Environment Protection Authority v Hunter Water Corporation

[2016] NSWLEC 76

Land and Environment Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Environment Protection Authority v Hunter Water Corporation [2016] NSWLEC 76
Hearing dates:	2 May 2016
Date of orders:	17 June 2016
Decision date:	17 June 2016
Jurisdiction:	Class 5
Before:	Moore J
Decision:	See orders at [169]
Catchwords:	PROSECUTION – pollution of waters – discharge of acidic substance into watercourse – discharge over four-month period PROSECUTION – pollution of waters – discharge of large volume of treated water containing chlorine – discharge effected to flush the receiving waterway of the substance subject of the first charge PROSECUTION – breach of Environment Protection Licence condition – failure to maintain an acid transfer pump – failure to maintain pump caused leakage of the substance in the first prosecution PROSECUTION – breach of Environment Protection Licence condition – failure to operate a bund drain pipe valve – bund drain pipe valve left open for a period of four months PROSECUTIONS – whether the offences charged should be regarded as one composite and related group of offences or whether two distinct instances of offending – first pollution of waters offence together with both contravention of licence condition offences constitute a single instance of continuing offending conduct – offence of pollution of waters by flushing with treated water containing chlorine is a separate and distinct offence PENALTIES – assessment of seriousness of the offending conduct PENALTIES – appropriate to have regard to aggregation and proportionality for the group of three offences – appropriate to have regard to the principle of totality when considering all four offences – discount for early plea – total indicative sentences of $600,000 appropriate – application of appropriate principles of aggregation and totality to derive penalties when coupled with the discount of 25% for the early guilty plea results in an appropriate total penalty of $187,500 PENALTIES – publication order – publication order made requiring notices to be produced in one regional and two local papers, all of which circulate in the area where the offences occurred PENALTIES – application of moneys to an environmental project – agreed project – project known as “Managing Sediment Export and Grazing on the Dungog Common Recreation Reserve” – any moneys not expended on the project to be paid into the Environmental Trust fund
Legislation Cited:	Crimes (Sentencing Procedure) Act 1999 Environmental Trust Act 1998 Protection of the Environment Operations Act 1997
Cases Cited:	Camilleri's Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 Environment Protection Authority v Big River Group Pty Ltd [2011] NSWLEC 80 Environment Protection Authority v CSR Building Products Limited [2008] NSWLEC 224 Environment Protection Authority v Hanson Precast Pty Ltd [2008] NSWLEC 285 Environment Protection Authority v Orica Australia (the Ammonium Nitrate Solution Spill Incident) [2014] NSWLEC 109 Environment Protection Authority v Orica Australia Pty Ltd (the Ammonia Incident) [2014] NSWLEC 107 Environment Protection Authority v Orica Australia Pty Ltd (the Botany Mercury Incident) [2014] NSWLEC 110 Environment Protection Authority v Orica Australia Pty Ltd (the Hexavalent Chromium Incident) [2014] NSWLEC 106 Environment Protection Authority v Orica Australia Pty Ltd (the Jackhammer Incident) [2014] NSWLEC 105 Environment Protection Authority v Orica Australia Pty Ltd (the Nitric Acid Air Life Incident) [2014] NSWLEC 103 Environment Protection Authority v Straits (Hillgrove) Gold Pty Ltd [2010] NSWLEC 113; (2010) 174 LGERA 314 Environment Protection Authority v Sydney Water Corporation [2015] NSWLEC 80 Environment Protection Authority v Timber Industries Ltd [2001] NSWLEC 25 Environment Protection Authority v Waste Recycling and Processing Corporation [2006] NSWLEC 419; 148 LGERA 299 Markarian v The Queen [2005] HCA 25; 228 CLR 357 Morrison v Defence Maritime Services Pty Ltd [2007] NSWLEC 421 Plath v Rawson [2009] NSWLEC 178; 170 LGERA 253 R v Thompson; R v Houlton [2000] NSWCCA 309; 49 NSWLR 383 Veen v The Queen (No 2) [1988] HCA 14; 164 CLR 465
Category:	Principal judgment
Parties:	Environment Protection Authority (Prosecutor) Hunter Water Corporation (Defendant)
Representation:	Counsel: Mr N Allan, solicitor (Prosecutor) Mr J Johnson, barrister (Defendant)   Solicitors: Environment Protection Authority (Prosecutor) Sparke Helmore (Defendant)
File Number(s):	158040, 158041, 158042 and 158043 of 2016 (formerly 50688, 50689, 50690 and 50691 of 2015)
Publication restriction:	No

TABLE OF CONTENTS

Introduction

The Corporation

The Statement of Agreed Facts

The legislative framework

The Environment Protection Licence

Prosecution of the Corporation

The incidents at the treatment plant

The maximum penalties

Other orders sought by the Prosecutor

Application of the financial penalties

Legal costs of the Prosecutor

Publication orders

The Corporation’s guilty pleas

Sufficient factual basis for the pleas

The hearing

Mr Cleary’s oral evidence

The sentencing framework

Legislation

The POEO Act

The Sentencing Procedure Act

The relevant objective and subjective factors

Introduction

Objective factors

The maximum penalties

Environmental harm

Introduction

The actual impact on the environment

The agreed position from the SOAF on the capacity of the discharged pollutants to cause harm

Actual environmental harm

Potential harm to the environment

Foreseeability of risk of harm to the environment

Control over the causes of the harm

Conclusion on environmental harm

Practical measures the Corporation could have taken to prevent the offences

No damage to property or livestock

Multiple victims or a series of criminal acts?

Introduction

Victims

A series of criminal acts (multiple offences - were there a single cluster of offences or 3+1)?

Financial gain

Subjective factors

Introduction

Prior offences

Hunter Water is now a good corporate citizen

Likelihood of reoffending

Contrition and remorse

Introduction

Corporate apology and regret

Reparation

Conclusion on contrition and remorse

The Corporation’s pleas of guilty

Assistance to the Prosecutor

The process for sentencing

Introduction

Specific deterrence

General deterrence

Submissions on characterisation of the offending

Classifying each offence within a range

Assessment of seriousness

Other potentially relevant pollution cases

Consistency in sentencing

Determining the appropriate sentences

Introduction

The indicative sentences

Totality and accumulation

Discount for the early guilty plea

Application of the penalty moneys to an environmental project

The publication orders

Orders

Annexure A

Annexure B

Judgment

Introduction

1. HIS HONOUR: Dungog is a small town in the Hunter Valley, some 50 kilometres to the north of Maitland. Chichester Dam, a water storage on the Chichester River, is located a further 22 kilometres or so to the north of Dungog. Chichester Dam is one of the sources of water drawn upon by the Hunter Water Corporation (the Corporation) for the supply of potable water to its customers in the Hunter Valley. Water from the dam is, initially, transported by pipeline to the Dungog Water Treatment Plant (the treatment plant) owned by the Corporation and located on the outskirts of Dungog.

The Corporation

2. The Corporation is a statutory state-owned corporation constituted by s 4 of the Hunter Water Act 1991 (NSW) (the Water Act).

The Statement of Agreed Facts

3. The Prosecutor and the Corporation have settled a comprehensive and lengthy Statement of Agreed Facts (the SOAF). The statement was tendered in the proceedings and became Exhibit A.

4. The SOAF is, effectively, in three parts. These are:

1. A statement of the charges laid by the Prosecutor against the Corporation;

2. A detailed outline of the operations and layout of the treatment plant, together with the events giving rise to, and forming, the foundation for these charges; and

3. The agreed position between the Prosecutor and the Corporation concerning various elements required to be taken into account as part of these sentencing proceedings.

5. The SOAF elements relating to the charges are later reproduced in their entirety. The relevant extracts from the SOAF concerning the matters that I am required to consider as part of this sentencing process are also set out in full at the relevant point in this decision.

6. However, because of the length of the document (32 pages), much of the factual descriptions of the treatment plant, the deficiencies in its operations between April and August 2014 and their consequences are summarised from the SOAF, although some material is also extracted directly from the SOAF.

The legislative framework

7. The Protection of the Environment Operations Act1997 (the POEO Act) sets the regulatory environmental framework for activities such as those carried out by the Corporation at the treatment plant.

8. Chapter 3 of the POEO Act is entitled “Environment protection licences”. It sets up, amongst other things, the regime for granting licences for activities such as that carried out by the Corporation at the treatment plant.

The Environment Protection Licence

9. The Corporation has been issued with an Environment Protection Licence (the EPL) under the POEO Act for the treatment plant as such a licence is required for the activities it undertakes at it. The EPL for the treatment plant was first granted on 28 June 2000. A copy of the EPL in force between 8 April 2014 and 17 August 2014 is in evidence.

10. The EPL incorporates conditions under a number of headings, the relevant one in these proceedings being “Operating Conditions”. The second operating condition is in the following terms:

O2 Maintenance of plant and equipment

O2.1 All plant and equipment installed at the premises or used in connection with the licensed activity:

(a) Must be maintained in a proper and efficient condition; and

(b) Must be operated in a proper and efficient manner.

Prosecution of the Corporation

11. The Environment Protection Authority (the Prosecutor) has charged the Corporation with four offences. These offences are for breaches of the POEO Act at the treatment plant at Short Street, Dungog. The offences are described in the SOAF in the following terms:

1. Pollution of waters contrary to section 120 of the POEO Act, in that from 8 April 2014 until 17 August 2014, hydrofluorosilicic acid (HFSA) leaked from a corroded HFSA transfer pump and flowed through a stormwater culvert described as Point 1 in Environment Protection Licence number 2863 held by Hunter Water (EPL), and flowed downstream into a tributary of Slaughteryard Creek and then Slaughteryard Creek (Offence 1). Offence 1 is the subject of proceedings 50688 of 2015.

2. Pollution of waters contrary to section 120 of the POEO Act, in that from 12 August 2014 to 14 August 2014 approximately 2 megalitres of treated water containing chlorine flowed from a clear water tank at the Plant through the stormwater culvert into the tributary to Slaughteryard Creek and then Slaughteryard Creek (Offence 2). Offence 2 is the subject of proceedings 50691 of 2015.

3. Contravention of licence condition contrary to section 64 of the POEO Act, in that from 8 April 2014 until 12 August 2014 it was the holder of the EPL, and condition O2.1(a) of the EPL was contravened by both Hunter Water and Hunter Water Australia Pty Limited (HWA) because the HFSA transfer pump which leaked was not maintained in a proper and efficient condition (Offence 3). Offence 3 is the subject of proceedings 50689 of 2015.

4. Contravention of licence condition contrary to section 64 of the POEO Act, in that from 8 April 2014 until 12 August 2014 it was the holder of the EPL, and condition O2.1(b) of the EPL was contravened by both Hunter Water and HWA because the HFSA transfer system was operated while the HFSA bund drain valve was open instead of closed (Offence 4). Offence 4 is the subject of proceedings 50690 of 2014.

The incidents at the treatment plant

12. In simple terms, the treatment plant adds chemicals to the raw water supplied from the Chichester Dam before the water is transmitted onward through a broad, potable water reticulation system to houses, commercial premises and industries in this portion of the Hunter Valley. The layout and operations of the plant are discussed in more detail later. It is sufficient, at this point, to note that aspects of the operation of the plant between April and August 2014 form the basis of the four offences with which the Corporation has been charged.

13. Amongst the chemicals added to the water at the treatment plant is HFSA. This substance is added, in measured doses, through an automatic dosing system, because, at the level of the substance in the final potable water distributed to consumers, it assists to improve dental health. However, HFSA is a highly toxic and corrosive substance when in concentrated form. It is, in its concentrated form, highly harmful to humans - whether through contact or ingestion.

14. The HFSA is held at the treatment plant in two 22,500-litre bulk tanks. The area where the tanks are located is surrounded by a concrete bund. The HFSA is pumped from the bulk tanks, automatically and on a daily basis, to treat water received from Chichester Dam prior to its distribution to the Corporation’s customers.

15. Although the water transferred from Chichester Dam to the treatment plant is treated with chlorine at the dam, the utility of that treatment is significantly dissipated by the time this water is received at the treatment plant. As a consequence, further chlorine dosing also forms part of the treatment of the raw water received from Chichester Dam prior to distribution into the Corporation’s network. The stored, treated water is known as “clear water”.

16. The treatment plant is located on elevated land. The only location where liquid discharge is permitted by the EPL is a stormwater culvert at the treatment plant’s boundary. The location of the discharge point at the culvert is referred to in the SOAF as Point 1.

17. Discharges at Point 1 flow via a tributary of Slaughteryard Creek to that creek, and thence to the Williams River – approximately 3.5 kilometres downstream from the discharge point. The area surrounding the flow path of discharged liquids between the culvert and the Williams River is rural, with horses and cattle in paddocks (some having access to the creek), and with the riparian zone being mostly cleared but with occasional patches of trees along the creekline.

18. Throughout the relevant period, there was one permanent water treatment operator at the treatment plant and a relief operator (who worked several days a week at the plant). Both these employees were within the Treatment Operations Group of the Corporation. The Corporation also employed a water quality engineer who was responsible for compliance with work safety and environmental requirements at the treatment plant (amongst a range of other responsibilities).

19. The system that operated the automatic daily dosing of HFSA and other chemicals is located in an area of the treatment plant described as the “services structure”. The bulk storage tanks were connected to the services structure by a series of pipes which ran inside a concrete trench. The trench was at ground level and covered by a metal cover plate, and was located in a paved outdoor area.

20. The bund around the bulk HFSA storage tanks had a sump in it. As this area was outdoors, a facility was needed to drain the bunded area of accumulated rainwater. As a consequence, the sump in the bunded area was connected to the trench via a pipe through the bund wall. Within the trench, there was a stop valve at the end of the pipe. Unless this valve was closed, all liquids within the HFSA bulk storage area bund would flow into the trench. The valve in the trench was under the cover plate.

21. To facilitate the daily HFSA dosing process, a transfer pump was located on a pedestal within the bunded area. As earlier noted, use of this pump to transfer the HFSA occurred, automatically, on a daily basis. The transfer usually occurred between 7.00 am and 8.00 am, taking approximately 10 minutes and delivering nearly 200 litres of HFSA to the dosing tank.

22. The pump was one designed for the transfer of corrosive liquids and required maintenance at six-monthly intervals (according to the manufacturer). The pump involved had been replaced at sometime between January 2011 and November 2012 but had not been maintained since it was installed.

23. The Corporation employed fitters who carried out three-monthly mechanical services of the HFSA dosing equipment at the treatment plant. These services should have included inspection of the pump, but did not. The Work Order Job Card for the fitters contained specific instructions to check the fluoride dosing pump (a different pump in a different location) but did not contain any specific instructions concerning the pump that transferred HFSA from the bulk storage tanks.

24. It is agreed, in the SOAF, that the plant's operators should have been visually inspecting the bulk storage HFSA transfer pump daily as part of their general responsibility for day-to-day inspection and basic maintenance of the treatment plant but did not do so.

25. The EPL permitted water to be discharged from the treatment plant at the discharge point flowing to Slaughteryard Creek. Chemicals (including HFSA) could not be discharged in this process. Approximately 200,000 litres of permitted water (including stormwater) was discharged per day.

26. The EPL required monthly sampling and testing at the discharge point for a variety of values. Testing for HFSA was not required by the EPL. However, a more limited range of sampling was undertaken on a weekly basis, and this sampling included testing for HFSA. The sampling process was undertaken by an entity (referred to as HWA) that was a subsidiary of the Corporation.

27. The results of the sampling were accessible to the Corporation on its computer network and were also e-mailed to the water quality engineer (amongst other people) each week in a consolidated dam data spreadsheet. A text message was separately sent to each person to whom the sampling data was circulated to alert them to the fact that the spreadsheet had been dispatched. The spreadsheet contained a significant amount of monitoring data about the treatment plant and Chichester Dam. No employees of the Corporation checked the sampling results for the treatment plant contained in the spreadsheet. The Corporation relied on HWA to bring to its attention any unusual results.

28. The above information provides a broad background to the four offences for which the Corporation has been prosecuted. However, to understand those offences, it is appropriate to reproduce the full detail concerning them as set out in the SOAF. However, in doing so, I have removed personal identification details – as it is unnecessary to name the people involved for the purposes of this prosecution (as they have not been individually prosecuted). The relevant portion of the SOAF reads as follows:

Offence 1

33   During the period between at least 8 April 2014 and 12 August 2014, HFSA was leaking from the Pump during the daily HFSA transfer and discharging into the creek through Point 1. It continued to be discharged into Point 1 until 17 August 2014.

34   Between about 8 April and 12 August 2014, HWA staff noticed that the weekly sample results for fluoride at Point 1 were higher than the background levels which were normally recorded. The sample results normally showed levels of less than 0.3 mg/L. The pH was usually around 7. From about April 2014 until 15 July 2014, the fluoride results were higher than the usual levels, but were mostly still less than 1 mg/L. On 12 August 2014, the fluoride concentration at Point 1 was 24 mg/L and the pH was around 4.

The pathway of the HFSA leak

35   The Valve between the HFSA bund and the chemical trench was left in the "open" position rather than being closed, as it should have been. HFSA was leaking from the Pump into the bund each day during the transfer, and flowing through the open Valve into the chemical trench. Cracks had formed in the concrete joint between the bund wall and the chemical trench wall. This joint was not designed to operate as a seal for corrosive liquids. The HFSA flowed through those cracks into the adjacent soil fill and groundwater beneath the paved area.

36   Some of the leaked HFSA migrated through the soil and groundwater beneath the paved area, parallel to the chemical trench wall. At a point, an underground stormwater pipe passes underneath the chemical trench. At this point, HFSA had corroded the lifting point on top of the pipe and passed through cracks into the stormwater pipe.

37   Water containing HFSA then flowed through the stormwater system to Point 1 and into the Slaughteryard Creek tributary.

38   On 12 August 2014, the leak involved HFSA spraying visibly into the air, such that most HFSA fell into the bund, but some HFSA sprayed out over the bund wall and landed on the paved area adjacent to it.

39   When the fluoride results first became slightly elevated at Point 1, HWA staff undertook checks to try and determine the reason for the increase. They thought that it was coming from the sludge lagoons. However, testing from the lagoons did not correlate with the sample results. The plant operators and their team leader could not work out the source of the increase. The weekly sample results were available and accessible to Hunter Water through its computer network and were being emailed to Hunter Water in the weekly Dam Data spreadsheet, but were not checked. HWA staff did not otherwise specifically notify any staff of Hunter Water about the issue.

The discovery of the HFSA leak

40   On 12 August 2014, one of the plant operators undertook the weekly water sample at Point 1 at 7.00 a.m. The result showed a very high level of 24 mg/L of fluoride, and a low pH of around 4. The previous sample, taken on 5 August 2014, had showed a fluoride result of 1.89 mg/L. The pH was typically around 7 at Point 1.

41   The operator immediately went to check the Pump, as it was around the time of its daily transfer. While the transfer was occurring, he saw HFSA spraying out of the pump housing in a fan pattern. The spray was striking the Pump's control cabinet, making access to the emergency stop unsafe. A photograph taken at this time showing the spraying Pump is in evidence. This operator called the other water treatment operator to advise him of the incident.

42   After noticing the spray of HFSA from the Pump at around 7.35 a.m. on 12 August 2014, the operator then on site isolated the pump (once it was safe to approach it) and logged a work order for repair of the Pump by Hunter Water. He phoned and left a voicemail for his supervisor. The relief plant operator assumed the HFSA was contained in the bund or chemical trench through closed isolation valves.

43   At 9.00 am, the relief plant operator collected and retested samples at the energy dissipater (result: fluoride 42 mg/L) and Point 1 (results of pH 4.7, fluoride 30mg/L). During the period from 12 August 2014 to 1 October 2014, fluoride and pH samples were taken at various locations in the creek between Point 1 and the confluence with the Williams River (which is a distance of about 3.55 kilometres). The results of that sampling are shown in the spreadsheet at Tab 11.

44   Between 9 am and 12 pm on 12 August 2014 a Hunter Water employee inspected the Pump and mechanically isolated it for maintenance or replacement.

45   750 litres of HFSA leaked from the Pump between 30 July 2014 and 12 August 2014. HFSA also leaked from the bulk storage system between 8 April 2014 and 30 July 2014, but the quantity is unknown. A significant volume of leaked HFSA was contained onsite and following the incident the water in the chemical trench was drained to the chemical detention dam and later taken off the Plant site by tankers. A system of pits was created to flush the soil fill and groundwater near the chemical trench to remove remaining HFSA. The flushing of soil and groundwater to remove residual HFSA ceased on 30 September 2014.

Offence 2

46   Clear water (water already treated at the Plant) was stored in a clear water tank. The clear water tank was designed so that its contents could be discharged into the stormwater system through a "scour" valve, to enable the tank to be emptied if required.

47   At a time between 9 am and 12 pm on 12 August 2014, The relief plant operator opened the Plant's clear water tank scour valve so that clear water was directed to flow into Point 1, to dilute the fluoride level in the creek.

48   The clear water that was flushed into Point 1 contained approximately 1.0mg/L to 1.2mg/L of chlorine. The rate of discharge was about 1 megalitre of water per day. This is about five times higher than the usual rate of flow of water into Point 1 and through the creek. The relevant chlorine trigger value for the protection of 95% of species in freshwater is 0.003mg/L, and 0.013mg/L for protection of 80% of species. The 95% trigger value is intended for "slightly-moderately impacted systems" and is the most relevant in this case.

49   During the period while clear water was being flushed into Point 1, the smell of chlorine was apparent in the vicinity of Point 1.

50   At 18.00 on 12 August 2014, a Hunter Water employee updated the Chief Operating Officer of Hunter Water who then contacted Hunter Water’s Manager, Environment and Sustainability and asked whether he thought flushing from the clear water tank was an appropriate response. The Manager, Environment and Sustainability noted that given the circumstances of high levels of fluoride in the creek, he thought flushing was an appropriate strategy. A decision was made to continue flushing with water from the clear water tank overnight.

51   On 13 August 2014 an EPA officer attended the Plant. He observed the smell of chlorine near Point 1 and asked Hunter Water staff whether there was an alternative to the use of chlorinated water to flush the creek.

52   On the morning of 14 August 2014 the flushing of clear water was stopped. Instead, raw water from the Chichester Trunk Gravity Main was used (this is water which had not yet been treated at the Plant). This raw water contained approximately 0.04mg/L to 0.06mg/L of chlorine.

53   There is no reason that raw water could not have been used initially to flush the creek. Neither Hunter Water nor HWA considered or assessed the consequences of flushing the Creek with clear water as opposed to raw water.

Offence 3

54   Between 8 April 2014 and 12 August 2014, the Pump which was used to transfer HFSA from the bulk storage tank to the daily dosing tank every day was not maintained in a proper and efficient condition. During this period, it was leaking HFSA into the HFSA bund. It is not known when the Pump first began leaking.

55   Between 8 April 2014 and 12 August 2014, no person observed the Pump during its automatic daily transfer. There is no record of any person inspecting the Pump at all during this period.

56   A Hunter Water fitter carried out a three monthly mechanical service of the fluoride dosing equipment on 2 June 2014. It is not known whether the fitter who carried out this service inspected the Pump. If they did, the inspection was not adequate to ensure that the Pump was not leaking.

57   The leak of HFSA from the Pump was not noticed by anyone until 12 August 2014. HFSA continued to flow from the Plant's stormwater system into Point 1 until around 17 August 2014.

58   The Pump had 6 bolts attaching the pump unit to the motor and applying pressure on an annular seal. By 12 August 2014, the attachment point of one of the bolts had major corrosion. There was also significant corrosion around two other points. There was significant corrosion on the edge of the casing between and around the bolt locations.

59   The preventative inspection and maintenance regime for the Pump was insufficient and inadequate to detect and rectify this problem with the Pump.

60   The failure of Hunter Water and HWA to maintain the Pump so that it did not leak HFSA was a contravention of condition O2.1(a) of the EPL.

Offence 4

61   Between at least 8 April 2014 and 12 August 2014, the Valve in the pipe between the HFSA bulk storage bund and the chemical trench was in an "open" position. During this period, the HFSA transfer system was configured to automatically transfer HFSA from the bulk storage tank to the daily dosing tank.

62   The operation of the HFSA transfer system while the Valve was in an "open" position was not a proper and efficient manner of operation and was a contravention of condition O2.1(b) of the EPL. The Valve should have been closed at all times, except when it was opened to clear rainwater out of the bund, which should only have been done after ensuring the rainwater did not contain any pollutants.

63   If the Valve had been closed during this period, the HFSA that leaked from the Pump would mostly have been contained in the bund.

64   No person checked that the Valve was closed at any point between at least 8 April 2014 and 12 August 2014. Hunter Water and HWA do not know for how long the Valve was open prior to 8 April 2014. It is not known when the Valve was last closed or checked.

65   The chemical trench was not designed to contain HFSA. The Plant's bulk HFSA spill containment system was therefore reliant on the Valve being closed. The join between the trench concrete and the bund wall was not designed to be a seal for the purposes of containing corrosive liquid such as HFSA for an extended period of time. The condition of this section of the chemical trench was not being inspected.

66   The Valve was normally covered by the plate over the chemical trench, making the "state" (whether open or closed) indicator button difficult to observe, because the plate had to be removed.

67   The Valve was stiff and a "local tool" had been fabricated to assist with operating it. The existence and location of this tool was not part of the site induction for water treatment plant operators. The relief plant operator was not aware until 12 August 2014 of the existence and location of this tool.

The maximum penalties

29. The maximum penalty for each offence is $1,000,000 for a corporation (s 123(a) of the POEO Act – first and fourth charges - and s 64(1)(a) of the POEO Act – second and third charges).

Other orders sought by the Prosecutor

Application of the financial penalties

30. The parties have agreed that any penalty amount (up to $150,000) shall be applied to an environmental project – “Managing Sediment Export and Grazing on the Dungog Common Recreation Reserve” - with any amount of penalty above $150,000 being paid into the Environmental Trust fund. The details of the agreed project form Annexure B to this judgment.

Legal costs of the Prosecutor

31. The Corporation has agreed to an order that it pay the Prosecutor’s legal costs in the sum of $75,000 (in addition to any penalties).

Publication orders

32. Chapter 8 of the POEO Act is entitled “Criminal and other proceedings”. Part 8.3, “Court orders in connection with offences”, applies “where a court finds an offence against this Act or regulations proved” (s 243(1)). Conviction of the Corporation in these proceedings engages that provision and, thus, a power to make one or more orders from the broad range of options contained in s 250(1) of the POEO Act.

33. The additional order that has been agreed to by the Corporation is a publication order made pursuant to s 250(1)(a), a provision in the following terms:

250 Additional orders

(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,

…

34. The parties have agreed as to the terms of the order requiring publication of an agreed statement in three newspapers circulating in the Dungog region – namely, the Newcastle Herald, The Maitland Mercury and the Dungog Chronicle. These publications are specified in the orders at the end of this decision. The statement that is to be published is reproduced as Annexure A to this decision.

35. Although s 250(1)(b) of the POEO Act also permits the Court to require a convicted offender to make an individual apology to specified persons, no need to engage this provision arises out of this offending conduct.

The Corporation’s guilty pleas

36. The Corporation has pleaded guilty to all four offences and, as a consequence, the Corporation comes before the Court in these proceedings solely for the purposes of assessing the appropriate penalty to be imposed for each offence, individually, and then, through an assessment dealt with later, to determine the extent of the aggregate penalty that should be imposed, having regard to each of the individual assessments.

37. The Corporation pleaded guilty to the offences at the third mention of the proceedings, at a time when the Prosecutor had provided its proposal for the SOAF to the Corporation for the Corporation’s consideration. The time at which the guilty pleas were entered is a relevant matter in the sentencing process, and brings into play consideration of issues of efficiency for the justice system and the extent to which the Corporation is entitled to a discount on the total penalty that would otherwise be proposed.

Sufficient factual basis for the pleas

38. As earlier noted, a SOAF was settled by the legal representatives of the parties prior to the commencement of the hearing. I have carefully read this document and I am satisfied that it contains a proper factual basis to support convictions on each of the charges to which the Corporation has pleaded guilty.

39. I am also satisfied that no defence is available to the Corporation pursuant to s 64(2) of the POEO Act for the two contravention of licence condition charges to which guilty pleas have been entered.

The hearing

40. In effect, the sole matter that was in dispute between the parties is how each of the offences should be characterised. The Prosecutor characterises the three charges concerning the HFSA discharge as giving rise to offences of moderate to medium seriousness, whilst the Prosecutor characterises that of using the treated water to flush the creek system (the second water pollution offence) as being of low to moderate seriousness.

41. The position advanced by Mr Johnson, counsel for the Corporation, is that all four offences should be regarded as being of low seriousness.

42. The Prosecutor also characterises the conduct giving rise to the three charges concerning the HFSA discharge as being negligent, whilst Mr Johnson contests this proposition.

43. How any particular offending conduct should be characterised forms an essential preliminary element for the commencement of the sentencing process for the offence for which an individual or entity is to be convicted. Other than this aspect of characterisation of each of the four instances of offending conduct (and the determination of monetary penalty to flow from each), the Prosecutor and the Corporation have reached agreement (as set out in the sections above) concerning all other outcomes to follow from these prosecutions.

Mr Cleary’s oral evidence

44. In addition to the SOAF, a folder of agreed documents was also tendered (Exhibit B). On behalf of the Corporation, Mr Johnson called Mr Darren Cleary, the Corporation’s Chief Operating Officer, to give evidence, and Mr Cleary's affidavit and annexures formed a substantial part of the Corporation’s evidence. However, the Corporation also relied on a number of other documents that were tendered. These documents were:

1. Using the ANZECC Guidelines and Water Quality Objectives in NSW;

2. National Water Quality Management Strategy, Paper No 4, Australian and New Zealand Guidelines for Fresh and Marine Water Quality, Vol 1, The Guidelines, Chapters 1-7, October 2000, ANZECC and ARMCANZ;

3. Hunter Water Corporation, Operating Licence 2012-2017;

4. Independent Pricing and Regulatory Tribunal, Hunter Water Corporation Reporting Manual, Water – Reporting Manual, June 2013;

5. Hunter Water Corporation, Community and Environment Policy, January 2015.

The sentencing framework

Legislation

45. The Crimes (Sentencing Procedure) Act1999 (the Sentencing Procedure Act) provides the general framework for sentencing (setting out matters required to be considered during this process), whilst the POEO Act contains a specific provision required to be taken into account in this process for offences such as those here involved.

The POEO Act

46. Section 241 of the POEO Act sets out those matters that are required to be considered in assessing what penalty should be imposed after the finding of guilt in any prosecution for a breach of this Act. It is in the following terms:

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.

47. In these proceedings, only the first four of the matters contained in s 241(1) require consideration.

The Sentencing Procedure Act

48. The Sentencing Procedure Act sets out, in s 3A, the purposes for which a sentence may be imposed. The provision is in the following terms:

3A Purposes of sentencing

The purposes for which a court may impose a sentence on an offender are as follows:

(a) to ensure that the offender is adequately punished for the offence,

(b) to prevent crime by deterring the offender and other persons from committing similar offences,

(c) to protect the community from the offender,

(d) to promote the rehabilitation of the offender,

(e) to make the offender accountable for his or her actions,

(f) to denounce the conduct of the offender,

(g) to recognise the harm done to the victim of the crime and the community.

49. The Sentencing Procedure Act also sets out, in s 21A, various aggravating, mitigating and other factors potentially required to be taken into account in a sentencing process. To the extent that the matters set out in these two provisions are relevant to these proceedings, I have had regard to them in the following discussion.

50. It is clear that the relevant factors that are called upon for consideration by the POEO Act also, effectively, coincide with elements requiring to be considered arising out of the provisions of s 21A of the Sentencing Procedure Act. In my subsequent analysis of the Corporation's objective and subjective factors, these provisions are drawn together as appropriate, as is noted in each instance.

51. In Plath v Rawson [2009] NSWLEC 178; 170 LGERA 253, Preston CJ set out, at [48], a list of matters potentially to be taken into account when assessing the objective gravity of an environmental offence. This list was not expressed as exhaustive. The matters listed by his Honour were:

• the nature of the offence;

• the maximum penalties for the offence;

• the harm caused to the environment by commission of the offence;

• the state of mind of the offender in committing the offence;

• the offender’s reasons for committing the offence;

• the foreseeable risk of harm to the environment by commission of the offence;

• the practical measures to avoid harm to the environment; and

• the offender’s control over the causes of harm to the environment.

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

• lack of prior criminality;

• prior good character;

• plea of guilty to the offences;

• contrition and remorse; and

• assistance to authorities.

53. Those matters relevant to these proceedings from each of the above lists, together with any other relevant matters, are discussed below. I now turn to address the relevant factors concerning the Corporation.

The relevant objective and subjective factors

Introduction

54. The Sentencing Procedure Act (s 21A(2) and (3)) requires that I consider any aggravating and mitigating factors concerning the Corporation that are to be taken into account in determining appropriate sentences for the Corporation for these four offences. As earlier noted, the relevant portions of s 241 of the POEO Act are also to be dealt with in this consideration.

55. I am satisfied that the steps taken by the Corporation, from about the end of 2013, to inform itself about, and address, its hazardous substance risks were appropriate. Although perhaps conducted a trifle slowly, nonetheless I could not conclude, beyond reasonable doubt, the Corporation’s overall conduct should be characterised as negligent for the purposes of regarding it as an aggravating factor. There is no other potentially aggravating factor arising from consideration of the matters set out in s 21A(2) with respect to the Corporation.

56. The facts giving rise to each of the offences have been set out earlier in this judgment, as has the statutory basis for each of the charges against the Corporation. It is against those facts, and the offences themselves, that the objective factors are to be considered. The subjective factors are those that are peculiar to the Corporation in this context.

Objective factors

The maximum penalties

57. As earlier set out, the maximum penalty for a corporation for each offence is $1,000,000. However, this has not always been the case. In 2006, the maximum penalties under the POEO Act for strict liability offences were increased significantly. Relevantly, for corporations, the penalties were increased from $250,000 to $1,000,000.

58. Although increases in the maximum penalty for an offence will ordinarily result in higher penalties being imposed for such offences as occur after the increase in penalties has come into effect, it does not follow that there is assumed to be some automatic multiplier applied to the penalty imposed reflecting the rate of increase in the maximum penalties in the statute (see Morrison v Defence Maritime Services Pty Ltd [2007] NSWLEC 421 at [60]).

59. However, the increase in the maximum available penalty is to be taken as being the legislature’s understanding and reflection of contemporary community standards concerning the offences involved (Environment Protection Authority v Timber Industries Ltd[2001] NSWLEC 25at [33]).

60. The maximum penalty is significant in determining the objective seriousness of the offence: Plath v Rawson at [57]. The maximum penalty also demonstrates the seriousness with which the offence charged is viewed: Camilleri'sStock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698.

61. The size of the penalty also “indicates the gravity of the offence as perceived by the community” (Camilleri'sStock Feeds also at 698).

62. Given the 2006 increase in penalties, caution must be taken when looking at historical sentencing information so that proper regard is had to the applicable sentencing regime within which an offence was assessed.

Environmental harm

Introduction

63. The first relevant factor is that in s 21A(3)(a) of the Sentencing Procedure Act as to whether I could be satisfied that “the injury, emotional harm, loss or damage caused by the offence was not substantial”. These matters also link to consideration of s 241(1)(a) of the POEO Act. The conclusion drawn in this section (as to whether or not the impact was substantial) also relates to the extent of harm in the provision of the POEO Act just cited.

64. The SOAF noted, in the context of consideration of how cured by the officers, that:

The parties have obtained the opinion of an expert ecologist and ecotoxicologist before agreeing to the facts set out in this section. The facts set out in this section are consistent with the opinions given by the expert ecologist and expert ecotoxicologist.

The actual impact on the environment

65. As a consequence, the material that I now set out dealing with environmental harm is derived from this section of the SOAF. The document notes:

135   When it was sampled in June and July 2015, Slaughteryard Creek had a very high diversity of macroinvertebrates. A typical small rural catchment such as this would not usually support such a high diversity of macroinvertebrates and would be essentially dry for much of the time. The creek is, however, artificially kept filled and flowing via the discharge of water from the Plant. The results of sampling were similar to samples collected from other local streams in the region in 2008 and 2010, with similar but natural flows.

136   At the time of the Offences, the 3.55 km of creek between point 1 and the confluence of Slaughteryard Creek with the Williams River would have supported a diverse array of aquatic macroinvertebrates.

137   The discharges of fluoride and chlorine had the potential to kill most of the aquatic macroinvertebrates in the creek, however the toxicity could have been mitigated by some animals being able to find local refuge in pooled or stratified less toxic water. At least some of the aquatic macroinvertebrates that were in the creek were actually killed by the discharges of fluoride and chlorine.

138   Aquatic biota would have begun re-colonising the creek after the concentrations of fluoride and chlorine had dropped to safe levels, which would have started with the rainfall occurring between 19 and 22 August 2014.

139   Given the relative concentrations of chlorine and fluoride that were discharged, compared to the concentration at which toxic effects are observed due to those contaminants, the exposure to the chlorine probably had a great effect than exposure to fluoride alone.

140   The maximum duration of the ecotoxicological effects in the creek would have been between 15 July 2014 and 18 August 2014. The impacted environment would have recovered as unpolluted plant discharge continued down the creek aided by periodic stormwater flushing events, the first between 19 and 28 August 2014. The creek was considered to be fully recovered by June and July 2015 when sampling was undertaken, however it was likely to have recovered earlier than this, given the rain events immediately following the incident (19 to 22 August, 27 to 28 August and 5 to 6 September) and further storm events in December 2014, January 2015, March 2015 and April 2015.

66. There are two observations to be made about the above passages. The first is that the amelioration of the impact of the discharges as a consequence of the rain and storm events set out in [140], whilst beneficial for the environment, do not weigh in the Corporation’s favour as they are beneficial events which the Corporation did not bring about.

67. Second, it is important to observe, for the purposes of considering the comparative seriousness of the various offences, the agreed comments in [139] that the exposure to the chlorine as a consequence of the discharge of the clear water for flushing purposes probably had a greater effect than exposure to fluoride alone. This requires consideration because, although the flushing was undertaken over a comparatively short period after the Corporation became aware of the HFSA discharge, this flushing is likely to have had a greater environmental impact than the discharge sought to be remedied by it.

68. In addition to noting this duality of consequence for the purposes of considering actual environmental harm, it is also a factor relevant in my later consideration of whether the four offences should be treated as a single incident or whether the clear-water-flushing pollution offence should be treated separately from the other three offences charged.

The agreed position from the SOAF on the capacity of the discharged pollutants to cause harm

69. The agreed ecotoxicological position concerning the capacity of the HFSA discharge and the subsequent clear water flushing sets out, in a little technical detail, the position in which the postulated potential for environmental harm (set out at [146] to [150]) would have had on Slaughteryard Creek and its tributaries (noting that the experts concluded that there would not have been any impact on the Williams River proper):

141   The fluoride trigger values for the protection of freshwater biota are 1.6mg/L, 2.4 mg/L and 4.2 mg/L for protection of 95%, 90% and 80% of species respectively. The 95% trigger value is intended for “slightly-moderately impacted systems” and is the most relevant trigger value in this case. The fluoride concentration at Point 1 was between 1.7 and 2.3 for approximately four weeks, between 15 July 2014 and 12 August 2014. On 12 August 2014, the concentration of fluoride was measured at 27 mg/L. By 16 August 2014, the fluoride concentrations in the impacted waters were lower than 1.6 mg/L.

142   On 16 August 2014 the fluoride concentration near the confluence of the creek with the Williams River was 2.47 mg/L.

143   The pH at Point 1 on 12 August 2014 was 5.0 at 7 a.m., 4.7 at 9 a.m. and 5.1 at 2pm. The toxicity of fluoride is greater at low pH values. The addition of lime on 12 August 2014 caused the pH to rise to 10 at Point 1 at 5 p.m. It returned to a safe range within 18 hours as a result of the clear water flushing.

144   For a maximum period of five weeks, the concentrations of fluoride discharged were capable of causing adverse toxic impacts on aquatic organisms in the creek. Such impacts would likely have included reduced reproductive success and death.

145   It is possible that for between two and six days previous, the discharge of HFSA could also have caused the mortality of pH sensitive organisms due to low pH.

146   It is likely that the discharge of lime would have caused adverse impacts due to high pH, although it is not known what particular organisms would have been affected. It is likely that mortality of any pH sensitive organisms occurred in the creek over a period of up to eighteen hours. It is also possible that the addition of lime would have mitigated the toxicity of fluoride.

147   The concentration of chlorine discharged is very likely to have caused adverse toxic impacts on aquatic organisms remaining in the creek. Likely impacts would have included significant mortality to organisms. The adverse impacts from chlorine would have been very likely for a period of 3 days.

148   The combined effect of the multiple toxicants and stressors present in the creek at the same time (fluoride, chlorine and high or low pH) may have caused effects that are greater than the impacts from the individual toxicants and stressors alone, however the impacts are likely to have been mitigated by the topology of the creek and stratification of water from base-flow and other sub-catchment inflows resulting in pockets of better water quality that could act as refuges.

Actual environmental harm

70. See [146] to [148] of the SOAF set out above.

Potential harm to the environment

71. Preston CJ set out, under the heading “Objective harmfulness of offence”, in Environment Protection Authority v Waste Recycling and Processing Corporation [2006] NSWLEC 419; 148 LGERA 299 (at [145]), a number of principles. The first of them, relevant in these proceedings, is that:

Harmfulness needs to not only be considered in terms of actual harm, the potential or risk of harm should also be taken into account.

72. Several paragraphs in the SOAF set out what might have been the potentiality for harm to the environment when compared to the actual results of the incident. These are set out below:

149   The sequential exposure to fluoride and then chlorine is capable of causing adverse impacts on a wider range of taxa than if fluoride exposure had occurred in isolation. That is because toxicity from exposure to chlorine would have impacted a number of taxa that are not expected to have been impacted by exposure to fluoride.

150   The maximum duration of any direct ecotoxicological impacts resulting from toxicity and pH of the contaminants would have likely been from 15 July 2014 to 18 August 2014.

151   The discharged pollutants would have had the capacity to cause harm between the discharge Point 1 and the confluence between Slaughteryard Creek and the Williams River, but not beyond that confluence.

73. As a consequence, it appears likely that, given that the leakage, at the time it was observed by the plant operator, had peaked, the detected rate of HFSA discharged downstream, had it continued unabated, there would have been a heightened potential for harm to the environment. Fortunately, the detection of the HFSA spraying from the faulty pump prevented this being materialised.

Foreseeability of risk of harm to the environment

74. The POEO Act requires my consideration of “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)) in the circumstances of this incident.

75. The SOAF makes it clear, at [154], that the Corporation had known since at least 2013 that there was a risk of HFSA pollution occurring at the plant and that, to avoid it, a number of changes needed to be made. These were:

1. Upgrading the automatic fluoride transfer system and addressing the pipe through the fluoride bulk storage bund;

2. Improving the preventative maintenance and inspection regime operating at the treatment plant; and

3. Upgrading the Corporation’s own system for verifying that inspections and maintenance were undertaken at the treatment plant in a proper and competent fashion.

76. It is clear that not only was the risk foreseeable but that the Corporation had not taken appropriate steps of a preventative nature.

154   Hunter Water had foreseen by at least 2013 that there was a risk of a pollution incident involving fluoride occurring at the Plant if changes were not made to:

(a)   the fluoridation system at the Plant, including specifically the automatic initiation of the HFSA transfer and the fact that there was a pipe through the Bund;

(b)   HWA’s system of preventative maintenance and inspection of hazardous chemicals storage equipment; and

(c)   Hunter Water’s own system of verifying the inspection and maintenance work undertaken by HWA.

Control over the causes of the harm

77. The POEO Act also requires my consideration of “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)) in the circumstances of these four offences.

78. The SOAF makes it clear, at [155], that the Corporation had, relevantly, complete control in all relevant respects (whether directly or through HWA being irrelevant for this consideration):

155    Hunter Water had control over the causes of the alleged offences. It had the control necessary to take the practical measures available to it to prevent the offences from occurring.

79. The SOAF also sets out, between [88] and [104], the deficiencies in training and maintenance for the two operators of the treatment plant. The deficiencies in the process for dealing with, and responding to, data contained in the dam data spreadsheet are also set out.

80. This section of the SOAF also records that the Corporation had an operation manual for the treatment plant, dated July 1988 and revised in March 1990. The 1990 manual contained four specific provisions dealing with bulk fluoride storage at the plant and how to respond to any incidents which might have arisen with respect to it. The two operators at the treatment plant were not aware of the 1990 manual and that which was set out in it concerning the bulk fluoride storage facilities at the treatment plant.

81. One operator was aware of, but had not read, a standard operating procedure document outlining the steps taken by the water treatment plant operator to receive delivery of HFSA by bulk road-tanker and coordinate the safe and effective transfer to bulk storage tanks. This document was not specific to this treatment plant. One of the operators was aware of this document but had not read it and did not comply with its terms. The other operator had not read this document, nor had he been asked to do so.

Conclusion on environmental harm

82. The material set out above leads me to conclude that the actual environmental harm was not likely to be significant. However, it is also obvious that, to the extent that there has been environmental damage at the macroinvertebrate level, the extent of that damage has been increased, significantly, as a consequence of the flushing of the creek system with the treated water drawn from the clear water tank. That flushing was flushing undertaken deliberately and without, apparently, considering the potential impact of using this water rather than using raw water drawn from the Chichester Dam feed to the treatment plant.

83. Although the combination of the factors set out immediately above leads me to conclude that the actual environmental harm was, in fact, insubstantial, the duration of the period throughout which the HFSA leakage and breaches of licence conditions continued to run is a significant indicator of the extent of the Corporation’s failures.

Practical measures the Corporation could have taken to prevent the offences

84. The SOAF sets out the agreed position at [152] and [153]. They set out a wide range of matters that could, if implemented, have avoided the three HFSA offences from occurring. These paragraphs are in the following terms:

152   Hunter Water could have taken the following practical measures which would have prevented all of the Offences from occurring, or would have reduced the duration of time over which the Offences occurred:

(a)   verifying that HWA’s staff were regularly inspecting the Pump and checking that the Valve was closed;

(b)   ensuring that its employed fitters inspected the Pump adequately for leaks when they carried out the three monthly mechanical services of the fluoride dosing equipment;

(c)   requiring all HWA staff at the Plant to undertake environmental training from Hunter Water, and ensuring that the content included training on the importance of inspecting the Pump and keeping the Valve closed, and specifically reporting to Hunter Water any changes in the sample results at Point 1;

(d)   auditing HWA’s scheduled task inspection system, which would have revealed that it was not adequate to ensure that operators were inspecting the Pump and Valve;

(e)   checking its own records of maintenance of the Pump, which would have revealed that it had been at least two years since the Pump was maintained, while the manufacturer recommended six monthly maintenance;

(f)   modifying the fluoridation system at the Plant sooner upon becoming aware in late 2012 that it was inadequate, by:

(i)   permanently blocking the pipe between the HFSA bund and the chemical trench or otherwise permanently locking the Valve closed;

(ii)   requiring manual initiation and visual monitoring of the Pump, which would have involved an operator observing the Pump as it transferred HFSA;

(iii)   installing alarms or other mechanisms to detect leakage from the Pump; and/or

(iv)   installing alarms or other mechanisms to detect a failure to close the Valve.

(g)   reviewing the weekly Dam Data spreadsheet, which contained the results of water samples taken at Point 1, which would have alerted Hunter Water to the fluoride discharge.

153   Hunter Water could have taken the following practical measures which would specifically have prevented Offence 2 from occurring:

(a)   Using raw water instead of chlorinated water to flush the creek, after discovering that HWA had opened the clear water tank and commenced flushing with chlorinated water; or

(b)   Developing a site specific plan to ensure that raw water instead of chlorinated water would be used by HWA initially to dilute the creek in the event of a chemical spill.

85. The fact that the Corporation did not implement matters arising out of its review of risks commenced in 2013 in sufficient time to avoid these incidents is also a factor (albeit a small one) to be taken into account in this consideration.

86. Overall, it is reasonable to conclude that there were significant steps within the Corporation’s control which, if implemented, could have prevented all four offences from taking place.

No damage to property or livestock

87. There was no damage to property. To the extent that there may have been (and it is not necessary to determine if there was) a risk of damage to property or livestock, I am satisfied that the Corporation’s actions in providing an on‑site alternative water supply where appropriate, when it became aware of the incidence of downstream pollution, eliminated any possible risk.

Multiple victims or a series of criminal acts?

Introduction

88. I now turn to consider the extent of the engagement of s 21A(2)(m) of the Sentencing Procedure Act, a provision in the following terms:

(m) the offence involved multiple victims or a series of criminal acts,

Victims

89. Apart from the agreed harm to the macroinvertebrates, there were no other victims of the pollution. From an anthropocentric perspective, there were no victims.

A series of criminal acts (multiple offences - were there a single cluster of offences or 3+1)?

90. One significant difference in the approach to the Corporation’s offending conduct lies in the position advanced by the Prosecutor as to how the offences should be viewed collectively and that advanced on behalf of the Corporation.

91. The Prosecutor says, in summary, that the first water pollution incident caused by the HFSA discharge, together with the two licence condition breaches, constitute a single bundle of offences that should be dealt with together. However, the Prosecutor says that the second water pollution offence, that of discharging the clear water down the creek toward the Williams River in order to flush the HFSA contamination, should be regarded as distinct and separate offending conduct and should, consequently, be punished accordingly.

92. The Corporation accepts that the HFSA discharge and the two licence condition breaches fall within the same, allied suite of offending conduct but says that, in addition, the clear water flushing, although itself offending conduct, should be regarded as part of the same collective group of offences.

93. As a consequence, Mr Johnson submitted that, for the purposes of determining sentence and assessment of totality of penalty, all four offences should be treated as part of the same punitive package. The reason for this proposition, he submits, is because the timeframe charged for the HFSA offence and the associated licence condition breaches runs from 8 April through to 12 August 2014 and the discharge of the clear water to flush the creek system toward the Williams River took place between 12 August and 14 August 2014, a period contained wholly within the band of dates charged for the HFSA and licence breach offences.

94. I am unable to accept this submission on behalf of the Corporation. Whilst I do adopt the agreed position that the HFSA discharge and the two licence breaches should be regarded as part and parcel of the same bundle of offending conduct, I do not accept that that extends to the clear water flushing.

95. Whilst the temporal coincidence upon which Mr Johnson founds his submission is self-evident, this does not compel the conclusion that all four matters should be treated as part of the same bundle of offending conduct. The omissions of the operators employed by the Corporation’s subsidiary (in not inspecting the fluoride pump or lifting the cover plate to the drain to see that the valve was open) were ongoing lapses that culminated in the three offences associated with, and causing, the HFSA discharge. The same cannot be said, for purely factual reasons, with respect to the clear water flushing.

96. Although the decision to flush the creek system with treated water was a well-meaning but misguided response, the decision to do so was a conscious one made in response to that which had become known of the existence of the HFSA leakage.

97. Fundamentally, although there is the temporal overlap earlier described, the clear water flushing was in response to the HFSA discharge and not, in any relevant sense, caused by the HFSA discharge. The subsequent recognition that the discharge of clear water was inappropriate and the use of a second‑stage flushing process using raw water was, clearly, in response to, and an attempt to resolve the impacts of, what had then been realised to be the inappropriate flushing of the high chlorine-loaded clear water.

98. Viewed, properly, in this fashion, it is evident that the second offence to which the Corporation has pleaded guilty, the breach of s 120(1) of the POEO Act by deciding to use clear water to flush the creek system, can only be regarded as separate and distinct offending conduct, despite the temporal overlap with the tail end of the offending conduct in the HFSA-related bundle of charges.

99. Therefore, in my subsequent consideration of the sentencing process, I need have regard to the HFSA incident and the two breaches of licence conditions associated with it as a single bundle of offences, whilst the second water pollution offence stands separately. However, this conclusion merely requires that, when I come to considering indicative and final sentences, questions of aggregation and totality are called into consideration.

Financial gain

100. The next factor to be dealt with is that in s 21A(2)(o) of the Sentencing Procedure Act, a provision in the following terms:

(o)   the offence was committed for financial gain,

101. The various elements of offending conduct were not committed for the purpose of financial gain. As a consequence, this provision has no role to play in these proceedings.

Subjective factors

Introduction

102. This section of my consideration requires an analysis of those matters that relate to the Corporation itself rather than to the offences that give rise to the charges to which it has pleaded guilty.

Prior offences

103. The first relevant factor is that in s 21A(3)(e) of the Sentencing Procedure Act as to whether the Corporation has “any record (or any significant record) of previous convictions”.

104. The extent to which the Corporation may have been convicted in the past, for environmental or other offences, is a matter of relevance in my sentencing consideration. The SOAF appended a schedule of past offences for which the Corporation had been convicted. The schedule lists six instances of prior convictions.

105. Two of the offences, both for pollution of waters, arose from conduct in December 1992. The other four offences, in 1999, 2001 (two offences) and 2002, were all for breaches of occupational health and workplace safety legislation.

106. There are two matters to be observed concerning the schedule. First, the most recent environmental offence listed was a conviction in December 1992 for polluting water. The Prosecutor accepts, as do I, that the comparative antiquity of this conviction does not warrant any adverse inference against the Corporation in the context of my consideration of its past record.

107. However, more recently, the Corporation has been convicted of the four offences for breaches of workplace laws, with the most recent of those offences being in October 2002, leading to the imposition of a penalty of $120,000.

108. As a consequence, as I understood the submissions from the Prosecutor and from Mr Johnson, it is the position that the Corporation is not entitled to be regarded as having no prior convictions for the purposes of s 21A(3)(e) of the Sentencing Procedure Act, but neither is it to be regarded as being a regular or repeat offender for these purposes.

109. I am satisfied that it is appropriate, as proposed, that I regard this as being a matter of neutrality in this sentencing process.

Hunter Water is now a good corporate citizen

110. The second relevant factor is that in s 21A(3)(f) of the Sentencing Procedure Act as to whether the company is “of good character”.

111. Annexed to Mr Cleary's affidavit was a lengthy schedule of the community activities of the Corporation during 2015. These activities (whether financial or functional and whether completed, ongoing or committed to for the future) are impressive. The Corporation is entitled to have them taken into account as a factor in its favour in the sentencing process.

Likelihood of reoffending

112. The third relevant factor is that in s 21A(3)(g) of the Sentencing Procedure Act as to whether the Corporation “is unlikely to re-offend”. This is also relevant, for the future, to prevention and, thus, avoidance of the potential for future incidents of this type. This is relevant as part of my consideration of matters required by s 241(1)(b) of the POEO Act.

113. The SOAF records (at [86] and [87]) that the Corporation has responded to the failures of the treatment plant by entirely reconstructing its HFSA-dosing system.

114. Material was tendered showing the nature of this reconstruction at the treatment plant (Exhibit B Tab 13). This material comprised a report produced by the Corporation for the Environment Protection Authority setting out, in detail, the nature of the new HFSA-dosing facility and the various measures incorporated in it to ensure that a repeat of any of this offending conduct is rendered impossible to recur.

115. In addition, whilst the reconstruction took place, interim changes were undertaken at the treatment plant to ensure that there would be no recurrence during the reconstruction process.

116. A beneficial byproduct of the incident was that the Corporation also checked the adequacy of the fluoride-dosing systems at its other water treatment plants.

117. The other measures implemented by the Corporation in cooperation with Veolia (a contractor which has taken over the running of a number of the Corporation’s operating facilities – including the treatment plant) include training of operators of the treatment plant (amongst others) and regular external operating audits for these facilities. More details were set out in the elements of [14] of Mr Cleary’s affidavit. All these new measures go further to decrease any possibility of such incidents being repeated.

Contrition and remorse

Introduction

118. The fourth relevant factor is that in s 21A(3)(i) of the Sentencing Procedure Act as to whether the Corporation “has shown remorse for the offence”. This engages consideration of two elements contained in the provision that are both required to be satisfied. These, relevantly adapted, are:

(i)   Whether the Corporation has provided evidence that it has accepted responsibility for its actions, and

(ii)    Whether the Corporation has acknowledged any loss caused by its actions and has made reparation for such loss.

Corporate apology and regret

119. Mr Cleary gave brief oral evidence of the Corporation’s contrition and remorse for the failures that founded the four offences. By letter from the Corporation’s Interim Chief Executive Officer (dated 18 December 2015) as annexed to Mr Cleary’s affidavit, the Corporation has apologised for its conduct that gave rise to the offences.

120. The Prosecutor acknowledged, in the prosecution’s submissions on sentence, that the Corporation was remorseful and contrite.

Reparation

121. As there was no actual damage able to be repaired, questions of actual reparation do not arise. However, it is appropriate to note, I consider, that the preventative actions of the Corporation in providing an alternative potable water supply for downstream livestock that might have otherwise accessed the creek for drinking should be taken into account under this heading.

Conclusion on contrition and remorse

122. On the basis of Mr Cleary's oral evidence, which I accept was genuine, and its acceptance by the prosecution, I am satisfied that the Corporation is genuinely remorseful for its failures and, as a consequence, is entitled to have this taken into account as a factor in its favour in the sentencing process.

The Corporation’s pleas of guilty

123. I have earlier noted that the Corporation pleaded guilty early in the Court processes. The Prosecutor accepts that, for sentencing purposes, these pleas should be regarded as having been entered at the earliest occasion. The timing of entering a guilty plea is a matter of relevant statutory consideration (s 22 of the Sentencing Procedure Act). As a consequence of the guidance given by the Court of Criminal Appeal in R v Thompson; R v Houlton [2000] NSWCCA 309; 49 NSWLR 383, the range of discount to be given as a consequence of the guilty plea will be between 10% and 25%.

124. In this instance, I am satisfied, as the Prosecutor accepts, that the pleas of guilty to the four offences should be regarded as having been entered at the earliest opportunity and, thus, the maximum discount of 25% should be afforded to the Corporation to the total penalty that would otherwise be imposed for these offences.

Assistance to the Prosecutor

125. Because of the nature of the offences, as earlier described, and the second stage of the flushing of the creek system via the creek system down Slaughterhouse Creek, and into the Williams River, with raw water drawn from Chichester Dam, there was no physical clean-up operation required in which it might have been expected the Corporation would participate as a factor for my consideration. However, it is appropriate to note that the Corporation has cooperated with the Prosecutor, fully, in the provision of relevant documents and providing access to relevant Corporation or HWA employees.

126. I am satisfied that the Corporation has cooperated with the Prosecutor to the maximum extent possible in the circumstances of the offences charged.

The process for sentencing

Introduction

127. In an instance such as this, where multiple offences are charged and some of them, but not all, are part of a single course of conduct, the sentencing process involves consideration of a range of elements (discussed below) and then involving a process of instinctive synthesis to derive initial, indicative sentences. Having reached this point, it is necessary then to consider issues of aggregation and totality and to make such an allowance as is appropriate in the circumstances for the pleas of guilty that have been entered by the Corporation to these offences.

Specific deterrence

128. I have earlier set out the broad, system-wide, risk and hazard assessment process undertaken by the Corporation and the significant human and financial capital steps committed to and progressively implemented from late 2013 onwards to address the identified deficiencies. At the broad level, although initiated prior to the offending conduct at the treatment plant, the implementation measures that have been and, I am satisfied, will be implemented provide a significant foundation for a conclusion that the Corporation is not likely to reoffend in any broadly similar fashion.

129. As to the specifics of the HFSA-dosing system at the treatment plant, those facilities have been entirely reconstructed (as earlier noted). The reconstructed aspect of the facility was shown in Exhibit B Tab 13. The material tendered concerning the reconstruction set out, in detail, the nature of the new fluoride-dosing facility and the various measures incorporated in it to ensure that a repeat of this offending conduct is rendered impossible.

130. Mr Johnson submitted that I could be satisfied that, on the basis of the broad programme of changes and, specifically to Dungog, the reconstruction of the fluoride-dosing facility, there was no likelihood of the Corporation reoffending and that, as a result, there was no need to incorporate any element of specific deterrence in any penalties to be imposed on the Corporation. I did not understand the Prosecutor to demur from this proposition.

131. On the two bases outlined concerning the Corporation itself, the general and the particular, I am satisfied that, as submitted, there is no need to incorporate any element of specific deterrence in the sentencing outcomes. In reaching this conclusion, I have had regard to the past record of the Corporation, as earlier discussed, treating it as a matter of neutrality, as foreshadowed, in this assessment.

General deterrence

132. In addition to considering whether or not a specific offender requires to be deterred from repeating offending conduct, the sentencing process also provides an opportunity to effect a public denunciation of the offending conduct and to provide a visible public warning of the potential punitive consequences that might await others who behave in a generally analogous fashion. This aspect of general deterrence must necessarily involve providing a warning about the unacceptability of the general nature of the offending conduct.

133. In this instance, in particular, the necessity to make completely clear that a failure to ensure that critical aspects of a system operating with, and dependent on, a hazardous chemical were not routinely inspected, for many months, to ensure that they were maintained and operating in a safe fashion be the first focus for general deterrence. The second element was the ignoring of the sampling data that could and should have provided an earlier alert that a comprehensive and thorough investigation was required to ascertain the cause. Such investigation during the time of the early-observed elevated HFSA levels (about April to 15 July 2015 – SOAF at [38]) would have likely eliminated the worst elements of the offending HFSA discharge.

134. In this context, it is also relevant to note that Corporation is both a large commercial enterprise and one that is publicly owned as a state-owned corporation and thus an entity of which high standards of corporate behaviour ought be expected. That such a body has offended, as has here occurred, provides an appropriately visible opportunity to demonstrate, for reasons of general deterrence, why such lapses as are demonstrated by the offending conduct are not to be tolerated.

135. I am satisfied in these circumstances that the need for general deterrence should play a significant role in the sentencing outcome for these proceedings.

Submissions on characterisation of the offending

Classifying each offence within a range

136. Camilleri's Stock Feeds (at [698]) also confirmed that:

“The task of a court is to assess the relative seriousness of the offender’s particular offence in relation to a worst case for which the maximum penalty is provided. Having determined the relative seriousness of the offence, the penalty to be imposed is that which approximately correlates upon the scale of penalty set by the legislature from zero to the maximum”.

137. The upper limit for the range within which the sentence for each offence falls must not exceed that which is proportionate to the gravity of the offence in light of its objective circumstances (Veenv The Queen (No 2) [1988] HCA 14; 164 CLR 465). The lower limit is fixed to permit allowance for subjective factors as those relevant to the offender cannot produce a sentence that fails to reflect the offences’ objective seriousness.

138. Consistent with this, it is necessary to categorise the objective seriousness of the behaviour constituting the offence, in these proceedings, as falling somewhere within a range between the “least bad case” and the “worst case” of such conduct – the contest in these proceedings being between the Prosecutor’s characterisation of “moderate” seriousness and that put by Mr Johnson of it being of “low” seriousness.

139. Placement within a range, however, is not a matter of mathematical precision. It is merely a tool to assist with the instinctive synthesis process needing to be undertaken to assess the appropriate penalty for the relevant defendant.

Assessment of seriousness

140. The three offences relating to the fluoride discharge occurred in a continuous fashion over a period of approximately four months between April and August 2014.

141. Although the downstream monitoring results earlier discussed showed varying levels of concentration of fluoride, there was sufficient information earlier than the massive spike in the HFSA level at the discharge point on 12 August that should have alerted the Corporation to the fact that something had occurred at the treatment plant that required investigation. Although not as prominent as this example, there were other instances throughout the period of the offending conduct where the monitoring results showed some degree of departure from what was expected and, as a consequence, even if a single, more aberrant, result had not been recorded to trigger concern, the obvious aberrant trendline should have done so.

142. There is no doubt, as set out earlier in the summary I have derived from the SOAF, that there was a hierarchy of responsibility for oversight of the treatment plant within which, if those responsibilities had been discharged appropriately, would have triggered concern warranting investigation. Self-evidently, the duration of the offending conduct shows that this did not occur.

143. When this is coupled with the fact that there was no systematic process in place whereby both the permanent operator of the treatment plant and the usual relief operator of the plant were mandated to check the ongoing safe functionality of equipment that was storing and processing large volumes of a hazardous substance also contributed significantly to the fact that the fluoride-related conduct continued undetected for such a lengthy period of time. In making this observation, it is pertinent to note that the broad risk assessment process commissioned by the Corporation prior to this offending conduct, whilst identifying some deficiencies at the treatment plant had not led to any known instruction for heightened vigilance concerning equipment such as that here involved but had led to what might be regarded as a thorough, but modestly leisurely, process for addressing the matters disclosed by the risk assessment.

144. However, as a factor in weighing the seriousness of the offending conduct concerning the fluoride-dosing equipment, this latter observation is of much more minor import than the earlier two factors described. This final aspect merely provides an element of general background rather than providing any leverage to the conclusion to be drawn from the earlier two observations.

145. When taken together, the length of time over which the offending conduct for the HFSA offences continued, despite circumstances where it should have been detected and addressed but was not, can only lead to me concluding that the Prosecutor's submission that this conduct should be regarded as being of medium to moderate in seriousness is to be preferred rather than, as Mr Johnson submitted, of this conduct being regarded as of low seriousness.

146. With respect to the second water pollution offence (using clear water to flush the creek system), the Prosecutor characterised it as being of low to moderate seriousness. Mr Johnson also submitted that this offence should be regarded as being of low seriousness.

147. Although the distinction between these positions is of lesser consequence that the difference concerning the HFSA offences, nonetheless, I am satisfied that the Prosecutor’s position is to be preferred. Whilst the flushing was undoubtedly well-intentioned, it was implemented without proper thought as to the consequences of the choice of water source, and later review by a more senior staff member did not lead, at that time, to alteration of the source used. This is sufficient basis to prefer the slightly more serious characterisation of the offending conduct as proposed by the Prosecutor.

Other potentially relevant pollution cases

148. Both the Prosecutor and Mr Johnson took me to other instances of prosecuted conduct that they considered, for sentencing purposes, provided some potential assistance as to how I should regard the conduct of the Corporation in this sentencing exercise. Those cases that I consider most relevant are set out below (including an edited extract from the Prosecutor’s analysis of each case I have considered as being sufficiently relevant to record – subject to the caveat in the paragraph following the list):

Environment Protection Authority v Orica Australia Pty Ltd(the Nitric Acid Air Life Incident) [2014] NSWLEC 103 – pollution of water and breach of licence condition

On one day, 6 to 12 tonnes of nitric acid escaped from a plant. It resulted from the failure of a weld in a pipe in an air lift apparatus. There was no evidence of actual environmental harm and any potential harm was expected to be insignificant. It was held that the offence caused environmental harm at the lower end of the spectrum. Overall objective seriousness of both offences was towards the lower to middle range. The appropriate penalties were held to be $70,000 for water pollution and $42,000 for breach of licence. Totality was applied to reduce the fine for the breach of licence offence by 25% to $31,500. The total aggregate penalty was $101,500.

Environment Protection Authority v Orica Australia Pty Ltd (the Hexavalent Chromium Incident) [2014] NSWLEC 106 – breach of condition of licence – failure to operate plant and equipment in a proper and efficient manner

During restarting of the ammonia plant, condensate leaked from the base of a stack causing Hexavalent Chromium to be released. The environmental harm was moderate to serious. A penalty of $175,000 was imposed.

It was found the offence was committed negligently.

Environment Protection Authority v Orica Australia (the Ammonium Nitrate Solution Spill Incident) [2014] NSWLEC 109 – breach of licence – failure to undertake licensed activities in a competent manner

Routine testing of control software was carried out while the plant was active. This caused an overflow as shutoff valves were rendered inoperative. The environmental harm was likely to have been insubstantial. It was held that Orica was negligent. The overall objective seriousness was low. A penalty of $35,000 was imposed.

Environment Protection Authority v Orica Australia Pty Ltd (the Botany Mercury Incident) [2014] NSWLEC 110 – breach of licence condition – failure to operate plant and equipment in an proper and efficient manner

A malfunction occurred with carbon beds used to prevent mercury vapour from escaping. Louvers remained open for a period whilst the fault was being located, allowing the release of mercury vapour. There was no actual environmental harm and only remote potential harm. The objective seriousness was low. A penalty of $35,000 was imposed.

Environment Protection Authority v Orica Australia Pty Ltd (the Jackhammer Incident) [2014] NSWLEC 105 – breach of licence condition – failure to carry out licensed activities in a competent manner

A worker broke through concrete with a jackhammer, unaware that an ammonia pipe was set into the concrete. The pipe ruptured. The environment harm was moderate. The overall objective seriousness was held to be moderate. A penalty of $87,500 was imposed.

Orica was held to have committed the offence negligently.

Environment Protection Authority v Orica Australia Pty Ltd (the Ammonia Incident) [2014] NSWLEC 107 – breach of licence condition – failure to carry out licensed activities in a competent manner

Ammonia was released through vents due to pressure build-up. It released into the atmosphere for one minute, six times. The environmental harm was moderate to serious. It was “substantial”. The overall objective seriousness was moderate to serious. A penalty of $175,000 was imposed.

Orica was held to have committed the offence negligently.

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

On one day, a hazardous chemical was pumped into the wrong container, which overflowed. This occurred because connections were changed. The container was not in a bunded area. The overflow entered stormwater drains on the premises and then the Parramatta River. It was held that there was substantial short-term environmental harm. It was also held that the objective seriousness was in the mid-range. A penalty of $280,000 was imposed.

Environment Protection Authority v Hanson Precast Pty Ltd [2008] NSWLEC 285 – water pollution

200 to 300 litres of heat transfer oil escaped from the defendant’s premises via a stormwater drainage system. The spill impacted 200 metres of unnamed watercourse. It was held that there was substantial short-term harm but no long-term harmful effects. The overall objective seriousness was at the lower end of the scale. The total penalty was $50,000.

Environment Protection Authority v Straits (Hillgrove) Gold Pty Ltd [2010] NSWLEC 113; (2010) 174 LGERA 314 – water pollution

The defendant operated a gold mine which processed ore. This produced toxic slimes normally kept in place by an earthen bund. On the day of the offence, the bund had been lowered and 1,000-3,000 tonnes of slimes escaped. The overall objective seriousness was of low to medium objective gravity. A penalty of $50,000 was imposed, after a 33% discount for subjective mitigating factors.

Environment Protection Authority vBig River Group Pty Ltd [2011] NSWLEC 80 – water pollution

Over two days, a pollutant containing a dangerous chemical resin flowed to a stormwater drain and in to a wetland. It was held the environmental harm was in the low to moderate range. The overall objective seriousness was moderate. Some specific deterrence was required. A penalty of $67,000 was imposed.

149. It is appropriate to observe, although trite to do so, that the sentencing exercises in each of those instances was taken having regard to the idiosyncratic facts and circumstances of the conduct giving rise to the charges. Looked at in this fashion, for example, I do not find that cases such as Environment Protection Authority v Sydney Water Corporation [2015] NSWLEC 80 (one where the facts as to duration [short] and impact [high] are quite dissimilar to these circumstances), although amongst the cases to which I have been referred, provide assistance.

150. The sentencing in these proceedings must, self-evidently, be undertaken on that basis.

151. There are two attributes of the first water pollution offence charged and the two licence conditions charged in these proceedings that render, in my assessment, the comparative process that the Prosecutor and Mr Johnson have undertaken of very little utility in the assessment of penalty concerning these three offences. One of these factors weighs in favour of the Corporation, whilst the other, for the reasons later discussed, weighs against it.

152. The first is the fact that the consequences of the discharge of the HFSA into the unnamed tributary of Slaughterhouse Creek, then into Slaughterhouse Creek itself, dissipated before reaching the Williams River, thus resulting in minimal actual environmental harm. This constituted the first general difference (although a factor in common with some of the offences set out above).

153. However, a factor that weighs against the Corporation and sets the HFSA-related offences apart is the comparatively lengthy period of time over which the offending conduct occurred. Indeed, it is this latter aspect that, for the reasons discussed below, demonstrates why those three offences must be given more weight in considering their seriousness in deriving a penalty than might have been the position had the offending conduct been of much more limited duration.

Consistency in sentencing

154. While sentencing is not, in comparative terms, a matter of mathematical precision, it is nonetheless appropriate to have some regard, to the extent that comparisons with other offending conduct of a similar nature and the penalties imposed for it might be regarded as comparable, in undertaking the sentencing exercise in these proceedings. In this regard, I have earlier set out the other proceedings to which I have been referred by both the Prosecutor and Mr Johnson. However, as is often the case, the nature of the offending conduct and the duration of the period over which the offending occurred (for the group of three offences associated with the fluoride discharge) make such comparisons of little value.

Determining the appropriate sentences

Introduction

155. I have earlier set out, with respect to each of the four offences charged, my conclusion as to how they should be viewed in the range between the most serious breach of the relevant provision and that which might be regarded as the least serious offending conduct. For the three offences associated with the fluoride discharge, I have determined that they should be regarded as within the medium band of such offence but toward the lower end of it.

156. For the clear-water-flushing pollution offence, I am satisfied that it should be viewed as a little less serious, particularly as a consequence of reasons earlier described, that this offence was well-meaning but foolish; was corrected promptly and within a comparatively short period of time of the inappropriateness of that flushing being realised and arose in circumstances where the primary damage to the creek system would have been occasioned by the fluoride discharge rather than that of the treated water.

157. It therefore behoves me, with those qualitative assessments in mind, to undertake the instinctive synthesis process (Markarian v The Queen [2005] HCA 25; 228 CLR 357) of assessing, after having proper regard to the objective facts of each of the four offences (each being distinct and different) and the subjective circumstances of the Corporation (these being the same for all four offences), to arrive at four separate, indicative sentences before moving to consider:

1. First, the extent to which the penalties for the three fluoride discharge-related offences should be brought together to determine a single, indicative, aggregated sentence for that conduct; and

2. Second, how that aggregated penalty and the indicative penalty for the clear-water-flushing offence should be considered in order to impose two penalties on the Corporation that reflect the totality of the offending behaviour.

The indicative sentences

158. Through undertaking the instinctive synthesis process outlined above, I am satisfied that the indicative penalties to be identified as the starting points in the sentencing process are as follows:

1. For the fluoride discharge, the appropriate starting point is a penalty of $200,000;

2. For the failure to maintain the pump in a fashion that would have prevented the spraying of the fluoride, both within and without the bunded area containing its storage tank, I have concluded that a penalty that is a little lower should be the starting point, a penalty of $150,000;

3. For the failure to ensure that the discharge valve from the fluoride storage bunded area was closed and was maintained in a closed position, a starting penalty of $150,000 is also appropriate; and

4. Finally, for the use of clear water to flush the downstream creek system toward the Williams River, a penalty of $100,000 is the appropriate starting point.

Totality and accumulation

159. However, with respect to the first three indicative penalties, I am satisfied that, although some accumulation is warranted, the factual circumstances of the three offences comprising different facets of the same conduct and consequences means that it is appropriate that there be only a limited degree of accumulation of penalties for the licence offences to be added to what is clearly, for the reasons earlier set out, the major aspect of this offending conduct, namely, the discharge of the fluoride into the unnamed tributary of Slaughterhouse Creek and, thence, into Slaughterhouse Creek toward the confluence with the Williams River.

160. Taking what I consider to be the appropriate nuanced approach to the extent of accumulation appropriate for these three offences, I am satisfied that, having regard to the need for some - but limited - accumulation, the appropriate total penalty to be imposed for the offending conduct relating to the discharge of the HFSA should be $250,000. In order to set that out as a table of penalties for the three offences, the allocation within that total is to be imposed as:

1. for the HFSA pollute waters offence, $100,000;

2. for the licence condition breach relating to maintenance of the pump, $50,000; and

3. for the licence condition breach relating to the valve, $50,000.

161. I now turn to the extent to which the broader question of the extent to which the indicative penalty for the clear water flushing might be lowered in order to ensure that, in totality, the overall penalty imposed reflects the totality of the offending conduct. In this regard, I am satisfied that a reduction of the earlier indicated indicative penalty for this conduct is also warranted as, if I were not to do so, in my assessment the overall total penalty would be disproportionate when viewed against the totality of the offending conduct. I have, therefore, concluded that the individual penalty for the treated water flushing should be reduced to $50,000.

Discount for the early guilty plea

162. I have earlier explained the reason why the Corporation should be granted a discount of 25% on each of the proposed penalties in order to reflect, in the settled fashion, the benefits to society and the system of justice occasioned by the entry of pleas of guilty to all four offences at the earliest relevant occasion.

163. Each of the above penalties is, therefore, to be reduced by 25% to reflect this position. Whilst, ordinarily perhaps, mathematically precise calculations in such circumstances might not be considered appropriate and a degree of rounding to the nearest thousand dollars or so might be desirable, I have not adopted that course in these proceedings as I am satisfied that a resultant total penalty of $187,500 (after the 25% guilty plea discount) is the appropriate outcome.

Application of the penalty moneys to an environmental project

164. The POEO Act provides, in s 250, options for diverting any financial penalty from becoming a mere contribution to consolidated revenue by specifying the nature of some compensatory environmental programme to which the penalty could be applied. Such a process is designed, in effect, to permit the outcome of the environmentally unacceptable and damaging conduct to act as a foundation for repair to, and thus compensation for, environmental damage (even if in a fashion not specifically addressing the particular environmental outcomes of the offending conduct).

165. In this instance, the Prosecutor and the Corporation have agreed on a project to which it would be appropriate to apply the financial penalty that will result from these prosecutions. That project is described as “Managing Sediment Export and Grazing on the Dungog Common Recreation Reserve” and is to be conducted under the auspices of Hunter Local Land Services. The parties have also agreed that, if this project does not go ahead or, after its completion, there is a surplus from the funds derived from the penalty I impose, such unrequired funds will be paid into the Environmental Trust established under the Environmental Trust Act 1998, thus becoming available for general application to environmentally positive projects across the state. This is an appropriate outcome for these proceedings and the orders to be made reflect the agreement by the parties on this point.

166. It is to be noted that any publicity that the Corporation might seek to generate concerning its financing of this environmental project is to include an express, agreed rider that makes it clear that this funding is not derived from some general environmentally positive corporate motive but arises out of penalties imposed for environmental offences. The mandated rider is in the following terms:

Hunter Water’s contribution was part of a penalty imposed on Hunter Water by the Land and Environment Court after it was convicted of four offences against section 120(1) (water pollution) and section 64(1) (contravention of licence condition) of the Protection of the Environment Operations Act 1997 (NSW)

The publication orders

167. As is commonly the case in prosecutions of this nature, the Prosecutor seeks, by invoking the provisions of s 250 of the POEO Act, to have the offender publicise the nature of the offending conduct and the penalties that have been imposed as a consequence of it. Such public shaming is, in a very general analogy, the corporate equivalent to the mediaeval practice of putting an offender in the stocks in the community marketplace and is an aspect of the general deterrence from proceedings such as these.

168. The parties have agreed to the terms of the notice to be published, including its dimensions and the three newspapers in which it is to appear. The terms of the notice to be published form Annexure A to the orders made in these proceedings. This notice is to be published in:

1. the Newcastle Herald;

2. The Maitland Mercury; and

3. the Dungog Chronicle.

Orders

169. Noting, for the purposes of these orders, that Hunter Local Land Services has agreed as part of the project in order (9) to report to the Prosecutor on the outcomes of the project, the orders of the Court are:

1. In proceedings 50688 of 2015, the Defendant is convicted of pollution of waters contrary to s 120(1) of the Protection of the Environment Operations Act 1997;

2. In proceedings 50688 of 2015, the Defendant is fined $75,000.00;

3. In proceedings 50689 of 2015, the Defendant is convicted of contravention of a licence condition contrary to s 64 of the Protection of the Environment Operations Act 1997;

4. In proceedings 50689 of 2015, the Defendant is fined $37,500.00;

5. In proceedings 50690 of 2015, the Defendant is convicted of contravention of a licence condition contrary to s 64(1) of the Protection of the Environment Operations Act 1997;

6. In proceedings 50690 of 2015, the Defendant is fined $37,500.00;

7. In proceedings 50691 of 2015, the Defendant is convicted of pollution of waters contrary to s 120(1) of the Protection of the Environment Operations Act 1997;

8. In proceedings 50691 of 2015, the Defendant is fined $37,500.00;

9. Pursuant to section 250(1)(e) of the Protection of the Environment Operations Act 1997, the Defendant is to pay to Hunter Local Land Services, within 28 days of this order, the amount of $150,000 (being the total of the amounts of penalty in (2), (4) and (6)) as contribution to the project entitled “Managing Sediment Export and Grazing on the Dungog Common Recreation Reserve”, as described in Annexure B to this order (the Project;

10. Any future public references by the Defendant to its funding of the Project are to be accompanied by the statement that “Hunter Water’s contribution was part of a penalty imposed on Hunter Water by the Land and Environment Court after it was convicted of four offences against section 120(1) (water pollution) and section 64(1) (contravention of licence condition) of the Protection of the Environment Operations Act 1997 (NSW)”;

11. If by 31 March 2018, Hunter Local Land Services informs the parties that it has decided not to proceed with the Project, or the amount paid by the Defendant to Hunter Local Land Services under order (9) is not fully expended on the Project by 31 March 2018, then any amount paid under Order (9) but not expended on the Project is to be paid to the NSW Environmental Trust for general environmental purposes;

12. Pursuant to s 250(1)(e) of the Protection of the Environment Operations Act 1997, the Defendant is ordered to pay, within 28 days of this order, an amount of $37,500 to the Environmental Trust established under the Environmental Trust Act 1998 for general environmental purposes;

13. The defendant is to pay the Prosecutor’s legal costs in the amount of $75,000; and

14. For the purposes of all proceedings, pursuant to s 250(1)(a) of the Protection of the Environment Operations Act 1997, the Defendant will:

1. within 28 days of the date of this order, at its expense, the Defendant will cause a notice in the form of Annexure B at a minimum size of 10 cm x 18 cm to be placed in:

1. the Newcastle Herald;

2. The Maitland Mercury; and

3. the Dungog Chronicle; and

2. within 35 days of the date of this order, provide to the Prosecutor a complete copy of the page of the publications in which the notice appears.

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Annexure A

Annexure A - notice (16.8 KB, docx)

Annexure B

Annexure B - 16 Jun 16 (1.87 MB, pdf)

Amendments

27 June 2016 - Orders reformatted to accommodate their entry into JusticeLink. Orders as to penalty and costs are those that have been reconfigured.

Decision last updated: 27 June 2016