NSWNSWLEC

Newcastle Port Corporation trading as Port Authority of New South Wales v Dudgeon; Newcastle Port Corporation trading as Port Authority of New South Wales v Svitzer Australia Pty Limited

[2015] NSWLEC 139

Land and Environment Court (NSW)|2015-08-14|Before: Moore AJ

View original source

At a glance

Source facts

Court

Land and Environment Court (NSW)

Decision date

2015-08-14

Before

Moore AJ

Catchwords

Filipowski v Rajagopalan (No 2) [2009] NSWLEC 104 Markarian v The Queen [2005] HCA 25
170 LGERA 253 R v Olbrich [1999] HCA 54
199 CLR 270 R v Thompson
R v Houlton [2000] NSWCCA 309

Source

Original judgment source is linked above.

Catchwords

Filipowski v Rajagopalan (No 2) [2009] NSWLEC 104 Markarian v The Queen [2005] HCA 25170 LGERA 253 R v Olbrich [1999] HCA 54199 CLR 270 R v ThompsonR v Houlton [2000] NSWCCA 309

Judgment (39 paragraphs)

[1]

Introduction

The Sentencing Procedure Act (s 21A(2) and (3)) requires that I consider, as elements of the instinctive synthesis process later discussed, any aggravating and mitigating factors concerning the company that are to be taken into account in determining the appropriate sentence for Svitzer.
As can be seen from the discussion that follows, none of the specific aggravating factors in s 21A(2) arise with respect to the company.
The facts giving rise to the spill of oil from the vessel into the waters of Newcastle Harbour have been set out at the commencement of this judgement as has the statutory basis for the charge against Svitzer. It is against those facts and the offence itself that the objective factors are to be considered. The subjective factors are those that are peculiar to the company for this context.
I now turn to address the relevant factors concerning the company.

[2]

[4]

Potential harm to the environment

Preston CJ set out, under the heading Objective harmfulness of offence, in Environment Protection Authority v Waste Recycling and Processing Corporation [2006] NSWLEC 419; 148 LGERA 299, a number of principles. The first of them, relevant in these proceedings, is that "Harmfulness needs to not only be considered in terms of actual harm, the potential or risk of harm should also be taken into account" (at [145]).
There are a number of matters requiring consideration to assess what might have been the potentiality for harm to the environment when compared to the actual results of the spill.
In the Svitzer proceedings, the Prosecutor's written submissions concerning this were: Other than simply considering the volume spill, the area affected by oil and kind of oil discharged; the extent of clean-up operation is an indication of the seriousness of the potential harm to the environment (see paragraph 23 of the agreed facts).
The paragraph referred to sets out the duration and cost of the clean-up operation.
Whilst the potentiality for harm will obviously be greater in proportion to the quantity spilled and the nature of the material spilled, Mr Nell submitted that the potentiality, in this instance, was minor, "having regard to both the nature and qualities of the oil discharged, as well as the movement of the oil within and out of Newcastle Harbour with the wind and tide".
The oil discharged was diesel fuel oil, a substance that was agreed to be one which would readily dissipate and evaporate. Whilst I accept that the nature of the oil discharged is a factor to be considered in my assessment of the potentiality for harm to the environment as a consequence of the spill, the effects of the wind and tide, in this instance, were ones that were serendipitously beneficial but were not ones to which I ought have regard as diminishing the potentiality for harm.
Although there are the quantitative and qualitative differences between the substances involved in the spill dealt with by Sheahan J in Newcastle Port Corporation v MS Magdalene Schiffahrtsgesellschaft MBH; Newcastle Port Corporation v Vazhnenko [2013] NSWLEC 210 and the substance spilled in these matters, the Magdalene facts demonstrate that, in that instance, environmental harm actually occurred from a spill in the Port of Newcastle.
The absence of actual harm in this instance is not proof that there was no potentiality for harm. Although trite to be repeated, the absence of evidence is not evidence of absence.
In this case, the quantity of diesel fuel oil spilled coupled with the fact that an extensive clean-up over three days was necessary to deal with the spill is sufficient, in my opinion, to draw the conclusion that, although there was no actual harm to the environment, nonetheless there was a real and foreseeable potential that there might be harm to the environment occasioned by such a spill.

[8]

Likelihood of reoffending

The second relevant factor is that in s 21A(3)(g) as to whether the company "is unlikely to re-offend".
Since October 2009, there have been three prior discharges of oil or an oily substance into Newcastle Harbour from Svitzer's tugs. The previous discharges were: 1. In October 2009, there was a 1 - 2 litre discharge of hydraulic oil from the vessel "Wilara" from a burst hydraulic line. 2. In February 2012, there was discharge of 5 litres of oily waste from the vessel "Carrington" during an onboard bilge transfer. 3. In July 2013, there was a 12 litre discharge of bilge water from the vessel "Mayfield" into Newcastle Harbour.
As can be seen, the volume of each of these discharges was very small. Although Svitzer has had these three previous discharges into Newcastle Harbour from vessels operated by it, Svitzer had not been prosecuted for any of these events. There is nothing to suggest that these incidents are anything other than uncharacteristic aberrations (Veen v The Queen [No 2] (1988) 164 CLR 465 at 477; Camilleri's Stock Feeds at 700). I am satisfied that these incidents do not warrant me finding that Svitzer is likely to reoffend.
The Agreed Statement of Facts in the Svitzer proceedings records (at [32]) that Svitzer has commenced upgrading its Safety Management System in the following manner: a) Training of all personnel at the Defendant in the new global Harmonised Management System, replacing and expanding upon the existing Safety Management System which involves the training of all of the Defendant's employees on a global basis. In respect of Newcastle, this involves six training sessions to cover all staff and crew. As of 13 March 2014, four of the six sessions had been completed; b) Preparation for accreditation to ISO-14001 - 2008 Environmental Management Systems with external auditing scheduled to begin late in 2014. c) The Defendant has registered in OVMSA (Offshore vessel Management and Self-Assessment), a ship management best practice
Although these propositions relate to the position as at early 2014 (as a consequence of the initial time of settlement of the document), I accept, as Mr Nell informed me from the bar table, that there has been substantial implementation during the intervening period. Mr Cox raised no objection to me taking this statement into account.
Svitzer has appointed an Environmental Officer in Newcastle to implement environmental training and awareness for its employees there.
I am satisfied these steps demonstrate an increased commitment on behalf the company to ensure that an incident such as that giving rise to this prosecution will not occur again. As earlier discussed, Svitzer's prior minor spills do not provide a foundation for any adverse conclusion. I am therefore satisfied that it is unlikely that the company will reoffend.

[19]

Mr Dudgeon's actions giving rise to his offence

As a consequence of Mr Dudgeon having spare time before the end of his shift, he elected to top up the diesel fuel in the daily service tank in order to assist the crew who would be operating the vessel next (and that there was no obligation for him to do so).
As an experienced Chief Engineer, he would necessarily have understood that such an activity needed to be undertaken in a fashion not occasioning any fuel spill from the vessel. Despite this, he chose to carry out the operation in breach of the procedures set out below as mandated by his employer for such transfer operations.
Svitzer's mandated procedures for conducting an internal fuel transfer set out nine steps to be carried out once a determination had been made that "operational activities necessitate internal fuel transfer". These steps were: 1) Inform master that a fuel transfer is required 2) Ensure all alarms and auto cut out switches are operational 3) Sound and record level in the to and from transfer tanks in the Engineer's Diary 4) Ensure overflow tank(s) (where fitted) have adequate capacity 5) Prepare fuel transfer system and commence internal transfer of fuel 6) Actively monitor tank levels during internal fuel transfer process 7) On completion of transfer, stop pump and check all valves are in correct position 8) Advise Master that fuel transfer is completed 9) Record details in the Engineer's Diary including stop and start times
Critically to causing the discharge to occur, Mr Dudgeon: 1. Did not inform the master of the Tug that a fuel transfer was proposed (ignoring Step 1); 2. Did not ensure all alarms and auto cut out switches were operational during the transfer (ignoring Step 2); 3. Did not monitor tank soundings during the transfer (ignoring Step 3); 4. Did not monitor tank levels during the internal fuel transfer process (ignoring Step 6); and 5. Did not stop the pump when the day tank was filled (effectively ignoring Step 7).
The cause of the spill arose from Mr Dudgeon's departure from the vessel whilst the transfer pumping was taking place and as a consequence of his failure to carry out the full processes required by the company's mandated procedures for conducting an internal fuel transfer.
I am satisfied that, had Mr Dudgeon followed the mandated procedures for internal fuel transfers, it would have been inevitable that the spill would not have occurred.
Whilst Mr Dudgeon's conduct is to be taken into account in determining the position of his offending conduct within the descriptive range of seriousness (as discussed later), the Prosecutor has not proved beyond reasonable doubt that Mr Dudgeon was reckless or careless or negligent so as to be an aggravating factor (R v Olbrich [1999] HCA 54; 199 CLR 270 at [27]).

[31]

Other potentially relevant marine pollution cases

I have carefully considered a number of other marine pollution cases to which I have been referred by Mr Cox and Mr Nell. These cases are:

Filipowski v Fratelli D'Amato S.r.l and Ors [2000] NSWLEC 50;
Filipowski v Frey [2005] NSWLEC 661;
Filipowski v Hemina Holdings S.A.; Filipowski v Rajagopalan (No 2) [2009] NSWLEC 104;
Newcastle Port Corporation v MS Magdalene Schiffahrtsgesellschaft MBH [2013] NSWLEC 210;
Newcastle Port Corporation v RN Dredging BV [2013] NSWLEC 217 (RN Dredging); and
Newcastle Port Corporation v Vazhnenko [2013] NSWLEC 210.

I do not consider it is necessary to undertake a detailed analysis of each of them in this judgment.
Although they provide some broad assistance in understanding where various oil spills of differing volumes and oil type might be fitted, broadly, within the range of such offences, they are of limited assistance in these proceedings (at best). This is because the volume and/or nature of the substances discharged varied, significantly, from the factual circumstances in each of these proceedings. In addition, although illustrative of differing environmental impacts caused by the individual spill and of the clean-up measures necessary to be employed in response to them, they are sufficiently idiosyncratic that the combination of all the facts and circumstances disclosed in each case do not make available anything which might be considered to be closely comparable to the facts and circumstances here requiring consideration.
The most potentially useful of the cases set out above is that of RN Dredging where the same general circumstances (of the Chief Engineer forgetting that he had commenced a diesel fuel oil pumping transfer) arose. However, there were also significant relevant differences that limit utility of consideration of this case. Those limitations are:

In RN Dredging, only 200 L of diesel fuel oil was spilt; and
Although the cause of the spill in that instance was also a failure of responsibility of the Chief Engineer, the Chief Engineer was not prosecuted

All the cited cases do, however, assist in understanding the broad range of seriousness (as discussed immediately below) within which the facts and circumstances of this spill into Newcastle Harbour should be fitted.

[33]

CONSIDERATION OF SUBMISSIONS ON SENTENCE FOR SVITZER

The sentencing submissions made by Mr Nell SC on behalf of Svitzer acknowledge that an environmental offence such as the pollution of State waters in contravention of s 8 of the 1987 Act is a potentially serious offence. However, he also submitted that Svitzer had reflected this in the formal operating procedures that it had had in place and which, had they been followed by Mr Dudgeon, would have acted to prevent this spill having occurred.
Mr Nell also acknowledged, on behalf of Svitzer, that the significant increase in the maximum penalty in 2002 reflected a community aspiration that higher penalties would ordinarily be imposed for such offences. However, he submitted: Offences of low criminality remain offences of low criminality even if the maximum penalty is increased and the increase can readily be recognised as operating as a deterrent to wilful disregard of statutory obligations.
However, I am satisfied that, for the reasons earlier articulated concerning the risk of harm to the environment, the volume spilled and attendant risk of environmental harm arising from it are not matters indicative merely of "low criminality".
Mr Nell submitted, on behalf of Svitzer, that "the cause of the discharge was not (as the Prosecutor contends) Svitzer's failure to ensure that its then procedures for internal transfer were being followed, either generally or on this occasion".
I accept this submission that the lengthy experience of Mr Dudgeon in his role as a Chief Engineer when coupled with the clarity of the procedural instructions for conducting internal fuel transfers meant that Svitzer had every reason to expect that any fuel transfer such as that which has given rise to this spill would be conducted competently and in accordance with the company's mandated procedures.
In his submissions for the company (at [61]), Mr Nell also put that Svitzer "should be afforded the benefit of the full extent of the discount of between 35% to 40% that is usually allowed in these cases".
In making this submission, he cited six instances as demonstrating what was usually allowed with two of those instances being the Magdalene and the RN Dredging cases noted above. Whilst, perhaps, the use of the word "discount" in this circumstance is not the most apt terminology, I accept that there needs to be, in my instinctive synthesis of all the factors, appropriate consideration of all the matters I need to take into account (but dealing with the question of any discount for the early plea of guilty separately).

[34]

THE APPROPRIATE SENTENCE FOR SVITZER

Determining the appropriate sentence involves me undertaking an instinctive synthesis of all the objective and subjective factors to determine an appropriate description of the seriousness of the company's conduct and then to consider where this fits, within the range up to the maximum penalty set by the Parliament, to arrive at the appropriate penalty in these circumstances and then, as the following step, to determine the extent to which the penalty so derived should be discounted for the early guilty plea.
In his written submissions for the company, Mr Nell submitted (at [34]) that I should conclude that this is not a worst-case offence and (at [63]) "that the present discharge is well within the lowest category in the scale of seriousness propounded by Stein J in Environment Protection Authority v Orange City Council [1995] NSWLEC 103" .
In his oral submissions for the company, Mr Nell also proposed that I should adopt the approach taken in Magdalene of following the formulation Stein J in Orange City Council, where he postulated a broad, five-step range of penalties within which, in general terms, the offending behaviour might warrant categorisation and then attaching specified percentage bands to each step.
Having considered all the objective factors in Svitzer's case, I am satisfied that it is appropriate to regard the company's offending as being at the upper end of the least worst offences. However, in adopting this position, it should be noted that I am not following the approach taken by Stein J as, in my view, it reflects too great a degree of mathematical precision to be appropriate.
I am satisfied, after consideration of Svitzer's objective and subjective factors and undertaking the process of instinctive synthesis of all these, that the appropriate penalty for Svitzer should be a fine of $800,000.
I am satisfied for the reasons earlier set out that I should make the maximum allowance of 25% for the utilitarian value of the company's early guilty plea, thus resulting in a fine of $600,000.

[37]

PAYING THE FINES TO THE PORT CORPORATION

As earlier noted, in each of the proceedings, the Prosecutor sought, as the third element of the relief claimed, the following: An order that pursuant to s 8 of the Fines Act 1996 (NSW), any fine be paid to Newcastle Port Corporation in accordance with s 21(a) of the Ports and Maritime Administration Act 1995 (NSW).
The provision of s 8(1) of the Fines Act upon which this order is sought to be founded is in the following terms: (1) A fine imposed by any court is payable to the registrar of the court unless the court or the registrar of the court otherwise directs.
The Prosecutor sought this direction for the payment of the penalties to the Port Corporation as it was submitted as being mandated as a consequence of the provisions of s 21A(1) of the Ports and Maritime Administration Act 1995 (the Maritime Administration Act). This provision is, relevantly, in the following terms: 21A Payment of penalties to Port Corporations (1) There is payable to a Port Corporation all penalties recovered for offences against the marine legislation that are recovered in prosecutions brought by (or penalty notices issued by) members of staff of the Port Corporation.
However, as the two prosecutions were initially brought in the name of the Port Corporation itself rather than being brought by a member of the staff of the Port Corporation, s 21A of the Maritime Administration Act was not able to be triggered in these proceedings. The Port Corporation subsequently filed a Notice of Motion in each proceedings seeking to amend the terms of the summons by: 1. substituting Mr Ron Sorensen, the Newcastle Port Corporation's Chief Operating Officer as the Prosecutor; and 2. Adding, as an additional order an order: 3A In the alternative, an order pursuant to section 122 of the Fines Act 1996 (NSW) that half of any fine be paid to the prosecutor, or such other proportion as the Court determines.
On Friday 14 August, I held a short supplementary hearing to deal with these Notices of Motion. Mr Cox did not seek to move on the portion of the Notices of Motion seeking leave to substitute Mr Sorensen as the Prosecutor in lieu of the Port Corporation in each of the proceedings.
Mr Cox explained that, after further consideration of the matters that had been raised, it had been discovered that the words "the marine legislation" contained in s 21A of the Maritime Administration Act were defined in that Act and in the Ports and Maritime Administration Regulation 2012 in a fashion which did not include the 1987 Act. As a consequence, he acknowledged, there was no utility in seeking to change the Prosecutor for the purposes of these proceedings as I could not be given the power to make an order pursuant to s 21A directing the payment of the penalties arising from these proceedings to the Port Corporation.
He did, however, move on the portion of the motions seeking to add, in each proceeding, the proposed order 3A outlined above.
As I had excused the representatives of the Defendants from attending at this additional hearing if they did not wish to be heard on any motions for amendment and they had elected to take advantage of this and were not present, I considered that the motions, to the extent moved upon, were uncontroversial and leave to amend to the limited extent sought was granted for each matter.
In Secretary, Department of Planning and Environment v Boggabri Coal Pty Limited [2014] NSWLEC, 154 Preston CJ observed at [62]: A justification for making a direction under s 122 of the Fines Act in this case is that, under the Environmental Planning and Assessment Act, the Court cannot make an order that the prosecutor be paid the costs and expenses it reasonably incurred during the investigation of the offence, unlike under s 248(1) of the Protection of the Environment Operations Act 1997. An order that the offender pay the prosecutor's legal costs of the proceedings does not include costs and expenses incurred during the investigation of an offence and before the prosecution has been commenced. Payment of a moiety in the fine to the prosecutor may compensate the prosecutor for the costs and expenses it incurred during the investigation of the offence.
As this process of reasoning is equally applicable in each of these proceedings, I have concluded that orders providing that a moiety of each fine be paid to the Port Corporation are appropriate.
However, it is not appropriate that the costs of the supplementary hearing on the Notices of Motion be included in the general costs order for these proceedings as this supplementary procedural hearing arose solely because the Port Corporation wished to cure now emerged defects in the orders originally sought in the Summonses.

Legislation Cited (3)

Marine Pollution Act 1987(NSW)

Fines Act 1996(NSW)

Ports and Maritime Administration Act 1995(NSW)

Cases Cited (16)

Legislation

The Crimes (Sentencing Procedure) Act 1999 (the Sentencing Procedure Act) sets out, in s 3A, the purposes for which a sentence may be imposed. The provision is in the following terms: 3A Purposes of sentencing The purposes for which a court may impose a sentence on an offender are as follows: (a) to ensure that the offender is adequately punished for the offence, (b) to prevent crime by deterring the offender and other persons from committing similar offences, (c) to protect the community from the offender, (d) to promote the rehabilitation of the offender, (e) to make the offender accountable for his or her actions, (f) to denounce the conduct of the offender, (g) to recognise the harm done to the victim of the crime and the community.
The Sentencing Procedure Act also sets out, in s 21A, various aggravating, mitigating and other factors potentially required to be taken into account in a sentencing process. To the extent that the matters set out in these two provisions are relevant to these proceedings, I have had regard to them in the following discussion.
In Plath v Rawson [2009] NSWLEC 178; 170 LGERA 253, Preston CJ set out at [48] a list of matters potentially to be taken into account when assessing the objective gravity of an environmental offence. This list was not expressed as exhaustive. The matters listed by his Honour were:

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

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

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

Those matters relevant to each of these proceedings from each of the above lists together with any other relevant matters are discussed below.

[1995] NSWLEC 103

[2005] HCA 25

(1993) 32 NSWLR 683

(1988) 164 CLR 465

Newcastle Port Corporation trading as Port Authority of New South Wales v Dudgeon; Newcastle Port Corporation trading as Port Authority of New South Wales v Svitzer Australia Pty Limited - [2015] NSWLEC 139 - NSWLEC 2015 case summary — Zoe