Environment Protection Authority v Sphere Healthcare Pty Ltd

[2022] NSWLEC 92

Land and Environment Court

New South Wales

Medium Neutral Citation:

Environment Protection Authority v Sphere Healthcare Pty Ltd [2022] NSWLEC 92

Hearing dates:

30 and 31 May 2022

Date of orders:

29 July 2022

Decision date:

29 July 2022

Jurisdiction:

Class 5

Before:

Duggan J

Decision:

See paragraph 81

Catchwords:

SENTENCING – environment offence – s 120(1) of the Protection of the Environment Operations Act 1997 (NSW) – polluted waters – significant harm – practical measures available but not taken – harm or risk of harm foreseeable – no financial benefit gained – upper middle range of objective seriousness – contrition and remorse demonstrated – co-operation with regulatory authority – early plea of guilty – no prior convictions – specific deterrence not warranted – general deterrence warranted – fine not reduced due to capacity to pay pursuant to s 6 of Fines Act 1996 (NSW) – monetary penalty imposed – publication order – investigation costs – legal costs

Legislation Cited:

Crimes (Sentencing Procedure) Act 1999 (NSW)

Criminal Procedure Act 1986 (NSW)

Environmental Trust Act 1998 (NSW)

Fines Act 1996 (NSW)

Protection of the Environment Operations Act 1997 (NSW)

Cases Cited:

Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357

Bankstown City Council v Hanna (2014) 205 LGERA 39

Bentley v BGP Properties Pty Ltd (2006) 145 LGERA 234

Camilleri’s Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683

Dyno Nobel Asia Pacific Pty Ltd v Environment Protection Authority (2017) 228 LGERA 55

Environment Protection Authority v Baiada Poultry Pty Ltd (2008) 163 LGERA 71

Environment Protection Authority v Cleanaway Equipment Services Pty Ltd [2022] NSWLEC 40

Environment Protection Authority v Sydney Water Corporation [2019] NSWLEC 100

Environment Protection Authority v Sydney Water Corporation [2021] NSWLEC 17

Environment Protection Authority v Waste Recycling and Processing Corporation (2006) 148 LGERA 299

Markarian v The Queen (2005) 228 CLR 357

R v Visconti [1982] 2 NSWLR 104

Williams v R [2012] NSWCCA 172

Category:

Sentence

Parties:

Environment Protection Authority (Prosecutor)
Sphere Healthcare Pty Ltd (Defendant)

Representation:

Counsel:
D Buchanan SC and J Caldwell (Prosecutor)
C Magee (Defendant)

Solicitors:
Legal and Corporate Division, Environment Protection Authority (Prosecutor)
H&H Lawyers (Defendant)

File Number(s):

2021/194209

Publication restriction:

No

Judgment

Nature of proceedings

1. On 25 February 2022, the Defendant, Sphere Healthcare Pty Ltd (Sphere or the Defendant) entered a plea of guilty to the offence that from about 9 July 2020 to 10 July 2020, at or near 12 Church Road, Moorebank in the State of New South Wales (the Premises), it committed an offence against s 120(1) of the Protection of the Environment Operations Act 1997 (NSW) (POEO Act) in that it polluted waters.

2. At the date of the offence, the maximum penalty for an offence committed by a corporation against s 120(1) of the POEO Act was $1,000,000.

3. By Summons filed 7 July 2021, the Prosecutor, the Environment Protection Authority (EPA or the Prosecutor) seeks the following orders:

1. That the Defendant be dealt with according to law for the commission of the offence;

2. Such orders pursuant to Pt 8.3 of the POEO Act as the Court in its discretion sees fit to make;

3. An order that the Defendant pay the Prosecutor’s costs; and

4. Such other orders as the Court in its discretion sees fit to make.

Facts

4. The offence relates to a large fire which occurred at Sphere’s manufacturing facility on 9 and 10 July 2020, which resulted in plastic drums containing approximately 31,500 litres of ethanol catching fire and descending into stormwater drains and waters downstream thereof.

5. The parties rely upon an extensive Agreed Statement of Facts (ASOF) filed 27 May 2022, as extracted below. References to “[attached]” indicate a copy of that document was attached to the filed ASOF and provided to the Court.

The Defendant, the Licence and the Premises

1    The defendant, Sphere Healthcare Pty Limited ACN 054 309 705 (Sphere or the Defendant), was a contract manufacturer of pharmaceutical products, complementary medicines and hand sanitiser. It operated a factory at 12 Church Street, Moorebank NSW, being Lot 3 in DP847587 (the Premises). The Defendant ceased manufacturing products at the Premises following a large fire at the Premises on 9-10 July 2020, which destroyed most of the factory at the Premises.

2    At all relevant times, the Defendant was the occupier of the Premises.

3    The Premises is on land zoned “general industrial” under the Liverpool Local Environmental Plan 2008, but is adjacent to land zoned “low density residential” and is approximately 500m from a public recreation area, Clinches Pond Public Reserve, situated to the north-east of the Premises. The aerial image [attached] shows the Premises in yellow and its immediate surrounds, including a small natural waterbody known as Clinches Pond.

4   At all relevant times, the Defendant held environment protection licence no. 6453 (the Licence) issued under the Protection of the Environment Operations Act 1997 (POEO Act), which authorised the scheduled activities of “chemical production – waste generation” and “pharmaceutical and veterinary products production”. The Licence did not authorise or regulate water pollution.

Offence

5 The Defendant has been charged with an offence of polluting waters contrary to s 120(1) of the POEO Act. It is alleged that the Defendant caused a pollutant, ethanol, stored in plastic drums, to be placed in an unbunded area at the southern end of the Premises, being a position from which the pollutant descended into a grated stormwater drain at the Premises and into waters downstream thereof, including Clinches Pond.

6   The particulars of the offence are set out in full in the summons filed on 7 July 2021.

Corporate history

7   On 16 August 2019, administrators were appointed to the Defendant.

8   On 9 December 2019, a Deed of Company Arrangement (DOCA) proposed by GMP Pharmaceuticals Pty Limited ACN 063 353 006 (GMP) was executed by the administrators. GMP executed its right under the DOCA to nominate Yes Family 2 Pty Limited ACN 627 650 355 (Yes Family) to acquire all the shares of the Defendant, which it did.

9   One of the three shareholders of Yes Family, Mr Karl (Qing) Ye, was also the sole director of the Defendant, and is the sole director and owner of GMP and the sole director of AUNEW Group Holdings Pty Limited ACN 114 811 906 (AUNEW).

10   Employees of AUNEW were assigned senior management positions at the Defendant and worked at the Premises, including:

(a)    from 4 January 2020 to at least 9 July 2020, Mr Vincent Cai (originally Group Planning Manager, or Group Planning and Resources Manager, of the Defendant. In about mid-June 2020, Mr Cai was appointed Deputy General Manager of the Defendant);

(b)    from late December 2019 to 20 June 2020, Mr Lakhvinder Singh (General Manager of the Defendant); and

(c)   from 16 March 2020 to 26 June 2020, Ms Tina Dong (Operations Manager of the Defendant).

11   Following the onset of the COVID-19 pandemic and state-wide lockdown restrictions, the Defendant experienced significant disruptions to its business, including a reduction of its workforce. In March 2020, Mr Singh resigned and on 26 June 2020 Ms Dong was made redundant.

12   On 6 April 2022, voluntary administrators were appointed to the Defendant. The Defendant’s net financial position as at 30 March 2022 was a deficit of approximately $10,164,192. It had $217,764.29 in cash and $60,628.18 in trade receivables. It made a loss in the first two quarters of the 2021-2022 financial year and a gross profit of $274,988 between 1 January 2022 and 28 February 2022. The Defendant’s profit and loss statement for the 2021-2022 financial year as at 28 February 2022 is [attached].

Ethanol – the Pollutant

13   Ethanol (ethyl alcohol) is a highly flammable liquid and vapor. In the Australian Dangerous Goods Code (edition 7.7, 2020), ethanol is classified as a flammable liquid Class 3 and is assigned to ‘packing group II’, being a substance presenting medium danger.

14   Ethanol is soluble and a highly biodegradable compound. It biodegrades rapidly, generally over a timescale of days or weeks depending on a wide range of environmental conditions (e.g., pH and temperature) and water chemistry (e.g., the availability of other nutrients such as nitrogen and phosphorus). Microbial degradation of ethanol is an aerobic process that requires oxygen and therefore depletes oxygen levels in water.

Australian Standard

15   At the time of the offence, there was a defined standard for the storage of flammable liquids, including ethanol, namely Australian Standard 1940-2017: Storage and Handling of Flammable and Combustible Liquids (AS 1940-2017). AS 1940-2017 set out requirements and recommendations for the safe storage and handling of flammable liquids of dangerous goods Class 3. It provided requirements for commonly used flammable liquids, including minimum acceptable safety requirements for storage facilities, operating procedures, emergency planning and fire protection.

16    Clause 4.4.3 of AS 1940-2017 required that provision be made to contain any leaks or spillages, and to prevent them from entering any watercourse or water drainage system. Subclause 4.4.3(a) required the provision of a spillage containment compound that was sufficiently impervious to retain spillage and to enable recovery of any such spillage, and that was chemically resistant and fire resistant so far as was necessary to fulfil its function. Subclause 4.4.3(d) required that the capacity of the spillage containment compound be at least 100% of the volume of the largest package plus 25% of the storage capacity up to 10,000L, together with 10% of the storage capacity between 10,000L and 100,000L, and 5% above 100,000L.

The Defendant starts to source ethanol in bulk

17   In about March 2020, there was an increased demand for hand sanitiser due to the emerging COVID-19 pandemic.

18   In this context, the Defendant decided to utilise its liquid production capabilities to manufacture hand sanitiser at the Premises. The key ingredient of the hand sanitiser was ethanol, which comprised 78.69% of the finished product. As a consequence, in about March or early April 2020, the Defendant started sourcing ethanol in bulk. It was seeking approximately 80,000kg of ethanol.

Defendant’s standard operating procedures relating to ethanol

19   At all relevant times, the Defendant had two standard operating procedures (SOPs) in relation to the storage and handling of ethanol at the Premises, namely:

(a)   Handling, Storage and Usage of Alcohol in IBCs (number SD818-04) (Handling and Storage SOP); and

(b)    Control of 95% Alcohol Usage (number WH822-05) (Alcohol Control SOP).

20   The Handling and Storage SOP:

stated that alcohol in Intermediate Bulk Containers (IBCs) “must be stored in the Flammable Goods Store” and that “any additional alcohol IBC’s can be stored in other pallet locations within the Flammable Goods Store”;

referred to the fact that the Flammable Goods Store was bunded; and

contained an appendix which was an extract from a Material Safety Data Sheet (MSDS) for “Ethyl Alcohol, denatured”. The MSDS said of this substance, “Danger! Flammable liquid” (emphasis in the original), and stated that it should be kept away from sources of ignition.

21   The Alcohol Control SOP stated that:

“Ethanol is extremely flammable and poses a serious risk of fire and thus needs to be handled with extreme care”;

“Containers [of ethanol] are stored in locked, secure flame-proof cabinets”; and

“Every effort must be made to minimise losses, leaks and evaporation”.

22   The Warehouse team leader employed by the Defendant was Mr Jose Coronel- Urbina (Mr Coronel). He was responsible for the storage of ethanol on the Premises. Ms Dong, who supervised production, engineering, maintenance and capital projects at the Premises, was given a list of about 40 SOPs when she joined the Defendant, many of which were overdue for review, some by as much as two years.

Defendant’s Pollution Incident Response Management Plan

23   The Defendant had a Pollution Incident Response Management Plan dated July 2018 (PIRMP) as required under section 153A of the POEO Act. Under the heading “Inventory of potential pollutants”, the PIRMP listed, amongst other things, “Ethyl alcohol – 3000L (Held in bunded container)”. Under the heading “Safety equipment and other devices”, the PIRMP relevantly stated:

Ethanol

Bunded storage

Fire extinguishers

Spill kits

PPE

Ethanol from Redox

24   On 24 April 2020, approximately 10,000L (8,080kg) of ethanol was delivered to the Premises, supplied by Redox Pty Ltd (the Redox ethanol). The Redox ethanol was contained in ten 1,000L IBCs, which were stored in the Flammable Goods Store until required for production.

25   Once the Redox ethanol was received, the Defendant started manufacturing hand sanitiser. By the time of the fire on 9-10 July 2020, most of the Redox ethanol had been consumed.

Ethanol from CRM

26   On 20 April 2020, the ethanol which the Defendant had ordered from CRM was loaded on board a vessel in Shanghai. It was shipped in 304 blue plastic 200L drums, stored in two shipping containers. CRM had advised Mr Cai that the ethanol would be shipped in plastic drums.

27   On 13 May 2020, Verus Global, a freight forwarding company, emailed Mr Cai and Mr Coronel advising that “4 semi loads” of ethanol were ready to be delivered to the Premises.

28   Subsequently, Ms Dong directed staff, including Mr Coronel, to store the new shipment of ethanol in the canopy area and to clear out the floor area to make room for the new ethanol. Staff of the Defendant cleaned the canopy area to make space for the ethanol. Items were moved around and some things were placed on racking, leaving a space in the canopy area for the ethanol.

29   Over two days, on 21 and 22 May 2020, the ethanol from CRM was delivered by truck to the Premises in 304 200L blue plastic drums. It consisted of 48,640kg (60,800L) of denatured ethanol 95% (the CRM ethanol). The drums were sitting on plastic pallets, four drums to a pallet. A copy of the receipt and MSDS for the CRM ethanol is [attached].

30    As shown in the photographs [attached], the pallets of drums of CRM ethanol were double-stacked by staff of the Defendant in the canopy area, adjacent to which was an east-west oriented grated stormwater drain. The following image is an extract of the stormwater diagram of the Premises [as attached], marked-up to show where the CRM ethanol was placed in relation to the drain (the image is orientated with south at the top of the diagram):

31   The drums of CRM ethanol were stored in the canopy area until required for production. From time to time, staff of the Defendant removed drums or pallets of the CRM ethanol using a forklift and took them to the production area as required. Once a drum of CRM ethanol was empty, it would be stored outside on a pallet on the driveway on the north-eastern side of the Premises. After the fire, around 80 empty blue plastic drums were found stored on pallets on the north-eastern driveway of the Premises.

32   The Defendant has estimated that 25,266kg (about 31,500L) of ethanol was being stored in the canopy area at the time of the fire, all of which was destroyed during the fire.

The Incident

33   At 6:22pm on 9 July 2020, Fire and Rescue NSW (FRNSW) were called to a fire at the Premises and a fire on the surface of Clinches Pond (the Incident).

34   Upon arrival, FRNSW officers observed a large fire at the southern end of the Premises (being the canopy area), which involved cardboard and blue drums marked with flammable liquid stickers. The fire was burning quite freely with flames around six to seven metres in height.

35   At around 6:35pm, upon evacuating staff from the Premises, FRNSW officers were advised that ethanol was possibly involved in the fire.

36   The fire consumed the blue plastic drums of CRM ethanol. As a result of the fire, ethanol descended from the burning drums and into the grated stormwater drain at the southern end of the Premises.

37   Whilst the precise volume of ethanol that descended into the drain is not known, all that remained after the fire was melted blue plastic on the floor of the canopy area.

38   As depicted in the stormwater drain map [attached], the ethanol travelled both east and west along the grated stormwater drain, then north towards the front of the Premises, across adjacent properties (Lots 1 and 2 in in DP847587) and into the stormwater drains along Church Road. Those stormwater drains drained into the south-western corner of Clinches Pond.

39   Blue flames were seen emanating from the stormwater drains. The flames were around knee-high in the grated stormwater drain at the southern end of the Premises, as depicted in the photographs [attached], and in the drains running down the middle of the driveway on the Premises towards Church Road. The blue colour of the flames was consistent with burning ethanol.

40   At an early stage, officers of the NSW Police Force (NSWPF) also saw Clinches Pond on fire. A photograph of the blue ring of fire which was observed by NSWPF officers on the surface of Clinches Pond is [attached].

41   By 7:45pm, FRNSW’s Incident Controller had not been able to determine from people that worked at the Premises exactly where the ethanol was stored, how much was stored and whether it was bunded. As a result, he upgraded the fire to an “8th Alarm Structure Fire” meaning that over 145 firefighting and support personnel were deployed to the Premises to manage the Incident.

42   FRNSW notified the Environment Protection Authority (EPA) of the Incident.

43   Water was initially used to suppress the fire. FRNSW crews placed temporary bunding around some of the drains at the Premises and two lines of booms at the stormwater inlets into Clinches Pond. Covers were also placed over some of the drains at the Premises.

44   At about 10:50pm, FRNSW transitioned from using water to suppress the fire to using a firefighting foam called FOREXPAN S.

45   At about 1:30am on 10 July 2020, the fire was downgraded to a “3rd Alarm Structure Fire”, as a consequence of which only about 50 firefighting and support personnel were required on site.

46    At around midday on 10 July 2020, two EPA officers attended the Premises. The fire remained active and the officers were unable to access the southern end of the Premises. Pools of dark odorous liquid were forming around stormwater drains at the front (north) of the Premises. The forecourt of the Premises also had a burnt sweet chemical odour. A rough diagram of the canopy area as seen after the fire, with the Flammable Goods Store next to it, drawn by FRNSW fire investigator Jack Edman, is [attached].

47   At nearby Clinches Pond, the liquid in two drainpipes entering the pond was still, with a slight film on the surface. Clinches Pond had a similar smell to that at the Premises, being a burnt sweet chemical odour.

48   The EPA officers collected water samples from a stormwater pit at the north of the Premises and at Clinches Pond. Ethanol was detected in the samples taken at both locations at the levels set out in the table [attached].

49   Two of the photographs taken by the EPA officers that day are [attached].

50   No cause of the fire was established.

First clean-up notice

51   On 11 July 2020, on an urgent basis, the EPA issued clean-up notice no. 1597376 to the Defendant pursuant to section 91 of the POEO Act. The notice directed the Defendant to take certain clean-up actions, including to remove contaminated water from pooled areas and stormwater pits at the Premises and assess whether contaminated water was leaving the Premises at any other location.

52   That same day, in response to the clean-up notice, Mr Edwards advised the EPA that he was arranging for vacuum trucks to remove contaminated water from the Premises.

53   The Defendant engaged Enviro Waste Services Group (Enviro Waste) to carry out the clean-up actions under the notice. Between 11 and 14 July, a total of 37,521Lof contaminated water was removed from the stormwater pits at the Premises.

Clinches Pond

54   On 21 July 2020, Mr Joel Daniels of Liverpool City Council (the Council) observed approximately 20 fish that were either dead or gasping for air, and eels that appeared to be dead or dying at Clinches Pond, in addition to turbid water and a strong odour. Mr Daniels contacted the EPA.

55   On 22 July 2020, EPA officers Ms Bernie Turner and Dr Ian Holland conducted an inspection of Clinches Pond.

56   Ms Turner observed a moderate to strong sweet chemical odour at various locations around Clinches Pond, an oily sheen on the surface of the water at the southern end, some dead fish floating on the surface and other fish gasping for air.

57   Dr Holland observed a scum layer on the surface of the water, several large dead fish and a strong odour reminiscent of decaying food waste at the southern end of Clinches Pond.

58   Photographs taken by Ms Turner and Dr Holland on 22 July 2020 are [attached].

59   Dr Holland collected water samples at various locations around Clinches Pond and at Anzac Creek, the latter being a creek connected to Clinches Pond via approximately 700m of closed and open stormwater drains.

60   All water samples taken from Clinches Pond were found to be toxic. The levels of ethanol detected in those samples are set out in the table [attached]. The ethanol concentrations in the samples taken from the southern boundary of Clinches Pond showed a consistently high level of ethanol ranging from 70,500 µg/L to 75,200 µg/L. Ethanol was detected at lower, though still very high, concentrations at the northern end of Clinches Pond (34,800 μg/L).

61   The concentrations of ethanol in Clinches Pond on 22 July 2020 were significantly higher than on 10 July 2020, indicating that ethanol had continued to migrate from stormwater pits located on the Premises over this time period and accumulated along the southern end of Clinches Pond. From 11-15 July 2020, there was 23.8mm of rain in the Moorebank area, which would have been sufficient to facilitate migration of ethanol from any pooling locations within the stormwater system downstream to Clinches Pond. In addition, ethanol still sitting in the stormwater system may have been flushed out to Clinches Pond by the rainfall event of 8-10 August 2020.

62   The concentrations of ethanol in Clinches Pond were well in excess of the Australian & New Zealand Guidelines for Fresh & Marine Water Quality’s default guideline value for ethanol of 1,400 μg/L for freshwaters. Those guidelines provide a standardised tool for assessing water quality for the protection of aquatic ecosystems.

63   These concentrations were also well in excess of the concentration required to completely deplete the oxygen in the pond. Dissolved oxygen levels at the sampled locations ranged from 0.03-0.19 mg/L. For most temperate aquatic animals, sustained dissolved oxygen levels below 4 mg/L can trigger some form of hypoxic stress, whereby the animal starts to implement behaviours or unconscious physiological means to increase oxygen uptake. The critical oxygen level for fish – which is the oxygen concentration below which a fish can no longer regulate internal oxygen levels to maintain a stable state, such that the animal will be under acute oxygen stress – is typically approximately 2 mg/L.

64   On 24 July 2020, a witness reported to the EPA that there were hundreds of dead fish in Clinches Pond and birds “hobbling around”.

65   The sample from further downstream at Anzac Creek had undetectable levels of ethanol and was found not to be toxic.

Second clean-up notice

66   On 24 July 2020, on an urgent basis, clean-up notice no. 1597849 was issued to the Defendant pursuant to section 91 of the POEO Act. This required the Defendant to take certain clean-up actions at the Premises and at Clinches Pond.

67   The Defendant again engaged Enviro Waste to carry out the clean-up actions under the notice.

68   In complying with the clean-up notice, Enviro Waste, on behalf of the Defendant:

(a)    collected and removed 209,870L of contaminated water from the Premises;

(b)   collected and removed 1,418,120L of contaminated water from Clinches Pond; and

(c)   collected and disposed of approximately 1 to 1.5 IBCs of dead fish and eels from Clinches Pond;

between 24 and 28 July 2020.

69   Photographs taken by employees of Enviro Waste during the clean-up are [attached]. This includes one photo of dead fish inside a 1,000L white plastic IBC.

70   On 6 August 2020, EPA officers inspected and collected water samples from the Premises and Clinches Pond. Ethanol was detected in the water samples taken at both locations at the levels set out in the table [attached]. The ethanol concentrations were lower than those previously recorded, which was likely due to both the clean-up activities carried out on behalf of the Defendant and the continued biodegradation of the ethanol. However, ethanol concentration levels were still found to be toxic in all samples. Measured dissolved oxygen levels in Clinches Pond ranged from 0.46-0.63 mg/L, well below the critical oxygen levels required to support aerobic aquatic life. Photographs taken by EPA officers on that day are [attached].

71   On 6 August 2020, a plumber for the Defendant concreted up three stormwater pipes at the Premises in an effort to prevent liquid leaving the Premises via the stormwater system.

72   As required by the second clean-up notice, the Defendant conducted water sampling at stormwater outfalls to Clinches Pond for a period of five weeks, between 29 July 2020 and 27 August 2020. Those results indicated that ethanol was present in the stormwater system until at least 12 August 2020.

73   On 3 September 2020, EPA officers collected further water samples from Clinches Pond. Ethanol was detected in the samples at the levels set out in the table [attached]. Although ethanol concentrations were far lower than on 6 August 2020, dissolved oxygen levels throughout Clinches Pond remained below the critical oxygen levels required to sustain aerobic aquatic life, with concentrations of just 0.11 mg/L at the southern and northern shorelines and 1.26 mg/L at the stormwater outflow.

74   On 4 November 2020, the Defendant provided the EPA with a report prepared by RARE Environmental Pty Ltd detailing actions taken by, or on behalf of, the Defendant in compliance with the two clean-up notices which is [attached].

Cooperation with EPA investigation

75   The Defendant cooperated with the EPA’s investigation.

Prior convictions

76   The Defendant has no prior convictions for environmental offences.

Harm to the environment

77   Prior to the Defendant’s offence, Clinches Pond was in relatively good ecological condition for an urban pond. The evidence suggests that despite intermittent impacts from local stormwater runoff, the pond ecosystem was capable of supporting an array of aquatic life in its waters, was adequately oxygenated for aerobic respiration and had not been previously impacted by catastrophic pollution.

78   The Defendant’s offence caused serious environmental harm. The pollution of the waters of Clinches Pond with ethanol had a significant impact on the physical, chemical and biological condition of the waters.

79   The offence resulted in the waters of Clinches Pond becoming toxic. It also resulted in the catastrophic depletion of oxygen throughout Clinches Pond due to the oxygen demands of ethanol biodegradation. This made the pond uninhabitable for aerobic aquatic organisms. In particular, the offence caused the death of a large number of fish and eels, including european carp Cyprinus carpio, goldfish Carassius auratus, longfinned eels Anguilla reinhardtii and freshwater catfish Tandanus tandanus.

80   Despite the clean-up actions undertaken by Enviro Waste between 25 and 28 July 2020 – including the removal of 1,418,120L of contaminated water from Clinches Pond – Clinches Pond remained polluted with ethanol until 3 September 2020. It is estimated that it may take until approximately July 2022 for the ecosystem at Clinches Pond to completely recover, although recovery of a significant biomass of larger fish could take several years.

81   There is some evidence that oils held on the Premises by the Defendant, including fish oil, linseed oil, sunflower oil and cottonseed oil, were present in water samples taken by FRNSW at the Premises and the stormwater outlet to Clinches Pond on 10 July 2020. The biodegradation of these oils can be expected to have contributed to the lowering of dissolved oxygen in Clinches Pond. In addition, the use by FRNSW officers of fire-fighting foam containing butoxyethoxyethanol had the potential to contribute to the depletion of dissolved oxygen in Clinches Pond and thus to the death of fish and eels. However, biodegradation of the relatively high levels of the more readily biodegradable ethanol would have made a more significant contribution to the oxygen demand.

82   The Defendant’s offence interfered with the amenity of the Moorebank area. In July and August 2020, concerned residents contacted the EPA and the Council about the condition of Clinches Pond. In addition, in early August, there was still an odour emanating from Clinches Pond that caused at least one local resident to keep the windows and doors of her home closed to prevent the smell entering.

83   The Defendant is no longer operating on the Premises and the land has been sold to a third-party company, Dexus Wholesale Management Limited.

Plea

84   On 10 September 2021, the Defendant entered a plea of not guilty.

85   On 11 February 2022, counsel for the Defendant indicated to senior counsel for the Prosecutor that the Defendant would plead guilty to the charge.

Remorse

86   The Defendant is remorseful for the harm and adverse impact that the fire has had on the environment.

6. In addition to the facts that were agreed the Prosecutor adduced evidence to establish further facts relating to the circumstances surrounding the Defendant’s decision-making in the ordering and storing of the CRM ethanol together with the actions that could have been taken by the Defendant to prevent, control, abate, or mitigate the harm that was experienced as a result of the offending.

Nature of charges to which guilty pleas entered

7. The relevant statutory provisions creating the offence is s 120(1) of the POEO Act which provides:

120   Prohibition of pollution of waters

(1)   A person who pollutes any waters is guilty of an offence.

(2)   In this section—

pollute waters includes cause or permit any waters to be polluted.

8. The Defendant is charged as the occupier of the Premises from which the pollution emanated. Section 257 of the POEO Act provides:

257   Occupier of premises responsible for pollution from premises

(1)   In any proceedings under this Act, the occupier of premises at or from which any pollution occurs is taken to have caused the pollution, unless it is established that—

(a)   the pollution was caused by another person, and

(b)   the other person was not associated with the occupier at the time the pollution occurred, and

(c)   the occupier took all reasonable steps to prevent the pollution.

A person is associated with the occupier for the purposes of paragraph (b) (but without limiting any other circumstances of association) if the person is an employee, agent, licensee, contractor or sub-contractor of the occupier.

(2)   Subsection (1) does not prevent proceedings being taken under this Act against the person who actually caused the pollution.

Sentencing principles

The purposes of sentencing

9. The purposes of sentencing are contained at s 3A of the Crimes (Sentencing and Procedure) Act 1999 (NSW) (CSP Act) as follows:

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.

Statutory matters required to be taken into account in sentencing

10. For the purposes of sentencing in this matter the following factors as provided for in s 21A of the CSP Act are relevant:

21A   Aggravating, mitigating and other factors in sentencing

(1)   General In determining the appropriate sentence for an offence, the court is to take into account the following matters –

(a)   the aggravating factors referred to in subsection (2) that are relevant and known to the court,

(b)   the mitigating factors referred to in subsection (3) that are relevant and known to the court,

(c)   any other objective or subjective factor that affects the relative seriousness of the offence.

The matters referred to in this subsection are in addition to any other matters that are required or permitted to be taken into account by the court under any Act or rule of law.

(2)   Aggravating factors The aggravating factors to be taken into account in determining the appropriate sentence for an offence are as follows –

…

(i)   the offence was committed without regard for public safety,

…

(o)   the offence was committed for financial gain,

…

The court is not to have additional regard to any such aggravating factor in sentencing if it is an element of the offence.

(3)   Mitigating factors The mitigating factors to be taken into account in determining the appropriate sentence for an offence are as follows –

…

(b)   the offence was not part of a planned or organised criminal activity,

…

(e)   the offender does not have any record (or any significant record) of previous convictions,

(f)   the offender was a person of good character,

(g)   the offender is unlikely to re-offend,

…

(i)   the remorse shown by the offender for the offence, but only if –

(i)   the offender has provided evidence that he or she has accepted responsibility for his or her actions, and

(ii)   the offender has acknowledged any injury, loss or damage caused by his or her actions or made reparation for such injury, loss or damage (or both),

…

(k)   a plea of guilty by the offender (as provided by section 22 or Division 1A),

…

(m)   assistance by the offender to law enforcement authorities (as provided by section 23),

…

(4)   The court is not to have regard to any such aggravating or mitigating factor in sentencing if it would be contrary to any Act or rule of law to do so.

(5)   The fact that any such aggravating or mitigating factor is relevant and known to the court does not require the court to increase or reduce the sentence for the offence.

11. In addition, the provisions of s 241 of the POEO Act require the following relevant matters to be considered in sentencing:

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,

(f)   the presence of asbestos in the environment.

(2)   The court may take into consideration other matters that it considers relevant.

12. In this case, having regard to the circumstances giving rise to the commission of the offence, the relevant considerations are those contained in s 241(1)(a)-(d) and s 241(2).

Objective seriousness of offences

13. The determination of an appropriate sentence as per Bentley v BGP Properties Pty Ltd (2006) 145 LGERA 234 at [162] is to be undertaken bearing in mind that:

A sentence should never exceed that which can be justified as appropriate or proportionate to the gravity of the crime considered in light of its subjective circumstances.

14. The primary factor to be considered in sentencing is the objective seriousness of the offence. The objective seriousness of the offence fixes both the upper and lower limits of proportionate punishment: the upper, as a sentence should never exceed that which can be identified as proportionate to the gravity of the particular crime; and the lower, as an allowance for the subjective considerations can never produce a punishment that does not reflect the objective seriousness of the offence: Environment Protection Authority v Waste Recycling and Processing Corporation (2006) 148 LGERA 299 at [139]-[140].

15. The objective gravity of the offence is to be judged by two principal components: the precise acts or omissions of the offender; and, the consequences of those acts or omissions: Environment Protection Authority v Baiada Poultry Pty Ltd (2008) 163 LGERA 71 at [22].

16. In these proceedings the Prosecutor submitted that the objective circumstances relevant to the determination of the objective seriousness were:

1. The nature of the offence;

2. The extent of the harm caused or likely to be caused to the environment by the commission of the offence;

3. The practical measures that could have been taken to prevent, control, abate or mitigate the harm;

4. The foreseeability of the risk of the harm caused to the environment by the commission of the offence;

5. Sphere’s control over the causes that gave rise to the offence;

6. The fact that Sphere obtained a financial gain by failing to take practical measures to avoid polluting the waters; and

7. The fact that the offence was committed without regard for public safety.

For the reasons that follow, I accept that the objective seriousness is to be determined by reference to the factors identified above at [16(1)-(5)].

Nature of offences

17. The offence is a strict liability offence and carries the maximum penalty for a corporation (which was agreed relevantly includes the Defendant) of $1,000,000: s 123(a) of the POEO Act. The strict liability nature of the offence and the quantum of the maximum penalty are indicators of the public expression by Parliament of the seriousness of the offence and the gravity of the offences as perceived by the community: Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 at 359; and Camilleri’s Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698.

18. The nature of the offending is not confined to the ingredients of the offence but may be taken to include the fundamental qualities of the offence: Williams v R [2012] NSWCCA 172 at [42].

19. In this case, the fundamental qualities of the offence were ones that were contrary to the objects of the POEO Act. The provisions of the POEO Act that, for the purposes of the consideration of sentence in these proceedings, relevantly includes as its stated objects:

3   Objects of Act

The objects of this Act are as follows:

(a)   to protect, restore and enhance the quality of the environment in New South Wales, having regard to the need to maintain ecologically sustainable development,

…

(d)   to reduce risks to human health and prevent the degradation of the environment by the use of mechanisms that promote the following:

(i)   pollution prevention and cleaner production,

(ii)   the reduction to harmless levels of the discharge of substances likely to cause harm to the environment,

(iia)   the elimination of harmful wastes,

…

20. These relevant objects reinforce the public protective nature of the legislative regime and the essential role that the regulation of pollution – through the licensing regime and the prohibition on nominated types of pollution outside that regime (such as the pollution of waters) – plays in achieving those objects. In this case, the manner of storage of the CRM ethanol as identified at [5(30)-(32)] above was not undertaken in a manner which would protect the environment or reduce risks to human health and protect the degradation of the environment. The inherent risk from the manner of storage was demonstrated by the actual consequence of that storage, being the effects experienced with the ultimate release of the CRM ethanol from the Premises.

The extent of the harm caused or likely to be caused to the environment by the commission of the offence: s 241(1)(a) of the POEO Act

21. The POEO Act contains in the dictionary the following relevant definitions for a consideration of this aspect of sentencing:

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.

environment means components of the earth, including:

(a)   land, air and water, and

(b)   any layer of the atmosphere, and

(c)   any organic or inorganic matter and any living organism, and

(d)   human-made or modified structures and areas,

and includes interacting natural ecosystems that include components referred to in paragraphs (a)-(c).

22. These defined terms raise wide-ranging considerations relating to this aspect of sentencing. It is to be noted that where a Prosecutor contends that a particular sentencing consideration should be treated as an aggravating feature it must establish by evidence, beyond reasonable doubt the presence of such aggravating factor. Where a Defendant contends for the presence of a mitigating factor in sentencing it must establish the presence of such factor on the balance of probabilities: Environment Protection Authority v Sydney Water Corporation [2019] NSWLEC 100 at [131].

23. The Defendant accepts that there was harm occasioned as a consequence of the offending together with a likelihood of harm. The Defendant submits that such harm would fall into the low to moderate end of the spectrum of harm. For the reasons that follow, I do not accept that characterisation and find that the extent of the actual harm and likely harm was greater and was significant.

24. In this case, there is evidence of actual harm as is indicated in the ASOF at [5(77)-(82)] above. The agreed harm indicates actual harm to both the aquatic fauna present in Clinches Pond comprising the death of fish and eels and to the nature of the waters of the pond that were rendered toxic and depleted the oxygen levels in the pond to such an extent as it became uninhabitable to aquatic organisms.

25. In addition, the offending caused adverse impacts on the amenity of the environment around Clinches Pond by the presence of flames on the surface of the pond in the initial aftermath of the fire and the visual presence of the dying fish and eels together with the odour.

26. The uncontested evidence discloses that, notwithstanding the steps taken by the Defendant to mitigate the effects of the CRM ethanol, it may take up to two years after the date of the offence for Clinches Pond to recover completely from the pollution event.

27. The actual harm to the environment both by its nature and extent together with the length of time during which the harm will persist are factors that increase the objective seriousness of the offending.

28. For the above reasons, I consider the harm to the environment, both actual and likely, to be significant and an aggravating matter in the sentencing exercise.

Practical measures that could have been taken to prevent, control, abate or mitigate the harm: s 241(1)(b) of the POEO Act

29. In this case, I accept the Prosecutor’s submissions that there were a number of practical measures that could have been taken by the Defendant, any of which if taken would likely have reduced or avoided the extent of the harm to the environment. As a consequence, the failure to take any of these measures increases the objective seriousness of the offending.

30. The measures identified by the Prosecutor in its written submissions at paragraph 30 that I have taken into account are, in summary:

1. Sphere could have constructed a spillage containment compound such as a bunded area to store the CRM ethanol;

2. Although Sphere’s Flammable Goods Store – which consisted of two flammable goods storage cabinets that were bunded and had the total capacity to store 16,200 litres of liquid – did not have sufficient capacity to store all of the CRM ethanol, Sphere could have stored some of the CRM ethanol in the Flammable Goods Store once it was emptied of Redox ethanol;

3. Sphere could have invested in new flammable goods storage cabinets to store the quantity of CRM ethanol which could not be accommodated in the Flammable Goods Store;

4. Sphere could have ordered a smaller quantity of CRM ethanol, such that all of the CRM ethanol could have been accommodated in the Flammable Goods Store;

5. Sphere could have stored the CRM ethanol in an area that was not proximate to a stormwater drain;

6. Sphere could have engaged a competent third party to store the CRM ethanol offsite; and

7. Sphere could have ensured that it had functioning equipment available to cover or block the stormwater drain in the event of an emergency.

31. The Defendant acknowledges that it had processes in place. It submits, however, that the circumstances of a recent takeover of the business and the changes that were necessary to improve the business since the takeover in order that sufficient capital could be raised to improve the operations, in part affected the capacity to carry out works or introduce programmes that may have affected the outcome of the relevant event. Whilst I accept that the company was in a period of transition, I do not consider that such is a sufficient justification for not taking action to ensure the protection of the environment. The company operations had an inherent risk to the environment by the bringing of CRM ethanol on to the Premises and it was incumbent upon the Defendant to ensure that such risks were appropriately managed. Its failure to do so is reflective of prioritising the taking of action to improve the company’s financial performance with less attention to the risks associated with those actions. Both the improvement of the company and the protection of the environment from the risks of such actions should have been equally of concern.

32. I consider that there were measures that could have been put in place to protect or mitigate the risks to the environment and the harm that was ultimately caused and that the Defendant had operated without sufficient care to implement such measures. This factor is an aggravating factor in the commission of the offence.

Reasonable foreseeability of the harm caused or likely to be caused by the commission of the offences: s 241(1)(c) of the POEO Act

33. For harm to be reasonably foreseeable what is being considered is whether it was reasonably foreseeable that by allowing the CRM ethanol to enter into the waters the harm that was experienced was reasonably foreseeable. In that context it is not necessary that the Prosecutor establish that the fire, which was the primary cause of the CRM ethanol being released from the Premises, was foreseeable, but rather whether a release of CRM ethanol and such release entering the waters (including in this case Clinches Pond) was reasonably foreseeable: Environment Protection Authority v Cleanaway Equipment Services Pty Ltd [2022] NSWLEC 40 at [75]; Environment Protection Authority v Sydney Water Corporation [2021] NSWLEC 17 at [122]-[123].

34. The Defendant accepts that the harm caused by the offence was foreseeable and that it should have foreseen the risk of fire.

35. On the evidence and having regard to the circumstances of this case, I am satisfied that the harm caused or likely to be caused by the commission of the offence was reasonably foreseeable. The evidence discloses that the Defendant was well aware of the risks associated with the storage of CRM ethanol both as a flammable product and one that posed risks to the environment and human safety in the event of spillage or release. These risks were identified in its own Pollution Incident Response Management Plan and its Alcohol Control Standard Operating Procedures. The drums containing the CRM ethanol were also marked with flammable liquid stickers.

36. Further, the Defendant’s staff had raised concerns with senior management, including the General Manager, about the receipt and storage of the volume of CRM ethanol. Despite these concerns the CRM ethanol was received in the volume ordered and stored in an unbunded and uncontained area immediately adjacent to a stormwater drain.

37. The extent to which the harm was foreseeable is an aggravating factor in the commission of the offence.

38. The extent to which the risk of harm was foreseeable in the circumstances of this case increases the objective seriousness of the offending.

The extent of control over the causes that gave rise to the offence: s 241(1)(d) of the POEO Act

39. The Defendant accepts that it had control of the causes that gave rise to the offence.

40. As is observable from the failures identified in [30] above the Defendant had control over the causes that gave rise to the offence. If any one of the matters identified had been undertaken by the Defendant, the pollution event would have been mitigated or prevented.

41. Where there is a high degree of control of the causes the objective seriousness of the offence will be greater: Bankstown City Council v Hanna (2014) 205 LGERA 39 at [88]. In this case, however, the control over the causes is evidenced by the same factors that identified the practical measures that could have been taken to mitigate or reduce the harm. To the extent that I have taken those matters into account in determining objective harm I do not increase the objective harm by reference to the matters identified in this consideration as I consider that to do so would be to consider the same aggravating factor twice which would produce an identification of objective seriousness that was not reflective of the degree of criminality involved in the offending.

Offence committed without regard for public safety: s 21A(i) of the CSP Act

42. The Prosecutor contended that the offence was committed without regard for public safety in that: Ethanol is a highly flammable liquid and vapor and is classified by the Australian Dangerous Goods Code as a substance presenting medium danger. By placing the CRM ethanol in an unbunded area which was not chemically resistant or fire resistant, being a position from the [sic] ethanol could descend into the waters, Sphere acted without regard for public safety.

43. The Prosecutor also accepted that if this factor had already been taken into account in the foreseeability consideration it should not be further taken into account as to do so would be double counting as harm to the environment included harm to public safety.

44. Whilst I accept that the offending was undertaken without regard to public safety, I do not consider it to be a further or additional aggravating feature beyond the consideration already undertaken in connection with the extent to which the harm was foreseeable.

Offence committed for financial gain: s 21A(2)(o) of the CSP Act

45. The Prosecutor contends that the offence was committed for financial gain in so far as:

1. It was committed in the course of an activity that was undertaken for financial gain; and

2. Whilst the Defendant did not make a profit from its pollution of the waters, it did “save the expense of taking the practical measures to avoid polluting the waters”. When staff advised management that the shipment of CRM ethanol should be delayed or stored offsite because the Flammable Goods Store was full at that time, the General Manager rejected that advice on the basis that it would be “very expensive” to do so. In that sense, the acts involved in the commission of the offence necessarily avoided the Defendant incurring expense such that it obtained financial gain.

46. I do not accept that the matters identified by the Prosecutor lead to a finding of an aggravating factor in the offending. I accept the Defendant’s submissions that there was no financial or other motive in committing the offence.

47. Whilst the Defendant was a commercial business which was intended to provide a profit from its endeavours, I do not consider that such factor alone is sufficient to demonstrate a financial motive of the type anticipated by this consideration. To the extent that some action was not taken because of the cost (such as offsite storage) I am not satisfied to the necessary extent that such a decision was made for the purpose of gaining a financial benefit from the offending. Further I have already taken into account both the foreseeability of harm and the Defendant’s control over causes which to a large degree took into account the Defendant’s poor decision-making.

48. I do not consider that this factor is an aggravating feature of the offending.

Conclusions on objective seriousness

49. The Defendant submitted that the objective seriousness is in the low to low moderate range. I do not accept such characterisation as it fails to have sufficient regard to the extent of harm and the extent to which the Defendant should have been aware of the risks and taken steps to manage such risks in an appropriate manner.

50. Having regard to the above matters I consider that the objective seriousness of the offending is at the upper middle range of objective seriousness.

Subjective circumstances of offender

Contrition and remorse

51. I find that the Defendant has demonstrated contrition and remorse by both its words and its actions.

52. As was submitted by the Defendant (and which I accept), the Company director, Mr Ye deposed in his affidavit that both he and the Defendant were:

1. Truly sorry that such an unfortunate and horrific accident occurred;

2. Distraught when he was informed that due to the drums containing CRM ethanol catching fire during the incident that quantities of CRM ethanol had flowed into the stormwater drain and had subsequently flowed through the gutters and into Clinches Pond;

3. Particularly saddened by the impact that the leaking CRM ethanol had on polluting Clinches Pond and the harm that this caused to the environment;

4. Upset at the impact that this pollution had on the pond’s wildlife, including the resulting death of many eels and fish that lived in the pond;

5. Very sorry that this pollution impacted the local communities’ enjoyment of the park area around the pond and the amenity of the pond itself due to the oily sheen and chemical odour from the decaying fish; and

6. Relieved to be informed that the pollution had not spread into other waterways connected to Clinches Pond.

53. In addition, Mr Ye, upon being advised of the pollution event directed that the company take all necessary steps, at whatever cost, to mitigate the adverse impacts of the pollution and the impacts upon the environment.

54. The Defendant engaged Enviro Waste Services Group to carry out clean-up works that included:

1. The collection and removal of 209,870L of contaminated water from the Premises;

2. The collection and removal of 1,418,120L of contaminated water from Clinches Pond; and

3. The collection and disposal of approximately 1 to 1.5 IBCs of dead fish and eels from Clinches Pond.

55. The Defendant incurred approximately $450,000 of clean-up costs.

56. Contrary to the Prosecutor’s submission that the clean-up works were not voluntary but a response to the clean-up notices, with which it complied, I accept that the evidence discloses that the Defendant was independently prepared to do whatever work was necessary to mitigate the harm and that the clean-up response was not motivated solely by the obligation cast by the clean-up notices.

57. I take into account by way of mitigation these factors. In particular, the voluntary undertaking of prompt action without a concern for the financial cost of such action is a factor that weights considerably in mitigation of a penalty that would otherwise be warranted in the circumstances of this case.

Assistance to EPA: s 21A(3)(m) and s 23 of the CSP Act

58. As can be observed from the agreed facts recited above, the Defendant has provided extensive agreement on the facts such that the time required for the hearing on sentence was significantly reduced.

59. Further, the Defendant co-operatively worked with the EPA in the clean-up response to the pollution event. As observed above, I consider that the Defendant’s clean-up activities were not motivated solely by the statutory requirement to comply with the two clean-up notices issued by the EPA.

60. These factors are mitigating factors.

Early plea of guilty: s 22 and s 21A(3)(k) of the CSP Act

61. Both the Prosecutor and the Defendant accept that the Defendant’s plea of guilty was not entered at the earliest opportunity and, therefore, the Defendant is not entitled to the full discount available for an early plea. The Prosecutor submits that the Defendant is entitled to a discount in the “middle of the range” and the Defendant submits a discount in the “mid to high range” is appropriate.

62. Whilst not entered at the earliest opportunity the entry of the plea some three months prior to the anticipated commencement of the contested hearing has some utilitarian value. I consider that the Defendant should receive a 15% discount in recognition of its guilty plea.

Prior convictions: s 21A(3)(e) of the CSP Act

63. The Defendant has no prior convictions for environmental offences.

Deterrence retribution and denunciation

64. In matters of deterrence, it is relevant to consider specific deterrence where a particular defendant is to be deterred from future similar conduct and general deterrence relating to deterring other operators in similar circumstances or industries from offending in the same manner. In this case, the Defendant is no longer operating, it no longer holds an environmental protection license, nor does it hold a licence from the therapeutic goods administration with respect to the Premises. For those reasons and in light of its lack of prior offending, I do not consider that specific deterrence is warranted.

65. I accept the Prosecutor’s submission that general deterrence is a relevant consideration in the circumstances of this offending. Operators that handle and store liquids that are potentially hazardous to the environment should be deterred from handling those liquids in a manner which poses a real risk in the event of spillage and escape. I will take the element of general deterrence into account in fixing the appropriate fine, however in doing so it is also necessary to ensure that the fine remains proportionate to the offending of the particular defendant.

Consistency in decision-making

66. The principle of even-handedness requires that the Court consider if there is any sentencing pattern for like offences in order to ensure that there is a consistent approach to penalty. This approach, however, must also acknowledge that care must be taken in comparing cases where the circumstances of and facts relating to the offences may be quite different: R v Visconti [1982] 2 NSWLR 104; and Axer Pty Ltd v Environment Protection Authority (1993) 113 LGERA 357 at [365].

67. In this case, the Prosecutor provided a table of decisions relating to breaches of s 120(1) of the POEO Act. What is apparent from a consideration of those matters is that each turned upon the particular facts of each case. The majority of the cases to which the table referred had significant factual differences either in relation to the manner of offending or the harm occasioned by such offending. Of all of the cases, I consider the most comparable (albeit still with manifest factual differences) is the case of Dyno Nobel Asia Pacific Pty Ltd v Environment Protection Authority (2017) 228 LGERA 55 (Dyno).

66. Having regard to the circumstances of Dyno in the context of the offending in the matter before me I consider the nature of the offending is of a higher order due to the foreseeability of harm and the control over causes being greater in the present circumstances as opposed to the valve failure in Dyno. In addition, I consider that the extent of harm in the present case is greater due to the period of time that was required to elapse until Clinches Pond was restored to a state that would support aquatic organisms. Balanced against those factors are the additional subjective factors that weigh in the current Defendant’s favour of the commitment to the clean-up and the expense incurred which I consider to be of greater mitigation in the present case to the subjective factors in Dyno.

67. Accordingly, I will bear in mind the penalty imposed in Dyno, whilst recognising that a single case does not itself indicate a pattern of sentencing.

Fines Act – capacity to pay

70. In the exercise of the discretion to fix the amount of any fine the Court is obliged to consider the provisions of s 6 of the Fines Act 1996 (NSW) which states:

6   Consideration of accused’s means to pay

In the exercise by a court of a discretion to fix the amount of any fine, the court is required to consider—

(a)   such information regarding the means of the accused as is reasonably and practicably available to the court for consideration, and

(b)   such other matters as, in the opinion of the court, are relevant to the fixing of that amount.

71. The Defendant submits that its capacity to pay a fine is of considerable significance in this case.

72. The Defendant provided evidence of its financial position by way of:

1. The affidavit of Mr Ye deposing that the company has ceased trading and that it no longer occupies the land (which has since been sold by the landowner) such that it has no capacity to generate income in the future;

2. A profit and loss statement for year ended 28 February 2022;

3. A trial balance sheet for financial year 2021/2022; and

4. The voluntary administrator’s report dated 16 May 2022.

73. The Defendant’s financial records disclose that the Defendant has met all of its obligations to its former employees but that it maintains a debt to the Australian Taxation Office. Further, the Defendant has significant liabilities in the order of $10,000,000 with assets in the order of $270,000. The administrator’s report, however, discloses that the Defendant has debt in the order of $18,500,000. It also indicated that the Defendant has some further plant assets (bottling plant) and a potential voidable transaction for a secured debt in the sum of $4,814,771 to a related entity. In addition, the Defendant has an insurance claim for the damage from the fire in the order of $8,500,000 which has been denied, but the Defendant is challenging its entitlement to the insurance.

74. I accept that the Defendant had at the date of the hearing liabilities that well exceed its assets. However, I am not able to accept that such position may not alter significantly in the future by way of recovery of money from the sale of plant; repayment of related entity transactions; and the potential insurance payment. The potential for recovery of such a large sum of money is such that I am not prepared to exercise my discretion to reduce the fine merely on the basis of the Defendant’s current financial position without taking into account the contingent sums.

75. Whilst it may be that the Defendant remains insolvent after the recovery process has occurred, the fine will rank appropriately with other debtors in any claim against the Defendant’s assets. In such circumstances I consider it appropriate that the fine not be reduced to take account of the corporate Defendant’s financial position and that there is a greater public interest to be served in the deterrent statement that an appropriate fine makes in the public arena than preserving the status quo of an already potentially insolvent corporate entity or reducing the claim on any contingent increase in assets that may be capable for recovery to the Defendant’s advantage in the future.

Additional Orders

76. In addition to any penalty imposed the Court may make further orders as identified in Div 5 Pt 8.3 of the POEO Act.

77. The Prosecutor and Defendant have agreed that in addition to any fine the Defendant should be required to:

1. Pay the amount of any fine to the Environmental Trust established under the Environmental Trust Act 1998 (NSW) for general environmental purposes;

2. Publicise the conviction in the agreed manner to the general public and the residents in close proximity to Clinches Pond;

3. Pursuant to s 248(1) of the POEO Act, pay the Prosecutor’s costs and expenses incurred during the investigation of the offence in the agreed amount of $63,496.73; and

4. Pursuant to s 257B of the Criminal Procedure Act 1986 (NSW), pay the Prosecutor’s legal costs as agreed or assessed.

78. In the circumstances of this case, I consider that the additional orders agreed by the Prosecutor and the Defendant are appropriate and I will make those orders in the form agreed. I also take the Defendant’s agreement as to these orders into account as a mitigating factor in the determination of sentence.

Appropriate sentence

79. The appropriate sentence is to be derived by an “instinctive synthesis” of all of the relevant factors in order to determine an appropriate proportionate sentence: Markarian v The Queen (2005) 228 CLR 357.

80. Taking into account the objective seriousness of the charge and the subjective factors identified above, I have determined that the appropriate sentence in this case includes the imposition of a monetary penalty (in addition to the publication order and the additional orders relating to legal and investigative costs) in the sum of $350,000 discounted by 15% for the guilty plea to the sum of $297,500.

Orders

81. In proceedings 194209 of 2021 the Court makes the following orders:

1. The Defendant is convicted of the offence against s 120(1) of the Protection of the Environment Operations Act 1997 (NSW) (POEO Act) as charged.

2. The Defendant is fined the sum of $297,500.

3. Pursuant to s 250(1)(e) of the POEO Act, the Defendant is to pay an amount of $297,500 to the Environmental Trust established under the Environmental Trust Act 1998 (NSW) for general environmental purposes within 28 days of the date of this order.

4. Pursuant to s 250(1)(a) of the POEO Act, the Defendant must, at its expense, cause a notice in the form of Annexure A to be published within 28 days of the date of this order in:

1. The Liverpool City Champion, within the first 5 pages at a minimum size of 186 mm x 129 mm; and

2. The Sydney Morning Herald, within the general news section on pages 9 to 21 at a minimum size of 14 cm x 12 cm.

5. Within 7 days of the date of the publications referred to in the previous order, the Defendant must provide to the Prosecutor a complete copy of the page of the Liverpool City Champion and The Sydney Morning Herald on which the notice appears.

6. Pursuant to s 250(1)(b) of the POEO Act, the Defendant must, within 14 days of the date of this order, cause a notice in the form of Annexure B, at a minimum size of A4 and on the Defendant’s letterhead, to be placed in the mailboxes of all street addresses:

1. On Church Road, Swain Street and Bradshaw Avenue, Moorebank NSW 2170; and

2. On Heathcote Road, Moorebank NSW 2170 between its intersections with Swain Street and Church Road.

7. Within 7 days of the date of delivery of the notice referred to in the previous order, the Defendant must provide to the Prosecutor a copy of the final form of the notice as delivered to the specified street addresses.

8. Pursuant to s 248(1) of POEO Act, the Defendant is to pay the Prosecutor’s costs and expenses incurred during the investigation of the offence in the agreed amount of $63,496.73.

9. Pursuant to s 257B of the Criminal Procedure Act 1986 (NSW), the Defendant is to pay the Prosecutor’s legal costs as agreed or assessed.

10. The exhibits are returned. The parties are directed to make arrangements with my Associate to collect the exhibits within 14 days of the date of the making of these orders.

Annexure A

SPHERE HEALTHCARE CONVICTED AND PENALISED FOR WATER POLLUTION

Sphere Healthcare Pty Limited (Sphere Healthcare) was convicted by the Land and Environment Court of an offence of causing water pollution when ethanol descended into a stormwater drain on its premises on Church Road in Moorebank NSW on 9 and 10 July 2020. The ethanol entered the stormwater system during a major fire and reached Clinches Pond in Moorebank. Sphere Healthcare was prosecuted by the NSW Environment Protection Authority (the EPA) and pleaded guilty to the charge.

The offence caused actual harm to the environment, including the death of a large number of fish and eels, and interfered with local residents’ use and enjoyment of the area. Sphere Healthcare has expressed sincere remorse for the harm and damage caused to the area and has since conducted significant clean-up efforts pursuant to clean-up notices issued by the EPA. It is estimated that Clinches Pond will have completely recovered by July 2022.

On [date], the Court convicted and fined Sphere Healthcare in the amount of [$ insert amount], all of which is to be paid to the NSW Environmental Trust for general environmental purposes. The Court also ordered Sphere Healthcare to pay the EPA’s investigation costs and legal costs and publish this notice. The Court’s judgment may be accessed at [Insert URL for judgment on Caselaw NSW].

Annexure B

Dear resident

On [date] Sphere Healthcare Pty Ltd (Sphere Healthcare) was convicted and ordered by the Land and Environment Court of NSW to pay the Environmental Trust the sum of $[insert amount] for causing water pollution in breach of section 120 of the Protection of the Environment Operations Act 1997.

The NSW Environment Protection Authority (EPA) prosecuted Sphere Healthcare for the offence, which was committed on 9-10 July 2020 when ethanol entered a stormwater drain during a major fire at Sphere Healthcare’s premises on Church Road, Moorebank NSW 2170. The ethanol travelled downstream to Clinches Pond. Sphere Healthcare pleaded guilty to the charge.

The offence caused actual environmental harm to Clinches Pond, including the death of a large number of fish and eels, and interfered with local residents’ use and enjoyment of the area. Sphere Healthcare has expressed sincere remorse for the harm and damage caused to the area and has since conducted significant clean-up efforts pursuant to clean-up notices issued by the EPA. It is estimated that Clinches Pond will have completely recovered by July 2022.

The Court’s judgment may be accessed at [Insert URL for judgment on Caselaw NSW].

Yours sincerely

[Signature of CEO, Director or Secretary of Defendant]

**********

Decision last updated: 29 July 2022