Environment Protection Authority v Devro-Teepak Pty Limited

[2000] NSWLEC 275

Land and Environment Court

of New South Wales

CITATION:

Environment Protection Authority v Devro-Teepak Pty Limited [2000] NSWLEC 275

PARTIES:

PROSECUTOR:
Environment Protection Authority

DEFENDANT:
Devro-Teepak Pty Limited

FILE NUMBER(S):

50031 of 2000

CORAM:

Bignold J

KEY ISSUES:

Environmental Offences :- Sentence on plea of guilty—mitigating factors—seriousness of the offence

LEGISLATION CITED:

Protection of the Environment Operations Act 1997, s 120(1)

CASES CITED:

Environment Protection Authority v Norco Corporation Ltd (2000) 108 LGERA 137 ;
Mathews v Goulburn Wool Provisions Pty Ltd (1987) 10 NSWLR 419;
R v Olbrich (1999) 199 CLR 270;
R v Thompson (2000) NSWCCA 309

DATES OF HEARING:

8 December 2000

DATE OF JUDGMENT:

12/20/2000

LEGAL REPRESENTATIVES:

PROSECUTOR:
Mr D Jordan, Barrister
SOLICITORS
Solicitor Environemnt Protection Authority

DEFENDANT:
Mr B Preston SC
SOLICITORS
Coleman and Greig

JUDGMENT:

IN THE LAND AND Matter No . 50031 of 2000

ENVIRONMENT COURT OF Coram : Bignold J.

NEW SOUTH WALES 20 December 2000

ENVIRONMENT PROTECTION AUTHORITY

Prosecutor

v

DEVRO-TEEPAK PTY LIMITED

Defendant

JUDGMENT

Bignold J:

A. INTRODUCTION

1. The Defendant has pleaded guilty to a charge of an offence against the Protection of the Environment Operations Act 1997 , s 120(1), (POE Act) in that on or about 26 July 1999 at Bathurst, it polluted waters.

2. According to the Summons, the relevant particulars of the offence are as follows:

POLLUTION
Placing matter in a position where it fell, descended or was washed into a drain used or designed to receive or pass rainwater such that the matter would had it been placed in waters, have polluted or have been likely to pollute waters.
MATTER
Waste water causing biochemical oxygen demand.
DRAIN
Stormwater drain running through the property of the Defendant at 139 Sydney Road Bathurst.
WATERS
Raglan Creek.

3. The POE Act s 120(1) is in the following terms:

A person must not pollute any waters.

4. The terms “ water pollution ” and “ waters ” are defined in very broad terms in the Dictionary to the POE Act (vide s 4 ). It is only necessary to note that the definition of “ water pollution ” includes (by way of extension) the following:

(d) placing any matter (whether solid, liquid or gaseous) in a position where:

(i) it falls, descends, is washed, is blown or percolates, or

(ii) it is likely to fall, descend, be washed, be blown or percolate, into any waters, onto the dry bed of any waters, or into any drain channel or gutter used or designed to receive or pass rainwater, floodwater or any water that is not polluted, or

……………

if the matter would, had it been placed in any waters, have polluted or have been likely to pollute those waters.

5. A similar provision had been contained in the now repealed Clean Waters Act 1970 which provision was often in the decided cases compendiously described as “ deemed pollution ” eg Mathews v Goulburn Wool Processors Pty Ltd (1987) 10 NSWLR 419.

6. In the present case, it is to be noted that the charge as particularised, relies upon par (d) of the statutory definition, by nominating (as the position where the polluting matter was placed) a stormwater drain traversing the Defendant’s premises, being a drain that forms part of the Bathurst Council Stormwater Drainage System, which drain ultimately discharges into Raglan Creek.

7. Notwithstanding this feature of the charge, it is also to be noted that the evidence (either in the agreed facts (Exhibit 1) or in Dr Kobayashi’s affidavit (Exhibit 5)) in addressing the question of “the harm likely to be caused to the environment by the commission of the offence” (vide the POE Act, s 241(1)(a)) has considered the likely environmental impact on Raglan Creek. This is more directly stated in Dr Kobayashi’s affidavit in par 55 as follows:-

It is estimated that up to about 162,500 litres of the wastewater from the balance tank in the premises of Devro-Teepak overflowed and entered Raglan Creek through the stormwater drainage system on 26 July 1999 ”.

8. There is, of course, nothing exceptional in Dr Kobayashi’s conclusion that the spill “ entered Raglan Creek ” which conclusion is deduced by way of inference from the following undisputed facts:—

(i.) an estimated quantity of 162,500 litres of untreated waste waters overspilled a holding tank located on the Defendant’s premises;

(ii.) the spillage was directed by gravitational forces into a nearby road gutter and associated subterranean stormwater drain;

(iii.) that drain forms part of the Bathurst Council’s Stormwater Drainage System; and

(iv.) where that System, as situate in the vicinity of the Defendant’s premises, discharges into Raglan Creek.

9. Moreover, there is nothing exceptional in Dr Kobayashi’s assessment of likely “harm to the environment” addressing as the relevant “environment”, Raglan Creek into which any liquid content placed in the Council’s stormwater drainage system in the vicinity of the Defendant’s premises, discharges. On the other hand, it would be an artificial and strained (to the point of absurdity) assessment of the likely environmental harm arising from the commission of the offence, if it confined the relevant “environment” to the stormwater drain itself since, by its nature and design, it is not an ultimate holding or storage receptacle but is merely a conduit transferring by gravitational forces any liquid contents entering the drain to their intended destination, namely Raglan Creek, into which the Council’s stormwater drainage system discharges in the vicinity of the Defendant’s premises.

B. THE FACTS CONCERNING THE OCCURRENCE OF THE POLLUTION INCIDENT

10. The parties have assisted the Court by preparing and tendering a comprehensive Statement of Agreed Facts (Exhibit 1) from which I extract the following summary of relevant facts.

11. The Defendant owns and operates a sausage skin manufacturing plant at Kelso, a suburb of Bathurst. The sausage skins are made from animal products and the production process generates large quantities of effluent, approximately 600,000 litres per day. The factory operates 24 hours a day.

12. In mid 1998, the Defendant embarked upon an expansion programme for its plant which included the provision of an effluent treatment plant to replace the existing system (whereby untreated effluent was discharged directly to the Council’s sewerage system).

13. The new effluent treatment plant was designed and constructed by Henry Walker Pty Ltd (the Consultant). Construction commenced in early 1999 and by early June 1999 was virtually completed at which time it was ready for commissioning.

14. By 14 July 1999, the new treatment plant was fully operational, having reached the stage of practical completion of the contract. From that time it was treating 100 per cent of the effluent created at the plant. The Consultant remained on site to attend to fine tuning of the new plant and to provide training for the Defendant’s staff in the operation of the new plant. This training commenced on 23 July 1999, just a few days before the occurrence of the pollution incident which occurred at the Defendant’s plant between the hours of midnight and 7 am on 26 July 1999 during the night shift.

15. Although at approximately 12.30 am on that morning an employee of the Defendant observed the waste water contents of one of the balance tanks (being part of the effluent treatment plant) overtopping the tank and flowing down the slope into the nearby road gutter and the associated stormwater drain, neither he nor any other employee working the night shift at the Defendant’s premises knew how to stop the overflow from the balance tank which continued without interruption until 7 am when it was stopped by Mr Windsor, the acting maintenance supervisor who had come on duty at that time. In the event, it was only a very simple solution that was required—namely switching a switch on the plant control panel from automatic to manual pumping mode. Mr Windsor had earlier conducted a brief investigation and realised from his observation of the plant control panel that the lagoon into which the contents of the balance tank should have been pumped for the purpose of aerating the effluent, was not receiving those contents because it was operating in “decant mode”. Further brief investigation of the aeration lagoon revealed how this unintended state of affairs had come about, namely by one of the floating switches becoming tangled around some pipework with the consequence that it had not descended (as it was designed to do) as the level of contents in the lagoon had dropped. The result of this fouling of one of the floating switches was that the automatic control system was operating on the basis of the electronically communicated misinformation that the lagoon was full and not able to receive further inflow of effluent from the balance tanks with the consequence that pumping of the effluent from the balance tanks had automatically ceased.

16. The Defendant’s night shift employees who were aware of, or witnessed, the overflowing of effluent from the balance tank for a period of some 6 1/2 hours but were helpless to remedy the situation, had not, at that point of time, received any instruction or training in the operation of the effluent treatment plant. They themselves did not know how to switch the plant down, though they unsuccessfully attempted to do so, during the spillage incident.

17. Faced with their own helplessness in the situation, they had contacted on the telephone at about 2 am Mr Warren, the Defendant’s maintenance supervisor, who was on leave at the time. Apparently, there was some failure in communication inasmuch as Mr Warren formed the impression that there was nothing that could be done about the situation and that the overflow would naturally come to an end when the treatment plant completed the cycle upon which it was then engaged.

18. Later on that morning, an employee of the Consultant who had come to the Defendant’s premises to undertake some fine tuning and minor adjustments to the effluent treatment plant, engaged in some discussions with the Defendant’s staff and undertook some investigation into the pollution incident, including the obtaining of samples of the contents in the balance tank, in the aeration lagoon, and from an electrical pit located in close vicinity to the source of the spillage at the Defendant’s premises and from a pool of the spillage which had formed in a depression in the space between the ultimate discharge point of the stormwater drain and Raglan Creek. These samples were later tested in the laboratory, and the results were transmitted to the Environment Protection Authority.

19. The Consultant’s presence at the Defendant’s premises on the day following the night-time spillage incident reflected the fact that although practical completion (in terms of the contract) of the effluent treatment plant had been achieved on 14 July 1999, final commissioning of the plant had not been achieved by the date of the pollution incident.

20. It was the Consultant who later in the day informed the Environment Protection Authority of the pollution incident. This course occurred following discussions between the Defendant’s plant engineer and the Consultant, the former then being of the opinion that since the plant had not been finally commissioned, responsibility for the plant lay with the Consultant.

21. Later in the day when the Environment Protection Authority investigating officer arrived at the Defendant’s premises, he made observations of the aftermath evidence of the spillage (eg sausage skins and fatty deposits on the ground next to the balance tank that had overflowed into the street gutter, in the stormwater drain and in the nearby electrical pit). He also took a number of samples—two from Raglan Creek, one from 20 m upstream the point of discharge and one 1.5 km downstream that point and a number from pits in the stormwater drainage system located on the Defendant’s premises. The reason that he could not collect a sample from the point of discharge of the drain into Raglan Creek was that the creek in this section was overgrown with vegetation and reeds, which made access to the creek dangerous.

22. These samples were subsequently analysed in the laboratory. The results of such analyses, together with the analyses provided by the Defendant’s Consultant, were provided to Dr Kobayashi for the purpose of his making an assessment of the potential environmental harm caused by the pollution incident.

23. Because potential environmental harm was the issue upon which the hearing principally focussed, I shall quote in their entirety the relevant extracts from the statement of agreed facts and from Dr Kobayshi’s affidavit which each deal with that issue.
(i) Statement of Agreed Facts (Exhibit 1) Par 28
28. The extent of the potential for environmental harm is difficult to gauge. The effluent which went into the stormwater system may have been further adulterated by the possible influx of detergent from the bin washing area on the premises; there may have been other residues in the stormwater system which the effluent flow collected. There were other inflows to Raglan Creek upstream of where Mr Robinson took the sample No 1 Devro Raglan Creek Downstream and it cannot be ruled out that those inflows may have influenced the quality of the Creek at the Point where sample 1 was taken. All of these variables make it difficult to give any definitive measure of the potential for harm. However, an estimated 162,500 litres of effluent was spilled and it is thought that most of this wastewater entered the stormwater drain that leads to Raglan Creek, although some of the effluent may have been absorbed by the soil and grassed area around the balance tank and the stormwater drain. (Exhibit affidavit of Tsayoshl Kobayashi affirmed 12 September 2000).
(ii) Dr Kobayashi’s affidavit (Exhibit 5) par 55-60 incl
55. Summary: It is estimated that up to about 162,500 litres of the wastewater from the balance tank in the premises of Devro-Teepak overflowed and entered Raglan Creek through the stormwater drainage system on 26 July 1999.
56. The overflowed wastewater from the balance tank was most likely to contain high BOD and high concentrations of ammonia and organic nitrogen that were well in excess of the concentrations of ammonia and organic nitrogen that were well in excess of the concentrations recommended in the ANZECC national guidelines for the protection of freshwater aquatic ecosystems, at or above which adverse environmental problems have been known to occur (e.g. the occurrences of algal blooms and excessive growth of nuisance aquatic plants).
57. The samples of wastewater collected from Devro Pit 1, Devro Pit 3 and Creek Downstream also contained concentrations of nitrogen and phosphorus that were in excess of the concentrations recommended in the ANZECC national guidelines for the protection of freshwater aquatic ecosystems, at or above which adverse environmental problems have been known to occur (e.g. the occurrences of algal glooms and excessive growth of nuisance aquatic plants).
58. In Raglan Creek, the ammonia concentrations of the wastewater discharged from Devro-Teepak had the potential to cause acute toxic effects to aquatic organisms in the creek. This was coupled with a high PH value that was likely to increase the toxicity of ammonia.
59. In addition, in Raglan Creek, an environmental impact of the discharge of the wastewater from Devro-Teepak appeared to be indicated by an increase in BOD level from less than 2 mg/L upstream of the discharge point to 54 mg/L downstream of the discharge point from Devro-Teepak. This increase in BOD had the potential to cause oxygen stress and even death of aquatic organisms in the creek.
60. As a cumulative effect, the nutrient (nitrogen and phosphorus) loads contained in the wastewater derived from the premises of Devro-Teepak had the potential to contribute to eutrophication of Raglan Creek thus increasing the potential for excessive growth of nuisance algae and aquatic plants and resulting in the deterioration of ecosystem health of Raglan Creek.

C. MITIGATING FACTORS RELEVANT TO SENTENCE

24. There are a number of mitigating factors in the present case that are to be taken into consideration on sentence, namely—
(i.) the fact that the pollution incident was caused by a malfunctioning of a newly installed effluent treatment plant at a time when it had not been finally commissioned, though it was then fully operational;
(ii.) the Defendant’s early plea of guilty;
(iii.) the Defendant’s co-operation with investigating officials;
(iv.) the corrective action taken by the Defendant in modifying the effluent treatment plant to prevent a recurrence of the pollution incident;
(v.) the Defendant’s excellent prior environmental record in conducting its manufacturing plant—this being its first environmental offence;
(vi.) the genuine contrition of the Defendant; and
(vii.) the excellent character of the Defendant in the Bathurst community and its acknowledged commitment to, and support for, the Council’s development of an environmentally responsible waste strategy for the City of Bathurst.

D. APPROPRIATE SENTENCE

25. The maximum penalty prescribed for the admitted offence is $250,000 when, as in the present case, the Defendant is a corporation: vide the POE Act, s 123.

26. The maximum penalty prescribed for this offence is double the maximum penalty that had been prescribed for the same offence against the Clean Waters Act 1970 s 16 which Act was repealed by the POE Act when it came into force on 1 July 1999.

27. The offence created by the POE Act s 120 is a Tier 2 offence under the Act (ie not the most serious environmental offence created by the Act). It is an offence of strict liability, this status having been judicially declared in the many judgments on the Clean Waters Act s 16.

28. While acknowledging that the Defendant is entitled, on account of the aforesaid mitigating factors, to a significant discount in the sentence that should be imposed in the present case, the Prosecutor submits that the offence committed by the Defendant must be regarded as a serious offence. Three specific reasons are advanced in support of the Prosecution submission—
(i.) the spillage involved waste waters containing high levels of contaminants with a strong potential for environmental harm for the waters of Raglan Creek into which the spill was ultimately discharged via the Council’s stormwater drainage system;
(ii.) the volume or quantity of the spillage was substantial—an estimated 162,500 litres; and
(iii.) much of the spillage could have been readily avoided in the present case if only the Defendant’s employees, who had detected or were made aware of the spillage, had been trained in the operations of the newly installed effluent treatment plant.

29. Each of these reasons was elaborated upon in the comprehensive written submissions made by the Prosecutor (which in my judgment, are entirely supported by the established facts of the present case) culminating in the following Prosecution appraisal of the relevant facts by reference to the terms of the POE Act, s 241:

For the above reasons it is submitted that the offence was serious and attracts several of the criteria which must be taken into account on sentence under s 241(1) of the Act. The highly toxic characteristics of the effluent, together with the large volume of the spill, are aggravating features under s 241(1)(a) . The defendant’s failure to provide adequate training, or a system for the nightshift employees to receive prompt advice on correcting the spill, are aggravating circumstances pursuant to ss 241(1)(b) and 241(1)(d) . The readily foreseeable prospect of teething problems with the potential to cause pollution is a further aggravating feature under s 241(1)(c). Moreover, as a licensee under the Act, albeit not in relation to waters, it is submitted that the defendant ought to have been more sensitive to such foreseeable environmental harm.

30. Senior Counsel for the Defendant advanced a detailed submission addressing each of the relevant factors stipulated in the POE Act , s 241(1) and the several mitigating factors earlier noted, (recognising that some of these overlap with the statutory considerations enumerated in s 241(1) ). As I have earlier mentioned, considerable attention was devoted in Senior Defence Counsel’s address to the issue of “ harm caused or likely to be caused to the environment by the commission of the offence ” : s 241(1)(a) . Much of this address was directed to contents of Dr Kobayashi’s affidavit (he was not cross-examined on it) which contain conjectural or speculative opinions based in part upon the lack of full knowledge of the facts of the pollution incident and in particular the laboratory results (that were not readily reconcilable) for various samples that had been collected either by the Defendant’s Consultant or by the Environment Protection Authority’s investigating officer.

31. However, it is to be noted that Dr Kobayashi’s evidence was the only expert evidence that was adduced on the issue of likely (or potential) environmental harm.

32. It is not in dispute that on the issue of environmental harm raised by the POE Act, s 241(1)(a), the Prosecutor must establish the relevant facts upon the criminal standard of proof: see R v Olbrich (1999) 199 CLR 270.

33. However, in the present case (unlike the case of the disputed expert evidence in Environment Protection Authority v Norco Corporation Ltd (2000) 108 LGERA 137, which was resolved by my finding at 147 that I was not satisfied beyond reasonable doubt that environmental harm (other than minimal harm) had been caused or was likely to be caused by the discharges of wastes), I have the agreed fact (par 28 of Exhibit 1) that “an estimated 162,500 litres spilled and it is thought that most of this wastewater entered the stormwater drain that leads to Raglan Creek…..” Additionally, I have Dr Kobayashi’s expert opinions that I have earlier recited, upon which he was not cross-examined.

34. Those opinions are substantially based upon Dr Kobayashi’s expert assessment of the laboratory test results of the various samples collected on or about the Defendant’s premises on the day that the offence was committed. Those results included the sample taken from the contents of Defendant’s balance tank by the Consultant which revealed the following levels of pollutants:—

Ammonia (as N) 280 mg/L
BOD (biological oxygen demand): 590 mg/L

in respect of which, Dr Kobayashi’s opinion ( par 26 ) was:

The data show that the wastewater from the balance tank contains very high concentrations of ammonia nitrogen and organic nitrogen and BOD. The discharge of such wastewater has the strong potential for environmental harm in aquatic environments.

35. In view of the fact that the Prosecution does not assert “ actual ” harm to the environment but rather asserts “ likely harm ”, I am satisfied beyond reasonable doubt on the basis of the agreed facts pertaining to “ environmental harm ” and of Dr Kobayashi’s unchallenged opinions (which I accept) that the pollution incident was likely to cause significant harm to the aquatic environment of Raglan Creek, by virtue of the nature and volume of the effluent that overspilled the balance tank.

36. In view of the foregoing conclusion, I am of the opinion that the appropriate penalty to be imposed is one that concurrently reflects (i) the serious nature of the offence committed (both in terms of the objective gravity of the facts concerning the pollution incident and the subjective culpability of the Defendant in respect of the incident) and (ii) the substantial mitigating factors operating in favour of sentence reduction. The result of such a conclusion is that a penalty of $60,000 is considered to be the appropriate sentence, thereby reflecting a penalty fixed at the level of 40 per cent of the maximum penalty ie yielding $100,000 less a substantial global reduction in sentence of 40 per cent ie $40,000.

37. The global sentence reduction or discount of 40 per cent incorporates an allowance of the maximum reduction representing the “utilitarian value” of the Defendant’s early plea of guilty conformably with the recent guideline judgment of the Court of Criminal Appeal in R v Thompson (2000) NSWCCA 309 (17 August 2000).

E. ORDERS

38. For all the foregoing reasons, I make the following orders:
1. The Defendant is convicted of the offence charged.
2. A penalty of $60,000 is imposed in respect of the conviction.
3. The Defendant shall pay the Prosecutor’s reasonable legal costs in the agreed sum of $10,000.
4. Exhibits shall remain on the Court file.