there was an act of sabotage on the part of any person. The real explanation of how the sea chest valves were fixed in the open position remains a mystery.

Crescenzo Rosato explained in his record of interview that he was employed by V Ships, the manager of Laura D'Amato . When asked who was in charge of pumping and transfer operations he said:- I am in charge of these operations. The Captain is in overall charge of the ship at all times but has no practical role in pumping and transfer operations.

The Master of the ship, Captain Furlan, had a two way radio to monitor discharge operations and he was in his office dealing with paperwork when the spill occurred. He says it is not part of his direct duties to inspect the sea chest valve. That is part of the Chief Mate's responsibilities. He claims that his duties on arrival of the ship in port are such that he would not be able to check the unloading operations.

Giuseppe D'Amato is the Managing Director of Fratelli D'Amato. It is his opinion that the V Ships Group, with more than 370 vessels under its management is one of the foremost ship management companies in the world.

As a consequence of the spill in Sydney Harbour, V Ships issued a circular to the Masters of all ships under its management to ensure that the incident is not repeated.

It is instructive to set out the probable causes of the Sydney incident from the V Ship's circular as follows:- 2) Probable causes of Incident a) Primary cause of the Incident Pollution occurred because the sea chest valves were in the open position instead being closed. b) Other Causes The official investigation held by the Port authorities and by the Group Safety & Quality Director does not reveal who left the sea chest valves in the open position in spite of both valves being sealed and thought to be closed.

The comments below are, in the writer's opinion, sufficient to identify the causes of the incident:

Adherence to Company Safety Procedures and Instructions.

The Chief Officer and the Pumpman were not strictly adhering to the Company instructions relative to all the checks to be undertaken before commencing the discharge operations.

Company Form OP 58 requires that before commencing discharge/loading operations the "Sea valves must be examined and correctly set, lashed and sealed".

Although he was ordered to check the sea valves, the same was done superficially by the Pumpman. He was satisfied that the valves were sealed, but he made no physical check to ensure that the valves were in a closed position.

Chief Officer had not himself carefully investigated if the sea chest valves were closed. Company instructions to check the tightness of the sea chest valves according to Oil Pollution Prevention Manual were not completely adhered to.

The Chief Officer, instead of carrying out the pressure test of the sea chests, was only checking if the manometer between the two sea chests was indicating a zero pressure (this can signify that seawater is not entering the line of the sea chests). In fact the test made was showing a zero pressure, but after the incident, with effecting a proper test it was found that the manometer was not working. 3) Conclusion

The above mentioned unfortunate incident may not have occurred had it not been for the lax attitude of the Chief Officer, and the Pumpman who did not adhere completely to Chief Officer's orders.

All tankers' Masters are reminded by the circular that, inter alia, pressure tests of the sea chest valves must be undertaken each time before the vessel carries out discharge or loading operations and tests logged. Furthermore, examination of the sea chest valves must also include a physical check to ensure that valves are positively closed, despite being lashed and sealed.

The conclusion by V Ships is confirmed by Peter Edwin Burge, a Consultant Marine Engineer retained by the prosecution, who concludes that the spillage of oil from Laura D'Amato was caused because the ship's officers had not followed good marine practice by their failure to properly test the cargo discharge system and because they had not followed sound operational practice in their management of the discharge of the cargo.

He holds this opinion principally because of the following facts:- Chief Officer Rosato had not effectively tested the integrity of the sea valves S1 and S2 during the voyage between Jebel Dhanna, when a seal was affixed to the valves by the SGS surveyor, and the cargo discharge operation at the Shell terminal at Gore Bay.

… [I]t would have been good operational practice for the Chief Officer to have carried out more than one of the following tests immediately prior to the vessels arrival in Sydney: (i) Checked the valve position indicators;

(ii) Opened the vent from the space between the two sea valves S1 and S2 (as recommended by ISGOTT and Prevention of Oil Spillages Through Cargo Pumproom Sea Valves);

(iii) Carried out a full static pressure test of the space between the two sea valves S1 and S2 (as recommended by ISGOTT and Prevention of Oil Spillages Through Cargo Pumproom Sea Valves).

The Chief Officer has stated that he tested the integrity of the sea valves by using only the pressure gauge to check the pressure in the short section of pipe between the two sea valves S1 and S2. This test is not amongst those recommended in the industry guide book "Prevention of Oil Spillages Through Cargo Pumproom Sea Vales [sic]" and is unreliable.

The ship's officers used the sea crossover pipe as a cargo-cross over line for cargo discharge. The industry guide book "Prevention of Oil Spillages Through Cargo Pumproom Sea Valves" expressly warns that there is a risk when using the sea cross over pipe and … the practice should be avoided where possible. … [I]t was quite possible for Laura D'Amato's officers to have discharged cargo oil by at least two other methods without using the sea crossover pipe as a cargo crossover line. If they had used the alternative cargo crossover methods, the spillage would not have occurred.

Peter James Kailofer, a Master Mariner with 28 years of oil tanker experience also believes that if the correct sea valve test had been carried out and if correct pre-arrival procedures had been followed, the sea chest valves would have been found to be open on 3 July and 29 July 1999. Further, he believes that if correct procedures had been followed on setting up cargo pipelines and valves prior to, and subsequent to, cargo operations on arrival and departure from Jebel Dhanna and on arrival in Sydney, they would have been found to be open, either on setting up to load or after loading in Jebel Dhanna, or prior to discharging in Sydney.

The above conclusions and opinions are not disputed in any real or significant way by the defendants. The Court therefore accepts that the spill occurred as a consequence of the failure to carry out proper and adequate tests of the sea chest valves before implementing the risky procedure of using the sea crossover pipe as a cargo crossover line during the unloading operation.

Photographs produced to the Court together with a video taken from the air several days later confirm that the area of affectation from the spill was a wide one despite the prompt implementation of preventative measures by various agencies. The oil spread across the waters of the Parramatta River, the Lane Cove River, the inner harbour and along the northern foreshore in the main harbour.

During the night of 3 August 1999 complaints of strong smells of gas and oil fumes were received from people in the Sydney suburbs bounded by Asquith, Davidson, Manly, Randwick, Vaucluse, Potts Point, the City, West Concord, Ryde and Southern Sydney. Initially calls were principally received from the Northern suburbs, but by 10.00 pm calls were also received from South Sydney. The 000 emergency number was overloaded to the extent that calls were diverted to Newcastle and then to Wollongong.

A health alert was issued to warn people in many parts of the city that they may experience odours which could cause irritation without long term effects. People were advised to remain indoors with their windows and doors closed and to seek medical advice if there was an increase or worsening of asthma or other respiratory complaints.

The smell of oil vapour was strong until about 10.00 pm, but by midnight the odour was dissipating. There is no record of a report of smell the next day.

The Court has been told that favourable weather conditions averted what may have been a more serious incident given the explosive nature of the spillage.

The volatile hydrocarbon vapours which escaped into the atmosphere were dispersed by the prevailing south/south westerly breeze.

The components evaporating from the oil included hydrocarbons of various types such as paraffins, cycloparaffins, naphthenes, olefins, small amounts of cyclic aromatics (such as benzene) and sulfur in the form of hydrogen sulfide, the odours of which are detectable at very low levels.

According to Michael J Morrison, an expert in the field of Petroleum Product Evaluations, inhalation of the vapours from the crude oil could cause nausea, dizziness, eye irritation and headaches and in extreme cases, vomiting and narcosis which can be fatal in cases of prolonged over exposure.

Ian Grocott Krimmer, an Inspector with the New South Wales Fire Brigade, received advice that strong smells of gas and oil fumes were reported in the Sydney Town Hall, the Art Gallery of New South Wales, the Sydney Opera House (causing the suspension of a performance), the Royal North Shore Hospital (causing the turning off of the air conditioning) and from the Ku-ring-gai Council (which caused a council meeting to be suspended).

There is no report of an increase in the incidence of health problems arising as a direct consequence of the incident.

By 5 August 1999 analysis indicates that very little of the volatile fraction of the floating crude oil remained.

Philip Mulvey, an environmental scientist, stated in his report commissioned on behalf of the prosecutor, that this is consistent with the odour, which had reduced considerably after the first evening.

Site inspections between 4 and 8 August 1999 revealed that effectively all the observable fauna of the mud flats and rocky foreshores in Balls Head Bay had died and oil was being forced into the rocks by the tide and was being trapped on the mud flats where it infiltrated the surficial sediments.

Sampling undertaken in December 1999 and January 2000 on the eastern foreshore of Balls Head Bay, Berry Island Beach, Gore Cove and Gore Creek indicate that Gore Cove and Gore Creek intertidal sediments were unaffected by the oil spill. However, rocky areas and mud flat surficial sediments remained significantly impacted by hydrocarbon sediments. Although limited weathering had occurred, concentrations were found to be well above the most appropriate ecological sediment criteria.

The beach areas no longer contain significant levels of hydrocarbon.

Rocky areas and rocky mud flats continue to leech oil, creating an oil slick on the water with each incoming tide.

This, together with the fact that hydrocarbon levels substantially exceed ecological criteria, suggest to Mr Mulvey that harm from the oil spill is ongoing and will remain so until the mud flat and rock areas are free from oil.

Sixteen birds were received for treatment. One was already dead, a further nine died, while the remaining six were released after treatment. One seahorse was recovered and subsequently died.

The Court has the benefit of a further study by William Rooney, a specialist in Applied Marine Science and Environmental Impact Assessment. He carried out a comparison of intertidal soft sediments from four localities in the vicinity of the spill. The results of his study to date do not show any clear signs of long term ecological impact attributable to the Laura D'Amato oil spill. There is high variability within plots and within locations as well as between locations in a number of biological parameters, including number of taxa, number of individuals and presence/absence of taxa. The only conclusion reached thus far, without statistical analysis, is that Gore Creek appears to be least impacted while Balls Head Bay, Berrys Island Beach and Gore Cove are all ecologically stressed to a greater or lesser degree. Mr Rooney is not able to state whether the stress is due entirely to the Laura D'Amato incident, but he concludes that it is undoubtedly a contributing factor. Any final conclusion is not possible at this time as the process of statistical analysis is continuing.

Overall, it can be said that the environmental consequences of the incident were not significant in terms of the potential for widespread, short term and long term damage to the harbour waters and its foreshores. Congenial weather conditions averted what could have been a major catastrophe on the land.

It must also be said that the prompt reaction by all those agencies who responded to the report of the spill played a significant role in confining and reducing the environmental consequences. The early deployment of booms around the scene effectively contained the majority of the product to the Gore Bay/Balls Head Bay area.

The high flashpoint of the crude oil released presented a significant catastrophic threat to the area of the spillage in the event that any source of fire, static electricity (mobile phones), spark or heat, including ferries/motorboats/vehicle exhausts had been present. Due to the magnitude of the released gas volume in a short space of time, the threat of explosion and the potential for disaster were extremely high, particularly as there were residential and commercial properties comprising real and significant heat sources and flame possibilities, situated very close to the spill area.

The potential for serious harm to the environment as a consequence of an oil spill is a real one. The prospect of a catastrophic effect is not to be discounted. The range of penalty indicates this. The significance of Sydney Harbour, in terms of visual and recreational amenity only serves to enliven an awareness of the importance of avoiding an oil spill during cargo handling operations.

The extent of actual harm caused is not to be measured solely by reference to the death or injury of living species. The spread of oil over such a large surface area of the harbour waters is inherently offensive. It remained over a number of days. There are long term consequences which are yet to be finally assessed.

Notwithstanding the relatively short duration of the impact of a pungent odour, it nevertheless was detected over a very wide area of the Sydney Metropolitan area and was sufficient to give rise to a multitude of complaints. The fact that no direct medical consequences for the health of individual persons have been reported is no more than fortuitous.

Part 4 of the Marine Pollution Act 1987, pursuant to s 26, applies to a discharge of oil into state waters from a ship, in or in connection with a transfer operation.

If a discharge occurs, s 27(1) provides that each appropriate person in relation to the discharge, 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 - 2000 penalty units ($220,000); or (b) if the offender is a body corporate - 10000 penalty units ($1.1 million).

Section 25 includes in the meaning of "appropriate person" the owner or the Master of the ship in relation to a discharge from a ship.

The offence created by s 27(1) is founded upon the occurrence of an event, namely, a discharge of oil. When that occurs, the Master and the owner of the ship are thereupon each guilty of an offence. In the case of the other person whose act caused the discharge, it is necessary to prove how the discharge occurred, whereupon that person is guilty of an offence against the section.

The Chief Officer, Crescenzo Rosato, is charged as a person whose act caused the discharge on the basis that his failure to carry out a proper and adequate test of the sea chest valves before engaging the sea crossover line allowed the oil to be discharged.

By creating an offence of strict liability and imposing substantial penalties in respect thereof, the parliament has declared that it regards the offence to be a serious one.

The impact of the discharge of the oil into the water and the release of fumes was readily foreseeable and simple methods of prevention were available.

The offences were not unforeseen, although they might be regarded as unintended.

The failure to detect the fact that the sea valves were open is understandable to the extent that the wheel was found to be jammed in the open position and did not readily respond to manual pressure. Furthermore, the continuing presence of the seals and lashing between the wheels suggested the valves were closed. The evidence established, however, that these superficial tests were not sufficient. The failure to carry out further procedures is not excusable for any reason. Although the failure to adopt proper procedure was negligent, the Court is not prepared to adopt the submission by Mr Tobias QC that it amounted to gross negligence.

The Court accepts that the incident was uncharacteristic of the defendants in that none of them have been shown to have a propensity for acting without due regard to their responsibilities except to the extent of failure to follow the appropriate procedures in this case.

Accordingly, although serious, the offences are not to be regarded as the worst kind.

In Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683, Kirby P (as he then was) recognised that 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.

The volume of oil which was allowed to escape, the widespread impact of the odour and the extensive area of the surface of Sydney Harbour and the foreshores impacted indicates that the nature of the actual pollution caused by the spill was serious.

The unrealised potential for greater pollution is highlighted by the real prospect of an explosion. The long term effects remain to be finally assessed.

It is axiomatic, for the reasons already outlined, that the object of the Marine Pollution Act is to protect the sea from pollution by oil from ships and requires a substantial penalty to be imposed.

Having regard to the whole of the evidence and the circumstances of the case Mr Tobias suggested that an appropriate penalty would be in the range of 75 per cent of the maximum. In the Court's opinion, this submission on behalf of the prosecutor is an overstatement.

The person or company found to be primarily responsible must nevertheless be regarded as being exposed to a penalty in the range of at least 50 per cent of the maximum penalty imposed by the statute.

It is still necessary to have regard to mitigating factors generally and also in so far as they relate to each individual defendant separately.

The defendants cooperated with and assisted the prosecution and other authorities with their inquiries. Once the prospect of a spill was reported, prompt action was taken to cease pumping.

A plea of guilty was entered in each case at the earliest opportunity. The defendants have facilitated the adducing of the evidence by raising no objection to any part of it and not disputing the prosecutor's version of the events leading up to, and in respect of, the incident itself.

Although the Court was left to subsequently peruse and digest a considerable volume of material presented to it, the approach taken by the defendants enabled the actual hearing to be disposed of in less than one day.

In addition to the cooperation and assistance rendered by the ship's officers and crew, the owners arranged for two advisers from International Tanker Owner's Pollution Federation to be flown to Sydney and placed at the disposal of Sydney Ports.

Costs and expenses exceeding 4.5 million dollars associated with the clean up have been met through the facility of the owner's insurers.

The defendants have agreed to pay the prosecutor's legal costs and disbursements in excess of $400,000.

Through their counsel, Mr Porter QC, each of the defendants have expressed their deep regret that the oil spill occurred.

The character of any one of the defendants is not impugned.

The Court recognises that a company must rely almost entirely upon the capability and diligence of its employees. In the case of a shipping company, the extent of delegation and trust is essentially remote in the sense that direct control over everyday actions and decisions is not possible. That is not to say, however, that the company is entitled to abdicate its responsibility so far as it extends, particularly in relation to the provision and maintenance of appropriate directions in regard to protocols and procedure.

In an affidavit read to the Court, Guiseppe D'Amato, as Managing Director of Fratelli D'Amato, has reiterated the deep regret of his company and apologises for the spill and for the effect on Sydney Harbour and the residents of Sydney.

In order to run and operate the Group's ships, Fratelli D'Amato has engaged the technical and crewing department of Shipping Management S.A.M. of Monte Carlo, part of the V Ships Group, with the intent of providing the best safety and maintenance service to its charterers. The D'Amato family has operated the business in Italy for several generations. The family company has been operating for 130 years. The Group's experience in the tanker market commenced in 1990.

Mr Guiseppe D'Amato has also set out an impressive record of his own personal achievements and public recognition, including a decoration with the title of Knight of the Italian Republic.

Although there is no direct evidence of the antecedents of the company itself, there has been nothing put by the prosecutor which would entitle the Court to assume other than that heretofore it has an impeccable record.

It is not, in my opinion, appropriate to attribute the good character and standing of Guiseppe D'Amato directly to the company even though his role as managing director may be reflected in day to day management and is to some extent indicative of the reputation of the company.

The Court is satisfied that at all relevant times the Captain, Chief Officer and other crew members were severally responsible for the management and functions of the Laura D'Amato in its many facets. They were employed by the company for that purpose. It was the responsibility of the Captain to oversee the total operation.

The Chief Officer, however, had direct and immediate responsibility for the management of cargo handling, including the operational decisions relating to the use of the various lines and valves within the ship.

The system broke down when procedures that fell within the ambit of the Chief Officer were not followed. The Court is satisfied that the Chief Officer was performing a function he was employed and authorised by the agent of the owner to carry out. The failure to perform that function in a proper manner is therefore attributable to the owner as the ultimate employer ( Tiger Nominees Pty Ltd and Anor v State Pollution Control Commission (1992) 75 LGRA 71).

This is not a case where the multiplicity of offenders as between the owner and its employees is accidental and quite unrelated to the merits of the case. The Court is not obliged to treat the imposition of penalty as though there is only one offender. Regard must be had to the comparative gravity of the conduct of the co-offenders and to their respective antecedents.

It is not suggested that the culpability of the owner arises as a consequence of any lack of care in the choice of its employees. However, the penalty must reflect an element of general deterrence as well as a personal deterrence against re-occurrence.

The ultimate damage from the spill was not as great as it could have been under more unfavourable conditions. There has been no financial cost to the citizens of New South Wales. The company has repented and learnt a lesson from the occurrence and taken steps to ensure it does not happen again.

It is appropriate in the circumstances, after taking into account all mitigating factors, including those provided by s 439 and s 442B of the Crimes Act 1900, that a penalty of $510,000 be imposed on Fratelli D'Amato.

Bruno Furlan has held a Master's Certificate for 26 years and was given his first command of a vessel in October 1977. Since that time he has always been employed as a Master on board bulk ore, oil and chemical tankers, owned by a number of multinational companies.

He was not involved directly in the process of unloading cargo, although the evidence is that he was monitoring the activity on board at the time.

He has held the position of a Safety and Pollution Inspector carrying out inspections on board several tankers at the SIOT Terminal at Trieste in Italy.

He deposes that during the period of his career at sea, he has never had an oil spill or any other incident involving a vessel under his command.

The Court accepts that Captain Furlan at the time of the offence had no direct responsibility for the operation of the sea valves.

In an affidavit he swears that he is truly sorry that the oil spill occurred and that "there has not been one day since the spill that I have not thought about the spill and the trouble it has caused. This has caused me great personal distress" .

The most that can be said against the Master of the ship is that he had a responsibility to ensure that safe procedures were followed in all aspects of the tankers operation. It may be suggested that this responsibility is reflected in the subsequent action taken by management to post a circular which dictates that the Master has a responsibility to be satisfied that pressure tests of the sea chest valves are undertaken before the discharge of cargo takes place.

The prosecutor asserts that the Captain is nevertheless responsible to see that the Chief Officer carries out his tasks correctly, including the necessary tests of the sea chest valves.

The Court has no evidence of any directions or instructions given by the Master to the Chief Officer. Nevertheless, Mr Tobias asserts that there were deficiencies in the system of the ship which created a responsibility for the Master. Accordingly, he says, the submission by Mr Porter that all fault lies with the Mate or Chief Officer should be rejected.

However, the Captain of the ship is properly to be regarded as the direct and immediate representative of the owner while the ship is under his command. To punish the Master or Captain of the ship personally for an occurrence over which he had no personal control, except in a detached overall sense where the owner has already been punished on the basis of its vicarious responsibility and the person directly responsible will also be punished, would, in my opinion be an excessive and unreasonable punishment.

The Captain has a good reputation extending over a long period of service without any prior conviction.

Having regard to the whole of the circumstances surrounding the event and its cause and after taking into account the respective duties of the Master of the ship and the Chief Officer or Mate, I am satisfied that it would not be appropriate to convict the Master, Captain Furlan. I find the offence of strict liability proved against him but propose to dismiss the charge under s 556A of the Crimes Act 1900.

The Court has not been assisted with a statement of the previous record of Crescenzo Rosato, either to his detriment or otherwise.

Although the Court has not heard direct evidence from the Chief Officer himself, he made the following statement to interviewing officers in a recorded interview:- It was a bad accident. I am really sorry. I would give anything to go back before it happened - unluckily, it is impossible. I am sorry for all the trouble it has caused the terminal, all the people around here, the residents.

He frankly acknowledged in his interview with investigating officers that although he reports directly to the Captain on a day to day basis and the Captain is in overall charge of the ship, the latter has no practical role in pumping and transfer operations. The evidence of Captain Furlan confirms that the responsibility for opening and closing the valves during unloading of cargo rests with the Chief Mate or Chief Officer.

The evidence places direct responsibility for the offence with him and he has acknowledged his error not only by the plea of guilty, but also in the record of interview.

I determine that an appropriate penalty in his case is $110,000.

The formal orders of the Court are: In matter No 50088 of 1999: 1. I find the offence proved.

The defendant is convicted of the charge as set out in the summons.

The defendant is ordered to pay the prosecutor's costs as agreed or assessed.

The exhibits may be returned. In matter No 50089 of 1999: 1. I find the offence proved.

The defendant is convicted of the charge as set out in the summons.

The defendant is ordered to pay the prosecutor's costs as agreed or assessed.

The exhibits may be returned. In matter No 50090 of 1999: 1. I find the offence proved.

The charge is dismissed pursuant to s 556A of the Crimes Act 1900.

The defendant is ordered to pay the prosecutor's costs as agreed or assessed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

3. The defendant is ordered to pay the prosecutor's costs as agreed or assessed.

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