Environment Protection Authority v Werris Creek Coal Pty Ltd; Environment Protection Authority v Holley - [2009] NSWLEC 124

No judgment structure available for this case.

Land and Environment Court

of New South Wales

CITATION: Environment Protection Authority v Werris Creek Coal Pty Ltd; Environment Protection Authority v Holley [2009] NSWLEC 124

PARTIES:
50042 of 2008
Environment Protection Authority (Prosecutor)
Werris Creek Coal Pty Ltd (Defendant)
50043 of 2008
Environment Protection Authority (Prosecutor)
Graham Robert Holley (Defendant)

FILE NUMBER(S): 50042 & 50043 of 2008

CORAM: Lloyd J

KEY ISSUES:
ENVIRONMENTAL OFFENCES :- penalty - breach of environment protection licence - concentration of total suspended solids at monitoring point in excess of licence requirement - delegation to contractor - contractor acting contrary to instruction - appropriate penalty for defendant company - no conviction for defendant director - relevant considerations - minor environmental harm - low culpability - general deterrence - discount for guilty plea entered after first opportunity - meaning of the first opportunity
PRACTICE AND PROCEDURE: - excessive citation of authorities

LEGISLATION CITED: Crimes (Sentencing Procedure) Act 1999 s 3A, s 10, s 21A
Protection of the Environment Operations Act 1997 s 64(1), s 169, s 241, s 250(1)

CASES CITED: Cabonne Shire Council v Environment Protection Authority [2001] NSWCCA 280; (2001) 115 LGERA 304
Cameron v Eurobodalla Shire Council [2006] NSWLEC 47; (2006) 146 LGERA 349
Cameron v R [2002] HCA 6; (2002) 209 CLR 339
Camilleri’s Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683
Environment Protection Authority v Ballina Shire Council [2006] NSWLEC 289; (2006) 148 LGERA 278
Environment Protection Authority v Baiada Poultry Pty Ltd [2008] NSWLEC 280; (2008) 163 LGERA 71
Environment Protection Authority v Bluescope Steel (AIS) Pty Ltd [2004] NSWLEC 400
Environment Protection Authority v Caltex Refineries (NSW) Pty Ltd [2008] NSWLEC 194
Environment Protection Authority v Delta Electricity [2009] NSWLEC 11
Environment Protection Authority v Lithgow City Council [2007] NSWLEC 695
Environment Protection Authority v Lithgow Coal Company Pty Ltd [2003] NSWLEC 430
Environment Protection Authority v Metalcorp Recyclers Pty Ltd [2000] NSWLEC 259
Environment Protection Authority v Metalcorp Recyclers Pty Ltd [2001] NSWLEC 253
Environment Protection Authority v Metalcorp Recyclers Pty Ltd [2004] NSWLEC 14; (2004) 136 LGERA 125
Environment Protection Authority v Sell and Parker Pty Ltd [2006] NSWLEC 626; (2006) 149 LGERA 209
Gittany Constructions Pty Ltd v Sutherland Shire Council [2006] NSWLEC 242; (2006) 145 LGERA 189
Gosford City Council v Australian Panel Products Pty Ltd [2009] NSWLEC 77
Markarian v R [2005] HCA 25; (2005) 228 CLR 357
Murray Irrigation Ltd v ICW Pty Ltd [2006] NSWLEC 23
R v Borkowski [2009] NSWCCA 102
R v Joseph Sukkar [2006] NSWCCA 92
R v Peel [1971] 1 NSWLR 247
R v Rushby [1977] 1 NSWLR 594
R v Thomson; R v Houlton [2000] NSWCCA 309; (2000) 49 NSWLR 383
State Pollution Control Commission v White Wings Pty Ltd (Land and Environment Court, 1 November 1991, unreported)
Sullivan v R; Skillin v R [2008] NSWCCA 296
SZ v R [2007] NSWCCA 19
Thorneloe v Filipowski [2001] NSWCCA 213; (2001) 52 NSWLR 60
Walden v Hensler (1987) 163 CLR 561

DATES OF HEARING: 1 June 2009 & 2 June 2009

DATE OF JUDGMENT:
31 July 2009

LEGAL REPRESENTATIVES:
Prosecutor:
A M Pickles (barrister)
Solicitor:
Gordon Plath, Department of Environment and Climate Change
50042 of 2008
Defendant:
A Djemal (barrister)
Solicitors:
McCullough Robertson
50043 of 2008
Defendant:
T G Howard (barrister)
Solicitor:
Michael P Hallett

JUDGMENT:

- 49 -

IN THE LAND AND
THE LAND AND
ENVIRONMENT COURT
OF NEW SOUTH WALES

Lloyd J

Friday, 31 July 2009

ENVIRONMENT PROTECTION AUTHORITY v WERRIS CREEK COAL PTY LTD; ENVIRONMENT PROTECTION AUTHORITY v HOLLEY [2009] NSWLEC 124

JUDGMENT

1 HIS HONOUR: The offences being considered in the present case are against s 64(1) of the Protection of the Environment Operations Act 1997 (”the POEO Act”). An offence against s 64(1) is a status offence. If a condition of an environment protection licence is contravened, the holder of the licence is guilty of an offence, regardless of who contravened the condition and why and how it was contravened. The legislature has deliberately given the section a broad ambit, a measure which, no doubt, has been brought home to Werris Creek Coal Pty Ltd and Mr Graham Holley, the defendants in the present proceedings.

2 Werris Creek Coal owned an open cut coal mine near Tamworth and was the holder of an environment protection licence under the POEO Act at all relevant times. Mr Holley was a director of Werris Creek Coal at all relevant times. On 16 July 2007 and 17 July 2007, the concentration of total suspended solids at a monitoring point being a dam on the mine site was higher than that required by Werris Creek Coal’s environment protection licence and, as a consequence, both defendants have pleaded guilty to offences against s 64(1) of the POEO Act. The primary cause of the breach, outlined further below, was an act of a Mr Barry Hauritz, an employee of John Marshall Pty Ltd, a mining contractor whom Werris Creek Coal had retained to conduct mining operations at the mine. The act in question was done contrary to instructions.

Water management at the mine

3 The site water management plan divides runoff into “clean” water and “dirty” water, with dirty water consisting of surface runoff from disturbed catchments, and clean water consisting of surface runoff from rehabilitated catchments and catchments that have not been disturbed by mining or related activities.

4 The water management structures and drainage controls on the site segregate the clean and dirty water. Clean water is diverted away from areas of disturbance via constructed diversion banks and held in “storage dams”. Dirty water is captured by catch banks, which divert the water to “sediment basins”.

5 There was also another structure on the mining site called the “pit dewatering dam”. The water in this dam was sourced directly from the open cut mining void. The pit dewatering dam was a temporary structure and, at the time of the offence, a replacement pit dewatering dam was in the process of being constructed in a different location.

6 A modification to the wall of the pit dewatering dam caused a breach of the environment protection licence. The modification caused water to flow out of the pit dewatering dam, which resulted in the below two dams overflowing. The first mining dam downstream was a sediment basin known as “sediment basin 3”, and the second mining dam downstream was a storage dam known as “storage dam 7”. Storage dam 7 was located about 110 metres from the mining site boundary, so most of the water discharged from that dam flowed onto neighbouring land and beyond.

Corporate relationships and obligations at the mine

7 At all relevant times, as noted above in par [2], Werris Creek Coal was the holder of the environment protection licence. However, the responsibility for the operation of the mine, and, relevantly, the responsibility for the pit dewatering dam, was held by a contractor. The contractor, John Marshall Pty Ltd, was operating under the terms of a written contract entered between Werris Creek Coal and a company that had been taken over by John Marshall Pty Ltd. Although John Marshall Pty Ltd was not a party to the agreement, it is not disputed that, as the contractor at the mining site, it was subject to its terms.

8 Schedule 6 of the contract provided a table detailing who had responsibility for core activities at the mining site. As mentioned above, the contractor was responsible for “pit dewatering – management”. Werris Creek Coal, on the other hand, was allocated responsibility for “water monitoring”, “EPA [Environment Protection Authority] approval and EPA Licences”, “pit dewatering – supply pumps/pipes”, “mine dirty water reticulation”, “surface sedimentation ponds”, “water reticulation” and “discharge rules”.

9 The relevant terms of the contract may be summarised as follows:

(a) the contractor had responsibility for water run off control and management and, as mentioned above, for dewatering the pit dewatering dam, and construction of a replacement pit dewatering dam;

(b) the contractor was required to comply with all applicable environmental, health and safety legislation and the environment protection licence;

(c) it was the contractor’s sole responsibility to ensure compliance with the environment protection licence when conducting work pursuant to the contract;

(d) the contractor was required to carry out all of the work under the contract in a good and workman like manner and with diligence, skill, care and competence;

(e) the contractor acknowledged that Werris Creek Coal was relying on its skill, knowledge and judgement;

(f) the contractor was required to adequately supervise the execution of the work under the contract;

(g) the contractor was required to perform the work under the contract in co-operation with Werris Creek Coal’s personnel, and in accordance with any oral or written direction of Werris Creek Coal’s representative under the contract, Mr Holley;

(h) the contractor’s personnel were required to be inducted in accordance with the site environmental management plan; and

10 The contractor also had responsibilities under the Coal Mine Health and Safety Regulation 2006, namely, responsibility for supervision of people on the mine site and responsibility for site induction of the contractor’s employees.

11 By combined effect of the contract and the Coal Mine Health and Safety Regulation, the pit dewatering dam was in a restricted area. This meant that Mr Holley, and all other Werris Creek Coal personnel, were not permitted to enter that area unless they were accompanied by an employee of the contractor.

12 It is also important to consider the role played by Mr Holley in the mining operation. Section 169(1) of the POEO Act provides as follows:

“(1) If a corporation contravenes, whether by act or omission, any provision of this Act or the regulations, each person who is a director of the corporation or who is concerned in the management of the corporation is taken to have contravened the same provision, unless the person satisfies the court that:

(a) (Repealed)

(b) the person was not in a position to influence the conduct of the corporation in relation to its contravention of the provision, or

(c) the person, if in such a position, used all due diligence to prevent the contravention by the corporation.”

13 As well as being a director, Mr Holley was a secretary of Werris Creek Coal at all relevant times. Mr Holley was also listed as Werris Creek Coal’s representative under the written contract referred to above. In this role, Mr Holley liaised with the contractor’s management and was on site almost daily from Monday to Saturday.

The authorisation

13 An important fact to consider is an authorisation given by Mr Holley to a representative of the contractor. The production supervisor employed by the contractor, Mr Jonathon Date, spoke to Mr Holley a few days before Thursday 12 July 2007. Mr Holley asked Mr Date about the progress of the new pit dewatering dam. In response, Mr Date said that it was not progressing well due to the extremely hard digging and that it would take longer than expected. Mr Date then said words to the effect: “hopefully the water in the current pit dewatering dam will not be a problem”.

14 In response, Mr Holley authorised Mr Date to siphon water out of the pit dewatering dam if required, by putting poly pipe over the bank. Mr Holley went on to say that the water in the dams below would catch the water if it got that far. Mr Peter Easey, who was the coal processing manager employed by Werris Creek Coal, confirmed this authorisation to Mr Date on Thursday 12 July 2007.

15 According to Mr Holley, there was no need for the water in the pit dewatering dam to be released immediately or even in the short term. This is supported by the expert evidence, which indicates that the pit dewatering dam was not full and had two metres of freeboard on the front dam wall.

16 The plan, it seems, was to gradually lower the level of the water in the pit dewatering dam so the structure could dry out prior to it being decommissioned. Mr Holley says he made the authorisation in the belief that: (i) the process of siphoning the water would be gradual; (ii) that this gradual process would allow him and the contractors to keep any eye on the dams below; (iii) that much of the water released by siphoning would be absorbed in the soil or would evaporate; (iv) that the process of siphoning would be easy to stop if the need arose; and (v) that the water would be captured in the dams downstream if it got that far.

17 As to the downstream dams, the expert evidence indicates that sediment basin 4 and storage dam 7 were likely to have been overflowing around two weeks earlier, due to a rainfall event on 27 June 2007. Mr Holley says that he was aware of this, but was sure that the first dam downstream, sediment basin 4, had some capacity at the time of the authorisation. He did not check the second dam downstream, storage dam 7, before making the authorisation. However, he assumed that it was not full because it did not fill up unless sediment basin 4 was full.

The instruction

18 As a result of the authorisation, on the morning of Friday, 13 July 2007, Mr Barry Hauritz, the safety manager employed by the contractor, informed Mr Date and Mr Latcham, the project manager for the contractor, that he would do the job. At about 5 pm, Mr Hauritz was instructed to siphon the water out of the pit dewatering dam using a section of poly piping of about 100 millimetres in diameter and approximately 40 metres in length. Mr Hauritz indicated that “he would have a look at it tomorrow”.

The failure to follow the instruction

19 At about 10:20 am on Saturday, 14 July 2007, Mr Hauritz, after inspecting the pit dewatering dam, decided that it would be a waste of time and difficult to siphon water out of the dam, in the belief that the siphon would bury itself in silt on one side of the wall. Instead of siphoning the water as instructed, Mr Hauritz used a small excavator to make an opening in the dam wall, the width of the excavator bucket and about one metre deep. Mr Hauritz left the Werris Creek Coal site at about 2:35 pm.

20 The water from the pit dewatering dam began to trickle out of the dam some time around 11:00 am. Around 8.4 megalitres of water proceeded to flow through to the dams below.

21 As noted above, the water from the pit dewatering dam caused sediment basin 3 and storage dam 7 to overflow. Water then proceeded to flow over the mining site boundary and into neighbouring farmland. After travelling over Wadwells Lane causeway and through Paynes Road culvert, the water first entered Quipolly Creek, which is about 3.5 kilometres from the mine site boundary, at about 4:45 pm on Saturday, 14 July 2008.

22 The breach in the dam wall was discovered by the contractor on Monday, 16 July at 6:00 am. It was repaired at about 9:00 am on that day.

23 Mr Holley was working on the Werris Creek Coal premises on Saturday, 14 July 2007 until about 4 pm. However, he was working on the rail line, an area of some distance from the pit dewatering dam, and was not aware of the breach in the dam wall. Mr Holley did not become aware of the breach until midmorning on Monday, 16 July 2007 when he next arrived at the site.

The breach of the licence condition

24 Section 64(1) of the POEO Act provides:

“If any condition of a licence is contravened by any person, each holder of the licence is guilty of an offence.”

25 It is not in dispute that Werris Creek Coal held at all relevant times Environment Protection Licence No. 12290 issued pursuant to s 55 of the POEO Act. Condition L3.1 of the licence provides:

“For each monitoring/discharge point or utilisation area specified in the table/s below (by a point number), the concentration of a pollutant discharged at that point, or applied to that area, must not exceed the concentration limits specified for that pollutant in the table.”

26 The table referred to in this condition provides that the maximum concentration level of total suspended solids for water discharged from storage dam 7 is 50 mg/L.

27 Measurements taken prior to the date of the offence indicate that water discharged from the pit dewatering dam generally had a total suspended solids concentration of between 11 mg/L and 28 mg/L. The expert evidence states that on the date of the offence, consistently with these prior measurements, the water in the pit dewatering dam had a total suspended solids concentration of less than 30 mg/L. The concentration of total suspended solids, however, increased after the water left the dewatering dam. The experts agreed that this probably occurred as the front wall of the dam was eroded and as the water flowed down a channel towards the first dam, sediment basin 3 and beyond.

28 There is no evidence before the Court of total suspended solids concentrations in sediment dam 7 on either Saturday, 14 July 2007 or Sunday, 15 July 2007. I note, however, that these measurements do not relate to the dates of the offence.

29 As mentioned above, the dates of the offence were Monday, 16 July 2007 and Tuesday, 17 July 2007. On these dates, there were four measurements taken of the total suspended solids, with each measurement exceeding 50 mg/L. The measurements were as follows:

(a) 68 mg/L at 12:45 pm on Monday, 16 July 2007;
(b) 143 mg/L at 2:00 pm on Tuesday, 17 July 2007;
(c) 52 mg/L at 2:30 pm on Tuesday, 17 July 2007; and
(d) 110 mg/L at 4:40 pm on Tuesday, 17 July 2007.

Relevant considerations under the Protection of the Environment Operations Act 1997

30 Section 241(1) of the POEO Act provides that in imposing a penalty for an offence against this Act, the court is to take into consideration the following:

“(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,

Environmental harm

31 The report of the joint experts has classified the effect of the discharge as “minor, but not zero”.

32 The flow regime caused by the discharge was not the same as the flow regime that would occur during a storm event. The discharge water would also have had slightly different chemical characteristics than natural runoff water. Of the 8.4 megalitres discharged, between 0.3 megalitres and 1.2 megalitres of the discharge water flowed into Quipolly Creek, with the remainder of the water captured in sediment basin 3, sediment basin 7, farm dams, and flat areas and depressions along the water course.

33 There was no rainfall in the Quipolly Creek catchment between 16 July 2007 and 25 July 2007, and hence the effects of the discharge were not compounded by further runoff.

34 In relation to the impact on the ecosystems of the creek, the joint experts concluded that: (i) the discharge would have caused a minor perturbation to the ecosystems for a period of up to one week; (ii) the length of Quipolly Creek impacted would be approximately 60 to 300 metres; (iii) the discharge with respect to turbidity was no greater than the impacts from rain events that occur several times each year; (iv) the discharge with respect to suspended solids was no greater and possibly less than the impacts from rain events that occur several times each year; (v) the extra turbidity and suspended solids from the discharge would add a minor impact on the ecosystems compared to an average year; and (iv) there would be impacts in the Quipolly Creek ecosystems due to slightly higher salinity in the discharge water, compared to the salinity in the natural runoff water.

35 There were only two measurements of total suspended solids taken at Quipolly Creek. These measurements, both taken on Tuesday, 17 July 2007, showed concentrations of 7 mg/L and 4 mg/L. All of the other samples of water collected in the area outside the mining site boundary on 16, 17 and 18 July 2007 had total suspended solids concentrations of less than 50 mg/L, with the highest concentration being 38 mg/L, measured at the Pains Road culvert on Monday, 16 July 2007 at 4:40 pm.

36 All of the neighbouring farmers were contacted about the discharge and only one farmer expressed concerns. This concern related to the effects on the stock that were drinking the discharged water. In my view, Werris Creek Coal made all reasonable efforts to work to address these concerns, and in any event, the report of the joint experts discloses that the discharge would not have caused any adverse impact for stock or humans, and there is no evidence before me of any adverse impacts. There is also no evidence of any complaints from surrounding farmers with respect to the amenity of the discharge. One of the neighbouring farmers was actually pleased with the discharge because he believed it improved the wellbeing of his stock.

37 Mr A M Pickles, appearing for the prosecutor, submits that in consideration of the harm “likely to be caused to the environment by the commission of the offence” under s 241(1)(a) of the POEO Act, the Court should also consider that the potential for harm was significant in that the breach of the licence condition would result in pollution of waters. However, I decline to follow this submission on the basis that there is simply no evidence before the Court indicating that there was any further potential for harm, or the nature of that potential harm. I note that a similar finding was made by Preston J (Chief Judge of the Land and Environment Court) in Environment Protection Authority v Baiada Poultry Pty Ltd [2008] NSWLEC 280; (2008) 163 LGERA 71 at 75 [13].

38 Mr Pickles also submits that it should not be any excuse that from time to time the waters of Quipolly Creek contain a high concentration of suspended solids due to rainfall. In support, Mr Pickles cites State Pollution Control Commission v White Wings Pty Ltd (Land and Environment Court, 1 November 1991, unreported). In that case, the expert retained by the defendant indicated that the creek in question was severely degraded and that the effect of the water pollution on aquatic life was similar to the consequences of an ordinary urban stormwater event. Bignold J said that a defendant is not to be given any advantage by way of mitigation if they pollute a waterway which is already in a degraded state.

39 I note, however, that in the present case, unlike White Wings, there is no expert evidence to suggest that Quipolly Creek could be classified as “degraded” before or after a natural runoff event. Nor is there evidence of the harm, if any, caused to aquatic life by the event in question or a natural runoff event. In the absence of such evidence, I can do no more than accept the analysis and conclusion provided by the joint experts. The fact remains that the joint expert’s report has classified the harm as “minor but not zero” and this is my primary consideration. The experts have clearly come to this conclusion after considering the pre-existing state of Quipolly Creek, the weather conditions effecting Quipolly Creek, and any consequent runoff events. I decline to interfere with their approach.

Suggested practical measures – Mr Holley

40 Mr Pickles submits that there were a number of practical measures which could have been taken by Mr Holley in order to prevent, control or mitigate the harm:

(a) Mr Holley failed to properly investigate the level of water in sediment basin 3 and storage dam 7. According to the joint experts, these dams were likely to have been overflowing around two weeks earlier, due to a rainfall event on 27 June 2007.

(b) Mr Holley should have either ensured that someone was “keeping an eye” on the downstream dams or “kept any eye” on the downstream dams himself. Mr Holley was aware that the siphoning may commence at any time after Friday, 13 July 2007, but he did not make any enquiries as to when it would commence. Mr Holley’s reliance on the contractor’s personnel, who he believed would inform him when they commenced the siphoning, was clearly insufficient.

(c) Mr Holley should have outlined the importance of releasing only small quantities of water. He should also have given specific instructions not to reduce the water levels in the dam by any means other than siphoning or by a means that might result in a breach of the licence condition. This would have reduced the temptation on the part of the contractor to achieve the desired result of lowering the dam level by the means chosen.

(d) Mr Holley should have ensured that a “float” was provided with the poly pipe, because it would have alleviated the concerns of Mr Hauritz, outlined in par [19] above, that the poly pipe would be stuck in the silt in the pit dewatering dam.

Evaluation of suggested practical measures – Mr Holley

41 With the exception of the measure specified in par [40](a) above, I accept that these are all measures which could have possibly prevented, controlled or mitigated the harm. As to par [40](a), Mr Holley had sound knowledge of the amount of water in sediment basin 3. Mr Holley knew for certain that there was capacity because he had visited the dam regularly in the weeks leading up to the offence, and because after the overflow event on 27 June 2007, a significant amount of water had been used from that dam to water newly planted trees on the mining site. Mr Holley admits that he did not know the level of water in storage dam 7, but assumed that it was not full because it did not fill unless sediment basin 3 was full. The evidence makes clear that Mr Holley had an intimate knowledge of the mining site, and in my view, even though Mr Holley did not inspect sediment dam 7, his judgement on the level of water in that dam was well grounded.

42 Although the measures suggested by Mr Pickles could potentially have prevented, controlled or mitigated the harm, in my view, it is also important to consider whether or not they were practical measures.

43 As to par [40](b), it would not in my opinion have been practical for Mr Holley to have been “keeping an eye” on the discharge over the course of the weekend. Mr Holley gave evidence that he had not “kept an eye” on the dam or arranged for someone to do so because he believed that he would have been informed by the contractor if the water was being released. I accept that it was not practical to do otherwise in circumstances where he was unable to go onto the mining site in the absence of Werris Creek Coal personnel; where the contractor was responsible for the pit dewatering dam and compliance with the licence; where Mr Holley gave a specific instruction to use a polypipe to drain the water; and where Mr Holley believed, in my opinion on solid grounds, that the water would not reach storage dam 7 if that instruction were duly followed.

44 As to par [40](c), it would not, in my opinion, have been practical for Mr Holley to qualify his authorisation in the way suggested. In my view, the suggested qualification to the order was so obvious as to go without saying. It was not in the contemplation of Mr Holley, nor should it have been in the contemplation of the contractor, that the water should be released by breaching the dam wall, or by any means other than siphoning in circumstances where Mr Holley gave a particular instruction to siphon. This view is consistent with Mr Holley’s evidence:

“I never suggested or approved that the dam wall be breached and I had no idea that Mr Hauritz would do this. There was no need to do this and I would not have suggested that such a stupid thing be done, because to structurally compromise that dam at that time could have had the consequence that the mine would have been without a functional pit dewatering dam, because the replacement dam had not yet been completed. The smooth running of the mine project required the new dam to be commissioned before the Pit Dewatering Dam could be decommissioned and, until then, there is no way I would have suggested anything which would have compromised that structure.”

45 Moreover, it would be unreasonable to expect Mr Holley to reinforce the requirements of the environment protection licence in circumstances where the method of siphoning was a gradual process which was highly unlikely to result in storage dam 7 from overfilling.

46 As to par [40](d), Mr Holley did provide evidence that a float would have assisted in the siphoning process. However, on the evidence before me, I am not persuaded on the balance of probabilities that the opinion of Mr Hauritz was correct, and that a siphon alone could not have been used to drain the dam. Accordingly, I am not persuaded that the float was necessary, and decline to find that this was a practical measure.

Suggested practical measures – Werris Creek Coal

47 Mr Pickles submits that Werris Creek Coal could have taken the following practical measures in order to prevent, control or mitigate the harm:

(a) organised their mining activities and divided their responsibility so that Werris Creek Coal had greater responsibility for compliance with the environment protection licence;

(b) had in place a surface water contingency plan or some other form of contingency plan dealing with the incident, and the removal of water from the dams and basins such as the pit dewatering dam should they reach capacity, or should the water be required for operational purposes on the site;

(c) provided a system for giving instructions and training for contractors on their environmental obligations and the importance of observing licence conditions;

48 In support, Mr Pickles points to the fact that the contractor has subsequently provided a contingency plan for pit dewatering and Werris Creek Coal are negotiating an updated site Management Plan with the Department of Natural Resources and Department of Planning, and have appointed a full time environmental officer on the site since December 2007.

Evaluation of suggested practical measures – Werris Creek Coal

49 As to par [47](a), I agree that this was a practical measure which could have prevented, controlled or mitigated the harm. In my opinion, if Werris Creek Coal been conducting the mining operations themselves, and had not delegated the responsibilities surrounding the pit dewatering dam and compliance with the licence, the offence in question would be less likely to have occurred. I note, however, that I do not find that the way in which the defendants managed and supervised the contractors was unreasonable.

50 As to par [47](b), I do not agree that this was a practical measure because: (i) the mine was a dry mine, meaning that there would not be a surplus of water on the mine site, as there was to be little to no groundwater seepage into the active pit; (ii) all environmental impact assessments and management plans at the mining site accepted and adopted that the mine was a dry mine and took this into account; (iii) the water from the mining void, which was there mainly as a result of rainfall, was not a problem and there was no problem with the capacity of the dams at the mine, as evidenced by the pit dewatering dam having further capacity despite the heavy rainfall event of 27 June 2007; (iv) the mining operation plan and site water management plan had adequately assessed the potential for water pollution control, capacity of dams and their response to heavy rainfall as well as a contingency plan in the event that total suspended solids were above the required level; (v) the offence was caused by an unauthorised action of Mr Hauritz for which it would be unreasonable to expect any management plan to contemplate; and (vi) the surface water contingency plan that was subsequently entered was between the Department of Environment and Climate Change and the contractor, not Werris Creek Coal.

51 As to par [47](c) and par [47](d), it would be unreasonable to expect these measures to be taken in the specific circumstances, given the terms of the agreement. I do, however, accept that these are measures which, if combined with the measure suggested in par [47](a), may have been practical and prevented, abated or controlled the harm.

Foreseeability

52 The prosecutor accepts that it was not directly foreseeable that Mr Hauritz would breach the dam wall. Mr Holley also gave evidence to support this by way of affidavit, extracted at par [44] above, which satisfied me that he could not have reasonably foreseen the actions of Mr Hauritz.

53 Mr Pickles submits, however, that both defendants could reasonably have foreseen that the arrangement of affairs, and responsibility for compliance therewith may lead to a breach of the licence condition. In particular, he submits that Werris Creek Coal had arranged its affairs in such a way that the contractor may regard the lowering of the levels of the pit dewatering dam as more important than the maintenance of the licence conditions. That disjunction, Mr Pickles submits, made it foreseeable that such an event might occur and that the contractor may take a path contrary to the path which was suggested to it or instructed in terms of siphoning the water from the dam.

54 I accept the general submission that the defendants could reasonably have foreseen that a breach of a licence condition, and the consequent harm was possible, where a contractor is delegated a high degree of responsibility in terms of compliance with an environment protection licence. However, I give this consideration little weight. As mentioned above, the agreement between the contractor and Werris Creek Coal contained adequate terms to ensure that the contractor properly inducted and supervised their employees, and to ensure that the contractor was made responsible and aware of its obligations of compliance with the environment protection licence. It would have been, at best, remotely foreseeable that an employee of a contractor would have acted completely contrary to instructions on a Saturday morning when, it seems, there was no supervision at the mining site, and nobody to monitor the discharge over the weekend.

55 I reject the specific submission. I do not accept that the contractor, or Mr Hauritz, regarded the lowering of the pit dewatering dams as more important than complying with the licence conditions. The evidence demonstrates that there was no urgency in dewatering the pit dewatering dam, which was not decommissioned until around six months later, in January 2008. The lack of urgency was reflected in Mr Holley’s instruction to siphon water, which is a gradual process. I am not satisfied that Mr Hauritz acted contrary to this instruction because he believed that the dewatering of the pit dewatering dam was urgent and more important than compliance with the licence conditions.

Control over causes

56 Mr Pickles submits that Mr Holley had control over the decision to lower the level of water in the pit dewatering dam and, as demonstrated by the measures outlined in par [40] and par [47] above, the defendants had significant, although not total control, over the events leading to the offence.

57 I am satisfied, however, that in the circumstances of the case, the defendants had little control over the causes of the offence. As mentioned above:

(a) Werris Creek Coal personnel were not entitled to enter the site without a representative of the contractor;

(b) the primary cause of the offence was an action of Mr Hauritz, who acted contrary to instructions;

(c) the contractor was responsible for complying with the environment protection licence and the induction and supervision of their personnel; and

(d) the discharge of water commenced on a Saturday, and Mr Holley was not made aware of the breach until midmorning on Monday.

Purposes of sentencing

58 The purposes of sentencing are set out in s 3A of the Crimes (Sentencing Procedure) Act 1999. The relevant purposes which I have taken into account in this case 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,

…

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

(f) to denounce the conduct of the offender,

General deterrence

59 It is well established that, for environmental offences, general deterrence is of central importance: Cameron v Eurobodalla Shire Council [2006] NSWLEC 47; (2006) 146 LGERA 349 at 364 [71]. It is the duty of the court to see that the sentence that is imposed will operate as a powerful factor in preventing the commission of similar crimes by those who might otherwise be tempted by the prospect that only light punishment will be imposed: R v Rushby [1977] 1 NSWLR 594 at 597-598; Environment Protection Authority v Ballina Shire Council [2006] NSWLEC 289; (2006) 148 LGERA 278 at 289 [66].

60 Mr Pickles submits that the deterrent effect of a fine must send an important message that laws and licences requiring the protection of the environment and its components must be complied with.

61 However, it is also significant that there was little the defendants could reasonably have been expected to do to prevent the commission of the offence. It is important to ensure that the penalty imposed does not cause the offender to shoulder an unfair burden of community education: Walden v Hensler (1987) 163 CLR 561 at 570.

Specific deterrence

62 Mr Pickles also submits that the sentence imposed by the Court must act as a specific deterrent, and that a fine should be imposed on the defendants that will make it worthwhile for the fine to act as a specific deterrent.

63 Mr Pickles submits that the penalty imposed must serve to reinforce Werris Creek Coal’s overriding responsibility to conduct its business so as not to cause pollution. It is relevant to note, however, that Werris Creek Coal no longer delegate mining operations to contractors, and hence there is no division of responsibility between contractor and principal. The mine is now operated by Whitehaven Coal Mining Ltd, who have an induction package which ensures that all employees at the Werris Creek Coal mine are educated according to the requirements of the environment protection licence. Mr Pickles submits, however, that despite this, Werris Creek Coal need to be deterred from reverting to any kind of system where environmental and water management is separated from the operation of the coal mine.

64 In my opinion, there is no need for specific deterrence in the case against Werris Creek Coal. As noted in par [72] below, Whitehaven Coal now owns and operates the mine and measures have been adopted to ensure that similar breaches will not occur: see par [74] below.

65 As to Mr Holley, in my opinion, there again is no need for specific deterrence. Mr Holley is 64 years old, no longer involved with any coal mining operation and has expressed remorse.

Mitigating circumstances

66 I have also taken into account a number of factors provided in s 21A of the Crimes (Sentencing Procedure) Act. In my view, none of the aggravating factors under s 21A(2) would apply to this case. The relevant mitigating factors under s 21A(3) are as follows:

“(a) the injury, emotional harm, loss or damage caused by the offence was not substantial,

…
(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 offender has shown remorse for the offence by making reparation for any injury, loss or damage or in any other manner,

…
(k) a plea of guilty by the offender (as provided by section 22),

Extent of the environmental harm

67 The environmental harm was “minor but not zero” and I consider this to be a mitigating circumstance.

Character and record of prior convictions

68 Neither of the defendants have any prior convictions for environmental offences.

69 The character references tendered, several of them written by members of the community surrounding the mine, satisfy me that Mr Holley is a person of otherwise good character. Werris Creek Coal has not committed any other offences of any nature. Its conduct following the offence indicates that it has a good corporate character.

Likelihood of re-offending

70 In considering this factor, I note that the primary cause of the offence was the unilateral act of the employee of a contractor who acted inconsistently with Mr Holley’s instructions.

71 In any event, Mr Holley is unlikely to re-offend. As noted above, he is 64 years old, no longer a director of Werris Creek Coal and is not involved in mining operations. He has also expressed remorse.

72 Werris Creek Coal is also unlikely to re-offend. As noted above, Whitehaven Coal now owns and operates the mine, but, I infer, in the absence of any suggestion to the contrary, that Werris Creek Coal would continue to hold the environment protection licence. There is no longer a division of responsibility for environmental compliance with a contractor, and as demonstrated in par [74] below, measures have been adopted to ensure that similar breaches of the licence do not occur.

Contrition and remorse

73 I am satisfied from the evidence that Mr Holley is appropriately contrite for the commission of the offence. Mr Holley co-operated with authorities and made every effort to contact neighbouring landholders and address any concerns that may have been raised.

74 In my view, Werris Creek Coal has demonstrated contrition and remorse because:

(a) it co-operated fulsomely with the prosecutor and addressed concerns of neighbouring landholders;

(b) an updated site water management plan is being negotiated with the Department of Natural Resources and the Department of Planning, which is to provide for an updated site water balance and identifies systems and procedures in place for the effective management of water across the site;

(c) the pit dewatering dam was decommissioned without further incident during December 2007 and January 2008;

(d) the current pit dewatering dam has been constructed in excess of the capacity requirements based on water balance calculations to ensure sufficient capacity for ongoing operations;

(e) there is ongoing monitoring of pit water to assess water quality parameters and the application of a nil discharge policy from the mining pit water storage dams;

(f) the agreement with the contractor was not renewed and there is thus no division of responsibility for compliance with the licence;

(g) Whitehaven Coal, who now owns and operates the mine in its entirety, has an induction package which ensures that all employees at the Werris Creek Coal mine are educated according to the requirements of the environment protection licence; and

75 I also take into account that the defendants have agreed to pay the legal and investigative costs of the prosecutor. Mr Holley has agreed to pay $52,147.80 in legal and investigative costs and Werris Creek Coal has agreed to pay $34,764.70.

Pleas of guilty

76 The parties agreed that the defendants pleaded guilty at the “first reasonable opportunity”. However, the defendants did not plead guilty on the return date of the summons. They pleaded guilty at the third mention of the summons before the Court on 3 October 2008 and after the prosecutor’s evidence was filed. According to Mr A Djemal, appearing for Werris Creek Coal, at the first return date for the summons on 15 August 2008, the defendants sought information as to whether all the prosecution’s evidence as to harm and liability were before the Court. The outcome of this was that there was still one affidavit yet to be filed, which was in the process of being put together, and included a number of important records of interview. This affidavit was filed between the first return date and the second mention of the summons on 26 August 2008. At the second occasion, held on 12 September 2008, only one of the defendants had received the affidavit, and the matter was stood over to 3 October 2008.

77 It was agreed by the parties that there was no loss of utility in the plea of guilty being entered at the third occasion, because the affidavit in question needed to be filed in any event, and it contained matters which fell within the prosecutor’s duty of disclosure, dealing with issues of sentencing and not liability.

78 The defendants submit that their plea of guilty was at the first reasonable available opportunity, and that this warrants a full 25 per cent discount of the penalty which the Court would otherwise have imposed in recognition of the early plea facilitating the course of justice: R v Thomson; R v Houlton [2000] NSWCCA 309; (2000) 49 NSWLR 383.

79 During the course of submissions I drew counsel’s attention to the case of Gosford City Council v Australian Panel Products Pty Ltd [2009] NSWLEC 77, a sentencing matter recently decided by Biscoe J. That case involved a plea of guilty for polluting waters. On the return date of the summons the prosecutor’s evidence was not complete, and the Court directed the prosecutor to serve the evidence upon which it intended to rely by the second mention, which it did. The defendant entered a plea of guilty on the second mention of the summons. It was agreed that there was no loss of utility in the defendant pleading guilty on the second occasion the matter was before the Court.

80 Biscoe J considered two authorities in the Court of Criminal Appeal: Sullivan v R; Skillin v R [2008] NSWCCA 296 and R v Borkowski [2009] NSWCCA 102. After consideration of these authorities, Biscoe J concluded that the sentence should be discounted for the utilitarian value of the plea not by the maximum 25 per cent but by 22 per cent.

81 Both defendants submit that I should continue to apply a full discount of 25 per cent, and that I continue to have discretion to do so. Mr T G Howard, appearing for Mr Holley, referred me to Cameron v R [2002] HCA 6; (2002) 209 CLR 339 and, in particular, the joint judgment of Gummow, Gaudron and Callinan JJ (at 345 [19] – [20]):

“... a plea of guilty may be taken into account in mitigation for the reason that a plea of guilty evidences a willingness to facilitate the course of justice and not simply because the plea saves the time and expense of those involved in the administration of justice. That being so, the relevant question is not simply when the plea was entered but … whether it was possible to enter a plea at an earlier time. The question whether it was possible for a person to plead at an earlier time is not one answered simply by looking at the charge sheet ... the question is when it would first have been reasonable for a plea to be entered.”

82 The second passage upon which Mr Howard relies is from the judgment of Kirby J, who agreed with the majority and said (at 363-364 [75]):

“The test is not the time when theoretically or physically a prisoner might have pleaded. The test is when it was reasonable, in all the circumstances and as a matter of practicality, to have expected a plea of guilty to be announced. That question is to be answered in a reasonable way, not mechanically or inflexibly.”

83 Mr Howard submits that this proposition advanced by Kirby J is not inconsistent with Borkowski or Sullivan. Mr Howard respectfully submits that the cases do not prevent a judge from giving a discount of 25 per cent where a plea is entered after the first return date and to do so would be to adopt the mechanical and formulaic approach that Kirby J warned about.

84 Mr Howard also adopts the arguments advanced by the defendant’s counsel in Gosford City Council, which were summarised in the judgment (at [99]):

“ The parties both submitted that the earliest reasonable opportunity for a defendant to plead guilty was when the prosecutor indicated that it had served all its evidence, which, as in the present case, may be later than the return date of the summons. The defendant suggested that three considerations supported that conclusion. First, this Court has a summary criminal jurisdiction whereas the authorities to which I have referred were concerned with indictable offences where there are committal proceedings. In the latter case the prosecutor provides the defendant with a brief of evidence before the committal proceedings. The defendant suggested that this is equivalent to a prosecutor in this Court serving the defendant with all the affidavits on which it intends to rely. Secondly, many offences tried in this Court are strict liability “result” offences. For example, strict liability pollution offences depend on proof of pollution and while the defendant knows whether an incident occurred on the defendant’s premises, the defendant does not necessarily know whether it has resulted in pollution off the premises until it has seen the prosecution evidence. Thirdly, it is the usual practice of this Court in sentencing matters to order the defendant to pay the prosecutor’s costs. Therefore there is usually a costs consequence for the defendant if it does not plead at the earliest opportunity. ”

85 Mr Djemal adopts the first submission provided by defendant’s counsel in Gosford City Council. He further submits that Werris Creek Coal should not be penalised for waiting for an affidavit to be served in circumstances where there was no loss of utility and where the defendant did not indicate that it had any intention of continuing to hearing. Mr Djemal submits that, to attempt to start the clock running before the defendant has seen the evidence, would suggest that there was no entitlement of the defendant to observe the full details of the charge it is pleading to.

86 Mr Pickles accepts that there was no loss of utilitarian value, but submits that the defendants had the opportunity to plead guilty at the first and second occasions, because the critical evidence relating to the breach was already prepared and Werris Creek Coal had already prepared a report on the licence breach. In making this submission, Mr Howard reminded me, however, that Mr Pickles was traversing the statement of agreed facts indicating the pleas of guilty were made at the “first reasonable opportunity”.

What is the appropriate discount for a plea of guilty in this case?

87 In the present case all parties accept that there was no loss of utility in the plea of guilty being entered on the third rather than the first occasion that the matter was before the Court.

88 Not all of the prosecutor’s evidence was before the Court on the first occasion. As noted in par [76] above, a further affidavit, which included a number of important records of interview, was filed between the first and second occasions but had not been received by one defendant. It was also agreed by all parties, as noted in par [77] above, that the affidavit needed to be filed in any event as it contained matters dealing with the prosecutor’s duty of disclosure and issues of sentencing as distinct from liability.

89 In R v Thomson, Spigelman CJ held, at [160], that the utilitarian value of the plea to the criminal justice system should generally be assessed in the range of 10 to 25 per cent discount on sentence and the primary consideration in determining where in the range a particular case should fall is the timing of the plea. The Chief Justice had earlier said, however, at [155], that the top of the range would be expected to be restricted to pleas at the earliest possible opportunity. In the present case the further affidavit, as I understand it, seems to have been directed to sentencing issues and not liability. That is, all the prosecutor’s evidence as to liability had been filed and served. The defendants were thus in a position to assess their liability on the first occasion that the matter was before the Court. In these circumstances it would seem that the defendants should not receive the full benefit of the maximum 25 per cent discount on any penalty, but 20 per cent.

Co-operation with the prosecutor

90 The prosecutor has informed the Court that Werris Creek Coal co-operated fulsomely during the investigation of the offence. I also consider that Mr Holley cooperated during the investigation of the offence, and acknowledge that the prosecutor has informed the Court that this co-operation was not forthcoming until two days after the discovery of the breach.

Objective seriousness

91 The primary factor to consider is the objective gravity or seriousness of each offence Gittany Constructions Pty Ltd v Sutherland Shire Council [2006] NSWLEC 242; (2006) 145 LGERA 189 at 215-216 [108] – [109]. Relevant factors in determining the objective gravity include the maximum penalty, the objective harmfulness of the defendant’s actions, the reasons for the commission of the offence and the state of mind of the offender.

Maximum penalty

92 The maximum statutory penalty reflects the public expression by parliament of the seriousness of the offence: Camilleri’s Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 698 per Kirby P. In sentencing an offender for a criminal offence, the fundamental consideration is the degree to which, having regard to the maximum penalties provided by the Act in question, the offender’s conduct offended against the legislative objective: see R v Peel [1971] 1 NSWLR 247 at 262. The maximum penalty is to be given careful attention and is to be used as a yardstick, for it represents the worst possible scenario for the offence: Markarian v R [2005] HCA 25; (2005) 228 CLR 357 at [31].

93 Under s 64 of the POEO Act, the maximum penalty for a corporation is $1 million and in the case of a continuing offence, a further penalty of $120,000 for each day the offence continues. The maximum penalty for an individual is $250,000 and in the case of a continuing offence, a further penalty of $60,000 for each day the offence continues.

94 I note that the maximum penalty was increased in May 2006. Formerly, for corporations, the maximum penalty was $250,000 and a further $120,000 daily for continuing offences. For individuals, the maximum penalty was $60,000 and a further $30,000 daily for continuing offences.

95 It does not follow, however, that a fine imposed must necessarily be increased in proportion to those changes. Offences of low criminality remain offences of low criminality even if the maximum penalty is increased: Cabonne Shire Council v Environment Protection Authority [2001] NSWCCA 280; (2001) 115 LGERA 304 at [37].

State of mind

96 Werris Creek Coal and Mr Holley did not commit the offence intentionally, and, in my view, there was no element of recklessness.

Culpability

97 Counsel for the defendants have referred me to a number of authorities which, in their submission, demonstrate that the Court should take into account the culpability of the defendants where there was little that they could have done to prevent the harm.

98 Thorneloe v Filipowski [2001] NSWCCA 213; (2001) 52 NSWLR 60 was an appeal to the Court of Criminal Appeal against the severity of a sentence imposed by Talbot J in this Court. The master of a shipping vessel had pleaded guilty to an offence under s 27 of the Marine Pollution Act 1987. That case, like this one, involved a status offence, whereby the master of a vessel committed an offence even though the offence was caused primarily by the actions of the ships crew. The offence in question involved a discharge of petrol into maritime waters at Botany Bay.

99 During an operation involving the loading of petrol onto the vessel in question, some of the petrol being unloaded was discharged onto the deck of the vessel due to a failure on the part of the chief officer to adequately operate the gauge which monitored the ullage in the petrol tank. The gauge had been sticking, and the chief officer was made aware of this at the beginning of his shift, and was also well aware the remedial action required to prevent the gauge from sticking.

100 The master had arranged for scupper plugs to be used to seal the deck in the event of a spillage, but one of the crew had failed to fully tighten one of the scupper plugs. This lead to some of the petrol being discharged into surrounding waters. The volume of water was estimated as being between 10 and 30 litres, an amount barely detectable on the surface of the water, and which did not require remedial action.

101 Spigelman CJ considered whether Talbot J had given any, or, alternatively, adequate consideration to the fact that no reasonable action on the part of the master of the ship could have averted the incident. On this point Spigelman CJ said (at 74-5 [171]):

“ Even in the case of an offence of strict liability, no public purpose is served by recording a conviction or imposing a penalty in circumstances where the relevant accused could not, as a matter of practical reality, have done anything to ensure that the offence or, in the case of a result offence, the adverse consequences of the conduct, did not occur .”

102 In applying this principle to the case at hand, Spigelman CJ noted the two operational failures, being the inadequate attempt of the crew to tighten the plug, and the failure to fix the gauge, and said (at 77 [186]):

“ No doubt some further guidance or training might have made a difference in each case, but it is difficult to identify any effective step which the master could have taken that does not require virtual perfection.”

103 Hulme J agreed on this point and explored the possibilities in relation to what the master could have done to avoid the offence. He found that there was no evidence that the gauge was necessarily faulty and thus the defendants should not have been required to repair it. He agreed that a news bulletin or standing instruction in relation to the operation of the gauge was something further that the offender could have done, but saw no grounds to infer that such an order or bulletin would make any difference. In relation to the scupper plug, Hulme J agreed that the crew could have been reminded of the need to tighten scupper plugs, but believed that it was sheer speculation to suggest that more training or instruction would or even might have made any difference. Hulme J also considered an order which had been given to the chief officer, that handed over responsibility for loading and discharge of cargo, and required the chief officer to double-check their actions when setting up or altering systems during the discharge of cargo. His Honour concluded that there was no evidence to suggest an instruction from the appellant would have made any difference.

104 Cabonne Shire Council v Environment Protection Authority was an appeal to the Court of Criminal Appeal against the severity of a sentence imposed by Cowdroy J in this Court. The issue was whether a fine of $75,000 was excessive for an offence against s 120(1) of the Protection of the Environment Operations Act 1997 for polluting waters.

105 An employee of the offending council was given the duty of pumping out septic tanks using a tanker owned by the council. The nature of his duties and the size of the local government area meant the employee worked alone and had a large degree of autonomy in the performance of his duties. The employee acted deliberately in disposing of sewage at a landfill site not authorised to receive it instead of at the authorised septic disposal pits. The employee was reliable and there was no evidence of any prior incident of the same nature. The employee was aware of the requirement that septic waste was to be deposited in the authorised places. The employee had acted contrary to instruction, practice and good sense on an isolated occasion. It appears on the facts that the employee had dumped the sewage at the site in an effort to save time so that he could achieve all the jobs that he had wanted to in one day.

106 The Court of Criminal Appeal assessed the degree of culpability of the Council for the actions of the Council’s employee. Giles JA, having noted that the judge at first instance had found that the employee’s acts were deliberate, said (at 310 [29]):

“ The person charged with the offence was the [Council], not [the employee]. It would be material to consider the education and instruction given to [the employee] and the procedures put in place by the appellant in order to guard against disposal of septic waste other than in a proper manner. That [the employee’s] actions were deliberate would, however, be a consequence of deficiencies in these respects, material because reflecting on the appellant but not itself a matter counting against the appellant in arriving at the penalty to be imposed. To illustrate the point, if an employer had done everything it could possibly have done to guard against the employee wrongly disposing of polluting matter, it could hardly be held against the employer that the employee, for reasons of his own, deliberately did so .”

107 Giles JA held that the defendant Council did not commit the offence intentionally and observed that the Council could have done more in the way of giving further instructions in relation to the disposal of septic waste but (at 311 [33]):

“Nonetheless, the question is whether the applicant acted culpably, for present purposes or whether it acted reasonably, I do not think it acted unreasonably. I am unable to see the same significance in the matters mentioned above as apparently seen by [Cowdroy J]. ”

108 The Court of Criminal Appeal ordered that the fine be reduced from $75,000 to $11,250.

109 In Murray Irrigation Ltd v ICW Pty Ltd [2006] NSWLEC 23, the defendants were guilty of taking a measurement wheel out of an irrigation channel so that water could freely flow onto land without being measured. The task was carried out by an employee who had decided on his own volition to take water onto the land otherwise than through the measuring wheels. The employers were held vicariously liable because the employee was acting through the realm of his employment albeit in an improper mode. In considering the sentence, Bignold J held (at [20]) that

“ the only moral culpability of the defendants was their entrusting the irrigation task to a casual employee (who was an unknown quantity). Whereas he was instructed how to operate the irrigation system his work was not strictly supervised (at least in the hours of nightfall during which times the offences were committed, without the knowledge or consent of Mr Meares Senior or Mr Meares Junior). The lack of such supervision explains how the wrongful conduct of the casual employee came to be committed without the knowledge and consent of the Meares’ family but it does not demonstrate any relevant neglect or carelessness on the part of the Meares family ..”

110 Ultimately, Bignold J dismissed the charge under s 10 of the Crimes (Sentencing Procedure) Act, acknowledging that the defendants had to pay some significant costs.

111 After considering these cases, I am satisfied that the culpability of the defendants needs to be considered and that, in this case, is at the low end of the spectrum. In my view, the defendants were not careless in their management of the contract and, although a failure to divide responsibility for compliance with the licence could have prevented, controlled or mitigated the harm, I do not think that the defendants were acting carelessly in the circumstances by delegating those responsibilities.

Submissions on appropriate sentence – Werris Creek Coal

112 Mr Pickles submits that the appropriate penalty for Werris Creek Coal would lie at the upper end of the low range, given the low environmental harm, the importance of ensuring compliance with licence conditions, and that practical measures should have been taken to prevent the breach.

113 Mr Pickles submits that I should have regard to the following:

(a) The breach undermines the objectives of the licensing system, which aims to protect the quality of the environment by minimising the potential for pollution of waters or neighbouring land. The licence limit and the monitoring regime under the licence is an important part of the licensing system under the POEO Act: Environment Protection Authority v Ballina Shire Council at [72].

(b) The breach indicates that there was a systemic failure on the part of Werris Creek Coal, and a fatal division of responsibility. Despite the provisions of its agreement, Werris Creek Coal did not have an adequate system in place to control the activities of the contractor who operated the mine, to ensure that licence conditions would be complied with. Werris Creek Coal had responsibility for water management outside the pit dewatering dam and breached that responsibility. By virtue of the division of responsibility, the contractor had very little regard for what happened downstream in the sediment dams and ponds because it wasn’t responsible for them.

(c) The object of the legislature in licensing is to make the licence holder and directors liable for the acts of employees and contractors to ensure systems such as those contemplated in sup-par (b) above are put in place.

114 Mr Djemal makes the primary submission that I should consider an order under section 10(1)(b) of the Crimes (Sentencing Procedure) Act. That section allows a court, without proceeding to conviction, to make an order discharging the person on the condition that the person enter into a good behaviour bond for a term not exceeding two years. Mr Djemal submits that the defendants in this case have a more favourable case than the defendants in Thorneloe v Filipowski, because, in this case, Mr Hauritz acted contrary to an instruction, whereas in Thorneloe v Filipowski, the staff of the ship merely failed to fully comply with an order.

115 Alternatively, Mr Djemal submits that any sentence should take into account that the offence is of a low objective gravity and that the mitigating circumstances warrant the maximum discount on any fine imposed. Mr Djemal submits that the overall discount should exceed 35 per cent and brings my attention to the cases of R v Joseph Sukkar [2006] NSWCCA 92 and SZ v R [2007] NSWCCA 19. In Sukkar, Howie J said (at [54]) that while there is no fixed figure for assistance to authorities, discounts customarily ranged between 20 per cent and 50 per cent and that, generally speaking, a discount of 50 per cent is appropriate to assistance of a very high order. In SZ v R, Howie J said (at [11]) that the application of two discrete discounts is liable to lead to error unless the court is conscious of the overall discount being given and considers whether the discount is unreasonably disproportionate to the nature and circumstances of the offence.

Authorities on appropriate sentence – Werris Creek Coal

116 I have been referred by Mr Pickles to a number of decisions of the Court concerning the breaches of licence conditions. In Environment Protection Authority v Metalcorp Recyclers Pty Ltd [2000] NSWLEC 259 the defendant was fined the sum of $5,000 when the maximum penalty was $30,000. The following cases were considered where the maximum penalty was $60,000: Environment Protection Authority v Metalcorp Recyclers Pty Ltd [2001] NSWLEC 253 (applying principle of totality, penalties were $8,000, $6,000 and $2,000 for balance of offences); Environment Protection Authority v Metalcorp Recyclers Pty Ltd [2004] NSWLEC 14; (2004) 136 LGERA 125 (penalty of $15,000); Environment Protection Authority v Sell and Parker Pty Ltd [2006] NSWLEC 626; (2006) 149 LGERA 209 (penalty of $7,500). The following cases were considered when the maximum penalty was $250,000: Environment Protection Authority v Ballina Shire Council (penalty of $35,000); Environment Protection Authority v Lithgow City Council [2007] NSWLEC 695 (penalty of $48,750); Environment Protection Authority v Bluescope Steel (AIS) Pty Ltd [2004] NSWLEC 400 (penalty of $70,000) Environment Protection Authority v Lithgow Coal Company Pty Ltd [2003] NSWLEC 430 (penalty of $30,000).

117 The following cases were considered when the maximum penalty was, as is for the present case, $1 million: Environment Protection Authority v Caltex Refineries (NSW) Pty Ltd [2008] NSWLEC 194 (penalty of $78,000): Environment Protection Authority v Delta Electricity [2009] NSWLEC 11 (penalty of $45,000).

118 I have considered the sentences imposed in these cases. However, consistency in sentencing must be applied with caution as it is often difficult to properly apply given the wide divergence of facts and, in particular, the varying mitigating circumstances in each case. In Cabonne Shire Council v Environment Protection Authority Giles JA said (at 312 [35]):

“ Indiscriminate reference to other cases is of no utility and should be discouraged. Even discriminating reference is likely to be of no utility because the facts in cases such as the present will almost always be peculiar to the individual case.”

119 None of the cases referred to me by Mr Pickles relate to breach of a condition of a licence requiring water at monitoring points to be beneath a specified concentration of total suspended solids and none of them deal with comparable foreseeability or practical measures as for the offence in the present case, being the unilateral act of an employee of an otherwise competent contractor.

120 I have, however, considered the fine imposed in the recent case of Delta Electricity for the purposes of consistency in sentencing. In that case, the breach of licence involved a failure to conduct operations at a power station so as to minimise or prevent the emission of dust from the premises.

121 I note that there are a number of similarities between Delta Electricity and the present case:

(a) a contractor, who had been delegated responsibility for compliance with the environment protection licence, was primarily responsible for the cause of the offence which resulted in pollution;

(b) Delta had taken steps to ensure that the contract was complied with, including the regular involvement of Delta employees in the management of the contract, and the power to provide oral instructions;

(c) the defendant’s culpability was considered to be at the low end of the spectrum of seriousness;

(d) Pain J considered that there was no need for specific deterrence;

(e) the mitigating circumstances were very similar, that is, the early plea of guilty, good character, Delta’s record of convictions, the likelihood of reoffending, cooperation with the prosecutor and the level of contrition and remorse; and

122 However, the nature of the breach of licence in that case was quite different. The breach involved a failure to maintain premises to a condition required by the licence. In the present case, the breach involves a higher level of discharge than that required by the licence over two days. The other main areas of divergence are as follows:

(a) The nature of environmental harm. In this case, the evidence demonstrates that there was actual environmental harm, albeit minor, and no potential for harm. In Delta Electricity , there was no actual environmental harm, but there was a potential, although not substantial, for environmental harm relating to the physical amenity and discomfort of members of the public.

(b) The reasons provided by Pain J in finding that Delta’s actions were at the low end of the spectrum of culpability. Pain J considered that the culpability of Delta was low because: it was reasonable for Delta in the circumstances to rely on the contractor’s specialist knowledge to manage the flyash mounds at the power station; Delta had not been careless in the management of the contract; and Delta had employees engaged in the ongoing management of the contract, who had provided warnings and made efforts to adequately manage the risks of dust pollution.

(c) The foreseeability of the harm. In my view, the foreseeability of the harm in the present case was much more remote than the foreseeability of harm considered in Delta Electricity .

Conclusion on appropriate sentence – Werris Creek Coal

123 I reject Mr Djemal’s submission that I should consider making an order under s 10(1)(b) of the Crimes (Sentencing Procedure) Act. The licensing system throws the onus on the person or body holding an environment protection licence to ensure that all the conditions of the licence are complied with. The licence holder should not enter into agreements with its contractors which have the effect of putting compliance beyond the licence holder’s control. As Mr Pickles submits, this would undermine the system of licensing. In this respect I accept and adopt the submission of Mr Pickles in par [113](a) above.

124 Although the maximum penalty is $1 million for a corporation, it is self-evident that the offence is of law objective gravity, particularly having regard to the relatively minor environmental harm, noted at par [31] to par [39] above.

125 Nevertheless, consideration of general deterrence requires that the penalty should send a powerful message to the holders of environment protection licences that it is their duty to ensure that all the conditions of such licences must be complied with and that such duty cannot be delegated.

126 In applying the principle of parity in sentencing described by Kirby P in Camilleri’s Stock Feed Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 at 701 as the principle of “even-handedness” - the penalty imposed in Delta Electricity provides the most reliable guide. In that case Pain J imposed a penalty of $45,000 after a substantial reduction in light of the numerous mitigating circumstances. In my opinion, the appropriate penalty in the present case is $70,000, which should be reduced by 30 per cent to $49,000 on account of all the mitigating circumstances in this case.

127 I note that there is an agreement between the two parties that any monetary penalty be directed to an environmental rehabilitation project for Quipolly Dam (described in Annexure “H” to the affidavit of Anthony James Haggarty, affirmed on 19 February 2009).

128 I also note that Werris Creek Coal have agreed to an order pursuant to s 250(1)(a) of the POEO Act that an advertisement be placed in two newspapers publicising the offence and the terms of that advertisement are yet to be agreed.

Submissions on appropriate sentence – Mr Holley

129 Mr Pickles submits that the appropriate penalty for Mr Holley would also lie at the upper end of the low range, given the low environmental harm, the importance of ensuring compliance with licence conditions, and the fact that practical measures should have been taken to prevent the breach.

130 Mr Howard primarily submits that I should consider making an order under s 10(1)(a) of the Crimes (Sentencing Procedure) Act. That section allows the court to make an order, without proceeding to conviction, directing that the charge be dismissed. In the alternative, Mr Howard submits that the Court could convict Mr Holley but refrain from imposing a fine. If the Court determines that a fine is appropriate, Mr Howard submits that the fine should be at the very low end of the range.

Authorities on appropriate sentence – Mr Holley

131 Mr Howard relies on the cases of Thorneloe v Filipowski, Cabonne Shire Council and Murray Irrigation above. Mr Howard has also informed the Court that, of all of the cases imposing liability on directors by virtue of s 169 of the POEO Act, there has never been a case where a director has been prosecuted in circumstances where his corporation is guilty of a status offence where the result has been brought about by the actions of a third party. Mr Howard repeats this submission in relation to the cases that preceded the current legislative regime. Mr Howard submits that this demonstrates that the present case can be set apart, and that Mr Holley has a lower culpability.

132 Mr Howard cited a large number of cases which were said to have some parity with the present, including cases in which sentences have been imposed on directors. However, in view of the conclusion to which I have come on the application of s 10 of the Crimes (Sentencing Procedure) Act, it is not necessary to consider those cases further.

133 Mr Pickles submits, however, that Mr Holley did have knowledge and control in relation to the events and the circumstances in which the events occurred, and that the offence was not caused exclusively by the actions of the third party.

Conclusion on appropriate sentence – Mr Holley

134 In my opinion, Mr Holley should have the benefit of s 10 of the Crimes (Sentencing Procedure) Act. That section enables the court, although finding the offence proved, to dismiss the charge without proceeding to conviction. The relevant considerations are those described in s 10(3):

“(a) the person’s character, antecedents, age, health and mental condition;

(b) the trivial nature of the offence;

(c) the extenuating circumstances in which the offence was committed;

135 As to subs 3(a), Mr Holley is 64 years old and has no prior convictions for environmental offences. Mr Holley left school at the age of 14 years and worked as a process worker for about a year before pursuing a brick laying apprenticeship. Shortly after completing his apprenticeship, Mr Holley commenced work in the transport industry, where he worked as an owner/driver. Mr Holley worked up his business until he owned a small fleet of trucks. Mr Holley was involved in the Werris Creek mining project for about four years. He resigned as director of Werris Creek Coal on 7 December 2007 and has sold his interest in Werris Creek Coal. Since doing so, Mr Holley has been involved in transport work on a small scale, operating one truck and transporting coal for the domestic market.

136 Along with his responsibilities at the Werris Creek coal mine, Mr Holley was responsible for environmental compliance at two separate coal processing areas at Gunnedah as part of his transport business for a number of years prior to becoming involved with the Werris Creek Coal mine. Mr Holley has not been subject to any other environmental prosecutions. Mr Holley has not had any major problems with respect to environmental compliance.

137 I have also considered several character references attesting to Mr Holley’s good character. These references also indicate that: Mr Holley has a genuine concern for the community surrounding the mine; Mr Holley has been generous with donations to the local community; Mr Holley has been involved in a number of community projects and council dealings with the mine; Mr Holley initiated mine tours in 2005, so that the local community and visitors could have the opportunity to visit and ask questions about the mining operation; and Mr Holley’s involvement has been well received and respected by local residents.

138 As to subs 3(b), I find Mr Holley’s offence trivial. As noted above, the extent of environmental harm was minor, and the neighbouring landholders did not have a problem with the offence for reasons of amenity or otherwise.

139 As to subs 3(c), I consider, in particular, the remote foreseeability of the offence and the lack of available practical measures. In Thorneloe v Filipowski, Spigelman CJ said (at 76 [178]):

“It is, in my opinion, relevant to the exercise of the discretion under s 10 of the Sentencing Act, in the context of a strict liability offence, to consider what the applicant for the benefit of s 10 could have done to avert the event that has occurred. While questions of weight are always for the sentencing judge, it is unlikely that this consideration will be given determinative weight in the case of a serious offence or a repeat offender. Where, as here, there was a comparatively minor pollution by a first offender, this consideration is entitled to weight.”

140 Mr Holley specifically authorised the removal of water by siphoning. It would have been unreasonable in the circumstances to expect Mr Holley to qualify this authorisation with a warning not to breach the environment protection licence, or a reminder that siphoning was the only method permitted to be used. To draw a comparison with the circumstances in Thorneloe v Filipowski, it is possible that such a qualification could have been given to prevent the harm, but, in my opinion, such measure was in the circumstances unreasonable. I have particular regard to the observation of Spigelman CJ that the suggested measure required “virtual perfection”, along with the observation of Hulme J that there is no evidence to suggest a different authorisation would have made any difference.

141 As to the prosecutor’s suggestion that Mr Holley should have been supervising the release of water from the dam, again I find that it would not have been reasonable to expect Mr Holley to have done so in the circumstances. There is no doubt that if Mr Holley had been supervising Mr Hauritz, or if Mr Holley had made sure he was present on the site at the time of the discharge, the offence may not have occurred. However, I believe that this would also require “virtual perfection”. The contractor had responsibility for decommissioning the pit dewatering dam, complying with the licence and supervising their employees. Mr Holley was not allowed on the site in the absence of the contractor’s personnel. I am satisfied that Mr Holley took his responsibilities under the licence seriously and had taken an active role in supervising the work under the contract.

142 As to the division of the responsibility under the contract and Mr Holley’s role as director of the company, the only moral culpability of Mr Holley was the entrusting of tasks to a contractor, who acted improperly within the realm of its contract despite specific instructions. Mr Holley was not careless or reckless. In this respect, the facts in this case are comparable to the facts in Murray IrrigationLtd, where the defendants were given the benefit of an order under s 10 of the Crimes (Sentencing Procedure) Act.

143 I have also dealt with the other suggested practical measures above in par [41] to par [46].

144 As to subs 3(d), the other matters to which I have regard are: (i) the mitigating circumstances mentioned above; (ii) that Mr Holley has agreed to pay a high proportion of the prosecutor’s legal and investigative costs, in the amount of $52,147.80; (iii) the fact that Mr Holley is no longer involved in any mining operation and there is no need for specific deterrence.

145 In my opinion, the principles laid down in Thorneloe v Filipowski should be applied to this case. There would be no public purpose served in convicting Mr Holley in circumstances where Mr Holley could not as a matter of practical reality done anything to ensure that the adverse consequences of the offence did not occur.

146 I recognise that the nature of the offence considered in Thorneloe v Filipowski was quite different, that is, it was a pollution offence rather than a breach of licence offence. I accept the submission of Mr Howard, however, that the offence was a status offence, and that the policy imperative in Thorneloe is similar to a relevant policy imperative under the POEO Act, that is, the prevention of water pollution.

Concluding observation

147 In the course of submissions the parties cited some 35 cases on sentencing. In doing so they no doubt believed that they were assisting the Court. The contrary, however, is true. I read all the cases that are cited. This can be an onerous task which inevitably delays judgment. Most of the cases cited, as is often the case, are at most of marginal relevance. The varying factual circumstances and, in particular, the varying mitigating circumstances in each case means that most cases that are cited in this and in other sentence hearings are of limited utility.

148 In Cabonne Shire Council v Environment Protection Authority, Giles JA (Hulme and Adams JJ concurring) said, at [35]:

Clean Waters Act

149 The practice of citing a large number of cases, not only in this case but also in other cases, continues - despite the criticism of the practice in Cabonne. I accept the fact that, since Cabonne, parties no longer cite over 100 cases, but even 35 cases deserves much the same criticism. In most instances the citing of only the most recent or the most relevant authority is generally sufficient. By relevant, I mean that in which the issues and facts are most closely analogous to the particular case. Finally, these comments may be applied not only to sentence hearings, but also to many other cases which come before the Court.

Orders

150 For the reasons outlined above I make the following orders:

50042 of 2008

Protection of the Environment Operations Act

3. By consent, the defendant must pay the prosecutor’s costs in the sum of $34,764.70.

Protection of the Environment Operations Act

5. Reserve liberty to apply in relation to order 4 above.

6. The exhibits, other than exhibit “A”, may be returned.

50043 of 2008

1. I find the offence proved, but pursuant to s 10(1)(a) of the Crimes (Sentencing Procedure) Act 1999, I am satisfied that it is inexpedient to impose any punishment on the defendant and without proceeding to a conviction the charge is dismissed.

2. By consent, the defendant must pay the prosecutor’s costs in the sum of $52,147.80.

3. The exhibits, other than exhibit “A”, may be returned.

I hereby certify that the preceding 150 paragraphs are a true copy of the reasons for judgment herein of the Honourable Mr Justice D H Lloyd.

Associate

**********

Citations

Environment Protection Authority v Werris Creek Coal Pty Ltd; Environment Protection Authority v Holley [2009] NSWLEC 124

Most Recent Citation

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Statutory Material Cited

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CITATION:	Environment Protection Authority v Werris Creek Coal Pty Ltd; Environment Protection Authority v Holley [2009] NSWLEC 124
PARTIES:	50042 of 2008 Environment Protection Authority (Prosecutor) Werris Creek Coal Pty Ltd (Defendant) 50043 of 2008 Environment Protection Authority (Prosecutor) Graham Robert Holley (Defendant)
FILE NUMBER(S):	50042 & 50043 of 2008
CORAM:	Lloyd J
KEY ISSUES:	ENVIRONMENTAL OFFENCES :- penalty - breach of environment protection licence - concentration of total suspended solids at monitoring point in excess of licence requirement - delegation to contractor - contractor acting contrary to instruction - appropriate penalty for defendant company - no conviction for defendant director - relevant considerations - minor environmental harm - low culpability - general deterrence - discount for guilty plea entered after first opportunity - meaning of the first opportunity PRACTICE AND PROCEDURE: - excessive citation of authorities
LEGISLATION CITED:	Crimes (Sentencing Procedure) Act 1999 s 3A, s 10, s 21A Protection of the Environment Operations Act 1997 s 64(1), s 169, s 241, s 250(1)
CASES CITED:	Cabonne Shire Council v Environment Protection Authority [2001] NSWCCA 280; (2001) 115 LGERA 304 Cameron v Eurobodalla Shire Council [2006] NSWLEC 47; (2006) 146 LGERA 349 Cameron v R [2002] HCA 6; (2002) 209 CLR 339 Camilleri’s Stock Feeds Pty Ltd v Environment Protection Authority (1993) 32 NSWLR 683 Environment Protection Authority v Ballina Shire Council [2006] NSWLEC 289; (2006) 148 LGERA 278 Environment Protection Authority v Baiada Poultry Pty Ltd [2008] NSWLEC 280; (2008) 163 LGERA 71 Environment Protection Authority v Bluescope Steel (AIS) Pty Ltd [2004] NSWLEC 400 Environment Protection Authority v Caltex Refineries (NSW) Pty Ltd [2008] NSWLEC 194 Environment Protection Authority v Delta Electricity [2009] NSWLEC 11 Environment Protection Authority v Lithgow City Council [2007] NSWLEC 695 Environment Protection Authority v Lithgow Coal Company Pty Ltd [2003] NSWLEC 430 Environment Protection Authority v Metalcorp Recyclers Pty Ltd [2000] NSWLEC 259 Environment Protection Authority v Metalcorp Recyclers Pty Ltd [2001] NSWLEC 253 Environment Protection Authority v Metalcorp Recyclers Pty Ltd [2004] NSWLEC 14; (2004) 136 LGERA 125 Environment Protection Authority v Sell and Parker Pty Ltd [2006] NSWLEC 626; (2006) 149 LGERA 209 Gittany Constructions Pty Ltd v Sutherland Shire Council [2006] NSWLEC 242; (2006) 145 LGERA 189 Gosford City Council v Australian Panel Products Pty Ltd [2009] NSWLEC 77 Markarian v R [2005] HCA 25; (2005) 228 CLR 357 Murray Irrigation Ltd v ICW Pty Ltd [2006] NSWLEC 23 R v Borkowski [2009] NSWCCA 102 R v Joseph Sukkar [2006] NSWCCA 92 R v Peel [1971] 1 NSWLR 247 R v Rushby [1977] 1 NSWLR 594 R v Thomson; R v Houlton [2000] NSWCCA 309; (2000) 49 NSWLR 383 State Pollution Control Commission v White Wings Pty Ltd (Land and Environment Court, 1 November 1991, unreported) Sullivan v R; Skillin v R [2008] NSWCCA 296 SZ v R [2007] NSWCCA 19 Thorneloe v Filipowski [2001] NSWCCA 213; (2001) 52 NSWLR 60 Walden v Hensler (1987) 163 CLR 561
DATES OF HEARING:	1 June 2009 & 2 June 2009
DATE OF JUDGMENT:	31 July 2009
LEGAL REPRESENTATIVES:	Prosecutor: A M Pickles (barrister) Solicitor: Gordon Plath, Department of Environment and Climate Change 50042 of 2008 Defendant: A Djemal (barrister) Solicitors: McCullough Robertson 50043 of 2008 Defendant: T G Howard (barrister) Solicitor: Michael P Hallett