Environment Protection Authority v CSR Building Products Limited

[2008] NSWLEC 224

Land and Environment Court

of New South Wales

CITATION:

Environment Protection Authority v CSR Building Products Limited [2008] NSWLEC 224

PARTIES:

PROSECUTOR
Environment Protection Authority

DEFENDANT
CSR Building Products Limited

FILE NUMBER(S):

50036 of 2007

CORAM:

Sheahan J

KEY ISSUES:

Prosecution :- pollute waters; Tier 2 offence; plea of guilty

LEGISLATION CITED:

Crimes (Sentencing Procedure) Act 1999, ss.3A, 21A, 22 & 23
Criminal Procedure Act 1986, s.257B
Protection of the Environment Operations Act 1997, s.120(1), s.241, s.246, s.248, s.250

CASES CITED:

Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357
Environment Protection Authority v Waste Recycling and Processing Corp (2006) 148 LGERA 299
Environment Protection Authority v CSR Ltd trading as CSR Woodpanels [2001] NSWLEC 267
State Pollution Control Commission v CSR Limited [1989] NSWLEC 64

DATES OF HEARING:

2 June 2008

 
DATE OF JUDGMENT: 

14 August 2008

LEGAL REPRESENTATIVES:

PROSECUTOR
Mr J Giles
SOLICITORS
Gordon Plath
Environment Protection Authority

DEFENDANT
Mr M Craig QC
SOLICITORS
Henry Davis York

JUDGMENT:

THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Sheahan J

14 August 2008

50036 of 2007 Environment Protection Authority v CSR Building Products Limited

JUDGMENT

Introduction

1 His Honour: The Defendant, a wholly owned subsidiary of CSR Limited, has pleaded guilty to a charge of “pollute waters” contrary to s.120(1) of the Protection of the Environment Operations Act 1997 (“POEO Act”). The charge was laid on 29 June 2007, the plea was entered on 14 March 2008, and the penalty hearing occurred on 2 June 2008.

2 The proceedings concern a “chemical spill” affecting the waters of the Parramatta River between Rydalmere ferry wharf and Camellia rail bridge, west of Duck Creek. The offence was allegedly committed at or near the Defendant’s concrete roof tile plant at 10 Grand Avenue, Camellia or Rosehill, between or about 14 and 15 July 2006.

3 CSR Limited is a large and complex $3Billion/5,492 employee corporation. The defendant company is a wholly owned subsidiary of CSR Limited, and its affairs are covered by the parent company’s annual report. It was formerly known as Monier PGH Holdings Ltd and its Rosehill plant was opened in 2002, and CSR Limited employs about 25 people there.

4 The parties are agreed that a monetary penalty should be imposed on the Defendant, in addition to clean-up etc. and legal costs, and the Court is asked to arrive at a figure, but not make any orders until there have been further negotiations with Parramatta Council about possible orders under s.250 of the POEO Act instead of the imposition of that figure in the form of a fine. The maximum fine is $1,000,000.00.

The evidence

5 The Court has been greatly assisted by the tendering of a Statement of Agreed Facts (“SAF” – Exhibit P1) and an Agreed Tender Bundle (“ATB” – Exhibit P2). These exhibits will remain in the Court file. Their content need not be set out in full in this judgment, but some salient points deserve mention.

6 In addition, the Prosecutor relies upon parts of an affidavit sworn by David Gathercole of the DECC/EPA on 30 May 2008, to which is annexed relevant material concerning (1) clean-up costs, (2) media coverage of the incident and its consequences, and (3) CSR Limited’s annual report for 2007.

7 The Defendant relied upon affidavits sworn by Warwick Juno (Operations Manager, Concrete Tiles Rosehill for CSR Building Products Limited since January 2006), Linden Birch (Group Environmental Manager for CSR Limited), Neill Evans (Executive General Manager, CSR Bricks & Roofing), and Debbie Schroeder (Legal Counsel, CSR Limited). Juno and Evans gave oral evidence during the hearing, and Mr Craig also relied upon the Group’s 2007 annual report.

The facts in brief

8 At the Rosehill plant the Defendant uses a substance called “Durasol GEP2” (“GEP2”) to coat some (not all) of its concrete tiles. GEP2 is manufactured exclusively for CSR and supplied by Hexion Specialty Chemicals Pty Ltd, usually in bulk amounts of approximately 20,000 litres.

9 The company’s normal operations involving the storage and application of GEP2 are described in detail in the SAF at pars 14-19, and illustrated in Diagram 1 (after par 19). The substance is kept flowing through a closed system of lines, even when the spraying of tiles is not occurring, as it is apparently necessary that GEP2 be kept warm and fluid.

10 GEP2 is a flammable liquid containing Hydrocarbons, Solvent Naphtha, and Acrylate/Methacrylate Co-polymer. It is classified as both a “S5 Poison” and a “hazardous substance, dangerous goods”, is ranked “moderately toxic”, and is capable of causing damage to both aquatic organisms and/or the environment (see SAF pars 4-6, 89 and 94).

11 The Defendant’s environmental protection licence (Exhibit P2 tab 5) does not authorise any discharge of GEP2 from the company’s premises, but on or about 14 or 15 July 2006 a quantity of GEP2 flowed into a stormwater drain system at the plant, and then into the Parramatta River.

12 The potential for harm, and the actual harm found to have occurred, in this case, are set out in a detailed but balanced way in the SAF (pars 90-99). “It is likely that adverse effects would have been highest on the first day following the spill (on Saturday 15 July 2006), then decreased with time because of weathering of GEP2 and dilution of hydrocarbons in water” (SAF par 92). The adverse effects on organisms are species-specific, but the GEP2 samples taken from the river proved “toxic” (SAF pars 93-94).

The spill on the CSR site

13 On 5 July 2006, the Defendant ordered from Hexion a delivery of about 20,000 litres of GEP2. Such an amount is commonly ordered when the volume stored in a bunded 30,000 litre bulk storage tank (“BST” – see photograph Exhibit P2 tab 6) on the site, falls to about 7,000 litres. Hexion on this occasion could not supply that volume in a single bulk delivery, and delivered 6 x 1,000 litre “Palecon” containers full of the material on 8 July.

14 By 7 July there was left in the BST only approximately 3,000 litres of GEP2, and some of it had formed a sludge which blocked the spraying system. Senior CSR staff on site decided to drain the sludge and clean the BST. The sludge was placed in 3 x 1,000 litre “Schultz” containers stored within the BST bunded area. (The word “Schultz” is spelt in three different ways in the evidence).

15 To enable tile production to continue, a senior CSR officer (the witness Juno) authorised connection of the spraying system to a different 1,000 litre Schultz container outside the bunded area, filled from the Palecon delivery. It is asserted that the container was located outside the bunded area because (1) the area was too small to accommodate any more of the smaller tanks, and (2) the hoses of the spraying system were too short. This decision is said to represent a “one-off” exception to normal CSR processes, and CSR had no procedures in place to regulate it (see diagram of temporary operating system at Exhibit P2 tab 8, and Diagram 2 after SAF par 28). As Mr Giles submitted (T38 L9-10), there “simply wasn’t any consideration given to the possibility of ceasing to produce the tiles pending the availability of a safe system”.

16 On Friday 14 July, Hexion delivered 20,365 litres of GEP2, and it was pumped into the BST at approximately 3.40pm. By 8pm the Schultz tank outside the bunded area was still in use, but virtually empty, and employees (including the witness Juno) decided to disconnect it. The spraying system was reconnected to the BST so that the GEP2 now stored in the BST could flow through the system as normally required. However, the return line was unintentionally left connected to the unbunded container instead of being connected to the BST (SAF pars 20-35).

17 The SAF continues:

“ 36 . The tile spray production continued until approximately 9.00pm [on 14 July]. This resulted in unused GEP2 being pumped out of the Bulk Storage Tank, through the system and back into the 1,000 litre Schultz container instead of back into the 20,000 litre Bulk Storage Tank. From 9.00pm Friday, 14 July 2006 until the spill was noticed at 6.30am on Saturday, 15 July 2006, the GEP2 continued to be pumped around the tile spray production system by drawing fluid from the bulk storage tank and returning it into the temporary 1,000 litre Schultz container, which overflowed. This resulted in a spill of GEP2, outside the bunded area.
37. Placing outside the bund area the temporary 1,000 litre Schultz container into which the GEP2 was pumped and which overflowed had the following consequences:
(i) Firstly, the (sic) some of the spilt GEP2 flowed into at least one of the storm water drains on the Premises. The storm water drains on the Premises lead into the local storm water drainage system. That storm water drain system flowed into the Parramatta River. About 2,250-3,250 litres of spilt GEP2 escaped from the Premises into the Parramatta River; and
(ii) Secondly, the spill was more difficult to contain.

CAUSE OF THE INCIDENT
38. The immediate cause of the incident was that the return line was not put into the 20,000 litre tank when the operating system was reverted to normal operations. This resulted in the 1,000 litre Schultz container overflowing as the supply of GEP2 was in excess of 20,000 litres and was being returned to the 1,000 litre Schultz container.
39. The spilt GEP2 flowed into the Parramatta River because the 1,000 litre Schultz container was placed outside the bund area on the Premises.
40. The incident resulted from a human error and a process failure.
41. At all times CSR had control of the causes that gave rise to the incident.”

18 When the spill was discovered on site at 6.30am on Saturday 15 July 2006, CSR employees at the premises informed management (see Garland email to Juno, 15 July, at Exhibit P2 tab 1). Steps were taken to prevent further escape of the material and sand was used to clean up waste and ash. The sand was shovelled into waste bins in slurry pits. Garbage and debris in the main drainage system made it difficult to determine whether and how much GEP2 was in the main drainage system. (Further detail of the clean-up on site, and the reporting to senior management, can be found in SAF pars 44-51).

19 The employees arrived at the erroneous view (1) that the maximum amount of GEP2 spilt was 365 litres, (2) that it had all been contained on the premises, and (3) that it had all been cleaned up. As a consequence, CSR classified this incident as “minor” in the context of the reporting system detailed in the Annual Report (at pp18 ff).

20 On 16 July the witness Juno saw a television report about a spill in the Parramatta River. Although CSR still believed its spill had been contained on the premises, it was decided that Ian Stott (CSR Limited Occupational Health Safety & Environment Manager) would report the on-site spill to the EPA on the morning of 17 July. (See SAF par 52).

The spill affecting the river

21 “A slick similar to oil” was observed on the river at around 8.30am on Saturday 15 July by NSW Maritime employee. It was seen to extend about 1km upstream to the Camellia Rail Bridge and, in some parts, covered the full width of the river, giving off “a strong smell similar to diesel”, or a “strong smell of paint thinners” (SAF pars 53-54).

22 “The slick formed together into lines of what appeared similar to white fairy floss”. (SAF par 53). Elsewhere in the evidence, it is said that “the slick … felt like plastic when touched”, resembled “old chewing gum”, and had “the consistency of wet cotton wool”. When removed by boat hook it “was like layers of glad wrap”. Other expressions used include “a gluey material, of which some have settled on the mangroves like thick cobwebs”, and “a grey rubbery solid with a solvent like odour”. (See photos in Exhibit P2 at tabs 7 and 9).

23 A (first) boom was placed across the river by 11am on Saturday 15 July and the investigation and clean-up commenced (See an account of the investigation and clean-up in pars 55-78 of the SAF). The River Cat “Marjorie Jackson” ran through the chemical on the morning of Saturday 15 July, and was subsequently withdrawn from service pending a diver’s examination. Ferry services on the river were cancelled from 11am.

24 By around 4pm on Saturday 15 July 2006, investigators had identified the drain from which the substance appeared to flow, namely a stormwater drain near the industrial estate in Camellia. Absorbent booms were placed across the drain. By Sunday 16 July the slick had settled in the mangroves, but the fuel-like smell had dissipated. The “white gluey material” had affixed itself along the banks of both sides of the river for approximately 800 metres. Ultimately a 2.5km length of the river was affected.

25 At about 11.45am on Sunday 16 July a slight chemical odour was detected in the stormwater drains in the gutter on the southern side of Grand Avenue, Camellia. Ferry operations remained suspended. At 6.15pm HAZMAT officers reported that 650kgs of the solid pollutant (depicted in the photos in Exhibit P2 at tabs 7 and 9) had been collected.

26 The CSR report of its on-site spill was received by the DECC at about midday on Monday 17 July. Ferry services resumed only at 4pm on that same day.

27 Details of the clean-up operation and its cost appear in the SAF (at pars 79-88) and in Gathercole’s affidavit. The agreed total cost, including a claim by Sydney Ferries, is $83,407.09.

CSR’s response and the defence case

28 In the 2007 annual report, CSR Limited’s Chairman points to the Group’s commitment to sustainability, and its “SHE” (“Safety, Health and Environment”) management programme, which is said to have commenced in the 1980’s. In the year ended 31 March 2007 there was an overall fall (15.8%) in environmental incidents, compared with 2006. Level 1 is “minor”, Level 2 “significant”, and Level 3 “serious”. There were no Level 3 incidents reported in respect of either year. There was a drop in Level 1, but a slight increase in Level 2 in the year ended 31 March 2007.

29 In his affidavit (par 47) Mr Juno has a 4th level of incident at the top of the scale, Level 4 “severe”. Before this prosecution commenced (after the reporting period ending 31 March 2007) the subject spill was classified Level 1, but Mr Juno says it has since been upgraded to Level 3. In his oral evidence he could not tell the Court when and by whom that “upgrade” was made, nor when the estimate of the volume spilt was increased to the now agreed amount (T22 L8-20).

30 The annual report (at p21ff) outlines a programme of changing to water-based coating of cement roof tiles – at p23 CSR Limited states its expectation that water-based coating would be in place, instead of GEP2 coating, at all concrete roof tile plants by March 2008, but the evidence indicates delays, which the EPA apparently accepts, as its April 2008 licence renewal allows a further three years for the conversion.

31 Ms Birch was recruited from outside CSR on 11 July 2005 as part of the company’s programme to “reinvigorate their environmental performance”. Her remit was to drive change in this largely autonomous role and align that change with the commercial imperatives of the company. In her affidavit she deals at some length with the evolution and administration of SHE and annexes the SHE management system document dated December 2003 (running to 134 pages). She reports to the Executive General Manager, who reports to the Managing Director of CSR. She was consulted by Ian Stott and attended the Rosehill site on Monday 17 July. She took part in the decision that the spill should be reported to the EPA by Stott. The SAF also records (par 109) the appointment in February 2007 of a Mr Peter Truasheim as National Environment Manager, CSR Bricks and Roofing.

32 Neill Evans had been Executive General Manager of the CSR roofing business since 2002. It amalgamated with the bricks business in November 2006. He reports directly to the Managing Director of CSR. The company has 14 operational manufacturing sites in Australia and New Zealand, four of them in New South Wales. He says he is “deeply upset and concerned that this incident occurred”, and (in his affidavit sworn on 28 May 2008) he says that the Rosehill operation will be converted to water-based “within 18 months”. Mr Evans did his best (at T26 LL17-35) to explain away the delay in making the conversion. He undertook (T28 LL4-11) that the information in the 2007 annual report regarding the incident, its classification, and the conversion, will be updated in the 2008 report. On the question of remorse he said (at T27 LL15-25):

“ I think everyone at CSR takes their safety and environmental obligations and responsibilities very seriously. It is one of the core values of CSR that we look after employees and the environment, and for our systems and our training to have broken down we take that very seriously. I’ve had a significant number of conversations with our Managing Director, with the Chairman of the Board, with other Board members on this topic, and all are deeply disappointed that whatever we have done is not enough to have prevented this from occurring.”

33 Mr Juno sets the procedures for his subsidiary in line with the parent company’s corporate guidelines. He confirmed that there was not enough senior level consultation before the decision was taken to change the connections on the Friday evening. He also conceded that his earlier decision to authorise the temporary arrangement reflected a primary concern to allow production of concrete tiles to continue. He admitted that he made the ultimate decision to place the Schultz container outside the bunded area, and that the hoses were too short, but he opined that it represented the least risky way to empty the Palecon tank. He admitted not considering the risk of a spill (see his affidavit pars 24-26). He put in the “near miss” report dated 17 July (SAF par 112, Exhibit P2 tab 1).

34 In par 54 of Mr Juno’s affidavit there appears the following list of actions taken by CSR “to ensure a similar event does not occur again” (see also SAF pars 106, 108-111):

“(a) The bunded area was expanded in November 2007 at a cost of approximately $30,000 so that other items could be stored in it.
(b) We are working on ceasing the use of GEP as a coating for our roof tiles. A water based, rather than solvent based, replacement is currently being investigated and developed. While this decision was based on a number of factors, the potential harm to the environment from the use of GEP was one of the main reason (sic) to discontinue its use. As a CSR (sic) will replace plant and equipment at a cost over $1 million.
(c) I conducted a Toolbox Talk about the incident, what corrective actions were taken and how to avoid this type of incident in the future. Toolbox Talks have also been formalised and now have a set agenda and recorded attendance.
(d) External consultants were hired to provide further spill response training for all employees. In addition, we hire external environmental training consultants regularly and our site specific training register ensures every employees training is up to date. This costs approximately $20,000 per annum.
(e) I now conduct monthly work place audits on parts of the Rosehill Site which includes an environmental component. …
(f) We realised as a result of this incident that along with training, the maintenance and testing of our equipment and procedures required attention. Accordingly, a maintenance register is now in effect….
(g) During the interim period while we investigate a replacement product for GEP, we have implemented a procedure whereby the stormwater system gates (which prevent any stormwater from leaving the site) are to be closed during all deliveries of GEP to ensure that, should any spill occur, it cannot leave the premises.”

35 Ms Schroeder’s affidavit deals with actions taken following the service of the EPA’s evidence on 29 June 2007. On 18 September 2007 the inventor of GEP2, Mr David McKay, provided CSR with a preliminary report denying that the product removed from the Parramatta River was, in fact, GEP2. She says (par 11) “this finding support CSR’s genuine belief that it was not responsible for the spill that occurred in the Parramatta River”. However, on or about 20 December 2007, Dr Rivett and Mr McKay expressed the revised opinion that the material in the Parramatta River was “a probable match with GEP2”. There was then a delay over Christmas before the company’s officers could consult the Board on the plea to be entered in this prosecution. The Board did not meet to consider the position until 11 February 2008, and she personally gave instructions to the lawyers in the week of 10 March to plead guilty (SAF pars 126-129).

Consideration

36 The Prosecutor accepts that the spill was accidental, but submits that the evidence shows that the accident was caused by a “fundamental system failure”, compounded by human error. A seriously inadequate temporary system of operation was adopted, to ensure continued production, without any (or any adequate) consideration being given to the possibility of a spill occurring outside the bunded area. An employee then failed to complete, in a safe way, the reversion of the production process to its normal state. A spill was foreseeable, even if not considered likely, and no precautions (such as temporary bunding) were put in place.

37 The Prosecutor also accepts that the Defendant developed and maintained an honest belief that only a relatively small amount of pollutant was spilt (a maximum of 365 litres – SAF par 43). However, a spill having occurred, the Defendant’s licence required it to notify the EPA “as soon as practicable”, by phone to the EPA’s Pollution Line, and, then, in writing within 7 days (Licence condition R2 – see Exhibit P2 tab 5 p20). The on-site spill occurred overnight on 14-15 July, and relevant senior managers were notified by/at about 8am on 15 July, but no report was made to the EPA until about noon on Monday 17 July.

38 A more timely notification of the on-site spill, regardless of any corporate ignorance of the condition of the river prior to the TV news on the Sunday night, almost certainly would have assisted the authorities in investigating, tracing, and dealing with the pollution incident in the river.

39 Section 241 of the POEO Act lists a series of factors to be taken into account in sentencing for an offence under that Act, and other relevant considerations are prescribed (with some overlap) by the Crimes (Sentencing Procedure) Act 1999 (“CSP Act”), especially sections 3A, 21A, 22 and 23.

Environmental Harm

40 As noted above, there is substantial agreement between the Prosecutor and the defence regarding the potential and actual harm (see par [12] and SAF pars 90-99). Such harm is a relevant factor under s.241(1)(a) of the POEO Act, and an aggravating factor under s.21A(2)(g) of the CSP Act. See Environment Protection Authority v Waste Recycling and Processing Corp (2006) 148 LGERA 299. There was actual harm occasioned to the riverside mangroves and the habitats of invertebrates, albeit that there were no signs of dead or dying mangroves or biota (SAF pars 90 and 92). It is also agreed that it is likely, even very likely, that other harm occurred (see SAF pars 91, 92, 96, 97, 98).

41 For present purposes the following statements (from SAF 98-99) summarise the position to be weighed in arriving at sentence:

“ 98. The spill of between 2,250 to 3,250 litres of GEP2 on Saturday, 15 July 2006, caused a change in the chemical composition of waters in a localised area in Parramatta River. The tides and environmental conditions in the River on Saturday, 15 July 2006 had very likely caused the split GEP2 to seriously impact on parts of the inter-tidal mangrove swamp, for example the crabs in the sediment holes, during the initial stage of the spill. This adversely affected sediment-dwelling organisms in the mangrove by physically trapping and/or smothering them. The affected organisms would have had difficulty recovering from the direct contact with they hydrocarbon solvent component of GEP2. The environmental conditions during the incident would have facilitated the weathering of GEP2 in the River that continued until Monday, 17 July 2006. The weathering of GEP2 left residues described as ‘white gluey material’ floating on water and hanging like ‘thick spider web’ on mangrove root system. Further, there may also have been components that dissolved into the water column….

99. The spilt GEP2 polluted the waters through the dissolution into a shallow part of the water column of part of its light aromatic hydrocarbon component. This resulted in a change in the chemical composition of the water in a localised section of the River. At the time of collection of the sample collected on Sunday 16 July 2006, the concentration was lower compared to early stage of the spill while the solid acrylic polymer was forming. The ANZECC water quality guidelines for aromatic hydrocarbons, naphthalene and C3-alkyl benzenes, detected from the water sample, were exceeded on Sunday, 16 July 2006. The spilt GEP2 released chemicals into the waters that had potential adverse effects on sensitive aquatic organisms. The potential toxicity of the water would have been high on Saturday, 15 July 2006 but decreased with time until Monday, 17 July 2006 when the white gluey material was removed. ”

42 I conclude that there was substantial short term environmental harm.

Practical measures available

43 Section 241(1)(b) requires consideration of “practical measures that may be taken to prevent, control, abate or mitigate” environmental harm. Potential polluters are expected to take reasonable precautions – see Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 (“Axer”).

44 On the evidence in this case, relevant available “measures” include (i) ensuring GEP2 is stored and handled in a bunded situation, either permanent or temporary, (ii) ceasing coating operations when appropriate precautions could not be applied, (iii) having an alarm of some sort to warn of a spill; and/or (iv) ensuring no spill reached the stormwater drain.

45 One imagines the situation would have been ameliorated if closer attention were given on-site to the requirements of the SHE. The need to continue production was weighed too heavily against the need to minimise the risk of a pollution incident. While the Court accepts there were in play some unprecedented coincidences – Hexion’s inability to supply, clogging of the spray system by sludge in the BST, unfamiliarity with Palecon containers, etc – there is clear evidence of the Defendant having and pursuing wrong priorities.

46 The defendant company made much of SHE (see SAF pars 100-105) in its submissions, even though it was of little specific utility regarding the temporary system the company put in place. However, it is to be noted that company employee Mr Steven Garland, who was “in charge” of the plant when the spill occurred (SAF pars 104-105), commented to Mr Juno (in his email of 15 July in Exhibit P2 tab 1): “… I’m concerned that we have a lack of understanding of the appropriate actions to be taken when an incident like this occurs i.e. whom to notify within CSR and externally”. It is unfortunate to note such a serious lack of knowledge of the conditions of the licence governing the everyday operations of the plant, on the part of a senior employee of the Defendant, described, in but one inconsistency among many in the Defendant’s evidence, as either Production Team Leader and/or the Maintenance Team Leader at Rosehill (Exhibit P2 tab 2).

Foreseeability

47 As already noted, harm or likely harm from any external spill of such a hazardous substance that reached a drainage system connected to the river was clearly foreseeable – POEO Act s.241(1)(c).

Control

48 It is also clear that the Defendant had “control over the causes that gave rise to the offence” – POEO Act s.241(1)(d) – and equally clear that s.241(1)(e) (“complying with orders”) does not apply to this case.

Deterrence

49 In arriving at appropriate penalties in pollution cases, both general and specific deterrence are relevant. Industry generally must be persuaded to “adopt preventative measures” (Axer at 359), and this particular Defendant must pay a penalty for the consequences of a serious system failure, and related human error on the part of its inadequately trained and supervised employees. Elaborate environmental management systems and policies, apparently not adequately supported by training and motivation of employees at all levels, counted for little when it looked possible that tile-coating may have to be suspended. The possibility of re-offending cannot be excluded. See CSP Act s.3A(b) and (c), and s.21A(3)(g).

Prior convictions

50 The parent and related companies have been before the Court for environmental offences, but the present Defendant has no prior convictions (CSP Act s.21A(2)(d) and (3)(e)). Given the enormity of the CSR Limited group of companies and its operations, they are rarely before the Court, and I give little weight to the two matters drawn to my attention, namely State Pollution Control Commission v CSR Limited [1989] NSWLEC 64 (Cripps ChJ), and Environment Protection Authority v CSR Ltd trading as CSR Woodpanels [2001] NSWLEC 267 (Pearlman ChJ), which concerned incidents in 1988 and 1992 respectively. In the earlier case a complex mix of 14 charges was brought, and in the latter Tier 1 case there was serious environmental harm, remediated, at great expense to the Defendant. These cases are old, and hardly comparable, and Mr Craig informed the Court that they concerned industrial activities no longer carried on by CSR companies.

Mitigating factors

51 It is to the Defendant’s credit that it has agreed to pay the clean-up and other incidental costs incurred by various public agencies as a result of the spill ($83,407.09), as well as the Prosecutor’s costs ($75,000.00). In any event, on the evidence available to the Court, I would have made orders to these effects.

52 It is also to its credit that remorse has been expressed at a senior level, and on oath, and that steps have been taken to improve its environmental performance. Preparedness to submit to orders under s.250 is also a relevant consideration. The Court accepts that the CSR group is, generally speaking, a good corporate citizen. On the other hand, the Court notes (1) the serious inconsistencies in the evidence presented to the Court, (2) that at least some of those improvements are driven by licence requirements, (3) that the expenditure involved is very small in relation to the overall funds turned over by the group, and (4) that the company’s public statement at the time of its plea endeavoured to limit its stated “regrets” to “isolated human error, rather than any inherent problem with our procedures” (see Exhibit DG58 to Gathercole affidavit).

53 The Defendant provided some assistance to the Prosecutor (SAF pars 107, and 113-116), but that must be balanced against the utility of, and benefits to be gained from, a more timely reporting of the on-site incident.

Guilty plea

54 I turn, finally, to the discount to be applied in acknowledgement of the Defendant’s guilty plea. It is common ground that there should be a discount of between 10% and 25%. The general rule is “the earlier the plea, the bigger the discount”, and the plea in this case was not very “early”.

55 The Defendant has sought to explain the relative lateness of its plea. It says it regarded itself as entirely innocent until the prosecution was commenced almost a year after the event. It then obtained expert advice on the Prosecutor’s evidence, which advice supported the thesis of innocence, but later proved to be in error (SAF pars 117-125). Not all of its delay is explained, and, despite repeated directions hearings, and the setting down of the hearing, no real urgency was demonstrated at the relevant time (SAF pars 126-129).

56 On the day the plea was entered (14 March 2008) the Defendant issued a press release acknowledging only that it “may” have been responsible for the spill, and asserting matters not entirely consistent with what has been put before the Court, especially in the SAF (see par [52] and SAF par 130). Mr Evans’ evidence in regard to those aspects of the matter (T29-30) was not convincing.

57 Nonetheless, there is no doubt that the plea saved substantial resources on all sides, given that a full hearing was likely to have run 10-15 days. The Prosecutor concedes that a discount in the middle of the 10%-25% range is appropriate, and I will discount the penalty by 15%-17.5% for the plea.

Conclusion

58 I agree with the Prosecutor that this offence falls in the “mid-range” of Tier 2 water pollution cases.

59 Given the fortunate absence of lasting environmental harm, I also agree with the Prosecutor that the penalty should fall within the lower part of that mid-range, and I consider the appropriate amount for a fine would be $350,000.00. Applying discounts for the plea of guilty, and for the mitigating factors supported by the evidence, and for the publicity component of a s.250 order, I arrive at a total discount of 20%.

60 The Defendant should, therefore, pay a fine of $280,000.00, in the absence of any s.250 order acceptable to the Court, plus the ss.246/248 amount of $83,407.09, and legal costs of $75,000.00 (pursuant to s.257B of the Criminal Procedure Act 1986).

Orders

61 No final orders will be made at this time, pending the discussions referred to in par [4]. The matter will be listed for mention before me, for the purpose of making final orders, at 9.30am Monday 22 September 2008, but the parties have liberty to apply on 48 hours’ notice in the meantime if appropriate orders can be agreed upon.

62 The two exhibits will remain in the Court file.