Environment Protection Authority v Bartter Enterprises Pty Ltd (No 4)

[2021] NSWLEC 45

Land and Environment Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Environment Protection Authority v Bartter Enterprises Pty Ltd (No 4) [2021] NSWLEC 45

Hearing dates:

24 and 25 March 2021

Date of orders:

21 May 2021

Decision date:

21 May 2021

Jurisdiction:

Class 5

Before:

Duggan J

Decision:

See paragraph 116

Catchwords:

SENTENCING – s 64 Protection of the Environment Operations Act 1997 – objective seriousness – strict liability offence – offence caused by actions of contractor – adequate practical measures taken by Defendant – limited subjective factors – additional penalties – publication order not appropriate

Legislation Cited:

Crimes (Sentencing Procedure) Act 1999

Criminal Procedure Act 1986

Environmental Trust Act 1998

Fines Act 1986

Heavy Vehicle (Adoption of National Law) Act 2013

Land and Environment Court Rules 2007

Protection of the Environment Operations Act 1997

Uniform Civil Procedure Rules 2005

Cases Cited:

Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357

Camilleri’s Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683

Carlino v Leichhardt Municipal Council (2005) 144 LGERA 235

Environment Protection Authority v Baiada Poultry Pty Ltd (2008) 163 LGERA 71

Environment Protection Authority v Barnes [2006] NSWCCA 246

Environment Protection Authority v Bartter Enterprises Pty Ltd (No 3) [2020] NSWLEC 114

Environment Protection Authority v Centennial Newstan Pty Ltd [2010] NSWLEC 211

Environment Protection Authority v Davis [2005] NSWLEC 643

Environment Protection Authority v Orica Australia Pty Ltd (2014) 206 LGERA 239

Environment Protection Authority v Robinson [2004] NSWLEC 629

Environment Protection Authority v Steggles Foods Mt Ku-ring-gai Pty Ltd [2017] NSWLEC 178

Environment Protection Authority v Sydney Water Corporation [2019] NSWLEC 100

Environment Protection Authority v Waste Recycling and Processing Corporation (2006) 148 LGERA 299

Environment Protection Authority v Wollondilly Abattoirs Pty Ltd; Environment Protection Authority v Davis [2019] NSWCCA 312

Environment Protections Authority v P&M Quality Smallgoods Pty Ltd; Environment Protection Authority v JBS Australia Pty Ltd [2017] NSWLEC 89

Markarian v R (2005) 228 CLR 357

Port Macquarie-Hastings Council v David Peter Waite (No 2) [2020] NSWLEC 60

R v Visconti (1982) 2 NSWLR 104

Walden v Hensler (1987) 163 CLR 561

Category:

Sentence

Parties:

Environment Protection Authority (Prosecutor)
Bartter Enterprises Pty Ltd (Defendant)

Representation:

Counsel:
Mr D Buchanan SC and Ms G Lewer (Prosecutor)
Mr T Howard SC and Mr J Smith (Defendant)

Solicitors:
Environment Protection Authority (Prosecutor)
Hones Lawyers (Defendant)

File Number(s):

2019/201063

Publication restriction:

No

Judgment

Nature of proceedings

1. Bartter Enterprises Pty Ltd (the Defendant) was charged with the offence of breaching a condition of its Environmental Protection Licence (the EPL) contrary to s 64 of the Protection of the Environment Operations Act1997 (POEO Act). It entered a plea of not guilty. Those proceedings were heard, and judgment was delivered in Environment Protection Authority v Bartter Enterprises Pty Ltd (No 3) [2020] NSWLEC 114. I adopt the same facts and defined terms in this judgment.

2. The Court found that contrary to s 64 of the POEO Act, the Defendant did not comply with Condition O2.1 of its EPL when it failed to maintain plant comprising the Southern Circuit refrigeration system in a proper and efficient condition, so that on 29 June 2018 Ammonia was introduced into the Southern Circuit when it was not capable of containing Ammonia, and that Ammonia was released into the atmosphere.

3. The Defendant is now before the Court for sentence.

Slip rule – 36.17 of the UCPR

4. In Bartter (No 3) at [10] I expressed myself infelicitously in the fourth sentence of that paragraph where I observed that: He placed “out of service” tags on both valves, which remained in place up to and during the 29 June 2018 incident. What I intended to indicate was that an out of service tag had been placed on the Ammonia supply valves on the Northern and Southern Circuits. To avoid confusion, and as was agreed by the parties, I propose to amend the wording of that sentence pursuant to r 36.17 of the Uniform Civil Procedure Rules 2005 and r 5.2(2)(h) of the Land and Environment Court Rules 2007, such that it will read: He placed out of service tags, inter alia, on the Ammonia liquid supply valves on the Northern and Southern Circuits, which remained in place up to and during the 29 June 2018 incident.

5. The decision in Bartter (No 3) will be amended accordingly.

Facts

6. In addition to facts at [2]-[19] and relevant findings at [49]-[74] as set out in Bartter (No 3), the parties rely on a statement of agreed facts. The facts that follow are some of those agreed facts.

Environmental harm

7. The duration of the discharge of Ammonia gas was less than 10 seconds and the quantity released was about 1 kilogram.

8. Mr Kieron Hayes was the only person known to have been exposed to Ammonia in the immediate vicinity of the point of release. Seventeen of the Defendant’s employees were assessed by paramedics on site and nine were transported to hospital. None of those employees were admitted to hospital.

9. The exposure of the Defendant’s employees to Ammonia appears to have been due to the gas entering the ceiling void above the facility and entering the ceiling penetrations.

10. At 3:30pm and immediately following the release, the Defendant’s maintenance team was advised by the Defendant’s production staff that there was a “strong chlorine smell”. Ten minutes later the building was evacuated. The Defendant took readings in various areas of the plant, which recorded Ammonia levels of between 0 and 13ppm. Staff were allowed back on site shortly after as further readings recorded Ammonia levels of 0.015ppm.

11. At 5:21pm, Fire and Rescue NSW and NSW Police attended and went through the site, took their own readings and left. At 5:48pm, the Defendant took further readings which did not record any detectable Ammonia.

12. Several employees reported feeling unwell and ambulances attended the facility between 6:14pm and shortly after 7:00pm. Fire and Rescue NSW re-entered the site with the Hazardous Materials Response Unit. The site was evacuated a second time. The Hazardous Materials Response Unit confirmed readings of between 33 and 38ppm taken in an unoccupied office directly below the processing building.

Ammonia

13. Inhalation of Ammonia may lead to irritation of the skin, throat and respiratory tract. It may also irritate the eyes if contact is made.

14. Ammonia exposure from the incident was short-term. The following symptoms are associated with Ammonia at the concentrations which were recorded at the site:

• 20ppm – eye irritation may occur.

• 30ppm – slight irritation (after 10 minutes of exposure).

• 50ppm – immediate/moderate irritation of the nose and throat (10 minutes to 2 hours of exposure).

15. Intense irritation begins to occur at 110ppm after 30 minutes to 2 hours of exposure. The Acute Exposure Guideline Levels for Selected Airborne Chemicals state that Ammonia concentrations at 2,500ppm for more than 30 seconds are dangerous to human health and that death can occur at concentrations or 5,000ppm and above.

The Defendant’s safety and management standards and procedures

16. At the time of the offence the Defendant had an Ammonia management standard, the “Baiada National Standard – Ammonia Management Standard”.

17. The Defendant also had a Workplace Health and Safety standard in place that included a section on contractor management.

18. The Defendant had a tag-out/lock-out procedure, the “Baiada Safety Management System – Standard Operating Procedure – Lock-Out Tag-Out (LOTO) Isolation System”. The valve opened by Mr Hayes on 29 June 2018 had an “Out of Service” tag attached to it and this was not removed by Gordon Bros.

Safe Work Method Statements

19. The Gordon Bros employees working on the Southern Circuit on 29 June 2018 failed to comply with applicable Safe Work Method Statements (SWMS). Before introducing Ammonia into the pipework of the Southern Circuit, the Gordon Bros employees:

1. failed to conduct a vacuum test of the pipework with the gauge in order to measure the pipework’s integrity in contravention of SWMS 02, 07, 08 and 17;

2. failed to conduct a leak test of the pipework with dry nitrogen for the same purpose in contravention of SWMS 02, 07 and 08; and

3. failed to notify Mr Mark Rooke (or any other employee of Bartter) that commissioning was occurring, or that Ammonia was being re-introduced to the Southern Circuit in contravention of SWMS 02, 07, 08 and 17.

20. The failure to conduct a vacuum test and the failure conduct a leak test with dry nitrogen departed from the Defendant’s standards and from accepted practice.

Signing of SWMS

21. The Defendant’s Maintenance Manager of the Processing Plant at the Beresfield premises, Mr Mark Rooke, was the contract manager of the Defendant’s contract with Gordon Bros to perform the upgrade to the Ammonia refrigeration system.

22. Mr Rooke oversaw the Gordon Bros employee signing the relevant SWMS in his office on their arrival to the site each day. On the day of the incident, Mr Rooke saw Mr Costello and Mr Hayes sign SWMS 03, 05, 06 and 08. They did not sign SWMS 07 or 17.

23. When attending Mr Rooke’s office on the date of the offence, Mr Costello had not yet formed an intention to recommission the Southern Circuit.

24. On deciding to do so that afternoon he did not inform Mr Rooke or any other employee of Bartter.

Previous incidents

25. On 7 March 2016, an incident occurred at the Beresfield premises involving a discharge of cleaning solution containing chlorine dioxide at a dilution of 0.3% (a “hazardous substance, dangerous goods” that can cause severe burns in its undiluted form (Twin Oxide 0.3% solution)), and water sprays for approximately 10 minutes. The 21 minute long incident occurred in the Cut-Up section of the primary processing plant and resulted in the evacuation of 430 employees.

26. It was thought to be caused by a malfunction of the Twin Oxide Dosing Operation although no cause for the malfunction was established either by the Defendant or by Integra who supplied and serviced the system.

27. That afternoon, a SafeWork NSW inspector issued the Defendant with a penalty improvement notice requiring the installation of a high level alarm and a fail-safe device to prevent exposure to elevated levels. Subsequently, the Defendant implemented a number of technical measures to avoid a recurrence of the incident, ultimately removing the system from operation.

28. On 14 October 2016, the Prosecutor issued the Defendant penalty notice number 3085780491 for the payment by the Defendant of a penalty of $15,000 for an offence of “Contravene Licence Condition – Corporation” in respect of the incident.

29. On 1 December 2016, an incident occurred at the Beresfield premises involving a Contractor called SHYON PTY LTD (SHYON), trading as Mackay Pipe Installations, and a leak of Ammonia gas from a plant room structure which had not been isolated. The Ammonia alarm at the premises was activated and the premises evacuated as a safety precaution. One Bartter employee attended hospital as a precautionary measure. HAZMAT conducted an assessment of the Ammonia gas level, determined it to be safe, and handed the site back to the Defendant. SafeWork NSW were notified of the incidence and inspected the site later in the day.

30. SHYON was a metal fabricator. The Defendant contracted with SHYON to replace the support legs of an Ammonia vertical liquid receiver vessel (VLR), located in a plant room, on 1 December 2016. The legs were corroded and in need of replacement. The Defendant provided the Contractor with an engineer’s plan for the task. SHYON provided support to the VLR for the replacement process by using a proprietary support (an Acrow prop) and by strapping its legs.

31. During the process for repairs, after melting built-up ice, the Contractor noticed that fitting connected to the VLR was weeping, venting small amounts of Ammonia gas. The Contractor contacted Mr Rooke who attended the plant room and manually operated the in-line valves to isolate the fitting. However, in addition to the weeping Swagelok fitting, one of the isolation valves which Mr Rooke operated caused the pipe to vent Ammonia gas.

32. The Defendant accepted responsibility for the incident. The incident was the subject of an Enforceable Undertaking under s 253A POEO Act given by the Defendant, dated 21 November 2017.

Prior convictions

33. The Defendant was convicted of two offences in the Local Court of NSW in proceedings 2019/245278 and 2019/245264 – being breaches of s 235(2)(b) Heavy Vehicle (Adoption of National Law) Act 2013. Section 235(2)(b) provides:

A consignor or consignee of goods for transport by a fatigue-regulated heaving vehicle must take all reasonable steps to ensure the terms of consignment will not result in, encourage or provide an incentive to a relevant party for the vehicle’s driver to cause the driver to…

(b) drive while in breach of the driver’s work and rest hours option;

34. The Prosecutor is not aware that the Defendant has any other convictions.

Evidence

35. In addition to the agreed facts the evidence that was before the Court in Bartter (No 3) was relied upon together with further written and oral evidence of Mr Fryer on behalf of the Prosecutor and Mr White, an employee of the Defendant.

Nature of the charge

36. As identified in [20] of Bartter (No 3) the Defendant was charged with the offence that on or about 29 June 2018 at the Premises it committed an offence against s 64(1) of the POEO Act, which provides that:

64   Failure to comply with condition

(1)   Offence If any condition of a licence is contravened by any person, each holder of the licence is guilty of an offence.

Maximum penalty—

(a)   in the case of a corporation—$1,000,000 and, in the case of a continuing offence, a further penalty of $120,000 for each day the offence continues, or

(b)   in the case of an individual—$250,000 and, in the case of a continuing offence, a further penalty of $60,000 for each day the offence continues.

37. In this case, the Defendant being a corporation (and there being no charge of a continuing offence) is liable to a fine not exceeding $1,000,000. The offence is one of strict liability.

38. In addition to the monetary penalty Part 8.3 of the POEO Act makes provision for the imposition of additional or other orders. In this case, the Prosecutor seeks the additional orders that:

1. The Defendant pay its costs and expenses of the investigation in the amount of $831.76 pursuant to s 248(1);

2. An order that any fine imposed be paid to the Environmental Trust established under the Environmental Trust Act 1998 pursuant to s 250(1)(e) of the POEO Act and s 8 of the Fines Act 1986; and

3. A publication order pursuant to s 250(1)(a).

39. The Defendant does not submit that a monetary penalty should not be imposed or that the orders sought in (1) and (2) above should not be made. The Defendant does submit that the publication order should not be made in the circumstances of this case.

Sentencing principles

The purposes of sentencing

40. In determining the appropriate sentence to be imposed regard is to be had to the purposes that a sentence is intended to serve. The purposes of sentencing have been identified in the Crimes (Sentencing Procedure) Act 1999 (CSP Act) as:

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.

Statutory matters required to be taken into account in sentencing

41. The CSP Act then makes provision in s 21A with respect of factors that are relevant for consideration in sentencing, which may have the effect of aggravating or mitigating a sentence in a particular matter.

42. It is to be noted that where a Prosecutor contends that a particular sentencing consideration should be treated as an aggravating feature it must establish by evidence, beyond reasonable doubt the presence of such aggravating factor. Where a Defendant contends for the presence of a mitigating factor in sentencing it must establish the presence of such factor on the balance of probabilities: Environment Protection Authority v Sydney Water Corporation [2019] NSWLEC 100 at [131].

43. For the purposes of sentencing in this matter the Prosecutor did not identify any particular aggravating factors as provided for in s 21A of the CSP Act as being relevant to the determination of an appropriate sentence. The Defendant identified the following mitigating factors as being relevant to the determination of sentence:

21A   Aggravating, mitigating and other factors in sentencing

(1)   General In determining the appropriate sentence for an offence, the court is to take into account the following matters—

(a)   the aggravating factors referred to in subsection (2) that are relevant and known to the court,

(b)   the mitigating factors referred to in subsection (3) that are relevant and known to the court,

(c)   any other objective or subjective factor that affects the relative seriousness of the offence.

The matters referred to in this subsection are in addition to any other matters that are required or permitted to be taken into account by the court under any Act or rule of law.

…

(3)   Mitigating factors The mitigating factors to be taken into account in determining the appropriate sentence for an offence are as follows—

…

(f)   the offender was a person of good character,

(g)   the offender is unlikely to re-offend,

(h)   the offender has good prospects of rehabilitation, whether by reason of the offender’s age or otherwise,

(i)   the remorse shown by the offender for the offence, but only if –

(i)   the offender has provided evidence that he or she has accepted responsibility for his or her actions, and

(ii)   the offender has acknowledged any injury, loss or damage caused by his or her actions or made reparation for such injury, loss or damage (or both),

(m)   assistance by the offender to law enforcement authorities (as provided by section 23),

…

(4)   The court is not to have regard to any such aggravating or mitigating factor in sentencing if it would be contrary to any Act or rule of law to do so.

(5)   The fact that any such aggravating or mitigating factor is relevant and known to the court does not require the court to increase or reduce the sentence for the offence.

44. Section 241 of the POEO Act makes provision for matters to be taken into consideration in imposing penalty. It was to these factors that both the Prosecutor and Defendant submitted were most relevant in determining the appropriate sentence in this case.

241   Matters to be considered in imposing penalty

(1)   In imposing a penalty for an offence against this Act or the regulations, the court is to take into consideration the following (so far as they are relevant):

(a)   the extent of the harm caused or likely to be caused to the environment by the commission of the offence,

(b)   the practical measures that may be taken to prevent, control, abate or mitigate that harm,

(c)   the extent to which the person who committed the offence could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence,

(d)   the extent to which the person who committed the offence had control over the causes that gave rise to the offence,

(e)   whether, in committing the offence, the person was complying with orders from an employer or supervising employee.

(2)   The court may take into consideration other matters that it considers relevant.

Objective seriousness of offences

45. The determination of an appropriate sentence is to be undertaken bearing in mind that:

A sentence should never exceed that which can be justified as appropriate or proportionate to the gravity of the crime considered in light of its subjective circumstances: Bentley v BGP Properties Pty Ltd (2006) 145 LGERA 234 at [162].

46. The primary factor to be considered in sentencing is the objective seriousness of the offences. The objective seriousness of the offence fixes both the upper and lower limits of proportionate punishment: the upper, as a sentence should never exceed that which can be identified as proportionate to the gravity of the particular crime; and the lower, as an allowance for the subjective considerations can never produce a punishment that does not reflect the objective seriousness of the offence: Environment Protection Authority v Waste Recycling and Processing Corporation (2006) 148 LGERA 299 at [139]-[140].

47. The objective gravity of the offence is to be judged by two principal components: the precise acts or omissions of the offender; and, the consequences of those acts or omissions: Environment Protection Authority v Baiada Poultry Pty Ltd (2008) 163 LGERA 71 at [22].

Nature of offences and maximum penalty

48. Having regard to the fact that the relevant offence arises under the provisions of the POEO Act, for the purposes of the consideration of sentence in these proceedings, it is appropriate to have regard to the stated objects of that Act which relevantly includes:

3 Objects of Act

The objects of this Act are as follows:

(a)   to protect, restore and enhance the quality of the environment in New South Wales, having regard to the need to maintain ecologically sustainable development,

…

(d)   to reduce risks to human health and prevent the degradation of the environment by the use of mechanisms that promote the following:

(i)   pollution prevention and cleaner production,

(ii)   the reduction to harmless levels of the discharge of substances likely to cause harm to the environment,

(iia)   the elimination of harmful wastes,

…

(e)   to rationalise, simplify and strengthen the regulatory framework for environment protection,

(f)   to improve the efficiency of administration of the environment protection legislation,

…

49. These relevant objects reinforce the public protective nature of the legislative regime and the essential role that the regulation of pollution – through the licensing regime and the prohibition on nominated types of pollution outside that regime – plays in achieving those objects.

50. The strict liability nature of the offence and the quantum of the maximum penalty are indicators of the public expression by Parliament of the seriousness of the offence and the gravity of the offences as perceived by the community: Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 at 359; Camilleri’s Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698.

51. In addition, there is a need for strict compliance with conditions imposed upon an EPL, as the licensing regime is a system of “authorised pollution” and the failure to observe the conditions imposed upon such authority will undermine the achievement of the objects of the POEO Act and the legislative intent of managing the discharge of pollutants into the environment: Environment Protection Authority v Orica Australia Pty Ltd (2014) 206 LGERA 239 at [204]; Environment Protections Authority v P&M Quality Smallgoods Pty Ltd; Environment Protection Authority v JBS Australia Pty Ltd [2017] NSWLEC 89 at [37].

The extent of the harm caused or likely to be caused to the environment by the commission of the offence: s 241(1)(a)

52. The POEO Act contains in the dictionary the following relevant definitions for a consideration of this aspect of sentencing:

harm to the environment includes any direct or indirect alteration of the environment that has the effect of degrading the environment and, without limiting the generality of the above, includes any act or omission that results in pollution.

environment means components of the earth, including:

(a)   land, air and water, and

(b)   any layer of the atmosphere, and

(c)   any organic or inorganic matter and any living organism, and

(d)   human-made or modified structures and areas,

and includes interacting natural ecosystems that include components referred to in paragraphs (a)-(c).

53. These defined terms raise wide ranging considerations relating to this aspect of sentencing.

54. In this case, it is an accepted fact that the offence related to the release to the atmosphere of a substance that is highly dangerous to human health. The inherent danger posed by exposure to Ammonia on human health is a factor that elevates the seriousness of the likely harm to the environment from an event that caused its uncontrolled release.

55. It was fortunate that due to the limited duration and quantum of the release that the potential catastrophic harm that could have occurred to occupants of the premises did not materialise. In this case, as the Prosecutor accepts at [21] of its written submissions, the following factors are relevant to the determination of actual harm:

1. because Hayes shut the valve as soon as he detected the discharged Ammonia, the amount of Ammonia released was not more than about 1 kilogram;

2. the areas affected by the discharge appear to have been an unoccupied office directly underneath the external pipework for the Southern Circuit and the adjacent processing room;

3. the discharge was detected at 3:30pm and staff in the immediate area were evacuated at 3:33pm; after this, at 4:15pm, the Defendant's staff measured the concentrations of Ammonia in specific locations of the plant; the maximum concentration of Ammonia measured at the locations monitored within the processing plant was 13ppm; this is associated with lower levels of injury but was measured some three quarters of an hour after the discharge had first been detected – in other words allowing time for the concentrations to dissipate;

4. the exposure to persons was acute and short-term;

5. twenty-six staff working on site reported symptoms from the exposure. Seventeen received first aid treatment on site. Nine people were conveyed to hospital; and

6. so far as concerned Mr Hayes, he smelt Ammonia after "a few seconds”.

... (i)t sort of overcame me"; he "had to turn around and catch my breath" and then immediately started to shut down the valve; his eyes were "a bit runny'' .

56. The release of the Ammonia was of short duration and of a limited quantity, however, the release had an adverse effect on the Defendant’s employees and on Mr Hayes. This effect was limited, in the sense that it was at the milder end of the range of potential health effects that Ammonia is known to cause to human health. Having regard to the relatively small Ammonia released for a short duration with the actual manifestation of milder effects on persons present on the site, I determine the extent of harm to be at the lower end of the range of actual harm to the environment.

Reasons for committing the offence and state of mind of the offender

57. As the offence is a strict liability offence, the state of mind of the offender is not an element of the offence. However, where the offence is committed with actual intention, recklessness or negligence is relevant to the culpability of the offender and is therefore relevant to the determine the objective seriousness of the offence: Environment Protection Authority v Wollondilly Abattoirs Pty Ltd; Environment Protection Authority v Davis [2019] NSWCCA 312 at [72].

58. In this case, there is no dispute that the actual release of the Ammonia was not caused by the Defendant but was caused by its Contractor: see [19] above. It is the actions of the Defendant to which the determination of this sentence is directed and there is no evidence in this case that would suggest that the Defendant had such a state of mind and, therefore, there is no factor relating to the reason for the commission of the offence that would aggravate the Defendant’s culpability.

The practical measures that may be taken to prevent, control, abate or mitigate that harm: s 241(1)(b)

59. It is with respect to this consideration that the Prosecutor submits that the Defendant’s conduct is to be judged most critically. Whilst the Prosecutor accepted that the Ammonia release was caused by the Contractor and that the Contractor could have prevented the incident by adopting standard industry practices as required by the Contractor’s own SWMS, it did not do so.

60. The Prosecutor also accepts that this consideration is again addressed to the culpability of the Defendant and not the Contractor. It submitted that there were relatively well-known measures that could have been implemented with ease that could have reduced or eliminated the risk of harm to the environment. These factors were identified as:

1. The implementation of the Defendant’s lock-out procedure and the tagging of the missing baseplate;

2. The implementation of the Defendant’s Contractor Management System by proper and actual supervision of the Contractors by the Defendant’s maintenance manager and manager of the contract, Mr Rooke; and

3. The correct completion of the Defendant’s Contractor Checklists.

61. In oral address Senior Counsel for the Prosecutor accepted that in the Prosecutor’s submission factor (1) is the only factor that could have the potential to eliminate the risk and factors (2) and (3) could have only operated to reduce the risk.

62. It is necessary to consider each of these factors in turn.

Lock-out procedure and tagging of missing baseplate

Prosecutor’s submissions

63. The Prosecutor took the Court to the evidence that disclosed that the Defendant had two systems in place as part of its Safety Management System Standard – Operating Procedure that comprised:

1. A Lock-out Tag-out System; and

2. An Out of Service Isolation System.

64. The Lock-Out Tag-Out System:

1. Was “to ensure the correct technique is used when isolating plant and equipment”;

2. It nominated the circumstances in which it was to be used as:

''This isolation device and tag is to be placed by Maintenance Staff and/or approved contractors to isolate an item of plant or equipment from all forms of energy.

This system is for the use of authorised personnel for the purpose of repairing, adjusting, servicing, removing items of plant and equipment."

3. The mechanism for a lock-out was illustrated as either a hasp or a padlock;

4. The nominated procedure defined Lock-Out Tag-Out as:

"Lock-Out Tag-Out (LOTO) - A tag and device/s to physically "lock-out" an item of plant or equipment, rendering it de-activated and de-energised from all forms of energy such as electricity, water, steam, compressed air, hydraulic pressure, gravity, inertia, etc."

5. And the procedure nominated that both a device and tag must be applied – at the same time, not as alternatives and, in particular, the Application/Placement section of that document provided that:

''An appropriate device and tag MUST be fitted at each isolation point."

65. The Out of Service Isolation System provided that:

1. Its objective was to “ensure personnel are shown the correct procedure for removing plant and equipment from service using Out of Service Isolation procedures”;

2. The conditions of use were identified as:

''This tag is to be placed by a person who deems that an item of plant or equipment present a risk to personal safety, food safety and/or environment and is in a condition that requires Maintenance attention."

3. The definitions provided that an Out of Service tag was:

"Out of Service Tag (Caution Tag) - A tag to identify plant or equipment as being not safe for operation use. The tag must contain the words 'CAUTION' and 'OUT OF SERVICE' and provision for name, date and remarks."

4. The procedure provided, by reference to the sub-heading “removal”, that:

"Removal is only by a suitably qualified and competent maintenance person or contractor”

66. The Prosecutor submitted that on a proper consideration of the evidence the Defendant was required by its own procedure to “lock-out” the Ammonia supply valve and had not done so – it had “tagged” it out. If the Ammonia supply valve had been locked out the valve could not have physically been opened until the lock was removed. If locked out the Ammonia release would not have occurred.

Defendant’s submissions

67. The Defendant observed that the manner of breach as specified in the Summons (see [27] of Bartter (No 3)) did not include an allegation of failure to comply with the Defendant’s systems, nor was is put to any of the expert witnesses (or in any of the records of interview) and, therefore, it would not be accepted that this was either a breach of the Defendant’s procedures or reasonable requirements.

Findings on lock-out tag-out procedures

68. I am unable to accept that there was a requirement to be discerned from the Defendant’s procedures that required the Ammonia supply valve to be physically treated so that it was unable to be opened. The two procedures to which the Prosecutor refers are not clear as to how they should be applied in relation to the particular works that were being undertaken at the time of the 2018 incident. The carrying out of the works does not fall squarely into either procedure, however, it is more likely to fall within the lock-out tag-out procedure. The evidence of the physical features of the Ammonia supply valve indicates that such a valve does not physically lend itself to the hasp or lock mechanism identified in that procedure. To the extent that the Prosecutor sought to identify another method of locking the valve that was not identified in the procedure, absent evidence that such methods were available and reasonable those submissions can only be treated as speculative. I cannot, on the evidence, be satisfied that the Ammonia supply valve could have been subject to the lock-out procedure. I further note that no evidence was adduced from any person with relevant experience of valves of this type to identify whether such a valve was either physically capable of being locked out in accordance with the procedure or otherwise treated to achieve the same effect. For those reasons, on the evidence in this matter, I do not find that the Defendant failed to follow an identified required procedure that was a practical measure it could have taken to prevent control or mitigate the harm.

The implementation of the Defendant’s Contractor Management System by supervision

69. The Prosecutor submitted that the Defendant could have supervised the carrying out of the work and that by actually physically supervising the Contractor the Defendant may have detected that the Contractor was not carrying out the work in a suitable manner.

70. I find that this submission does not reflect a practical response to the events leading up to the 2018 incident or a response that is practical in the context of the work. As observed by the Defendant (and is an agreed fact as referred to at [23] and [24] above) the escape of Ammonia occurred because an employee of the Contractor made a decision that he did not communicate to any person, and one that he had not formed at the start of the work day, to bring the circuit back on line without performing the safety procedures dictated to be performed prior to Ammonia being introduced into the circuit: see [19] above. His failure consisted of either:

1. Not carrying out nominated protocols, such as advising the Defendant of his intention to introduce Ammonia and/or testing the line by the introduction of an inert substance; or

2. By incorrectly carrying out protocols, such as applying the pump to test the vacuum without a pressure gauge and ignoring the known audible indication that a vacuum had not been achieved.

71. The manner of supervision that would be required to avoid the incident would be the constant visual supervision of the Contractor by a person sufficiently familiar with this specialised type of work. This is an unreasonable and impractical suggestion. The Defendant had in place a system of checks and had employed a reputable Specialist Contractor who had in place its own safety systems. It is unreasonable to expect the Defendant to assume that the systems in place would fail due to the inexplicable actions of an employee of the Contractor. If the Contractor’s employee had employed any one of the testing regimes or advised the Defendant that he was proposing to recharge the circuit with Ammonia the incident would have been avoided. The adequacy of the Defendant’s and the Contractor’s systems was demonstrated by the recharging of the Northern Circuit without incident by the same Contractors (but a different employee) with the same degree of supervision.

72. I do not find that the Defendant failed in any way to properly manage the contract or the Contractors such that it had control of the causes of the Ammonia release.

The correct completion of the Defendant’s contractor checklists

73. The Prosecutor submitted that on the evidence there were various irregularities in the completion of the Defendant’s Contractor Checklist. Of primary concern was the fact that it appeared that rather than a representative of the Contractor completing the checklist it was completed by a representative of the Defendant and, in doing so, he failed to identify Ammonia as a hazardous substance. This, it was submitted, had the likely consequence that the Contractor’s mind was not focussed on the safety requirements of the works and if it was the employee may not have made the decisions that he did.

74. As set out in the agreed facts, the cause of the release of the Ammonia was not due to any failure in understanding on the part of the Contractor or the Defendant that Ammonia was in use or that it had a potential for great harm to human health. The release resulted from the Contractor’s employee knowing these factors and failing to follow the required procedure. The completion of the checklist would not have relevantly guarded against this extraordinary conduct.

75. Accordingly, I do not find that the manner or form of the completion of the Contractor Checklist could have had any impact on either the Ammonia release occurring, or the consequential harm caused or potentially caused by the conduct.

The extent to which the person who committed the offence could reasonably have foreseen the harm caused or likely to be caused to the environment by the commission of the offence: s 241(1)(c)

76. Where a particular offence relates to the breach of an EPL it is to be taken into account that the Defendant was to a degree aware of the possibility of harm were it not to comply with the terms of its EPL. I adopt the reasoning of Preston J in Environment Protection Authority v Centennial Newstan Pty Ltd [2010] NSWLEC 211 where he found at [81]:

The holder of an environment protection licence is clearly on notice of the possibility of harm to the environment occasioned by any of the activities which it carries out on the site to which that licence relates.

77. In this case, the Prosecutor accepted that the Defendant did not, through its officers or employees, foresee the materialisation of the risk of an Ammonia release on this occasion and that there were significant failures on the part of the Contractor. However, it does contend that Defendant (or a reasonable person in the position of the Defendant) could have foreseen the likelihood of harm in the present case.

78. In particular, the Prosecutor submits that the Defendant had addressed the management of the inherent risk of an Ammonia release during the conduct of the works by employing a Specialist Contractor, and the Defendant should doubt that the risk could be eliminated merely by the retention of a Specialist Contractor. The Prosecutor pointed to the agreed fact at [25]-[32] above that there had been two prior Ammonia leaks, one at the premises and one on a site that was operated by a subsidiary of the Defendant’s parent company. Each of these leaks occurred either during or after works had been undertaken on plant by a specialist operator.

77. Whilst it is a fair characterisation that the Defendant relied heavily on the expertise of Specialist Contractors I do not accept that the Defendant relied solely on such Contractors to eliminate the risk. The Defendant had its own systems in place and additional measures such as the evacuation procedure (which was promptly and efficiently implemented at the 2018 incident) to minimise risk. Further, the facts relating to the two prior leaks were sufficiently different from the present incident that concern about the inherent risk that was present, even where Specialist Contractors were being used, could not have been eliminated in the circumstances that gave rise to the commission of the present offence.

The extent to which the person who committed the offence had control over the causes that gave rise to the offence: s 241(1)(d)

80. The Prosecutor relied on the submissions it made above as to the role of Bartter in the control of the causes that gave rise to the offence to support the submission that Bartter had some control over those causes. As I have not found that the earlier submissions indicate that the Defendant had failed to undertake any reasonable or necessary work, supervision or control over the Contractor and its employees I do not find that the Defendant had any real control over the causes that gave rise to this offence.

Conclusions on objective seriousness

81. Having regard to the nature of the offence, its causes and the actual harm caused by the commission of the offence I find that the objective seriousness of the criminal conduct is in the low range of seriousness. Weighing in my assessment that the offence is objectively serious is the fact that the commission of the offence resulted in actual harm, whilst of acute and short duration. Further, the Defendant is in a position of trust that the community places upon the holder of an EPL to ensure that the terms of that licence are met. However, those factors must be considered in the context of the Defendant’s particular criminal culpability in the circumstances that gave rise to the breach of the condition of the EPL and the resultant harm. As I have found, after considering all of the relevant factors that indicate the Defendant’s objective role, the cause of the offence was the Contractor’s conduct and not any direct or indirect conduct on the part of the Defendant. Balancing all of those objective factors I consider that the facts of this case indicate a low range objective seriousness.

Subjective circumstances of offender

Contrition and remorse

82. In this case, the Defendant submitted at [78]-[79] of its written submission that it had demonstrated an appropriate degree of contrition and remorse in that:

78. For the purposes of section 21A(3)(i) of the Crimes (Sentencing Procedure) Act 1999 (CSP Act), Mr White, while candidly putting that the Defendant has concluded that the primary causes of the Incident was the negligent operational error of specialist refrigeration contractors, has expressed the company's disappointment and displeasure that the Incident occurred. An appropriate discount of the penalty for these expressions of remorse should be taken into consideration by the Court in this case.

79.   The Defendant treats, and continues to treat, any breaches of its policies and procedures as matters of utmost seriousness and importance.

83. In this context, it was submitted by the Prosecutor that the Defendant was not in fact demonstrating contrition and remorse as required by s 21A(3)(i) as the Defendant has not in fact taken responsibility for the breach of the EPL condition, rather it has focussed on blaming the Contractor.

84. During oral address Mr Howard, Senior Counsel for the Defendant frankly conceded (Tcpt, 25 March 2021, p 182(33-37)):

HOWARD: My client does not accept responsibility for this incident--

HER HONOUR: In which case there is no remorse.

HOWARD: There’s no remorse, it’s only regret that this incident occurred.

85. Whilst there is no basis not to accept that the Defendant does regret the offence occurred it has not demonstrated remorse in the sense that is required to form a relevant mitigating factor pursuant to s 21A(3)(i) of the CSP Act. Accordingly, I have not taken the expression of contrition and remorse into account as a mitigating subjective factor in the determination of the sentence in this case.

Assistance to EPA – s 21A(3)(m) and s 23 CSP Act

86. The Defendant’s assistance to the Prosecutor was that as was required by the holder of an EPL in the event of a pollution incident. Accordingly, I do not take into consideration as a mitigating factor the assistance that the Defendant gave to the EPA in connection with the 2018 incident.

Prior convictions – s 21A(2)(d) CSP Act

87. The Defendant has not been convicted of any prior similar offence. However, it has been the subject of a penalty notice and, an enforceable undertaking as set out in the agreed fact outlined above, and two heavy vehicle offences.

88. I do not consider that this past history indicates a tendency to commit offences of the present type. I consider that past convictions are a neutral factor in the determination of this sentence.

Deterrence retribution and denunciation

Specific deterrence

89. The Prosecutor submitted that the circumstances of this case warranted a finding of a need for specific deterrence. The primary foundation for this submission was that the Defendant had failed to take responsibility for its own role in the commission of the offence and continued to place responsibility on the Contractor.

90. For the reasons outlined above, I do not consider the Defendant’s placement of responsibility for the commission of the offence on the Contractor to be misplaced. Notwithstanding that the Defendant considered the Contractor to be the person responsible for the Ammonia discharge, it has implemented further systems such as updating its requirements for permits to work in an attempt to further reduce risks.

91. I do not consider that the circumstances of this case or the antecedent behaviour of the Defendant indicates a need for specific deterrence to be a necessary element in the sentence.

General deterrence

92. The Prosecutor placed considerable emphasis in this matter on the need for general deterrence, as was identified in [13] of its written submission in the following manner:

Emphasis on deterrence

13.   In sentencing for regulatory offences of this type, principles of general deterrence are of central importance. The sentence imposed needs to send a signal to others in like position to the Defendant to deter them from offending in a similar way.

93. In making this submission the Prosecutor relied upon the principles enunciated in: Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 (CCA) at 359; Camilleri's Stock Feeds at 701; Carlino v Leichhardt Municipal Council [2005] NSWLEC 198; 144 LGERA 235 (Lloyd J) at [31].

94. The Defendant resisted the emphasis on general deterrence in the circumstances of this case noting that the principle of general deterrence is always subject to the important qualification that in serving the objectives of general deterrence care must be taken to ensure that the penalty imposed does not cause a particular defendant to “shoulder an unfair burden of community education”: Walden v Hensler (1987) 163 CLR 561 at [570]; Environment Protection Authority v Robinson [2004] NSWLEC 629 at [30]; Environment Protection Authority v Davis [2005] NSWLEC 643 at [27].

95. The principle of general deterrence does have an important role to play in environmental offences. In that context, I repeat the observation made by me in Port Macquarie-Hastings Council v David Peter Waite (No 2) [2020] NSWLEC 60 [92]-[95] that any penalty should be proportionate to the relevant degree of criminality and should not be increased to an extent that it exceeds a proportional sentence merely to give effect to notions of general deterrence.

96. In approaching the concept of general deterrence in this particular matter it is to be borne in mind that for the reasons outlined above the conduct that gave rise to the breach of the EPL was that of the Contractor and not the holder of the EPL. As conduct that is to be the subject of consideration of general deterrence is the conduct of the holder of the EPL it would not be appropriate to consider an element of deterring Contractors (and in this respect I note that the Contractor in this case was not charged with an offence).

97. In the circumstances that I have found relating to the objective seriousness of this offence and having regard to the degree of criminality that the Defendant bore in respect of that conduct it would be inappropriate to emphasise general deterrence in a manner that would result in a fine or penalty that was disproportionate to the Defendant’s criminality. For those reasons, whilst I take into account the concept of general deterrence in the determination of sentence I do not consider that it should be of significant weight in the determination of the financial penalty, but is more appropriate to be considered in the context of the additional penalties sought by the Prosecutor in these proceedings and will be examined in terms in that context.

Consistency in decision making

98. The principle of even-handedness requires that the Court consider if there is any sentencing pattern for like offences in order to ensure that there is a consistent approach to penalty. This approach, however, must also acknowledge that care must be taken in comparing cases where the circumstances of and facts relating to the offences may be quite different: R v Visconti (1982) 2 NSWLR 104; Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 at [365].

99. Neither party identified a particular clearly established range for offences of this type that had been established by past decisions on sentence. The Prosecutor correctly observed that in order to give effect to the purpose of sentencing regard must be had to the particular circumstances of each case. The Prosecutor provided a table of some “comparable cases” that may be of assistance in ensuring even-handedness in sentencing.

100. Having considered the cases to which I was referred I accept that there is no directly comparable case or cases which would indicate that an offence of the type, the subject matter of these proceedings, has an established range of penalty.

101. However, the decision of Pain J in Environment Protection Authority v Steggles Foods Mount Ku-ring-gai Pty Ltd [2017] NSWLEC 178 is a case that appeared to be loosely comparable to the factual subject matter of these proceedings in that it related to the breach of an EPL as the consequence of conduct by the same specialist contractor. In those proceedings, after finding that the objective seriousness of the offence was at the high end of the low range and that there were no steps identified that the Defendant in that case could reasonably have taken to control the escape of Ammonia, her Honour determined the appropriate penalty (before the reduction of 25% for the guilty plea) to be $120,000.

Legal costs and investigative costs

102. It was submitted by the Defendant that it had agreed to pay the Prosecutor’s costs of the proceedings as agreed or assessed and that the quantum of the legal costs that the Defendant would be liable for in this case would be significant. That being said, it did accept that the Defendant was not of such little means that the payment of the legal costs would operate as, in effect, a further penalty of the type considered in Environment Protection Authority v Barnes [2006] NSWCCA 246 at [88].

103. Whilst I accept that the legal costs will be significant and that the payment of such costs in some circumstances may be taken into account in determining the appropriate sentence the legal costs in these proceedings primarily relate to the Defendant’s unsuccessful defence of the proceedings. It is a company of some means and the potential impost of those costs in addition to any fine upon conviction would have been a considered decision taken by the Defendant. In such circumstances I do not consider that the liability for the payment of the Prosecutor’s costs should be a matter taken into account in the determination of the appropriate sentence in this matter.

Publication order

104. In addition to any penalty imposed the Court may make further orders as identified in Division 5 Part 8.3 of the POEO Act. Section 250(1)(a) of the POEO Act provides that:

(1) Orders The court may do any one or more of the following—

(a)   order the offender to take specified action to publicise the offence (including the circumstances of the offence) and its environmental and other consequences and any other orders made against the person,

105. In the context of the purposes of sentencing the publication order serves the functions of: general deterrence, denunciation and recognition of the harm done as a consequence of the offending. Whilst the imposition of a publication order is a common additional order made in environmental offences in recognition of the need for general deterrence, having regard to the nature of environmental offences, it does not necessary follow that a publication order should be made as a matter of course in all proceedings.

106. In each case it is a matter of determining whether the additional requirement for publication is warranted having regard to the purposes that such publication would serve. In this case, for the reasons that I have found, the primary culpability rests on the Contractor and not the Defendant. The conduct that would be sought to be deterred would be the conduct of the Contractor and not the Defendant. As the Contractor is not the subject of the sentence the publication of a sentence relating to the offence of breach of the condition of an EPL by the holder of that EPL is unlikely to resonate with contractors by the publication of the sentence as requested by the Prosecutor.

107. Further, any publication order by its summary form must convey sufficiently particularly the nature of the offence and the conduct which is being denounced. A publication order should not allow inferences as to greater or lesser criminality than the actual sentence imposed. In this case, I accept the Defendant’s submission that even a careful drafting of the terms of any publication order would be insufficient to convey the state of affairs as to the Defendant’s criminal culpability that I have found, namely that the Contractor was the primary if not the exclusive cause of the commission of the offence. To publish a notice that allowed an inference that the Defendant has somehow, by action or inaction, participated in the actual events would be to punish the Defendant by the inference by publication that circumstances existed contrary to the circumstances I have found.

108. For those reasons, I decline to order that a publication order be made.

Monetary penalty to be paid to environmental trust

109. Section 250(e) also provides that the Court may:

(e)   order the offender to pay a specified amount to the Environmental Trust established under the Environmental Trust Act 1998, or a specified organisation, for the purposes of a specified project for the restoration or enhancement of the environment or for general environmental purposes.

110. The Prosecutor seeks an order pursuant to s 250(1)(e) of the POEO Act that any financial penalty imposed on the Defendant be made payable to the Environmental Trust established under the Environmental Trust Act 1998 for general environmental purposes. The Defendant does not oppose the making of such an order. I consider that, in light of the nature of this offence, it is appropriate that such an order be made and that any financial penalty be utilised for general environmental purposes.

Capacity to pay – s 6 Fines Act

111. In the exercise of the discretion to fix the amount of any fine the Court is required to consider any evidence regarding the Defendant’s means to pay a fine and any other matter that is relevant to the fixing of that amount. There is no suggestion that the Defendant does not have the means to pay a fine even if fixed at a substantial amount and there being no further matter raised relating to this consideration I am satisfied that the Defendant has the means to pay a fine of any amount lawfully available to be imposed in this matter.

Appropriate sentence

112. The appropriate sentence is to be derived by an “instinctive synthesis” of all of the relevant factors in order to determine an appropriate proportionate sentence: Markarian v R (2005) 228 CLR 357.

113. In the circumstances of this case there is limited subjective factors that are relevant to that synthesis. It is the objective circumstances of this case that both parties accept will be relevantly determinative of the appropriate sentence. For the reasons I have outlined above, I consider that whilst the release of the Ammonia into the atmosphere was a significant event with actual harm being caused and the risk of much greater harm being sustained if the circumstances were different, the culpability for that action rests with the Contractor and not the Defendant. The culpability of the Defendant in this case is at the low end of the scale. I have accepted that it had in place all reasonable systems and safeguards to ensure that the work could be undertaken with an extremely small residual risk of an Ammonia discharge. It was entirely reasonable in this case for the Defendant to rely upon the Specialist Contractors to undertake the work in a safe and appropriate manner. This did not occur. For reasons unknown, the employee of the Contractor took it upon himself to introduce Ammonia into the system in a manner that was not only contrary to the Contractor’s and Defendant’s written policies, but which was inexplicable on any objective assessment of his actions.

114. The Defendant is, as the holder of the EPL in breach of the condition of the EPL for the reasons I found in Bartter (No 3) and it should be fined an amount that is proportionate to the objective seriousness of the offence and having regard to the acts and omissions of the Defendant.

115. Taking into account the objective seriousness of the charge in light of the factors identified above I have determined that the appropriate sentence in this case includes the imposition of a monetary penalty (and the additional orders relating to legal and investigative costs) in the amount of $50,000.

Orders

116. The Court makes the following Orders:

1. The Defendant is convicted as charged;

2. The Defendant is fined the sum of $50,000;

3. Pursuant to s 8 of the Fines Act 1986 and s 250(1)(e) of the Protection of the Environment Operations Act 1997 the fine imposed by Order (2) is to be paid to the Environmental Trust established under the Environmental Trust Act 1998 for general environmental purposes;

4. The Defendant is to pay the Prosecutor’s legal costs of the proceedings in the amount as may be determined under s 257B of the Criminal Procedure Act 1986;

5. The Defendant is to pay the Prosecutor’s investigation costs in the agreed sum of $837.76 pursuant to s 248(1) of the Protection of the Environment Operations Act 1997; and

6. The exhibits are returned.

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Amendments

21 May 2021 - At [115] inserted "(" before the word "and" and ")" after the word "costs".

Decision last updated: 21 May 2021