Environment Protection Authority v Knight Frank (NSW) Pty Ltd
[1999] NSWLEC 223
•08/27/1999
Land and Environment Court
of New South Wales
CITATION:
Environment Protection Authority v Knight Frank (NSW) Pty Ltd [1999] NSWLEC 223
PARTIES
PROSECUTOR
Environment Protection AuthorityDEFENDANT
Knight Frank (NSW) Pty Ltd
NUMBER:
50017-18 of 1999
CORAM:
Cowdroy J
KEY ISSUES:
Environmental Offences :- Water pollution - diesel oil leak from redundant basement furnace tank into Sydney Harbour
LEGISLATION CITED:
Environmental Offences and Penalties Act 1989
Clean Waters Act 1970 s 16(1)
DATES OF HEARING:
08/27/1999
EX TEMPORE JUDGMENT DATE:
08/27/1999
LEGAL REPRESENTATIVES:
PROSECUTOR
Ms J Kelly (Barrister)SOLICITORS
Environment Protection AuthorityDEFENDANT
SOLICITORS
Mr I Lloyd QC
Phillips Fox
JUDGMENT:
IN THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALESMATTER No. 50017-18 of 1999
CORAM: Cowdroy J
DECISION DATE: 27/8/99
Prosecutor
Defendant
Facts
1. By summons class five filed on 24 March 1999 Knight Frank (NSW) Pty Ltd, (“the defendant”) was charged that between 18 March 1998 and continuing each day thereafter until 31 March 1998, it committed an offence against Environmental Offences and Penalties Act 1989 in that it polluted waters contrary to s 16(1) of the Clean Waters Act 1970. The pollutant was identified as diesel oil and the waters alleged to be polluted were artificial watercourses, water channels, water mains and water pipes at or near North Sydney, leading to Careening Cove.
2. The defendant has pleaded guilty to the charge and accordingly the Court is required to assess penalty. In doing so it has been greatly assisted by a succinct statement of facts and by helpful submissions from both parties.
3. The defendant has been engaged in the business of managing properties since 1872. Amongst the 6000 properties which it manages is the multi-storey office building known as 80-84 Mount Street, North Sydney (“the building”). Knight Frank first commenced to manage the building by agreement made on 10 September 1992 with the owner, a company known as JAT Investments Pty Ltd. Pursuant to the terms of that agreement the defendant was to maintain the building to a high standard in accordance with the periodic service contract approved by the principal and specified in the contract which included repairs and maintenance.
4. The building was constructed between 1972 and 1974 and was originally occupied by the Government Insurance Office which then owned the building. The building had water heating which involved the use of a diesel oil driven furnace. In 1987 whilst the building was owned by the Government Insurance Office, the system of heating water was changed and a gas system was installed. Part of the decommissioning resulted in the removal of various parts of the oil heating equipment.
5. The tank which held diesel oil for the heating system was located in the basement of the building beneath a concrete ramp in the car park. A brick wall surrounded it and effectively concealed it from view. In the decommissioning process, it seems that an oil contents gauge which may have been visible in a pump room was removed. Accordingly the only traces left of the tank visible to the naked eye was a manhole made of steel and concrete. The tank should have been decommissioned and drained in 1987 pursuant to regulations known as the Dangerous Goods Regulation 1978 (NSW), and particularly reg 138 thereof.
6. Between 1987 and the change of ownership of the building in 1992 the building was heated by gas. Upon becoming the owner of the building in 1987, JAT leased the building for a period of ten years to Advance Bank. In 1995 there was a further alteration to the equipment used in the heating of the building. In that year certain boilers located in the roof of the building were changed. Knight Frank was involved in such work as agent for JAT. However at no stage did Knight Frank became aware of the existence of the diesel oil storage tank. In 1997 the Advance Bank lease of the premises was drawing to a close and it began to vacate. Between the end of 1997 and March 1998 a new building supervisor was appointed. It was at this time the events which have brought this matter before the Court occurred.
7. In early March 1998 diesel oil was observed in Careening Cove. It was promptly contained as a result of the efforts of the prosecutor and other authorities including Sydney Water. A boom was placed around the oil which was flowing from a drain into Careening Cove. Extensive investigations were carried out in the days that followed to trace the source of the oil. The North Sydney Council was also involved and the council wrote to all residents or property owners from whose property it was believed the source of the oil might have emanated. It wrote a letter addressed to residents but upon the agreed facts it is acknowledged by the prosecutor that the defendant did not receive the letter specifically addressed to the building.
8. Painstaking and systematic investigations finally discovered the source of the oil to be that which was leaking from the tank beneath the building. Oil from the disused tank had leaked into a sump in the basement of the building, activating a pump which pumped the liquid into the stormwater drains that led from Mount Street North Sydney, to Careening Cove.
9. The defendant was unaware of the tank and of the oil leak until the prosecutor brought them to its attention. When the defendant became aware of the specific nature of the charges brought against it, it pleaded guilty and has cooperated with the prosecutor. All remaining oil in the tank was pumped out on 1 April 1998 and accordingly there will be no risk of repetition.
10. The prosecutor alleges that the defendant ought to have been aware of the potential hazard. Photographs tendered in evidence show the presence of diesel oil which had permeated through cracks in concrete in the basement of the building and there was a strong odour of diesel in the basement of the building. In a plant room of the building a heating diagram of the building was displayed which showed the existence amongst other things, of the tank in the basement of the building. From these indicia the prosecutor submits that a competent building manager ought to have been aware of the tank’s existence.
11. The defendant represented by Mr Lloyd of Queens Counsel has pointed out that the only visible sign of any tank is the concrete manhole, which by itself gave no indication that a tank was beneath it. There was no other equipment in the building to indicate the presence of the tank. Mr Lloyd QC submitted that there was no evidence before the Court of the length of time the oil which is observed on the floor of the car park had been present and that the odour of diesel oil in a car park is not of itself symptomatic of an oil leak.
12. The Court does not draw any conclusion that the traces of oil in the car park and the odour was indicative of the leak. However the heating plans do demonstrate the location of a tank.
13. The Court is required to consider various matters under s 9 of the Environmental Planning and Offences Act 1989 (“the Act”) in the assessment of penalty. I should add that the Clean Waters Act has now been repealed by the protection of the Environment Operations Act 1997. However, the considerations that apply under s 241 of the new Act are substantially the same as those under s 9 of the Act.
14. The Court is required under s 9(a) of the Act to consider the extent of harm caused or likely to be caused to the environment by the commission of the offence. Upon the evidence the Court cannot conclude that there was any actual harm sustained. It is clear from the experts of the prosecutor that there was the likelihood of harm to the environment. That likelihood results from the presence of petroleum hydrocarbons accumulating in sediments in the waters of Careening Bay, or Careening Cove. Approximately two hundred and fifty litres of oil was discharged into those waters. Dr Peter Skaines, for the prosecutor, has diposed that there could be an effect on biota from the dieseline due to the toxicity of the oil to organisms particularly inter-tidal organisms on rocks exposed during the change of tide. He has explained that the main causes of toxicity are from dissolved petroleum hydrocarbons such as volatile aromatic hydrocarbons and from polynuclear aromatic hydrocarbons. Inter-tidal organisms such as crustaceans and molluscs would have been mostly exposed to any oil slick and small fish, crustaceans and bottom-dwelling animals may also have been affected. Whilst fish would avoid oil pollution, small fish may not be able to avoid the toxic plume. He also considered there may be an effect on the plumage of birds. No actual damage to the environment however has been established.
15. The Court is required to consider under s 9(b) of the Act the practical measures which might have been taken to abate or mitigate, prevent or control the harm. In this case the the defendant was oblivious of the oil tank but if it was to manage the building in all respects it should have carried out a comprehensive investigation of all its facets. Such an investigation would have revealed the presence of a manhole which ought to have initiated a chain of inquiry. Even the plan in the plant room should have alerted the defendant to the presence of the tank. In this respect it is appropriate to find that there were measures that could have been taken to prevent or mitigate the harm, had a proper inspection been carried out.
16. The Court is required to consider under s 9(c) of the Act whether there was the reasonable foreseeability of harm that might have been caused to the environment by the commission of the offence. The escape of oil into Careening Cove would only have been foreseeable had a building assessment been made and the tank discovered. In the circumstances the leak was virtually unforeseeable. As regards s 9(d) and 9(e) of the Act the defendant is clearly in control and has admitted as much in relation to its operations over the building.
17. The defendant has pleaded guilty at an early stage of the proceedings and in accordance with the principle in Camilleri Stockfeeds Proprietary Limited v The Environment Protection Authority (1993) 32 NSWLR 683 the Court is entitled to give the defendant leniency. Further, the defendant has demonstrated its contrition by the assistance it has provided to the authorities. This also entitles the defendant to consideration. This is not the case of a discharge of oil arising through a gross act of negligence or of any disregard by the defendant towards the environmental legislation.
18. The Court also takes into consideration the fact there was no established harm to the environment only the likelihood of harm. Having said that, the fact remains the defendant was responsible for the building which it managed and it ought to have been at least aware of the presence of the tank. Accordingly it must bear responsibility for the event. However the penalty to be imposed should be relatively small bearing in mind the maximum amount of the fine which is $125,000.
Orders
19. The Court will make the following orders:
1. The defendant is convicted of the offence as charged.
2. The defendant is fined the sum of $15,000.
3. The defendant is to pay the prosecutor's costs assessed by agreement in the sum of $9000.
4. The exhibits may be returned.
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