Environment Protection Authority v The Crown in the Right of New South Wales

[2002] NSWLEC 52

Land and Environment Court

of New South Wales

CITATION:

Environment Protection Authority v The Crown in the right of New South Wales [2002] NSWLEC 52

PARTIES:

PROSECUTOR
Environment Protection Authority

DEFENDANT
The Crown in the right of New South Wales

FILE NUMBER(S):

50062 of 2000

CORAM:

Talbot J

KEY ISSUES:

Prosecution :- consideration of offence by a government agency - although in lowest range of seriousness offence not trivial - extent of foreseeability and control over the cause of the offence - relevance of Penalty Infringement Notices to antecedents of defendant

LEGISLATION CITED:

Clean Waters Act 1970
Crimes (Sentencing Procedure) Act 1999 s 10, s 10(1)(a), s 10(3)(a), s 10(3)(b), s 10(3)(c)
Protection of the Environment Operations Act 1997 s 120(2), s 241, s 241(1)(a), s 315
Public Sector Management Act 1988

CASES CITED:

Environment Protection Authority v Middle Harbour Constructions Pty Limited [2002] NSWCCA 123, unreported;
Environment Protection Authority v Orange City Council (Stein J, NSWLEC, 23 June 1995, unreported) ;
Ex parte Newman; Re Fischer and McInerny [1969] 1 NSWR 538;
R v O'Neill [1979] 2 NSWLR 582 ;
R v Thomson; R v Houlton (2000) 49 NSWLR 383

DATES OF HEARING:

17/04/2002

DATE OF JUDGMENT:

04/19/2002

LEGAL REPRESENTATIVES:

PROSECUTOR
Mr BG Docking (Barrister)
SOLICITORS
Environment Protection Authority

DEFENDANT
Mr SJ Rushton SC
SOLICITORS
National Parks and Wildlife Service

JUDGMENT:

IN THE LAND AND Matter No. 50062 of 2000
ENVIRONMENT COURT Coram: Talbot J
OF NEW SOUTH WALES Decision Date: 19 April 2002

Environment Protection Authority
Prosecutor

v
The Crown in the right of New South Wales

Defendant

REASONS FOR JUDGMENT
1. The Department of Public Works and Services (“DPWS”) and the New South Wales National Parks and Wildlife Service (“NPWS”) were established pursuant to the Public Sector Management Act 1988. The Crown is a corporation sole. The defendant in these proceedings is the State of New South Wales (“NSW”), also known as the Crown in the right of the State of New South Wales (“the Crown”).
2. By summons filed on 28 May 2001 the prosecutor alleges that the Crown between 30 May 2000 and 2 June 2000 at Perisher Valley, committed an offence against s 120(2) of the Protection of the Environment Operations Act 1997 (“the PEO Act”) in that it caused Perisher Creek, in or about the Perisher Sewerage Treatment Plant (“the STP”) to be polluted with partially treated effluent from the STP.
3. Section 315 of the PEO Act binds the NSW Crown and, in so far as the legislative power of Parliament permits, the Crown in all its other capacities.
4. It is accepted that s 315 overcomes the otherwise prevailing presumption that the Crown cannot be liable for prosecution for a criminal offence.
5. A plea of guilty was entered by the defendant on 5 October 2001. The prosecutor does not take issue with the fact that the defendant is entitled to the maximum discount of 25 per cent for the utilitarian value of the entry of a plea at the earliest reasonable opportunity ( R v Thomson; R v Houlton (2000) 49 NSWLR 383).
6. The resolution of evidentiary issues and, thus, the efficient conduct of the proceedings has been greatly assisted by the preparation of a comprehensive Statement of Agreed Facts (“SOAF”). It is not appropriate to reiterate and set out in full all of the matters dealt with by the SOAF in order to deal with the remaining issues of penalty and costs. In respect of the latter the defendant has agreed to pay the prosecutor’s costs in the sum of $30, 000.
7. It is convenient and constructive to set out such of the SOAF which identify the essential legal ingredients of the offence and the matters which the Court must take into account in order to assess an appropriate penalty.
8. The entry of the plea of guilty is an admission of the essential legal ingredients of the offence, namely that waters were polluted and the defendant caused the waters to be so polluted ( R v O’Neill [1979] 2 NSWLR 582 at 588).

The essential facts giving rise to the offence

9. As the material on which the Court must decide the outstanding issues is limited to the SOAF, the Court proposes to reiterate the more highly relevant sections of the statement to provide an understanding of the circumstances.
10. Between 1 June 1999 and 1 June 2000 NPWS was the holder of a licence under the PEO Act which contained the following conditions:-

L1.1 The licensee must not pollute waters except as expressly permitted by this licence.

L3.1 Liquid waste discharged from the following authorised discharge points must not exceed the quality limits specified for each authorised discharge point


Quality limits applicable to liquid waste discharged from ADP001

….

Parameter 80 percent limit 100 percent limit
FC (Faecal Coliforms cfu/100ml) 200 600

11. At all relevant times, the licence permitted discharge of treated effluent from the STP to Perisher Creek through one point of discharge, known as ADP001.
12. By notice dated 4 April 1997 the Environment Protection Authority (“the EPA”) required NPWS to upgrade and augment the Perisher Range Sewerage Scheme so that the quality of effluent discharged would meet the criteria applicable to sensitive waters. The EPA Discharge Standard for Sensitive Waters sets a faecal coliform of 200 cfu/100ml (90 percentile) as the limit criterion. The required augmentation works included the construction of a catch/balance pond at the STP.
13. DPWS designed to be prepared forÿÿ thea catch/balance pondÿÿ sewerage scheme upgradefor the STPÿÿ and, in March 1999, was engaged by NPWS as the project and construction managersÿÿ for the Perisher Range sewage scheme upgrade and augmentation, including the construction of the catch/balance pond.
14. On 20 August 1999, DPWS engaged Kaydo Pty Ltd (“Kaydo”) as contractor to construct the catch/balance pond and other items.
15. The design of the catch/balance pond for the STP was intended to achieve the following objectives:-

_ balance the flow of partially undisinfected treated effluent from the STP to the design capacity of an ultra violet disinfection plant (the “UV Plant”) also installed at the STP;

_ allow retention time for undisinfected treated effluent to enable the settling out of suspended material in the effluent; and

_ catch any un partially treated sewage discharged from the STP during a malfunction at the STP.
16. The The purpose of the UV Plant is to disinfect undisinfectedpartially treated effluent prior to its discharge under the licence. The UV plant consists of banks of light that irradiate effluent as it passes by in a channel. The irradiation kills pathogens.
17. The major relevant features of the design of the catch/balance pond are as follows:-
(a) construction of a temporary pond at the northern end of the existing catch pond footprint for use to catch and balance flows from the STP during the construction over the summer of 1999/2000 of the catch/balance pond;
(b) preparation of the foundation of the new catch/balance pond in the remaining area of the footprint of the old catch pond;
(c) installation of a free draining layer for the new catch/balance pond to capture natural water flows in and about the pond and direct those to Perisher Creek;
(d) installation of a clay liner on top of the free draining layer to create a watertight layer for the catch/balance pond;
(e) installation of a concrete liner on top of the clay liner to make the surface of the catch/balance pond robust enough for mechanical cleaning of sludge from the pond;
(f) The concrete liner is not designed to play a role in ensuring that the pond is watertight;
(g) various baffles to direct effluent flow in the catch/balance pond for the purposes of achieving retention time; and
(h) associated pipework to connect the catch/balance pond to the STP and the UV Plant.


18. During the winter season, the STP experiences significantly increased inflows of sewerage over short periods of time due to the operation of the Perisher Ski Resort.
19. Construction of the catch/balance pond did in factcommenced around the end of November 1999.
20. Delays were experienced in the construction of the catch/balance pond. and the pond was not complete Kaydo left the site on 26 May 2000 after being directed not to complete further work that winter. On 26 May 2000prior to the incident the subject of this statement of facts. the works listed in (a) – (d) above were complete. The remainder of the contract works were incomplete.
21. Between 26 May and 31 May 2000 representatives of NPWS and DPWS installed a temporary pipe to bring the catch/balance pond on line for the winter season. The pipe was installed between the temporary catch/balance pond and the new catch/balance pond to enable the new catch/balance pond to be used in conjunction with the STP. The installation of the pipe was completed on 31 May 2000.
22. Neither a high density poly ethylene (“HDPE”) membrane nor geofabric liner was placed on the clay filled pond during the period between 24 May 2000 and date of the incident which occurred overnight between 31 May and 1 June 2000. A geofabric liner was available on-site whereas a waterproof HDPE could have been ordered on approximately one weeks notice.
23. DPWS believes that the contractor had installed the designed impermeable clay liner and there was no utility in installing an HDPE liner to undertake the same function.
24. Prior to the installation of the temporary pipe used to fill the pond, the clay liner of the catch/balance pond was not tested for its watertightness. The contract with Kaydo had required that, on completion of all construction work on the pond, a watertightness test be carried out by filling the catch/balance pond with water and observing that water over a seven day period. NPWS and DPWS knew that this was not done prior to Kaydo leaving the site.


25. It is usual construction practice to test a pond of the nature of the catch/balance pond for its watertightness prior to placing it into operation.

26. Prior to the incident, testing of the pond using sources other than treated non-pollutedeffluent would not have taken more than three to five days approximately two weeks to complete. Identification as to whether there was a significant source of leakagelarge hole existing in the catch/balance pond would have been likely to have taken significantly less time.

27. Prior to 31 May 2000 NPWS was verbally advised by geotechnical consultants, Woodward-Clyde, that the material for the clay lining was suitable for its purpose.
28. Prior to 31 May 2000 DPWS was aware that Kaydo had caused compaction tests to be carried out on parts of the clay liner to test for the achieved degree of clay compaction in the clay liner. Kaydo had informed DPWS and NPWS that tests of the level of compaction of the clay lining were “looking good”.
29. NPWS and DPWS did not consider that the new catch/balance pond was likely to fail.
30. It was considered by DPWS and NPWS that a pending increase in population created a high risk of pollution to Perisher Creek in that prior to 1 June 2000 the temporary catch/balance pond was operating near its capacity and, if flows increased, would be unable to continue to balance flow to the UV unit or to catch any sludge carryover in the event of a STP malfunction.
31. If the temporary catch/balance pond had failed to balance flows to the UV unit or to catch any carryover, undisinfected treated effluent would have discharged into Perisher Creek. If the temporary catch/balance pond was required to catch any carryover due to a plant malfunction, partially treated effluent would have discharged into Perisher Creek.
32. Prior to commissioning the pond, other options such as temporarily closing one or all of the relevant ski resorts and/or tankering out effluent were considered by NPWS and DPWS. These options were discarded on the basis that they were not real possibilities, being logistically impossible and/or grossly inappropriate having regard to the impact of such a decision and the perceived risk. The decision to commission the catch/balance pond was ultimately made having regard to the view that the pond was unlikely to leak and the competing risks of environmental harm.
33. After completing the interconnecting pipe work NPWS officers manually decanted the undisinfected treated effluent from a treatment tank at the STP into the temporary catch/balance pond. At the time the temporary catch/balance pond was empty. All effluent in it had been pumped back into the sewage treatment plant so that the interconnecting pipe work could be installed. Scott Dicker, an employee of NPWS at the time who was previously the Superintendent’s Phosphorous Representative on the Construction Contract, estimated that the amount of effluent that would have flowed into the pond at this time was, at most, two inches in height across the area of the pond above the 0.5 of a metre of snow. He thereupon directed that the STP be placed on automatic decant so that automatic decants of undisinfected treated effluent from the STP would be directed to the temporary pond and then into the catch/balance pond.
34. STP records show that approximately 120-135 kilolitres of partially treated effluent was caused to be placed into the catch/balance pond at about 3:22am on the morning of 1 June 2000 as a result of an automatic decant occurring from the STP.
35. All of the effluent caused to be placed in the pond on 31 May and 1 June 2000 was effluent that had not received UV disinfection and was likely to have contained elevated levels of faecal coliforms.
36. The undisinfected treated effluent that was placed into the catch/balance pond on the evening of 31 May – 1 June 2000 escaped from the pond and would have flowed through the drainage blanket beneath the pond to Perisher Creek via the deep drainage trench.
37. The effluent that was discharged would have entered the creek otherwise than via the authorised discharge point for the STP.
38. It is agreed that between 100 kilolitres and 104 kilolitres of partially treated effluent leaked from the pond during the evening of 31 May - 1 June 2000.
39. There is no conclusive evidence as to the precise manner in which the undisinfected partially treated effluent escaped from the catch/balance pond on the evening of 31 May and the morning of 1 June 2000.
40. No holes or scars were observed in the clay liner on or after 1 June 2000.
41. The evidence supports a number of possible pathways by which the leakage may haveof occurred, namely:
(a) infiltration of it into and through the whole of the clay liner;
(b) infiltration of it through the clay liner in the north west corner, possibly in or about a sump (a hole created for drainage purposes during construction which is backfilled with compacted clay prior to completion);
(c) infiltration of it through the clay liner in or near the buried horizontal pipe from MH1 (also in the north west corner area);; or
(d) infiltration of it through an eroded hole in the clay lining caused by the filling of the pond with partially treated effluent from the temporary inlet line in the north western corner of the pond; or
(e) infiltration of it through the clay liner in or about the join between the clay lining and the where it was penetratedion of by the pipe from manhole MH2.

Application of s 10 Crimes (Sentencing Procedure) Act 1999

42. Mr Rushton SC, appearing for the defendant, contends that the seriousness of the offence must be regarded as being at the lowest end of the scale. It is his contention that s 10 of the Crimes (Sentencing Procedure) Act 1999 is designed to address just that circumstance.
43. Section 10(3)(a) requires the Court to have regard to the character, antecedents, age, health and mental condition of the defendant. Having regard to the nature of the entity before the Court, it is difficult to have regard to this criteria except in respect of antecedents. There is evidence that penalty infringement notices have been issued to NPWS in respect of the operation of the Perisher Range STP.
44. A penalty infringement notice was issued on the 21 August 2001. The only particulars the Court has are those contained in a summary document tended by the prosecutor and accepted as an exhibit without objection by the defendant. The summary states that NPWS failed to meet sensitive waters criteria by a set date as required by conditions of the licence.
45. A further four penalty infringement notices were issued on 4 April 1997. These are referred to as responses to a series of separate incidents regarding breaches of the Clean Waters Act 1970 on 12 October 1996, 20 September 1996, 30 July 1996 and 28 July 1996. Three of the incidents involved the discharge of untreated sewerage into Perisher Creek together with partially treated effluent on two of those occasions. The fourth event on 30 July 1996 related to discharge of sewerage sludge in Perisher Creek.
46. In Ex parte Newman; Re Fischer and McInerny [1969] 1 NSWR 538, the Court of Appeal rejected a submission that the payment of a penalty pursuant to infringement notices involved no admission of being guilty of the offence in question. At p 539 Jacobs JA expressed an opinion that where the recipient of the notice does not deny the commission of the offence as alleged then the conduct is capable of being regarded as an admission of guilt. Thus, the payment of a penalty in answer to such an allegation can be construed as an admission of guilt, whatever the motives may be for making for that admission.
47. In the present case the Court is not assisted by evidence of the response by NPWS to the issue of the penalty infringement notices. Accordingly, the Court cannot reach any conclusion other than that the commission of the offence in each case was not denied.
48. For the purposes of s 10(3)(a) the Court is entitled to take account of the record, such as is disclosed by the evidence, as part of the antecedents of the defendant.
49. Pursuant to s 10(3)(b) Mr Rushton does not make the general submission that the offence alleged against the defendant should be treated as trivial. Rather, as mentioned above, he submits that the seriousness of the offence is to be regarded at the lowest end of the scale. Nevertheless, he makes the submission for the purposes of s 10(3)(b) that, given the defendant was in the difficult position of either continuing to rely on the capacity of the temporary pond or to proceed with the commissioning of the new pond before final testing was complete, in that context the offence can be regarded as trivial. The Court is not persuaded that the circumstance in which the defendant found itself was such that the commission of the offence can be regarded as trivial in the sense of being trifling or unimportant. The circumstances leading up to the actual period when the offence occurred are relevant. In this regard the Court has not been satisfied that the planning for the completion of the works prior to the commencement of the winter season was sufficient.
50. Although the Court has concentrated on the submission made in relation to the trivial nature of the offence, the same reasoning is to be applied when the Court has regard to the extenuating circumstances in which the offence was permitted, as prescribed by s 10(3)(c).
51. For all of the above reasons it is not, in the Court’s view, an appropriate case for the Court to dismiss the charge pursuant to s 10(1)(a).

Other matters to be considered

52. Firstly, it must be said that the two letters placed before the Court, one from the Director-General of NSW DPWS and the other from the Director-General of NSW NPWS, leave the Court in no doubt that the representatives of the defendant deeply regret what occurred. The Director-Generals’, however, both emphasise that there was a concern of imminent failure of the capacity of the temporary pond and that prospect had to be balanced in the light of the time constraints and a consideration of the risks involved when the decision was made to commission the new pond before it had been fully tested. Obviously, reliance was placed upon an assumption that the new pond had been completed to a stage where it should have been watertight. The authorities were not prepared to take the risk of failure of the temporary pond during a testing period which could have occurred over two weeks. Although the expressions of regret are tempered by the explanations offered, they are nevertheless clear evidence of contrition on the part of the defendant.

53. There is no question that the defendant, through its representatives, has co-operated to the fullest extent with the prosecutor, not only in relation to its inquiries but also in relation to the implementation of remediation action.
54. The matters identified by s 241 of the PEO Act, in so far as they are relevant, must be taken into consideration by the Court in imposing a penalty for the offence.
55. The prosecutor emphases upon the sensitivity of the waters in Perisher Creek and the locality generally, being within the Kosciusko National Park. Even though there is no concise explanation of how or where the discharge occurred, it is nevertheless conceded by the defendant that the partially treated effluent would have found its way into Perisher Creek and ultimately the Snowy River. There is no evidence of any person suffering actual harm.
56. Although the controls imposed by the licence are expressed as a measure of faecal coliforms cfu/100ml, the Court has the benefit of an opinion provided to the defendant by Associate Professor Ashbolt, who explains that faceal coliforms are not pathogens but simply indicators of possible faecal contamination. It is the actual pathogens present, not faecal coliforms, that may cause environmental harm. There is no evidence of the extent of pathogens reaching Perisher Creek. Professor Ashbolt explains that unless people are ingesting contaminated creek water, human enteric viruses, which may have persisted and be present in the river for a considerable distance downstream of the discharge point, would be of negligible environmental consequence given their dilution and the general environmental sequestering within the creek/Snowy River hydroelectric scheme environment.
57. In any event, given the state of the evidence, the Court cannot be satisfied beyond reasonable doubt that any pathogens entered the water. However, the extent of the harm likely to be caused by operating the STP in circumstances where the effluent was not effectively retained until final treatment had been completed must be regarded as significant notwithstanding the potential for dilution and the unlikely prospect of direct exposure to humans given the seasonal conditions. There is no evidence that the pollution of the waters persisted for any significant period of time. Accordingly, the actual or likely extent of harm as the result of the defendant’s actions in the circumstances is to be regarded as being in the very lowest range of seriousness for the purposes of s 241(1)(a) of the PEO Act.
58. Although the Court does not accept that it would have been reasonable to expect the defendant to install a protective liner, it nevertheless is reasonable to expect that some manner of testing or verification of the impermeablity of the installed clay liner should have been carried out before the new pond was commissioned. The Court appreciates the dilemma in which the defendant’s agencies were placed in the period immediately leading up to the incident which gave rise to the offence. However, questions remain as to how it was that the completion of the works was still extant so far beyond the date originally proposed for completion. Without pausing to identify how the difficulty may have been resolved, it is the fact that the clay liner failed at a time when full testing had not been undertaken. The dilemma which required a choice between two unsatisfactory solutions does not necessarily provide the basis for vindication when the chosen course fails.
59. The Court nevertheless accepts the submission made by Mr Rushton that the decision to commission the new pond is to considered in the light of the prospect of the alternative available at the time, namely that the defendant rely solely upon the temporary pond in respect of which there would have been a high prospect of failure.
60. In regard to the issue of whether the harm caused or likely to be caused to the environment by the commission of the event could have been reasonably foreseen, the defendant makes the submission that it was entitled to rely on the belief that the contractor had installed the clay liner in accordance with the specification. It is not suggested that the design was not suitable. Visual inspection by various officers of the defendant revealed nothing which would suggest the clay liner would leak. The defendant has been assured that the compaction results were satisfactory. Assuming that the defendant was entitled to rely upon the contractor, the efficacy of the design and the integrity of the works, then it may not have foreseen the prospect of leakage and a consequent discharge to Perisher Creek. However, the prospect of the escape of effluent from any STP plant is generally foreseeable and needs to be taken into account. For the reasons outlined above, the Court cannot be satisfied that the defendant had taken all of the opportunities available to it to overcome the prospect of the foreseeable harm to the waters of Perisher Creek and beyond.
61. There can be no question that the defendant had effective control over the site and the operation of the STP. The defendant’s control over the installation, compaction and compliance with the design of the clay liner was constrained to the extent that it was dependant upon the efficiency and integrity of its contractor. Its control over the circumstances that gave rise to the offence was in respect of the final determination to go ahead and commission the new pond without testing the watertightness of the clay liner.

Penalty

62. I note that my reservation about using the characterisation of an offence by reference to the percentage scale discussed by Stein J in Environment Protection Authority v Orange City Council (Stein J, NSWLEC, 23 June 1995, unreported) as prescriptive is now supported by the Court or Criminal Appeal ( Environment Protection Authority v Middle Harbour Constructions Pty Limited [2002] NSWCCA 123, unreported, per Beazley JA at 15).
63. It is imperative for the Court to take account of the serious nature of the offence characterised by the significant maximum penalty imposed by the legislation in the sum of $250, 000.
64. In a sense, there may be a perception of a heightened responsibility imposed upon a government authority to have serious regard to its responsibilities in respect of preventing harm to the environment. It is important for the Court to bear in mind that a penalty should reflect a consideration of the general deterrence against offences which involve harm or potential harm to the environment. Although there is some record of previous difficulties in relation to the operation of the STP at Perisher, the Court does not place a high significance on the element of personal deterrence in respect of this defendant. On balance, any question or suggestion of a heightened responsibility of a Crown agency can be weighed against the reduced likelihood of the Crown re-offending.
65. Having regard to the whole of the circumstances and after allowing a discount to the fullest extent recommended by the Court of Criminal Appeal in Thomson, the Court is of the opinion that a penalty in the lowest range is appropriate. It is, therefore, proposed that the defendant be convicted and be ordered to pay a penalty in the sum of $20, 000.

Orders

66. The Court makes the following formal orders:-
(1) The defendant is convicted of the charge in the summons.
(2) The defendant is ordered to pay a fine in the sum of $20, 000.
(3) The Court notes the agreement by the defendant to pay the prosecutor’s costs in the sum of $30, 000.
(4) The exhibits may be returned.