Environment Protection Authority v Nationwide Oil

[2002] NSWLEC 201

Land and Environment Court

of New South Wales

CITATION:	Environment Protection Authority v Nationwide Oil Pty Limited [2002] NSWLEC 201
PARTIES:	PROSECUTOR Environment Protection Authority DEFENDANT Nationwide Oil Pty Limited
FILE NUMBER(S):	50053; 50064 of 2002
CORAM:	Talbot J
KEY ISSUES:	Prosecution :- application of totality principle
LEGISLATION CITED:	Pollution Control Act 1970 s 17D(9) Protection of the Environment Operations Act 1997 s 120(1), s 129(1), s 129(2), s 241(1)(a), s 241(1)(b), s 241(1)(c), s 241(1)(d)
CASES CITED:	L Vogel and Son Pty Limited and Another v Anderson, Minister of State for Customs and Excise for the Commonwealth of Australia (1967 - 1968) 120 CLR 157; Mill v The Queen (1988) 166 CLR 39; Pearce v The Queen (1998) 194 CLR 610; R v Thomson; R v Houlton (2000) 49 NSWLR 383; R v Holder (1983) 3 NSWLR 245
DATES OF HEARING:	28/10/2002, 29/10/2002
DATE OF JUDGMENT:	11/15/2002
LEGAL REPRESENTATIVES:	PROSECUTOR Mr D M Samuels (Solicitor) SOLICITORS Environment Protection Authority DEFENDANT Mr M A Gray-Spencer (Solicitor) SOLICITORS Riley Gray-Spencer Lawyers

JUDGMENT:

IN THE LAND AND

ENVIRONMENT COURT

OF NEW SOUTH WALES

50053 of 2002 and 50064 of 2002

Talbot J

15 November 2002

Environment Protection Authority

Prosecutor
v

Nationwide Oil Pty Limited

Defendant

Judgment

Introduction

1 In matter No. 50053 of 2002 the defendant is charged that on or about 15 July 2001 at premises in Wetherill Park it committed an offence against s 129(1) of the Protection of the Environment Operations Act 1997 (“the PEO Act”) in that, being the occupier of a premises at which a scheduled activity was carried on under the authority conferred by a licence, it caused the emission of an offensive odour from the premises to which the licence applies.

2 In matter No. 50064 of 2002 the defendant is charged that on or about 25 January 2002 at the same premises it committed an offence against s 120(1) of the PEO Act in that it did pollute waters.

3 It is appropriate to deal with the facts related to each offence separately as they are not immediately directly connected events.

4 The defendant has been operating a waste oil facility situated at 6 Davis Road, Wetherill Park (“the premises”) for the past 15 years. The company receives waste oil at the premises and reprocesses it to various grades for resale.

5 It previously held a Pollution Control Licence and now holds an Environment Protection Licence which contains Condition L7.1 as follows:-

No condition of this licence identifies a potentially offensive odour for the purposes of s 129 of the Protection of the Environment Operations Act 1997.

6 Section 129(1) of the PEO Act provides that the occupier of any premises at which scheduled activities are carried on under the authority conferred by a licence must not cause or permit the emission of any offensive odour from the premises to which the licence applies. The defendant is not entitled to rely on either of the defences referred to in s 129(2) of the PEO Act.

Matter No. 50053 of 2002

7 The company entered a plea of guilty at an early stage.

8 According to an employee of the company, Mr Syme, sometime between 3:30am and 4:00am on 15 July 2001 during a routine inspection round of the refinery he discovered a spill coming from the tank known as V300 within the light gas oil (“LGO”) separator system. He immediately advised another employee, Omar Hussein, who helped him clean up the spill. He estimated that up to 100 litres of a mixture of water and LGO escaped into the bunded area around the tank. He claims there was no odour from this spill. However, as a precaution he and Mr Hussein put down “odour kill” in the area of the spill after it was cleaned up.

9 A furnace system operates to provide heat for the refinery. The furnace is fuelled by natural gas and LGO. LGO is a by-product of the waste oil refining process and is sometimes burned in the furnace as an alternate fuel to natural gas. LGO is odorous. On the evening of 14 July 2001 the LGO Burner (“the burner”) was ignited at approximately 9:00pm and extinguished at approximately 2:30am on 15 July 2001. The burner was extinguished following a visit from the Fire Brigade who were called to investigate a report of odours.

10 Paul Jones is employed as a security guard by the owner of an adjoining property to perform security functions for the building next door to the premises. At about 11:30pm on 14 July 2001 Mr Jones detected an oily smell. At about 1:15am the next day he smelt an overpowering biting smell of heavy oil, which made him feel nauseous, and it became difficult for him to breathe. He was overpowered by the smell and vomited. At approximately 1:40am he spoke to a male person who answered the telephone at the defendant’s premises and reported that he could smell a “really bad oil smell”. He was told that everything was normal. He again vomited, had a drink of water and tried to relax.

11 At 1:31am on 15 July 2001 Christopher Kirsten, a Fire Brigade Officer, received an emergency call “in relation to a gas smell”. He was unable to find the source of the smell and returned to the Fire Station. Subsequently, at 1:56am he responded to a further call. He noticed that the smell outside the gates of the premises was strong. Police Sergeant Peter Mercouris also received a report of a “gas leak” at about 1:50am on 15 July 2001. He proceeded to the area. At about 2:15am Mr Kirsten, in company with a police officer, spoke to Mr Hussein who said “here we burn small quantities of Naptha, it is a set procedure”.

12 The After Hours Incident Service Officer of the Environment Protection Authority (“the EPA”), Mr Zamora, met with Sergeant Mercouris at around 4:40am and, together with another police officer, Chief Inspector O’Connor, went to the entrance of the premises where they met Mr Hussein. Mr Zamora asked to carry out an inspection of the site, together with the police. Mr Hussein told them there were two burners, one for natural gas and one for Naptha. He said he had switched the burner on at around 1:00am, but had to turn the Naptha burner off as a precaution around 2:30am when he received telephone complaints about the odour. Mr Hussein gave no other explanation for the odour to Mr Zamora. The spill which had been attended to by Mr Syme and Mr Hussein earlier in the morning was not referred to and the site of the spill was not inspected.

13 A formal Notification of Potential Odour Release was sent to the EPA at 2:47am on 15 July 2001 as follows:

Nationwide Oil Wetherill Park has experienced an incident that may result in the potential release of odour beyond our boundary.

14 A more specific notification was given to the EPA by facsimile message on 18 July 2001. This message identified the cause as “a pump failure which did not allow draining of the holding tank causing it to overflow”.

15 There is evidence that complaints were made on the EPA Pollution Line from members of the public commencing at 1:39am on 15 July 2001 continuing through to the early morning at 8:04am. Three more calls were received during the day. The odour was variously described in the complaints as a strong petroleum smell, a tar smell, like burning tyres, burning oil, like gas and chemicals and a bad gassy smell. Effects identified included vomiting, nausea, headaches, sore stomachs and disturbed sleep.

16 The prosecutor seeks to persuade the Court that the defendant, through its employees, was not diligent in its responses and it did not co-operate with the EPA in its enquiries to the extent which would justify any reduction in penalty. Although Mr Hussein initially made no reference to the spill from the tank, a perusal of the documentary evidence leaves it open for the Court to conclude that when complaints were first received he assumed that the problem lay with the burner as he had not detected any odour associated with the spill from the tank. Mr Samuels, appearing for the EPA, attempted to support the submission by also pointing out that the original diagrammatic description of the plant configuration provided to the EPA did not correspond with the description furnished with written statements in support of the defendant’s case. The difference between the two diagrams has been explained by Mr Gray-Spencer, on behalf of the defendant, on the basis that the first diagram related to the operation of the plant whereas the second diagram was a description of the safety system.

17 Diary records kept by the employees in respect of the night of 14-15 July 2001 confirm that those on duty believed that the burner was the possible cause of the emission and it was turned off as a precautionary measure.

18 A detailed incident report was provided to the EPA on 5 December 2001 wherein the defendant amplified the explanation for the odour given in the facsimile message forwarded to the EPA on 18 July 2001.

19 The report dated 5 December 2001 described the incident as follows:-

At approximately 1.00am on the 15th July 2001 a pump on the LGO/Water separator failed allowing the vessel V300 to fill to maximum capacity. The high level alarm on V300 failed and the operators were unaware that the tank had filled to capacity and was about to overflow. A review of the alarm status confirmed that there was no alarm activated to indicate a problem with the LGO/water separator. Earlier checks indicated that the pump and separator system were operating correctly.

20 In summary, therefore, Mr Hussein responded to the complaints made by the authorities by turning off the burner as a precautionary measure and immediately notified the EPA that an incident had occurred. Within three days a more formal communication was forwarded to the EPA and an opinion as to the cause provided.

21 Ultimately, a full and comprehensive report was provided to the EPA on 5 December 2001.

22 Furthermore, all relevant employees were made available for interview and no complaint is made about the co-operation of the individuals in this regard. The defendant has facilitated the preparation of an Agreed Statement of Facts. As a result only one witness was called to give oral evidence.

23 The Court is not prepared to find that there is evidence of a failure by the defendant to co-operate with the EPA in relation to its enquiries. The evidence is to the contrary, even if the actual responses made by the company were engendered as a consequence of statutory obligations to provide the information.

24 The defendant is also entitled to the maximum reduction representing the utilitarian value of its early plea of guilty referred to by the Court of Appeal in R v Thomson; R v Houlton (2000) 49 NSWLR 383.

25 The maximum penalty for this type of offence has since been increased from $125,000 to $250,000 where the offence is committed by a company.

The penalty imposed by the Court needs to reflect an element of general deterrence against the emission of odours, particularly in a case such as the present where there is a real prospect that there can be a direct effect on the amenity, well-being and health of members of the public. Notwithstanding that the direct effect on individuals was not long-term in the sense of extending beyond discomfort and minor illness over several days at the most, nevertheless it is important for the Court to demonstrate that it is cognisant of the effect on a local community and that a penalty should be sufficient to provide a warning to all industrial operators that they must act within the parameters of the law and in the interest of the welfare of the general public.

26 The Court accepts the expressions of contrition made on behalf of the company by its State Manager and that (although somewhat belatedly) it has re-organised the staff and personnel with a view to increasing the technical expertise in the operation of the plant. The company has also taken steps to improve the standard of high level alarm indicators within its system and the maintenance thereof.

27 There is no issue that the Court must take into account the highly odorous nature of the substances used in the plant and the harm likely to be caused to the environment by allowing odours to be emitted, contrary to the conditions of the licence. The defendant accepts there was actual harm to persons as a consequence of the emission, although, as I have already said, there were no long-term effects in this instance. Since the offence occurred the defendant has taken the following measures to ensure that no similar incident will occur in the future:-

· Restructuring the work force;

· Increased training;

· Accreditation to ISO14001 (environmental management systems)

· Improved switch alarms;

· Regular maintenance;

· Regular checking of alarms;

· Operation of pumps.

28 Appreciating that this is not a case where there were no protective measures in place at the relevant date, nevertheless the practical measures taken since July 2001 demonstrate that there was room for improvement. The Court takes into account these practical measures for the purposes of s 241(1)(b) of the PEO Act.

29 The defendant accepts that for the purposes of s 241(1)(c) it was reasonably foreseeable that harm could be caused or would be likely to be caused to the environment by what occurred. Although, as I have said, this is not a situation where there was no safety systems already in place, the defendant accepts for the purposes of s 241(1)(d) that it did have control over the cause that gave rise to the effects.

30 Despite some suggestion that the EPA harbours some concern that the real cause of the emission of odours was as a consequence of the operation of the burner, the Court accepts that the offence occurred as a consequence of the spill from the V300 tank and that this was the cause of the release of the offending odour. The emission occurred contrary to the condition of the licence. Accordingly, the Court finds that the elements of the offence have been proved beyond reasonable doubt not solely as a consequence of the plea of guilty, but based upon the evidence presented in the form of an Agreed Statement of Facts.

Matter No. 50064 of 2002

31 The defendant has also entered an early plea of guilty in these proceedings and an Agreed Statement of Facts has been tendered.

32 At approximately 11:45am on 25 January 2002 a join in a pipe which normally carries vapour overflow ruptured and spilt a mixture of water/LGO onto the ground. The overflow occurred due to the high level of the tank following the failure of an alarm. As the area is normally a place where only vapours are carried and not water/LGO mixtures, the area was not bunded. The mixture ran into a storm water drain on adjoining premises. It ran through a storm water system for approximately 200 metres into an open storm water culvert which forms part of the headwaters of Prospect Creek.

33 A bad odour was detected by factory workers at an adjoining site.

34 Oil absorbent booms were placed across the culvert and at a point about a kilometre further downstream.

35 Employees from the adjoining factory were evacuated from their work premises shortly after the incident occurred. Between 100 and 125 employees were evacuated up wind from the storm water drain. Prior to evacuation the employees were affected with dizziness, watering eyes, difficulty in breathing and nausea. None required medical treatment. Analysis of samples taken from the storm water system revealed that the liquid contained various hydrocarbons, including Benzene, Toluene and Alkyl Benzenes.

36 The defendant arranged for a Specialist Drain Cleaning Truck to attend the site, which enabled the drain to be flushed and for water to be flushed into a tank on the truck. Drain cleaning equipment was inserted into the storm water pipe.

37 The amount of product spilt at the premises has been estimated by the defendant as between 60 litres and 600 litres and that approximately 20 litres of water/LGO discharged into the open drain adjoining the premises and into the storm water pipe.

38 The evacuation of employees from the adjoining factory resulted in the loss of working hours for that business.

39 Although the offence is that the defendant did pollute waters, nevertheless as a result of polluting the water, offensive odours were expelled from the waters. The offensive odours entered the premises of the adjoining factory and caused the effects referred to earlier at par 35. It is appropriate that the extent of the harm caused should include the impact of the odour for the purposes of s 241(1)(a) of the PEO Act. It is also appropriate for the Court to take into account the likely prospect that if prompt action had not been taken to contain the spill, there could have been an affect on aquatic life downstream of the storm water system and, further, that persons in addition to those occupying the adjoining factory premises could have been affected by the odour. In this context it is appropriate to note the definition of “harm” in the Dictionary to the PEO Act as follows:-

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

40 Beyond the physical affects on the workforce and the loss of business in the adjoining factory, there was a significant public cost in the deployment of Police, Ambulance and Fire Brigade services.

41 Since the incident the company has implemented a number of practical measures in an attempt to prevent, control, abate or mitigate the harm and to ensure that no similar incidents will occur in the future. These include the following steps:-

§ restructuring the work force;

§ increased training;

§ accreditation to ISO14001 (environmental management systems);

§ increased maintenance of the transmitter to twice a week. This involves a visual/physical check;

§ ducting to be moved to bunded area on next shut down of plant;

§ louder alarm has been installed;

§ regular preventative maintenance to tank PT11 to ensure no accumulation of LGO;

§ proposed to add an extra level indicator.

42 Once again, the undertaking of these steps demonstrates the practical measures that may have been taken to prevent, control, abate or mitigate that harm and which the Court is required to take into account pursuant to s 241(1)(b).

43 The defendant also accepts that it was reasonably foreseeable that harm could be caused or would be likely to be caused to the environment by what occurred for the purposes of s 241(1)(c) and that it did have control over the cause which gave rise to the offence. It is contended, however, that it was not a situation where there was no safety system in place. Unfortunately, due to a combination of circumstances, the safety system failed. As with the offence in matter No. 50053 of 2002, the alarm system did not work to expectations.

44 The defendant co-operated with the EPA in its enquiries and provided written reports and supporting documents in relation to the incident.

45 There is no evidence of any actual harm to aquatic life. However, it is agreed that there was potential for environmental harm to aquatic life.

46 The defendant has incurred costs undertaking the clean up of the discharge. The need for the Court to impose a penalty reflecting the elements of general deterrence as well as individual deterrence, the early plea of guilty, co-operation by the defendant and its contrition are all matters that need to be taken into account. These factors will be considered in assessing the amount of penalty to be imposed in the same way as it was discussed earlier in relation to matter No. 50053 of 2002.

Antecedents

47 The defendant has two prior convictions for breaches of s 17D(9) of the Pollution Control Act 1970. These matters both related to the release of odours in February 1999 in breach of licence conditions. Since 1999 the defendant has spent hundreds of thousands of dollars to rectify the situation and was in the process of purchasing the necessary equipment and installing it at the time of the subject offences. However, the 1999 incidents relate to yet another part of the plant within the premises

Totality

48 The defendant contends that the offences, although not immediately contemporaneous, are very similar factually, particularly as both offences were caused by the failure of the safety alarm system. As a result, Mr Gray-Spencer contends there should be a downward adjustment of the penalty, after determining the overall criminality involved on the basis discussed in R v Holder (1983) 3 NSWLR 245.

49 The High Court has adopted the following description of the totality principle from Thomas, Principles of Sentencing, 2nd ed., 1979, p 56 – 7 (see Mill v The Queen (1988) 166 CLR 39 at 62-3) as follows:-

The effect of the totality principle is to require a sentencer who has passed a series of sentences, each properly calculated in relation to the offence for which it is imposed…to review the aggregate sentence and consider whether the aggregate is “just and appropriate”. The principle has been stated many times in various forms: ‘when a number of offences are being dealt with and specific punishments in respect of them are being totted up to make a total, it is always necessary for the court to take a last look at the total just to see whether it looks wrong[‘]; ‘when…cases of multiplicity of offences come before the courts, the court must not content itself by doing the arithmetic and passing the sentence which the arithmetic produces. It must look at the totality of the criminal behaviour and ask itself what is the appropriate sentence for all the offences.

50 The principle was reiterated by the High court in Pearce v The Queen (1998) 194 CLR 610 at 624 as follows:-

A judge sentencing an offender for more than one offence must fix an appropriate sentence for each offence and then consider questions of cumulation or concurrence, as well, of course, as questions of totality.

51 In the present case, the first offence occurred as a consequence of a failure of the alarm system to warn of a discharge of liquid that had odorous qualities. The effects of the discharge of the odour were widespread and the offence is regarded as serious.

52 Similarly, the second offence involved a spill of odorous liquid, which in addition to the impact from the emission into the air it involved the pollution of water which extended the ambit of the potential for the spread of the odour into the atmosphere.

53 Both offences attract a maximum penalty of $250,000 and, accordingly, are regarded with equal seriousness by Parliament.

54 Apart from the failure of separate and distinct components of the safety system, the common elements to each offence are the premises and the consequences in terms of odour. Notwithstanding that each offence involved a separate contravention of the PEO Act, nevertheless, for the purpose of applying the totality principle, they are, in the Court’s view, substantially contemporaneous and connected (L. Vogel and Son Pty Limitedand Another v Anderson, Minister of State for Customs and Excise for the Commonwealth of Australia (1967-1968) 120 CLR 157 at 168).

55 Before allowing any discount for the early plea of guilty and the utilitarian benefits flowing from the co-operation of the defendant, an appropriate penalty in respect of the second offence would be $75,000. In the case of the first offence, an appropriate penalty, before the application of any discount, would be in the order of $60,000. After discount and taking account of mitigation factors these penalties would be reduced to $53,000 and $42,000 respectively.

56 Having regard to the overall criminality involved in the two offences, the Court determines that the defendant should incur a penalty by way of a fine in the sum of $50,000 in matter No. 50064 of 2002 and $30,000 in matter No. 50053 of 2002.

57 The overall penalty of $80,000 reflects the total criminality involved in the two offences as well as the antecedent history of the defendant and takes into account the mitigating factors referred to above. It includes a discount for the early pleas of guilty and the overall co-operation with the prosecuting authority.

Costs

58 In matter No. 50064 of 2002, the defendant has agreed to pay the prosecutor’s costs in the sum of $7,000. The defendant has also agreed to pay the prosecutor’s costs in the sum of $10,000 in matter No. 50053 of 2002.

Orders

59 The Court finds the offences proved and the defendant is convicted in each case.

60 The formal orders of the Court are as follows:-

(1) In matter No. 50064 of 2002 the defendant is convicted of the charge in the summons.

(2) In matter No. 50064 of 2002 the defendant is ordered to pay a fine in the sum of $50,000.

(3) In matter No. 50064 of 2002 the defendant is ordered to pay the prosecutor’s costs in the agreed sum of $7,000.

(4) In matter No. 50053 of 2002 the defendant is convicted of the charge in the
summons.

(5) In matter No. 50053 of 2002 the defendant is ordered to pay a fine in the sum of $30,000.

(6) In matter No. 50053 of 2002 the defendant is ordered to pay the prosecutor’s costs in the agreed sum of $10,000.

(7) The exhibits may be returned.